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Federal Reserve issues enforcement action against BankEast

By Jeaneane Payne

The Federal Reserve has, once again, issued an enforcement action against BankEast of Knoxville. It was determined by the Board of Governors of the Federal Reserve System that BankEast was undercapitalized. Further, the bank failed to submit to the Board of Governors an acceptable capital restoration plan as required by the FDI Act.

The Board of Governors has given the BankEast 90 days to increase the bank's equity through the sale of shares or contributions to surplus in an amount sufficient to make the bank adequately capitalized. In addition, the bank must enter into and close a contract to be acquired by a depository institution holding company or combine with another insured depository institution.

Under the enforcement action, BankEast cannot solicit or accept new deposit accounts without the prior written approval of the Federal Reserve Bank of Atlanta. Further, the bank has been restricted from paying bonuses to senior executive officers or increasing their compensation.

Published December 29, 2010

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