Today is the fourth anniversary of the failure of Penn Square Bank in
One wonders if those involved with the bank in its heyday would
ever have imagined how much money, how many attorneys, and most of
all, how much time it would take to unravel the tangled jumble of
issues which emerged when the bank's doors were closed on July 5,
Nine major cases stemming from the failed bank, seeking a total
$740.6 million in damages, have been consolidated for trial Aug. 18
in federal district court in Oklahoma City. The resolution of those
issues could be a significant milestone in putting this subject to
Jurors will be asked to examine whether the former management of
Penn Square Bank, along with Peat, Marwick, Mitchell & Co., the
bank's audit firm, and the Federal Deposit Insurance Corp., committed
fraud and negligence upon depositors.
But there are a host of related matters set in motion by Penn
Square Bank that are likely to continue for some time to come,
insuring that Oklahoma's biggest bank failure will be a topic of
conversation for quite awhile.
- For example, Oklahoma legislators became riled when they
suspected the Federal Deposit Insurance Corp. was wasting money on
the failed bank's liquidation.
Complaints by U.S. Sen. David Boren, D-Seminole, and U.S. Rep.
Mickey Edwards, R-Oklahoma City, resulted in the U.S. General
Accounting Office conducting a supplemental audit of Penn Square
expenditures in connection with a nationwide overview of FDIC
Results of the audit should be available later this month,
predicted Barbara Webb, press secretary to Boren.
The Oklahoma legislators have charged that the FDIC used a double
standard in handling the Penn Square Bank failure compared to other
Boren and Edwards introduced bills to require periodic bank
liquidation reports to Congress by the FDIC, which is pending in
House and Senate Banking Committees.
- Criminal investigations by the U.S. Attorney's office in
Oklahoma City in connection with the failed bank continue.
Three former bank officers have faced federal grand jury
indictments. Two - former Executive Vice President Thomas Orr and
former Assistant Vice President Clark Long - were convicted and are
The third, former Senior Executive Vice President William G.
Patterson, was acquitted of one 25-count indictment in an Oklahoma
City federal court, but faces another 16-count indictment by a
Chicago grand jury. That trial has been postponed twice, for what
looks like an indefinite period.
Also indicted by the Chicago grand jury were Enid oilman and
former Penn Square Bank borrower Jere Strugis, and John Lytle, former
vice president at Continental Illinois National Bank & Trust Co. in
- Liquidation of the bank's remains, plus litigation of claims,
The FDIC has paid three dividends to uninsured depositors and
proven creditors of Penn Square Bank, for a total of $251.6 million,
or 55 percent of the amount of their claims. Yet to be paid are
$205.9 million in proven claims.
The agency has predicted that proven creditors will recover 65
percent of their losses.
The last dividend was 20 percent, and was paid in December.
The receivership estate has issued $457.5 million in receivership
certificates, while more than $700 million in claims have been
Pending claims litigation has been reduced to about $40 million.
About $217 million in assets remain to be liquidated.
- A long-awaited answer to the status of standby letters of
credit in a failed bank situation was answered when the U. …