Old Court Savings and Loans
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Old Court Savings and Loan (Old Court Thrift Savings) was a savings and loan association headquartered in Pikesville, Maryland, United States, that failed due to embezzlement by its president Jeffrey Levitt, which led to the failure of the state deposit insurance corporation.
Collapse of state deposit insurance corporation
In 1962 Maryland established a quasi-public non-profit corporation, the Maryland Savings-Share Insurance Corporation (MSSIC), to insure accounts held in state chartered savings and loan associations. In May 1985, rumors emerged of financial instability at two thrifts, Old Court and Merritt Commercial Savings and Loan. Old Court had recently grown from $86 million in deposits to $839 million in only three years by offering high deposit interest rates, allowing it to make risky loans.{{cite book |last=Wolfson |first=Martin H.
|title=Financial Crises: Understanding the Postwar U.S. Experience |publisher=M.E. Sharpe |year=2004 |location=Armonk, New York |pages=106–07 |url=https://books.google.com/books?id=QBI4zwEACAAJ |isbn=0-87332-750-0}} Merritt was considered to be at risk as a result of loans made to a failed repo company.{{cite book |last=Markham |first=Jerry W. |author-link=Jerry Markham |title=A Financial History of the United States |publisher=M.E. Sharpe |volume=3 |year=2002 |location=Armonk, New York |pages=169–71 |url=https://books.google.com/books?id=ISBN0765607301 |isbn=0-7656-0730-1 }}{{Dead link|date=January 2024 |bot=InternetArchiveBot |fix-attempted=yes }} The rumors led to depositors questioning whether MSSIC was financially able to guarantee all of the deposits, resulting in a run on all state savings and loan associations.{{cite court |litigants=Brandenburg v. Seidel |vol=859 |reporter=F.2d |opinion=1179 |pinpoint=1181 |court=4th Cir. |year=1988}} This led to the withdrawal of deposits, the failure of Old Court and the subsequent collapse of MSSIC. To temporarily protect other state savings and loan associations, Governor Harry Hughes issued an executive order limiting withdrawals to $1000 per month. The Maryland General Assembly during two special sessions in 1985 established the Maryland Deposit Insurance Fund (MDIF) to replace the MSSIC.
Conviction of Levitt
Old Court President Jeffrey Levitt was charged in relation to the failure of the bank, and pleaded guilty to theft and misappropriation of bank funds.{{cite news |first=Tony |last=Kornheiser |author-link=Tony Kornheiser |url=https://www.washingtonpost.com/wp-dyn/content/article/2006/11/27/AR2006112700867.html |title=Jeffrey Levitt Stole $15 Million |newspaper=The Washington Post |date=October 26, 1986 |access-date=May 7, 2007}}{{cite news |first=Tom |last=Stuckey |url=https://news.google.com/newspapers?nid=1955&dat=19860527&id=2VIiAAAAIBAJ&sjid=7aYFAAAAIBAJ&pg=6268,5929036 |title=Levitt enters plea of guilty |agency=Associated Press |newspaper=Reading Eagle |via=Google News |date=May 27, 1986 |access-date=November 20, 2013}} He served 6 years in Maryland prison before being released on parole in 1993.{{cite news |first1=Craig S. |last1=Ey |first2=David |last2=Harrison |first3=Rob |last3=Kaiser |url=https://www.bizjournals.com/baltimore/stories/1997/11/03/tidbits.html?page=all |title=Jeff, Where art thou? |newspaper=Baltimore Business Journal |date=November 3, 1997 |access-date=December 23, 2012}}
He then moved to Florida and opened a cigar shop.{{cite news |first=Michael |last=James |url=https://www.baltimoresun.com/news/bs-xpm-1997-03-16-1997075030-story.html |title=Jeffrey Levitt's new life Survivor: A decade after losing his wealth, his wife and his freedom, the villain of the Maryland S&L scandal is breaking his angry silence |newspaper=The Baltimore Sun |date=March 16, 1997 |access-date=December 23, 2012}}
Subsequent events
The failure of the state bank insurance systems of Maryland, Ohio, and Arizona presaged the national collapse of the Federal Savings and Loan Insurance Corporation. It also resulted in the Supreme Court case Tafflin v. Levitt regarding whether civil claims brought under the Racketeer Influenced and Corrupt Organizations Act could be heard in state court.
References
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See also
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Category:Banks based in Maryland