Word: thrift
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...panic indeed exploded in Maryland last week, prompting Hughes to seize emergency control of his state's 102 privately insured thrifts. The events demonstrated the shaky state of consumer confidence in banking and sparked demands that all deposit-taking institutions be federally insured. Most of all, Maryland's crisis raised doubts about the overall health of the savings and loan industry, which is attempting to recover from a six-year slump. Said Willard Butcher, chairman of Chase Manhattan Bank: "We have the potential for a very serious thrift crisis in this country...
...Cincinnati's Home State Savings, Maryland's full-blown panic started with trouble at just one institution. The run began when press reports revealed that Old Court's president and part owner, Jeffrey Levitt, had stepped down under pressure from the insurance fund, which was worried about the thrift's sloppy management and overly rapid growth. In three years, Levitt had pushed the thrift from $140 million in assets to $873 million. Old Court made that leap with risky real estate deals and flashy Government securities trades, but faltered when some of those ventures fell through...
...panic spread to Baltimore's Merritt Commercial Savings (assets: $339 million) following news reports that state regulators had asked the thrift to bolster its cash position by selling a 39-story downtown skyscraper it is constructing. Maryland authorities tried to restore confidence by placing both institutions under the wing of state conservators, but that failed to stop the runs from spreading to other privately insured thrifts...
...last week more than two dozen Ohio thrifts had reopened, backed now by the Federal Savings and Loan Insurance Corporation, a federal agency that guarantees deposits up to $100,000. The remaining privately insured S and Ls were allowing customers to withdraw up to $750. Depositors said they had confidence in their thrifts, and there was little sense of panic. Nonetheless, at least 200 jittery customers lined up to make withdrawals last Thursday from Cincinnati's Oakmont Savings and Loan, where there had been reports that some of the thrift's officers had illegally taken money from their accounts...
More accusations about Home State's financial dealings may emerge next week during a Cincinnati hearing involving the divorce of the thrift's former president, Burton Bongard. His ex-wife Susan, represented by Los Angeles Attorney Marvin Mitchelson, claims that Bongard cheated her in their division of property, which included the sale last year of his 15% share of Home State. Bongard contends he sold the stock to Warner for $277,000 because that was all he could get for it. But his former wife charges that the bank president received a secret bonus of $3 million taken from...