Old Court Savings and Loan (Old Court Thrift Savings) was a

savings and loan association A savings and loan association (S&L), or thrift institution, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans. The terms "S&L" or "thrift" are mainly used in the United States; simi ...

headquartered in Pikesville,

Maryland Maryland ( ) is a state in the Mid-Atlantic region of the United States. It shares borders with Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware and the Atlantic Ocean to ...

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...

, that failed due to

embezzlement Embezzlement is a crime that consists of withholding assets for the purpose of conversion of such assets, by one or more persons to whom the assets were entrusted, either to be held or to be used for specific purposes. Embezzlement is a type ...

by its president Jeffrey Levitt, which led to the failure of the state

deposit insurance Deposit insurance or deposit protection is a measure implemented in many countries to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due. Deposit insurance systems are one component of ...

corporation.

Collapse of state deposit insurance corporation

In 1962 Maryland established a quasi-public

non-profit A nonprofit organization (NPO) or non-profit organisation, also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in co ...

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 rate An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, th ...

s, allowing it to make risky loans. Merritt was considered to be at risk as a result of loans made to a failed repo company. The rumours 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. 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 Harry Roe Hughes (November 13, 1926 – March 13, 2019) was an American politician from the Democratic Party who served as the 57th Governor of Maryland from 1979 to 1987. Early life and family Hughes was born in Easton, Maryland, the s ...

issued an executive order limiting withdrawals to $1000 per month. The

Maryland General Assembly The Maryland General Assembly is the state legislature of the U.S. state of Maryland that convenes within the State House in Annapolis. It is a bicameral body: the upper chamber, the Maryland Senate, has 47 representatives and the lower chamb ...

during two

special session In a legislature, a special session (also extraordinary session) is a period when the body convenes outside of the normal legislative session. This most frequently occurs in order to complete unfinished tasks for the year (often delayed by confli ...

s 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. He served 6 years in

prison A prison, also known as a jail, gaol (dated, standard English, Australian, and historically in Canada), penitentiary (American English and Canadian English), detention center (or detention centre outside the US), correction center, correc ...

before being released on

parole Parole (also known as provisional release or supervised release) is a form of early release of a prison inmate where the prisoner agrees to abide by certain behavioral conditions, including checking-in with their designated parole officers, or ...

in 1993. He then moved to Florida and opened a cigar shop.Michael James
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

Baltimore Sun ''The Baltimore Sun'' is the largest general-circulation daily newspaper based in the U.S. state of Maryland and provides coverage of local and regional news, events, issues, people, and industries. Founded in 1837, it is currently owned by Tr ...

(March 16, 1997). Retrieved on December 23, 2012.

Subsequent events

The failure of the state bank insurance systems of

Ohio Ohio () is a state in the Midwestern region of the United States. Of the fifty U.S. states, it is the 34th-largest by area, and with a population of nearly 11.8 million, is the seventh-most populous and tenth-most densely populated. The sta ...

, and

Arizona Arizona ( ; nv, Hoozdo Hahoodzo ; ood, Alĭ ṣonak ) is a state in the Southwestern United States. It is the 6th largest and the 14th most populous of the 50 states. Its capital and largest city is Phoenix. Arizona is part of the Fou ...

presaged the national collapse of the

Federal Savings and Loan Insurance Corporation The Federal Savings and Loan Insurance Corporation (FSLIC) was an institution that administered deposit insurance for savings and loan institutions in the United States. History Establishment The FSLIC was established by the National Housing Act ...

. It also resulted in the

Supreme Court A supreme court is the highest court within the hierarchy of courts in most legal jurisdictions. Other descriptions for such courts include court of last resort, apex court, and high (or final) court of appeal. Broadly speaking, the decisions of ...

case '' Tafflin v. Levitt'' regarding whether civil claims brought under the

Racketeer Influenced and Corrupt Organizations Act The Racketeer Influenced and Corrupt Organizations (RICO) Act is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. RICO was en ...

could be heard in state court.

Collapse of state deposit insurance corporation

Conviction of Levitt

Subsequent events

References

See also