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Financial Services Law Insights and Observations

FDIC releases September enforcement actions

Federal Issues FDIC Enforcement Flood Disaster Protection Act Civil Money Penalties RESPA TCPA Bank Secrecy Act Bank Compliance

Federal Issues

On October 25, the FDIC announced its release of a list of administrative enforcement actions taken against banks and individuals in September. According to the press release, the FDIC issued 24 orders, which include “one consent order; five removal and prohibition orders; six assessments of civil money penalty; three voluntary terminations of deposit insurance; six section 19 orders; and three terminations of orders of restitution.”

Among other actions, the FDIC assessed separate civil money penalties (CMPs) against four banks for alleged violations of the Flood Disaster Protection Act:

  • New Jersey-based bank CMP: Failure to (i) notify borrowers that they should obtain flood insurance; and (ii) follow force-placement flood insurance procedures;
  • Wisconsin-based bank CMP: Failure to (i) maintain flood insurance coverage for the term of a loan; (ii) follow force-placement flood insurance procedures; and (iii) provide written notice to borrowers concerning flood insurance coverage prior to extending, increasing, or renewing a loan;
  • Wisconsin-based bank CMP: Failure to (i) follow escrow requirements for flood insurance; and (ii) provide borrowers with notice of the availability of federal disaster relief assistance;
  • Wisconsin-based bank CMP: Failure to (i) obtain flood insurance coverage on loans at the time of origination; (ii) obtain adequate flood insurance; (iii) follow escrow requirements for flood insurance; (iv) follow force-placement flood insurance procedures; and (v) provide borrowers with notice of the availability of federal disaster relief assistance.

The FDIC also assessed a CMP against an Oregon-based bank for allegedly violating RESPA and the TCPA by (i) placing telemarketing calls to consumers listed on the Do-Not-Call registry; and (ii) using an automated dialing system to send pre-recorded calls or text messages to consumers’ cell phones.

Additionally, the FDIC entered a notice of charges and hearing against a Georgia-based bank relating to alleged weaknesses in its Bank Secrecy Act compliance program.

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