Inner City Press Community Reinvestment Reporter 2005-2012

   Click here for Current CRA Reporter

     Welcome to Inner City Press’ CRA Report.  Our other Reporters cover the financial services industry, human rights, the Federal Reserve, and other beats.  ICP has published a book about the CRA-relevant topic of predatory lending - click here for sample chapters, a map, and ordering informationCBS MarketWatch of April 23, 2004, says the the novel has "some very funny moments," and that the non-fiction mixes "global statistics and first-person accounts."  The Washington Post of March 15, 2004, calls Predatory Bender: America in the Aughts "the first novel about predatory lending;" the London Times of April 15, 2004, "A Novel Approach," said it "has a cast of colorful characters."  See also, "City Lit: Roman a Klepto [Review of 'Predatory Bender']," by Matt Pacenza, City Limits, Oct. 2004.  The Pittsburgh City Paper says the 100-page afterword makes the "indispensable point that predatory lending is now being aggressively exported to the rest of the globe." Click here for that review; click here to Search This Site

December 31, 2012

HSBC is being sued by three counties in Georgia which say its "predatory lending practices include targeting vulnerable borrowers for mortgage loans with unfavorable terms; directing credit-worthy borrowers to more costly loans; putting unreasonable terms, excessive fees or pre-payment penalties into mortgage loans; basing loan values on inflated or fraudulent appraisals; and refinancing a loan without benefit to the borrower." That's what we said when HSBC bought Household, saying it all the way to Hong Kong and Singapore. Now the chickens come home to roost...

December 24, 2012

It started slow and it is still ongoing. Back in August, Inner City Press / Fair Finance Watch wrote to Customers Bancorp for its mortgage data, expressing some concerns. A month later, at the deadline, some data was provided. It was disparate and Inner City Press comments on Customers' Acacia application. There were questions from the Federal Reserve, some FOIA requests. Now, Customer's has passed back the drop-dead date from December 31 to January 31. But how do they know it will be approved by then?

December 17, 2012

Annals of secrecy and mis-regulation: so HSBC settles for money laundering for drug dealers, but there's no criminal sentence, no jail time, nothing. Meanwhile the Federal Reserve responds thusly to a Freedom of Information Act request from Inner City Press:

To facilitate secure email exchanges with the Federal Reserve, please see the attached file and link that

contain instructions for registering with the Zix e-mail system. The web address is

https:// WITHHELD

For shame... Also, from FirstMerit's submission to the Federal Reserve about Citizens Republic, the entire "Environmental Matters" section is blacked out, in response to Inner City Press' FOIA request...

December 10, 2012

Inner City Press has filed this: a formal request under FOIA for the portions of FirstMerit's November 30 response to FRS questions which were not sent to Inner City Press.

To virtually every FRS question about its proposal to acquire Citizens Republic, which ICP timely challenged and made a still pending FOIA request about, FirstMerit states, See Confidential Exhibit. For example, to FRS Question 1, FirstMerit says only, "See Confidential Exhibit 1."

To FRS Question 2, FirstMerit says only, "See Confidential Exhibit 2."

To FRS Question 3, FirstMerit says, "See Confidential Exhibit 3."

To FRS Question 5, FirstMerit says, "See Confidential Exhibit 4."

To FRS Question 6, FirstMerit says, "See Confidential Exhibit 6."

To FRS Question 7, FirstMerit says only, "See Confidential Exhibit 6."

To FRS Question 8 and 9, FirstMerit says only, "See Confidential Exhibit 7."

To FRS Question 10, FirstMerit says only, "See Confidential Exhibit 8."

To FRS Question 11, FirstMerit says only, "See Confidential Exhibit 9."

To FRS Question 12, FirstMerit says only, "See Confidential Exhibit 10."

To FRS Question 14, FirstMerit says only, "See Confidential Exhibit 11."

This is outrageous, and makes a mockery of the FRS' stated Rules against Ex Parte Communications. This is a timely challenge to all of the withholdings.

December 3, 2012

From the big picture to the "small" but telling: in Knoxville, Tennessee, predatory lending victim Dwight Newton sued Bank of America for $25,000 in small claims court. He's $100,000 upside down on his mortgage and trying to work out a modification, as so many promise.

But when Bank of America didn't show up, rather than winning a default judgment, the judge Tony Stansberry "had his assistant call B of A and they hung up on her. Still he gave them a continuance even though they weren't even there. If the roles were reversed and dwight newton was the defendant instead of the plaintiff he would have awarded them judgment without hesitation." So it goes, Bank of America...

November 26, 2012

Hudson City Savings Bank, which M&T is trying to buy, is in New Jersey but not of it. When ICP / Fair Finance Watch challenged the deal, highlighting disparities in Hudson City's record, Hudson City had no response at all. Now it has been challenged from New Jersey as well, and M&T will run there on December 13.

Meanwhile the Fed has had no response to the absurdity of it providing heavily redacted records of its pre-announcement meetings with M&T, an hour before the comment period was set to expire. This is not transparency. Watch this site.

November 19, 2012

Talk about old school -- when the OCC got a Community Reinvestment Act protest by email on October 26 from Inner City Press to BankUnited's application to open branches only in the most affluent parts of New York, for ten days nothing was heard. Then on November 7it acknowledged receipt, even providing another OCC email address -- and sent the acknowledgment by snail mail, posting it November 8 for arrival days later. Ah, regulation...

And still the OCC has yet to improve its website listing of pending merger subject to public comment, even to bring it up to speed with the Federal Reserve...

November 5, 2012

Royal Bank of Scotland has had to settle in Nevada for securitizing predatory loans -- meanwhile, it may have to sell off Citizens and Charter One in the United States. In Nevada:

RBS Financial Products will pay a $42 million settlement to resolve an investigation into the firm’s role in purchasing and securitizing subprime and payment option adjustable rate mortgages in Nevada. The assurance of discontinuance, filed in Eighth Judicial District Court, requires RBSFP to commit to certain changes in its practices to the extent it securitizes Nevada mortgages and to pay the State $42 million to be used for payments to affected borrowers, mortgage fraud enforcement, and foreclosure prevention, and attorney’s fees and costs.

Nevada Attorney General Catherine Cortez Masto specified it's about "misrepresentations by lenders, including Countrywide and Option One, to Nevada consumers who took out subprime loans and payment option ARMs that were bought and securitized by RBS." For shame...

October 29, 2012

Three weeks ago, Inner City Press / Fair Finance Watch made a first timely submission to the Federal Reserve opposing the applications by M&T to acquire Hudson City Savings Bank, highlighting outrageous disparities in Hudson City's lending including that in the NYC Metropolitan Statistical Area in 2011, Hudson City made 765 conventional home purchase loans to whites and only FIVE to African Americans.

This is one of the worst records seen.

But M&T in its purported response only filed late in the comment period on October 24, by outside counsel who worked in the merger review process at the Fed -- ICP is with all due respect questioning whether this is appropriate -- M&T says hardly anything about Hudson, instead merely repeating claims about M&T's CRA record.

Hudson City is a (much) larger mortgage lending in the NYC MSA than M&T. It's record must be answered for.

But even when asked by the media, Hudson City "did not respond to requests for comment." See, http://www.northjersey.com/news/173838811_Fair_lending_advocate_challenging_Hudson_City-M.html?page=all

While wishing to focus the FRB on Hudson City's outrageous (and larger than M&T) record, we also contest M&T's presentation, on the analysis previously submitted and have submitted more, concerning M&T's actions after a previous acquisition, of Provident. Watch this site.

October 22, 2012

Sleaze fest: "Bank of America says it plans to unveil at least a dozen 'flagship' branches across the country that will offer customers more space, more specialized bankers and financial advisers, and the latest gadgets. The flagship banking centers will include videoconference screens, so customers can talk to their favorite banker or financial adviser — even if they are located elsewhere. In addition, the branches will also feature a 'power bar' where customers can plug in their laptop or tablet to do their banking while digital signs display stock quotes, pictures of branch staff, and the latest product promotions."

Meanwhile the OCC considering the "permissibility" of Capital One / ING's beverage service -- then the advisory letter went offline. Drink up!

October 15, 2012

As M&T Protest Proceeds, Trustmark Delayed and Apple in Denial, Lax Regulators and Media Allow

By Matthew R. Lee

SOUTH BRONX, October 13 -- Since the bank-led predatory lending meltdown in 2008, have banks become more responsive, or more fair in their lending? Has reporting on banks become more critical?

As Inner City Press reported on October 7, Fair Finance Watch challenged the application of Buffalo-based M&T to buy Hudson City Savings Bank, the biggest merger proposal in the US in 2012.

Regulators had allowed Hudson City in 2011, for conventional home purchase loans in the New York City Metropolital Statistical Area, to make 765 such loans to whites and only FIVE to African Americans (and only 14 to Latinos). Meanwhile, Hudson City denied the applications of African Americans 3.21 times more frequently then those of whites.

Picking up on the challenge, the Buffalo News contacted M&T for its comment. M&T spokesman C. Michael Zabel countered that "we support community-based organizations."

But reporting by Inner City Press find this questionable, throughout M&T's footprint down to Virginia. M&T's next move was to reach out to friendlier media and announce that its merger application is proceeding - without mentioning the protest or why it was reaching out.

Similarly, M&T hyped up after the protests it celebration of Hispanic Heritage Month at its Newburg, New York branch, and got it reported without any mention of its lending record, much less the challenge.

But at least on M&T, the word got out in New York and New Jersey, where Hudson is based. The Deep South seems worse, in lending disparities and weak coverage of banks.

On August 11, Inner City Press challenged and reported on Trustmark's application to acquire Banktrust, noting in the most recent mortgage data then available that in the Jackson, Mississippi MSA for conventional home purchase loans TrustMark had a denial rate for African Americans more than SIX TIMES HIGHER than for whites: 44.7% denial rate for African Americans, versus 7.3% for whites. It had a 100% denial rate for these and refinance loans for Latinos.

On October 5, Trustmark wrote to the Federal Reserve and said is was extending the planned closing date of the merger into 2013, because it has rightfully not obtained regulatory approval. Trustmark's lawyers mailed Inner City Press a copy of their email to the Fed -- we'll put it online here -- and then four days after the email, put out a press release about the extension (but not the protest).

Media reported the extension but not the challenge. How hard is this? On October 11, after its press release and uninformed reports of it, Trustmark answered another round of questions from the Federal Reserve. The regulator may be lax, but the media doesn't help.

This laxity makes banks arrogant, and regulators non responsive. A recent example of each is Apple Bank, which is seeking to acquire nearly all the branches of Emigrant Savings Bank in New York. Despite the location, when comments were submitted to the New York State Financial Services Department as well as the FDIC, only the FDIC has so far responded.

The comment noted that in the NYC Metropolitan Statistical Area, Apple in 2011 made 13 conventional home purchase loans to whites, and NONE to either African Americans or Latinos.

Apple collects deposits in, for example, the South Bronx -- but look at its lending record. It should not on this record be allowed to acquire Emigrant's deposits and similarly redline with them.

For refinance loans in the NYC MSA in 2011, Apple made 27 loans to whites, only one to an African American applicant (while denying another), and NONE to Latinos.

Apple's "Chairman, President and CEO" Alan Shamoon, despite his bank's lack of visibility and weak community lending record, submitted a short response under his own signature, calling the mortgage lending analysis "disparagement" and "devoid of substance," to be "dismissed." Takes one to know one.

Amid too little, too late lawsuits against JPMorgan Chase and Wells Fargo, this tale of three mergers shows an industry, a media and regulatory environment ripe for yet another meltdown. What has been learned? Watch this site.

October 8, 2012

Lending Disparities Shown in Protest to M&T - Hudson City, Biggest Merger of 2011

By Matthew R. Lee

SOUTH BRONX, October 7 -- The largest proposed bank merger in the United States in 2011, M&T Bank's application to acquire Hudson City Savings Bank for $3.7 billion, has been challenged to the Federal Reserve based on both banks' lending disparities. It will be a test of the Federal Reserve's seriousness.

  Inner City Press' Fair Finance Watch has used 2011 Home Mortgage Disclosure Act data to document that although Hudson City Savings Bank is lesser known than M&T, in for example the New York City Metropolitan Statistical Area Hudson City is a much larger home purchase lender.

  But Hudson City disproportionately excludes African Americans and Latinos: for conventional home purchase loans in the NYC MSA in 2011, Hudson City made 765 such loans to whites and only FIVE to African Americans (and only 14 to Latinos).

  Meanwhile, Hudson City denied the applications of African Americans 3.21 times more frequently then those of whites.

  M&T cannot make up for this: in the NYC MSA in 2001, M&T for conventional home purchase loans made 119 such loans to whites, and only 17 to Latinos. It denied Latinos 1.91 times more frequently than whites.

  Hudson City is a much larger home purchase mortgage lender in the NYC MSA than M&T - based on its record, there should be public hearings in New York City under the Community Reinvestment Act and on this record, the merger should not be approved.

  In the Nassau-Suffolk (Long Island) MSA in 2011, Hudson City for conventional home purchase loans made 294 such loans to whites and only TWO to African Americans (and only seven to Latinos).

In this same Long Island MSA in 2011, M&T for conventional home purchase loans made 48 such loans to whites, only three to African Americans and NONE to Latinos: denial rate 100%. It denied African Americans 2.92 times more frequently than whites; it denied Latinos infinitely more than whites

  Hudson City is a much larger home purchase mortgage lender in the Long Island MSA than M&T - based on its record, there should be public hearings on Long Island and on this record, the merger should not be approved.

  In the Bridgeport - Stamford - Norwalk MSA in Connecticut in 2011, Hudson City for conventional home purchase loans made 288 such loans to whites and only ONE to an African American (and only six to Latinos).

  Elsewhere in the 2011 HMDA data, not yet taken into account in any CRA performance evaluation, moving north M&T in the Washington DC MSA for conventional home purchase loans made 34 such loans to whites, and only six to African Americans and NONE to Latinos. On this low volume, it denied African Americans 2.92 times more frequently than whites.

