June 13, 2007
Marcus C. Marsden, Jr., Esq.
P.O. Box 1778
Fort Worth, TX 76101
Re: Richard Abrams
Dear Mr. Marsden:
This is to inform you that, pursuant to sections 8(b)(3) and 8(e)(7)(B) of the Federal Deposit Insurance Act, as amended (the "FDI Act") (12 U.S.C. §§ 1818(b)(3) & (e)(7)(B)), the Board of Governors of the Federal Reserve System (the "Board"), subject to the conditions set forth below, has approved your request on behalf of your client, Richard Abrams, who is subject to an Order of Prohibition issued by the Office of the Comptroller of the Currency on June 11, 2007 (the "OCC Order"), for consent to participate in negotiating the merger, sale of all or substantially all of the shares of Surety Capital Corporation, Fort Worth, Texas, a registered bank holding company ("Surety Capital"), or its assets (including the sale of Surety Bank, Fort Worth, Texas, or substantially all of its assets) or any similar transaction (the "Sale") or providing information in connection therewith, executing necessary agreements or documents to effect any such Sale, or voting shares of Surety Capital held in the name of Mr. Abrams as of the date of this letter in connection with any proposed Sale.
The following conditions apply to this consent:
- This consent shall expire on October 1, 2007, except for the provision relating to the voting of shares;
- Mr. Abrams shall furnish monthly to the Federal Reserve Bank of Dallas a report on the status of any proposed Sale;
- Mr. Abrams shall timely file, on behalf of Surety Capital, all financial and regulatory reports required by federal law; and
- Mr. Abrams shall, on behalf of Surety Capital, continue to take affirmative steps to identify replacement officers and directors and file the quarterly progress reports required by the Written Agreement between Surety Capital Corporation and the Federal Reserve Bank of Dallas, dated October 11, 2005.
Your client has requested this consent, in connection with the resolution of the OCC enforcement proceeding, in order to facilitate a Sale at the earliest possible time. Currently, Mr. Abrams is the only officer and director of Surety Capital, and, therefore, the only individual who is authorized to act on behalf of Surety Capital. Your client has also represented to the Board and the Federal Reserve Bank of Dallas that efforts to effectuate a Sale are active and would be delayed significantly if Mr. Abrams was unable to act on behalf of Surety Capital immediately. You have further represented that Mr. Abrams will cause Surety Capital to make appropriate filings with the Securities and Exchange Commission with respect to the issuance of the OCC's prohibition order and this consent.
In connection with this consent, Mr. Abrams may continue to act as an officer and director of Surety Capital during the period between June 11, 2007, and October 1, 2007, in the capacities set forth above. Thereafter, pursuant to the OCC Order, Mr. Abrams must resign as an officer and director of Surety Capital, and may no longer participate in the conduct of the affairs of Surety Capital as long as it is an institution covered by section 8(e)(7)(A) of the FDI Act. Until October 1, 2007, Mr. Abrams, as Surety Capital's sole officer and director, should take steps to convene a shareholders' meeting, whether or not a Sale is imminent. The Board does not contemplate granting extensions to the consent, except if a bona fide Sale has been agreed to with an apparently qualified buyer and some additional time is necessary to complete regulatory review and approval prior to closing of the Sale.
This consent does not authorize Mr. Abrams to participate in the conduct of the affairs of any institution covered by section 8(e)(7)(A) of the FDI Act other than Surety Capital. Specifically, this consent does not permit Mr. Abrams to participate in the conduct of the affairs of Surety Bank.
Under the provisions of section 8(e)(7)(B) of the FDI Act, the Board will publicly disclose this action.
If you have any questions regarding this matter, please contact Mr. Stephen Meyer, Assistant General Counsel, Legal Division, at 202-452-2522.
Sincerely,
[SIGNED]
Jennifer J. Johnson
Secretary of the Board
cc:
Ronald G. Schenck, Director, Special Supervision
Office of the Comptroller of the Currency
E. Ann Worthy, Vice President
Federal Reserve Bank of Dallas
July 12, 2007