In May 1985, rumors emerged of financial instability at two thrifts, Old Court and Merritt Commercial Savings and Loan.
[1] Merritt was considered to be at risk as a result of loans made to a failed repo company.
[2] 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.
[3] 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.