Ohio Sues Thrift That Sparked Run : Seeks $432 Million Damages; Nearly All S&Ls; Reopen

Associated Press

Virtually all of the Ohio savings and loans ordered closed for most of last week because of a banking emergency reopened for at least limited service Monday, while the state filed a $432-million suit against officers of the thrift that triggered the crisis.

Some long lines of customers were reported Monday, but most thrifts said business was returning to normal.

In Cincinnati, attorneys representing the state Commerce Department filed suit against the officers and directors of Home State Savings Bank, attorney Bob Trafford said.

The suit seeks $144 million in compensatory damages and $288 million in punitive damages “against a number of officers and directors of Home State,” including Home State’s principal owner, Marvin Warner, Trafford said.


The courts had closed by the time the suit was announced, and Trafford would not immediately detail the allegations in it.

Meanwhile, a state lawmaker was finishing work on legislation designed to speed up the acquisition of Home State, the Cincinnati-based thrift whose closing March 9 after a three-day run on deposits triggered the crisis.

Checks with the savings and loans showed that all but a few of the 70 thrift institutions that were closed March 15 were reopened by Monday. Lines were reported outside at least three Cincinnati-area thrifts, but there were no signs of the panic that had prompted the closings 10 days earlier.

At Molitor Loan & Building Co., about 70 people waited in line as the thrift opened its doors. Customers also lined up outside that Cincinnati institution Saturday.


Lines also were reported Monday outside Oakmont Savings & Loan and at Charter Oak Savings Assn. in Cincinnati.

Charter Oak President Dan Pugh said customers were polite and orderly. “I’ve been out all day working with the crowd,” Pugh said. “We’ve been giving them handouts, explaining what’s allowed. They’ve been very nice.”

Elsewhere, no major problems were reported.

“It’s very normal--no crowds . . . the usual Monday traffic,” said Esther Mohr, vice president and secretary at People’s Building & Loan Co. of DeGraff, in west central Ohio.

In Gallipolis, in southern Ohio, managing officer Richard Brown said things were calm at Buckeye Building & Loan Co.

“I’ve had one withdrawal of $750 and three depositors,” Brown said shortly after the thrift opened.

Gov. Richard F. Celeste signed legislation last week allowing all of the closed state-chartered S&Ls; to reopen if they obtained federal deposit insurance. Other conditions under which they could reopen were that the institutions be owned or agree to merge with a company already federally insured or that they demonstrate to the satisfaction of the state superintendent of savings and loans that the interests of depositors would not be jeopardized.

Thrifts that had not obtained permission to reopen for full service, however, were able to open to accept deposits and permit withdrawals of up to $750.


Robert McAlister, new superintendent of the state division of savings and loans, said 18 thrifts that opened Monday would be able to offer full service. The rest offered limited service.

At the Capitol, meanwhile, Sen. Richard Finan was working on a bill that would give any out-of-state banking institution until Sept. 30 to acquire any depository institution in Ohio that is in severe financial trouble, said Amy Showalter, an aide to the Cincinnati Republican.

Such acquisitions currently are prohibited under Ohio law.

“We’re trying to get a committee set up now,” Showalter said, explaining that hearings could begin as early as today or Wednesday.

State officials have been working with the insurance industry on a plan under which an insurance consortium would provide $1 billion in temporary deposit insurance for savings and loans without federal insurance.

James Wilmers, managing director of the Columbus firm of Marsh & McLennan, said the company would tell state officials early this week if the temporary deposit insurance can be made available.

“We’ll need a very large group, quite a huge number (of insurers) to carry this off,” Wilmers said.