The ordinance requires the Federal Savings Bank to establish a compliance committee of at least three members. The majority of the panel should not be employed by the bank.
The enforcement action comes four months after former chief executive officer Stephen Calk was convicted by a federal jury in New York of granting $ 16 million in bank home loans to the former campaign manager of Trump, Paul Manafort, following Donald Trump’s 2016 election victory in an ultimately unsuccessful attempt. land a high-level position in the Ministry of Defense. Calk is expected to be sentenced in January. His conviction for financial institution corruption carries a maximum sentence of 30 years in prison.
The bank eventually wrote off $ 12 million from that total.
His brother John Calk is now President and CEO. Stephen Calk held 66% of the shares in the bank’s holding company when he was forced to step down from his management position.
In an emailed statement, John Calk said, “As the Federal Savings Bank continues to experience significant business growth, we have been working closely with the Office of the Comptroller of the Currency to upgrade our policies and procedures. . These improvements have made and will make the bank even stronger as we help our clients realize the American dream of homeownership. “
The written agreement does not frame the situation that way. “The Comptroller of the Currency … has found unsafe or misguided practices, including those relating to: (i) risk management; (ii) the Bank’s consumer compliance program and violations of any law, rule or regulation, including those related to the Real Estate Settlement Procedures Act and the Loan Truth Act; and (iii) compliance with the law on banking secrecy.
The agreement requires the bank to strengthen its risk management practices, including ensuring that internal audit is independent, fully staffed, and reports to the board or special committee.
The bank must also improve its treatment of consumers, including ensuring that it monitors inappropriate behavior by loan officers “to identify loan losses, loan reversals and other forms of predatory lending and misconduct. of employees “, according to the agreement. It should also establish processes to identify violations of fair lending rules.
And it needs to strengthen its capabilities to detect money laundering and other customer abuses of the bank.
Federal Savings Bank is not your typical commercial or community bank. It is strictly a mortgage lender and works the same as non-bank mortgage companies like the Chicago Guaranteed Rate. She sells most of the loans she takes out in the secondary market and specializes in mortgages guaranteed by the Department of Veterans Affairs and the Federal Housing Administration. Assets on its balance sheet totaled just $ 861 million as of September 30, although it makes home loans nationwide.
Last year, it issued $ 11.8 billion in mortgages, according to the bank’s website. It promotes itself as veteran owned with an emphasis on home loans to veterans and military.
So the bank is an unusual cash cow. It employs more than 1,700 people nationwide, including a few hundred at its Chicago headquarters. Net profit in the first three quarters of 2021 was $ 45 million, well above what a typical bank generates with less than $ 1 billion in assets.
So far, in 2021, the bank has paid out that exact amount – $ 45 million – in dividends to shareholders, according to its quarterly filing with the Federal Deposit Insurance Corp.
Stephen Calk remained 66% owner at the end of 2020, according to a filing with the Federal Reserve. Assuming he still is, that would entitle him to $ 30 million of those dividends. John Calk owns 28.4% of the shares. The two partners held 95% of the capital at the end of 2020.
A spokesperson did not respond when asked if Stephen Calk was still the majority owner.