Laws In Texas

FDIC as Receiver after the 2008 Financial Crisis – The Quietly Settled Deutsche Bank Legal Court Cases

Since the mortgage meltdown, the FDIC has opted to settle cases while helping banks avoid bad press, rather than trumpeting punitive actions as a deterrent to others.

Deutsche Bank and the FDIC have been locked in legal battle for years.  Deutsche Bank is suing the FDIC for an estimated $10 billion.  Cases are pending in the DC District Court and the 9th Circuit.  One case, in which it has an interest, is coming to a head in the US Court of Appeals, DC Circuit, today.

The cases weren’t mentioned in the pair of articles the LA Times ran accusing the Federal Deposit Insurance Corp. of shielding banks from negative press by keeping its settlements with them secret and asking whether announcing the settlements would deter wrongdoing.

“Since the mortgage meltdown, the FDIC has opted to settle cases while helping banks avoid bad press, rather than trumpeting punitive actions as a deterrent to others.”

The FDIC has a valuable mission protecting consumers in case of a bank failure. It’s an example of how We, the people, collective our power and keep predatory business practices in check. An accusation that the FDIC is in cahoots with banks is serious and it needs solid substantiation. The article says:

“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 . . . Defendants benefit by settling because they can avoid admitting guilt and limit the damages they might face in court. The FDIC benefits by collecting money without the hassle and expense of litigation. The no-press-release arrangements help close those deals.Deutsche Bank, now the world’s largest, settled to resolve claims that subsidiary MortgageIT sold shaky loans to Pasadena-based IndyMac Bank.

Bank, which imploded under the weight of risky mortgages and construction loans.”

Any sensible citizen would object to the FDIC shielding a bank from bad publicity but the article offers no proof it was doing that.  It’s much more likely that the FDIC settled with no press release because it didn’t want to jeopardize the outcome of other pending matters in federal court.  The FDIC may have been legally prevented from issuing a press release because of the pending cases.

The FDIC got tangled up with Deutsche Bank because of the Washington Mutual Bank failure in 2008 which was even bigger than the IndyMac Bank failure referenced in the LA Times article.  The FDIC, attempted to recover damages from Deutsche Bank, for the fraudulent mortgages issued by its subsidiary, MortgageIt, and for selling them to Wamu. Deutsche responded by filing suit against the FDIC.

Update on Settlement Reached by FDIC in 2017 pertaining to some of the cases listed herein can be Read Memorandum and Opinion (Amended) Online Here and Settlement Here

Here’s the case information:

Deutsche Bank National Trust Company, Plaintiff v FDIC, FDIC as Receiver for IndyMac Bank
Case Number: 2:2009cv03852
Filed: May 29, 2009
Court: California Central District Court

Deutsche Bank National Trust Company, plaintiff, as Trustee for certain residential mortgage-backed securitization trusts v FDIC, as Receiver of IndyMac Bank, F.S.B.; FDIC, as Conservator and Receiver of IndyMac Federal Bank F.S.B
Case Number: 11-80152
Filed: July 12, 2011
Court: U.S. Court of Appeals, Ninth Circuit

Deutsche Bank National Trust Company, as Trustee for certain residential mortgage-backed securitization trusts v FDIC, as Receiver of IndyMac Bank, F.S.B.; FDIC, as Conservator and Receiver of IndyMac Federal Bank F.S.B
Case Number: 11-56339
Filed: August 10, 2011
Court: U.S. Court of Appeals, Ninth Circuit

Deutsche Bank National Trust Company, plaintiff v FDIC, in its capacity as Receiver of Washington Mutual Bank
Case Number:  12-5170
Filed:  May 25, 2012
Court:  U.S. Court of Appeals, D.C. Circuit

MBIA, Inc. jumped into the cluster and also filed suit against the FDIC.  MBIA, a Fortune 1000 business enterprise, (#655 in 2010) provides financial guarantee insurance and other forms of credit protection. It wanted $654 million from the FDIC for the losses it incurred by insuring the lousy mortgages Deutche Bank issued.  (Deutshe is referenced in the legal brief.)   One of these cases was dismissed on March 8 and the appeal decision came in just as I was writing.

03/12/2013 03:07:50 PM EST
Panel Affirms Dismissal Of MBIA’s IndyMac-Related Suit Against FDIC

WASHINGTON, D.C. – The District of Columbia Circuit U.S. Court of Appeals on March 8 affirmed the dismissal of MBIA Insurance Corp.’s suit alleging that the Federal Deposit Insurance Corp., as the receiver for the failed IndyMac Bank FSB, wrongly refused to reimburse it for losses on mortgage-backed securities (MBS) contracts it insured (MBIA Insurance Corp. v. Federal Deposit Insurance Corp., No. 11-5317, D.C. Cir.; 2013 U.S. App. LEXIS 4707).

This decision doesn’t bode well for Deutsche Bank’s efforts to find an escape from its responsibilities for what it did in 2007.  What a coincidence that the FDIC would be smeared at this point in the story!

Democracy begins with responsible citizens.  Inform yourself.  Beware of false friends.

The FDIC’s enforcement actions are publicly disclosed on its website.  The announcement of enforcement actions is released monthly.  You can browse the fdic.gov website by clicking on the “News and Events” tab on the home page and then clicking the link for “Press Releases.”  Or you can use this link to the list of recent Press Releases.  How does the accusation of secrecy regarding settlements square with the announcements that have been made?

View Press Release FDIC (2013)

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Laws In Texas is a blog about the Financial Crisis and how the banks and government are colluding against the citizens and homeowners of the State of Texas and relying on a system of #FakeDocs and post-crisis legal precedents, specially created by the Court of Appeals for the Fifth Circuit to foreclose on homeowners around this great State. We are not lawyers. We do not offer legal advice. We are citizens of the State of Texas who have spent a decade in the court system in Texas and have been party to during this period to the good, the bad and the very ugly.

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