WILMINGTON, DEL. (CN) – The First Bank of Delaware sued the Federal Deposit Insurance Corp. in Federal Court, claiming a July 3 FDIC order illegally and irrationally blocked the bank from buying credit-card accounts from another FDIC-insured bank. CompuCredit sued the FDIC in a separate complaint, claiming it may be one of the unidentified “institution-affiliated parties” covered by the FDIC order.
First Bank says the FDIC issued the order for inadequate reasons, or no reason. It says it has “a risk-based capital ratio nearly four times the requirement for a ‘well capitalized’ bank. It calls the proposed purchase of credit card accounts “a standard, profitable and low-risk transaction”.
The complaint continues: “To support its Order, the FDIC makes false and unsupportable assertions that the proposed acquisition would somehow weaken the financial condition of the bank. On the contrary, rather than weakening the bank’s financial condition, as the FDIC asserts, the proposed acquisition poses little or no risk to the bank, but rather would enhance the bank’s already strong economic condition. … Nor has the FDIC explained how the proposed acquisition would create risk to the bank of the kind necessary to meet the statutory criteria for issuance of the order.
“When the proposed acquisition is completed, the bank will own additional credit card accounts that have been owned by another FDIC-insured bank for some time. The economic risk associated with these accounts, however, already has been transferred to third parties, who will have no recourse to make claims against the bank.
“Any new credit card receivables that may be generated out of the newly acquired credit card accounts will be purchased by third parties on a daily basis pursuant to contractual commitments. In addition, the bank through contractual relationships has more than adequate indemnification.”
The bank wants the FDIC order enjoined It is represented by Edmond Johnson with Pepper Hamilton.