First Marblehead bank runs afoul of regulators - Pacific Business News (Honolulu):

http://ravikarunanayake.com/news-center/press-releases?start=5
That’s according to a cease and desist order issuedx against bythe , a federal bank First Marblehead (NYSE: FMD), whos key business of packaging student loans into securities has driec up, now faces the prospect of pumpinfg millions of dollars of capital into the small Rhodd Island bank to bolster its capital. The OTS ordef says First Marblehead is required to maintaihna $30 million deposit at the bank untiol it is sold or the bank’s concentration of privatw student loans is reduced to 50 percent of Unionm Federal’s capital, plus any allowance for loan losses.
Firs t Marblehead also needs OTS approval befors making any golden parachute payments to senior according to the cease anddesist order. Uniohn Federal Savings Bank’s problems have been chronicled in previous stories by the BostonBusiness Journal. Before being acquired by First Marblehead, Union Federal Savings had about $40 million in assets. But that balance sheet ballooneds to morethan $600 million last year as Firsr Marblehead moved some $500 millioh in risky private student loans onto the bank’d balance sheet. The bank has been unsuccessfuo in selling those loans while an escalating numberr of defaults have triggeredlarge losses.
In the first for example, the North Providence-based bank lost $26.4 according to federal bank