FDIC launches probe into 50 US banks

The Federal Deposit Insurance Corporation (FDIC) has launched about 50 criminal investigations, probing former executives and employees at US banks which failed during the financial crisis.

“We anticipate results from our investigations, although we cannot predict when a particular case will reach a stage at which disclosure of specifics would be appropriate,” the agency’s Deputy Inspector General Fred W. Gibson said in an interview that was published by The Wall Street Journal on Wednesday.

Gibson, however, declined to disclose the names of the people or banks under investigation.

The investigations are seeking to punish alleged recklessness, fraud and other criminal behavior on failed banks and financial institutions of all sizes in cities across the US.

The agency also authorized more than 80 civil lawsuits against officers and directors of failed banks, seeking to recover more than USD 2 billion.

The number of civil suits, which was previously placed at 50 seeking more than USD 1 billion, has increased substantially since October.

As the federal receiver for failed banks, the FDIC must use its deposit insurance to fund the cost of bank failures. The agency has three years from the failure of a bank to file a lawsuit.

Since the start of 2008, more than 300 banks and savings institutions have been closed by the FDIC.

The number of civil and criminal investigations is expected to increase in the future.