  In the Baltimore MSA in 2011, M&T for conventional home purchase loans made 88 such loans to whites, only 14 to African Americans and only one to a Latino.

  M&T denied African Americans 3.67 times more frequently than whites; it denied Latinos 16.6 times more frequently than whites. It bought AllFirst and Provident in this market; it should not be allowed to buy Hudson City Saving Bank.

  In the Philadelphia MSA in 2011, M&T for conventional home purchase loans made 85 such loans to whites, only ONE to a African American and NONE to Latinos. On this record, M&T should not be allowed to buy Hudson City Saving Bank.

  ICP Fair Finance Watch will be submitting more comments, including once it receives the records responsive to its pending Freedom of Information Act request. If those timely requested documents are not received ten days before the current expiration of the comment period on October 27, the comment period should be extended on that ground. The public comment period should be extended for public hearings in any event.

The Federal Reserve last granted public hearings on the largest merger of 2011, Capital One - ING. But click here to view the Fed's February 3, 2012 FOIA Denial,  and click here to view the heavily redacted 34 page document that the Fed provided to Inner City Press (and Capital One to NCRC and the other protesters from which it had withheld this information). What will happen this time, on M&T - Hudson City? Watch this site.

October 1, 2012

Capital One announces layoffs in Washington State - then says they can re-applying to Capital One's growing fraud unit. Yes, Capital One continues to grow in fraud:

"Capital One said Wednesday that it would cut 217 collections jobs from its Tigard office. It's the second time this year the financial company has announced large-scale layoffs at the former HSBC call center. The cutbacks are set to begin Jan. 2 as Virginia-based Capital One shifts the operations elsewhere, spokeswoman Julie Rakes wrote in an e-mail.

"Capital One earlier this year outlined plans to slash marketing jobs in Tigard after acquiring the site from HSBC. It bought the British banking company's U.S. credit division in a $2.6 billion deal that closed in May. Employees affected by the most recent round of layoffs can interview for jobs in the office's growing fraud division, the company said."

September 24, 2012

The biggest proposed merger of 2012 is M&T's proposal to acquire Hudson City Savings Bank for $3.7 billion. Steps to raise issues on it have begun.

Capital One - ING DIRECT was the biggest merger of 2011 and its problems continue even after the CFPB enforcement action and fine, and on subprime auto lending

Last week Akron, Ohio based FirstMerit announced a proposal to buy Flint, Michigan based Citizens Republic, which is also in Ohio and Wisconsin, for 912 million (or really $1.2 billion, with TARP repayment included) There are doubts about the deal, not only branch closures in Ohio but also whether FirstMerit can handle it. Watch this site.

September 17, 2012

So after the Fed handed out an approval without any mention or consideration of it, now it's reported that BB&T will close 21 branches in South Florida as it swallows BankAtlantic -- nine from BB&T and 12 from BankAtlantic. And, 365 jobs will be cut by Feb. 1, 2013...

Meanwhile Fed Governor Jerome H. Powell, formerly of Deutsche Bank and the Carlyle Group, has belatedly ruled on Inner City Press' June 30 FOIA appeal about Mitsubishi UFJ, largely rubber stamping the withholding but saying that some additional pages mis-withheld under Exemption 8 will be released. But these wrongfully withheld pages weren't included with Powell's letter, and haven't been e-mailed.

The Fed did belatedly send a copy of its August 27 to Trustmark, after it was raised. Better late than never.

September 10, 2012

After Inner City Press / Fair Finance Watch commented on Trustmark's application to acquire BankTrust, its law firm Wachtell Lipton replied, saying that a six to one denial rate disparity was okay. Now the Federal Reserve has asked Trustmark and Wachtell Lipton questions about the reply, including about Somerville Bank & Trust, who reviewed and claimed no discrimination? The responses are not convincing - and one wonders why the Fed didn't send ICP a copy of the questions, when they were asked...

September 3, 2012

In predatory lending news, beyond Advance America and Mexico's Grupo Elektra, there's interest rates over 200% at World Acceptance. There's also this, from Citigroup:

Citi agreed to pay $590 million to settle a lawsuit by shareholders who claims that they took massive losses because the bank failed to take timely writedowns on collaterized debt obligations backed by subprime mortgages. U.S. District Judge Sidney Stein granted the deal preliminary approval last week, and set a Jan. 15, 2013, hearing to consider final approval....

August 27, 2012

  So what does Trustmark's law firm Wachtell, Lipton have to say about its lending disparities? That the Office of the Comptroller found them okay. But here they are, as raised on the pending application to acquire BankTrust:
 
  in its headquarters Metropolitan Statistical Area of Jackson, Mississippli in 2010, Trustmark for conventional home purchase loans had a denial rate for African Americans more than SIX TIMES HIGHER than for whites: 44.7% denial rate for African Americans, versus 7.3% for whites. It had a 100% denial rate for these and refinance loans for Latinos.

  MEANWHILE, the Federal Reserve in an August 22 FOIA response blacks out even Trustmark's market share of deposits in Jackson -- clearly public information. The Fed has hit a new low.

In the Gulfport - Biloxi MSA in 2010, for conventional home purchase loans Trustmark made 40 loans to whites and only four to African Americans.

In the Memphis MSA in 2010, for conventional home purchase loans Trustmark made 34 loans to whites and only two to African Americans.

In the Houston MSA in 2010, for conventional home purchase loans Trustmark made 35 loans to whites and NONE to African Americans.

   This is NOT okay. Watch this site.

August 20, 2012

While the New York State Department of Financial Services quickly filed and settled charges against Standard Chartered Bank for laundering money for Iran to evade sanctions against that country, the same NYSDFS has been remiss in its more local duties.

  A major New York bank franchise, Emigrant Bank, is up for sale to Apple Bank for Savings, but the NYSDFS appears asleep at the switch. The NYSDFS is rubbing stamping mergers and branch closings, and not responding to comments from the public.

  On August 6, Inner City Press / Fair Finance Watch submitted a timely challenge to the NYSDFS against a pre-merger branch closing by Emigrant. While not responding, the NYSDFS then provided notice of a merger application filed August 8, saying the comment period expired August 6 - click here to view.

 The NYSDFS has not explained this either. Can you say Kafka?

August 13, 2012

Inner City Press / Fair Finance Watch has a timely first comment on the applications by Trustmark to acquire troubled BankTrust, highlighting in its headquarters Metropolitan Statistical Area of Jackson, Mississippli in 2010, Trustmark for conventional home purchase loans had a denial rate for African Americans more than SIX TIMES HIGHER than for whites: 44.7% denial rate for African Americans, versus 7.3% for whites. It had a 100% denial rate for these and refinance loans for Latinos.

In the Gulfport - Biloxi MSA in 2010, for conventional home purchase loans Trustmark made 40 loans to whites and only four to African Americans.

In the Memphis MSA in 2010, for conventional home purchase loans Trustmark made 34 loans to whites and only two to African Americans.

In the Houston MSA in 2010, for conventional home purchase loans Trustmark made 35 loans to whites and NONE to African Americans.

See also, http://www.mslitigationreview.com/uploads/file/Trustmark%20order.pdf

On the current record, the merger applications should not be approved.

August 6, 2012

On behalf of Inner City Press / Fair Finance Watch and its members and affiliates (collectively, "ICP"), this is a FOIA request concerning withheld submission related the applications of Mitsubishi UFJ Financial Group, Inc., The Bank of Tokyo-Mitsubishi UFJ, Ltd and UnionBanCal Corporation to acquire Pacific Capital Bancorp & Santa Barbara Bank & Trust, which ICP timely protested.

Many of the applicants' submissions are being withheld, including directly on issues raised in ICP's timely protest. For example, and this is specifically requesting, a July 31 submission recites an FRB questions about Tax Refund Anticipation Loans (raised by ICP), and says "Please see Confidential Exhibit 1."

ICP is request that and the other withheld exhibits.

Similarly, in a July 24 submission, there is a question about Swiss regulators' inquiring into interest rate manipulation (that is, LIBOR scandal) - and it says "Please see Confidential Exhibit 2."

ICP is request that and the other withheld exhibits.

Still sleazy: Community Bank System Inc. is closing five branches, three of which are former HSBC Bank USA NA branches divested by First Niagara. Among the remaining two, one of the branches is from among the three additional branches that Community Bank is acquiring from First Niagara. Supposedly the consolidation will be effective Sept. 10 and the consolidations will not result in any layoffs.

July 30, 2012

Federal Reserve Seems to Pre-Approve Mergers, BB&T FOIA Release to Inner City Press Shows

By Matthew Russell Lee, Exclusive

SOUTH BRONX, July 29 -- This month the Federal Reserve Board quietly announced a willingness to pre-approve, or to indicate a willingness to approve, bank mergers proposals even before the public is made aware of them.

  To some, this shows how little the regulator has learned from the financial meltdown.

  Inner City Press has also just learned, via a Freedom of Information Act request and appeal, that the Fed has even this year been entertaining bank merger proposals under code names such as "Project Palm," assigned to BB&T's proposal with BankAtlantic.

   Click here for Governer Jerome Powell's response to Inner City Press' FOIA Appeal. Click here for some of the documents released

   The deal is still pending.

  When the Fed on July 11 announced the policy by a "Supervisory Letter," its press release provided a telephone number in Washington for media inquiries. Inner City Press called the number and asked among other things how it would impact review under the Community Reinvestment Act, which involves public notice and comment.

  Inner City Press will not here report the name of the person answering, because it was insisted that no name could be given.

  Rather Inner City Press was directed to the FOIA footnote of the Supervisory Letter, that some records about the pre-approvals will be available, after the fact, under FOIA.

  But while the Fed is pre-approving, the public will have no way to know what records to request. This can be called false transparency.

  Even on BB&T's "Project Palm," it is only now that the Fed releases records half-showing its response to Inner City Press' February 2012 comment on and against the proposal.

  The just-released records show that on February 7, Claudia A. VonPervieux of Fed staff was "working on a draft rejection letter for M.Lee" of Inner City Press when the Fed belatedly realized that the Press was right: public notice had disappeared such that one couldn't know what to comment on.

   And so a brief extension of the comment period was granted, but only for Inner City Press, which did not cure the problem of lack of notice to the public at large. See released e-mails, attached. And so it goes at the Fed. Watch this site.

** * *

  Two of the vendors that sold the credit card add-ons cited in Capital One's settlement with the CFPB and OCC also do business with Wells Fargo, Citigroup and Bank of America: private equity owned Affinion Group Holdings, and Intersections, for which Bank of America is more than half of the company's income....

July 23, 2012

So the Consumer Financial Protection Bureau finally hauled off and fined a bank, and it couldn't be a more deserving one: Capital One.

The Consumer Financial Protection Bureau and OCC on July 18 initiated action against Capital One Financial Corp. unit Glen Allen, Va.-based Capital One Bank (USA) NA for unfair and deceptive practices relating to payment protection and credit monitoring products and ordered the bank to reimburse $150 million to 2.5 million affected consumers.

The OCC also asked the bank to stop the sales and marketing of any debt suspension product, debt cancellation product, credit and identity monitoring products, or any other similar products and to take other corrective action to ensure compliance with consumer protection laws.

The OCC based its penalty on the bank's failure to develop and implement a comprehensive and effective enterprise risk-management program to detect and prevent unfair and deceptive practices, as well as the duration of and failure to correct those practices

So why did the OCC let Capital One buy the subprime credit card business of HSBC?

So just in the last week there are announcements of a credit union merger proposal in Washington State (Prevail and Harborstone), the buy-up of United Community Bnak in Texas, and of Inland in Ontario, California; there is CRA-challenged WesBanco making a move into Pittsburgh. And there is a proposed deal in New York we will keeping a close, close eye on.

The Fed has done it again: improperly withheld basic information about an application, as admitted even by the pro-bank Governor now in charge of ruling on FOIA appeals. Governor Jay Powell, recently withholding ING - Capital One information, now finds on another application (BB&T) that information was improperly withheld under Exemption 5 and can now be released including records that "describe transaction filings and discuss comment period timings and news articles." The rest -- at least 156 full pages -- he withholds.

Meanwhile one of Governor Powell's ex employers has decided to hold onto its stake in a bank in Taiwan, Ta Chong. How does or will Powell recuse himself? Watch this site.

July 16, 2012

Even without major nationwide news there are a lot of small regional deals, of the type on which CRA could and should be enforced, like

July 2: Montana, 7 branch deal

July 2: Maine deal

July 3: Illinois deal, Heartland and Farmer City

July 5: Kansas deal, Southern Kansas

July 5: Nebraska, Valley Bank

July 6: Texas, LubCo (Lubbock)

July 9: California, Opus Bank buying 10 branches in and around LA

July 10: Maryland, federal savings bank deal

July 10: Texas: Comanche - Texas Savings

And that's just in 10 days. Overseas, HSBC is selling in Monaco and buying in Egypt, GE is selling, so is Santander in Latin America...

Last week, the Federal Reserve put out a letter offering "pre-filing" review of merger applications to banks. Inner City Press decided to call the number on the Fed's press release with a "media inquiry."

At first they said they'd give an on the record answer. Then they offered only "deep background" not attributable to the Fed -- and even then, only directed ICP to the FOIA part of the letter. This... is what lets scandals like LIBOR and predatory lending happen.

July 9, 2012

Guess who the Federal Reserve Board has put in charge of ruling on Freedom of Information Act appeals? It's new Governor (and former official and Deutsche Bank and the Carlyle Group) Jerome Powell. In an 8-page July 3 letter to Inner City Press, Powell upholds multiple withholdings of information about Capital One and ING, while also "determining that certain limited information previously withheld pursuant to exemptions 4, 5, 6 and 8 is releasable."

