Federal Reserve Bans Former Bank CFO from Industry for Misuse of TARP Funds

The Board of Governors of the Federal Reserve System ("FRB") announced the issuance of a Consent Order of Prohibition against a former President and Chairman of the Board of a bank holding company, Calvert Financial Corporation. In addition to consenting to the FRB's order, the former President pled guilty to a criminal charge in connection with the case.

According to the Consent Order, Darryl Woods engaged in violations of law in connection with his use of $1,037,000 in bailout funds received by Calvert through the Troubled Asset Relief Program ("TARP"). The Consent Order states that roughly one-third, or approximately $381,000, of the TARP funds was used to purchase a luxury condominium (although the loan appeared to have been made by a banking subsidiary of Calvert, Mainstreet Bank). Additionally, the Order states that Woods failed to disclose the purchase of the condominium when later responding to a use-of-funds inquiry from the Office of the Special Inspector General for TARP ("SIGTARP"). The Consent Order banned the former chief financial officer and director from the banking industry, and he was sentenced to a term of probation and ordered to pay restitution and a fine.The above sanctions were imposed even though there was no suggestion in the Order that the loan violated the insider lending provisions (Regulation O), nor is there any indication that the bank holding company suffered a loss as a result (although Calvert and Mainstreet later entered into a Written Agreement with the FRB).

See: FRB Consent Order.