WASHINGTON (Reuters) - Former IndyMac Chief Executive Michael Perry agreed on Friday to settle a lawsuit filed by the Federal Deposit Insurance Corp that stemmed from the collapse of the bank during the financial crisis, the FDIC said.
The FDIC had alleged Perry “negligently” allowed the production of a pool of more than $10 billion in “risky” residential loans.
Under the terms of the settlement, FDIC spokesman Andrew Gray said it will recover $1 million in Perry’s personal assets and bar Perry from the banking industry.
The collapse of the California-based bank cost the FDIC, which stands behind bank deposits, an estimated $12.8 billion. The bank was seized by regulators in July 2008.
The FDIC will also recover up to $11 million in insurance policy money.
In a statement, Perry’s defense lawyers at Covington and Burling said their client has “steadfastly denied the allegation” he was negligent and “continues to deny liability as part of the settlement.”
They added that the FDIC had “extracted” the industry bar from Perry at the last minute.
“The FDIC apparently views this order as having great importance,” said D. Jean Veta, a Covington partner who leads Perry’s defense.
“In fact, it is almost meaningless because Mr. Perry is so disillusioned by the FDIC’s conduct in this case that he wants nothing to do with them, even as a back-up regulator,” Veta said.
An FDIC spokesman declined to comment on Veta’s remarks.
The settlement with the FDIC marks the latest effort by Perry to put his legal troubles behind him.
His lawyers said he opted to settle because insurance funds to pay for his defense had been exhausted by other lawsuits brought against former IndyMac directors and officers.
Perry also won dismissal of all but one of a series of claims filed against him by the U.S. Securities and Exchange Commission.
After a federal court had dismissed most of the case, Perry agreed to pay $80,000 to settle one SEC charge that hinged on whether or not IndyMac’s top executives disclosed crucial information about the bank’s financial health at the onset of the 2007-2009 financial crisis.
Just last week, three other former officers of IndyMac Bank’s FSB homebuilder division were found liable by a jury of negligence and breach of fiduciary duty in connection with 23 loans. Jurors found that all three men should pay $168.1 million in damages for lending to developers who were unlikely to repay millions of dollars in loans.
Reporting By Sarah N. Lynch; editing by Carol Bishopric and Dan Grebler