The CEO who presided over the largest California-based bank collapse during the recent financial meltdown was let off the hook without reaching into his own pocket. His failed bank’s insurance company is paying a relatively small settlement for “one of the biggest bank failures in U.S. history.”
The Federal Deposit Insurance Corporation filed a $600 million lawsuit last year against former IndyMac Bancorp chief executive Michael W. Perry. The suit charged negligence against bank officers resulting in $13 billion in costs to the FDIC as they were forced to bail out depositors. The bank was a star player in the dicey mortgage funding which led to the near-collapse of the U.S. financial system in 2008. IndyMac specialize in what were called “liar loans,” where borrowers were not required to prove their income or provide much documentation.
Unlike CEO Perry, the man behind this debacle, the families who got caught in the liar loan snare were personally responsible to pay whatever they needed to in order to resolve their issues.
Shareholders settled for a $6.5 million payment for their class-action lawsuit. “The lawsuit accused the defendants of making statements that concealed the true extent of IndyMac’s deteriorating capital and liquidity as well as its growing exposure to regulatory action, among other claims,” according to an AP report in the Kansas City Star.