THE 1985 MARYLAND SAVINGS AND LOAN CRISIS
On 9 May 1985, Old Court Savings and Loan in the State of Maryland was depleted of $15 million in funds in a run on the institution that was precipitated by rumors of trouble at the thrift. On 13 May 1985, Old Court Savings and Loan was placed in conservatorship, and the State of Maryland contributed $25 million to subsidize the purchase of another Maryland thrift institution, Merritt Commercial, by Chase Bank. Two other troubled thrift institutions, Chesapeake Savings and Loan and Friendship Savings and Loan, were merged whit Chase Bank in the same transaction.
On 13 May 1985 also, Maryland Governor Harry Hughes orders a $1,000 per month withdrawal limit for all depositors at the state-chartered savings and loan associations in the state. Four days later on 17 May 1985, Governor Hughes signed into law hastily enacted legislation (a package of seven separate bills) to address the crisis. One of these seven bills created the Maryland Deposit Insurance Fund to take over from the private insurance fund that had been guaranteeing the deposits at the state-chartered thrift institutions in Maryland. Two days later, 19 May 1985, the governor's general distribution fund paid $111 million to Old Court Savings and Loan depositors. Between the time of the beginning of the savings and loan crisis in Maryland in 1985 and 1987, the State of Maryland took over six thrift institutions in the state. Maryland's savings and loans did not even begin to emerge from the crisis until 1989. By that time, many of them were engulfed by the national savings and loan crisis.
The Maryland savings and loan crisis did not occur in a vacuum. In 1985, 120 banking institutions in the United States failed. This number was the largest in any single year in the United States since the Great Depression of the 1930s. The failing economy--particularly in energy, agriculture, and r...