The US Court of Appeals for the Eleventh Circuit recently issued the first appellate decision holding that, in actions brought by the Federal Deposit Insurance Corporation (FDIC), the officers and directors of failed banking institutions can assert affirmative defenses relating to the FDIC’s post-receivership conduct.
Eleventh Circuit Rejects FDIC’s “No Duty” Argument, Allows Post-Receivership Affirmative Defenses Against the Agency
One of the most contentious issues in the litigation the FDIC has been pursuing in its capacity as receiver of various failed banks is whether the defendant former directors and officers can assert affirmative defenses against the FDIC for the agency’s own conduct.
With the costs of compliance on the rise, we are seeing some significant consolidation in the banking industry, particularly among community banks. In a recent article on www.bankdirector.com, Rick Maroney writes that although bank M&A has been tepid thus far in 2013, some key drivers of M&A activity are starting to emerge and he predicts that we are likely to see increased merger and consolidation activity in the industry as smaller banks need to grow to remain viable.
CFTC: On October 30, the CFTC voted 3-1 to approve a set of final rules to enhance customer protections at commodities brokers. One provision in the Customer Protection Rules changes how Futures Commission Merchants (“FCMs”) calculate the funds (“residual interest”) they must maintain in customer accounts to cover margin deficits.
CFPB: On October 15 the Consumer Financial Protection Bureau (“CFPB”) issued an interim final rule amending certain provisions of its mortgage servicing rules and making technical changes to other January 2013 mortgage rules (“Interim Amendments”).
FDIC Statement Inveighs Against Directors & Officers’ Insurance Exclusions and Coverage for Civil Money Penalties
In an unusual step, the FDIC, the federal regulator responsible for insuring and supervising depositary institutions, has weighed in on financial institutions’ purchase of D&O insurance.
A Georgia court recently held that an insured-vs-insured exclusion in a directors and officers policy precluded coverage for two former officers of a failed bank sued by the FDIC.
Directors & Officers Insurance: Insured Vs. Insured Exclusion Unambiguously Precludes Coverage for FDIC Failed Bank Lawsuit
One of the recurring D&O insurance coverage issues that has arisen during the current wave of failed bank litigation has been the question whether coverage for an action by the FDIC in its role as receiver of a failed bank against a failed bank’s directors and officers is precluded by the Insured vs. Insured exclusion found in most D&O insurance policies.
A federal court has denied the motion of the accountants of the failed Colonial Bank’s holding company to dismiss the claims the FDIC, in its capacity as the failed bank’s receiver, had filed against them.