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While one bank regulator recently expressed support for the Obama administration’s proposed Consumer Financial Protection Agency, at least three financial trade groups and one federal regulator voiced concerns. Meanwhile, nearly 90 actions were taken by bank regulators against U.S. financial institutions.

In testimony last month before the House Financial Services Committee, Federal Deposit Insurance Corporation Chairman Sheila C. Bair said the proposed regulator would eliminate regulatory gaps between depository institutions and non-bank providers of financial products and services.

 

But Bair also noted that although the proposed regulator would be the sole rule-making authority for consumer financial protection statutes, “It would set a floor on consumer regulation and supervision and would guarantee the ability of states to adopt and enforce stricter laws for institutions of all types, regardless of charter.”

Comptroller of the Currency John C. Dugan testified that banking supervisors won’t have enough input in formulating rules under the proposed regulator and called for more banking supervisors on the board of the new regulator. He also expressed concern that federal preemption would be abandoned and states could impose their own rules — leaving no uniformity.

Dugan told lawmakers that he supports designating the Federal Reserve Board as the consolidated supervisor of systemically significant financial firms. He also said that consumer protection examination and enforcement responsibilities should not be assigned to the new agency as proposed, but instead should be left with banking agencies.

“Moving these banking agency functions to the CFPA would only distract it from its most important and daunting implementation challenge: establishing an effective examination and enforcement regime for the ‘shadow banking system’ of the tens of thousands of nonbank providers that are currently unregulated or lightly regulated, like the nonbank mortgage brokers and originators that were at the heart of the subprime mortgage problem,” he said.

The Consumer Mortgage Coalition told lawmakers in a letter to step back and analyze what the costs to consumers will be from the proposed regulator. The group said that it is still unclear what type of companies would be covered by the regulator and what the benefits to consumers will be.

“Both of these shortcomings raise a very real probability that there will be significant dangerous, unintended consequences if the legislation is enacted in its current form,” the group said. “We strongly urge you to delay your committee’s consideration of H.R. 3126 until after the August recess in order to provide due time for all stakeholders and decision-makers to fully understand the legislation’s scope and its potential economic and legal impacts.”

Last month, both the Mortgage Bankers Association and the American Bankers Association expressed their opposition to the proposed regulator during Congressional testimony.

The Colonial Bankgroup Inc. consented to a cease-and-desist order with the State of Alabama State Banking Department, according to a copy of the order (Docket No. 09-086-B-HC) filed with the Federal Reserve Board on July 22. Such orders often precede bank failures.

The FDIC reported Friday that it processed 66 regulatory orders during June, including the following 27 cease-and-desist orders.

 

Institution Location Order # Date
Advanta Bank Corp. Draper, Utah FDIC-08-259b,
FDIC-08-403k,
FDIC-09-266b
June 30
AL Amerilife First Financial LLC Clearwater, Fla. FDIC-09-257b,
FDIC-09-258k
June 18
American Express Centurion Bank Salt Lake City FDIC-09-251b June 30
American Patriot Bank Greeneville, Tenn. FDIC-09-163b June 3
Americana Community Bank Sleepy Eye, Minn. FDIC-09-168b June 9
Arcola Homestead Savings Bank Arcola, Ill. FDIC-09-078b June 9
The Bank of Georgia Peachtree City, Ga. FDIC-09-133b June 30
Centennial Bank Ogden, Utah FDIC-09-293b June 26
City Bank Lynnwood, Wash. FDIC-09-291b June 29
Colonial Bank Montgomery, Ala. FDIC-09-186b June 15
The Community Bank Brocton, Mass. FDIC-09-212b June 29
First BankAmericano (failed 7/31) Elizabeth, N.J. FDIC-09-235b June 19
First DuPage Bank Westmont, Ill. FDIC-08-387b June 16
Grand Rivers Community Bank Grand Chain, Ill. FDIC-09-093b June 25
The Hicksville Bank Hicksville, Ohio FDIC-09-045b June 10
High Desert State Bank Albuquerque, N.M. FDIC-09-127b June 22
Mountain Heritage Bank Clayton, Ga. FDIC-09-117b June 17
Nevada Security Bank Reno, Nev. FDIC-09-173b June 29
New Liberty Bank Plymouth, Mich. FDIC-09-193b June 17
Park State Bank & Trust Woodland Park, Colo. FDIC-09-186b June 22
Prime Alliance Bank Woods Cross, Utah FDIC-09-239b June 23
Prosper Bank Prosper, Texas FDIC-09-191b June 9
Satilla Community Bank St. Marys, Ga. FDIC-09-149b June 30
Savoy Bank New York FDIC-09-118b June 8
Seattle Bank Seattle FDIC-09-139b June 8
Valley Bank and Trust Brighton, Colo. FDIC-09-126b June 1

