InfoBytes Blog
Fed issues enforcement action to two banks after examinations
On October 21, the Fed executed a written agreement between itself, the State of Washington Department of Financial Institutions (WDFI), and a bank holding company and its subsidiary state-chartered bank (respondents). The agreement addressed deficiencies with respect to the respondents’ consumer compliance risk management program identified in recent examinations conducted by the San Francisco Fed and the WDFI. Pursuant to the agreement, respondents are required to (i) take corrective actions to ensure compliance with federal and state laws, rules and regulations, and (ii) improve their financial soundness and risk management practices.
The agreement included the strengthening of board oversight, the retention of independent third parties to review corporate governance and consumer compliance programs, and the development of comprehensive plans to address deficiencies. Respondents must also submit written policies and procedures to improve lending and credit risk practices, establish effective loan grading and review programs, and maintain an adequate allowance for credit losses. Additionally, respondents are required to revise their code of ethics and conflicts of interest policy, enhance their liquidity risk management program, and develop a capital plan to ensure sufficient capital levels. Lastly, the agreement restricts respondents’ ability to declare dividends, engage in share repurchases, incur or increase debt, and make capital distributions without prior regulatory approval.