Fed Finally Deploys Source-of-Strength Authority
In its first action imposing source-of-strength requirements in recent high-risk situations, the Federal Reserve today issued an enforcement action against FTX-connected Farmington State Bank and its holdco, FBH Corp. The action cites improper changes to the bank’s business plan without notifying or receiving prior supervisory approval and prohibits capital distributions as well as engaging in share repurchases, dissipating cash assets, or acquiring additional brokered deposits without prior supervisory approval. It also stipulates that Farmington and FBH preserve records and submit compliance progress reports.