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Inside Washington (08/24/2011)
* WASHINGTON (8/25/11)--The Federal Deposit Insurance Corp. (FDIC) will face a $10 billion lawsuit brought by the Deutsche Bank National Trust Co. over bad mortgages and the failure of Washington Mutual Bank (Reuters Aug. 24). A federal judge refused the FDIC’s motion to dismiss the lawsuit Tuesday. The Office of Thrift Supervision seized WaMu in September 2008 in the biggest bank failure in U.S. history. After being named receiver of WaMu, the FDIC sold the bank to JPMorgan Chase & Co for $1.9 billion. Deutsche Bank National Trust Co. filed its lawsuit in 2009, claiming the securitized mortgages failed to meet the promised underwriting standards, causing huge losses for investors … * WASHINGTON (8/25/11)--Federal Deposit Insurance Corp. (FDIC) in a lawsuit filed Tuesday alleged that executives at a failed Georgia bank bought two airplanes, built a hangar in which to store them and hired eight private pilots to transport directors and prospective clients to corporate retreats (American Banker Aug. 24). The FDIC is seeking $71 million in losses from the former executives of Silverton Bank. The bank’s failure, the largest in Georgia history, cost the FDIC $386 million. The lawsuit charges Silverton’s board, made up of CEOs or presidents of other community banks, with gross negligence, breach of fiduciary duty and waste … * WASHINGTON (8/25/11)--While loans grew during the second quarter for the first time since 2008, loss provisions continued to drive earnings, and lower revenue indicated that banks remain risk-averse in the midst of the sluggish economy, according to the the Federal Deposit Insurance Corp.’s Quarterly Banking Profile (American Banker Aug. 24). “Recent events have reminded us that the U.S. economy and U.S. banks still face serious challenges ahead,” said Acting FDIC Chairman Martin J. Gruenberg. Overall, banks and thrifts reported a $28.8 billion profit in the second quarter, a $7.9 billion improvement from the $20.9 billion in net income the industry reported for the same period in 2010. It was the eighth consecutive quarter that earnings registered a year-over-year increase. The profits were primarily a result of lower reserves for loan losses. Second-quarter loss provisions totaled $19 billion, less than half the $40.4 billion that insured institutions set aside for losses in the second quarter of 2010. However, net operating revenue (net interest income plus total noninterest income) was $3 billion or 1.8% lower than a year earlier, and realized gains on securities declined by $1.3 billion, or 61.1% …


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