State Senate banking chair to pay defaulted loan

Atlanta-based Silverton Bank, formerly known as The Bankers Bank, sued Murphy in 2009 claiming he’d fallen into default on the loan.

Silverton actively lent to community bank directors and investors who wanted to buy bigger chunks of stock in their institutions, with the stock pledged as collateral. The loans were generally considered safe during the go-go bank formation days of the early-to mid-2000s.

Silverton failed in 2009 and the FDIC, which regulates banks and insures deposits, stepped into the case as receiver of the failed bank to wind down Silverton’s affairs.

The loan case is separate from another lawsuit involving Murphy, Integrity Bank and the FDIC. Last year, the regulator sued Murphy and seven other Integrity insiders for more than $70 million, alleging the insiders failed in their oversight of the bank.

That case is pending. However, a federal judge recently dismissed claims for simple negligence against the Integrity officers and directors, setting a higher bar for the FDIC to win the case.

Murphy is a powerful state senator. In addition to chairing the banking committee, Murphy is on several others, including the Appropriations, Ethics, Insurance and Labor and Public Safety committees.

An FDIC spokesman declined to comment, citing agency policy regarding legal matters.

Murphy also settled last year a lawsuit from an Alabama bank that claimed he owed about $50,000 on a defaulted loan.