Limited, indeed. Worst, Powell "affirms the Secretary's decision to withhold certain information as 'Not Responsive' and to refer 212 pages to the OCC for disposition."

This is one of the Fed's new moves, to black out information that is not exempt, but which it claims it "not responsive" to the FOIA request. Why so secretive? We'll have more on this.

July 2, 2012

U.S. consumers paid $2.4 billion in fees for such plans in 2009, according to a March 2011 report from the Government Accountability Office that looked at nine credit-card issuers, including Capital One Discover, American Express, and Bank of America. Fees typically ranged from 85 cents to $1.35 per $100 of outstanding balance each month, the GAO said, noting a "relatively small proportion of the fees consumers pay for debt-protection products is returned to them in tangible financial benefits."

Meanwhile the Federal Reserve's FOIA response to Inner City Press about the applications of Mitsubishi UFJ Financial Group, Inc., The Bank of Tokyo-Mitsubishi UFJ, Ltd and UnionBanCal Corporation to acquire Pacific Capital Bancorp & Santa Barbara Bank & Trust outright withholds 634 pages, and we have appealed.

But what's provided points to more. For example:

Subject: Unionbancal/Pacific Capital BC transaction - call Wed?
From: Elisa Johnson
To: Kenneth Binning; Cynthia Holbrook; Steven Takizawa Cc: Jose Alonso
Date: 02/21/2012 04:53 PM

Hello everyone -

I just took a call from Mark Gillett of Union Bank wanting to have a preliminary call tomorrow at 11am to discuss the filing requirements for Unionbancal's acquisition of Pacific Capital BC, Santa Barbara. Union is in the midst of conducting their due diligence . This will be an all cash transaction. FYI: the code name for this deal is Pebble Beach. The structure of the deal has "gelled"

But no earlier records are provided. And many records are withheld as "not responsive" -- with "also b(5)" added later in a different font. The Fed continues to abuse FOIA - we have appealed. Watch this site.

June 25, 2012

So after Inner City Press / Fair Finance Watch challenged the applications of Mitsubishi UFJ Financial Group to acquire Pacific Capital Bancorp & Santa Barbara Bank & Trust, the applicants decided to withhold basic information about their Community Reinvestment Act programs.

Then Inner City Press filed Freedom of Information Act requests and appeals. Now, Mitsubishi related some information, while blacking out columns and columns, and most of its response on the CRA.

Still, "Corporate Social Responsibility" chief Julius Robinson decided to turn in a "Supplement to the Convenience and Needs Considerations portion of the Application," while arguing that SBBT put its tax Refund Anticipation Loan rip-offs behind it. But why keep withholding information? Watch this site.

June 18, 2012

Of Occupy and the big banks: In Philadelphia, Occupiers are gearing up to oppose Wells Fargo's move to renew its contract with City Hall on June 21, saying Wells "plundered the Philly school system."

In Detroit, the group Moratorium argues that Michigan "Governor Snyder, trying to bully Detroit and stop the lawsuit against the 'consent decree,' is threatening that '100% of the city’s ongoing revenue sharing payments will be U.S. Bank … with no residual payments transferred to the city until the $80 million bond is paid in full' (Deputy Treasurer Thomas Saxton quoted in The Morning Sun). So the state is planning to give U.S. Bank all our revenue sharing money after years of refusing to pay revenue sharing money already owed to the City – the exact reason for the lawsuit in the first place. Who is U.S. Bank? This is one of the banks that criminally targeted Detroit by selling racist, fraudulent, predatory loans to over 80% of the people taking out mortgages or refinancing. This directly led to the foreclosure crisis that destroyed the tax base of Detroit and drove hundreds of thousands of people from the city."

Meanwhile, TIME says "Today, credit bureau Experian announced the debut of a product it calls an Extended View Score. Intended for people without bank accounts and spotty credit histories, the formula uses alternative data sources like rent payment history and public records data to create a score." Scary?

June 11, 2012

The Federal Reserve has issued a flurry of FOIA denials and extensions of time. Then comes a heavily redacted submission TO the Fed from Sullivan & Cromwell, on Mitsubishi UFJ Financial Group's application to buy Pacific Capital Bancorp and long time RALs rogue Santa Barbara Bank & Trust.

Asked about its due diligence on the RALs rogue, Sullivan & Cromwell say "see Confidential Exhibit 1" -- but do not provide it. Well, we DO want to see it.

Last month of Michigan it was reported by SNL Financial that

"Huntington Bancshares Inc.'s 10-year deal to open branches in Meijer grocery stores in Michigan is the bank's next step to increase its Michigan market share... The bank will open 20 branches in Meijer stores from May until the end of the year and will eventually open a total of more than 80 branches in the next three to five years, said Mary Navarro, Huntington's retail and banking director. Huntington has an opportunity to put a branch in every Meijer store in Michigan, of which there are more than 100, but bank executives could not provide a specific number."

But advocates in Detroit say their neighborhoods don't have these Meijer (or other) supermarkets. And so it seems a PROMISE of redlining. Watch this site.

So the FDIC, even after the subprime meltdown, rules that GE Capital Financial Inc, buying the deposits of MetLife Bank, is NOT responsible for the predatory lending of WMC, because it "was a subsidiary of a different financial institution (GE Capital Retail Bank)." This hairsplitting is shameful -- and dangerous. Watch this site.

June 4, 2012

Three and a half months after Inner City Press / Fair Finance Watch complained to the Office of the Comptroller of the Currency about its secret communications with Capital One and HSBC while approving their deal, a response from the OCC's general counsel Julie L. Williams arrived last week.

She states that "direct communications between the OCC and applicants (or their counsel) seeking approval of an acquisition under the Bank Merger Act are not prohibited ex parte communications" -- unless, she writes, "in the context of hearings."

So if the OCC denies hearings, as it did on Capital One - HSBC, it can do anything it wants?

Williams letter is dated May 9 - but was not put in the mail until May 30. Maybe THIS is one of the reasons the OCC didn't stop the subprime meltdown...

May 29, 2012

Months after the Federal Reserve approved the applications of Capital One and ING DIRECT, now the Fed admits it improperly withheld information in response to Freedom of Information Act requests and appeals by Inner City Press / Fair Finance Watch. A little late, isn't it? We need new regulators.

Last week Inner City Press RSVP-ed for and went to cover a speech by the President of the Federal Reserve Bank of New York William Dudley. But from CFR's overflow run to which the media was confined, ICP was not able to ask any questions, whether about bank accounts for UN member states or why it is appropriate for JPMorgan Chase CEO to be on the Federal Reserve Bank of NY board of directors, given that the FRBNY directly regulated JPMC, which has recently gambled and lost $3 billion and counting. This last question, Inner City Press submitted twice by email, but it was not posed. Nor has it been answered since. Watch this site.

May 21, 2012

While the Office of the Comptroller of the Currency months ago told Inner City Press / Fair Finance Watch it would provide information, including when to comment, about First Niagara's proposal to acquire branches from HSBC and close many of them. But the OCC never provided any information, and on Friday First Niagara announced it had consummated the proposal. There is a problem with that.

Inner City Press / Fair Finance Watch was asked by the NYC Responsible Banking act:

The growing movement to local Community Reinvestment ordinances is a response to the Federal regulators' lack of commitment to enforcing the CRA of 1977. Also, that law is enforced if at all only in connection with bank mergers, of which there have been many fewer since the subprime financial meltdown. So activist have had to look elsewhere.

Whether municipal authorities will ever have enough independence from corporate interests to bar a major bank from business with the city remains to be seen.

Cleveland, for example, has been seeking its own agreements with banks for some years. But one of its two major banks was acquired and moved its headquarters away. As with CRA challenges, there will be a need for activists in different cities to work together.

May 14, 2012

So sleazy Deutsche Bank, AFTER de-certifying with the Fed, now pays out a governmental settlement for predatory loans defrauding FHA. Wouldn't it seem like time for the Fed to reconsider that decertification?

May 7, 2012

As Deutsche Bank Evades Fed, Tarullo Alludes to "Some Private Actors," Blurs FOIA & Volcker Rulemaking

By Matthew Russell Lee

UNITED NATIONS, May 2 -- When the Federal Reserve's Daniel Tarullo spoke Wednesday at the Council on Foreign Relations about regulatory reform, he did not mention a single bank or financial institution.

  Inner City Press asked him about Deutsche Bank, which earlier this year split off its investment banking business so as to avoid Fed regulation. Tarullo on March 22 told the Senate the Fed would have to "respond" to this, that it had some impact on this thinking on regulation.

  Tarullo replied, "Matthew, what I said was it effected my thinking, not change, that implies a dramatic shift." Then he answered, six minutes in all, without once mentioning Deutsche Bank. He said that "the kind of changes some private actors are engaged in will have to effect the scope of our regulations."

  These regulations, he said, will be "under 165... to make sure we can implement Congressional concern."

  Inner City Press also asked Tarullo if he claimed the Fed has gotten more transparent since the financial meltdown, noting the Fed's recent denial in full of access to over 2000 pages responses to an Inner City Press FOIA request.

  Here now is an online copy of the Fed's FOIA denial

  Tarullo, which has previously heard of FOIA problems at the Fed, said he didn't know which FOIA request was referred to, then answered about administrative rule making. He said "for rule making, we get comments" and now distinguish "unique comments -- that is, not form letters."

He said there have been "17,000 Volcker Rule submissions... Absorbing all the comments is a substantial undertaking. If it takes longer to give due respect to comments," so be it.

  The FOIA request referred to was about Capital One's compliance, since the Fed's approval order on Capital One - ING DIRECT, including with Capital One's commitments to open branches and lend $180 billion" and about Capital One firing 490 assistant branch managers despite having made representations about increasing service.

  Amazingly, the Fed found 2200 pages responsive but provided not a single document, instead saying that "your request is denied in full," including as to each and every record "regarding with the Approval Order" of Capital One - ING DIRECT. ICP commented extensively on that application, as did NCRC, and the Fed's order cites the comments and Capital One's responses and representations. Now the Fed denies access to every record about compliance with the representations.

Inner City Press' request included a specific reference to branch closings, for example, which are not confidential. Additionally, information submitted and reviewed about compliance with Capital One's representations would contain HMDA data, which is public and not withholdable.

Even since the April 10 request, ICP on April 22 submitted to the Fed information about an admission by Capital One of fraud on consumers:

"Earnings power of HSBC card deal to drown out near-term noise, says Capital One CEO," April 19, 2012

Fairbank also reported a $75 million accrual for customer refunds stemming from what he described as 'instances in which phone sales people didn't adhere to our scripts and sales policy when cross-selling products to our credit card customers.' He said it is very important that Capital One ensures customers bought the unspecified products in the manner the company intended."

Just because it SOUNDS like the responsive records might include some withholdable information, it is outrageous to withheld each and every responsive record, citing the catch-all Exemption 8. The Fed is increasingly abusing and evading FOIA. Watch this site.

And this was filed:

this is a timely comment opposing and requesting public hearings on the applications of Mitsubishi UFJ Financial Group, Inc., The Bank of Tokyo-Mitsubishi UFJ, Ltd and UnionBanCal Corporation to acquire Pacific Capital Bancorp & Santa Barbara Bank & Trust.

Santa Barbara Bank & Trust has a long and sordid history of high cost tax Refund Anticipation Loans (RALs), see below.

Mitsubishi UFJ, beyond the Union Bank N.A. lending disparities initially sketched below, is under investigation. As reported on February 3 of this year:

"The Swiss Competition Commission said today that it launched an investigation into alleged collusion among derivative traders of various banks to manipulate LIBOR and TIBOR, as well as the market conditions regarding derivative products based on these reference rates. The banks being investigated are: Mitsubishi UFJ Financial Group Inc. unit Bank of Tokyo-Mitsubishi UFJ Ltd., Citigroup Inc," etc

In the Los Angeles MSA in 2010, the most recent year for which data is publicly available, Union Bank made 354 conventional home purchase loans to whites and only EIGHT such loans to African Americans. To Latinos, Union Bank made only 23 such loans, compared to the 354 to whites.

In the Seattle MSA in 2010, Union Bank made 23 conventional home purchase loans to whites, and NO such loans to African Americans or Latinos.

In the Seattle MSA in 2010, Union Bank made 34 refinance loans to whites and NO such loans to African Americans or Latinos -- both applications from Latinos were "withdrawn."

In the Portland, Oregon MSA in 2010, Union Bank made four conventional home purchase loans to whites, and NO such loans to African Americans or Latinos.

In the Portland, Oregon MSA in 2010, Union Bank made eight refinance loans to whites and NO such loans to African Americans or Latinos.

In the Santa Barbara MSA in 2010, Union Bank made nine conventional home purchase loans to whites, and NO such loans to African Americans or Latinos.

In the Oakland MSA in 2010, Union Bank made 31 conventional home purchase loans to whites, and only TWO such loans to African Americans. To Latinos, Union Bank made NO such loans.

Regarding Santa Barbara Bank & Trust:

"On November 21, $180 million in TARP money wound up in the affluent seaside community of Santa Barbara, California. The tarp dollars flowed mostly into the coffers of a beige, Spanish-style building on Carrillo Street, home to the Santa Barbara Bank & Trust... the bank also operates a little-known and controversial program far from the lush enclaves of Santa Barbara... Outside Santa Barbara, S.B.B.&T. peddles what are known as refund-anticipation loans (rals)... The U.S. Department of Justice and state authorities in California, New Jersey, and New York have taken action against tax preparers with whom S.B.B.&T. works, charging them with deceptive advertising and with preparing fraudulent returns. Santa Barbara later took a $22 million hit on its books because of unpaid refund-anticipation loans.... in a conference call with analysts on November 21, Stephen Masterson, the chief financial officer of Pacific Capital Bancorp, admitted that tarp “obviously helps us .… We didn’t take the tarp money to increase our ral program or to build our ral program, but it certainly helps our capital ratios.” Indeed, the infusion from Treasury may well have been a lifeline for Santa Barbara."

