FDIC sues bank that financed Landmark Hotel

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The Federal Deposit Insurance Corp. (FDIC) has filed a lawsuit against officers of Atlanta-based Silverton Bank, the lender of the Landmark Hotel. Bloomberg reports that the FDIC sued Silverton for $71 million to help regain the loss after the bank was taken over by the FDIC in 2009.

According to the article, in the suit filed in Atlanta on Monday, FDIC is arguing that Silverton officials mismanaged loan policies and spent millions on a corporate aircraft.

“Silverton’s aggressive expansion plan was accompanied by significant weaknesses in loan underwriting, credit administration and a complete disregard of a declining economy,” the article quotes the complaint as saying.

The $71 million is a small part of the $386 million the FDIC had invested in the failing bank. Specialty Finance Group (SFG), which is a subsidiary of Silverton Bank, loaned Halsey Minor, Landmark Hotel owner, $23.6 million for the hotel construction in 2008. Minor was later charged with defaulting on that loan and in 2009, SFG sued Minor for $10.5 million of the loan.

Asked what this latest development means for the Landmark, Minor says “nothing more than pure irony.” The FDIC is litigating against Minor for a $10 million loan and, he says, legal fees have far exceeded that amount and now stand at $13 million.

To read more about the Landmark Hotel, click here and here.