Credit Suisse Tries to Overhaul Its Image, but Problems Remain

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Mr. Miller, you may recall, was the bank's architect, starting in 2004, of a new syndicated loan product -- called a dividend recapitalization loan -- that allowed big-time real estate developers in the Western half of the United States to borrow based on the inflated valuation of their projects, pocket hundreds of millions of dollars in the form of dividends and lay the risk at the doorstep of new investors whom Mr. Miller and his team had lined up.

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In the end, all of the loans blew up, and investors lost billions. Soured deals include $375 million in loans to the Yellowstone Club, an hour outside of Bozeman, Mont.; $250 million to the Tamarack Resort in Idaho; $540 million to Lake Las Vegas, a 3,592-acre golf community in Nevada; $275 million to Promontory, a 10-square-mile second-home resort outside Park City, Utah; $400 million to the Turtle Bay Resort in Hawaii; and $675 million to the Ginn resorts in Port St. Lucie, Fla.; Naples, Fla.; Boone, N.C.; and the Bahamas.

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After each of the developments ended up in Bankruptcy Court, a federal bankruptcy judge admonished the Credit Suisse bankers by calling the loans "doomed to failure" from the outset... In September, Highland Capital won a $287.5 million judgment against Credit Suisse related to losses stemming from its participation in a refinancing of Lake Las Vegas before it went into bankruptcy; Credit Suisse is appealing the ruling, and the judgment has not yet been paid pending the appeal. Highland Capital affiliates are also suing Credit Suisse in New York State over additional losses related to other deals.