US could bring lawsuits against 109 bank staff

US BANKING regulators have authorised lawsuits against 109 bank officials so far as they seek to recover at least $2.5bn (£1.6bn) in losses connected to recent bank failures.

The Federal Deposit Insurance Corp said yesterday the suits target bank directors and officers for “either gross or simple negligence”.

It is seeking to recoup money for its deposit insurance fund, which backs customer accounts.

It is the first time the FDIC has published the number of bankers facing legal action.

The regulator’s website will be updated monthly with a running tally of the amount of lawsuits authorised and how much the agency is seeking to recover. So far, however, the FDIC has only filed suits against directors and officers from two banks.

In November, the agency sued former executives of Heritage Community Bank of Illinois. When the bank failed in February 2009, the FDIC estimated it would cost the insurance fund $41.6m.

In 2010, 157 banks with total assets of $92bn failed. FDIC chairman Sheila Bair has said the agency expects the number of failures to drop in 2011.