Among the many cautionary tales to emerge from the financial industry crisis of 2008-09 is the story of Wilmington, NC-based Cooperative Bank. Womble Carlyle attorney Jonathan Reich takes an in-depth look at the collapse of Cooperative Bank, and the subsequent litigation surrounding it, in the December 2015 issue of the Professional Liability Underwriting Society (PLUS) Journal.
Before the economic downturn, Cooperative Bank issued a number of questionable loans for customers to buy vacation property in coastal North Carolina. The loans were presented as a “too good to be true” investment and, in fact, that proved to be the case. The FDIC claims that Cooperative lost 66 percent of the money lent through this program.
After the bank’s failure in 2009, the FDIC, as receiver, sued the bank’s directors and officers alleging simple negligence, gross negligence, and breach of fiduciary duty. In the PLUS Journal article, Reich discusses the case of Federal Deposit Insurance Corporation v. Rippy, and examines what it means for D&O insurance coverage.
Jonathan Reich is a litigator practicing primarily in the commercial litigation, tort defense, and insurance coverage and bad faith areas. He also advises on insurance regulatory issues. He is a member of the Board of Directors of the North Carolina Captive Insurance Association. Reich also writes extensively on North Carolina insurance law topics at Womble Carlyle’s All Risks Covered blog. He practices in Womble Carlyle’s Winston-Salem, NC office.