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Financial Services Law Insights and Observations

Fed issues cease and desist order against California bank

Bank Regulatory Federal Reserve Cease and Desist Enforcement California

On January 18, the Federal Reserve Board issued a cease and desist order against two California-based bank holding companies (companies) and their jointly-owned bank, due to “additional safety and soundness deficiencies at the Bank, including with respect to unsecured loans,” following the termination of a February 2021 written agreement. According to the Fed’s order, “the Bank is currently operating without a permanent Chief Executive Officer, and Chief Financial Officer, and a sufficient number of board members, which are vital to the safe and sound operations of the Bank in light of the numerous remedial requirements of the Written Agreement.” The order requires, among other things, that the bank, within 60 days, submit written lending and credit administration policies and procedures and retain an independent third party to assess the adequacy of the bank’s compensation governance, policies, procedures, and internal controls. The order imposes no financial penalty.

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