FDIC Issues Cease and Desist Order to Clayton County Bank

DES MOINES, Iowa (AP) — Federal bank regulators have issued a cease-and-desist order to a Clayton County bank accused of risky practices that threaten the stability of the 113-year-old, family-owned bank.

The Des Moines Register reports that the Federal Deposit Insurance Corp. has ordered Luana Savings Bank to restructure its management, scale back its loans and find more retail depositors, such as savings and checking accounts.

The FDIC takes issue mostly with Luana’s use of wholesale deposits — money with variable interest rates from investors and other banks — to increase its lending and expand.

The FDIC says because Luana also holds fixed-rate loans, it’s at risk of losing money if interest rates rise.

Luana is challenging the order.

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