The FRS should require answers, extend the comment period and hold public hearings.

April 30, 2012

The Federal Reserve just continues to hit new lows, leading to this FOIA appeal by ICP:

This is an immediate FOIA appeal to the Federal Reserve Board's denial dated April 26, 2012 of my FOIA request of April 10, 2012 for "all records in the possession of the FRS concerning Capital One's compliance, since the FRB's approval order on Capital One - ING DIRECT, including with Capital One's commitments to open branches and lend $180 billion" and about Capital One firing 490 assistant branch managers despite having made representations about increasing service.

Amazingly, the Fed provides not a single document, instead saying that "your request is denied in full," including as to each and every record "regarding with the Approval Order" of Capital One - ING DIRECT. ICP commented extensively on that application, as did NCRC, and the Fed's order cites the comments and Capital One's responses and representations. Now the Fed denies access to every record about compliance with the representations. This is a new low.

Inner City Press' request included a specific reference to branch closings, for example, which are not confidential. Additionally, information submitted and reviewed about compliance with Capital One's representations would contain HMDA data, which is public and not withholdable.

Even since the April 10 request, ICP on April 22 submitted to the Fed information about an admission by Capital One of fraud on consumers:

"Earnings power of HSBC card deal to drown out near-term noise, says Capital One CEO," April 19, 2012

Fairbank also reported a $75 million accrual for customer refunds stemming from what he described as 'instances in which phone sales people didn't adhere to our scripts and sales policy when cross-selling products to our credit card customers.' He said it is very important that Capital One ensures customers bought the unspecified products in the manner the company intended."

Just because it SOUNDS like the responsive records might include some withholdable information, it is outrageous to withheld each and every responsive record, citing the catch-all Exemption 8. The Fed is increasingly abusing and evading FOIA and this must be not only reversed, but explained and accountability imposed in response to this appeal.

Meanwhile, ICP has commented to the FDIC, and NYS DFS:

On behalf of Inner City Press / Fair Finance Watch and its members and affiliates (collectively, "ICP"), this is a comment opposing and requesting public hearings on the application by New York Community Bank to acquire substantially all of the assets, and $2.3 billion of deposits of Aurora Bank FSB.

On the FDIC's web site, the comment period on this application runs through May 5, 2012. This comment is timely.

Aurora is a subprime, some say predatory, lending unit of the scandal wracked Lehman Brothers. For the record:

"Aurora had become one of the largest players in that market, originating $25-billion worth of loans in 2006. It was also the biggest supplier of loans to Lehman for securitization. Lehman had acquired a stake in Aurora in 1998 and had taken control in 2003. By May, 2006, some people inside Lehman were becoming worried about Aurora's lending practices."

NYCB is a bank which has sought to fly under the radar -- for example, a recent search of the FFIEC HMDA data back for "New York Community Bank" reveals only one HMDA reporter, 0000016022-3, reporting geography specific data in only three MSAs.

In these MSA, NYCB is decidedly disparate in its marketing and lending.

In the Phoenix MSA in 2010, the most recent year for which data is publicly available, NYCB made 292 conventional home purchase loans to whites and NO such loans to African Americans. Based on its disparate marketing, NYCB received only four such applications from African Americans, and denied three of them. To Latinos, NYCB more only 14 such loans, compared to the 292 to whites.

In the Fort Lauderdale MSA in 2010, NYCB made 38 conventional home purchase loans to whites, and NO such loans to African Americans.

In the West Palm Beach MSA in 2010, NYCB made 83 refinance loans to whites and only ONE such loan to an African American applicant, and only seven to Latinos.

The FDIC should require answers, extend the comment period and hold public hearings.

April 23, 2012

From the department of unintended consequence -- or not -- comes the fact that principal forgiveness on mortgages might, by year's end, be considered taxable income. That is, if a household earning say $56,000 a year and about to be foreclosed on had $80,000 of its mortgage debt forgiven, suddenly it would be in the top tax bracket, and likely lose the house anyway.

April 19 on Capitol Hill the issue was raised to a range of Congress members. Some were receptive, some were not. But nearly all agreed that nothing will be accomplished between now and the election in November. Is this any way to run a country?

Meanwhile in the course of spinning its first quarter earnings numbers, Capital One's CEO let it slip that $75 million are being set aside to deal with fraudulently sold products. "Oops." This has been raised to the OCC and Federal Reserve; watch this site.

April 16, 2012

General Electric is one of the largest corporations in the world, and played a significant role in the subprime lending meltdown that trashed the global economy. Yet its move to grow in retail banking is being done through an obscure Utah-based "industrial loan company." Ever since in late 2011 GE announced it would seek to buy $7.5 billion of deposits from MetLife -- which seeks to escape Federal Reserve regulation -- Inner City Press has been looking for GE's application. To the Office of the Comptroller of the Currency? No, they finally answered - to Utah. And so this:

Utah Department of Financial Institutions
Darryle Rude, Supervisor of Industrial Banks
P O Box 146800
Salt Lake City UT 84114-6800

Re: Comment opposing and requesting public hearings on application by GE Capital Financial to acquire $7.5 billion in deposits from MetLife

Dear Mr. Rude, Paul Allred, Sonja Long and others in the DFI:

On behalf of Inner City Press / Fair Finance Watch and its members and affiliates (collectively, "ICP"), this is a comment opposing and requesting public hearings on the application by GE Capital Financial to acquire $7.5 billion in deposits from MetLife.

MetLife's motive for trying to off-load these deposits is clear. It is to escape regulation, in particular, to deregister as a financial services holding company with the Federal Reserve System.

But what is GE's motive, and what would the proposed acquisition portend for the public? What public benefit would it offer?

When GE decided to get into the mortgage business, as it now seeks to get into the retail deposit business, it injured consumers, punished whistleblowers and hurt the economy and working Americans.

GE acquired the notorious subprime lender WMC, and demoted and silenced those employees who came forward to say that predatory and fraudulent lending was occurring.

See, for the record on this application, "Feds investigating possible fraud at GE’s former subprime unit," http://www.iwatchnews.org/2012/01/20/7908/feds-investigating-possible-fraud-ge-s-former-subprime-unit and see, http://www.iwatchnews.org/2012/01/06/7802/fraud-and-folly-untold-story-general-electric-s-subprime-debacle

With GE as owner, WMC was identified by to Congress by the Comptroller of the Currency as the fourth worst forecloser in the nation, see http://fcic-static.law.stanford.edu/cdn_media/fcic-testimony/2010-0408-Dugan.pdf

Now, GE seeks to become a retail deposit collector. At an investor meeting December 6, General Electric Capital Corp. CEO Michael Neal said the firm would launch a direct-to-consumer U.S. deposit program in the first half of 2012. General Electric Co. CEO Jeffrey Immelt has stated that the company hopes to increase alternative funding at GE Capital by $15 billion to about $80 billion, Sterne Agee & Leach analyst Ben Elias said in a note December 27. "The acquisition fits with our plans to launch a U.S. deposit platform," Dan Henson, president and CEO of GE Capital-Americas, said in a Dec. 27 press release. "It accelerates our timing, helps us build a stronger and more cost-efficient funding base.

Given GE's track record of harming consumers, and burying malfeasance by punishing whistleblowers, ICP hereby opposes and requests public hearings on GE's application.

April 9, 2012

In the first study of Bank of America's just-released 2011 mortgage lending data, Bronx-based Fair Finance Watch has found that BofA continued with high cost loans, and disparately. 2011 is the eighth year in which the data distinguishes which loans are higher cost, over a federally-defined rate spread of 1.5 percent over Treasury bill yields. The data, late provided by Bank of America, show that BofA confined African Americans to higher-cost loans above this rate spread 2.11 times more frequently than whites in 2011.

For a MarketWatch report on ICP's study last week, see http://articles.marketwatch.com/2012-04-03/commentary/31275917_1_high-cost-loans-liar-loans-cra-banks

April 2, 2012

  In the first study of the just-released 2011 mortgage lending data, Inner City Press and Bronx-based Fair Finance Watch have found that banking behemoths Citigroup, JPMorgan Chase and Wells Fargo continued with high cost loans and disparities by race and ethnicity in denials and higher-cost lending.

2011 is the eighth year in which the data distinguishes which loans are higher cost, over a federally-defined rate spread of 1.5 percent over Treasury bill yields.

The just released data show that Citigroup confined African Americans to higher-cost loans above this rate spread 3.38 times more frequently than whites in 2011, worse that its 2.25 disparity in 2009, Fair Finance Watch has found.

Citigroup confined Latinos to higher-cost loans above the rate spread 2.42 times more frequently than whites in 2011, worse that its 1.72 disparity in 2009, the data show.

Even after the bailouts, lending disparities grew worse and not better," said Fair Finance Watch. "Regulatory laxity, at least on fair lending, has continued despite the financial meltdown caused by predatory lending."

For JPMorgan Chase, the disparity for African Americans in 2011 was 2.21; for the largest of Wells Fargo's many HMDA data reporters, the disparity for African Americans in 2011 was 2.28.

"The Federal Reserve is becoming more and more bank-friendly, including with the recent nomination of former hedge funder and Deutsche Bank official Jay Powell for a seat on the Federal Reserve Board. It is still not clear if the new Consumer Financial Protection Bureau will get to this problem," Fair Finance Watch continued. "The disparities in the 2011 mortgage data of these banks further militate for aggressively watchdogging and breaking up these banks."

Regional bank Keycorp in 2011 confined African Americans to higher-cost loans above the rate spread 1.70 times more frequently than whites -- more than a third of Keycorp's loans to African American were rate spread or high-cost loans.

U.S. Bancorp in 2011 confined African Americans to higher-cost loans above the rate spread 2.13 times more frequently than whites, worse than in 2010.

Regions Financial in 2011 denied applications by African Americans 2.44 times more frequently than whites.

Comerica, not yet including its Texas-based purchase Sterling, in 2011 confined African Americans to higher-cost loans above the rate spread 2.81 times more frequently than whites

Growing Southern bank BB&T, even absent its subprime unit Lendmark, in 2011 confined African Americans to higher-cost loans above the rate spread 2.59 times more frequently than whites

Fair Finance Watch has continued its enforcement project in the South, most recently raising issues under the Community Reinvestment Act on BB&T's proposal to acquire BankAtlantic. In response, the Federal Reserve Board extended the comment period. Much of BB&T's application has been blacked out or withheld in full, which Inner City Press is challenging under the Freedom of Information Act.

Another acquisition, that of MetLife's deposits by General Electric, has proceeded stealthly with the Office of the Comptroller of the Currency belatedly stating that it plays no role in the review since GE is using a Utah-based "non-bank bank." These loopholes, like GE, played a role in the subprime meltdown.

Inner City Press & FFW have also joined others concerned with Deutsche Bank's decertification as a financial services holding company to escape Dodd Frank including its capital adequacy rules -- particularly given Deutsche Bank's role in the subprime scandal, as lender, securitizer and now major forecloser.

The law required that the 2011 data be provided by March 31, following March 1 joint requests by Fair Finance Watch and Inner City Press. Several banks did not provide their data by the deadline, most notably Capital One and Bank of America, despite confirming receipt of the request. Further studies will follow: watch this site.


March 26, 2012

Deutsche Bank was big into subprime, as lender, securitizing and foreclosing trustee. But now that the Dodd-Frank law is coming into effect, Deutsche Bank is restructuring to avoid the law's requirements. We will have more on this.

Republic Bank & Trust signed an agreement in December to allow itself to keep issuing high cost tax refund anticipation loans this Spring...

March 19, 2012

So on March 12, Japanese-owned UnionBanCal agreed to pay $1.5 billion to acquire Pacific Capital Bancorp, which owns Santa Barbara Bank & Trust -- which was one of the Tax Refund Anticipation (RALs) predatory lenders. While the trend is for non-US, mostly European banks to be SELLING OFF their business in the US, like ING sold ING DIRECT to Capital One, and HSBC is selling its upstate NY branches, this one goes the other way. UnionBanCal is owned by Mitsubishi UFJ Financial Group, one of the 29 "globally significant banks." We'll have more on this.

March 12, 2012

So the OCC approved Capital One - HSBC, and what's surprising is how much the OCC relies on the Fed, including for HMDA analysis that the OCC should be able to do itself. Also, the OCC Letter doesn't even address the due process / ex parte issues, for example of at least one meeting by Capital One outside council Patricia Robinson with OCC staff, that commenters including ICP and NCRC never got a summary of. One is left wondering if the OCC even has rules on banks providing commenters with copies or summaries of what they say to the OCC, on issues raised by commenters. We'll see.
 
  Meanwhile at the UN Inner City Press asked the Mexican head of this G20  if it is true that the G20 is against implementation of the US Volcker Rule, not because it is pro deregulation, but only because it would lower the value of non-US goverment bonds. It hadn't been implemented, Magiro agilely answered. But in fact a Mexico based subprime lending owned by Salinas Pliego, the Grupo Elektra, is now in line to buy controversial US payday lending Advance America. We'll have more on this.

March 5, 2012

Even as requests for reconsideration of Capital One - ING DIRECT pend at the Federal Reserve, in Europe, the terms of ING’s bailout by the Dutch government are being questioned by a European Union court in the first case challenging EU conditions on more than $1.3 trillion of bank rescues throughout the region. ING was ordered by the European Commission to sell units to shrink its balance sheet by 45 percent by the end of 2013 and avoid undercutting rivals on prices for some banking products for three years or until it repaid the aid. The EU must approve large state subsidies and can impose conditions on the aid. There have beeen challenges by ING and the Dutch government to the terms of the EU’s approval, which the bank says punished it too harshly for state help in 2008 and 2009. ING said the regulator miscalculated the amount of aid and imposed excessive restructuring demands. We'll see.

Meanwhile, a community group is getting a speech from Arkadi Kuhlmann, CEO of ING DIRECT. Go figure.

