WASHINGTON -- President Bush's son Neil and 10 other former officials of the defunct Silverado Banking, Savings and Loan have tentatively agreed to pay nearly $50 million to settle a lawsuit stemming from the thrift's 1988 failure, an official said Thursday.
Alan Whitney, a spokesman for the Federal Deposit Insurance Corp., which had sued Silverado, said the settlement calls for the defendants to pay the FDIC $26.5 million. Additionally, he said, the FDIC will take over the $23 million Silverado Indemnity Fund. The $49.5 million total is less than a quarter of the $200 million in damages the FDIC had sought in its lawsuit, filed last fall.
Whitney said the settlement was announced in Denver, where Silverado is based, by U.S. District Judge Sherman Finesilver, who also said details of the agreement in principle will be filed at 2 p.m. Friday. Final documents are due June 12, Whitney said.
Bush's lawyer, James Nesland, said his client is obviously relieved.
'He hopes this will put it all behind him. We look at this as the end of a period,' Nesland said.
Bush's involvement in the scandal has been an ongoing embarrassment for his father as well as the Republican Party. Democrats have vowed to make Neil Bush the 'poster child' of the savings and loan scandal.
The agreement involves the 11 former officials of the now defunct Silverado as well as the thrift's former law firm, Sherman and Howard.
The government's suit was filed in Denver last September just days before Neil Bush was to appear before an administrative law judge to defend himself against charges he violated conflict-of-interest laws while serving as Silverado director.
The FDIC claimed the former officers and directors of Silverado breached their fiduciary duty and were grossly negligent in their duties. Douglas Jones, the FDIC's senior deputy general counsel, said at the time, 'Our conclusion is that Silverado was the victim of sophisticated schemes and abuses by insiders and of gross negligence by its directors and outside professionals.'
The suit alleged that former Silverado officers made improper loans and investments that were approved by the directors.
The suit sought to recover, in Jones's words, 'every available dollar' for the federal deposit insurance fund and taxpayers. Bailing out Silverado is expected to cost taxpayers $1.6 billion.
Silverado collapsed in 1988 and was taken over by government regulators in December of that year, four months after Bush stepped down as a director. Bush, who lives in Denver and is in the oil industry there, joined Silverado's board in 1985.
Bush has maintained he did nothing wrong while serving as a Silverado director. But last month, the Office of Thrift Supervision formally reprimanded Bush for engaging in business deals that presented conflicts of interest.
OTS Director Timothy Ryan said the agency issued a cease-and-desist order in finding that the president's son violated prudent business practices by failing to disclose to fellow S&L directors private business deals he had with people seeking loans from Silverado.
Also named as defendants in the FDIC suit, besides Bush, were Silverado's former chairman and chief executive officer Michael Wise, chief financial officer Robert Lewis, chief operating officer Richard Vandapool and executive vice president Russell Murray.
W. James Metz, who owned 88 percent of Silverado's stock, also was named, along with former board members Florian Barth, Richard Bunchman, Diane Ingels, Marjorie Page and Richard Vitkus.
The Denver law firm of Sherman & Howard was named as a defendant, as was Ronald Jacobs, a partner in the firm who also served on the board of Silverado's holding company.
The FDIC said it included the law firm in the suit because it allegedly placed 'the interests of a few insiders over those of the institution they were retained to protect.'