Troubled bank and mortgage lender Fremont General said on Friday that Federal regulators had stepped in and given it 60 days to raise additional capital, or face a forced sale. The Federal Deposit Insurance Corporation issued a so-called Supervisory Prompt Corrective Action Directive to Fremont General and to Fremont General Credit Corporation, the company said, requiring the bank to take immediate steps to recapitalize. In March of last year, the FDIC issued a Cease and Desist Order to Fremont regarding its subprime lending operation, including an allegation that the company violated Section 23B of the Federal Reserve Act by engaging in transactions with its affiliates on terms and under circumstances that in good faith would not be offered to, or would not apply to, nonaffiliated companies. Under the terms of the new directive by its regulators, the bank has 60 days to either raise enough equity capital or otherwise sell obligations in order to reach FDIC-required levels for "adequate capitalization," or either be acquired and/or divest itself of the bank altogether. Fremont has been caught up in the latest round of industry turmoil, saying in late February that write-downs and loss reserve charges had eroded its capital base; since that time, it has defaulted on loan purchase contracts worth $3.15 billion and delayed an interest payment on $169 million in debt. In the directive, the FDIC categorized Fremont as being an "undercapitalized" depository institution, and established restrictions limiting the interest rates the bank may pay on deposits, among other restrictions designed to protect consumers and prevent further outflow of capital from the bank itself. The FDIC-mandated restrictions would remain in place for up to four quarters, if and when Fremont is able to successfully recapitalize. Clearly, this is one bank that both FDIC officials and consumers alike would not want to see fail, given Fremont's nearly $9 billion in assets. Shares in the troubled financial services had fallen nearly 13 percent in early trading on the New York Stock Exchange, to $0.53; any share price below one dollar is generally considered highly speculative. Disclosure: The author owned no positions in FMT when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.