February 27, 2012

ICP has now requested reconsideration, following the Federal Reserve Board's February 14 approval of the proposed acquisition by Capital One Financial Corporation (“Capital One”) to acquire ING Bank, FSB and its affiliates (“ING”), to form what would be the fifth largest bank in the country.

One of the FRB's sleights of hand is in footnote 27, where after reciting ICP's objections the FRB says "the Board has determined in a separate action that ING Groep would not control Capital One as a result of this proposal. See Board letter to Mark Menting, Esq. (February 14, 2012)."

So a major contested issue was confined to a side letter on the same day at the approval. Amazingly, the Board has yet to provide even a copy of this letter to ICP, which commented extensively on this part of the proposal, including on ING being under investigation for violating sanctions.

While the Order says the charges are against ING, not ING Direct, in the side letter the Board was addressing ING owning a substantial percentage of Capital One. This segmentation is the type of legal legeredemain by which the FRB allowed the financial meltdown. This Order should be reconsidered, including in light of Capital One's dramatic drop in mortgage lending and did not adequately explain its findings - for example, the FRB asserts that Capital One’s credit card small business lending is minimal in contrast to findings by NCRC and others.

Footnote 10 of the FRB's approval order says

"One commenter expressed concern about ex parte communications and the opportunity for the public to rebut all information that was provided by Capital One. On review, the Board found that the public had a full opportunity to provide the Board with any information related to the factors that the Board must consider in acting on the notice. The information submitted by Capital One, and the release of that information to the public, was in accordance with the Board’s regulations and policies. The Board confirmed that all contacts between Capital One and staff were in accordance with the Board’s rules on ex parte communications."

The FRB should void and reconsider its Order, inter alia following its now appealed under the Freedom of Information Act denial of February 7, 2011 -- emailed to ICP after 5 pm on Feb 7 -- of ICP's FOIA request of October 29, 2011. This document dump was and is beneath the Federal Reserve.

Among the 1040 pages provided (more than 200 have been withheld in full), some show an irregular process tainted by ex parte communications and a disturbingly pervasive resolving door. Some examples, from a single one of the files dumped on ICP on February 7:

Former Federal Reserve legal staffer Andy Navarrete, now Senior Vice President of Capital One, improperly reached out to Scott Alvarez on August 25, 2011;

On November 7, 2011, PARobinson [a] wlrk.com – Patricia A. Robinson, presumably the always cordial Pat Robinson who was in the Federal Reserve Board’s Legal Division working on applications -- wrote to michael.sexton [a] frb.gov and stanlyn.clark [a] frb.gov

"It was great talking to you last week, Mike. Stanlyn, I am sorry that I missed you but hope to catch up very soon (now that my one-year 'cooling off' period has expired).

With all due respect to Ms. Robinson, it is troubling that Capital One could hire and use an attorney who personally knows and worked with all of the Fed attorneys reviewing the application. This led to a November 21, 2011, call about, among other things, the HSBC credit card portfolio, with 3 OCC officials on the call -- tainting that process as well. On November 18, 2011, Ms. Robinson was at the OCC, 8:45 to 10:45 AM. There was another call on December 9, 2011.

As noted in ICP's Feb 7 FOIA appeal, as simply one example, the Fed held ex parte communications with Capital One on November 21, writing a memo ostensibly as a tip of the hat to the rules against ex parte communications. Then the Fed withhold the summary under Exemption 4.

The Fed has even made withholdings from its own August 29, 2011 questions to Capital One. This is an outrage and has been appealed from.

The Fed is increasingly abusing and evading FOIA and this must be not only reversed, but explained and accountability imposed in connection with this request for reconsideration.

February 20, 2012

Fed Approves Capital One - ING After Delay & Data Dump, Reconsideration?

By Matthew R. Lee

SOUTH BRONX, February 14, updated -- Some Valentine: the day after the Federal Reserve for the second time postponed decision on the Capital One - ING bank merger, a Fed legal staffer called Inner City Press at 5:15 pm on Valentine's Day to say the deal was approved, but not in the normal way.

Inner City Press asked for an explanation of the February 8 postponement, and the February 13 deferral of decision, but none was provided. Reconsideration will be requested.

  One of the Fed's sleights of hand is in footnote 27, where after reciting Inner City Press' objections the Fed says "the Board has determined in a separate action that ING Groep would not control Capital One as a result of this proposal. See Board letter to Mark Menting, Esq. (February 14, 2012)."

  So a major contested issue was confined to a side letter on the same day at the approval. Footnote 10 of the Fed's approval order says

"One commenter expressed concern about ex parte communications and the opportunity for the public to rebut all information that was provided by Capital One. On review, the Board found that the public had a full opportunity to provide the Board with any information related to the factors that the Board must consider in acting on the notice. The information submitted by Capital One, and the release of that information to the public, was in accordance with the Board’s regulations and policies. The Board confirmed that all contacts between Capital One and staff were in accordance with the Board’s rules on ex parte communications."

   Consider: on the night of February 7, the Fed issued a document dump of some 1040 pages responding to a Freedom of Information Act request Inner City Press filed in October.

   Among the 1040 pages provided (more than 200 have been withheld in full, from ICP and other commenters, NCRC and others), some show an irregular process tainted by ex parte communications and a disturbingly pervasive resolving door. Some examples, from a single one of the files dumped on ICP on February 7, and which ICP commented on to the Fed in the run-up to its February 13 meeting:

Former Federal Reserve legal staffer Andy Navarrete, now Senior Vice President of Capital One, improperly reached out to Scott Alvarez on August 25, 2011;

On November 7, 2011, Patricia A. Robinson at Capital One's law firm – presumably the same Pat Robinson who was in the Federal Reserve Board’s Legal Division working on applications -- wrote to Michael Sexton and Stanlyn Clark at the Federal Reserve:

"It was great talking to you last week, Mike. Stanlyn, I am sorry that I missed you but hope to catch up very soon (now that my one-year 'cooling off' period has expired).

As ICP commented, it is troubling that Capital One could hire and use an attorney who personally knows and worked with all of the Fed attorneys reviewing the application. This led to a November 21, 2011, call about, among other things, the HSBC credit card portfolio, with 3 OCC officials on the call -- tainting that process as well. On November 18, 2011, Ms. Robinson was at the OCC, 8:45 to 10:45 AM. There was another call on December 9, 2011.

The Fed is increasingly abusing and evading FOIA and this must be not only reversed, but explained and accountability imposed in response to ICP's pending appeal.

For the reasons of record, and as argued by NCRC, the Federal Reserve should reconsider the ING approval...
 
  And the day after, ICP commented to the OCC:

ICP has just submitted to the OCC a FOIA request, based on information dumped on us by the Federal Reserve just before it ruled on Capital One - ING, which reflects ex parte contacts between the OCC and Capital One regarding Capital One's applications to acquire HSBC's national banks.

According to documents the Federal Reserve gave us under FOIA, on November 7, 2011, Patricia A. Robinson at Capital One's law firm – presumably the same Pat Robinson who was in the Federal Reserve Board’s Legal Division working on applications -- wrote to Michael Sexton and Stanlyn Clark at the Federal Reserve:

"It was great talking to you last week, Mike. Stanlyn, I am sorry that I missed you but hope to catch up very soon (now that my one-year 'cooling off' period has expired).

It is troubling that Capital One could hire and use an attorney who personally knows and worked / coordinated with attorneys reviewing the application. This led to a November 21, 2011, call about, among other things, the HSBC credit card portfolio, with 3 OCC officials on the call -- tainting the OCC process as well, we hereby timely contend.

The OCC officials including Michael DeClue, Wai-Fan Chang and Ancris Randhanie.

On November 18, 2011, Ms. Robinson tells the FRB that she was at the OCC, 8:45 to 10:45 AM.

ICP has submitted to the OCC a request for all records concerning these and other contacts between the OCC and Capital One in this proceeding, under FOIA and due process / rules against ex parte contacts. The records should be released, and comment allowed thereon, prior to any OCC ruling on Capital One's applications.


The comment period must be extending, and as argued by NCRC, public hearings like the Fed held should be scheduled.




February 13, 2012

Why did the Federal Reserve postpone its meeting on Capital One - ING from Wednesday afternoon for five days until Monday, February 13? Capital One's spokeswoman said “The board has informed us that the planned meeting for this afternoon has been rescheduled for Monday, February 13th. We understand that the delay is due to a scheduling conflict, and we look forward to their decision early next week."

But there's a problem with this spin, that scheduling made it impossible. At 3:05 pm on Wednesday, Inner City Press got a voice mail from the Federal Reserve's Legal Division, Michael Waldron, about an application that ICP Fair Finance Watch had commented on some time ago: Hawa - Korea Exchange Bank. The Board had just approved the application, Waldron said (without also stating any right to request reconsideration.)

In that Order Inner City Press / Fair Finance Watch is, yes, "the commenter."

So if the Fed could approve applications on Wednesday afternoon but chose not to do so for Capital One, why not?

One can hope that the outrageous "document dump" of hundreds of pages on the eve of the Fed's scheduled February 8 meeting, which Inner City Press immediately raised to the highest levels of the Fed, combined with calls Wednesday from NCRC members to open the meeting, caught the Fed's attention.

Then this should, too: Inner City Press, reviewing the documents dumped, has now commented to the Fed that

Among the 1040 pages provided (more than 200 have been withheld in full), some show an irregular process tainted by ex parte communications and a disturbingly pervasive resolving door. Some examples, from a single one of the files dumped on ICP on February 7:

Former Federal Reserve legal staffer Andy Navarrete, now Senior Vice President of Capital One, improperly reached out to Scott Alvarez on August 25, 2011;

On November 7, 2011, PARobinson [a] wlrk.com – Patricia A. Robinson, presumably the always cordial Pat Robinson who was in the Federal Reserve Board’s Legal Division working on applications -- wrote to michael.sexton [a] frb.gov and stanlyn.clark [a] frb.gov

"It was great talking to you last week, Mike. Stanlyn, I am sorry that I missed you but hope to catch up very soon (now that my one-year 'cooling off' period has expired).

With all due respect to Ms. Robinson, it is troubling that Capital One could hire and use an attorney who personally knows and worked with all of the Fed attorneys reviewing the application. This led to a November 21, 2011, call about, among other things, the HSBC credit card portfolio, with 3 OCC officials on the call -- tainting that process as well. On November 18, 2011, Ms. Robinson was at the OCC, 8:45 to 10:45 AM. There was another call on December 9, 2011...

The Fed is increasingly abusing and evading FOIA and this must be not only reversed, but explained and accountability imposed in response to this appeal.

This information must be reviewed, and released and comment allowed thereon, by ICP, NCRC and others, before the Fed considers approving the Capital One - ING proposals.

February 6, 2012

The fight on Capital One - ING continues, as more and more information is withheld. Inner City Press filed this FOIA appeal on February 4:

This is a timely FOIA appeal to the Federal Reserve Board's denial of February 3, 2012 of my FOIA request of January 6, 2012, for all of Capital One's January 3, 2012 submission to the Fed, etc..

The Fed has provide a document with redactions which ICP is hereby appealing. From Capital One's response to the Fed's December 15, 2011 questions, the Fed has blacked out the entirety of Footnote 1, which seemingly explains Capital One's lending in California.

The Fed has blacked out on the top of Page 6 some Capital One argument about how and why it will improve the fairness of its lending.

On Pages 11 and 12, Capital One makes representations to the Fed about with whom it will partner, representations clearly meant to argue for approval of Capital One's applications - but Capital One, and now the Fed, withheld the names and the argument. ICP is appealing.

The bottom of Page 16 is entirely redacted; there is no way to know what type of information it contains, and ICP appeals from the invocation of Exemption 8 (bank supervision) and Exemption 4, including the many redactions from the Exhibits to Capital One's submission.

The Fed is increasingly abusing and evading FOIA and this must be not only reversed, but explained and accountability imposed in response to this appeal.

This information must be reviewed, and released and comment allowed there, before the Fed considers approving the Capital One - ING proposals, protested by NCRC, ICP and others

January 30, 2012

With Fed Mulling Capital One's ING Deal, 590 Pages Withheld, Blacked Out

By Matthew R. Lee

SOUTH BRONX, January 29 -- Amid questions about the Federal Reserve's transparency as it considers allowing Capital One to buy ING Direct and become the fifth largest bank in the US, the Fed last week responded to a Freedom of Information Act request by Inner City Press by withholding 590 pages in full, and at least half of the single 34 page document it did provide.

  Click here to view the Fed's FOIA Denial, from which Inner City Press has already appealed, and click here to view the heavily redacted 34 page document that the Fed provided to Inner City Press (and Capital One to NCRC and the other protesters from which it had withheld this information).

  As argued in Inner City Press' FOIA appeal, the Fed should re-open its comment period, inter alia following its now appealed under the Freedom of Information Act denial of January 24, 2012 of ICP's FOIA request of December 4, 2011, for "all withheld portions of Capital One's November 15, 2011 submission to the Fed on the pending ING DIRECT application."

  It took 50 days for the Fed to respond. Worse, 590 pages are being withheld in full, and of the single 35 page document subsequently sent to Inner City Press, much has been redacted, including how Capital One would pay for the acquisition,

- weaknesses in ING DIRECT (page 3);

- all information about Capital One's credit card lending to people with FICO scores below 660, and subprime card lending (page 4);

- small business lending (page 5);

- due diligence on HSBC's card platform, previously of the predatory lender Household (page 13);

- forward sale agreements (page 14 - even the Fed's question is withheld, we appeal that);

- mortgage lending (page 16); swaps (page17);

- and the entirety of pages 19 through 34, including the Fed's questions.

  The Fed cites Exemption 5, but it how an "intra-agency" exemption could be cited for what Capital One submitted is unclear. ICP opposes the invocation, too, of exemption 8 without explaining in detail the type of information in the 590 pages withheld in full.

