Former IndyMac Chief Settles with FDICFriday, December 14, 2012
Michael Perry, the former head of failed mortgage lender IndyMac Bank, has reached a settlement with the Federal Deposit Insurance Corp. in a lawsuit stemming from the institution’s 2008 failure.
Under the agreement, Perry, the former chief executive and chairman of the Pasadena thrift, will pay $1 million and IndyMac’s insurers will pay an additional $11 million. The FDIC also barred Perry from participating in the affairs of any other banks.
The FDIC, which filed the lawsuit in U.S. District Court in Los Angeles last year, said Perry had negligently failed to reduce IndyMac’s core loan volume fast enough as the housing market was deteriorating. The agency had been seeking as much as $600 million in damages.
The deal comes two months after Perry settled the last remaining claim in a lawsuit from the Securities and Exchange Commission for $80,000. Perry, who was sued by numerous shareholders and bank customers since IndyMac’s failure, is still facing several private plaintiff lawsuits.
Perry settled the FDIC’s claims in part because the insurance funds available for former IndyMac officers and directors was running low, according to a statement from Covington & Burling LLP, the law firm representing Perry. Earlier this month, three former IndyMac executives were found to be negligent in approving a number of risky loans and were ordered to pay $169 million in damages.
Prior to the housing bust, IndyMac had been one of the country’s largest independent mortgage lenders, specializing in so-called Alt-A loans for borrowers with less-than-perfect credit. But the thrift suffered a liquidity crisis in mid-2008 amid a bank run. It was seized by regulators in July of that year and subsequently sold to a group of investors who renamed it OneWest Bank.
Perry’s lawyers have argued that he acted prudently and that the institution was done in by market forces outside anyone’s control.
“It remains true that no court has issued a single adverse ruling on the merits against Mr. Perry,” Perry’s attorney, D. Jean Veta, said in a statement Friday.
The FDIC did not return calls requesting comment.