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

sucujovide.wordpress.com
That’s according to a cease and desisr order issued against bythe , a federal bank regulator. First Marblehead (NYSE: whose key business of packaging student loana into securities hasdried up, now faces the prospecg of pumping millions of dollars of capital into the small Rhodee Island bank to bolster its capital. The OTS ordedr says First Marblehead is requirec to maintaina $30 million deposif at the bank until it is sold or the bank’s concentrationh of private student loans is reducecd to 50 percent of Union Federal’es capital, plus any allowance for loan losses.
Firsg Marblehead also needs OTS approval before making any goldenb parachute payments tosenior executives, according to the ceasee and desist order. Union Federal Saving Bank’s problems have been chroniclefd in previous stories by the BostonBusinesas Journal. Before being acquired by First Marblehead, Union Federal Savingsa had about $40 million in But that balance sheet ballooned to morethan $600 millionb last year as First Marblehead moved some $500 million in risku private student loans onto the bank’sd balance sheet. The bank has been unsuccessful in sellinf those loans while an escalating numbert of defaults have triggeredlarge losses.
In the first quarter, for example, the North Providence-basex bank lost $26.4 million, according to federal bank filings.