JUDGE RULES AGAINST THE FDICMayer said the FDIC was left scratching its head on how to best "get their fair share of the D&O policy" after being "bounced out of court" on December 29, when U.S. Northern District of Georgia Judge Charles A. Pannell, Jr. denied the agency's motion to intervene in a class action suit brought by shareholders of Haven Trust Bancorp, which was the holding company for Haven Trust Bank of Duluth, Ga. The bank failed in December 2008, costing the FDIC's insurance fund $207 million. The FDIC sold Haven Trust Bank's deposits to BB&T ( BBT - Get Report). Haven Trust Bancorp's shareholders filed suit in December 2009 alleging that the holding company's directors had mislead investors. The FDIC in October 2010 filed a motion to intervene, saying that the agency had assumed all of the failed bank's rights and had an interest in preserving the holding company's D&O policy. The FDIC argued that the plaintiff's claims were "derivative" and belonged solely to the agency. The court agreed with the plaintiffs and the defendants in the class action suit "that the FDIC does not have an interest in this case," adding that the claims "are not derivative claims against the Bank but are instead direct claims against the defendants regarding the marketing and selling of the holding company's stock." FDIC Spokesman David Barr said the agency was "still studying the order, and will not be commenting."
A GOOD DEFENSE.When asked about how directors and officers of banks can best protect themselves against claims in the event their bank fails, Mayer explained that it is essential to "detail in the minutes board decision making," adding that "in hindsight, the decision didn't have to be correct, but had to be prudent that appropriate business judgment was exercised." Mayer said that it is also essential for the directors to have previously appointed a special counsel who was provided with copies of all board documents ahead of time, since "once the FDIC becomes the receiver it is very difficult to get the documents."
Thorough Bank Failure CoverageAll bank and thrift closures since the beginning of 2008 are detailed in TheStreet's interactive bank failure map: The bank failure map is color-coded, with the states having the greatest number of failures highlighted in dark gray, and states with no failures in light green. By moving your mouse over a state you can see its combined 2008-2010 totals. Then click the state to open a detailed map pinpointing the locations and providing additional information for each bank failure.
Philip van Doorn. To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn. To submit a news tip, send an email to: firstname.lastname@example.org.