From the "that was quick" department comes the news (via Kevin LaCroix's D&O Diary) that a mere week after a jury rendered a verdict against a group of former IndyMac officers and in favor of the FDIC on a D&O lawsuit, the former CEO of IndyMac, Michael Perry, settled his FDIC lawsuit for $1 million and an assignment of his claims against IndyMac's D&O insurance carrier. As Kevin astutely observes, "the FDIC’s settlement with Perry also appears in large measure to be about the D&O insurance."
In other words, it appears that the $11 million insurance portion of Perry’s settlement with the FDIC basically represents a claim check for the agency to try to redeem in the interpleader action. Because there are numerous other claimants each attempting to assert their own claims to the insurance proceeds, it will remain to be seen how much of the $11 million insurance portion of its settlement with Perry the FDIC will ultimately collect.
Kevin also noticed another interesting aspect of the settlement agreement.
[T]he FDIC expressly acknowledges that the FDIC’s complaint “does not allege that Mr. Perry caused the Bank to fail or that he caused a loss to the FDIC insurance fund.” Nevertheless, on December 14, 2012, the FDIC entered – apparently with Perry’s consent – an Order of Prohibition from Further Participation (here) reciting that Perry “engaged or participated in unsafe or unsound banking practices” at IndyMac; that these practices "demonstrate [his] unfitness" to serve as a director or officer at any FDIC-insured institution; and prohibiting him from involvement in any financial institution. The Am Law Litigation Daily article quotes Perry’s counsel as saying with respect to this order, to which Perry consented, that “the FDIC extracted this condition at the eleventh hour because they could,” and that “the FDIC knew Perry was out of insurance funds, and they took advantage of the situation."
"Were not alleging that he caused a loss to the insurance fund, but we're alleging that he engaged in unsafe and unsound practices and must be banned from the business until hell freezes over."
Only lawyers could think of getting away with serving up such contradictory baloney with a straight face. Then again, when a large segment of your profession is basically shameless, its not such a stretch.
Kevin's blog post also discusses a recent FDIC lawsuit against former officers and directors of a failed Georgia bank as evidence that the FDIC has it in for the land of peaches. One third of all FDIC lawsuits arising out of the current crop of bank failures have been filed against officers and directors of Georgia banks (even though Georgia bank failures represent 18% of all failures), and the last four lawsuits filed by the FDIC all involve failed Georgia banks. That's good news for Georgia defense lawyers (and FDIC lawyers, for that matter), but a lousy omen for Georgia bankers. When I made the statement in one of my recent speeches that being a bank officer or director was the equivalent to being a featured actor in "The Hurt Locker," I didn't have Georgia on my mind, but I should have.
An in-house counsel for one of my good clients recently said candidly over lunch, "Why would anyone want to be a community bank director, given the FDIC's perfect 20/20 hindsight, exercised years after decisions are made?" I couldn't think of an answer for that one. Certainly, in Georgia, I wouldn't sign on to a directorship without combat pay.
