The Federal Deposit Insurance Corp. has fired the Washington law firm of Akin, Gump, Strauss, Hauer & Feld as counsel on a number of cases because one of the firm's banking attorneys owes millions of dollars to troubled banks taken over by the agency, an FDIC official confirmed yesterday.
John J. Kendrick, Akin, Gump's lead banking partner in Washington, recently filed for personal bankruptcy in Dallas, saying he owed nearly $16 million to creditors, including various banks and savings and loans that had failed and were under the control of the FDIC and the Resolution Trust Corp (RTC). The firm was representing the FDIC as receiver for the failed National Bank of Washington in about 15 cases where the bank is being sued by investors.
Laurence Hoffman, the managing partner of the law firm, yesterday declined to comment on the firm's firing by the FDIC. He said that Kendrick is still the firm's lead banking partner and that no change in Kendrick's status is anticipated. Kendrick declined to comment.
The Washington law firm of Steptoe & Johnson has been hired by the FDIC to replace Akin, Gump.
The FDIC and the RTC, the agency charged with disposing of the assets of failed S&Ls, recently adopted rules that bar the agencies from hiring or doing business with anyone who has caused a thrift or bank to lose more than $50,000.
"Our basic approach is not to hire people who've contributed to the problem," said Alan Whitney, a spokesman for the FDIC. "If we think there's cause for concern about a particular law firm or accounting firm in connection with the failure of a bank or S&L, we would evaluate that very carefully."
Whitney said there was another reason the FDIC severed its relationship with Akin, Gump: The firm is not on the agency's list of approved contractors because it has clients whose interests conflict with the FDIC's.
Akin, Gump was originally hired in August by William S. Ogden, who was put in charge of National Bank of Washington by the Office of the Comptroller of the Currency. Shortly after Ogden hired Akin, Gump, the FDIC took over the bank and the law firm continued to work on the matter.
Both Ogden and FDIC officials said they would not have hired Akin, Gump if they had known of Kendrick's financial problems. A Sept. 22 article in The Washington Post reported Kendrick's bankruptcy filing.