Editor's note: Updated to include information about Park Avenue Bank president pleading guilty to fraud charges.
NEW YORK (
) -- It seems some executives who walked away from their crumbling banks may not get off scot-free.
Federal Deposit Insurance Corp.
is waiting to pull the trigger on lawsuits against more than 50 individuals, according to a spokesman. The regulator hopes to recoup up to $1 billion in losses from crisis-era deals.
Since the start of 2008, the FDIC has booked $57.2 million in losses on 165 bank failures or assisted acquisitions. But that figure doesn't include 129 bank failures this year, whose cost hasn't been estimated, or just over a dozen deals the FDIC supported in 2008 related to subsidiaries of Countrywide, Merrill Lynch,
Bank of America
(BAC - Get Report)
(C - Get Report)
The most costly bank failure for the FDIC so far has been that of IndyMac, the only incident for which the regulator has so far filed suit. The California banks' collapse cost the FDIC's insurance fund $12.75 million, compared to an average cost of less than $350,000 for all the crisis-era failures that have estimates. The FDIC is seeking $300 million in damages from four former IndyMac executives.
It has taken the FDIC this long to pursue other litigation because investigators that analyze bank failures typically take period of a year to 18 months to complete their work. Following the investigation a legal team then tries to negotiate a settlement with management to avoid costly litigation.
In some cases, it doesn't make sense to sue if there's little chance of recovery.
The idea of regulators holding bank management financially responsible isn't new: The FDIC filed hundreds of suits following the savings and loan crisis the started in the late-1980s and bled into the early 90s. Between 1987 and 1993, thousands of banks collapsed, ultimately costing the fund roughly $106 million.
The FDIC has also sent a letter to 15 bank directors and officers from BankUnited - which represents the second-most costly government-assisted deal. The letter was attached to a motion filed on Nov. 24, claiming the bank "blindly made loans to borrowers who, for the most part, were un-creditworthy, creating an unduly high risk of inevitable failure when the housing market began to decline." The letter charged that executives had "breached their fiduciary duties," according to
, which first reported the new round of planned litigation.
The FDIC isn't the only regulator attacking the management of banks that had big problems during the crisis. The
Securities and Exchange Commission
has settled suits with Bank of America and
(GS - Get Report)
, though the employees or managers alleged to have committed fraud haven't admitted wrongdoing. New York Attorney General Andrew Cuomo has also accused former Bank of America CEO Ken Lewis and former CFO Joe Price with misleading investors in a suit filed against the bank.
Also on Friday, the former head of Park Avenue Bank pleaded guilty to having stolen $6.5 million worth of the bank's bailout funds for personal use. Charles Antonucci, Park Avenue's one-time president, agreed to forfeit $11 million along with interest payments that were received from the Treasury Department's Troubled Asset Relief Program. He was arrested and charged with fraud in March by federal officials.