A federal judge has ordered the chairman of the state Senate banking committee to pay more than $260,000, plus interest, to the Federal Deposit Insurance Corp. to settle a bad loan.
Sen. Jack Murphy, R-Cumming, in e-mails Monday to The Atlanta Journal-Constitution, said “attorneys are working on a settlement” in the case. That settlement amount, he said, would be “considerably less” than the amount approved Friday by U.S. District Court Senior Judge William O'Kelley in granting the FDIC's motion for summary judgment.
Murphy took out a loan in 2003 to buy stock in Integrity Bank, an Alpharetta institution where Murphy was a director. Integrity failed in 2008, making worthless the 30,000 shares of stock Murphy used as collateral.
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.
About the Author
