Compliancex

A pair of former IndyMac executives being sued by the Federal Deposit Insurance Corp. are accusing the bank regulator of a “stunning display of incompetence” for failing to preserve some evidence when it took over receivership of the failed bank.

Lawyers for onetime midlevel IndyMac executives Kenneth Shellem and Richard Koon say the FDIC failed to collect and preserve documents and emails after taking receivership of IndyMac following the bank’s 2008 collapse, leaving the pair handicapped in mounting their defense.

“The breadth and depth of the government’s document-retention failures are staggering, and violations of this magnitude rarely occur,” lawyers for the two said last week in court papers filed in U.S. District Court in Los Angeles. “It is a stunning display of incompetence from an agency that is supposed to be the expert at seizing and managing banks.”

The FDIC, the federal agency that manages the receiverships of failed banking institutions, sued Messrs. Shellen, Koon and two other former executives at IndyMac’s home builders’ division for $300 million. The civil suit, filed about two years after the FDIC took over as receiver, accused the executives of negligence by signing off on commercial loans to home builders that had little chance of being repaid.

Click link to view full article at The Wall Street Journal

Patrick Fitzgerald, The Wall Street Journal, January 26, 2012