April 28, 2016 Articles

Defending Banks from Civil Money Penalties

Be on the watch for early warning signs and proactive in addressing and disarming bank examiners' concerns

by Kevin J. Handly

You're at your daughter's Sunday afternoon championship soccer game. You get a text message from the president of an important bank client: "This is urgent, can you talk?" You step behind the grandstand and call him back. He tells you that yesterday several of his directors received at their homes letters from the Federal Deposit Insurance Corporation (FDIC)—by certified mail, return receipt requested. The letters (some of which were opened by the directors' spouses) recite that under federal law, the FDIC has authority to assess civil money penalties up to $1,425,000 per day against individual bank directors for violations of the federal banking laws. The letters request that the directors complete, sign, and return the enclosed personal financial disclosure forms to allow the FDIC to determine the amount of civil money penalties to be assessed against them for certain alleged violations of federal law. The directors want to know: What is this about and what should they do?

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