James M. Fail (March 28, 1926 – February 26, 2010) was an American financial executive who served as chairman of Stone Holdings, Inc. and Bluebonnet Savings Bank.
[4] In the following decades, Fail and his holding companies have owned and operated a variety of investment, mortgage, banking, savings and loan, and insurance businesses throughout the U.S.[3] Fail was thrust into public attention[5][6][7] in 1990, when the Senate Judiciary Antitrust Subcommittee held hearings scrutinizing his business activities, in particular his acquisition of a federally funded thrift despite a prior indictment for fraud and the criminal conviction of his company.
As a result of a plea bargain, the charges against him personally were dropped; he pleaded guilty on behalf of his already-bankrupt company, and he was barred from doing any further business in Alabama.
[13] In order to buy Bluebonnet, in September 1988, Fail borrowed $34 million from Mutual Security Life Insurance Co., a Fort Wayne, Indiana company he had bought the previous year while it was struggling with debt.
Mutual Security became insolvent in August 1990 and moved its headquarters to Lincoln, Nebraska and Dallas, Texas;[14] its Indiana business was seized by state regulators, prompting BusinessWeek to describe 130,000 policyholders as "in limbo".
[11][16][17] The Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights investigated the Bluebonnet deal in 1990 to determine, among other questions, why Fail's bid succeeded despite the 1976 fraud conviction of his company, which should have been a "presumptive disqualifier" per FHLBB regulations.
Initially, most of the criticism came from chairman Howard Metzenbaum, who described the deal as "an abomination, the worst case we have found" among the savings and loan bailouts.