Feds tell bank: no more student loans

NORTH PROVIDENCE, R.I. (AP/WPRI) - A Rhode Island bank has been ordered by federal regulators to stop making student loans.

The U.S. Office of Thrift Supervision said Monday that North Providence-based Union Federal Savings Bank must stop making the loans after the bank’s parent company was ordered to lessen its reliance on the private lending packages.

Union Federal and its parent, Boston-based First Marblehead Corp., agreed to oversight by the OTS and accepted a cease-and-desist order.

Under the agreement, the bank must either boost capital on hand or sell some of its student loan portfolio.

The agreements set minimum capital and deposit requirements for Union Federal.

According to the Rhode Island Department of Business Regulation, current loans at the bank are not affected and customers' deposits are not in jeopardy.

First Marblehead’s CEO says the company is working hard to address the issues.