United Commercial Bank, a lending institution based in San Francisco and with branches in Sacramento and Citrus Heights, is the focus of an examination by the Securities and Exchange Commission (SEC) after an internal investigation found that losses in its real estate loans were hidden from both outside auditors and United's own finance Department. The bank, which received almost $300 million in TARP (Troubled Asset Relief Program ) from the federal government, is under a cease-and-desist order which forbids it from opening any new branches or extending more credit to its high-end customers without board approval.
The commotion has resulted in the resignations of Chairman and CEO Thomas S. Wu, David S. Ng (chairman of the board's audit and finance committees) and Ebrahim Shabudin, (loan officer). Doreen Woo Ho is now the acting president and CEO and said the bank is reviewing options to rebuild its capital, including either a partial or total sale of the bank.
United Commercial Bank is the largest of the 65 California-based banks to receive TARP funds. If it is unable to repay the U.S. Treasury at the promised 5% dividend for 5 years, the loan (that's what TARP is) by U.S. taxpayers could be in jeopardy.
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