As you are aware, the Subcommittee on Financial Institutions Supervision, Regulation and Insurance is conducting an ongoing study of various banking issues raised by the Comptroller of the Currency's report on T. Bertram Lance. In a supplemental report issued by the Comptroller on September 7, certain questions involving correspondent banking relationships of the Northwest Georgia Bank, Ringgold, Georgia and the Cohutta Banking Company of Chatsworth, Georgia were referred to your office. I would appreciate a report on the FDIC's findings regarding this referral and any other issues relating to these banks which have come to your attention. FJStG:mLr --No reply received at time of printing. Sincerely, and St Germain Chairman SUMMARY OF ACTIONS TAKEN BY THE FEDERAL RESERVE UNDER THE FINANCIAL INSTITUTIONS SUPERVISORY ACT of 1966 (1977 to 1972) Orders and Agreements Executed by the Board of Governors pursuant to 2. Written Agreement upon consent. High volume of classified loans, liquidity problems, accruing interest on delinquent loans, excessive Cease and Desist Order. Violation of Bank Holding Company Act, i. e., increasing ownership in second tier holding company without 4. Notice of Charges issued - hearing pending; excessive fees, bonuses, dividends to controlling shareholder. Holding company - total assets $1.8 billion. Written Agreement upon consent. Violation of Section 3 of Bank Notice of Charges issued hearing pending; bootstrap, subordinated notes outstanding to public with questionable support, excessive leverage. 1976 Cease and Desist Order upon consent. Violation of Regulation Y and Bank Holding Company Act. 2. 3. 4. Cease and Desist Order upon consent. Bootstrap control change. Holding company issuing commercial paper without ability to repay. Holding company - total assets $989 million. Written Agreement. Failure to comply with Board divestiture order. Cease and Desist Order upon consent. Excessive marginal loans, weak capital position, lack of adequate credit documentation, imprudent credit extensions. Holding company - total assets $13 million. Cease and Desist Order upon consent. Violation of Section 3 of Bank Cease and Desist Order upon consent. Excessive marginal loans, extensive out-of-area lending, high percentage of classifications, critical liquidity. Cease and Desist Order upon consent. Violations of Federal Reserve Cease and Desist Order upon consent. Violation of Section 4 of Bank 9. Cease and Desist Order upon consent. Violation of Section 3 of Bank Holding Company Act. Bank total deposits $5 million. Temporary Order served action mooted by bank stock foreclosure. Board sought removal of president and shareholder for personal 10. Holding company - total assets $54.1 million. Cease and Desist Order upon consent. Subject: Violations of Regulation Y, unsafe and unsound practices in the form of insider loans and letters of credit to borrowers who were not creditworthy, and the placement of some of these credits into subsidiary banks. Order: Prohibited the issuance of letters of credit and making, guaran teeing, or participating in loans without Board approval; prohibited further lending to insiders who were not creditworthy; provided for a Committee to proceed with the collection of bank debts, and a trustee 13. Bank total deposits $7.8 million) Cease and Desist Orders upon consent. Subject: Loans to insiders who were not creditworthy, insufficient documentation on loans, failure to institute aggressive loan collection program. Orders: Prohibited further insider lending, set up a Loan Committee and required it to submit collection progress reports to Federal Reserve Bank periodically; provision for appointment of trustee if collection program was not successful. Holding company - total assets $2 million. Cease and Desist Order upon consent. Subject: Holding company was involved in a bootstrapping transaction whereby it repurchased sufficient quantities of its own shares to render Order: Required principals responsible for bootstrap to make capital |