United Western Bancorp has challenged federal regulators’ seizure of its chief holding, United Western Bank, in a lawsuit filed today in Washington, D.C., federal court.
Officials of the Denver-based holding company insist regulators prematurely pulled the plug on the bank in January, saying the company had notified regulators that it had written commitments from investors for $149 million in capital.
“We are trying to reverse this situation” by asking the court to remove the Federal Deposit Insurance Corp. as receiver and return control of the bank to United Western, said Michael McCloskey, United Western’s executive vice president and chief operating officer.
“We believe the government acted in an arbitrary and capricious fashion and lacked any basis in applicable law,” McCloskey said.
The Office of Thrift Supervision closed the $2.05 billion bank on Jan. 21, claiming it was “undercapitalized and in an unsafe and unsound condition to transact business.”
The bank then was handed it over to the FDIC, which arranged a sale to First-Citizens Bank & Trust Co. of Raleigh, N.C.
United Western’s eight locations reopened as First Citizens branches.
The lawsuit seeks to rescind the seizure but does not ask for monetary damages, McCloskey said. However, United Western is asking for “whatever equitable legal relief” is possible, McCloskey said, citing damage to the institution in the form of interruption of client relationships and dismissal of valuable employees.
“Unscrambling the egg will be difficult at best,” McCloskey said.
The lawsuit states that the regulators “profoundly abused their enormous powers to protect the banking system” by seizing “an economically viable bank with over $400 million in available cash.”
The “illegal seizure,” the lawsuit contends, could cause a loss to the Deposit Insurance Fund of more than $312 million, a figure the lawsuit attributes to the FDIC.
United Western had been on the “problem bank” list for a year due to significant losses in construction, development and commercial real estate loans, the FDIC said.
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Ann Schrader: 303-954-1967 or aschrader@denverpost.com.
