July 22, 2008 -- A Florida bank is suing a prominent banking analyst and his firm after they named it a candidate for failure.
BankAtlantic Bancorp's suit against banking expert Richard X. Bove and his firm, Ladenburg Thalmann, claims defamation and negligence, after Bove included the institution in a recent report aiming to identify which U.S. banks were struggling hardest to cope with the current lending crisis.
Bove produced his report following the collapse of lending giant IndyMac by analyzing publicly available information on banks' loan default rates, assets and other figures.
Bove's "so-called analysis" was "totally false," bank chairman Alan B. Levan said in a statement about the suit, filed in Broward County, Fla.
According to BankAtlantic's lawyer, Gene Stearns, the bank's suit claims Bove did not base the report on the correct data. Stearns said he could not provide ABC News with a copy of the suit because "I can't republish defamation."
Bove did not immediately respond to a request for comment. A spokesman for Bove's firm, Ladenburg Thalmann, said the firm "will defend ourselves against this meritless lawsuit."
The Federal Deposit Insurance Corporation, which guarantees deposits at thousands of U.S. banks, keeps its own list of banks it believes may fail, a topic of increasing concern as U.S. borrowers default on billions in loans. The FDIC, however, does not release its list to the public, and will not confirm which banks it has flagged.
After IndyMac collapsed, "breathless television reporters filled the airwaves with the repeated question on the minds of an anxious public: 'who is next?'," Levan's statement read. "[W]ithout an official answer [from FDIC] based on real information, some members of the media. . . turned to what seemed to be the next best thing: a supposed expert who said he knew the answer."
The suit does not specify what damages the bank believes it has suffered as a result of Bove's report, Stearns said in an interview Tuesday, comparing it to damages suffered by a woman facing false claims about her chastity. "How can you prove that?"
"We want a retraction, and we want it quick," Stearns said, but acknowledged that so far Bove doesn't appear inclined to issue one.
"If he doesn't stop, we want damages," added Stearns. To date, according to the lawyer, BankAtlantic has not alleged it has suffered "more than insignificant damages" because of Bove's analysis.
In the past year, the stock price of the bank's parent company dropped from over $8 a share to under $2. The day after Bove's report was released, the institution's stock dropped 30 cents a share to close at 90 cents. It is now trading at around $1.80.