The Federal Deposit Insurance Corp. sued former IndyMac Bancorp Inc. Chief Executive Michael Perry, accusing him of causing more than $600 million in losses from risky mortgage loans that couldn't be sold.
Perry acted negligently when he allowed IndyMac to generate and purchase $10 billion in loans for sale in the secondary market in 2007 when he knew that that market had become unstable and illiquid, the FDIC said Wednesday in a complaint filed in federal court in Los Angeles.
When IndyMac wasn't able to sell the loans, the bank was forced to transfer them to its investment portfolio where they created more than $600 million in losses, according to the complaint. In 2008, Perry acknowledged that he was responsible for the debacle, according to the complaint.
"Instead of enforcing credit standards, Perry chose to roll the dice in an aggressive gamble to increase market share while sacrificing credit standards," the FDIC said in the complaint.