Stanford C. Stoddard has enlisted the state of Michigan in his fight to return to the banking industry.
The Michigan Financial Institutions Bureau is arguing that the Federal Deposit Insurance Corp. acted "arbitrarily and capriciously" in denying deposit coverage to Mr. Stoddard's proposed bank, according to a brief it filed March 10 with the 6th U.S. Circuit Court of Appeals.
The Michigan filing, drafted by Attorney General Frank J. Kelley, was included with briefs from Mr. Stoddard and other directors of the would-be Bank of Michigan.
In line with the other briefs, the Michigan regulator argued that federal regulators were prejudiced against Mr. Stoddard, who was forced to resign as chief executive officer of Michigan National Corp. in 1993.
"There's a lot of history," Michigan Banking Commissioner Patrick McQueen acknowledged in an interview. But "we wouldn't have issued the charter originally if I didn't feel he was qualified."
Robert Garsson, communications director at the FDIC, said the agency has no plan to change its opposition to Mr. Stoddard's getting back into the business. "We are comfortable with our position on this case," he said.
The directors of the proposed bank are appealing to the Cincinnati-based federal appeals court because U.S. District Court in Michigan threw out their case last December.
Mr. Stoddard was convicted of illegally profiting from a bank lease after he resigned from Michigan National. That verdict was subsequently overturned, and Mr. Stoddard beat back efforts by the Office of the Comptroller of the Currency to ban him from banking.
He applied for a state charter in 1993. Aware of the controversy surrounding the former banker, Mr. McQueen subjected him to a four-hour interview under oath, according to the brief.
Mr. McQueen was satisfied with Mr. Stoddard's answers and character and in December 1993 approved a charter for Bank of Michigan in the Detroit suburb of Bloomfield Hills, the brief said. The commissioner also sent a letter to the FDIC supporting deposit insurance for the start-up.
The state's brief charges that the FDIC arrogantly ignored Mr. McQueen's recommendation when it refused to insure the proposed bank's deposits.
"There is not ... even the slightest hint that the FDIC gave the finding any consideration whatsoever," the brief said. "It is inconceivable that the FDIC would find the commissioner's determination irrelevant without explanation."
This was the first time Mr. McQueen has intervened in court on Mr. Stoddard's behalf.
"Stoddard asked us to look at it, so the attorney general and I looked at it," Mr. McQueen said.
