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FDIC waives bankers fines to protect Lloyds of London

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Funny how it took nearly three weeks for this one to surface in banking news. Other banks need to be outraged by this action, for they have to pay FDIC assessments to keep the FDIC fund replenished and fully funded.

FDIC waives bankers fines to protect Lloyds of London

September 9, Phoenix Business Journal – (Arizona)

Former bank execs settle FDIC lawsuit for $20 million each . . . but FDIC waives it, after reducing it down from $193 million!!!

The ex-chief executive of First National Bank (FNB) of Arizona and a former director settled a lawsuit brought by the Federal Deposit Insurance Corporation (FDIC) August 23, alleging the two "sacrificed safety" and promoted risky loans that ultimately caused the bank’s failure. The pair agreed to settle for $20 million each, while denying all allegations in the complaint As part of the settlement, the FDIC agreed not to collect the judgments against them if the pair waived their right to sue Lloyds of London Catlin Syndicate, which insured both men. The broader settlement agreement, which is not public, also included other former officers and directors of FNB. In its original complaint, the government agency sought to recover more than $193 million in damages resulting from the directors’ and officers’ breaches of fiduciary duties, including "gross negligence." In its complaint, the FDIC alleged FNB created a wholesale mortgage division to purchase and market billions of dollars in risky nontraditional mortgages dubbed "Alt-A" loans. The loans boosted FNB's profits to record levels in the short-term, but eventually caused the bank’s failure when the real estate market softened. The pair promoted the risky mortgages "long after they should have known the loans being made created a substantial harm to the bank," FDIC documents said.


Source: http://www.bizjournals.com/phoenix/print....t.html?page=all

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