   It is hard or impossible to argue about this black hole of information: the Governor charged with ruling on this appeal should review all of the information in camera, and release all portions that are not strictly exempt.

  The Fed is increasingly abusing and evading FOIA and this must be not only reversed, but explained and accountability imposed in response to this appeal.

 This information must be reviewed, and released and comment allowed there, before the Fed considers approving the Capital One - ING proposals.

  For the reasons of record, and as argued by NCRC, the Federal Reserve should re-open the comment period to fully consider Capital One's related proposal to buy the ex-Household predatory lending platform from HSBC, and the related stealth ING proposals.


January 23, 2012

Slowly, too slowly, some pigeons come home to roost.

General Electric, which engaged in predatory lending through WMC, is now reportedly under investigation -- just as it proposes to acquire $7.5 billion in deposits from Met Life.

Royal Bank of Scotland's former boss, Sir Fred "the Shred" Goodwin, faces the loss of his knighthood, after he helped enable predatory lending by securitizing and trading in the loans through RBS Greenwich Capital Markets. PM Cameron said, "There’s a forfeiture committee in terms of honors that exists and it will now examine this issue. I think it’s right that it does so."

Meanwhile on Capital One: When in September the Federal Reserve held a public meeting on Cap One - ING in Chicago, Fed legal division official Ms. Thro replied, on camera, to Inner City Press / Fair Finance Watch's comments by saying ICP should submit a Freedom of Information Act request. ICP immediately did.

Among other things, ING is reportedly under investigation for violating sanctions, on Sudan, Iran and other elsewhere - topics which deserve a public airing before ING is considered to be allowed to own 9.9% of what would become the fifth largest US financial institution.

Inner City Press returned a telephone call to another Fed Legal Division staffer and voluntarily narrowed its FOIA request, for specific adverse ING information such as the above. The Fed identified responsive information but forwarded the request to the OCC, they say on December 20.

Now, more than three months later, the information is withheld in full by OCC denial on Friday. The OCC's denial does not provide a speck of information, does not give any idea of what is being withheld, and does not even state how many pages are being withheld.

There is no way to assess the propriety of these withholdings in full, ostensibly under Exemption 4. ICP has immediately appealed the withholding(s).

This information about ING must be reviewed, and released and comment allowed there, before the Fed considers approving the Capital One - ING proposals.

For the reasons of record, and as argued by NCRC, the Federal Reserve should re-open the comment period to fully consider Capital One's related proposal to buy the ex-Household predatory lending platform from HSBC, and the related stealth ING proposals.

January 16, 2012

   Responding to the Federal Reserve to allegations that Capital One violates bankruptcy laws, COF's law firm Wachtell, Lipton, Rosen & Katz in a January 11 submission wroted that it "was unaware of the debtor's bankruptcy because [REDACTION, Pages 3 - 4]." Inner City Press on January 14 challenged this redaction under the Freedom of Information Act, sating that as before and on the still pending requests, all information not clearly entitled to confidential treatment under the narrowest reading of the exemptions should be provided before any decision to approve, even conditionally, COF's applications to acquire ING DIRECT, protected by ICP, NCRC and others.

As Morgan Keegan Sells Out to Raymond James, Recess Appointment for FRB?

By Matthew R. Lee

SOUTH BRONX, January 11 -- As the biggest bank merger of 2012 so far was announced Wednesday, Morgan Keegan for sale to Raymond James for $930 million, Morgan Keegan's recent settlement of subprime related fraud charges was not lost on community activists. Would it be raised to regulator? Why not?

  But who will the regulators be? President Barack Obama showed himself willing to use a recess appointment to put Richard Cordray atop the Consumer Financial Protection Bureau, which seems to have no merger review role.

  It is argued that Obama "had" to nominate a Deutsche Bank and Carlyle Group hedge fund insider, Jay Powell, to the Federal Reserve as a condition of getting a Democrat also confirmed.

  Meanwhile Democratic representatives are urging Obama to offer a recess appointment for a new head of the Federal Housing Finance Agency. Twenty eight congressmembers from California signed a January 10 letter, which argued that Obama should use the same legal justification for appointing a new director at the agency that he applied to Cordray and the CFPB.

"As the fiduciary of government-backed entities, there are steps that the FHFA can take to help prevent foreclosures while also protecting taxpayers," they wrote. "Installing a permanent Director of the FHFA will allow the FHFA to move forward to make key decisions that will help keep families in their homes and improve our economy."

  Some wonder why this logic isn't applied to the Federal Reserve Board, where Obama supporters argue that he "had" to nominate a hedge fund insider Jay Powell in order to get any confirmation.

  The Fed is reportedly preparing to rubber stamp Capital One's application to acquire ING DIRECT, protested by NCRC, Fair Finance Watch and others, even as Capital One's lawyers try to withhold the most substantial portions of their responses to the Fed, including on Capital One's related application to the Office of the Comptroller of the Currency to buy from HSBC the subprime credit card platform of the former Household International, charged with nationside predatory lending. Why?


January 9, 2012

Capital One put in another submission to the Federal Reserve on its ING DIRECT application -- but then withheld large parts of it as sent to Inner City Press and other commenters. ICP has challenged under the Freedom of Information Act, and submitted the below to the Office of the Comptroller of the Currency on Capital One's HSBC application:

On behalf of Inner City Press / Fair Finance Watch and its members and affiliates (collectively, "ICP"), this is a sixth comment opposing Capital One's applications to acquire HSBC's national banks -- that is, HSBC's at least partially subprime credit card business (some of which HSBC acquired, without review, along with the scandal tainted Household International).

The OCC should hold public hearings on this HSBC proposal, as the Federal Reserve did on the ING (but not HSBC) proposal. The OCC should re-open its comment period inter alia following improper withholdings, now challenged under the Freedom of Information Act, from Capital One's (COF's) submissions to the Federal Reserve System dated January 3, 2012, with those improperly redacted by COF's law firm Wachtell, Lipton, Rosen & Katz. We refer most pressingly to the redacted response to the FRS' December 16 questions, sent to us by email on January 6 by WLRK under cover lever dated January 3, 2012. COF is required to send us their submission under the FRS' ex parte rules, but has sent us significantly redacted versions.

Even as provided, the material make clear that the two proposals -- HSBC and ING DIRECT -- are related, with Capital One make representations to the Fed about the HSBC proposal. HSBC put out a press release bragging about accounts renewed that would to go to Capital One: even regarding this, there are issues...

Under the headings “Mortgage Lending," "Community Development Lending," "Other Lending" and the like, COF makes claims about policies and loans made and then redacts line after line. This also takes place when COF is asked in 1d about its lending geographically: contrary to the spirit and letter of CRA, geographical identifiers are redacted, even footnotes. We challenge each and every one of these absurd redactions, as well as the withholding of purported confidential exhibits 1, 2 and 3.

This was submitted through the FRS' FOIA form on January 6 to gain expedited treatment. All information not clearly entitled to confidential treatment under the narrowest reading of the exemptions should be provided before any decision to approve, even conditionally, COF's applications to acquire HSBC's credit card platform.

ICP submitted a first comment to the OCC on October 18, a second comment on November 6, and a third on November 13. ICP received a copy of (most of) the application, and challenged under FOIA the withholding of Exhibits, particularly but not only "Confidential" Exhibit D. Inner City Press then submitted a timely FOIA appeal for the continued withholding in full of Confidential Exhibit D,which says only that it is "Additional Information Regarding the Acquisition." Nor does the OCC's Denial Letter provide any information about what is being withheld. ICP is appealing the withholding of this and all other information.

The comment period must be extending, and as argued by NCRC, public hearings like the Fed held should be scheduled.

January 2, 2012

 Capital One announced its proposal to acquire ING DIRECT back in June, and the deal still hasn't closed or been approved. Over the holiday, Inner City Press / Fair Finance Watch filed additional comments with both the Federal Reserve and the Office of the Comptroller of the Currency, which is considering Capital One's related proposal to acquire the ex-Household predatory credit card lending platform from HSBC.  The OCC, despite the issues raised, has yet to schedule a public hearing. Watch this site.

December 26, 2011

As the Federal Reserve (and OCC, which will be a separate story) try to shield the Capital One - ING - HSBC deals, Inner City Press / Fair Finance Watch has submitted to the Fed a FOIA appeal of the Fed's FOIA denial the the FOIA request of September 28, which stated:

This is a request under FOIA for the entirety of ING's request for a non-control determination to own up to 9.9% of Capital One, and all records reflecting any FRS communications regarding the request or ING from January 1, 2011 to the date of your final response to this request.


Background: at yesterday's public meeting in Chicago on Capital One - ING DIRECT, Ms. Thro of the Legal Division commented on Inner City Press' testimony, that ICP "can file a FOIA request" for ING's request. This is that request, and for communications, and response should be expedited before October 12, or Capital One - ING DIRECT comment period should be extended. Thank you.

Despite Ms. Thro's public comment about the ability to file a FOIA request and implication what one would thereby receive the requested documents, on a timely basis, it took two and a half months for the Fed to respond. This constructive denial should be explained and acted on in response to this appeal.

Worse, among the documents subsequently sent to Inner City Press -- this appeal is timely -- nearly everything is redacted.

Of the August 15 submission by Sullivan & Cromwel (S&C), the letter requesting confidential treatment is provide: but the entirety of the referenced "Annex A" is withheld.

The denial letter claimed that "the nature and amount of information being withheld will be evident from the face of the documents being provided." This is not true, and should be reversed, explained and acted on in connection with this appeal.

From the September 29 S&C cover letter, the area under Mark Menting's signature is blacked out, with the notation "N/R." Since ICP requested "all" documents, it is absurd to call this portion of the submission, whatever it is, "non responsive." If it is the people who the letter is cc-ed to, the Fed has hit a new low that must be reversed, explained and acted on in connection with this appeal.

Also, the entirely of the September 29 Annex A, including its footnote, is redacted.

Getting even worse, of the November 18 submissions, even a portion of the request for confidential treatment is redacted, as well as the entire annex.

Of the November 23 submission, two and a half paragraphs of S&C's letter to Ms. Thro are redacted - each and every redaction is hereby being appealed, including again the absurd blacking out of the area under Mr. Menting's signature.

From the November 29 submission, the blacked out "N/R" is on a separate page. It is absurd to a claim, in response to the request -- invited by Ms. Thro -- for information related to the any non-control determination that this material, which S&C's letter says is related to the requested non-control determination, is "not responsive." The Fed is increasingly abusing and evading FOIA and this must be not only reversed, but explained and accountability imposed in response to this appeal.

Watch this site.

December 19, 2011

ICP has submitted a timely FOIA appeal and comment to the OCC on Capital One's applications to acquire HSBC's national banks, the Household International predatory lending platform.

ICP submitted a first comment to the OCC on October 18, a second comment on November 6, and a third on November 13. ICP received a copy of (most of) the application, and challenged under FOIA the withholding of Exhibits, particularly but not only "Confidential" Exhibit D.

Now, Inner City Press is submitting a timely FOIA appeal for the continued withholding in full of Confidential Exhibit D,which says only that it is "Additional Information Regarding the Acquisition." Nor does the OCC's Denial Letter provide any information about what is being withheld. ICP is appealing the withholding of this and all other information. The comment period must be extending, and as argued by NCRC, public hearings like the Fed held should be scheduled. In the interim, consider that


Capital One Financial Corp. experienced a significant increase in credit card charge-offs during the month of November. The 30-day delinquency rate for the Capital One Master Trust increased by one basis point to 3.46%, according to a Form 10-D filed Dec. 15. The charge-off rate jumped to 3.86% from 3.39%.

Watch this site.

December 12, 2011

Capital One spent $330,000 in the third quarter to lobby the federal government for "issues [including] bank mergers," according to the report the company filed Oct. 20 with the House of Representatives' clerk's office. That's a 74 percent increase from the $190,000 that the bank spent a year earlier but 23 percent less than the $430,000 it spent in the second quarter of 2010...

Bad karma: Bank of New York Mellon moved to evict Occupy Pittsburgh from "its" park. Will there be repercussions?

December 5, 2011

Capital One was required to send a copy of its November 15, 2011 submission to the Federal Reserve to ICP. But under the heading "Community Reinvestment Act," Capital One says "for additional responsive information, please see Capital One's... Confidential Responses enclosure." ICP is challenging the withholding of CRA responses, as well as Capital One's submissions on the key question of how much of its and HSBC's business is subprime, and the connection between ING DIRECT's loans and depositors. Watch this site.

November 28, 2011

With Capital One, the fight continues. This week this came in:

Subject: OCC Press Release: Capital One/HSBC Credit Card Application
From: Lybarger, Stephen @occ.treas.gov
Date: Mon, Nov 21, 2011 at 1:52 PM
To: "Matthew R. Lee" @ innercitypress.org

Matthew, The OCC today reopened the public comment period on the Capital One/HSBC credit card application. We have also made the application available on the OCC website, a link is contained in the press release. http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-138.html

Please forward to others who would have an interest.

Consider it done.

November 21, 2011

The OCC's stumbling processing of Capital One's application to buy the predatory credit card platform of Household International from HSBC had given rise to complaints and requests to improve the OCC's process. Will they? Watch this site.

November 14, 2011

The Office of the Comptroller of the Currency has yet to even extend its comment period on Capital One's applications to acquire HSBC's national banks -- that is, HSBC's at least partially subprime credit card business (some of which HSBC acquired, without review, along with the scandal tainted Household International).

Inner City Press / Fair Finance Watch submitted a first comment to the OCC on October 18, and a second comment on November 6. After that, ICP received a copy of (most of) the application, which we contend should have analyzed subprime credit card lending as a separate product market. We also challenge the withholding of Exhibits, particularly but not only "Confidential" Exhibit D.

In a just filed third comment ICP has formally argued that the OCC should re-open its comment period, as while Capital One would presumptively become a global systemically important bank under Basel III, subject to loss absorbency requirements ranging from 1% to 3.5% of risk-weighted assets, Capital One is publicly said it is assuming this will NOT be the case, and has premised its application to the OCC on this dubious assumption.

