Litigation against banks in FDIC receiverships

As the nation dives deeper into financial turmoil, the savings & loan crisis of the mid-1980s begins to look mild in comparison. After all, the federal government bailout at that time was valued at perhaps $125 billion, and the current bailout numbers are staggeringly greater. In this remarkable crisis, the Federal Deposit Insurance Corporation has emerged from the sidelines to become one of the most important and certainly conspicuous federal agencies, not only for its role in protecting the deposits of bank customers but also for taking charge of financial institutions when they fail. Many of the failed institutions were actively involved in the defense of consumer litigation, some of which were putative class actions. In better times, flush with deep pockets, these very same lenders were targets of opportunity for plaintiff's lawyers. As the subprime market began to collapse, consumer litigation added greatly to their burdens. When a bank is seized and placed into receivership, what becomes of litigation against the failed institutions? This article examines that question.