Word: thrifts
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Dates: during 1980-1989
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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...
...Another bout of uneasiness hit the financial industry, this time inspired partly by the plight of Texas banks laden with bad loans in energy and real estate. Meanwhile, everyone from divorce lawyers to the FBI was busily looking for culprits in the failure of Home State Savings, the Cincinnati thrift whose sudden collapse last month touched off a minor financial panic. The scare forced Governor Richard Celeste to close Ohio's 69 privately insured thrifts in the largest U.S. bank holiday since the Depression...
...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...
...federal ceilings on the interest rates they could pay depositors. Now bankers have much more freedom to pay what they wish, and competition has pushed rates up. That in turn has led the S and Ls to make riskier investments to cover the handsome payouts. In the past, thrifts generally limited their loan business to home mortgages. Now many have plunged into higher-yielding but more dangerous ventures, ranging from office-building construction to securities deals with traders like E.S.M. "It's harder to make a profit," says Robert Seaton, president of Cleveland's Cardinal Federal Savings & Loan. "Therefore institutions...