The Maryland Senate, brushing aside objections from two of its Montgomery County members, gave preliminary approval tonight to tough new savings and loan regulations that still would be less stringent than those the House of Delegates adopted at the urging of a special investigative counsel.
The generally placid debate on regulations designed to reform the state's scandal-tarred thrift industry reflected the firm control over the Senate held by its president, Melvin A. Steinberg. The Baltimore County Democrat used long presentations by his four committee chairmen and the Republican minority leader to muster overwhelming support for the new S&L rules.
Today's votes and debate in the Senate virtually guarantee passage of the S&L regulatory bill later this week, when the senators are expected to take their final vote on the measure. After that, the bill is likely to move to a House-Senate conference committee, where the two sides may iron out their differences.
Steinberg closed tonight's Senate session with an announcement that he favors disclosure by all 188 members of the General Assembly and other elected officials of any funds they had deposited in state-chartered savings and loans before last May, when the industry's private insurance system collapsed after depositor runs.
Such a disclosure, said Steinberg, would silence the months of "rumors and innuendo" that some Maryland politicians acted on what he called "inside information" by quietly withdrawing their deposits before the crisis hit.
Steinberg's call for the disclosure was prompted by an amendment offered by state Sen. Stewart Bainum Jr. (D-Montgomery), who along with Sen. Howard A. Denis (R-Montgomery) proposed the only substantive changes tonight to the regulatory reform measure.
Bainum and Denis tried but failed several times to knock out of the regulatory bill the very provisions that their Senate colleagues had added to a version that was unanimously approved by the House in late February.
The House, in approving its version, left largely intact the recommendations of special counsel Wilbur D. Preston Jr., a Baltimore lawyer who investigated the origins of the crisis and concluded that the state should get out of the business of insuring savings associations.
"We concluded that Mr. Preston drew the wagons a little too tight," said Republican Sen. John A. Cade, the minority leader who fended off attempts by Bainum and Denis to restore the bill to its House version.
Denis railed against provisions that would permit state-chartered, federally-insured thrifts to invest in Sun Belt states and grant loans to thrifts' officers and employes, while Bainum tried to strip from the bill a section that would effectively shield small associations from some of the new regulations.
Denis, waving a copy of Preston's thick report on the S&L crisis, suggested at one point that the Senate could be laying the groundwork for another financial debacle.
"We've had two [thrift industry] collapses in our lifetime -- let's not let it happen again," he said.
During the debate over a section of the bill that would expand associations' real estate investment rights, Sen. Julian L. Lapides (D-Baltimore) sarcastically attacked the majority who favored it. "It's really funny how soon we forget," said Lapides. "We're not out of the crisis yet and we're still bending over for this wonderful industry."
But the objections of Lapides, Denis and a few others were drowned out in a chorus by Steinberg's lieutenants on the Senate floor -- his committee chairmen, Cade and Majority Leader Clarence W. Blount (D-Baltimore). The proponents argued that Preston's recommendations went too far, that new powers included in the bill for the state Division of Savings and Loan were an adequate safeguard against abuse and that the small associations that could win waivers from regulation were well-managed and secure institutions.
When Bainum proposed an amendment to force all state-chartered savings and loans to obtain federal deposit insurance by mid-1989 or face dissolution, Cade attacked the proposal as "the height of folly," saying the smaller S&Ls that would be affected were the safe "foundation" of the industry in Maryland.
Bainum's amendment died, 23 to 20.