Federal regulators are requiring a small Chicago-based bank to overhaul its operations after its former CEO was convicted of bribery in connection with loans to onetime Trump campaign chair Paul Manafort.
The $815 million-asset Federal Savings Bank agreed to make improvements to its risk management controls, its consumer compliance program and its anti-money- laundering protections as part of an agreement with the Office of the Comptroller of the Currency.
The agreement, which was made public Thursday, did not mention either Manafort or Stephen Calk, the bank’s former CEO, by name. It also did not list any financial penalty to be paid the bank.
After a criminal
During and shortly after the 2016 presidential campaign, Federal Savings made two loans to Manafort totaling $16 million. Prosecutors alleged that Calk approved the loans in return for assistance in snagging a senior role in the Trump administration, though he ultimately did not land a job. Manafort was later imprisoned on financial fraud charges, but Trump pardoned him before leaving office.
Calk’s brother, John Calk, is now chairman and CEO of the bank. He signed the Oct. 29 agreement with the OCC.
In an emailed statement, John Calk said that Federal Savings has been "working closely with the Office of the Comptroller of the Currency to upgrade our policies and procedures" and that the "enhancements have and will make the bank even stronger."
Under the agreement, the OCC is requiring the bank’s board to create a compliance committee composed mostly of directors who do not work for the bank. The committee will have to file a report with the OCC every month detailing the bank’s progress toward addressing regulators’ concerns.
Federal Savings will also have to create a new risk management system that includes independent reviews and internal audits. And the bank will need to develop a new program to ensure that it is complying with all consumer protection rules.
The agreement also requires an overhaul of how the bank complies with the Bank Secrecy Act and other anti-money-laundering laws. One issue at Stephen Calk’s trial was whether Federal Savings was adequately factoring Manafort’s income from sources in Eastern Europe into its credit decisions.
