The Spiegel Group, Downers Grove, IL, yesterday announced an agreement with MBIA Insurance Corp. involving certain asset-backed securities issued by its credit-card bank subsidiary, First Consumers National Bank.
Spiegel also said that the bank entered into an agreement with the Office of the Comptroller of the Currency, the bank's primary federal regulator.
The company said the deal resolves the declaration of a “pay out event” by MBIA regarding two asset-backed securities offerings involving credit-card receivables originated by FCNB. The company agreed to dismiss its litigation against MBIA and The Bank of New York, and MBIA agreed to withdraw its letter declaring the pay out event. Spiegel said the agreement strengthens the insured transactions.
FCNB's deal with the OCC calls for the bank to comply with certain requirements regarding capital, liquidity, growth, product offering and transactions with affiliates. The agreement includes restrictions on extending credit to certain customers and requires the bank to obtain a $198 million guarantee, which has been provided through the company's majority shareholder. Also, the bank must provide to the OCC the details of a plan to sell, merge or dispose the bank.
On Feb. 21, the company announced plans to sell its credit-card operations this year, including the bank. The company said that it plans to form a relationship with a third party to continue to provide private-label credit-card programs to customers of its retail brands.
