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Rise in Regulatory Orders Against Banks

Regulatory actions against U.S. financial institutions continued higher during the first quarter, albeit at a slower pace.

Federal regulators took 437 actions against banks and credit unions during the first quarter, a 6 percent increase from the previous quarter. Activity was up 88 percent from a year earlier. The findings were based on a quarterly analysis by

Regulatory actions have increased each of the last eight quarters.

The analysis reflects actions reported by the Federal Deposit Insurance Corp., the Federal Reserve, the National Credit Union Administration, the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

Actions by Quarter

Q1 2010 Q4 2009 Q1 2009
437 412 233

full 1st-quarter 2010 listing by institution

Cease-and-desist orders, which often precede bank failures, came in at 137 — dropping 15 percent from the fourth quarter and suggesting bank failures might be near a peak.

Also lower were formal agreements. Such agreements often require institutions to shore up capital, improve operations or even change management.

But the number of civil money penalties jumped 40 percent.

Type of Order Q1 2010
Agreement (written and formal) 79
Capital Directive 1
Cease-and-Desist 137
Civil Money Penalty # 73
Civil Money Penalty $ $50.5 million
Noticed Filed 5
Order Granting Permission to File Application 1
Prompt Corrective Action 26
Removal-Prohibition 57
Termination of Insurance 2
Other 56
Total 437

full 1st-quarter 2010 table by order type

The biggest jump in activity was at the Federal Deposit Insurance Corp., where the number of actions rose 21 percent from the fourth quarter. The FDIC issued more than twice as many orders as it did a year earlier.

Orders also increased at the Office of the Comptroller of the Currency.

But actions were down nearly a third at the Office of Thrift Supervision, while Fed actions were off 5 percent.

Regulator Q1 2010
FDIC 235
Federal Reserve 55
OCC 77
OTS 54

full 1st-quarter 2010 table by regulator

“While we did see an increase in overall actions, the rate of increase slowed by more than half compared to the fourth quarter,” Founder and Publisher Sam Garcia said. “Based on the pace of orders and the number of first-half 2010 failures — and given no extraordinary market events — we project that between 175 and 200 banks will fail during all of this year.”

Last year, 140 federally insured banks failed.

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