The Maryland General Assembly, deeply polarized after a tumultuous 18-hour session collapsed into chaos and discord at 4 a.m. today, will attempt again Monday to reach an agreement on the Hughes administration's proposal to allow Chase Manhattan Corp. to acquire three state savings and loan associations.
But the legislature and the governor, having lost critical momentum today when exhausted legislators limped home after the Senate abruptly reneged on an expected compromise, are running short of time to conclude delicate negotiations with Chase and the chief owner of Merritt Commercial Savings and Loan Association.
Because of an agreement with Chase Manhattan, the state has until Tuesday to pass legislation that would permit the New York bank to acquire Merritt and two other thrifts -- Friendship Savings and Loan of Bethesda and Chesapeake Savings and Loan of Annapolis -- and convert them to full-service banks, relieving the state of an estimated $100 million in possible losses at Merritt, which has been under state conservatorship since May.
A compromise -- which at two points during a weekend session of the legislature appeared to appease Senate concerns over the deal -- disintegrated early today after senators learned the details of Chase's financial arrangements with chief Merritt owner Gerald S. Klein.
The Senate's primary objection to the deal -- the state's payment of $25 million to Chase for acquiring Merritt -- had seemed to be overcome by an agreement with the House to send two versions of the legislation to Hughes, who had pledged to seek additional concessions from Chase.
But that agreement collapsed after the Senate saw a document detailing Chase's agreement to forgive, over five years, $7.5 million in debts personally guaranteed by Klein.
Senate President Melvin A. Steinberg (D-Baltimore County), who had earlier capitulated to a personal appeal from Gov. Harry Hughes, told his colleagues from the Senate podium at 3:30 a.m.: "The Senate of Maryland will not tolerate this transaction." Later, speaking to reporters, Steinberg said, "All bets are off again."
Steinberg's reversal was his fourth within 12 hours.
Though House leaders and the governor maintained that the essence of the Klein financial agreement had been fully disclosed by Chase nearly two weeks ago, Steinberg and many of his colleagues denounced the document as a last-minute revelation that fatally flaws the Chase transaction.
"I feel like a yo-yo," said Steinberg. "It seems every time we have something agreed to . . . something comes forth that knocks it off its pins."
Steinberg's final address to the Senate -- what one savings and loan lobbyist dubbed his "second 'Yankee Go Home' speech of the night" -- put a bizarre end to a tragicomic legislative day that left many legislators frayed and perplexed.
"We all ought to resign and run against the incumbents," said one legislator in a nonsensical but somehow fitting observation on the assembly's often halting and disjointed effort to grapple with a multimillion-dollar deal that has thousands of thrift depositors hanging in the balance.
Though Steinberg retains considerable support in the Senate, many House members were baffled and angry that the Senate president had taken the legislature on a roller coaster ride by alternately opposing and favoring the Chase deal.
Theories abounded on Steinberg's motivation, but one House leader ultimately attributed the result to sheer fatigue. "I think Mickey was tired. He didn't have enough psychic strength left, and it caused him to make a knee-jerk reaction."
Steinberg, who places enormous importance on the dignity of his position and that of the Senate, appeared to be under considerable stress as the session and its attendant negotiations wore on into the night.
The Senate floor, bathed in television lights, took on a surreal atmosphere: Senators went from sleeping at their desks to bellowing in outrage. House members filled the gallery to watch and comment derisively upon the scene below.
State House veterans groped for historical comparisons to the long day's journey into naught, and they came up empty-handed.
"I've never seen anything like it," said Tom Stuckey, an Associated Press correspondent whose 22 years of covering the legislature makes him the dean of the press corps. "It was bizarre; that's the only word for it."
House Speaker Benjamin L. Cardin (D-Baltimore) said he had seen "other times when it has been as brutal between the House and the Senate, but never on an issue as important as this."
Expressing renewed optimism this afternoon, Cardin said the legislature will attempt on Monday to reconstruct the shattered compromise that collapsed this morning. Under that plan, the legislature would send to Hughes two versions of the banking legislation, one permitting the $25 million state payment to Chase and one preferred by the Senate that deletes the payment.
In addition, the House will press forward with separate legislation that would preserve the state's option of suing Klein for civil damages over his management of Merritt.
Allegations by the attorney for the state conservator of Merritt that Klein mismanaged the thrift have lent new urgency to amending Chase's original proposal that the state assign to the bank all rights to sue Klein for civil damages.
Klein, reached by telephone at home today, refused to comment.
"Last night was a setback," said Cardin. "But I think we can overcome that. I think we have a good shot."
Nonetheless, Cardin and a key Hughes administration official said putting the compromise back together will be difficult with time running out. Hughes had appealed to the Senate to conclude its business today to give him maximum time to negotiate changes with Chase and to give the bank time to bargain with Klein.
"The governor's going to have a gun at his head to get everything completed in 12 hours," said Cardin. "Going into Monday makes it much more difficult."
"Monday is the critical date," agreed Benjamin Bialek, Hughes' chief legislative aide. "Part of the fear is that Chase Manhattan will have had enough of the Maryland legislative process."