The FDIC made public their enforcement actions from November, last Friday, revealing that they handed out more than half a million dollars in civil money penalties against banks and bank executives
The largest fine was levied against John H. Pearlson Jr. of the failed Butler Bank of Lowell, MA, which failed in April of 2010. He was fined $225,000. He was the only person fined in November at a failed bank.
As seems to be typical of these federal enforcement actions, Pearson does not need to admit to or deny any breach of fiduciary duty, unsafe or unsound banking practices, or any other violation of the law that the memo implies he is guilty of. Pearson must only pay up. One hopes he will have to sell a yacht or second home or something symbolic in this way in order to pony up the quarter million dollars.
According to the Boston Globe, Butler Bank was founded by the Pearson family, and it failed due to its overextension in real estate construction lending, which of course collapsed in the wake of the 2008 collapse.
Pearson was also accused of acting dishonestly in his management of the bank, putting his depositors at risk, and has been banned from the banking industry for this reason. Ten other bankers received similar banishments in November.
The next biggest fine was levied against the River City Bank of Louisville, KY, for $145,000. The second biggest fine levied against an individual was that for Amy Bryant of GreenBank of Greenville, TN, for $75,000 — a large sum but minor compared to Pearlson’s fine. Bryant, like Pearlson, was also banned from the banking industry.
Still, no one will see time behind bars, which many Americans would probably love to see: someone, anyone, being punished with hard time for what happened to our economy. Of course, small bank presidents aren’t exactly the big wigs the public would like to see punished. At the very least they won’t be able to mismanage depositor’s money elsewhere in the future.