The Office of Thrift Supervision argued that the court challenge to its January closure of United Western Bank is invalid because, it claims, the plaintiffs lacked authority to bring the suit.
The lawsuit, which also targets the Federal Deposit Insurance Corp., was filed last month, naming the former Denver thrift, its holding company and five individuals affiliated with the organization as plaintiffs. They claimed regulators jumped the gun on the failure, and were unresponsive when the United Western submitted a recapitalization plan.
It was the first such challenge to a failure in the recent crisis.
But in a motion to dismiss the case filed March 4, the OTS said the plaintiffs have not shown that the thrift's full board of directors approved the lawsuit, which, the regulator said, is required when challenging a receivership. According to the motion, closed thrifts have 30 days from the point of failure to challenge a failure. But the agency said the filing by the five individuals, including individual board members, on behalf of United Western is not sufficient.
"The courts have consistently held that neither shareholders, nor directors, nor debtors of a savings association placed into receivership by OTS may challenge the receivership decision," the motion said, adding later that "formal action by United Western Bank's board of directors was necessary in order to authorize the association to bring this suit."
A lawyer for the thrift held firm. "The motion has no merit," said Andrew Sandler, a partner in BuckleySandler LLP.
