MNC counters false rumors about its fate

November 03, 1990|By Peter H. Frank

Federal and state regulators and executives at MNC Financial Inc., parent of Maryland National Bank and American Security Bank, emphatically denied widespread and erroneous rumors yesterday that the state's largest banking company had filed for bankruptcy.

Several hundred phone calls flooded the bank's offices; the city's Rumor Control office said it had received more than 100 calls by midafternoon; and state and federal regulators were also busy squelching the reports. The message to all callers was the same.

"The bank has not failed, the holding company has not declared bankruptcy, the bank is still open and it will be open on Monday," said Ellen Stockdale, a spokesman for the Office of the Comptroller of the Currency, a federal agency that regulates the nation's banks.

"There's no substance to the reports," echoed Federal Deposit Insurance Corp. spokesman Alan J. Whitney.

On Wall Street, investors seemed either unaware of the rumors or simply dismissed them as untrue. Traded on the New York Stock Exchange, MNC closed at $4.50 a share, up 25 cents for the day.

While no one was sure how many calls had been placed to the various companies and agencies, it appeared that by afternoon the rumors had reached a feverish pitch across much of the Baltimore region.

"We're in damage control right now," said Daniel G. Finney, a spokesman for MNC Financial. "The rumor is a rumor and there is no truth to it."

Mr. Finney said that more than 2,500 messages had been sent by fax machine to the bank's branches and employees and that each of the company's 3,000 workers who deal directly with the public had been sent information they could use to help stem the false reports. He said he also contacted eight local radio stations and the three network affiliate television stations to assure them the rumors were false.

At the Rumor Control Office, a city agency created to respond to questions and ferret out the source of rumors, supervisor Thomas L. Saunders said his office had been receiving calls for two weeks from people asking about MNC's financial health.

The calls increased after MNC said Oct. 25 that it had lost $173.4 million in the third quarter and that federal regulators had increased their supervision of the banking company, Mr. Saunders said. In all, the office had received 423 calls regarding MNC by 3 p.m. yesterday, with 116 coming yesterday alone, Mr. Saunders said.

"That's a lot for one rumor," he said.

Despite attempts by various parties to pinpoint the source of the rumors, no one was certain how or where they began.

A number of callers to The Baltimore Sun said they, or someone they knew, had heard it on the radio -- itself a rumor that could not be confirmed. Other callers said they had been told the rumor by Maryland National employees.

Some of the officials attempting to track down a reason for the rumors speculated that they were fueled by the presence of Treasury Secretary Nicholas F. Brady, who attended a fund-raiser yesterday at the bank's headquarters for Wayne T. Gilchrest, the Republican candidate in Maryland's 1st Congressional District.

At MNC, Mr. Finney stressed that it was against state law to pass along "any untrue statement that is derogatory to the financial condition or affects the solvency or financial standing of any bank" in the state.

Regardless of how the rumors began, the fact so many people believed the stories was seen as a sad legacy to the history of banking in Maryland, some said.

While most of the country must remember back to the Great Depression to recall depositor runs on banks or savings and loans, many Marylanders only have to think back five years and the debacle at Old Court Savings & Loan Association. The block-long lines and years of waiting for deposits has apparently misled many into believing the same situation might exist despite the guarantee of federal insurance.

"People are reacting to an S&L situation when this is totally different," said Margie H. Muller, the state bank commissioner. "There is full federal insurance, there is no regulatory action that would suggest any further problems that they can't deal with, and, as far as we can see, the bank will continue to operate as in the past."

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.