FDIC Sues Neil Bush in Silverado S&L;'s Failure
Federal regulators filed a $200-million suit against President Bush’s son Neil and other officers of the failed Silverado Banking, Savings & Loan Assn. on Friday, accusing them of “gross negligence” contributing to the institution’s collapse.
The civil suit, filed by the Federal Deposit Insurance Corp. in U.S. District Court in Denver, said the defendants “repeatedly breached their duties” to the Denver-based institution and its depositors.
It said Bush and the other outside directors failed to properly monitor the affairs of Silverado and the conduct of its senior management.
“Our conclusion is that Silverado was the victim of sophisticated schemes and abuses by insiders and of gross negligence by its directors and outside professionals,” FDIC Senior Deputy General Counsel Douglas H. Jones said in a statement.
“We are seeking in this case to recover every available dollar for the federal deposit insurance funds and the American taxpayers,” Jones said.
Bush, 35, served from August, 1985, to August, 1988, on the board of Silverado, which was seized by federal regulators on Dec. 9, 1988. The failure cost taxpayers an estimated $1 billion.
Bush and his attorneys were not immediately available for comment. He has denied any wrongdoing concerning Silverado in a separate conflict-of-interest case brought against him by the Office of Thrift Supervision.
The FDIC said improper loans and investments were made by Silverado’s officers and approved by its directors. Many of the transactions violated federal regulations, it said.
“Silverado’s lending and investment practices during this period were unsafe and unsound and were designed to achieve the appearance of growth at the expense of the long-term health” of the institution, said the brief filed by the FDIC.
In addition to Bush, former Silverado officials named as defendants were: Michael Wise, chairman and chief executive officer; Robert Lewis, chief financial officer; Richard Vandapool, chief operating officer; Russell Murray, executive vice president; W. James Metz, who owned 88% of Silverado’s stock, and board members Florian Barth, Richard Bunchman, Diane Ingels, Marjorie Page and Richard Vitkus.
The suit also accuses Wise, Lewis and Metz of “unjust enrichment”.
The FDIC also named Silverado’s lawyers as defendants. They are the firm of Sherman & Howard of Denver, general counsel to Silverado from 1984 to 1988, and Ronald Jacobs, a partner in the law firm who served on the board of the institution’s holding company.
The law firm and its attorneys placed “the interests of a few insiders over those of the institution they were retained to protect,” the FDIC said in a statement.
Separately, Bush faces a public hearing in Denver starting Tuesday on thrift regulators’ charges of conflict of interest.
The Office of Thrift Supervision is seeking an order against Bush that effectively could bar him from working for a bank or a savings and loan. The thrift agency contends that Bush failed to adequately disclose to Silverado his business relationships with developers Kenneth M. Good and Bill L. Walters, two big borrowers from the institution who defaulted on their loans.
The FDIC lawsuit will have no effect on the Office of Thrift Supervision’s proceeding, OTS spokesman Tom Mason said Friday.
A final decision in the OTS case isn’t due until next April.