Federal regulators today formally reprimanded Newport Beach-based Downey Financial, ordering it to maintain higher levels of capital and take other steps to protect consumer deposits.
The Office of Thrift Supervision issued two cease-and-desist orders against Downey. One order requires the company to maintain adequate levels of capital, develop a business strategy for running the thrift unit, reduce assets, and develop a plan to sell foreclosed homes. Another order says the savings and loan unit must not pay any dividends without regulatory approval.
Thomas Prince, interim chief executive of Downey, downplayed the regulatory actions today, saying his company has been working with regulators and taking needed steps.
For example, Downey recently sold about $110 million in assets, including land in Northern California marked for a shopping center and interest in other properties.
“Clearly we are moving forward,” Prince said. “And our intent is to be around for the long-term. As it relates to consumer deposits, they are all insured up to the limits of the FDIC, and we work closely with our depositors to make sure they understand their insurance coverage.”
Prince said consumers withdrew more than $500 million in deposits in July, but they put more than that back in Downey in August. The company has nearly $10 billion in deposits.
The cease and desist orders and Downey’s response can be found
And here is the long Downey saga…
