First Marblehead bank runs afoul of regulators
July 23, 2009
By MoneyAisle
According to the Boston Business Journal, Union Federal Savings Bank, a Rhode Island bank owned by First Marblehead Corp. of Boston, has an undue amount of student loans and insufficient capital to cover losses.
The Office of Thrift Supervision has issued a cease and desist order that says “First Marblehead is required to maintain a $30 million deposit at the bank until it is sold or the bank’s concentration of private student loans is reduced to 50 percent of Union Federal’s capital, plus any allowance for loan losses.”
First Marblehead began having problems last year after it was unable to sell over $500 million worth of risky student loans and defaults that led to substantial losses.