“Mike: I was present with you the entire time in 2006 and 2007 through July 11th (2008) and with Indymac until July 18th when I resigned from Indymac Bank because I believed the US government had made a mistake by allowing Indymac to fail (due to unrealized paper losses and a bank run triggered by a senior US senator) and because I felt the FDIC’s actions and announcements when putting Indymac into conservatorship maximized the loss on Indymac instead of minimizing it which I understood to be their responsibility…
…When the FDIC walked you out and announced their decision to sell Indymac into the most panic driven market we had seen in many decades, I knew they had lost any opportunity to avoid losses on Indymac. I believe if the FDIC had taken you up on your offer which you made to the OTS before the bank run on IMB (which I remember you making this offer!) – to work for ‘free’ at IMB for as long as necessary to minimize any losses on Indymac…that we would be in a position today where the losses on Indymac would have been ZERO…we would have been back to a profit in aggregate. I have felt your pain all along because I know and saw the truth….and I know how painful it was for you to settle the FDIC’s fake and politically driven lawsuit….being forced to accept the banking ban so you could sleep at night knowing your family was safe….but at the actual expense of your career in finance and banking. So I have known the real facts all along. And now I am happy that you can share the OTS report which speaks loud and clear to the facts at hand on how Indymac was managed and perceived by our primary regulator. In fact, I remember just before the crisis how happy we were to be rated a CAMELS 2. Our regulators thought our risk management was getting better…not worse as the crisis started. So my question is – in light of the below….how can you leverage this to finally win back your moral victory and reputation and maybe even get back into the business world in a more significant way if that is still of interest of you as I hope. And how can I help? I would like nothing better than for the world the know the truth and for my friend Mike to have peace of mind and any career he would like. I think you should write a book.”, E-mail received from former IndyMac Senior Manager in response to mine below, April 21, 2016
Mid-April 2016 E-mail from Mike Perry to various Interested Parties:
I am not sure you are aware, but there were two civil lawsuits filed by the FDIC related to our seizure on July 11, 2008.
One negligence suit against me and one against three of my managers for their allegedly negligent actions in approving a dozen or so homebuilder construction loans.
The sole reason for two suits was the FDIC and their outside counsel wanted to make financial claims under two separate D&O insurance policies of about $80 million each (they were different years’ coverage).
I could tell you a lot of details, but both suits were completely bogus. They sued us for ordinary negligence, because the lower federal courts said California law did not provide officers with Business Judgment Rule protections (My judge agreed there was some dispute about this in California, certified his ruling and allowed me to see if the 9thCircuit would decide this issue. The 9th Circuit said, “we won’t hear it now. will decide it after trial.”)
The homebuilder case was related to 2006 and my case was related to 2007, so they went first and went to trial and unbelievably lost before an L.A. jury near the end of 2012. The three of them got a judgment against them of some unbelievable amount….I can’t remember exactly, but like $160/$170 million……guess how much they personally paid? I don’t know for sure, but combined I heard (from more than one source) like $200,000 or so, total. Why? For three reasons: 1) The FDIC doesn’t want to test the California Business Judgment Rule with higher appeals courts. 2) The case and mine were 100% bogus. 3) And these three guys, I am guessing they didn’t have significant net worth’s.
After they lost, then the FDIC had their big phony victory and wanted to settle with me (the FDIC used emails/memos I had written to those guys against them, basically saying…”the prudent ceo warned you. why didn’t you listen to him?” That would have hurt them in my case.)….happy to discuss…..they sued me for $600 million. They wanted a headline $1 million settlement….it was not a penalty or fine, it was a settlement were I formally denied all of their bogus allegations. They refused to settle this bogus case though, unless I agreed to be banned for life as a banker. My attorneys said to the FDIC, “settle the civil suit for $600 million and sue Mike to seek an enforcement order banning him.” They said, “no” we won’t settle then. What would you do if you had to protect your family?
Late last year, I filed a FOIA request to the OCC to get a 12-page summary/presentation of IndyMac Bank’s March 21, 2007 CAMELS (Safety and Soundness Report) publicly released, so that the truth about IndyMac’s management and our bank regulators views could be known (the Treasury OIG report issued on IndyMac Banks failure was materially false and biased….I said so at the time, but couldn’t get the CAMELS reports out to the public…as you know, they are required to be kept strictly confidential), they denied my FOIA request and I appealed, and they denied my appeal on December 16, 2015 and said, “sue us”.
On December 17, 2015, I emailed a senior manager in the FDIC/homebuilder suit, asking him if they had filed the 12-page 2007 CAMELS summary in their 2012 FDIC court case? He didn’t respond to me until last Thursday. He apologized for the delay and said he had talked to his attorneys and they responded with the case number and document number where it might be found.
I didn’t find the 12-page summary/presentation, but I found the full 2007 CAMELS Report!!!! It’s attached above (and also the 12-page presentation, because its really just a subset now)….they have been in the public domain on the court’s public website for years (you just have to register and you have online access to all the court documents in the case), but neither the OCC nor I knew this!!!!!
The reason I believe that this 2007 Safety and Soundness examination is so important is that the examination completion date was March 21, 2007. It is the last examination just before the financial crisis and reflects the views of our primary banking regulator. Unbelievably, just a few days after this report was issued, the FDIC’s bogus negligence suit against me claims I was a negligent bank ceo during a period from April to October of 2007. They basically said I should have known the crisis was coming and reduced our loan volume by about $10 billion more than I already had. (This $10 billion figure just came from our public filings, not any work they did….later in 2007, we like many financial institutions put $10 billion into our held for investment portfolio and took a $600 million reserve against it, because the secondary markets for private MBS had collapsed by then. At December 31, 2007, despite all of this, we were still well capitalized, because I had prudently raised about $700 million in capital in 2007, which covered all our massive and surprising losses in the second half of 2007 and still kept us well capitalized. A point they overlooked in suing me.)
P.S. My wife said it’s a little like that scene in Spotlight, where the investigative reporter, hustles down to the courthouse to get the records before the church’s attorneys could get them sealed.