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TMCNet: Caldera on Failed Bank's Board: Ex-UNM leader taught law course on legality of how corporations are governed

[July 15, 2008]

Caldera on Failed Bank's Board: Ex-UNM leader taught law course on legality of how corporations are governed

(Albuquerque Journal (NM) (KRT) Via Acquire Media NewsEdge) Jul. 15--Former University of New Mexico President Louis Caldera, who taught corporate governance at the UNM School of Law last fall, is on the board of directors of a California bank seized by the federal government.

Caldera has been on the board of IndyMac Bank of Pasadena and its holding company, IndyMac Bancorp Inc., since May 2002. He earned more than $200,000 for serving on the board in 2007.

The company got caught up in what its chief executive officer described in March as an "unprecedented crisis in the housing and mortgage industries."

A massive run on deposits forced the U.S. Treasury's Office of Thrift Supervision to close the bank Friday in what the agency called the second-largest bank failure in U.S. history.

The Federal Deposit Insurance Corporation was quickly named conservator, and the bank reopened Monday as IndyMac Federal Bank. The FDIC estimates the cost of the failure to the deposit insurance fund at between $4 billion and $8 billion.

Reached at his home Monday night, Caldera said, "I have no comment."

Caldera serves on Indy-Mac's corporate governance committee and on its management development and compensation committee, according to a Securities and Exchange Commission filing from earlier this year. In that same filing, the company disclosed Caldera took in $213,520 in total compensation for his service on the board in 2007 and $261,626 in 2006.

Caldera, a former U.S. Army secretary in the Clinton administration, began teaching at the UNM School of Law last fall, earning a salary of about $120,000. The faculty appointment followed Caldera's contentious 30-month stint as UNM president that ended when regents agreed to pay him more than $700,000 under a settlement that cleared the way for his resignation in January 2006. He took a sabbatical before taking on his tenured faculty position.

During his first semester on the UNM law faculty, he taught corporate governance and legislative process & advocacy. Last spring, he taught election law.

The corporate governance class was a seminar exploring the legal framework under which corporations are governed and exploring duties and responsibilities of directors and officers of business corporations.

"A number of high-profile business failures, some involving accounting improprieties and criminal wrongdoing, as well as issues of escalating executive compensation unrelated to financial performance, have brought recent scrutiny to the laws and principles that govern public companies," the course description states. It notes that many reforms have been suggested by shareholder activist groups and that the class would explore the proposals.

Part of IndyMac's problem stemmed from the company's loan practices. IndyMac had specialized in making and selling Alt-A mortgage loans, essentially loans to consumers who didn't have complete documentation of income or assets necessary to receive prime-rate loans.

Regulators blamed the bank's collapse on Democratic Sen. Charles Schumer of New York, who wrote to the OTS and FDIC expressing concerns about IndyMac's viability.

The letter was released publicly June 26. In the next 11 business days, depositors withdrew more than $1.3 billion, the OTS said in its news release.

During a Sunday news conference, Schumer accused federal regulators of being asleep at the switch.

"IndyMac was one of the most poorly run and reckless of all the banks," CNN quotes Schumer as saying. "It was a spinoff from the old Countrywide, and like Countrywide, it did all kinds of profligate activities that it never should have. Both IndyMac and Countrywide helped cause the housing crisis we're now in."

IndyMac has 10 directors.

Caldera has served on a number of corporate boards since leaving the Clinton administration. According to a BusinessWeek database, Caldera also is on the board of directors of A.H. Belo Corporation, Helinet Aviation Services, LLC and Southwest Airlines. Bank panic

Worried customers flooded IndyMac branches on Monday

Business, D5

To see more of the Albuquerque Journal, or to subscribe to the newspaper, go to http://www.abqjournal.com.

Copyright (c) 2008, Albuquerque Journal, N.M.
Distributed by McClatchy-Tribune Information Services.
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