Good afternoon,
The file has been closed on the Wilmington Trust case.
Delaware U.S. District Attorney David Weiss announced this week that his office would not attempt to retry a fraud case or pursue other leads in a case involving four executives accused of failing to disclose bad loans. Several lower-level bankers were successfully prosecuted.
The U.S. Court of Appeals in Philadelphia agreed with the defense that regulations on disclosure were ambiguous and should not have led the jury to issue a guilty verdict.
The defense further argued that the loans in question went bad but were not the result of poor judgment. The Appeals Court did leave the door open a crack for a retrial.
Weiss was clearly unhappy with the Appeals Court decision. In the end, he cited limited resources and a need to deal with higher priority issues such as crime.
Many will disagree with the defense’s claims. Clearly, there were some loans that, even to casual observers, were ill-advised.
At one point, M&T’s longtime CEO, the late Robert Wilmers, felt compelled to tell a Delaware business gathering that contrary to the prevailing v, Wilmington Trust had been in terrible shape. M&T acquired the bank for $300 million, a fraction of its stock market price before the loan disclosure.
In the end, the culprit was a lax regulatory environment that led to the near-collapse of the financial system in 2009.
The federal government stepped in with the TARP program, which injected capital into the system via bank stock purchases.
TARP arguably kept the financial system from falling into the abyss and the government ended up selling the stock at a handsome profit as the economy recovered.
TARP led to increased scrutiny of financial institutions but few criminal cases, the biggest being Wilmington Trust.
The end result here will be a lingering lack of trust in a regulatory and justice system that puts accountability on the back burner.
A final note to newsletter readers. Due to a technical issue, Thursday’s newsletter was not posted. – Doug Rainey, chief content officer.
