Posted on Wednesday, December 8, 2010
In a move reminiscent of the last time the United States was in such dire financial straits, the FDIC announced recently that it has begun an investigation of executives and other employees of failed banks.
In the 1980s and 1990s, the savings and loan (S&L) crisis prompted the government to investigate and prosecute hundreds of bank insiders, sending more than 1,000 to prison, and collecting $4.5 billion.
This time around, the FDIC has opened more than 200 civil cases, including more than 50 against top officials of failed banks, seeking to recover around $2 billion in money it spent taking over the failed institutions.
The cases aim to prosecute banking employees who may have helped exacerbate the financial collapse by fraud, dangerous lending, and other criminal behavior.
So far this year 149 banks have failed. This increase is not as sizable as the predicted increase from 2009, when there were 140 bank failures, but does show how dramatically the market has changed in recent years. In 2008 there were 25 bank failures, and in 2007 there were only three.
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