Exhibit 10.2

 

UNITED STATES OF AMERICA

Before The

OFFICE OF THRIFT SUPERVISION

)

 

 

 

In the Matter of

)

Order No.:

SF-07-004

 

 

 

)

 

 

 

DOWNEY SAVINGS

)

Issuance Date:

August 30, 2007

 

 

   AND LOAN ASSOCIATION, F.A.,

)

 

 

 

Newport Beach, California.

)

 

 

 

 

)

 

 

 

OTS Docket No.: 06189

)

 

 

 

 

)

 

 

 

 

STIPULATION AND CONSENT TO ISSUANCE OF AN

ORDER TO CEASE AND DESIST FOR AFFIRMATIVE RELIEF

WHEREAS, the Office of Thrift Supervision (OTS), based upon information derived
from the exercise of its regulatory responsibilities, is of the opinion that
grounds exist to initiate an administrative cease and desist proceeding for
affirmative relief against Downey Savings and Loan Association, F.A., Newport
Beach, California, OTS Docket No. 06189 (Institution), pursuant to Section 8(b)
of the Federal Deposit Insurance Act (FDIA), 12 U.S.C. § 1818(b); and

WHEREAS, the Institution desires to cooperate with the OTS and to avoid the time
and expense of such administrative proceeding; and

WHEREAS, the Institution has taken corrective actions to address the
deficiencies found by the OTS, some of which the Institution asserts have been
completed, but some of which remain in progress, and the Institution wishes to
demonstrate its commitment to complete all necessary actions; and

--------------------------------------------------------------------------------

WHEREAS, the Institution enters into this Stipulation and Consent to the
Issuance of an Order to Cease and Desist for Affirmative Relief (Stipulation):
 (i) without any adjudication on the merits; (ii) without admitting or denying
that grounds exist to initiate an administrative cease and desist proceedings;
(iii) without admitting or denying the Findings of Fact, except as to
jurisdiction (¶1 below), which jurisdiction is admitted; and (iv) solely for the
purpose of resolving this matter in accordance with Rule 408 of the Federal
Rules of Evidence.

NOW, THEREFORE, the Institution hereby stipulates and agrees as follows:

1.                          Jurisdiction.

(a)                      The Institution is a “savings association” within the
meaning of Section 3(b) of the FDIA, 12 U.S.C. § 1813(b), and Section 2(4) of
the Home Owners’ Loan Act (HOLA), 12 U.S.C. § 1462(4).  Accordingly, the
Institution is an “insured depository institution” as that term is defined in
Section 3(c) of the FDIA, 12 U.S.C. § 1813(c).

(b)                     Pursuant to Section 3(q) of the FDIA, 12 U.S.C. §
1813(q), the Director of the OTS is the “appropriate Federal banking agency”
with jurisdiction to maintain an administrative cease and desist proceeding
against such a savings association.  Therefore, the Institution is subject to
the jurisdiction of the OTS to initiate and maintain a cease and desist
proceeding against it pursuant to Section 8(b) of the FDIA, 12 U.S.C. §
1818(b).  The Director of the OTS has delegated to the Regional Director of the
West Region of the OTS (Regional Director) the authority to issue cease and
desist orders where the savings association has consented to the issuance of the
orders.

2.                          OTS Findings of Fact.   The OTS has determined that
the Institution has failed to comply fully with the requirements of the Currency
and Foreign Transactions Reporting

2

--------------------------------------------------------------------------------

Act, as amended by the USA PATRIOT Act and other laws, 31 U.S.C. § 5311 et seq.
(the Bank Secrecy Act or BSA); the related BSA regulations issued by the U. S.
Department of the Treasury, 31 C.F.R. Part 103, and the OTS, 12 C.F.R. §
563.177; and the OTS regulations governing suspicious activity reports (SAR) and
other reports and statements set forth in 12 C.F.R. § 563.180.

3.                          Consent.  The Institution consents to the issuance
by the OTS of the accompanying Consent Order to Cease and Desist for Affirmative
Relief (C&D Order).  The Institution further agrees to comply with the terms of
the C&D Order upon issuance and stipulates that the C&D Order complies with all
requirements of law.

4.                          Finality.  The C&D Order is issued under the
provisions of Section 8(b) of the FDIA, 12 U.S.C. § 1818(b).  Upon its issuance
by the Regional Director, the C&D Order shall be a final order, effective and
fully enforceable by the OTS under the provisions of Section 8(i) of the FDIA,
12 U.S.C. § 1818(i).

