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The Federal Deposit Insurance Corporation (FDIC) has been complying with a “no press release” clause added to its settlements by banks that break the law. The clause is added to keep the regulator quiet on reputation damaging legal settlements. Typically settlements are announced by regulators in hopes of deterring would be law breakers but the FDIC has changed its previous policy without explicitly stating why.
Since 2007, 471 U.S. banks have failed, nearly depleting the FDIC deposit-insurance fund with $92.5 billion in losses. Rather than sue, the agency has typically preferred to settle for a fraction of the losses while helping the banks avoid bad press.
Under the Freedom of Information Act, The Times obtained more than 1,600 pages of FDIC settlements, made from 2007 through this year with former bank insiders and others accused of wrongdoing. The agreements constitute a catalog of fraud and negligence: reckless loans to homeowners and builders; falsified documents; inflated appraisals; lender refusals to buy back bad loans.
What an odd game. During the Savings and Loan Crisis a law was passed banning secret settlements which means no matter how poorly the FDIC is negotiating with criminal bankers they can not agree to keep the settlement secret. Instead the FDIC merely agrees not to announce the deals in hopes that no one looks for the information.
FDIC spokesman David Barr said the agency always tries to settle failed-bank cases before filing lawsuits and that it announces settlements only when damage payments are large and media interest intense…
Barr says attorneys representing the FDIC make clear to the defendants that, although it will not publicize settlements, it also cannot legally keep them secret.
But why not announce it? Isn’t the point of settling in the first place to punish the guilty but avoid costly trials? Sending a press release is practically free and lets everyone know that certain practices will not be tolerated by regulators. Secret deterrence is a contradiction in terms and an open invitation to continue treating crime as a business expense.
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When did the FDIC get the authority to negotiate away the public’s right to know?
Its one big club and you and I aren’t in it.
Thanks, George C.
You must be like me, I missed the memo entirely.
Actually, I think it’s a very small club because MOST of us aren’t in it.
.
Is it just me or does this nightmare get worse EVERY day? There’s just never any good news for us to share.
This administration makes the Nixon bunch look like a group of blabber mouths. The secrecy has gone far beyond anything I imagined.
ObamaCo makes Nixon look like an amateur petty crook.
It is not just you. Some of us keep alluding to the beginning of Fascism in Amerika but I wonder is there one worse? Totalitarianism? Forprofitism?
Actually Nixon WAS an amateur petty crook but laid the foundation for these professions.
With this and the preceding story, you get the sense that one of the forty or fifty shoes that have never dropped in the Great Fraud – the significant rich getting enough evidence to sue the bejeebers out of the Big Banks who screwed them too – might finally be heading toward the floor.
Tricky Dick is a saint compared to these motherfuckers …
Something’s gotta be done. It’s just gotta. Pardon me, I am seething. How much worse will it get? Arg!
This really upsets me to the point sometimes I just want to scream.
Is THIS what we are to expect form our government from now on?
If so, I don’t see any choice but a revolution. HOpefully it can be a revolution in the voting booth.
I am so disappointed in Obama.