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Related: About this forumReuters: Bankers escape big penalties in FDIC failed bank cases + The SEC Defends Itself (gag)
http://www.reuters.com/article/2012/02/23/us-insight-bankers-idUSTRE81M1S420120223?feedType=RSS&feedName=businessNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=56943Like many banks engulfed by the mortgage crisis, First National Bank of Nevada specialized in risky home loans that didn't require borrowers to prove their incomes. When the housing bubble burst, First National got crushed in 2008 under the weight of bad loans that it could no longer resell to investors. Last year, the Federal Deposit Insurance Corporation sued two former senior executives of the defunct bank for alleged negligence and breach of fiduciary duty, hoping to recover nearly $200 million in losses that it tied directly to those executives' decisions. The two men denied wrongdoing and settled for $40 million.
But they didn't pay a dime.
Instead, the federal agency - which is better known as a regulator that seizes control of failing banks and provides deposit insurance for consumers than for its prosecutorial endeavors - is still fighting in court to collect that money from Catlin Group Ltd., a Lloyd's insurance syndicate. Catlin provided an equivalent of malpractice insurance to First National's executives, but the insurer denied liability for the executives' alleged mistakes. The case illustrates complex legal maneuvering as the FDIC steps up efforts to pick through the detritus of the financial crisis, and to recoup at least some of the nearly $87 billion costs to its deposit insurance fund from the collapse of about 400 federally insured banks between 2008 and late 2011. The First National Bank failure cost the fund $900 million.
Concerns about whether the FDIC's strategy isn't aggressive enough in such cases at least partly echo criticism levied at other regulators and enforcement agencies for being too lenient. Over the past 18 months, the FDIC has filed 22 lawsuits targeting personal finances of former executives, their insurance policies, and sometimes their spouses' assets, in an attempt to claw back some of the money, and to deter reckless banking practices in the future.
Of the lawsuits filed so far, none has gone to trial yet, and three have been settled. A look at the three deals suggests the FDIC is prepared to accept a fraction of the alleged damages as a settlement while some former executives deny wrongdoing and escape significant financial responsibility for bank failures.
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Responding to Critics, S.E.C. Defends No Wrongdoing Settlements
http://dealbook.nytimes.com/2012/02/22/s-e-c-chairwoman-defends-settlement-practices/?ref=business
WASHINGTON The chairwoman of the Securities and Exchange Commission defended the agencys record of settling fraud cases with Wall Street companies, saying on Wednesday that she believed the agencys practices clearly have deterrent value, even though firms were often charged repeatedly for violating the same securities laws. Mary L. Schapiro, the S.E.C. chairwoman, added that repeat offenders remained a problem because people have short memories on Wall Street. That forces the commission to bring many of the same types of cases so that people dont forget that they have these obligations and that somebody is watching and somebody is willing to hold them accountable. The remarks, at a news media breakfast, were the first by Ms. Schapiro to address the issue since a federal district judge refused last year to approve a commission settlement of fraud charges involving Citigroup.
Critics of the agency have also raised concerns about its settlement practices over the last decade. According to a New York Times analysis of enforcement cases, nearly all of the biggest Wall Street firms have settled fraud cases by promising never to violate a law that they had already promised not to break, usually multiple times. In addition, the Times analysis showed, those settlements also repeatedly granted exemptions to the biggest Wall Street firms from punishments intended by Congress and regulators to act as a deterrent to multiple fraud violations.
The commission frequently settles cases and avoids court costs by allowing a Wall Street firm to pay a fine, often in the millions or hundreds of millions of dollars, while also agreeing that it will not deny that the fraudulent actions took place. The settlements usually do not require the defendants to admit any wrongful conduct. People wont settle with us if they have to admit wrongdoing, Ms. Schapiro said, because it opens them to liability in civil damages lawsuits. But because the settlements often carry terms that require a Wall Street firm to overhaul their compliance departments, she said, there is a deterrent effect.
The settlements serve the purpose of putting the rest of the industry on notice, she said, about conduct we believe violates the law and can lead to hundreds of millions of dollars in fines, which I dont think any firm enjoys paying, or seeing their name highlighted as somebody whos violated the law. Some people have questioned that deterrent effect and the value of relying on the neither admit nor deny clause. Judge Jed S. Rakoff of the Federal District Court in Manhattan rejected the commissions proposed settlement with Citigroup last year, saying that the lack of agreed-upon facts left him with no way to determine whether the settlement was fair, adequate and in the public interest.
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THIS IS WHY SHAPIRO AND THE SEC ARE BANKSTER PUPPETS
Bloomberg:SEC Surrender Continues w/ Bear Stearns Banker Deal (Another Sell-out by the 'Regulators')
http://www.democraticunderground.com/11166778
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Reuters: Bankers escape big penalties in FDIC failed bank cases + The SEC Defends Itself (gag) (Original Post)
stockholmer
Feb 2012
OP
xchrom
(108,903 posts)1. Du rec. Nt
dixiegrrrrl
(60,010 posts)2. AArgghh...and rec.
snot
(10,524 posts)3. K&R'd.