Here are some answers provided by Maryland state officials, banking officials and other sources to the most frequently asked questions about the current S&L crisis:
What S&Ls are covered by the governor's order?
All S&Ls that are insured by Maryland Savings-Share Insurance Corp. Those with federal insurance and banks are not affected.
What accounts are restricted by the governor's order?
All accounts, including certificates of deposit, savings accounts and checking accounts. A depositor with multiple accounts may withdraw $1,000 each month from each account.
When does the $1,000 limit take effect?
The $1,000 monthly limit on each account took effect immediately when Hughes signed his order, at 4:47 p.m. Tuesday.
The limit applies only to money that was in the privately insured S&Ls at that time. Depositors may not withdraw more than $1,000 from each of their accounts. If a depositor has two accounts at a privately insured S&L -- for instance, a savings and an interest-bearing checking account -- he or she may withdraw up to $2,000 per month -- provided there is at least $1,000 in each of the accounts.
What about new funds -- such as just-issued payroll or Social Security checks deposited after 4:47 p.m. Tuesday?
The $1,000 limit does not apply to new funds deposited after Hughes' order. "We don't want to discourage any new deposits," said Frances Pugh, Maryland's assistant attorney general who serves as counsel to the department of licensing and regulation. As a result, the affected S&Ls are redoing their data-processing systems to recognize which money is old and restricted -- and which is new and can be withdrawn without any limits.
Does the limit apply only to checks written after 4:47 p.m. Tuesday or only to those that have been cleared by the S&L at that time?
Because consumers can easily backdate checks with little detection, Hughes' office decided his rule would be impossible to enforce if it applied to the date the check was written. Similarly, state officials concluded it would be impossible to determine when a check was deposited. "You can't read the back of the checks," Pugh said.
Thus, the limit covers all checks that clear the S&L after 4:47 p.m. Tuesday. If you wrote a check several days before the order was signed but the recipient held it until afer the order, or if it had not cleared before that time, its amount will apply against the $1,000 limit.
Some S&Ls, however, said they are trying to bend the rules a bit to make life easier for customers. First Maryland Savings & Loan Inc. yesterday said that if it could determine that a check had been deposited by Tuesday and reached the association's clearance center by Thursday, it may not count that check against the $1,000 total.
How often can I withdraw $1,000?
Once every 30 days. Thus, since Hughes' order was signed May 14, you could withdraw only $1,000 from each account until June 13, when a new 30-day period will begin.
What if I went to my S&L Tuesday and closed out my account, by getting the association to write me a check for all of my $10,000 on deposit. Will that check, which hasn't yet cleared, be affected by the limit?
If the check was written by the S&L itself before Hughes' order, it will not be affected. However, if the check was written by you and had not cleared before the order took place, if it is for more than $1,000, it will be bounced for insufficient funds.
What happens if the S&L says I am overdrawn? Will I be charged an overdraft fee?
Most S&Ls said that if customers' checks are returned because they exceed the $1,000 limit, overdraft fees will be waived. Many retailers and major creditors also said yesterday that they would not impose late charges or finance fees if consumers can't pay their bills because of the limit. However, they added, each decision would be on a case-by-case basis, with consumers probably having to show proof that they have sufficient funds with the S&Ls, before the fees are waived.
Are major retailers going to continue to accept checks drawn on the affected S&Ls?
Yes. Most major retailers, including Giant Food and Safeway Stores, said business will continue as usual. They will accept checks from the affected S&Ls for food purchases as well as for cash. "We're not going to change our policy at all," said Ernie Moore, a spokesman for Safeway. "We have confidence that the banking system works and we owe a service to our customers."
Similarly, Woodward & Lothrop, The Hecht Co. and Sears Roebuck & Co. said they would continue to accept checks from privately insured savings and loan associations.
"We had the same policy in Ohio and had no resulting problems," said a Sears spokesman.
What happens if I have already met my $1,000 limit and still have bills to pay?
Alan Thomas Fell, Maryland's commissioner of consumer credit, gave this advice: "The key to the situation is to contact a creditor before the bills come due and tell them you have the money but are limited on the amount you can withdraw. Take whatever proof you have to show that you are not trying to escape anything. Most creditors will be willing to make special exceptions." If unsatisfied with the answers you get from the creditor's representative, demand to see his or her superior until you get a satisfactory answer, Fell added. And if that fails, call Fell's office: 1-800-492-7521 (from Maryland phones only).
Fell also suggested that if you run into problems and you have had a good credit rating up to now, you should contact the two major credit-rating companies in the area -- CBI Inc. or TRW -- to see if they have a credit file on you. If so, you should send them a letter, notifying them you may have problems meeting some of your bills because of the order. Also send them the name of your association, your account numbers and the balance in your accounts to back up your statement, so that when the order is lifted, you will not have incurred a bad credit history. Records are kept seven years, Fell stressed.
Will the utilities make any special concessions?
All have indicated they will make special exemptions and will not cut off service -- or impose late fees or finance charges -- as long as the consumer contacts them before a bill is due. The numbers to call are 750-1000 for Washington Gas Light Co.; 833-7500 for Potomac Electric Power Co., and the number on a consumer's telephone bill for Chesapeake & Potomac Cos.
What if I have a special need that requires more than $1,000 -- such as a down payment needed to buy a house? Similarly, what if I have a payroll I have to meet?
The attorney general's office said that for the time being there will be no special exemptions, not even to meet a payroll. "If we started granting exemptions, we'd have longer lines than we already had," Pugh said. S&L executives hope that the special legislative session scheduled for this Friday will include consideration of some exemptions to meet these problems.
Can I continue to use my credit card if it is issued by one of the affected S&Ls?
You can continue to use credit cards to buy goods and services -- without any limit on the amount. The state considers such use as a loan. However, if you use a credit card to draw money from your account at an automatic-teller machine, that money is immediately subtracted from your account and will be applied against the $1,000 limit.
What if I have a certificate of deposit that has just come due or is scheduled to come due in the next few days?
Only $1,000 of the principal and/or interest can be withdrawn during a 30-day period. Pugh advised consumers who are in such a predicament and who don't want the CD to roll over into a new CD with a newly set interest rate to notify the association immediately and let the expired CD be converted into a passbook or money-market account until the consumer can gain further access to it.
What about funds transfers, if I have a savings and a checking account?
You will still be able to transfer funds, but such transactions will account as withdrawals from each account. Thus, if you transfer $1,000 from your savings into your checking, you will not be able to then get another $1,000 from your savings account. Nor will that transfer be regarded as new money to permit you to withdraw $2,000 from your checking. Also, if you have only $500 in your checking account but $2,000 in your savings account, you cannot transfer $500 into the checking and then withdraw $1,000 from each account, Pugh said.
How will the associations know what is old money, affected by the $1,000 limit and what is newly deposited money, unaffected by the limit?
S&Ls already have or are redesigning their data-processing system to recognize the difference.
How long will the limit remain in effect?
No date for lifting the restriction has been set.
Is money guaranteed up to $100,000 at all institutions, including Old Court and Merritt?
Yes. CAPTION: Picture, Garland McLauhlin holds his $1,000 check from Old Court Savings and Loan. UNITED PRESS INTERNATIONAL