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$10 Billion Regulator

Recent regulatory activity

March 11, 2009

By MortgageDaily.com staff


The chairman of the Federal Reserve is calling for the creation of a new regulator to oversee mammoth financial institutions that could pose a risk to the U.S. financial system. At the same time, a new unit is being created at one bank regulator to oversee regulatory actions against institutions with more than $10 billion in assets. Meantime, dozens of banks were recently hit with a variety of regulatory orders.

Federal Reserve Chairman Ben Bernanke yesterday told the Council on Foreign Relations in Washington, D.C., that policymakers should embrace a regulatory strategy that will ensure a similar crisis in the financial markets does not occur again, a written transcript of his prepared speech said.

An all-encompassing approach must address institutions too big to fail; strengthen the system, procedures and conventions that govern financial market transactions; and eliminate wide swings in the markets and the economy. He noted that improved tools are needed to enable the orderly resolution of systemically important nonbank financial firms.

Bernanke said a new authority should be considered to regulate financial firms that could pose a systematic risk. He indicated the receivership process is an effective way to reduce potential market disruption from the failure of systemic financial firms by providing a bridge to a sale or orderly liquidation. He said a "new resolution regime" would need to seamlessly interact with foreign insolvency regimes involved with the failing organization.

The Office of Thrift Supervision recently said it is establishing a large bank unit to review and approve supervisory actions by OTS regional offices. The unit will oversee actions on institutions with more than $10 billion in assets. In addition, new standards are being implemented for reviewing and approving enforcement actions by existing regional committees.

"This initiative is part of the agency's ongoing effort to improve its supervision of the thrift industry and in response to lessons learned from recent thrift failures," the thrift regulator said.

The increased focus is in line with Bernanke's call for more effective supervision of large and complex financial firms that are too big to fail. Bernanke said that if the failure of a firm would pose a systemic risk, then especially close supervisory oversight of its risk-taking, risk management, and financial condition is required. He also said these firms should "be held to high capital and liquidity standards."

Temecula Valley Bancorp Inc., of Temecula, Calif., entered a formal agreement with the Federal Reserve Bank of San Francisco on Feb. 11 that requires it to conserve capital, maintain compliance with laws and regulations and report back on its progress.

A similar agreement was reached on Feb. 17 between Polk County Bancorporation Inc. and the Federal Reserve Bank of Chicago; Florida Community Banks Inc. and the Federal Reserve Bank of Atlanta on Feb. 13; Corus Bankshares Inc. of Chicago and the Federal Reserve Bank of Chicago on Feb. 18; and Cape Fear Bank Corp. of Wilmington, N.C., and the Federal Reserve Bank of Richmond.

SolutionsBank in Overland Park, Kan., and its parent also reached a similar agreement with the Federal Reserve Bank of Kansas City and Kansas' Office of the State Bank Commissioner. In addition, SolutionsBank agree to diversify its commercial credit concentration, restrict credit to borrowers who the bank has previously charged off and improve its credit standards. It will also charges of bad debts.

A consent cease-and-desist order was issued by the Federal Reserve Board on Feb. 11 against FSB Bancorp Inc. The Altus, Okla., company failed to file regulatory reports and notices on time and was out of regulatory compliance on merchant banking activities.

Genoa Banking Co. consented to the issuance of an order-of-assessment of a $3,990 civil money penalty by the fed on Feb. 4. At issue were violations of the National Flood Insurance Act. East Dubuque Savings Bank consented to a $1,710 order-of-assessment for the same violations.

The Federal Deposit Insurance Corporation and the Oregon Division of Finance and Corporate Securities issued a cease-and-desist order against Columbia River Bank requiring it to maintain its capital levels, a Feb. 12 announcement said. The parent of Columbia, which shut down its mortgage unit in September 2008, reported a $23 million third-quarter 2008 loss.

The FDIC also issued cease-and-desist orders against the following companies.

