FDIC Report Blames Fred DeCaro Jr. For USA Bank Failure

The watchdog that inspects what went wrong after the FDIC seizes a bank has found USA Bank failed because of its Chairman’s actions. Today I report at The Distressed Debt Report , Fred DeCaro Jr was named as violating multiple banking and lending laws that lead to last summer’s seizure of USA Bank. DeCaro and other bank executives had repeatedly told Hearst CT Newspapers that the failure of the bank was a cause of the financial crisis and not the fault of management. Now the bank’s primary regulator says this isn’t true.

To make matters worse the FDIC’s Office of Inspector General also lays out a case against USA Bank’s board of directors for misleading the regional FDIC examiners and lying about who was really controlling the bank’s executive decisions after DeCaro Jr was kicked out of his CEO title in 2007.

When I asked FDIC spokesperson David Barr when the civil suits will start for DeCaro Jr he wouldn’t comment. But Ralph Hutchinson, former federal bank regulator who now consults on bank fraud told The Distressed Debt Report he expects the FDIC to impose a bar against DeCaro from ever working as an executive of a FDIC insured bank. Hutchinson says the FDIC is likely to go after DeCaro’s personal fortune if they cannot recover the $65 million they took in losses to the insurance fund from the bank’s officers and directors insurance. Shareholders of the bank say USA Bank had only $5 million in D&O insurance.

What’s not clear is how serious the Department of Justice is in going after board members who allegedly lied to Federal bank regulators or DeCaro’s son who I previously reported acted as a bagman to fool the FDIC into thinking his construction loans were performing.

But the heat is definitely on DeCaro Jr now. This morning I learned Congressman Himes office has looked into my reporting on the lending abuse and fraud at USA Bank and encouraged the Connecticut Attorney General to begin an investigation into DeCaro and the bank directors. Himes office told me in May he’d contacted the FDIC and wanted an answer, on behalf of constituents who lost millions as shareholders of the bank, as to the status of their investigation.

It looks like if you complain loud and often enough the FDIC will pick up the pace and actually work to spot the villains that abuse our free markets. DeCaro has been fined over $100,000 but no criminal charges have been filed yet. People who have spoken with DeCaro lately say he’s prepared for any upcoming civil suits and has squirreled away some of his alleged ill gotten millions, making it hard for plaintiffs to get any real cash out of his estate. DeCaro did not return a request for comment and the last time I spoke to him his comments about why the bank failed turned out to be untrue – but we are always open to hearing from you Fred.


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  1. Fred DeCaro Jr is a criminal clearly but shouldn’t the original board members like the lawyer who was double dipping on legal fees, Jim Verrillo, also be investigated for criminal fraud? I don’t think there is only one person to blame for the shareholders losses Teri but great reporting. It is odd that the Greenwich paper hasn’t written on this yet.

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