FDIC to recover $2.5 bn from failed banks professionals

FDIC, which acts as caretaker of failed American banks, plans to slap lawsuits seeking damages worth $2.5 billion from individuals who were responsible for the collapse of banks.

The move comes against the backdrop of rising bank failures in recent years, especially after the financial meltdown in 2008-09. Last year alone saw 157 banks going out of business, the highest in nearly two decades.

Federal Deposit Insurance Corporation (FDIC) also insures deposits at more than 8,000 American banks.

"As of December 14, 2010, the FDIC has authorised suits against 109 individuals for Director & Officer liability with damage claims of approximately $2.5 billion," the federal agency said on Tuesday.

According to the FDIC, professional liability suits are only pursued if they are both meritorious and cost-effective.

Before filing such lawsuits, aimed at ensuring maximum recoveries from professionals, the agency carries out a thorough investigation into the reasons for failure of the particular bank.

Going by recent estimates, bank collapses in the past three years was worth more than $73 billion.

As many as 311 banks have folded up since the bankruptcy of then Wall Street giant Lehman Brothers on September 15, 2008, which worsened the financial situation.

Meanwhile, the count of problem banks -- those at the risk of failure -- stood at a staggering 860 problem banks at the end of September 30, 2010.