Also, according to its Form 10-Q filed November 7, Capital One Financial Corp. increased its mortgage repurchase reserves for uninsured securitizations. The OCC should require answers, extend the comment period and hold public hearings.

November 7, 2011

To the Office of the Comptroller of the Currency, ICP submitted a first comment on October 18, of which the OCC has yet to even acknowledge receipt, much less get a responses from Capital One. (The OCC also did not respond to ICP's October 18 reuqest "please immediately send all portions of the applications for which Capital One has not requested confidential treatment by e-mail.")

The OCC should extend its comment period, and hold public hearings, particularly given the predatory history of the lending platform at issue which raises issues different from those in Capital One - ING DIRECT, in which the Federal Reserve extended the comment period and held public meetings. The OCC must go beyond that, given the issues raised.

October 31, 2011

So the Office of the Comptroller of the Currency has clarified its initial comment period on Capital One's application to buy the former Household International predatory lending business from HSBC -- it runs through November 7. A request has been made to extend it, as even the Fed did, in this case for 60 days. We'll see.

The subprime meltdown of 2008 and the global financial crisis that has followed was made possible by the largest banks' crackdown on internal whistleblowers who could have alerted the public to the predatory nature of the mortgage loans being securitized. Inner City Press was contacted by a number of such whistleblowers, many of them inside Citigroup's CitiFinancial subsidiary. Beyond those whose affidavits Inner City Press published, one in Knoxville, Tennessee was particularly significant. This whistleblower described to Inner City Press in detail how CitiFinancial's compensation schemes operated, including the sale of credit insurance on personal property with absolutely no benefit to the borrowers. Inner City Press submitted this information to the Federal Reserve, which ultimately fined Citigroup $75 million dollars. The whistleblower was not only fired, but sued and harassed. But the whistleblower persisted.


October 24, 2011

Even with the Federal Reserve having closed its comment period on Capital One - ING DIRECT while refusing to process FOIA requests, there is another, related process. On October 18, Inner City Press / Fair Finance Watch filed comments with the Office of the Comptroller of the Currency on Capital One's application to acquire the platform of predatory lender Household International from HSBC -- the OCC says it will accept comments at least through October 31:

Re: Timely Oppositions to, and Requests on, Capital One's applications to Acquire HSBC (Formerly Household Int'l) Banks

Dear Mr. Lybarger and others in the OCC:

On behalf of Inner City Press / Fair Finance Watch and its members and affiliates (collectively, "ICP"), this timely comment opposes Capital One's applications to acquire HSBC's national banks -- that is, HSBC's at least partially subprime credit card business (some of which HSBC acquired, without review, along with the scandal tainted Household International).

When HSBC bought Household International, in order to avoid CRA review Household's Federal Savings Bank was dissolved. CRA was not reviewed.

Capital One, alongside its brick and mortar banking operations, is a nationwide credit card lender surrounded by mounting allegations of abusing consumers. As sampled below, Capital One's mortgage lending is disparate, and threatens to become more so as it limits and reported seeks to end its Federal Housing Administration lending.

As simply one example, in the Washington DC Metropolitan Statistical Area in 2009, the most recent year for which aggregate Home Mortgage Disclosure Act data is available, for conventional home purchase loans Capital One made 102 loans to whites and only 11 to African Americans.

Meanwhile for the FHA and VA loans in Table 4-1, Capital One made 25 loans to African Americans and 74 to whites. These disparities, Capital One's FHA lending policies and reported plan to cease FHA lending would harm protected classes and, disproportionately, low and moderate income families.

In Louisiana in 2010, Capital One denied 68% of applications from African Americans, versus only 44% of applications from whites. Capital One confined 8.1% of its Latinos borrowers to high cost (rate spread) loans, versus 6.3% of its white borrowers.

In the District of Columbia in 2010, Capital One denied 32.4% of applications from African Americans, versus only 11.7% of applications from whites - a denial rate disparity of 2.77.

Also for the record:

Thursday, September 15, 2011 4:24 PM ET

Credit conditions weaken at Capital One in August

Capital One Financial Corp. saw its credit trends reverse in August as delinquencies reported by the Capital One Master Trust inched higher to 3.32% from 3.31% in the prior month.

According to a Form 10-D filed Sept. 15, Capital One's net charge-off rate moved higher to 3.70% from 3.51% in July.

In a Form 8-K filed the same day, Capital One reported that the 30-day delinquency rate for its domestic card segment rose to 3.43% from 3.37% in the previous month. The annualized net charge-off rate for that segment climbed to 4.10% from 3.77%".

From a research report that came out right after that: "Sandler O'Neill & Partners LP analyst Michael Taiano reduced his 2011 and 2012 EPS estimates for McLean, Va.-based Capital One Financial Corp. to $7.25 and $5.46 from $7.51 and $6.00 following the release of the company's August credit performance. The analyst also lowered his price target to $54 from $58..."

You will be hear from other NCRC members about Capital One's disparate lending record, and the systemic risk and lack of public benefit of the Capital One - ING Direct proposal.

Capital One's mortgage lending disparities in 2010,was MORE disparate in New York State than elsewhere.


For example, in New York State in 2010 Capital One denied a whopping 72.7% of applications from Latinos, and 69.2% of application from African Americans, both higher that its nationwide numbers.

ICP is timely raising that the on this record the OCC should schedule a public meeting in New York, where Capital One was allowed to acquire North Fork, see e.g., http://www.highbeam.com/doc/1G1-143359086.html

To be continued.


October 17, 2011

The Federal Reserve closed its comment period on Capital One - ING DIRECT with more than 300 comments in opposition in the record, and while evading and outright ignoring and refusing to respond to FOIA requests. We'll have more on this.

October 10, 2011 --

At Occupy Wall Street, Baldwin Flacks for Capital One, Of Chase & Desperate Housewives

By Matthew Russell Lee

WALL STREET, October 8 -- In Zuccotti Park on Saturday night, there was drumming and tombstones for the Glass-Steagall Act. There were police on all four corners with bullhorns, and busses of tourists rolling past on Broadway snapping pictures.

  Earlier at a General Assembly in Washington Square Park, a self-described banker told the crowd to max out their credit cards to get an education, and then not pay it back. The bankers, he said, are living in million dollar condominium and don't need your money.

  In the days after the October 5 labor march and late night Wall Street action complete with pepper spray and batons, there's been increasing focus on who supports Occupy Wall Street. Obama, Nancy Pelosi, even Federal Reserve Board chairman Ben Bernanke saying he understands. Is this the death or new stage of the movement?

  For Inner City Press at least, the hunger for celebrities at Occupy Wall Street is troubling. Alec Baldwin, for example, tweeted Friday that despite Occupy Wall Street, Capital One is still a good partner. Really? Even the Fed has held three hearing on Capital One's rip-off of consumers, considering its application to buy ING DIRECT and HSBC's subprime credit cards.

  In Zuccotti Park Saturday night, a sign lay on the ground about Capital One abusive calling a borrower up to ten times a day. This is what Capital One does, but Alec Baldwin doesn't seem to care. He like Jimmy Fallon, both considered liberals, take Capital One's money to advertise for them.

  Some in Zuccotti Park, meanwhile, are happy for visits by celebrities, whether feel-good spiritualists who moonlight with the UN or otherwise.

  A close observer likened some of those in Zuccotti Park to the Desparate Housewifes in suburban New Jersey -- they are paid to keep the home fires burning, to "look good." But look good then: much is made online of a protester defecating on an NYPD squad car.

  Inner City Press' view, after the arrests of October 1 and the ad hoc moves on Wall Street October 5, is that some keep up residence in the park to keep the momentum going, but the energy comes from outside for real marches, best when challenging the physical symbols of the crisis: JPMorgan Chase, Goldman Sachs, further uptown Citigroup. Desperate Housewives indeed. Watch this site.


October 3, 2011 --

As Capital One Plays Chicago, Fed Plays Hide the (Predators') Ball

By Matthew R. Lee

SOUTH BRONX, September 27 -- At the second of the Federal Reserve Board's three public meetings on Capital One's application to acquire ING DIRECT, Capital One in Chicago Tuesday morning made much of the $180 billion, ten year lending pledge it made on September 20.

 But when asked if this would be broken down by region, Capital One's representative said "no," adding "we may change what we have included" in the pledge.

Inner City Press' testimony asserted that some portion of Capital One's pledge may be predatory lending of the type engaged in by the Household International platform Capital One is seeking simultaneously to buy from HSBC.

The Fed has yet to schedule a hearing in New York, where it allowed Capital One to buy North Fork Bank and make further disparate its lending. So ICP's testimony was graceously read into the record by another NCRC member.

Even so, the Federal Reserve decided to "comment" on the testimony, telling Inner City Press to submit a new Freedom of Information Act request for ING's "request for a non-control determination" for its proposal to own 9.8% of Capital One.

Inner City Press has said ING should apply, to allow comment on issues like ING being under investigation for violating sanctions and doing business in Sudan and Syria. Now the Fed says to request a copy of ING's "request for a non-control determination" -- on which no public comment is accepted. And the Fed has delayed responding ICP's pending FOIA requests.

  Nevertheless, ICP the next day submitted a new FOIA request, which has yet to even be acknowledged by the Fed. Watch this site.

The next hearing -- ostensibly the last -- is this  week in San Francisco, with the Fed's comment period slated to close on October 12. We will continue on this.

September 26, 2011

At the Fed's September 20 public meeting in Washington, Capital One whipped out a $180 billion lending pledge. However, with the still unexamined proposal for Capital One to lend through the subprime lending platform that HSBC acquired along with notorious predatory lender Household International, this pledge could represent new predatory lending.

September 19, 2011

Inner City Press / Fair Finance Watch has put in an eighth comment to the Federal Reserve on Capital One, including

ICP has received an FRB letter of September 12, responding to ICP's August 19 FOIA request by saying "there may be delays." The comment period should, in that case, be extended. In this context it is unreasonable to expect new FOIA requests, for example for the withheld portions of the September 9 response Capital One was supposed to send. The improperly withheld portions from be provided forthwith. And for the additional reasons set forth before a public meeting should be held in New York, where the Fed allowed Capital One to acquire North Fork, and in New Orleans, Louisiana and Texas.

ICP has reviewed the Loan Application Register of Capital One for 2010, during which year Capital One received 1034 applications in the District of Columbia (and 109 in California and 24 in Illinois.)

The 2010 New York and Louisiana disparities of Capital One have already been analyzed for the record. In the District of Columbia in 2010, Capital One denied 32.4% of applications from African Americans, versus only 11.7% of applications from whites - a denial rate disparity of 2.77.  

   Watch for NCRC testimony in DC - then Chicago.

September 12, 2011

  Inner City Press / Fair Finance Watch has submitted to the Federal Reserve a seventh comment opposing the proposed acquisition by Capital One Financial Corporation (“Capital One”) to acquire ING Bank, FSB and its affiliates (“ING”), to form what would be the fifth largest bank in the country.

The Fed has yet to fully respond to ICP's FOIA requests and appeals: this should take place forthwith. And for the additional reasons set forth before a public meeting should be held in New York, where the Fed allowed Capital One to acquire North Fork, and in New Orleans, Louisiana and Texas.

ICP has reviewed theLoan Application Register of Capital One for 2010, during which year Capital One received 2279 applications in New York, 8786 in Louisiana and 4704 in Texas. (By comparison Capital One in 2010 received 1034 applications in the District of Columbia, 109 in California and 24 in Illinois.)

The New York disparities of Capital One have already been analyzed for the record. In Louisiana in 2010, Capital One denied 68% of applications from African Americans, versus only 44% of applications from whites. Capital One confined 8.1% of its Latinos borrowers to high cost (rate spread) loans, versus 6.3% of its white borrowers.

So why isn't the Fed holding a public meeting in Louisiana, and in New York? This should be done.

Also in New York, this transaction has an impact, including in terms of layoffs. According to SNL Financial:

Wednesday, September 07, 2011 1:30 PM ET

Capital One consolidating back-office ops

Capital One Financial Corp. is consolidating its New York back-office operations.

The McLean, Va.-based company is consolidating the majority of work currently done in Mattituck, N.Y., to Melville, N.Y., and Richmond, Va.

The move will affect about 135 jobs currently in Mattituck...

ICP is timely raising that the on this record the FRB should schedule a public meeting in New York, where it allowed Capital One to acquire Mattituck-based North Fork, see e.g., http://www.highbeam.com/doc/1G1-143359086.html

In an abundance of caution, ICP has put in a request to the Federal Reserve Bank of Chicago to testify, but this is entirely without prejudice to this formal request that the FRB hold a hearing in Capital One's major disparate market of New York (including given the NY Fed's questionable role in the systemic issues raised by this proposal.)


September 5, 2011

After the Federal Reserve's belated announcement of three public meetings on Capital One - ING Direct, Inner City Press has commented as follows to the Fed:

This is a sixth comment from Inner City Press / Fair Finance Watch ("ICP") opposing the proposed acquisition by Capital One Financial Corporation (“Capital One”) to acquire ING Bank, FSB and its affiliates (“ING”), to form what would be the fifth largest bank in the country.

The Fed has yet to fully response to ICP's FOIA requests and appeals: this should take place forthwith. And for the reasons set forth before a public meeting should be held in New York, where the Fed allowed Capital One to acquire North Fork.

Given the issues raised, including by Federal Reserve official Thomas Hoenig and NCRC and others, about this proposal, it is imperative that the Fed either finalize these regulations before the public meetings, or further extend the comment period.

While the Fed scheduled three public meeting, two of the three are in communities in which Capital One does not have a branches, while the Fed has avoided Capital One's major market of New York (and New Orleans and elsewhere).

