The purpose of the FDIC professional liability program is to recover funds for FDIC receiverships and to hold accountable directors, officers, and professionals who caused losses to insured depository institutions (“IDIs”) that are later placed in FDIC receivership. From 1986 through 2021, the FDIC and the former Resolution Trust Corporation (“RTC”)** recovered $10.47 billion from professional liability claims and spent $2.50 billion to fund all investigations and litigation. Of the total recoveries, $4.40 billion was recovered since the start of the last financial crisis in 2008 through 2021, with $1.09 billion spent.
|2,629||$10.47 billion||$2.50 billion|
|536||$4.40 billion||$1.09 billion||Professional Liability Settlement Agreements|
|Dates||Failed IDIs||% Failed IDIs With D&O Claims||% Failed IDIs With Claims of Any Type||Recoveries||Expenses|
|1986-1992||1,970||24%||Not Available||$2.17 billion||$623.20 million|
|2008-2013||489||41%||52%||$1.40 billion||$617.60 million|
|Dates||Failed IDIs||% Failed IDIs With D&O Claims||% Failed IDIs With Any Claim||Recoveries||Expenses|
|2014-2021||47||13%||19%||$2.99 billion||$470.91 million|
|Failed IDIs With Open Investigation/Litigation||Open Investigations||Pending Lawsuits (Except MMF)||Pending MMF Lawsuits|
In addition to recovering funds, the program’s existence also enhances industry awareness of sound corporate governance standards. The FDIC conducts a thorough investigation into potential professional liability claims arising from every IDI failure but pursues claims only if they are both meritorious and expected to be cost-effective.
All lawsuits are reviewed by senior FDIC managers and, with limited exceptions, are approved by the FDIC Board of Directors. Prior to filing a lawsuit, staff in most cases will attempt to settle with the responsible parties. Professional Liability Program Settlement Agreements entered into since 2007 are publicly available. Litigation is initiated if a settlement cannot be reached. Attorneys in the Legal Division may engage outside counsel to assist with the investigation and litigation of professional liability matters. However, whether outside counsel is involved or not, attorneys in the Legal Division manage all legal assignments and litigation and oversee settlement and litigation strategy. The FDIC’s in-house attorneys are always available to discuss all aspects of litigation and settlement.
Further information on the FDIC’s professional liability activities is available in Professional Liability Program Annual Reports, the FDIC's Statement Concerning the Responsibilities of Bank Directors and Officers, Chapter 11 of Managing the Crisis: The FDIC and RTC Experience; and Legal Claims and Administrative Enforcement Proceedings 2008-2013 Banking Crisis.
** The RTC was created by Congress in August 1989 to resolve savings and loan associations insured by the former Federal Savings and Loan Insurance Corporation. At the end of 1995, the RTC ceased operation and its activities were absorbed by the FDIC. During its existence, the RTC resolved 747 savings and loans.