COLUMBUS, Ohio — An Ohio bank dropped its offer to buy the closed Home State Savings Bank on Thursday, leaving a New York bank as the sole bidder under consideration in private talks to implement a sale.
Legislation needed for the sale of the Cincinnati bank has been drafted, but negotiations on a sale agreement with Chemical Bank of New York continued Thursday, said a spokeswoman in the governor's office.
Senate Republicans want a signed agreement before passing laws needed to implement any deal, Senate President Paul Gillmor said.
Among the proposals still being discussed was using tax money to guarantee that Home State depositors would get all their money, officials said.
Previously announced terms called for an out-of-state buyer to pay a premium for entering the Ohio market and for the state to supplement the purchase price with a guarantee, possibly of $80 million, to assure that all depositors would get their money.
Gov. Richard F. Celeste's office announced Thursday morning that an Ohio bank had withdrawn its purchase proposal. The bank was not identified.
Under Celeste's proposal, the state would put in "substantially more" money than the buyer, Gillmor said Thursday. He did not elaborate.
In addition, he said the buyer had raised constitutional questions about a guarantee and asked for cash instead.
"The problem with that is, it's not any more constitutional if you use cash than if you use credit. But from the buyer's point of view, possession is nine points of the law," Gillmor said.
Under the constitution, the state is prohibited from loaning its tax revenues to private interests.
Brian Usher, Celeste's press secretary, said the up-front payment to the buyer was one of the items under discussion.
"The governor's attempting to work out a position with . . . legislative leaders on that. He's attempting to work out a measure that would, if necessary, use state monies of some kind to help provide that guarantee that every depositor gets 100% of their deposits back," Usher said.
Among the proposals offered in earlier closed-door meetings was creation of a special state lottery, with the proceeds used for Home State.
"Well, there are some constitutional problems with that, if you want a serious answer," Gillmor said. "How about a statewide bake sale?"
The March 8 closing of Home State, following the collapse of ESM Securities Inc. of Florida, triggered runs by depositors at other state-chartered, privately insured savings and loans.
Celeste ordered 69 of the institutions closed March 15. Although all have since been given permission to reopen, most are offering only limited service.
The General Assembly, which was to have been in recess this week, reconvened Thursday to consider the Home State buy-out bill and two other measures stemming from the S&L crisis.
Senators approved 31 to 0 and sent to the House a measure giving subpoena powers to special prosecutor Lawrence Kane, who was appointed to investigate the crisis. The bill also broadens the subpoena powers and scope of a special legislative committee created to investigate Home State.
The Senate was expected to vote later on a bill that would provide $60 million in state funds already set aside to bolster the assets of closed institutions to meet federal insurance requirements, thus allowing them to reopen for full service.