St. Louis, MO: Mark Turkcan pled guilty to the misapplication of funds connected with his position at First Bank Mortgage, causing a loss of $35 million, United States Attorney Catherine L. Hanaway announced today.

According to court documents, the losses began as early as 1987 when Turkcan was employed by Sheahan Financial, which, along with Clayton Savings and Loan, was purchased by First Bank. The substantial losses that Turkcan incurred at Sheahan were from on hedge positions taken on behalf of Sheahan, and were concealed at Sheahan. In 1990, First Bank purchased Clayton Savings and Loan and Sheahan Financial without knowing about the losses concealed on the books of Sheahan Financial, causing First Bank to overpay in the purchase. After the purchase of Sheahan in 1990, Turkcan became President of First Bank Mortgage. He continued to buy and sell mortgage backed securities as part of his job. However, losses from the unauthorized and unapproved borrowings continued ultimately rising to a level of approximately $35 million. They were covered up and concealed from First Bank by destroying or changing records and posting profits on the books and records of the Bank. To cover the losses, Turkcan borrowed against the mortgage backed securities of First Bank Mortgage. These loans were also concealed from First Bank. To conceal the true nature of these transactions, Turkcan created false and fictitious trade tickets and Bear Stearns confirmations.

Ultimately these losses rose to a level of approximately $35 million, which First Bank had to pay Bear Stearns.

Turkcan, 53, Kirkwood, MO, pled guilty to one felony count of misapplication of bank money by a bank officer. He appeared before United States District Judge Donald J. Stohr.

Turkcan now faces a maximum penalty of 30 years in prison and/or fines up to $1 million, when he is sentenced on April 17, 2009. Restitution is mandatory.

Hanaway commended the First Bank’s officers and employees for bringing this information to the U.S. Attorney’s Office, and the Federal Bureau of Investigation for their expeditious investigation of this case. First Assistant Michael W. Reap is handling the case for the U.S. Attorney’s Office.

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Washington, D.C., Dec. 3, 2008 — The Securities and Exchange Commission today approved a series of measures to increase transparency and accountability at credit rating agencies, and ensure that firms provide more meaningful ratings and greater disclosure to investors.

The new measures impose additional requirements on credit rating agencies, whose ratings of residential mortgage-backed securities backed by subprime mortgage loans and of collateralized debt obligations linked to subprime loans contributed to the recent turmoil in the credit markets. The SEC also proposed additional measures related to transparency and competition concerning credit rating agencies. The SEC’s actions were informed by the agency’s extensive 10-month examination of three major credit rating agencies that found significant weaknesses in ratings practices.

“These comprehensive rules touch every aspect of the credit rating process – from conflicts of interest, to publication of ratings methodologies, to disclosure of ratings track records,” said SEC Chairman Christopher Cox. “The SEC’s examinations of credit rating agencies uncovered serious deficiencies that these rules will address, so that investors and markets will have better information to guide investment decisions.”

This is the second set of credit rating agency reforms since the SEC received its new regulatory authority from Congress to register and oversee credit rating agencies. The initial rules were implemented by the Commission under the Credit Rating Agency Reform Act in June 2007. The regulatory program established through the Credit Rating Agency Reform Act allows the SEC to promulgate rules regarding public disclosure, recordkeeping and financial reporting, and substantive requirements to ensure that credit rating agencies conduct their activities with integrity and impartiality.

Public comments on the new proposed amendments must be received by the Commission within 45 days after their publication in the Federal Register.

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The full text of the final rule amendments and proposed rule amendments will be posted to the SEC Web site as soon as possible.

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Fact Sheet with additional details about the SEC’s actions

November 25, 2008 U.S. Treasury release:

Treasury Provides TARP Funds to Federal Reserve
Consumer ABS Lending Facility

Washington– The U.S. Treasury Department today announced it will allocate $20 billion to back a lending facility for the consumer asset backed securities market established by the Federal Reserve Bank of New York.

The asset backed securities market provides liquidity to financial institutions that provide small business loans and consumer lending such as auto loans, student loans, and credit cards. While ABS issuances in these categories were roughly $240 billion in 2007, issuance of consumer ABS declined precipitously in the third quarter of 2008 before essentially coming to a halt in October. Continued disruption in the ABS market could further deteriorate credit availability for consumers and increase the prospects for further deterioration in the economy generally.

This facility, the Term Asset Backed Securities Loan Facility, is intended to assist the credit markets in accommodating the credit needs of consumers and small businesses by facilitating the issuance of ABS and improving ABS market conditions. The underlying credit exposures of eligible securities initially must be newly or recently originated auto loans, student loans, credit card loans or small business loans guaranteed by the U.S. Small Business Administration. The facility may be expanded over time and eligible asset classes may be expanded later to include other assets, such as commercial mortgage-backed securities, non-agency residential mortgage-backed securities or other asset classes.

Under the new facility, the Federal Reserve Bank of New York will lend up to $200 billion on a non-recourse basis to holders of newly issued AAA-rated ABS for a term of at least one year. The Federal Reserve will lend an amount equal to the market value of the ABS less a haircut and will be secured at all times by the ABS. The U.S. Treasury Department will provide a $20 billion of credit protection to the Federal Reserve in connection with the facility, using its authorities in the Emergency Economic Stabilization Act of 2008. The attached term sheet describes the basic terms and operational details of the facility.