BNA INSIGHTS: Claims of Excessive Risk Taking by Bank Directors and Officers Are in the Eye of the Beholder

This is the second of a two-part series analyzing the historical context beneath the Federal Deposit Insurance Corporation’s lawsuits against directors and officers (D’s & O’s) of banks that have failed since 2008. Part I examined statutory and common law standards of liability as they have developed since the S&L crisis of the 1980s and 1990s (97 BBR 762, 11/1/11). Part II examines the nature of claims asserted by regulators against D’s & O’s of institutions that failed during that prior crisis, the issues of standard of liability for D’s & O’s, whether the business judgment rule applies, what conduct the FDIC seeks to use as a basis for liability in the 15 lawsuits it has filed since 2008, and what the litigation might portend for D’s & O’s of banks that have thus far made it through the most turbulent financial crisis since the Great Depression.

BNA INSIGHTS: FDIC Lawsuits Against Former Directors and Officers of Banks That Have Failed Since 2008: Is This Déjà Vu All Over Again?

Since the recession of 1980-81, each round of failures of federally-insured depository institutions has brought with it a tidal wave of post-failure investigations and civil actions by the FDIC, criminal investigations and prosecutions by the DoJ, and administrative enforcement proceedings by the federal banking agencies to recover the resulting losses suffered by the government due to defaulted loans, devalued securities, borrower fraud and conflicts of interest and other insider abuses…

FDIC Must Face $10 Billion Lawsuit by Deutsche Bank Over Washington Mutual Loans

The Federal Deposit Insurance Corporation will have to defend a $10 billion suit over mortgage-backed securities originated by the now-failed Washington Mutual Bank, the U.S. District Court for the District of Columbia said (Deutsche Bank National Trust Co. v. Federal Deposit Insurance Corporation)…

Commercial Banks, Thrifts Report Best Quarterly Profits Since Crisis

Commercial banks and thrifts reported an aggregate profit of $29 billion in the first quarter of 2011, the highest quarterly net income since the 2007 onset of the financial crisis, according to the latest Federal Deposit Insurance Corporation Quarterly Banking Profile, released May 24…

ANALYSIS: Bank Bailout Program Seen to Benefit Big Banks More Than Small Ones; $49 Billion Unpaid

The Troubled Asset Relief Program responsible for $205 billion in bank bailouts has recouped most of the funds but small and medium-sized banks are struggling to repay their debt obligation and may take years to exit the program if they emerge at all, according to…

BNA INSIGHTS: Higher Minimum Capital Standards: Basel Committee on Banking Supervision Crowns Common Equity King

On Sept. 12, the Group of Governors and Heads of Supervision of the Basel Committee on Banking Supervision (the “Basel Committee Group”) announced capital reforms designed to substantially strengthen…

BNA INSIGHTS: Dodd-Frank Reform Law’s Impact on Financial Firm Liquidation

The primary stated goal of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act” or the “Act”) 1 is to prevent the failure of the…

Six Bank Failures Bring 2010 Total to 96; Cost Deposit Insurance Fund $335 Million

Six bank failures July 16 brought the year’s total of failed federally insured banks to 96, and cost the deposit insurance fund $334.8 million…

Bank Profits Reach Two-Year High, but Failures Expected to Peak in 2010

Banks’ aggregate profit reached a two-year high of $18 billion in the first quarter of 2010, but the number of troubled banks also rose to 775, the highest since June 30, 1993, according to…

Senate Set to Resume Voting on Financial Reform with Tough Proprietary Trading, Capital Proposals

The Senate May 11 will again take up the Restoring American Financial Stability Act of 2010 (S. 3217) as a multitude of amendments await action, including calls for more limits on proprietary trading…

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