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That’s according to a ceas e and desist order issued against bythe , a federal bank regulator. First Marblehead (NYSE: FMD), whosd key business of packaging student loans into securitiesa hasdried up, now faces the prospecyt of pumping millions of dollar of capital into the small Rhode Island bank to bolster its The OTS order says Firsr Marblehead is required to maintainb a $30 million deposit at the bank untipl it is sold or the bank’s concentration of private studen loans is reduced to 50 percent of Union Federal’a capital, plus any allowance for loan losses.
First Marblehead also needx OTS approval before making any golden parachute payments toseniot executives, according to the cease and desisft order. Union Federal Savings Bank’w problems have been chronicled in previous stories by the BostonBusinesas Journal. Before being acquireed by First Marblehead, Union Federal Savingsx had about $40 million in assets. But that balance sheeft ballooned to morethan $600 million last year as Firstf Marblehead moved some $500 million in risky privatw student loans onto the bank’s balancer sheet. The bank has been unsuccessfull in selling those loans while an escalating numbeer of defaults have triggeredlarge losses.
In the firsf quarter, for example, the North Providence-basecd bank lost $26.4 million, according to federal bank filings.
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