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Super Bowl-winning quarterback Jim McMahon, he of the headbands and rebel attitude, is the latest former community bank board member targeted by federal regulators.
McMahon, onetime director of Chicago-based Broadway Bank, is part of a steamrolling trend: The Federal Deposit Insurance Corp. continues to sue and approve potential lawsuits against executives and board members of shuttered banks at an increasingly fast rate. The lawsuits are aimed at recovering money banks lost where the FDIC alleges some type of negligence.
The trend resonates on the Gulf Coast, where more than 15 banks have failed in the recession. That leaves a high quotient of vulnerable former bankers in the region.
The FDIC, just through March, has already authorized lawsuits against 96 former bankers and bank board members, according to agency data. That's up from 98 authorizations in all of 2010. Many times a threat of a lawsuit is enough to engage settlement talks.
In the case of McMahon, who has played in several charity golf events on the Gulf Coast over the last decade, the FDIC is past the authorization stage. Indeed, McMahon is one of nine people connected to Broadway Bank being sued. The FDIC alleges McMahon and the other bank directors, through “gross negligence,” authorized 17 loans that led to $104 million in losses.
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