Independence Bank in East Greenwich, R.I., which recently filed a lawsuit against its regulators, is facing Federal Deposit Insurance Corp. claims that it violated certain Small Business Administration rules and regulations.
The FDIC, in a notice of charges and of hearing and prayer for relief document, claims that the $28.4 million-asset bank charged several fees in violation of SBA rules, including certain packaging fees.
The FDIC also claims that the bank assessed closing documentation fees for services billed on an hourly basis that were not performed by lawyers or paralegals.
“The bank made express false representations that all fees charged in connection with its SBA lending program were authorized and approved by the SBA and complied with all applicable regulations and requirements for SBA lenders, when in fact it charged prohibited fees,” the FDIC alleged.
“The bank omitted material information when it engaged in SBA lending without disclosing that it was charging fees that were prohibited by applicable SBA regulations,” the agency further claimed.
The FDIC said the next step is adjudication before a hearing officer.
Independence’s lawsuit alleges that its regulators are illegally requiring the bank to stay open despite a desire to wind down. The FDIC, for its part, has claimed that three bank executives have been “recklessly engaging in unsafe or unsound practices” tied to bridge loans.