A judge last week rejected the Federal Deposit Insurance Corp.'s bid to take over 42 regulatory goodwill cases from investors.
The FDIC, however, may participate in the cases as co-plaintiff, Judge James T. Turner of the U.S. Court of Federal Claims ruled late last Thursday.
The decision means the agency will be allowed to question witnesses and address the court during trials. Lawyers for the investors also said the agency cannot settle cases without their permission.
At hearings last week, lawyers for the FDIC argued that the agency, as receiver of the failed institutions, is the only party with the right to sue for goodwill damages. Investors, however, argued that the FDIC should not be allowed to sue the government.
Judge Turner's decision represents a compromise. The FDIC will be able to fulfill its duty as receiver by recouping money for creditors, and investors will have the chance to fight for the largest settlement possible, he said.