- Key insight: The Federal Savings Bank in Chicago sent out millions of mailers falsely claiming consumers had "available funds" waiting for them.
- Supporting data: The OCC flagged the advertisements as "unfair or deceptive acts," and riddled with misleading statements about loan products and consumer eligibility.
- What's at stake: Veterans and service members eligible for Veterans Administration-guaranteed loans were targeted between 2022 and 2024.
The Office of the Comptroller of the Currency hit privately owned The Federal Savings Bank in Chicago with a consent order for sending out millions of deceptive advertisements to military service members. The OCC said the $1.1 billion-asset bank lured service members into cash-out refinancings through the U.S. Department of Veterans Affairs that resulted in higher fees and bigger mortgage payments.
On Thursday, the OCC issued a
"Certain Bank employees made deceptive statements to consumers indicating that the Bank maintained a special relationship with the VA," the OCC also alleged.
Because refinancing requires that a new loan be originated, which requires the payment of fees and closing costs, the bank's deceptive statements led some consumers to pay "significant origination fees" and to receive "refinanced mortgage loans with significantly increased interest rates and monthly payments," the OCC said.
The Federal Savings Bank could not in fact guarantee that consumers would be able to refinance their loans with a lower interest or lower monthly payments, "as stated or implied by Bank employees," the OCC said.
Under the consent order and a settlement, in which the bank neither admitted nor denied wrongdoing, the bank's board is required to take several corrective actions.
The board must monitor the bank's progress in abiding by the consent order and in overseeing payment of restitution to eligible consumers, the OCC said.
The board is also required to hire a restitution consultant who will prepare a written methodology to identify harmed consumers and determine, within 90 days, the appropriate amount of restitution. The bank's board must verify that the bank is adhering to all corrective actions and holding "management and personnel accountable for executing their duties," the OCC said.
During the first Trump administration, The Federal Savings Bank's former CEO, Stephen Calk, was convicted and sent to prison for giving Paul Manafort, the former chairman of President Trump's 2016 campaign, $16 million in high-risk loans.
Calk was convicted in 2021 by a Manhattan jury in a pay-to-play scheme in which he sought Manafort's help getting a high-profile role in the first Trump administration. Calk interviewed in early January 2017 at Trump Tower for the job of Under Secretary of the Army, just weeks before the presidential inauguration.
Ultimately, Calk didn't get a job in the Trump administration, but the interview and communications surrounding it played a central role in his 2021 conviction for financial institution bribery and conspiracy. Following unsuccessful appeals, Calk was ordered to report for a 366-day prison sentence in mid-April 2025, to pay a $1.25 million fine and to have two years of supervised release.
Since his conviction, The Federal Savings Bank was placed under federal oversight and entered into a formal agreement with the OCC. In 2019, the bank named John Calk, Steven Calk's brother, chairman and CEO.
Separately,
Under the current consent order, the OCC is requiring the bank's board to form a three-member compliance committee to oversee corrective actions. The bank must also appoint a dedicated consumer compliance officer and adopt new anti-money-laundering procedures.
The bank did not immediately respond to a request for comment.
