The Hughes administration's proposal to allow Chase Manhattan Corp. to acquire three Maryland savings and loan associations ran into a firestorm of opposition in the General Assembly today as some legislators called it too generous to the New York bank and executives of the thrifts it would purchase.
With many legislators getting their first detailed look at the complex proposal during briefings in the two General Assembly chambers, members of the Senate mounted a revolt that continued into the night and could threaten timely action on the plan during a special session set for Thursday.
Senate President Melvin A. Steinberg (D-Baltimore County), after repeatedly telling his 46 colleagues that the state has no alternative to accepting the Chase deal, began looking for negotiating room tonight but said time may work against finding a means of appeasing opposition in the Senate.
"We've got a real serious time problem," said Steinberg after Chase officials rebuffed an appeal to extend their deadline for completion of the package. Chase has repeatedly said the session must be completed this week to give them the nearly two weeks necessary to secure federal approval of the takeovers.
"The problem is very simple," said Steinberg. "We are attempting to thrust upon the majority of members in one week information and proposals that were developed over four months. Nobody's brought up the alternatives, what the state of affairs will be if we are unable to resolve it."
Chase and the Hughes administration have proposed an arrangement under which the giant New York bank will acquire Merritt Commercial Savings and Loan of Baltimore, Friendship Savings and Loan of Bethesda and Chesapeake Savings and Loan of Annapolis in exchange for a $25 million payment from an industry insurance fund now controlled by the state.
Opposition centers on the $25 million payment and the terms of a separate agreement between Chase and Merritt owner Gerald S. Klein, who will retain four commercial properties and continue working with Chase to resolve some of the thrift's complex real estate ventures.
Senate Minority Leader John A. Cade (R-Anne Arundel), arguing that any money taken from the insurance fund will reduce the state's ability to pay for the possible liquidation of other thrifts, said the $25 million "is, in the final analysis, taxpayers' money. They talk about it like it's moon money or Confederate money, but it's not."
With no other potential buyers in sight for Merritt and the two other thrifts, the top legislative leadership has joined the Hughes administration in arguing that the assembly has no choice but to accept the deal, which would free up $500 million in deposits.
But the legislature's rank and file, particularly in the Senate, remained profoundly skeptical about the proposed acquisitions today.
"We feel the state is being shortchanged," said Sen. Laurence Levitan (D-Montgomery). "It's difficult to come into a restaurant to find food already on the table that you're not excited about and you have to eat it. We are paying $25 million, Klein is walking away with good assets and the owners of two insolvent savings and loans are making out like bandits."
Hughes, after meeting with the assembly's presiding officers, promised to ameliorate some of their concerns by providing them by the time they adjourn with a detailed plan to release some funds to depositors with personal hardships.
The governor said the hardship plan would affect two thrifts under conservatorship -- Old Court of Baltimore and Community of Bethesda, and possibly a third, First Maryland -- if the state's attempts to repair talks between that association and Citicorp fail. Citicorp, which had been negotiating to acquire First Maryland, broke off talks last week.