The U.S. Office of Thrift Supervision ordered First Marblehead Corp. on July 2 to reduce its concentration of private student loans, according to published reports.
The move is designed to lower risk, but could cause a significant loss.
Reports said that First Marblehead stated the market disruptions have kept Union Federal Savings Bank from securitizing new loans since September 2007, resulting in more loans on the books then expected when they purchased the bank with OTS approval in late 2006.
According to the regulatory filing, First Marblehead agreed to OTS oversight while Union Federal agreed to a cease-and-desist order.
The agreements set minimum capital and deposit requirements for the bank, and require a new business plan to be submitted by Union Federal within 60 days covering the fiscal period through 2012. Additionally, OTS approval must be granted before Union Federal distributes any golden parachute payments to departing officials.
First Marblehead Agrees to OTS Oversight
Published July 07, 2009, 3:10 p.m. EDT
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