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Banks Hammered With Regulatory Orders

Recent regulatory actions

November 26, 2008

By MortgageDaily.com staff

The Office of the Comptroller of the Currency recently doled out 25 regulatory orders to banks and individuals. Meanwhile, Fannie Mae and Freddie Mac have been warned that their shares have been trading so low that they face suspension from trading on the New York Stock Exchange.

But first, the OCC announced last week that it granted its first conditional preliminary approval of a shelf-charter to establish the Ford Group Bank, N.A. The new type of national bank charter is designed to facilitate new equity investments in troubled depository institutions. The charter remains inactive until an investor group is ready to make a bank acquisition.

"By granting the preliminary approval, the OCC expands the pool of potential buyers available to buy troubled institutions, and in particular the new equity capital available to bid on troubled institutions through the Federal Deposit Insurance Corporation's bid process," OCC stated.

The New York Stock Exchange warned Freddie Mac and Fannie Mae that the price of their common stock fell below $1 per share during a consecutive 30-trading-day period -- in violation of NYSE requirements, according to announcements from both secondary lenders.

As a result, the two government sponsored enterprises' shares are subject to suspension and delisting. Freddie and Fannie have until Dec. 2 to notify the exchange of their intent to cure the deficiencies. Freddie has until May 17, 2009, to bring its common stock share prices and average share prices for 30 consecutive trading days above $1, while Fannie has until May 11, 2009.

Freddie indicated it is consulting with its regulator, Federal Housing Finance Agency, over what steps to take. Fannie said it is considering undertaking a reverse stock split to cure the deficiency.

OCC reported today that it issued a number of regulatory orders. Cease-and-desist orders against the following companies:

  • Valley Capital Bank, N.A., Mesa, Ariz.;
  • Delta Bank, N.A., Manteca, Calif.; and
  • Omni National Bank, Atlanta.

The regulator issued civil money penalty orders against David S. Eisenberg, California National Bank, Los Angeles; and Eastern National Bank, Miami.

Formal agreements were made with the following institutions:

  • First National Bank of Baldwin County, Foley, Ala.;
  • Palm Desert National Bank, Palm Desert, Calif.;
  • The Adams National Bank, Washington, D.C.;
  • First National Bank of Griffin, Griffin, Ga.;
  • First Suburban National Bank, Maywood, Ill.;
  • The First National Bank of Olathe, Olathe, Kan.;
  • First National Bank in Howell, Howell, Mich.;
  • Heritage Bank, National Association, Spicer, Minn.;
  • The First National Bank of Wayne, Wayne, Neb.;
  • Charter West National Bank, West Point, Neb.;
  • Bank of Anderson, N.A., Anderson, S.C.; and
  • Beach First National Bank, Myrtle Beach, S.C.

A personal cease-and-desist order and a restitution order was issued against Vernon W. Hill, II, Commerce Bank, N.A., Philadelphia.

Removal-and-prohibition orders were issued against the following individuals:

  • David S. Eisenberg, California National Bank, Los Angeles;
  • Madai Contreras, Los Angeles National Bank, Buena Park, Calif.;
  • Wendie J. Kirkpatrick, First National Bank of Omaha, Omaha, Neb.;
  • Loretta S. Flenar, JPMorgan Chase Bank, N.A., Columbus, Ohio;
  • Anthony Diamante, Commerce Bank, N.A., Philadelphia; and
  • Yeshua C. Bullock, Wells Fargo Bank, N.A., Sioux Falls, S.D.
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