Financial Institutions and Banking

Failed Bank Litigation

In the aftermath of the financial crisis, the FDIC has filed lawsuits against directors and officers (D&O) of approximately one-quarter of failed banks. While the number of bank failures has been declining, the number of D&O lawsuits is on the rise. Typical D&O lawsuits allege failure to satisfy duties of loyalty and care and attempt to develop evidence of unsafe and unsound banking practices, poor loan underwriting policies and practices, and/or dishonest conduct and abusive transactions with insiders.
 
Clients rely on NERA to perform detailed and objective analysis on regulatory, risk management, accounting, and D&O duty issues in the context of bank litigation. Our experts have significant bank supervision and policy-making experience, as well as direct experience working for banking organizations. This background allows for a comprehensive and definitive expert assessment of the reasonableness of bank strategies, lending practices, accounting, and regulatory compliance. Additionally, given NERA's well-established economic, research, and analysis capabilities we are able to comprehensively assess all the potential factors contributing to a given bank's failure, to ensure that D&O decisions are considered in the proper context without hindsight bias.