During June, the FDIC terminated cease-and-desist orders against Columbus Bank and Trust Co. in Columbus, Ga.; Southern Community Bank in Fayetteville, Ga.; American Southern Bank, Kennesaw, Ga.; Herrin Security Bank in Herrin, Ill.; Great Basin Bank of Nevada, Elko, Nev.; Israel Discount Bank of New York in New York; and Cooperative Bank of Wilmington, N.C.

Final order number FDIC-09-169OA for $300 was issued against Community Bank, National Association, in Mobile, Ala., on June 5. The order was issued pursuant to Section 8(h), 12 U.S.C. § 1828(h).

The FDIC said it issued civil money penalties against the following banks.

Institution Location Order # Amount Date
Advanta Bank Corp. Draper, Utah FDIC-08-259b,
FDIC-08-403k
$150,000 June 30
AL Amerilife First Financial LLC Clearwater, Fla. FDIC-09-257b,
FDIC-09-258k
$100,000 June 18
Altoona First Savings Bank Altoona, Penn. FDIC-09-170k $4,350 June 2
American Express Centurion Bank Salt Lake City FDIC-09-215k $250,000 June 30
First Exchange Bank Mannington, W.V. FDIC-09-130k $8,225 June 19
Gateway Bank of St. Louis St. Louis FDIC-09-088k $2,500 June 10
Home Banking Co. Selmer, Tenn. FDIC-08-400k $25,000 June 2
Jennings State Bank
against Anne E. Justesen
Spring Grove, Minn. FDIC-08-391k $25,000 June 29
Purdum State Bank
against Michael L. Moody
Purdum, Neb. FDIC-07-249k $12,500 June 2
Securant Bank & Trust Menomonee Falls, Wis. FDIC-08-283k $2,500 June 2
Solon State Bank Solon, Iowa FDIC-09-141k $1,500 June 29
USA Bank
against Thomas Calabro
Port Chester, N.Y. FDIC-08-076k $1,000 June 11
USA Bank
against Fred A. DeCaro Jr.
Port Chester, N.Y. FDIC-08-076k $125,000 June 11
USA Bank
against Fred A. DeCaro III
Port Chester, N.Y. FDIC-08-076k $15,000 June 11
USA Bank
against Peter Keller
Port Chester, N.Y. FDIC-08-076k $1,500 June 11
USA Bank
against Barry I. Spiegler
Port Chester, N.Y. FDIC-08-076k $25,000 June 11
USA Bank
against James G. Verrillo
Port Chester, N.Y. FDIC-08-076k $15,000 June 11
USA Bank
against Ilyse Wilpon
Port Chester, N.Y. FDIC-08-076k $5,000 June 11
USA Bank
against Richard D. Zeisler
Port Chester, N.Y. FDIC-08-076k $15,000 June 11

The FDIC entered a formal written agreement on April 20 with Michigan Commerce Bank in Ann Arbor, Mich.

Also recently announcing several formal written agreements was the fed. Among other things, written agreements generally require institutions to preserve capital, improve operations and compliance, and even sometimes replace management.

