U.S. Sets Up 50 Criminal Bank Probes

The Federal Deposit Insurance Corp. is conducting about 50 criminal investigations of former executives, directors and employees at U.S. banks that have failed since the start of the financial crisis.

The agency responsible for dealing with bank failures is stepping up its effort to punish alleged recklessness, fraud and other criminal behavior, as U.S. officials did in the wake of the savings-and-loan crisis a generation ago. More than 300 banks and savings institutions have failed since the start of 2008, but just a few have led to criminal charges being filed against bank officials.

In an interview, Fred W. Gibson, deputy inspector general at the FDIC, which works with the Federal Bureau of Investigation to investigate crime at financial institutions, said the probes involve failed banks of all sizes in cities across the U.S. The FDIC is also ramping up civil claims to recover money from former bankers at busted lenders. He declined to identify any of the people or banks under investigation.

"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," Mr. Gibson said.

Pressure is high on regulators to identify and prosecute bankers for any wrongdoing that contributed to the largest number of failures in nearly 20 years. The September 2008 collapse of Washington Mutual Inc. was the biggest ever, with seven times the value of the assets that Continental Illinois Corp. had when it failed in 1984. The current epidemic of bank failures, including 146 so far this year, has deepened the nation's lending drought and left the industry's survivors with more muscle to squeeze customers.

The S&L crisis of the 1980s and 1990s killed more than 1,800 institutions. From 1990 to 1995, federal officials prosecuted about 1,850 bank insiders. More than 1,000 officers, directors and other officials went to prison, and federal agencies collected $4.5 billion in professional-liability claims.

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