As detailed in the accompanying
blog post , all signs are that the FDIC will be filing increasing numbers of
civil actions against former officials of banks that have been closed as part
of the current round of bank failures. With this possibility in mind, it seems
like it is time for The D&O Diary...
If the lawsuit filed on February 7, 2011 in the Northern
District of Georgia is any indication, the FDIC's efforts to pursue liability
claims will not only include suits against the directors and officers of failed
banks, but will also include in at least some instances the failed
The FDIC's pursuit of litigation against directors and
officers of banks that have failed as part of the current round of bank
failures has been moving forward, albeit at a deliberate pace. The agency's
litigation efforts advanced a couple of steps in recent days, as the agency
filed an additional...
In the wake of the current round of bank failures, the
FDIC has filed
a number of lawsuits against former directors and officers of failed banks,
indicated that it intends to file more. Among the issues this litigation
raises is the question of when the former directors of a failed bank...
On August 22, 2011, when the FDIC filed a lawsuit
related to the collapse of Silverton Bank, which is Georgia's largest failed
bank, the named defendants included not only bank officers that the regulators
allege are responsible for the bank's failure, but also the bank's former
Turns out that while some of us were wondering when the
lawsuits arising out of the current bank wave would really start to
accumulate, the FDIC itself was busy filing lawsuits -- they just didn't tell
anybody about it, at least not until now. Specifically, the FDIC filed three
On October 25, 2011, the FDIC filed its latest failed
bank lawsuit, in connection with events surrounding the July 2009
failure of Mutual Bank of Harvey, IL . The FDIC's
complaint , which was filed in the Northern District of Illinois, names as
defendants eight former directors and two former...
An inevitable part of the current wave of bank failures
has been the FDIC's filing of lawsuits against former directors and officers of
the failed institutions. And though the FDIC's initiation of this litigation
has been gradual, the lawsuits have now started to
accumulate in significant...
In the FDIC's latest lawsuit filed in its role as
receiver of a failed bank, the FDIC not only named as defendants nineteen
former directors and officers of the failed bank, but also included as
defendants seventeen of their spouses and the failed bank's D&O insurer. A
copy of the FDIC's...
Even as the number of bank failures now appears to be
winding down, the FDIC's failed bank litigation filings seem to just be ramping
up. With now 21 lawsuits filed as part of the current wave of bank failures, it
may be possible to try to make some generalizations about the lawsuits so far.
The FDIC's latest Quarterly Banking Profile for the
period ending December 31, 2011, released February 28, 2012 ( here ), reflects a generally
improving banking landscape and a continuing reduction in the number of problem
institutions. But though the industry is showing improvement, the number...
Though the current bank failure wave has been rolling for
several years now and though there have been over 425 bank
closures during that period , the much anticipated FDIC failed bank
litigation has been slower to gain momentum - that is, perhaps, at least until
now. Through the end of 2011, the...
The number of bank failures has been winding down for a
while now, but at same time the FDIC's failed bank litigation has been ramping
up. Through April 20, 2012, the FDIC has filed a total of 29 lawsuits against
former directors and officers of failed banks, involving 28 different
In a May 31, 2012 study of the FDIC failed bank litigation that contains a number of interesting observations and projections, NERA Economic Consulting projects at the current filing rate, the FDIC's failed bank litigation ultimately could total 86 lawsuits, or much as 20% of all banks that have...
The pace of bank closures has slowed to a trickle. There
have only been three bank failures so far in 2013 (including one this past
Friday evening, involving the Covenant
Bank of Chicago, Illinois ). But while bank failures have dwindled, the
number of failed bank lawsuit filings has surged. On February...
Possibly as a result of a barrage of recent press
criticism for its nonpublic settlements, the FDIC has launched a page on its
website to publish details regarding the settlements it has reached in failed
bank claims. The page, which can be found here , acknowledges
that it is not yet complete. Even...
According to the latest update on the FDIC's website, the
pace of the agency's filing of failed bank lawsuits picked up considerably in
the last month. According to the agency's website ( here ),
which the agency updated on May 22, 2013 the agency has now filed a total of 63
As discussed in an article in the Sarasota Herald
Tribune ( here ),
on May 22, 2013, a Middle District of Florida jury returned a verdict against
Sarasota law firm Icard Merrill , and
one of its partners, Robert
Messick , in a legal malpractice action arising out of the collapse of the
The improvement in the banking sector continued in the
first quarter of 2013, according to the FDIC's Quarterly Banking Profile for
the first quarter of 2013, which the agency released on May 29, 2013. A copy of
the Quarterly Banking Profile can be found here . Overall the industry
A federal court has denied the motion of the accountants of the failed Colonial Bank’s holding company to dismiss the claims the FDIC, in its capacity as the failed bank’s receiver, had filed against them. As discussed here , the FDIC’s November 2012 lawsuit was the first the agency...
One of the most contentious issues in the litigation the FDIC has been pursuing in its capacity as receiver of various failed banks is whether the defendant former directors and officers can assert affirmative defenses against the FDIC for the agency’s own conduct.
In a part of a December 23...
In 2013, the number of lawsuits the FDIC has filed against the directors and officers of failed banks reached the highest annual level during the current wave of failed bank litigation, though the pace of litigation filings peaked in the second quarter and slowed as the year progressed, according to...
Since the early stages of the financial crisis, nearly 500 banks have failed across the U.S., and even though we are now well past the peak of the financial crisis, banks continue to fail. Yet during the same time as scores of banks were failing, many more banks did not fail – which raises the...
The commercial banking industry is continuing its rebound from the subprime meltdown and the global financial crisis. According to the FDIC’s latest Quarterly Banking Profile for the period ending December 31, 2014 ( here ), the industry’s overall earnings continue to improve, largely as...
Federal prosecutors have come in for considerable criticism over their failure to press criminal charges against executives of financial institutions whose stumbles led to the global financial crisis. As Southern District of New York Judge Jed Rakoff pointed out in his blistering January 9, 2014 opinion...