Posted on Monday, January 10, 2011
WASHINGTON: U.S. banking regulators have authorized lawsuits against 109 bank officials so far as they seek to recover at least $2.5 billion in losses connected to recent bank failures.
The Federal Deposit Insurance Corp said on Tuesday the suits target bank directors and officers for "either gross or simple negligence." It is seeking to recoup money for its deposit insurance fund, which backs customer accounts.
The FDIC has previously said it was pursuing such legal actions but now has unveiled a website with updated numbers.
The website will be updated monthly with a running tally of the amount of lawsuits authorized and how much the agency is seeking to recover. So far, however, the FDIC has only filed suits against directors and officers from two banks.
In November, the agency sued former executives and directors of Heritage Community Bank of Illinois. When the bank failed in February 2009, the FDIC estimated it would cost the insurance fund $41.6 million.
In July, the FDIC also sued to recover $300 million from former executives of IndyMac Bancorp Inc, a large California mortgage lender that failed in July 2008.
The agency has pursued lawsuits against executives of failed banks in the past. From 1986 to 2009 the government recovered $6.2 billion from these types of suits, according to the FDIC.
The FDIC suffers the losses to its deposit insurance fund when a bank is seized.
In 2010, 157 banks with total assets of $92 billion failed. FDIC Chairman Sheila Bair has said the agency expects the number of failures to drop in 2011.
Dave Clarke, Huffington Post