Regulators Sue Frankel's former banks. (Briefing).

Insurance commissioners from five states are suing banks, saying they allowed Martin Frankel to steal more than $200 million from seven insurance companies.

Regulators said First Tennessee Bank and First American National Bank--now known as AmSouth Bank--should have seen what Frankel and his coconspirators were doing and should have stopped them from looting the insurers' reserves, which were kept at the banks.

In the lawsuit, filed in the Hinds County Circuit Court in Mississippi, regulators said as a result of First American's action--and inaction--more than $139 million of insurance companies' assets was laundered through and looted from accounts at First American. As a result of First Tennessee's alleged action or inaction, more than $228 million of insurer assets also was looted, according to the lawsuit.

AmSouth filed a lawsuit in federal court in Nashville, Tenn., in July "asking the judge to confirm that we've done nothing wrong," said Rick Swagler, a spokesman for AmSouth.

Frankel and several of his associates have pleaded guilty to numerous state and federal criminal charges. Frankel is accused of controlling a racketeering enterprise that included Thunor Trust and Liberty National Securities Inc., a brokerage house. Authorities allege that Frankel used Thunor Trust to buy insurance companies, funnel the insurers' assets to Liberty National and then instead of investing the funds, Frankel allegedly stole at least $200 million.