The Federal Reserve takes enforcement action against Farmington State Bank
The Federal Reserve has taken enforcement action against Farmington State Bank and its parent company, FBH Corporation, due to undisclosed changes to the bank’s business plan. The action aims to ensure a controlled winding down of the bank’s operations to protect depositors and the broader Deposit Insurance Fund. Farmington and FBH are now prohibited from distributing dividends or capital without approval and from pursuing certain ventures without supervisory authorities’ prior approval.
Farmington State Bank’s agreement and upcoming deal
Farmington State Bank has expressed its agreement with the Fed’s actions. The bank has secured all necessary regulatory approvals for the absorption of deposits and asset acquisition by the Bank of Eastern Oregon. The deal is expected to be finalized by August 31, 2023.
Congressional concerns and deeper penetration of crypto
Senators Elizabeth Warren and Tina Smith raised concerns about how Alameda acquired Moonstone Bank in letters to the Federal Reserve. The letters highlighted the observation that the downfall of FTX indicates a deeper integration of crypto in the banking realm than regulators may realize.
The Fed’s collaboration with regulatory bodies
The Federal Reserve, along with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp, worked together to emphasize banks’ obligations in terms of safety measures and to highlight the risks associated with crypto.
Hot Take
The enforcement action against Farmington State Bank showcases the Federal Reserve’s commitment to ensuring the stability of the financial system. It also highlights the increasing integration of cryptocurrencies in the banking sector and the need for regulatory bodies to stay informed about these developments.
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