The Supreme Court has let stand an appeals court decision that has the effect of giving federal regulators the upper hand in suing bank and thrift officials when an institution fails.
For mortgage lending institutions, the decision means their officers and directors may be sued for simple negligence in states with that standard as the threshold for liability. In states that have a gross or even higher standard of care, regulators may still sue for gross negligence. The court's decision was on a petition for a writ of certiorari in McSweeney and Stalder vs. FDIC, No. 92-1417.