Saturday, March 15, 2003

Ohio Moments

Home State collapse creates banking crisis


On March 15, 1985, Ohio Gov. Richard Celeste ordered all banks insured by the Ohio Deposit Guarantee Fund (ODGF) closed. That month, Home State Savings Bank of Cincinnati incurred losses that ultimately totaled more than $275 million. People began withdrawing money from Home State and 69 other banks insured by ODGF, which could not cover the withdrawals. When Home State, ODGF's biggest client, collapsed in March 1985, it also brought down the private insurer and touched off a statewide panic among its other banks. Depositors had no access to their money for weeks, although in the end, none lost any money. Of the banks closed by Celeste, most were permitted to reopen after purchasing insurance from the federal government. Four, including Home State, were liquidated by the state. Taxpayers bailed out Home State to the tune of $129 million after the Ohio General Assembly passed legislation to do so. That money was recouped in a series of court actions against financier Marvin Warner, who would spend 28 months in prison.

Rebecca Goodman

E-mail or call 768-8361

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