FDIC Cease-and-Desist Orders
Institution Location Date Issued Order No.
Uniti Bank Buena Park, Calif. Jan. 30 FDIC-08-395b
Golden Coast Bank Long Beach, Calif. Jan. 27 FDIC-08-359b
First Vietnamese American Bank Westminster, Calif. Jan. 29 FDIC-08-365b
Douglas County Bank Douglasville, Ga. Jan. 27 FDIC-08-357b
First Commerce Community Bank Douglasville, Ga. Jan. 6 FDIC-08-339b
Central Progressive Bank Lacombe, La. Jan. 28 FDIC-08-398b
Horizon Bank Pine City, Minn. Jan. 6 FDIC-08-393b
Paragon Bank Wells, Minn. Jan. 26 FDIC-08-212b
Westbridge Bank and Trust Chesterfield, Mo. Jan. 23 FDIC-09-016b
Garden City Bank Garden City, Mo. Jan. 29 FDIC-09-009b
Geauga Savings Bank Newbury, Ohio Jan. 12 FDIC-08-241b
First State Bank of Altus Altus, Okla. Jan. 16 FDIC-08-287b
Citizens State Bank Woodville, Texas Jan. 30 FDIC-08-379b

Civil money penalties were issued against the following firms by the FDIC.

FDIC Civil Money Penalties
Institution Location Date Issued Order No. Amount
Alliance Bank Culver City, Calif. Jan. 12 FDIC-08-311k $3,520
Metropolitan Bank and Trust Co Chicago Jan. 5 FDIC-08-075k $1,550
Kennebunk Savings Bank Kennebunk, Maine Jan. 8 FDIC-08-376k $21,525
Citizens Bank of Newburg Rolla, Mo. Jan. 20 FDIC-08-276k $3,200
Valley Bank and Trust Co. Scottsbluff, Neb. Jan. 30 FDIC-08-338k $9,200
Drayton State Bank Drayton, N.D. Jan. 29 FDIC-08-326k $1,200
Mifflin County Savings Bank Lewistown, Pa. Jan. 13 FDIC-08-222k $8,295
Farmers and Merchants State Bank Plankinton, S.D. Jan. 13 FDIC-08-340k $2,420
Park Bank Holmen, Wis. July 15, 2008 FDIC-07-042k HMDA; FDIC-07-196k FLOOD na
Community First Bank Rosholt, Wis. Jan. 14 FDIC-08-024k $1,150

The FDIC issued final orders against American Savings Inc. in New Prague, Minn., on Jan. 8 (FDIC-08-001q) and Ericka Eugena Tello on Jan. 14 (FDIC-08-191L).

The Office of the Comptroller of the Currency recently reported that it issued cease-and-desist orders against Southern Colorado National Bank in Pueblo, Colo.; Corus Bank, N.A., in Chicago; and Hometown Bank, N.A., in Carthage, Mo. The OCC also issued civil money penalty orders against Timothy M. Kosiek of Marshall Bank, N.A., in Hallock, Minn., and Capital One Home Loans in McLean, Va.

First National Bank of Crestview, of Crestview, Fla., reached a formal agreement with the OCC, as did the Bank of Miami, N.A., in Coral Gables, Fla., the agency reported. Personal cease-and-desist orders were issued against Gregory Bobb and Cheryl Thornhill at Union Planters Bank, N.A., in Memphis, Tenn.

Albert S. Palacci, Safra National Bank of New York and Mark E. Pappas at KeyBank National Association in Cleveland both faced removal-prohibition orders by the OCC, while existing enforcement actions were terminated against the International Bank of Miami, N.A., in Coral Gables and the Citizens National Bank of Somerset, in Somerset, Ky.

Hanover Capital Mortgage Holdings Inc. disclosed last month that the NYSE Alternext US LLC extended the Edison, N.J.-based company deadline to regain compliance with the continued listing standards. Hanover was first notified on April 8, 2008, that it did not meet the minimum $2 million in required stockholder equity. It was also out of compliance because of losses during two of the prior three years.

"The company had sustained losses which were so substantial in relation to overall operations or its existing financial resources, or its financial condition had become so impaired, that it appeared questionable, in the opinion of the exchange, as to whether the company would be able to continue operations and/or meet its obligations as they mature," the exchange reportedly told Hanover.

