Federal Reserve Board issues enforcement action with Small Business Bank and announces termination enforcement actions with BNP Paribas S.A., BNP Paribas USA, Inc., BNP Paribas Securities Corp., and Community Bankshares, Inc.
AI Analysis
The Federal Reserve Board issued a Prompt Corrective Action Directive to Small Business Bank, based on a determination that the bank was significantly undercapitalized as of June 18, 2026. It also terminated older enforcement actions against BNP Paribas entities and Community Bankshares, which signals closure of those matters but no new substantive obligations for those institutions.
Key dates
- 2026-06-18
- Federal Reserve determined Small Business Bank was significantly undercapitalized
- 2026-06-25
- Termination effective date for the BNP Paribas-related cease-and-desist order and the Community Bankshares cease-and-desist order
- 2026-06-29
- Prompt Corrective Action Directive issued for Small Business Bank
- 2026-07-29 Deadline
- Approximate latest date to increase equity if measured as 30 days from the June 29, 2026 directive date; the exact deadline depends on the directive's effective date and any permitted extension
Suggested considerations
- Compliance teams at banks facing PCA should review whether capital ratios trigger section 38 of the FDI Act and Regulation H thresholds.
- Affected institutions may wish to map the directive's capital restoration timeline to board oversight, funding sources, and shareholder approval processes.
- Firms with open Federal Reserve enforcement matters may wish to monitor the Board's enforcement database for termination notices and effective dates.
- Boards and management teams may wish to ensure the documentation supporting capital adequacy, if relevant, is current and ready for supervisory review.
What changed
For Small Business Bank, the Board executed a Prompt Corrective Action Directive dated June 29, 2026 under section 38 of the Federal Deposit Insurance Act and Regulation H. The directive states the bank was significantly undercapitalized as defined in 12 C.F.R. 208.43(b)(4) and requires the bank to raise equity within 30 days of the effective date so it becomes adequately capitalized under 12 C.F.R. 208.43(b)(2). The Board also terminated a July 17, 2017 cease-and-desist order against BNP Paribas S.A., BNP Paribas USA, Inc., and BNP Paribas Securities Corp., and terminated an April 14, 2026 cease-and-desist order against Community Bankshares, Inc., both effective June 25, 2026. The publication does not describe any new obligations for the terminated matters; it only records that those enfo
Compliance impact
The Small Business Bank action is high severity because PCA directives can force rapid capital restoration and signal serious supervisory concern about safety and soundness. The terminations for BNP Paribas entities and Community Bankshares reduce active enforcement burden for those firms, but they do not change the fact that the matters were publicly recorded and only ended on June 25, 2026.
Who is affected
Related regulations
References
AI-generated analysis. May contain errors or omissions — verify with the original Federal Reserve source before acting. Full disclaimer.
What the Federal Reserve said
Federal Reserve Board issues enforcement action with Small Business Bank and announces termination enforcement actions with BNP Paribas S.A., BNP Paribas USA, Inc., BNP Paribas Securities Corp., and Community Bankshares, Inc.
Published by Federal Reserve . Read the full notice at the source for the authoritative text.