The billionaire Pritzker family, which co-owned a suburban Chicago bank that failed three years ago, appears set to receive tens of millions of dollars in a settlement involving the bank's collapse.
Investigators for the U.S. Treasury, the Federal Deposit Insurance Corp. and Congress blamed risky business strategies by Superior Bank's management for the collapse, but they also cited failures on the part of Superior's outside auditing firm, Ernst & Young. The FDIC accused the auditing firm of negligence and concealing the bank's true financial conditions.
The Pritzkers agreed to a $460-million voluntary settlement in 2001 that barred government action against the owners. The owners admitted no liability. In exchange, the family would receive 25% of anything the FDIC recovered from Ernst & Young and 50% of any punitive damages.
Ernst & Young announced Friday that they had agreed to pay $125 million to the FDIC over Superior Bank's collapse.
Critics said some of Superior's 1,400 uninsured depositors should receive money before it is distributed to any other parties. Superior Bank's failure cost the FDIC about $700 million, making it one of the largest federally insured financial institutions to fail in a decade.
"If anyone should be nailed, it should be the Pritzkers," Bert Ely, a banking consultant based in Alexandria, Va., told the Chicago Tribune. "They were the ones running the place, and I think it's unfortunate that a quarter of the money is going to the people who ultimately were at fault."
Attorneys for the Pritzkers could not be reached.
The Pritzker family has agreed to a sizable settlement that federal regulators were hard-pressed to turn down, FDIC spokesman David Barr told the Tribune.
The Pritzkers have paid about $175 million under the payment schedule, Barr said.