A Beltsville-based thrift institution requested a federal injunction today to block Tuesday's scheduled sale of Community Savings and Loan to Mellon Bank Corp.
John Hanson Savings and Loan officials are seeking to stop the sale, claiming in documents filed in federal court that they are legally entitled to some of the funds the state has pledged to pay Mellon in the Community takeover.
John Hanson's efforts to block the sale could jeopardize Mellon's plans to reopen eight Community branches on Wednesday, which would give 20,000 depositors access to $324 million in funds that have been frozen since August.
Under terms of the Community sale, the state promised to pay Mellon $130.4 million and pledged an additional $40 million to absorb future losses that result from the collapse of Community's real estate syndication holdings. Some of the money to pay Mellon is to come from a fund that had been maintained by the defunct Maryland Savings-Share Insurance Corp., the agency that formerly insured deposits at state-chartered thrifts.
The state took control of the MSSIC fund after the thrift crisis began a year ago.
In a motion filed in U.S. District Court here today, John Hanson maintained that it is entitled to a refund of $17.5 million it contributed to MSSIC. John Hanson also sought a preliminary injunction to prevent the sale from taking place.
Two other thrifts, Second National Building and Loan and Chevy Chase Savings and Loan, also are taking court action to reclaim money they contributed to the MSSIC fund. Last week, attorneys for Chevy Chase argued their case before the state Court of Appeals, which has not issued a decision.
Attorneys representing the Maryland Deposit Insurance Fund, a state agency set up after MSSIC's collapse, have argued that whatever MSSIC funds remain should first be used to give depositors -- not thrift institutions -- access to their money.
John Hanson's motion said that the state intends to use all of the money in MSSIC's Central Insurance Fund in the sale of Community, a contention that was disputed today by Deputy Attorney General Dennis Sweeney. Sweeney said that there was $174 million in the fund, and that the state intends to use $86 million of it that is in the form of "ready cash."