BankUnited Financial Corp. reported last week that it received a notice from the Nasdaq Stock Market because it didn't file its 2008 annual report on Form 10-Q with the Securities and Exchange Commission on time. The Coral Gables, Fla.-based bank has until May 4, 2009, to submit a plan to regain compliance.


Southern Colorado National Bank
OCC Cease-and-Desist Order No. 2009-001, Jan. 27, 2009

Corus Bank, N.A.
OCC Cease-and-Desist Order No. 2009-010, Feb. 18, 2009

Hometown Bank, N.A.
OCC Cease-and-Desist Order No. 2008-173, Dec. 18, 2008

Timothy M. Kosiek, Marshall Bank, N.A.
Civil Money Penalty Order No. 2009-002, Jan. 13, 2009

Capital One Home Loans, Capital One, N.A.
Civil Money Penalty Order No. 2009-003, Jan. 16, 2009

First National Bank of Crestview
Formal Agreement No.2008-174, Dec. 19, 2008

The Bank of Miami, N.A.
Formal Agreement No. 2009-004, Jan. 15, 2009

Cheryl Thornhill, Union Planters Bank, N.A.
Personal Cease-and-Desist Order No. 2008-175, Dec. 18, 2008

Gregory Bobb, Union Planters Bank, N.A.
Personal Cease and Desist Order No. 2009-009, Feb. 4

Albert S. Palacci, Safra National Bank of New York
Removal / Prohibition Order No. 2009-005, Jan. 8, 2009

Mark E. Pappas, KeyBank N.A.
Removal / Prohibition Order No. 2009-006, Jan. 13, 2009

International Bank of Miami, N.A.
Terminations of Existing Enforcement Action No. 2009-007, Jan. 5, 2009

The Citizens National Bank of Somerset
Terminations of Existing Enforcement Action No. 2009-008, Jan. 15

Written Agreement by and between TEMECULA VALLEY BANCORP, INC., Temecula, California and FEDERAL RESERVE BANK OF SAN FRANCISCO, San Francisco, California.
Docket No. 09-011-WA/RB-HC, Feb. 11, 2009 (BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Washington, D.C.)

Written Agreement by and between POLK COUNTY BANCORPORATION, INC. Johnston, Iowa and FEDERAL RESERVE BANK OF CHICAGO Chicago, Illinois.
Docket No. 08-059-WA/RB-HC No., Feb. 17, 2009 (BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.)

Written Agreement by and among SOLUTIONSBANK CORPORATION Overland Park, Kansas
SOLUTIONSBANK Overland Park, Kansas FEDERAL RESERVE BANK OF KANSAS CITY Kansas City, Missouri and OFFICE OF THE STATE BANK COMMISSIONER Topeka, Kansas
.
Docket Nos. 09-016-WA/RB-HC, 09-016-WA/RB-SM and
OSBC-2009-47, March 2, 2009 (BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D.C.)

In the Matter of FSB BANCORP, INC. Altus, Oklahoma.
Docket No. 09-006-B-HC, Feb. 11, 2009 (BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.)

Written Agreement by and between FLORIDA COMMUNITY BANKS, INC. Immokalee, Florida and FEDERAL RESERVE BANK OF ATLANTA Atlanta, Georgia.
Docket No. 09-008-WA/RB-HC, Feb. 13, 2009 (BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.)

In the Matter of GENOA BANKING COMPANY Genoa, Ohio.
Docket No. 09-003-CMP-SM, Feb. 4, 2009 (BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM).

In the Matter of EAST DUBUQUE SAVINGS BANK East Dubuque, Illinois.
Docket No. 09-004-CMP-SM, March 5, 2009 (BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM).

Written Agreement by and between CORUS BANKSHARES, INC. Chicago, Illinois and FEDERAL RESERVE BANK OF CHICAGO Chicago, Illinois.
Docket No. 09-017-WA/RB-HC, Feb. 18, 2009 (BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM,
WASHINGTON, D.C.).

Written Agreement by and between CAPE FEAR BANK CORPORATION Wilmington, North Carolina and FEDERAL RESERVE BANK OF RICHMOND Richmond, Virginia.
Docket No. 09-019-WA/RB-HC, Feb. 24, 2009 (BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.).

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