FDIC Recovery Efforts Highlight D&O Insurance Issues

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The Federal Deposit Insurance Corporation’s recovery efforts against the directors and officers of failed financial institutions raise numerous insurance issues that highlight the importance of negotiating favorable coverage terms before a serious claim arises.

The financial crisis that began in 2008 has resulted in an unprecedented number of failed financial institutions. As the receiver for those institutions, the Federal Deposit Insurance Corporation (FDIC) may sue professionals, including directors and officers, alleged to have played a role in the failure. In addition to these civil lawsuits, the FDIC has other recovery tools at its disposal, including the potential “clawback” of compensation from the directors and officers of the failed institutions.

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