Arkansas Banker Sues OCC for Breach of Contract

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An Arkansas banker is suing the Office of the Comptroller of the Currency for breach of contract for blocking his plan to buy subprime loans made to low-income and minority borrowers.

Damian Sinclair owns the controlling interest in the $30 million-asset Sinclair National Bank in Gravette, Ark., which he purchased for $2.7 million last Christmas eve. In twin complaints filed last month in U.S. District Court for the District of Columbia and the U.S. Court of Federal Claims, Mr. Sinclair alleged that after approving his business plan in March, OCC officials began a systematic campaign of regulatory harassment that has prevented him from implementing it.

Warren L. Dennis, Mr. Sinclair's Washington, attorney, said the OCC's actions were motivated at least in part by prejudice.

Kevin Mukri, a spokesman for the agency, said the claim is "without basis."

"OCC policies promote equal respect for all and do not tolerate comments referring to racial bias or disrespecting any group," Mr. Mukri said. "This matter is an issue of jurisdiction, and we do not believe the court has jurisdiction."

The suit alleges each time bank officials responded to one set of questions from the OCC, regulators raised new concerns, said Gerri R. Dolan, an accountant for the bank.

"Since May 2000 (OCC) personnel have repeatedly retracted commitments to Sinclair National Bank and instead continue to raise the bar by requiring more information and posing further restrictions on the lending program as soon as (the bank) has complied with a request," Ms. Dolan said in an affidavit dated Oct. 19. "It has become such a recurring theme that the (Dallas) office has effectively shut down the heart of the bank's operations."

The suit also contends that OCC officials made disparaging remarks about the minority borrowers whose loans Sinclair National Bank wanted to buy. In court documents, John A. Bodnar, the deputy comptroller in charge of the OCC's Dallas office, was quoted as telling Mr. Sinclair that he did not want any of the banks for which he was responsible dealing with "those kinds of people."

Mr. Bodnar declined to comment.

In addition, employees of Sinclair National Bank, and a finance company from which the bank planned to purchase subprime loans, swore in affidavits that other officials in OCC's Dallas regional office made insensitive remarks. …