5.                          Waivers.  The Institution waives the following:

(a)                      the right to be served with any written notice of the
OTS’s charges against it as provided by Section 8(b) of the FDIA, 12 U.S.C. §
1818(b);

(b)                     the right to an administrative hearing of the OTS’s
charges against it as provided by Section 8(b) of the FDIA, 12 U.S.C. § 1818(b);

(c)                      the right to seek judicial review of the C&D Order
including, without limitation, any such right provided by Section 8(h) of the
FDIA, 12 U.S.C. § 1818(h), or otherwise to challenge the validity of the C&D
Order;

(d)                     any and all claims against the OTS, including its
employees and agents, and any other governmental entity for the award of fees,
costs, or expenses related to this OTS

3

--------------------------------------------------------------------------------

enforcement matter, the C&D Order, or both, whether arising under common law,
the Equal Access to Justice Act, 5 U.S.C. § 504, or 28 U.S.C. § 2412; and

(e)                      the right to assert this proceeding, its consent to
issuance of the C&D Order, the issuance of the C&D Order, or any one or more of
them, as the basis for a claim of double jeopardy in any pending or future
proceeding brought by the United States Department of Justice or any other
governmental entity.

6.                          Other Governmental Actions Not Affected.  The
Institution acknowledges and agrees that its consent to the issuance of the
accompanying C&D Order is solely for the purpose of resolving certain potential
OTS administrative enforcement charges as provided above, and does not otherwise
release, discharge, compromise, settle, dismiss, resolve, or in any way affect
any actions, charges against, liability, or other administrative, civil, or
criminal proceeding that arise pursuant to this action or otherwise, and that
may be or have been brought by another governmental entity.

7.                          Miscellaneous.

(a)                      The laws of the United States of America shall govern
the construction and validity of this Stipulation and the C&D Order.

(b)                     If any provision of this Stipulation and the C&D Order
is ruled to be invalid, illegal, or unenforceable by the decision of any Court
of competent jurisdiction, the validity, legality, and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby, unless the Regional Director in his or her sole discretion determines
otherwise.

(c)                      The terms and provisions of this C&D Order shall be
binding upon, and inure to the benefit of, the parties hereto and their
successors in interest.  Nothing in this

4

--------------------------------------------------------------------------------

Stipulation or the C&D Order, express or implied, shall give to any person or
entity, other than the parties hereto, the Federal Deposit Insurance
Corporation, and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Stipulation or the C&D Order.

(d)                     The section and paragraph headings in this Stipulation
and the C&D Order are for convenience only, and such headings shall not affect
the interpretation of this Stipulation or the C&D Order.

(e)                      The terms of this Stipulation and the C&D Order
represent the final agreement of the parties with respect to the subject matters
hereof and constitute the sole agreement of the parties with respect to such
subject matters.

(f)                        This Stipulation and the C&D Order shall remain in
effect until terminated, modified, or suspended in writing by the OTS, acting
through its Director, Senior Deputy Director, Regional Director, or other
authorized representative.

8.                          Signature of Directors.

Each Director signing this Stipulation attests that he or she voted in favor of
a resolution authorizing the execution of the Stipulation.

//

//

//

//

//

5

--------------------------------------------------------------------------------

WHEREFORE, The Institution, by a majority of its directors, executes this
Stipulation and Consent to the Issuance of an Order to Cease and Desist for
Affirmative Relief intending to be legally bound hereby.

Downey Savings and Loan Association, F.A.

 

Office of Thrift Supervision

Newport Beach, California

 

West Region

 

 

 

 

 

 

Accepted by a majority of its directors:

 

By:

/s/ Michael E. Finn

 

 

 

 

Michael E. Finn

By:

 

 

Regional Director, West

 

 

 

 

/s/ Maurice L. McAlister

 

 

Dated:

August 30, 2007

 

Director Maurice L. McAlister

 

 

 

 

 

 

 

/s/ Cheryl E. Olson

 

 

 

Director Cheryl E. Olson

 

 

 

 

 

 

 

/s/ Michael B. Abrahams

 

 

 

Director Michael B. Abrahams

 

 

 

 

 

 

 

/s/ Michael D. Bozarth

 

 

 

Director Michael D. Bozarth

 

 

 

 

 

 

 

/s/ Gary W. Brummett

 

 

 

Director Gary W. Brummett

 

 

 

 

 

 

 

/s/ Gerald E. Finnell

 

 

 

Director Gerald E. Finnell

 

 

 

 

 

 

 

/s/ James H. Hunter

 

 

 

Director James H. Hunter

 

 

 

 

 

 

 

/s/ Brent McQuarrie

 

 

 

Director Brent McQuarrie

 

 

 

 

6

--------------------------------------------------------------------------------

 

/s/ Daniel D. Rosenthal

 

 

 

Director Daniel D. Rosenthal

 

 

 

 

 

 

 

/s/ Lester C. Smull

 

 

 

Director Lester C. Smull

 

 

 

 

 

 

 

/s/ Jane Wolfe

 

 

 

Director Jane Wolfe

 

 

 

 

7

--------------------------------------------------------------------------------