Downey Financial Group Inc.'s savings and loan unit will close its wholesale loan department and shrink its retail operation, affecting about 200 employees, as it said fewer borrowers are able to qualify for loans amid the ongoing credit crisis.

The move comes about a month after federal banking regulators clamped down on Downey. The Office of Thrift Supervision issued a cease-and-desist order that required the bank to raise capital, name a permanent chief executive and take other actions including the sale of bank real estate.

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