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FDIC sues former NFL star

By David McMillin · Bankrate.com
Friday, April 13, 2012
Posted: 3 pm ET

While Jim McMahon was a standout for the Chicago Bears in the 1980s, the former NFL quarterback did not go on to have such a strong career in the banking industry. The Chicago Sun-Times recently reported the FDIC is currently suing McMahon for his role in the 2010 failure of Chicago-based Broadway Bank.

Broadway Bank, like many other financial institutions, made some high-risk loans that came back to bite the bank and the FDIC's insurance funds when those loans weren't repaid. In McMahon's case, the lawsuit spells out that the Super Bowl-winning quarterback didn't display such exemplary leadership skills when he served on Broadway's Board of Directors. From approving a loan that lost the bank $19.5 million to missing important meetings, the lawsuit throws him in with many other executives at banks whose carelessness allegedly contributed to the economic slowdown, created hassle for account holders and cost the FDIC's Deposit Insurance Fund a lot of money.

This isn't the first lawsuit the FDIC has filed, either. According to Philip Shiskin at Reuters, the FDIC has filed 22 lawsuits over the past 18 months "targeting personal finances of former executives, their insurance policies, and sometimes their spouses' assets, in an attempt to claw back some of the money."

Still, if you think about the number of banks that failed over the past few years, 22 seems small in the grand scheme of collecting some of these funds. More than 400 banks have shuttered their doors since 2008, and I'm guessing there are more executives who should be held responsible for poor decision-making. Shiskin highlights that some critics argue that the FDIC has failed to make the extra effort to recoup some of the costs of these failures, citing the $95 million WaMu settlement. The FDIC initially stated that it was seeking up to $900 million in the damages from the most well-known bank failure of the past few years.

What do you think? Should the FDIC be more aggressive in holding banking executives accountable for their role in a financial failure?

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66 Comments
Muthamedia
May 22, 2012 at 1:17 pm

Will they also sue the Obama thugs for Solyndra..Lightsquared.et al?

John
May 21, 2012 at 1:34 pm

FDIC should go after all big banks and review their records that cost us 700 billion and sue every individual involved for causing us this economic downturn.

mr O
May 21, 2012 at 9:27 am

Why not sue who ever let Jim McMahon on the board in the first place. He's been hit so many times in the head and his short term memory is horrible. How can you sue someone that doesn't remember you just sued him?

tcaros
May 19, 2012 at 5:39 am

McMahon is suing the NFL. He'll probably say he can't remember anything he did and plead the 5th.

Devin Rutkowski
May 18, 2012 at 8:53 am

While I applaud the FDIC's tepid response to hold some former bank executives peronsonally accountable for their actions they may have led to their banks ultimate failing, the next great banking scandal is still going on unabated by the FDIC, Congress and the Press.

That is the unleashing of the greed and econonimc ruin that the new "rescue bank" befalls upon the previous banks borrowers and the small communities they reside in. Does anyone care that lenders with perfect credit scores and having never missed a loan payment are now nothing more than "easy pickings" for the thugs mascerading as "bankers". Why does the FDIC sit back and allow thousands of borrowers with performning loans (yes performing loans) be forced into foreclosure just so a handful of hedge fund managers and friends of the FDIC can reap windfalls of hundreds of millions of dollars. And when all said and done, billions of dollars.

With over 200 community banks already shuttered and more every week by the FDIC, I pity those who have done nothing more than conduct business at their local bank and now are foced to deal with people with the morals and values of a well financed, well organized crime organization. You see when the FDIC pays out 80 cents on the dollar for every failed loan on the books and then upwards of 100 cents on the dollar, the incentives are just too great for anything other than to wipe out the performing loan borrower in addition to the non-performing loans and collect at the FDIC money window. The hell with the borrower, their credit and local communities where these assets are located.

Evidence clearly indicates that by perverting the terms and spirit of the FDIC's LOSS/SHARE Agreements, these rescue banks are reaping huge windfalls, while prolonging the foreclosure crisis, depressing real estate values and of course, sticking the taxpayers with the final bill.

It's past time to do some real investigative reporting, to name names and to stop the rampid out of control greed that is ruining millions of average americans so a very few can be grossly rewarded.

Mansa
May 11, 2012 at 9:05 pm

Having worked in the financial services (banks) industries, I will say that they (next to the medical industry) are probably the tightest regulated.
That said, the job of lawyers is to find loop-holes in the law and find ways to get off when crimes are committed.
For the FDIC or SEC or any other regulatory agency to indict or bring a suit on one of these institutions, they need an ironclad case. They need very solid evidence (witness all the SpotFX bucket shops who play the other side of their clients and 'steal' their clients money... the regulatory body - FINRA -- which oversees them needs a very solid case to bring suit).
ALong with that, a lawyer working for the FDIC probably makes $100,000 a year. A lawyer working for these banks probably makes $1,000,000 (including bonuses) a year. The banks have friends in high places who may stymie the FDIC investigation. Along with that, the perpetrator of the crime, knows how to camoflouge the paper trail to their advantage.
All in all, just because the FDIC may or may not succeed in these cases, does not necessarily mean that they are sleeping at their desks. Unlike the FBI or CIA or DEA or your local police who only need 'probable evidence' to kick in your door and drag you to a cold cell, the FDIC, SEC, FINRA are more civilized.

al
May 11, 2012 at 1:36 pm

A resounding YES !! The FDIC should be shaking down those bank executives for the cash they lost of the consumers. Their lack of judgement created a substancial loss that normal Americans could ill affort.

I want to see those white collars looking out from behind bars ASAP!!

Michael
May 10, 2012 at 2:07 pm

It's been well documented that Jim McMahon had an extensive history of concussions in his NFL playing career, and has a hard time functioning independently today because of memory problems and dizziness.

So while I applaud the FDIC efforts here in general, it would be wise not to jump to rush to judgement about McMahon's role.

Terry Horne
May 07, 2012 at 6:44 pm

it would be frivolous and quite ignorant, to not believe the deregulation of banks did not precipitate the whole fraudulent collapse of the banking system... leading up to the bailout, etc. the "too large to fail" banks were allowed to expand and monopolize the local banks across america....local banks which more or less, much more than currently anyway, abided by the laws and rules of sound business.... again, political patronage is the culprit.... which is what is wrong with our once moral and great country.... until and unlees this is reversed the banking magnates will rule our country for us...even if indirectly.....

Myron
May 04, 2012 at 2:58 pm

Linda,

The president earns a $400,000 annual salary, along with a $50,000 annual expense account, a $100,000 nontaxable travel account and $19,000 for entertainment.[72][73] The most recent raise in salary was approved by Congress and President Bill Clinton in 1999 and went into effect in 2001.

The President released his 2011 federal income and gift tax returns. He and the First Lady filed their income tax returns jointly and reported adjusted gross income of $789,674. About half of the first family’s income is the President’s salary; the other half is from sales proceeds of the President’s books. The Obamas paid $162,074 in total tax.

The President and First Lady also reported donating $172,130 – or about 22% of their adjusted gross income – to 39 different charities. The largest reported gift to charity was a $117,130 contribution to the Fisher House Foundation. The President is donating the after-tax proceeds from his children’s book to Fisher House, a scholarship fund for children of fallen and disabled soldiers.

Quit worrying about your tax dollars feeding his mother-in-law. I am sure they are making it without you enormous tax contribution!