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FDIC Cites OneUnited Bank for Violations


The FDIC didn't make any bank seizures yesterday, but it did release October enforcement actions. There were 14 cease and desist orders, and one of those 14 was issued against OneUnited Bank. The order (pdf) lists several unsafe and unsound activities. A few of these are included below:
  • Operating with an inadequate level of capital for the kind and quality of assets held
  • Failing to provide adequate supervision and direction over the officers of the Bank
  • Engaging in speculative investment practices and failing to prudently diversify its equities portfolio
  • Operating without sufficient liquidity, in light of the asset and liability mix and overall financial condition of the Bank
  • Committing violations of law and regulation
OneUnited has long been offering a high yield online savings account (see post). The APY is currently 3.75%. One interesting thing to note is that OneUnited increased the yield in early October from 3.26% to 3.75% APY. Also, the bank was recently offering a very competitive 4.25% 5-month CD at its branches (see post).

In the two years since I've been reporting on OneUnited, it has not built a reputation of a well-run internet bank. Many readers have reported problems with the bank's online application, the online banking and with their customer service. OneUnited's policy of crediting interest quarterly is another issue.

OneUnited Bank has average financial ratings for soundness: 3 stars (adequate) at BauerFinancial and 3 stars (performing) at Bankrate.com. However, these ratings are based on 6/30/08 data. The FDIC just released 9/30/08 data, so it'll be interesting to see how the ratings change. This is one example of how these ratings can miss a lot.
Related Pages: OneUnited Bank, Boston, Miami, Los Angeles

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  |     |   Comment #1
Boycott any and all banks that pay their interest quarterly.

Quarterly interest payments are unfair to the depositor, since the bank itself gets its interest payments on its loans monthly.
  |     |   Comment #2
they will be gone within 90 days. Read that order! Holy Sh!t
  |     |   Comment #3
This bank has offered among the highest online savings rates for a while. They seem to have offices in Boston, Los Angeles, and Miami. They apparently are getting a lot of funding from residents in major metropolitan areas. They have a ton of glowing company newsletters on their website, but there is, of course, no mention about the FDIC action. I wonder why? Maybe it might scare off a lot of current and potential customers? I have noticed that their rates were always above the other offerings, but I never was lured into opening an account with them. Not to sound negative about inner city customers, but when you deal a lot with a customer base that have suspect credit histories, your accounting books will not look good (not unless you fake the information).
  |     |   Comment #4
Dear bankdeals,
A quick search on this site shows that you have dedicated up to SEVEN full posts for OneUnited products/promotions, not to mention countless other posts that advertise OneUnited’s high rates. The first negative comments begin to appear in your second post(June 2006) and these complains have grown steadily in both seriousness and quantity in your subsequent posts. I’m shocked that you are still providing free publicity for this bank as recent as November 2008 (4.25% CD) despite the clear warnings in the comments.

I agree that consumers should be diligent and have the freedom to decide where to put their money. I also understand and appreciate your good intention to provide information about the best deals out there. However, I think that OneUnited does not deserved the continued favorable coverage on your blog. I’m glad that you post about the FDIC action and hope that you will keep us up to date, but please STOP posting any deals offered by OneUnited.


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