The FDIC can determine whether severance payments to former executives at troubled banks are “golden parachutes” even if the payouts are being disputed by the parties, a federal appeals court ruled.
The U.S. Court of Appeals for the D.C. Circuit on Tuesday overturned a lower court ruling that the Federal Deposit Insurance Corp. lacked the authority to determine whether payments to a pair of executives at a bank that ran into trouble during the 2008 financial crisis were excessive.
“Nothing in the relevant statute or regulations requires that the FDIC be presented with a precise dollar figure before it has the power to determine whether a proposed payment qualifies as a golden parachute payment,” U.S. Circuit Judge Patricia A. Millett wrote for a unanimous three-judge panel.
The case now returns to the lower court, which had found the FDIC was not in position to deem any payments to be golden parachutes because the bank—which had since merged with another financial institution—and the two former executives were locked in litigation over whether they would be paid at all.
The dispute centers around payments that F. Scott Bauer, the former chairman and CEO of Southern Community Bank and Trust, and Jeffrey T. Clark, the bank’s former president and chief commercial banking officer, tried to recover after the bank merged with another North Carolina bank,...
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