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Officials Seek to Restore Confidence in 71 Ohio S&Ls

March 18, 1985|Associated Press

CINCINNATI — Whether doors would reopen today at 71 state-chartered savings and loan associations remained in doubt Sunday, as Gov. Richard F. Celeste and financial officials worked to stop further runs on deposits.

Meanwhile, Senate President Paul Gillmor said a special session of the state Legislature was planned for today, but refused to say what legislation would be considered.

Celeste, who declared a three-day holiday for the institutions Friday, met Sunday with legislative leaders in Columbus. They kept in touch with state, Federal Reserve and commercial bank officials meeting in Cleveland.

News Conference Planned

The governor was also expected to meet with executives of the state's privately insured savings and loan institutions late Sunday night in Columbus, and was then to fly to Cincinnati for a news conference.

Officials in Cleveland were discussing whether the state-chartered institutions could be provided with federal deposit insurance, or could be taken over by Ohio's major commercial banks.

Celeste's order came after customers began camping outside two Cincinnati thrift institutions, hoping to withdraw their money. They were alarmed by the March 9 closing of the Cincinnati-based Home State Savings Bank, where a run started after the collapse of a major lender that held its securities as collateral.

Lines of Depositors

The lines of depositors were blamed on eroding confidence in the private Ohio Deposit Guarantee Fund, which insured Home State and the 71 institutions covered by Celeste's order.

The order did not affect Ohio's federally insured S&Ls.

Account holders withdrew more than $60 million from institutions covered by the Ohio fund last Thursday, Celeste said Saturday. The institutions began last week with about $4 billion in assets.

"I want you to know that we are doing everything possible to come up with a solution that will restore confidence," Celeste said Sunday. "No course of action has been ruled out.

"I understand the frustrations of those of you who are depositors of these privately insured savings and loan institutions. I want you to know we have been working night and day to ease your concerns," he said.

Saturday, Celeste met for several hours in Cleveland with the bank officials trying to resolve the situation. He was represented at Sunday's session by Ray Sawyer, his chief of staff.

Federal Examiners at Work

About 200 federal examiners were assessing the financial health of the closed institutions, Celeste said, adding that he believes most of them are in good shape.

Meanwhile, negotiations continued in Cincinnati over the weekend on the possible sale of Home State.

In the wake of the firm's troubles, newspapers focused over the weekend on the financial affairs of Marvin L. Warner, a Cincinnati businessman and primary owner of Home State Financial Inc., its parent firm. Warner resigned as chairman of the Ohio Building Authority after Home State closed.

A Cleveland newspaper, the Plain Dealer, reported Sunday that Home State Financial has made bargain-rate loans to Warner, his family and other Home State Financial executives. The newspaper cited documents filed by Financial with federal and state regulators.

It said Warner had two 1983 loans from Home State Financial of $2.6 million each, and $1.8 million was due from his daughter, Alyson Warner, during 1983.

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