“(Reuters) – Late Wednesday, Delaware U.S. Attorney Charles Oberly announced the indictment of Wilmington Trust, which is accused of hiding failed loans in its commercial real estate portfolio in 2009 and 2010. The bank’s supposed deception of regulators and investors propped up the bank’s shaky financials as it undertook a $274 million stock offering in February 2010 to repay money it had accepted from the U.S. government’s Troubled Asset Relief Program.”
“Dennis Kelleher of the Wall Street watchdog Better Markets agreed with Garrett that the Wilmington Trust indictment is a positive development, but he said the Justice Department still treats banks much more gently than other corporations accused of crimes. Kelleher said the reason there has been no fallout from bank guilty pleas in the Libor and forex cases is because the government “prewired” the deals to minimize the collateral consequences. Banks, he said, should have to suffer the consequences of their crimes just like every other defendant.
“It is also telling, Kelleher said, that Wilmington Trust is a “corporate fiction” after the M&T acquisition, no longer a standalone entity. He said a better test of the Justice Department’s resolve is whether the government is willing to indict a big, powerful bank for the sort of disclosure violations Wilmington is accused of. So far, Kelleher said, Justice has failed that test.”
Read the full Reuters article by Alison Frankel here.