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What Did They Do?




by Sam Ott, BOL Guru

A recent BOL Top Story reported that the FDIC recently announced 18 enforcement orders against current and former bank officers and directors. Various violations were cited, but what we found of greatest interest was the enormous variation in the amounts of the Civil Money Penalties ("CMP") assessed for the infractions.

  • One former banker was accessed a $4,000 CMP for misappropriation of bank funds, changing the terms of loans and improper extensions of credit.
  • Filing inaccurate call reports and falsifying Board minutes resulted in a CMP of $10,000 for another banker.
  • Another was nailed for a check kiting scheme, reckless lending and falsifying loan records. He received a $15,000 CMP.

It appears the more serious the violation, the higher the CMP, which is what would be expected.

If that is the case, then what do you think the underlying violations were that resulted in CMPs of $1.4 million against a former CEO, $125,000 for a Vice president, $20,000 for one Director and $10,000 each for eight other Directors? They were all cited for unsafe and unsound banking practices and breaches of fiduciary duty. Based on the severity of the penalties, you don't want to even think about doing whatever they did. We've dug for details and will file a Freedom of Information Act Request, if necessary, to see what we can learn about the type of conduct that would warrant penalties of this size.

First published on BankersOnline.com 6/13/03

First published on 06/13/2003

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