Under pressure from angry depositors, Ohio legislators patched up their partisan differences early today and approved a plan to reopen 70 closed savings and loan institutions.
After a day of intense political infighting, the Republican controlled Senate unanimously adopted a proposal passed late Tuesday by the House, which is controlled by Democrats. Republicans had earlier balked at the plan, claiming that it would force from 25 to 30 institutions out of business.
Gov. Richard F. Celeste said he planned to sign the bill at this morning, which will enable some of the privately insured thrifts, closed last Friday to prevent a run on deposits, to reopen this week.
But under the plan, most of the thrifts won't open for weeks.
Aides to the governor said one Columbus S&L might be eligible to reopen today.
The plan is a revised version of one adopted by the House but rejected by the Senate Monday and supposedly dead earlier Tuesday. Like the earlier version, it is designed to bring closed institutions under federal protection.
But it includes provisions allowing depositors to withdraw $750 each from closed S&Ls, exempts some thrifts with unusual circumstances from requirements and calls for a special prosecutor to investigate events leading up to the collapse of one of the state's largest thrifts that precipitated the crisis.
State Sen. Paul Pfeifer, a Republican, said he had opposed an earlier version of the plan because he thought legislators were being "stampeded" to support a bill that "for some savings and loans meant either a forced assassination or a shotgun marriage."
Senate Democratic leader Harry Meshel, defending the original plan, said "there was no forced marriage, I saw no shotguns. Instead I saw some courtship. Ultimately, we were concerned with our offspring and that they have a legitimate name."
Sen. Richard R. Finan, a Republican who joined with Celeste in writing the plan, said it didn't provide an "instant solution" to reopening all the closed institutions, but the plan sets up a system for the gradual reopening of the thrifts and protects the interests of depositors.
Celeste, a Democrat, spent the Tuesday trying to elicit assistance from the Federal Reserve Board and the Federal Home Loan Bank Board, then flew back to Columbus to put pressure on Republican legislators to back the bipartisan effort he fashioned.
He told reporters before he returned to Ohio that Federal Home Loan Bank Board Chairman Edwin J. Gray promised him a "superhuman" effort in evaluating and processing the privately chartered Ohio institutions that want to apply for federal deposit insurance.
Celeste closed 70 savings and loans last Friday to stop a run on deposits that was triggered when the biggest savings and loan in the private insurance fund failed and its losses threatened to wipe out the entire insurance fund.
Celeste wants the closed institutions to apply for federal deposit insurance and have state regulatory officials certify that an institution is qualified for federal insurance before it is permitted to reopen.
But the Republican-controlled state Senate turned down Celeste's emergency plan earlier Tuesday as GOP leaders complained that 30 of the 70 closed thrifts might be forced out of business by the proposal.
Celeste said in Washington that he would wait to confer with Republican legislators before deciding whether to extend the "holiday" for the 70 savings and loans.
Federal examiners are doing complete audits of the closed institutions, but officials said that preliminary examinations last week showed that about 30 were so weak that they could not be reopened, and another 25 or so need assistance if they are to survive.
Rep. Chalmers Wylie (R-Ohio) said the bank board's Gray told him 31 of the 70 Ohio institutions appeared to qualify for federal insurance, but a bank board spokesman said he could neither confirm nor deny that figure. The spokesman said that 12 of the Ohio savings and loans have applied for federal insurance and another five have signed letters of intent to do so.
A tiny savings and loan, Columbia of Cincinnati, was approved for federal insurance late Friday -- it had applied a year earlier -- and reopened Monday as a federally insured institution.
Celeste, in a meeting with reporters in Washington, said his main goal is to protect the $4 billion in deposits in the closed savings and loans and said that he thinks the public will regain confidence in the institutions if they are certified as eligible for federal insurance. But he did not say how many of those institutions would not be eligible.
The state legislature continued in session late into the night Tuesday as Celeste returned from Washington to his office here, claiming he still had hopes that the two legislative bodies would work out a solution to the crisis before morning. He said he had decided against addressing a joint session of the legislature.
Earlier Tuesday, Senate President Pro Tempore Stanley J. Aronoff, a Cincinatti Republican, said, "We were uneasy with signing the death warrant for dozens of savings and loan institutions and maybe the death warrant for thousands of depositors."
Republicans balked at an earlier Celeste drawn plan because they feared it would force 25 to 30 institutions out of business.
The Senate did unanimously pass a bill that would allow depositors to withdraw up to $750 each from the closed S&Ls and make deposits to them. The deposits would be segregated into accounts separate from other funds.
Senate President Paul E. Gillmor, a Republican, said the bill would not resolve the state's banking crisis but it would give "people on fixed incomes, senior citizens and others money to put food on the table and pay their rent bills."
Democrats and Republicans each complained that the other party had politicized the crisis. "Republicans want to put Dick [Celeste] out on a limb," said one of the governor's top strategists. "They want him to take all the heat. I think they are nervous about the out-front way he has handled this thing and they want to lay the groundwork for him to fail."
Gillmor denied this. "We didn't politicize this," he told a press conference. "We don't politicize this now. Those that are doing that will have to take responsibility."
The bipartisan effort to shore up the S&Ls fell apart in the wee hours Tuesday morning over a seemingly minor dispute over wording.
The House-passed bill said S&Ls "shall" be required to apply for federal insurance protection and be found eligible for such coverage by state regulators before reopening. Senate Republicans sought to change the shall to "may."
Republicans said this would put the decision on what S&Ls could reopen on the shoulders of Celeste's appointed savings and loans superintendent and his commerce director and not on legislators.
Their concerns centered on fears that from 25 to 30 of the institutions would be unable to meet federal standards, and be forced to liquidate, merge or shut down.
"The governor was saying, 'You [the legislators] make that decision,' " said Aronoff. "We're saying, 'You do it. Don't try to hide under us.' "
Senate Democratic leader Meshel disagreed. "The fact is there won't be any blame for anyone if we save everyone's deposits. This business isn't partisan. It's the worst place in the world to play politics."
The Ohio Deposit Guarantee Fund, which insures the 70 institutions, will probably be completely exhausted by the failure of Cincinnati-based Home State Savings Association, the biggest institution in the fund. It is owned by Marvin Warner, a wealthy Ohioan and a political supporter of Celeste.