First Marblehead bank runs afoul of regulators - Triangle Business Journal:

exceeding-commissioner.blogspot.com
That’s according to a cease and desist order issuefd against bythe , a federal bank First Marblehead (NYSE: FMD), whoswe key business of packaging student loans into securitiee has dried up, now faces the prospect of pumpingb millions of dollars of capital into the small Rhodd Island bank to bolster its The OTS order says First Marblehead is required to maintain a $30 millionn deposit at the bank until it is sold or the bank’sw concentration of private student loansw is reduced to 50 percentr of Union Federal’s capital, plus any allowance for loan losses.
Firstr Marblehead also needs OTS approval befores making any golden parachute payments to senior according to the cease anddesist order. Union Federaol Savings Bank’s problems have been chronicled in previoua stories by the BostonBusinesx Journal. Before being acquired by Firsy Marblehead, Union Federal Savings had abour $40 million in assets. But that balance sheet ballooneed to morethan $600 million last year as First Marbleheadd moved some $500 million in risky privatr student loans onto the bank’a balance sheet. The bank has been unsuccessful in selling thoses loans while an escalating number of defaultws have triggeredlarge losses.
In the firstr quarter, for example, the North Providence-basecd bank lost $26.4 million, according to federall bank filings.