WILMINGTON, Del. – An email between Wilmington Trust executives sent amid the Great Recession appears to mock the gravity of accusations against the now-defunct bank.
Continue Reading Below
The News Journal reported Wednesday that the email included a script of a scene adapted from the movie "A Few Good Men." Wilmington Trust officers were set to perform the scene at a post-audit cocktail party. The details are fictitious, but the adaptation highlights the pressure financiers face to flout laws to maximize returns.
Federal prosecutors included the email in a docket this week as character evidence in the case against the bank. Four executives are accused of hiding the truth about Wilmington Trust's deteriorating commercial real estate loan portfolio before its collapse.
Delaware market manager Brian Bailey emailed the adaptation of the 1992 film to chief financial officer David Gibson in January 2009. In it, an auditor questions Bailey, who defiantly rebuffs the inquiry, echoing a character played by Jack Nicholson.
"I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the roofs of the very houses I provide financing for, then questions the manner in which I provide it. I'd prefer you just said thank you and went on your way," read a line from the script.
In 2014, Bailey admitted that he conspired with other officials to hide the bank's true financial condition from federal regulators. At his plea hearing, Bailey said "everyone" in his area was working to extend the maturity of past-due loans, including people working "above" and "below" him.
Continue Reading Below
Bailey and others at the bank, including Joseph Terranova, who headed Wilmington Trust's Delaware commercial real estate division, would cause matured loans to be waived if the loans were current on the interest payment and considered to be in the process of extension, according to court documents.
This led to Wilmington Trust not reporting to the Federal Reserve and others the full extent of past-due loans, prosecutors allege.
Bailey pleaded guilty to one count that he conspired to cause the bank to make a false entry in a report to federal regulators. Terranova pleaded guilty to conspiracy to commit bank fraud.
After the bank was acquired by M&T, shareholders filed a series of securities fraud class-action lawsuits against the bank, board members and top managers.
The fictitious script reveals a dark-comedic take on the financial system.
"We make loans, son. We make loans or clients can't live their lavish lifestyles beyond their means. It's that simple. Are we clear?" it says at one point.
"Crystal," answers the auditor.
University of Delaware Alfred Lerner College of Business & Economics Dean Bruce Weber says the takeaway is that bank officials didn't take their precarious position seriously.
"You can't read it any other way," he said.
At the time, Wilmington Trust was facing the same pressures that took down giants like Lehman Brothers and Bear Stearns, he said.
"Like a number of other lenders at the time, they did not spread their risk out and manage their lending successfully," he said.
Prosecutors declined to comment on the email. Defense attorneys in the ongoing case did not respond to requests for comment.