Concern about a plan to make banks help shore up the Savings Association Insurance Fund has temporarily derailed a merger between Maryland's major bank and thrift trade groups.
In a surprise move this month, the Maryland Bankers Association, acting on a motion by an influential member, voted to "table" the agreement to merge with the Maryland League of Financial Institutions.
The vote "is ludicrous," said a stunned Charles H. Kresslein Jr., president of the Maryland League. "They are the ones who were pushing the hell out of it (a merger) for three years."
The vote was surprising because the boards of both groups had approved the merger and recommended it to their memberships. Once members of the thrift group voted for the merger at their annual meeting late in May, the deal appeared ready to be formalized when members of the Maryland Bankers met on June 1 for their annual meeting.
During a meeting on the merger, H. Furlong Baldwin, chairman and chief executive of Baltimore-based Mercantile Bankshares, motioned to table the vote, said John B. Bowers Jr., the group's executive vice president.
After debating the issue, members supported the motion.
Mr. Baldwin could not be reached for comment.
Mr. Bowers said his members were concerned over a bill sponsored by Rep. Bill McCollum, R-Fla., which would merge the bank and thrift insurance funds and require banks to help pay off bonds used to clean up the failed Federal Savings and Loan Insurance Corp.
Bankers want a separate fund, and they don't think they should shoulder the thrift industry's burden. Mr. Bowers said a vote to merge might send a message that Maryland's bankers support the McCollum bill. And he said he wasn't surprised by Mr. Baldwin's move to table the merger.
"We just didn't want to send an inconsistent message," he said. "I think it (the bill) was just fresh on a lot of people's minds."
Mr. Bowers, however, said representatives of Mercantile were "involved in the process" of the merger leading up to the final vote.
"We felt we looked at it from all angles," he said.
Trade association mergers in Pennsylvania, Florida, and Tennessee have been completed in recent years as groups have found they can put aside their differences and lobby for positions that benefit both banks and thrifts.
Despite the vote, Mr. Bowers said bankers are willing to try again as soon as the issues over the bank and thrift insurance funds are settled. He expects that to happen within months.
"We are certainly hopeful this (merger) is going to occur sooner rather than later," Mr. Bowers said. "All the reasons for the merger are still there, and I think are sound ones. We are optimistic ... that we will revisit the issue with their membership with a special meeting."
Mr. Kresslein said he is not "so sure" the thrift group will look to reopen negotiations with the bankers association.
Although both Maryland groups have been hurt by consolidation, the league's situation is more pressing. Mr. Kresslein said it could post a deficit for its fiscal year ending June 30.
He said the trade group might downsize or look for an alignment with Maryland's mortgage bankers trade group. "We are back to square one," Mr. Kresslein said. "It's been up in the air."
