Relative to the collapse of First Brands Group and Tricolor Holdings, the hits disclosed by regional lenders Zions Bancorp and Western Alliance Bancorp seemed small — a figure in the tens of millions, not billions
Still, the back-to-back reveal of loan fraud renewed the simmering debate on Wall Street about whether the era of freewheeling capital is about to cause a comeuppance for banks and non-banks alike.
- In the case of Zions and Western Alliance, the alleged culprits were the same: investment funds tied to Andrew Stupin and Gerald Marcil, among other parties, borrowed the funds to finance their purchase of distressed commercial mortgage loans.
- A lawsuit from Zions revealed its wholly-owned subsidiary, California Bank & Trust, provided $60 million to the borrowers, and that an investigation found many of the notes and underlying properties were transferred to other entities — allegations that Stupin and Marcil’s attorney said they “vehemently deny.”
That was followed by the collapse of auto-parts supplier First Brands Group, which owed more than $10 billion to some of the biggest names on Wall Street.
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