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FDIC Enforcement Decisions and Orders

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   [12,167] In the Matter of The Chinese American Bank, New York, New York, Docket No. 03-218b (3-16-04).

   A cease and desist order was issued, based on findings by the FDIC that it had reason to believe that respondent was engaged in unsafe and unsound practices.

   [.1] Regulation O—Compliance Required

   [.2] Regulation O—Written Policy Required

   [.3] Compliance Committee—Establishment Required

   [.4] Shareholders—Disclosure of Cease and Desist Order Required

In the Matter of
THE CHINESE AMERICAN BANK
NEW YORK, NEW YORK
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST

FDIC-03-218b

   THE CHINESE AMERICAN BANK, New York, New York, ("Insured Institution"), having been advised of its right to a Notice of Charges and of Hearing detailing the unsafe or unsound banking practices and violations of law and/or regulations alleged to have been committed by the Insured Institution and of its right to a hearing on the alleged charges under section 8(b)(1) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. § 1818(b)(1), and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST ("CONSENT AGREEMENT") with counsel for the Federal Deposit Insurance Corporation ("FDIC"), dated March 16, 2004, whereby solely for the purpose of this proceeding and without admitting or denying the alleged charges of unsafe or unsound banking practices, the Insured Institution consented to the issuance of an ORDER TO CEASE AND DESIST ("ORDER") by the FDIC.

   The FDIC considered the matter and determined that it had reason to believe that the Insured Institution had engaged in unsafe or unsound banking practices and had committed violations of law and/or regulations. The FDIC, therefore, accepted the CONSENT AGREEMENT and issued the following:

ORDER TO CEASE AND DESIST

   IT IS HEREBY ORDERED that the Insured Institution, its directors, officers, employees, agents, and other institution-affiliated parties (as that term is defined in Section 3(u) of the Act, 12 U.S.C. § 1813(u)), and its successors and assigns cease and desist from the following unsafe or unsound banking practices and violations:

       (a) Operating in violation of section 22(h) of the Federal Reserve Act, as amended, 12 U.S.C. § 375b, and section 215.4(c) of Regulation O ("Regulation O") of the Board of Governors of the Federal Reserve System, 12 C.F.R. § 215.4(c), made applicable to state nonmember banks by section 18(j)(2) of the Act, 12 U.S.C. § 1828(j)(2); and section 337.3 of the FDIC's Rules and Regulations, 12 C.F.R. § 337.3;

       (b) Operating in violation of section 23A of the Federal Reserve Act, as amended, 12 U.S.C. § 371c, made applicable to state


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       nonmember banks by section 18(j)(1) of the Act, 12 U.S.C. § 1828(j)(1);

       (c) Operating in violation of the State of New York legal lending limit restrictions as set forth in New York Banking Law Section 103; and

       (d) Operating with a board of directors which has failed to provide adequate supervision over and direction to the active management of the Insured Institution.

   IT IS FURTHER ORDERED that the Insured Institution, its institution-affiliated parties, and its successors and assigns, take affirmative action as follows:

   [.1] (a) Within ten (10 days from the effective date of this ORDER, the Insured Institution shall develop and submit a plan ("Plan") acceptable to the Regional Director of the FDIC New York Regional Office ("Regional Director") to correct any violations of Regulation O and section 23A of the Federal Reserve Act, and the lending limits imposed by the laws of the State of New York, New York Banking Law Section 103 (the "State Lending Limits").

   (b) The Insured Institution shall not engage or participate, directly or indirectly, in any violations of Regulation O and sections 23A and 23B of the Federal Reserve Act, and the State Lending Limits.

   (c) The Insured Institution shall submit evidence of the actions taken to comply with the Plan submitted pursuant to Paragraph 1(a) of this ORDER to the Regional Director within ten (10) days of taking each action.

   [.2] (a) Within thirty (30) days from the effective date of this ORDER, the Insured Institution shall develop and submit to the Regional Director for review and comment a written policy ("Policy") to ensure that the Insured Institution does not engage in transactions or payment of funds which may violate Regulation O, 12 C.F.R. Part 215, and sections 23A and 23B of the Federal Reserve Act, 12 U.S.C. §§ 371c and 371c-1. Among other things, the Policy shall limit the payment of any management, consulting, or other fees or funds of any nature, directly or indirectly, to or for the benefit of CAB Holding, LLC, Wilmington, Delaware, a registered bank holding company and the Insured Institution's holding company, to only those fees or funds paid in connection with services performed by CAB Holding, LLC on behalf of or for the benefit of the Insured Institution.

   (b) Upon receipt and consideration of the Regional Director's comments on the Policy submitted and reviewed pursuant to Paragraph 2(a) of this ORDER, the Insured Institution shall adopt and implement the Policy within ten (10) business days of approval and note such in the minutes of the board of directors.

   [.3] Within thirty (30) days from the effective date of this ORDER, the board of directors shall establish a committee comprised of board members (the "Board Compliance Committee") with the responsibility to ensure that the Insured Institution complies with the provisions of this ORDER. At least two-thirds of the members of the Board Compliance Committee shall be independent, outside directors. The Board Compliance Committee shall report monthly in writing to the entire board of directors, and a copy of each monthly report and any discussion relating to such report or to this ORDER shall be included in the minutes of the board of directors. Nothing contained herein shall diminish the responsibility of the entire board of directors to ensure compliance with the provisions of this ORDER.

   [.4] Following the effective date of this ORDER, the Insured Institution shall send to its sole shareholder, CAB Holding, LLC, or otherwise furnish a description of this ORDER in conjunction with the Insured Institution's next shareholder communication. The description shall fully describe the ORDER in all material respects.

   5. Notwithstanding any provision of this ORDER to the contrary, the Regional Director may, in his sole discretion, grant written extensions of time to the Insured Institution to comply with any provision of this ORDER.

   6. The provisions of this ORDER shall not bar, estop or otherwise prevent the FDIC, or any other federal or state agency or department from taking any other action affecting the Insured Institution or any of its current or former institution-affiliated parties.

   7. The provisions of this ORDER shall be binding upon the Insured Institution, its directors, officers, employees, agents, successors, assigns, and other institution-affiliated parties of the Insured Institution.

   8. This ORDER shall become effective upon the date of its issuance as set forth below.
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   9. The provisions of this ORDER shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this ORDER shall have been modified, terminated, suspended, or set aside by the FDIC.

   Pursuant to delegated authority.

   Dated: March 16, 2004.

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Last Updated 6/13/2004 legal@fdic.gov