WASHINGTON - Bank regulators have accused four former executives of failed IndyMac Bank of negligence in making loans to home builders and are seeking $300 million in damages.
The Federal Deposit Insurance Corp., which took over California-based IndyMac when it collapsed two years ago, filed the civil lawsuit against the four executives in federal court in Los Angeles. The suit, filed July 2, is the FDIC's first legal volley related to the wave of bank failures in the financial crisis, and an FDIC spokesman said Wednesday that more can be expected in the future.
The FDIC alleges that the officers "negligently" approved loans to home builders that had slim chance of being repaid.
The four deny the FDIC's allegations.
The collapse and seizure of IndyMac in July 2008, with about $30.2 billion in assets, was one of the biggest bank failures in U.S. history. It also was the costliest failure in the current wave for the federal deposit insurance fund, with an estimated loss of $12.7 billion.
The four former officials of the bank's Homebuilder Division are Scott Van Dellen, president and chief executive of the division until its takeover; Richard Koon, its chief lending officer from July 2001 to July 2006; Kenneth Shellem, chief credit officer; and William Rothman, chief lending officer from July 2006 to July 2008.