Bank of New York Mellon Corp., the world’s largest custody bank, was fined $6 million by the Federal Reserve Board for misstating the collateral it pledged to a government lending program in 2008.
A portion of the collateral the bank pledged to the Boston Reserve Bank was ineligible for the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, or AMLF, a program set up to help ease the credit squeeze during the financial crisis, the Federal Reserve said today in a press release. As a result, BNY Mellon received more in loans than it should have, according to the statement.
As part of a “consent cease and desist order,” the bank agreed to submit a plan to the Fed to improve its procedures and to step up training for its employees, according to the statement.
“This situation resulted from a failure in our internal reporting and escalation processes related to our use of the program in 2008,” Ron Gruendl, a spokesman for New York-based BNY Mellon, said in an emailed statement. “We are pleased to put this matter behind us.”