The Federal Reserve (Fed) has initiated regulatory measures against Washington-based Farmington State Bank and its holding company, FBH Corporation, following undisclosed modifications to the bank’s operational strategy. Formerly recognized as Moonstone Bank, it had significant connections with FTX’s trading arm, Alameda Research.
On Aug. 17, the Fed explained that the intention behind these measures is to manage a systematic cessation of the bank’s activities, crucial for safeguarding the bank’s clients and the overarching Deposit Insurance Fund. Furthermore, both Farmington and FBH are now explicitly restricted from dispersing dividends, decreasing monetary assets, or embarking on specific business pursuits without prior consent from their overseeing bodies.
Responding to the Fed’s decisions, Farmington State Bank concurred in their public announcement. They also unveiled that, “All critical regulatory permissions related to the transition of deposits and asset purchase by the Bank of Eastern Oregon from Farmington State Bank are in place. The transaction is expected to conclude by Aug. 31, 2023.”
In the broader context, this event gained attention in the US Congress. Senators Elizabeth Warren of Massachusetts and Tina Smith of Minnesota recently wrote to the Federal Reserve, seeking extensive information regarding Alameda’s acquisition of Moonstone Bank.
These Congressional correspondences highlighted a crucial insight, stating, “While the banking industry has largely stayed resilient amid the crypto market’s recent decline, FTX’s failure suggests a more profound crypto integration in banking than regulators might perceive.”
Reaffirming their commitment to ensuring financial stability, the Fed collaborated with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp (FDIC) to emphasize the responsibilities banks have regarding safety and to bring attention to the potential risks associated with cryptocurrencies.