LA Times blog:
Federal regulators have filed a $300-million negligence lawsuit against four former executives at IndyMac Bank, accusing them of granting loans to home builders who were unlikely to repay the debts.
The lawsuit, filed July 2 in federal court in Los Angeles, is the first professional liability suit that the Federal Deposit Insurance Corp. has brought in connection with the spate of more than 200 bank failures that began in 2008. FDIC spokesman David Barr said Monday that the agency generally has three years from the date of the failure to file civil cases.
The defendants, who denied the allegations, operated the Homebuilder Division at IndyMac, which was mainly a mortgage lender. The FDIC said they approved 64 loans described in the 309-page lawsuit.
They are Scott Van Dellen, the division’s president and chief executive during six years ending in its seizure; Richard Koon, its chief lending officer for five years ending in July 2006; Kenneth Shellem, its chief credit officer for five years ending in November 2006; and William Rothman, its chief lending officer during the two years before the seizure.
The suit alleges that IndyMac’s compensation policies prompted the home-building division to increase lending to developers and builders with little regard for the quality of the loans.
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