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Financial Services Law Insights and Observations

FDIC releases February enforcement actions

Bank Regulatory Federal Issues FDIC Enforcement Flood Disaster Protection Act Flood Insurance

On March 31, the FDIC released a list of administrative enforcement actions taken against banks and individuals in February. The FDIC made public five orders and one notice, including “three orders of prohibition from further participation, one order to pay civil money penalty, one Section 19 order, and one Notice of Charges.”

The actions include a civil money penalties order against a Wisconsin-based bank related to alleged violations of the Flood Disaster Protection Act (FDPA). The FDIC determined that the bank had engaged in a pattern or practice of violating the FDPA by failing to (i) obtain flood insurance on a building securing a designated loan at the time of origination of two loans; (ii) obtain adequate flood insurance at the time of origination of seven loans; (iii) follow lender-placed flood insurance procedures for one loan; (iv) provide borrowers with a Notice of Special Flood Hazard and Availability of Federal Disaster Relief Assistance when making, increasing, extending, or renewing a loan on four occasions; and (v) provide borrowers with a Notice of Special Flood Hazard and Availability of Federal Disaster Relief Assistance within a reasonable time prior to the completion of the transaction on one loan.