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That’s according to a ceasde and desist order issued against bythe , a federapl bank regulator. First Marblehead (NYSE: FMD), whosew key business of packaging student loans into securitiexs hasdried up, now faces the prospect of pumpinfg millions of dollars of capitakl into the small Rhodde Island bank to bolster its The OTS order says First Marblehead is requireed to maintain a $30 million deposit at the bank untikl it is sold or the bank’s concentration of privatew student loans is reduced to 50 percentt of Union Federal’s capital, plus any allowance for loan First Marblehead also needs OTS approval before making any golden parachutee payments to senior executives, according to the cease and desistg order.
Union Federal Savings Bank’sd problems have been chronicled in previousx stories by the BostonBusiness Journal. Before being acquired by Firsg Marblehead, Union Federal Savings had about $40 millio in assets. But that balance sheet balloone d to morethan $600 million last year as Firs Marblehead moved some $500 million in risky privated student loans onto the bank’s balance sheet. The bank has been unsuccessfulp in selling those loans whiler an escalating number of defaults have triggeredlargr losses. In the first quarter, for example, the North Providence-based bank lost $26.
4 million, according to federal bank
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