FDIC Sues Former Directors of Failed Illinois Bank

by Hugh Collins Nov 2nd 2010 7:50AM
Updated Nov 2nd 2010 7:54AM
The Federal Deposit Insurance Corp sued 11 former executives and directors of a failed bank as it works to recover as much as $2 billion suffered by one of its funds during the financial crisis.

The FDIC filed the lawsuit in the U.S. District Court of Chicago, Reuters reported. It accuses former officials of Heritage Community Bank of negligence, gross negligence and breach of fiduciary duty.

The FDIC accused the officials of trying to hide problems in the bank's commercial property portfolio by making new loans. This strategy caused more than $8.5 million of losses, the complaint says.

The complaint also accused the officials of handing out more than $11 million of dividends and incentive payments to senior management, including to CEO John Saphir, when they should have been conserving cash for the bank.

"Defendants failed to preserve the bank's capital and provide sufficient reserves to absorb losses that would inevitably result when poorly underwritten commercial real estate loans went bad," the complaint said.

Lawyers for the defendants said the lawsuit lacked merit.



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12 Comments

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Mr, Bill

This is good, but can anyone tell me who has been called on the carpet for the total melt down of the system? All the Wall street foke and AIG scumbbags who did the real damage. Oh, and what about all the oil speculators who started the mess. HELP, I need answers.

November 02 2010 at 6:02 PM Report abuse rate up rate down Reply
sgentilejr

It is sad indeed that almost everyone today is so ignorant. They banks got into trouble for one reason and only one reason______YOU walked into their doors and YOU asked to borrow THEIR money and now YOU cannot repay what YOU asked them to lend to YOU. It is not the banks fault that YOU asked to borrow THEIR money. It is not the banks fault that YOU needed to borrow their money. Grow up and accept responsibility. YOU created this mess by borrowing more money than YOU want to or can repay.

November 02 2010 at 5:38 PM Report abuse rate up rate down Reply
jmjjdj

About time. Hopefully, it's just the beginning to get to these greed-mongers.

November 02 2010 at 2:10 PM Report abuse +1 rate up rate down Reply
bocaneuman

Canada doesn't have any banking problems and are slowly taking over many banks in the US. RBC & TD Bank are both huge Canadian banks. Their system is essentially having only 5-6 super large banks for the entire country. Easier to control, no bank fraud, stupid loan programs, etc.

November 02 2010 at 1:55 PM Report abuse rate up rate down Reply
ahoy

Sure, sue 'em, they parked the $$$ in Brazil. What a joke! FDIC is insolvent, like the rest of the bankrupt US Gov't.

November 02 2010 at 1:19 PM Report abuse +2 rate up rate down Reply
jyatt7

Where are the lawsuits for Bank of America, Citicorp, Goldman Sachs etccc???

November 02 2010 at 12:43 PM Report abuse +2 rate up rate down Reply
pozboys

If we took all the money we used to bail these scumbags out of the mess THEY created,and gave it to the people who got put into this mess, by them, we would be out of the problems we now face!! I sure could have used 1 million dollars, I could pay off the mortgage, and not owe a cent, not to mention, help the kids out with the rest, sending them to the best collages, etc! The trickle down effect ,does not work,how about trying the trickle up effect!! I KNOW that would work!!!!With 200 million taxpayers out there, 200 billion would about cover it!! And, it would be alot cheaper!!!

November 02 2010 at 12:31 PM Report abuse rate up rate down Reply
1 reply to pozboys's comment
yuppiepup

The way I figure your math, that would equal about $1,000 per person......what "best" college can I send my kids to on that amount???? Just wondering where you got the 1 million number????

November 02 2010 at 2:03 PM Report abuse -1 rate up rate down Reply
pozboys

If we took all the money we used to bail these scumbags out of the mess THEY created,and gave it to the people who got put into this mess, by them, we would be out of the problems we now face!! I sure could have used 1 million dollars, I could pay off the mortgage, and not owe a cent, not to mention, help the kids out with the rest, sending them to the best collages, etc! The trickle down effect ,does not work,how about trying the trickle up effect!! I KNOW that would work!!!!With 200 million taxpayers out there, 200 billion would about cover it!! And, it would be alot cheaper!!!

November 02 2010 at 12:31 PM Report abuse -1 rate up rate down Reply
diagd1

How about the U.S. suing Barney Frank and Chris Dodd, who used the system for their own purposes and abandoned their responsibility in the Congress? They were the heads of the watchdog committees who were supposed to keep us from financial failure. Instead, they end up crafting the financial overhaul bill. We Americans have been misinformed by the media, who is not doing their jobs! Frank and Dodd should be in jail and the media should be reporting on it.

November 02 2010 at 11:43 AM Report abuse +4 rate up rate down Reply
gramorrison123

One down many to go, this has become common practice with banks, that is to beat the little man. If you bank with Chase please watch them close, NOW that's what you call crooks

November 02 2010 at 11:39 AM Report abuse +2 rate up rate down Reply