Greetings!
I hope that you will find this newsletter informative and timely.
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FDIC Pursues Former Viking
The FDIC has taken action against Stu Voight, the former Chairman of First Commercial Bank in Bloomington, MN. Click this link to see the FDIC's notice which details the claim. The notice proposes to ban Mr. Voight from banking and seeks a $125,000 civil money penalty. A hearing is to be scheduled within 60 days of the 12/20/2011 notice. The FDIC states that Voight did not fully disclosed his relationship with HFFS (borrower) and related companies to the board and loan committee during discussions of the borrower's line of credit.
The FDIC does not allow the Bank to indemnify a director or officer that is being fined for civil money penalties. The FDIC wants the payment to come from the individual. D & O insurance polices normally do not include coverage for civil money penalties although several carriers allow the coverage to be added by endorsement. The cost of the endorsement is paid directly by the director or officer. | | |
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FDIC Litigation Update
Jeff Maas and Kris St. Martin were recently invited to participate in a Webinar on the topic on the FDIC's legal actions against Bank Directors and Officers. The panel included Richard Osterman who is the Deputy General Counsel for the Litigation and Resolutions Branch of the FDIC. Mr. Osterman personally reviews all potential litigation against bank directors. Also on the panel were Donna Wilson, Samuel Buffone and David Baris of the law firm of BuckleySandler LLP.
Here is a summary of their discussion about what happens from the time a bank is closed to when legal action is filed:
- After business hours on a Friday, FDIC Professional Liability investigators interview all employees, officers and directors who are on site. The overall investigation may go on for 12 to 18 months.
- A material loss review is performed to assess the cost to the FDIC.
- "Deep Pocket Letters" are sent to Directors and Officers. This is a subpoena for personal financial statements and tax returns.
- Demand letters are sent to Directors and Officers demanding payment for all or part of the material loss suffered by the FDIC.
- The FDIC Board reviews the recommendation from staff and makes a decision to authorize suits against Directors and Officers. The Board considers the strength of the case, defenses raised, personal assets of the Directors and Officers and insurance coverage.
- The FDIC will consider settlements any time in the process.
- The FDIC Professional Liability investigators may refer potential criminal cases to other departments, such as Justice for prosecution.
Kris asked Mr. Osterman if "Deep Pocket Letters" were routinely sent out to Directors and Officers of all failed banks. He said that because a subpoena is needed, they have to demonstrate a basis to the judge. As an interesting aside, Mr. Osterman objected to the term "Deep Pocket Letters" which was previously used by Mr. Buffone. Mr Osterman also stated that directors and officers cannot take records, loan files, SARS, exam reports and other confidential documents out of the bank prior to closing, (if they do, this may become part of the case against the director - this is my own comment) He did state that the FDIC is very willing to share bank documents that are needed to help defend a case. | | |
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Bank and Insurance Stories
Oklahoma City-based BancInsure Inc. asked a federal judge to rule that St. Paul-based Highland's loss isn't covered by its fraud insurance because the bank didn't conduct a routine investigation that would have uncovered a fraudulent equipment-financing scheme. In an unrelated story, in January of 2012, A.M. Best Co. downgraded the financial strength rating (FSR) to B (Fair) from B++ (Good) and the insurer credit rating to "bb" from "bbb" of BancInsure Inc. The outlook for both ratings is negative.
Only two Minnesota banks were closed in 2011. Wyoming, MN based RiverBank and Rosemount National Bank. The first bank to close in 2012 is Patriot Bank MN, which was closed on Friday, January 27th.
Minnesota had 5 bank robberies in December of 2010 and 13 in 2011. Minnesota is ending 2011 with 67 bank robberies for the year, up from 54 in 2010.
Give Hu a hand; he gave up his for the insurance money. This article is a must read. | | |
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News at AiA from All Agency Newsletter
AiA handles Metrodome Roof Claim
See our customer's comments that continue to be played nationally: |
 | | Bill Lester, Metrodome. Minneapolis, MN. |
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| |  Agency of the Year
AiA is proud to have been named the 2011 Minnesota Independent Agency of the Year. Minnesota has over 3,500 independent agencies, which makes this a very humbling honor. We thank all of our customers, business partners and employees who have made this possible.
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AiA Launches a New Website and Logo
We are very excited to unveil our new website and logo. The website offers a more interesting design and easy navigation. Most importantly, it details clearly who we are and what we do.
- Our Specialty Programs page describes several of AiA's areas of expertise
- The Testimonial Page shows what some of our key customers have to say about AiA
- Life, Health and Group Benefits Because of the complex changes involved with the health care reform bill (over 2,000 pages), it is critical to be with an agency that is on top of all the requirements
- The Agent Page lists our 25 agents who bring a wealth of knowledge and experience
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Minneapolis based AiA has been a leader in providing insurance solutions since 1980. AiA is a large independent agency with access to over 30 insurance carriers. AiA's strength is the ability to proactively negotiate with underwriters to maximize your coverage and minimize your cost.
Jeffrey Maas Owner and President of AiA. Jeff has been in the insurance industry for 28 years and has insured banks for 15 years. Jeff teaches continuing education classes for the MN Independent Insurance Agents Association and serves as an expert witness in Property and Casualty insurance litigation. Jeff can be reached at 763-549-2266.
John Gondek Executive Vice President. John brings 25 years of experience and has a MBA degree from the Carlson School of Management at the University of Minnesota. He holds the CPCU designation (Chartered Property & Casualty Underwriter) which is a premier-earned award in the industry. John can be reached at 763-549-2217
Kris St. Martin Bank Program Director who has 23 years of bank president experience. Kris brings his expert understanding of the banking industry including the expertise to understand your bank's story and critical financial information. Kris can be reached at 763-549-2267.
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