Institution Location Regulatory Order # Date
American Bancorporation, American Bank of Saint Paul St. Paul, Minn. Federal Reserve Bank of Minneapolis 09-032-WA/RB-HC,
09-032-WA/RB-SM
July 22
Bank Hapoalim, B.M. Tel Aviv, Israel Federal Reserve Bank of New York, Federal Reserve Bank of Atlanta, Florida Office of Financial Regulation 09-083-WA/RB-FB,
09-083-WA/RB-FBR
July 8
Buckeye Bancshares Inc., Buckeye Community Bank Lorain, Ohio Federal Reserve Bank of Cleveland, Ohio Division of Financial Institutions 09-085-WA/RB-HC,
09-085-WA/RB-SM
July 24
Centennial Bankshares Inc. Ogden, Utah Federal Reserve Bank of San Francisco 09-081-WA/RB-HC July 20
Crescent Banking Co. Jasper, Ga. Federal Reserve Bank of Atlanta, Banking Commissioner of the State of Georgia 09-089-WA/RB-HC July 20
First Flo Corp. Florence, Colo. Federal Reserve Bank of Kansas City 09-080-WA/RB-HC July 16
North Georgia Bancorp Inc. Watkinsville, Ga. Federal Reserve Bank of Atlanta 09-098-WA/RB-HCb July 14
PAB Bankshares Inc., The Park Avenue Bank Valdosta, Ga. Federal Reserve Bank of Atlanta, Banking Commissioner of the State of Georgia 09-084-WA/RB-HC,
09-084-WA/RB-SM
July 14
Sunrise Bank Cocoa Beach, Fla. Federal Reserve Bank of Atlanta, State of Florida, Office of Financial Regulation 09-091-WA/RB-SM,
OFR Administrative File No. 0649-FI-07/09
July 22

The fed said it issued a prompt corrective action directive (Docket No. 09-087-PCA-SM) on July 28 against Warren Bank in Warren, Mich. Also hit with a prompt corrective action directive, on July 21, was Bank of Elmwood in Racine, Wis. (Docket No. 09-090-PCA-SM).

Prompt corrective actions were taken by the FDIC against Temecula Valley Bank in Temecula, Calif. (order number FDIC-09-280PCAS) on June 15 and Security Bank of North Fulton in Alpharetta, Ga. (order number FDIC-09-310PCAP) on June 30.

An order (number FDIC-08-407p) was issued on June 2 against National Motors Bank FSB in Fort Washington, Penn., by the FDIC.

The FDIC also issued an adjudicated decision and order (number FDIC-07-252e and FDIC-08-016k) to prohibit Brenda J. Vikre of Boston’s Commonwealth Co-operative Bank from further participation.

The fed issued a July 27 a consent order of prohibition (Docket No. 09-078-E-I) against Ronnie A. Jenkins, a former loan officer with Middleburg Bank in Middleburg, Va.

Removal and prohibition orders were issued by the FDIC against the following seven firms.

Institution Individual Location Order # Date
Branch Banking and Trust Co. Melody A. Owens Winston Salem, N.C. FDIC-09-012e June 2
Citizens Bank of Pennsylvania Clarissa A. Gavin Philadelphia FDIC-08-215e June 29
Citizens Bank of Pennsylvania Marcus R. Nabried Philadelphia FDIC-09-107e June 29
First Texas Bank Pamela Ruth Haynie Lampasas, Texas FDIC-08-315e June 2
Home Banking Co. Pamela S. Sagely Selmer, Tenn. FDIC-08-143e June 2
Jennings State Bank Anne E. Justesen Spring Grove, Minn. FDIC-09-390e June 29
Purdum State Bank Michael L. Moody Purdum, Neb. FDIC-07-248e June 2

The National Credit Union Administration Board announced Friday that it issued several prohibition orders, including one against former Southern Delaware Postal Employees Federal Credit Union employee Rebecca Andino, who was convicted of theft, sentenced to six months supervised work release and 12 months supervised probation, and ordered to pay $54,800 in restitution.

Rhonda Campbell, a former employee of North Star Federal Credit Union in Lima, Ohio, faced a prohibition order because she was convicted of embezzlement. Campbell was sentenced to eight months in prison and ordered to pay $105,000 in restitution.

Former Capital Power Credit Union employee Richard James Ditzel — who was convicted of embezzlement, sentenced to 33 months in prison and ordered to pay $478,992 in restitution — faced an NCUA prohibition order. Capital Power operates from Sacramento, Calif.

The agency issued a prohibition order against Richard A. Lange, the former president of Columbia Heights, Minn.-based Financial One Credit Union. Lange was convicted of embezzlement and filing false tax returns, sentenced to 21 months in prison and ordered to pay $249,691 in restitution.

Sharon Quattrone, who previously worked at CCSE Federal Credit Union in Salamanca, N.Y., also faced a prohibition order. She was convicted of a false statement to a federal credit union and sentenced to 3 years supervised release.

 

In addition, former Mid Island Federal Credit Union manager Hyacinth Richardson signed an order of prohibition. Richardson, who agreed to the order to avoid the time and cost of litigation, didn’t admit or deny fault. Mid Island is located in St. Croix, Virgin Island.

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