Capital One's mortgage lending disparaties in 2010, the most recent year for year data is available (from Capital One, as ICP obtained it), was MORE disparate in New York State than elsewhere.

For example, in New York State in 2010 Capital One denied a whopping 72.7% of applications from Latinos, and 69.2% of application from African Americans, both higher that its nationwide numbers...

As noted, on August 11, the day after Capital One announced a related proposal to acquire HSBC's largely subprime credit card business (much of which HSBC acquired along with the scandal tainted Household International), ICP asked that the comment periods should be extended specifically to allow comment on the proposals together, to avoid a segmented and illegitimately limited review.

ICP has yet to receive documents or even a confirmation of receipt of its FOIA Appeal of the improperly withheld records concerning Capital One, ING and the FRS. It is also still not clear what the FRS has done in response to ING's request for a ruling -- without any public comment -- that it would not control Capital One while owning up to 9.9% of the company.

August 29, 2011

As Fed Sets 3 Public Hearings on Capital One -ING Direct, ING and HSBC Subprime Card Filings Missing, Info Still Withheld

By Matthew R. Lee

SOUTH BRONX, August 26 -- With the Federal Reserve Board on August 26 belatedly granting over 200 requests for public hearings on Capital One and its application to acquire ING Direct, the question arises why the Fed delayed and why it now said "yes."

On August 25, three days after the Fed allowed the comment period to close on the application, the Fed admitted in writing to improperly withholding under the Freedom of Information Act some of Capital One's many communications with the Fed, writing to Inner City Press that

"subsequent to the Secretary's response of August 3, 2011, Board staff was informed that an employee at the Federal Reserve Bank of Richmond located additional responsive material. The employee had been traveling between the date of your request on July 22, 2011 and the date of the Secretary's response on August 3, 2011. Accordingly, Board staff was not aware that these additional responsive material existed until after the Secretary had responded to your request on August 3, 2011."

   With Fed chairman Ben Bernanke out in Jackson Hole, Wyoming, long time Fed official Tom Hoenig became on his way out a whistleblower, saying on camera that he has

"serious doubts about Capital One's proposed purchase of ING Direct. 'I have very grave concerns about allowing these amalgamations of institutions that by their very structure are too big to fail, too interconnected to fail and I think the burden should be very heavily against that,' Hoenig said."

   Now at public hearing set in Washington, Chicago and San Francisco, the Fed will have to consider testimony from hundreds, many from NCRC, on this and other points, including Capital One's abuse of credit card consumers, and the predatory lending history of the card platform it seeks to buy from HSBC to deploy the ING Direct deposits.

There is still the question of why ING has not filed an application for its proposal to acquire up to 9.8% of the stock of Capital One, and to control a seat on Capital One's board of directors. And there is still a slew of information improperly withheld by the Fed under FOIA.

The hearings are as follows:

Washington, D.C. – Tuesday, September 20, 2011, beginning at 8:30 a.m. EDT, at a location to be determined.

Chicago – Tuesday, September 27, 2011, beginning at 8:30 a.m. CDT, at the Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, IL.

San Francisco – Wednesday, October 5, 2011, beginning at 8:30 a.m. PDT, at the Federal Reserve Bank of San Francisco, 101 Market Street, San Francisco, CA.

  The Fed also re-opened and extended its comment period until October 12. We will continue on this.

   With these two acquisitions, Capital One could become a fifth "too big to fail" bank in the US, after JP Morgan Chase, Bank of America, Wells Fargo and Citigroup. The anachronistic gang in Capital One's television ads, along with Alec Baldwin, may be funny, but less so if considered too big to fail, possibly requiring bailouts.

  In group's  initial comments to the Fed, less has been said about ING, in part because ING's US business had been directed at a more affluent clientele, and because ING was not viewed as the applicant.

  But after Inner City Press filed a Freedom of Information Act request with the Federal Reserve Board on July 22, a partial response from the Federal Reserve shows that ING has quietly sought a ruling from Fed General Counsel Scott Alvarez that ING should not have submit any application subject to public comment to own up to 9.9% of Capital One. Click here to view the Fed's (first) FOIA partial denial letter, from which Inner City Press has already appealed.

  This would exclude public comment and consideration of ING doing business with the likes of Sudan, Iran, Cuba, Syria and others on the US state sponsors of terrorism list. ING had admitted being under investigation for, and negotiating with the US Department of Justice about, such violations, and there have been expressions of Congressional concern, which the Fed could ignore by granting ING's stealth request.

  The documents obtained under FOIA show that ING, represented by the Wall Street law firm of Sullivan & Cromwell, on July 15 wrote to the Fed's Alvarez asking for "written confirmation that [ING] will not be deemed to directly or indirectly 'control' Capital One for purposes of the Bank Holding Company Act upon the consummation of the Bank Sale."

Earlier in ING's 13 page request, on which the Fed has until now not solicited or accepted any public comment, ING says that the shares with which Capital One would pay it for ING Direct would "represent between 9.7% and 9.9% of the outstanding shares of Capital One's Common Stock on the closing date." Click here to view some of the released records, including Sullivan & Cromwell's letter to the Fed for ING.

Under the Bank Holding Company Act, any holding over 4.9% can be considered control. One would think, given the issues raised, that the Fed would solicit comment and hold the requested public hearings on ING's request to own nearly 10% of Capital One. But it has only come about because of the Fed's partial FOIA response.

Amazingly, the Fed mis-read Inner City Press' FOIA request as only asking from Fed communications with ING and Capital One about the proposed acquisitions, when in fact Inner City Press requested all records reflecting Fed communications concerning either of the two companies.

The Fed has provided such records, including internal Fed emails about the Industrial & Commercial Bank of China and Governor Warsh's meeting with its chairman, in previous responses to Inner City Press.

  It seems the Fed, ING and Capital One have already had something to hide in this transaction, including seeking to exclude from public comment and consideration ING illegally doing business in and with Syria, Iran, and Sudan. Now they seek to sweep through and under the carpet Capital One's proposed acquisition of the predatory lending platform of Household International from HSBC. But it will continue to be opposed, including at all three belatedly announced Fed hearings. Watch this site.


August 22, 2011

Now, with the Federal Reserve Board having received over 150 comments opposing the proposed acquisition by Capital One to acquire ING Direct to form what would be the fifth largest bank in the country, largely from NCRC members like ICP and also including from the lead co-sponsor of the Dodd Frank bill, it would sees clear that the Fed must extend the comment period.

On August 7, ICP filed a timely comment demanding the ING file an application regarding control of Capital One. On August 11, the day after Capital One announced a related proposal to acquire HSBC's largely subprime credit card business (much of which HSBC acquired along with the scandal tainted Household International), ICP asked that the comment periods should be extended specifically to allow comment on the proposals together, to avoid a segmented and illegitimately limited review.

The proposed combination of Capital On and ING Direct is particularly troubling given that not only Capital One, but also ING, have disparate mortgage lending records. Beyond Capital One's, in the most recent year for which aggregate Home Mortgage Disclosure Act data is available, 2009, in the Wilmington Metropolitan Statistical Area for conventional home purchase loans ING Bank FSB made six loans to whites and none to African Americans -- ING Bank FSB denied all eight applications it received from African Americans.

Meanwhile for refinance loans in Table 4-3, ING Bank FSB in the Wilmington MSA in 2009 made 114 loans to whites but only eight to African Americans and only two to Hispanics.

While the applicants have impermissibly withheld information about ING's "cafes," it now appears that these facilities were cashing checks, and thus should be viewed as branches, but for the institution-friendly mis-regulation of the now defunct OTS. This too should be addressed at the requested hearings. Watch this site.


August 15, 2011

As Capital One Eyes HSBC's Predatory Credit Cards, Federal Reserve Tries to Sweep ING & Violations Under Carpet

By Matthew R. Lee

SOUTH BRONX, August 10 -- Now that Capital One has announced it seeks to buy the US credit card business of HSBC, much of which HSBC bought from predatory lender Household International with very little regulatory review, it becomes clearer that the US Federal Reserve Board must hold public hearings on Capital One.

  When Capital One applied to the Fed to acquire ING Direct, the US Internet banking subsidiary of Amsterdam-based ING, community groups like ours around the country and Washington-based NCRC began to file protests, based on Capital One's anti-consumer practices.

  But the impending addition to Capital One of the predatory lending platform HSBC bought along with Household International, while Household was being pursued by state Attorneys General around the country, would make matters worse.

   With these two acquisitions, Capital One could become a fifth "too big to fail" bank in the US, after JP Morgan Chase, Bank of America, Wells Fargo and Citigroup. The anachronistic gang in Capital One's television ads, along with Alec Baldwin, may be funny, but less so if considered too big to fail, possibly requiring bailouts.

  Currently, the Federal Reserve says that the public has only until August 22 to comment on Capital One, and only on the ING Direct proposal. This is akin to segmenting a destructive project into separate pieces so the overall impact is never acknowledged or reviewed.

  In initial comments to the Fed, prior to today's HSBC announcement, less has been said about ING, in part because ING's US business had been directed at a more affluent clientele, and because ING was not viewed as the applicant.

  But after Inner City Press filed a Freedom of Information Act request with the Federal Reserve Board on July 22, a partial response from the Federal Reserve shows that ING has quietly sought a ruling from Fed General Counsel Scott Alvarez that ING should not have submit any application subject to public comment to own up to 9.9% of Capital One. Click here to view the Fed's (first) FOIA partial denial letter, from which Inner City Press has already appealed.

  This would exclude public comment and consideration of ING doing business with the likes of Sudan, Iran, Cuba, Syria and others on the US state sponsors of terrorism list. ING had admitted being under investigation for, and negotiating with the US Department of Justice about, such violations, and there have been expressions of Congressional concern, which the Fed could ignore by granting ING's stealth request.

  The documents obtained under FOIA show that ING, represented by the Wall Street law firm of Sullivan & Cromwell, on July 15 wrote to the Fed's Alvarez asking for "written confirmation that [ING] will not be deemed to directly or indirectly 'control' Capital One for purposes of the Bank Holding Company Act upon the consummation of the Bank Sale."

Earlier in ING's 13 page request, on which the Fed has until now not solicited or accepted any public comment, ING says that the shares with which Capital One would pay it for ING Direct would "represent between 9.7% and 9.9% of the outstanding shares of Capital One's Common Stock on the closing date." Click here to view some of the released records, including Sullivan & Cromwell's letter to the Fed for ING.

Under the Bank Holding Company Act, any holding over 4.9% can be considered control. One would think, given the issues raised, that the Fed would solicit comment and hold the requested public hearings on ING's request to own nearly 10% of Capital One. But it has only come about because of the Fed's partial FOIA response.

Inner City Press / Fair Finance Watch immediately submitted a comment to the Fed and its chairman Ben Bernanke formally demanding the ING submit an application, and joining in requests by NCRC and others for public meetings and an extension of the comment periods until at least October 22.

In a FOIA appeal already filed with but not yet even acknowledged by the Fed, Inner City Press has demanded all withheld records about ING's stealth request, as well as the withhold portions of Capital One's application, which range from exhibits about money laundering to ING's mortgage portfolio.

Amazingly, the Fed mis-read Inner City Press' FOIA request as only asking from Fed communications with ING and Capital One about the proposed acquisitions, when in fact Inner City Press requested all records reflecting Fed communications concerning either of the two companies.

The Fed has provided such records, including internal Fed emails about the Industrial & Commercial Bank of China and Governor Warsh's meeting with its chairman, in previous responses to Inner City Press.

  The Fed has also withheld records about an "ex parte" meeting as far back at May 26 between Capital One's Kevin Murray (SVP of Regulatory Relations), John Finneran and Gary Perlin with a range of Fed officials.

  It seems the Fed, ING and Capital One have already had something to hide in this transaction, including seeking to exclude from public comment and consideration ING illegally doing business in and with Syria, Iran, and Sudan. Now they seek to sweep through and under the carpet Capital One's proposed acquisition of the predatory lending platform of Household International from HSBC. But it will be opposed. Watch this site


August 8, 2011

Beyond opposition to Capital One - ING, which is growing and on which we'll have more in coming weeks, the cynical plan to sell 195 HSBC branches to too-small First Niagara, which would in turn closed 33 of them and sell on 67 of them is an outrage, has no benefits to the public, and should be denied.

HSBC irresponsibly bought, saved and imposed Household International on consumers. Now it seeks to pull back from the US in another irresponsible way. This will be fought.

August 1, 2011

The process on Capital One's applications to acquire ING Direct has begun, with an initial comment period running only to August 22. The proposal would create a fifth Too Big to Fail bank.

Inner City Press asked for the whole application, but sixteen exhibits have been withheld in full, at Capital One's request, including Anti Money Laundering, analysis of mortgage portfolio ("Confidential" Exhibit I) and "Post-Closing operations and integration plans" ("Confidential" Exhibit B). We are pursuing this -- watch this site.


July 25, 2011

As Fed Fines Wells Fargo It's Too Little, Too Late, Focus Turns to Capital One - ING

By Matthew R. Lee

SOUTH BRONX, July 21 -- After being presented with evidence of Wells Fargo's predatory lending for years, but nevertheless approving all of Wells Fargo's merger applications, the Federal Reserve this week belatedly imposed a $85 million fine for abuses by Wells Fargo Financial.

The response by Bronx-based Fair Finance Watch, which provided the Fed with testimony for whistleblowing employees of Wells Fargo Financial, was too little, too late. At Wells, subprime lending has already been shifted into other of the bank's units. In 2010, the sixth year in which the Home Mortgage Disclosure Act data distinguishes which loans are higher cost, over a federally-defined rate spread of 1.5 percent over Treasury bill yields, the data show that the largest of Wells Fargo's many HMDA data reporters confined African Americans to higher-cost loans 2.56 times more frequently than whites.

Predatory lending already triggered the global financial meltdown. The Fed, it seems, is merely saving face.

But what can be learned for the future? Also this week, the Fed published notice of the proposal by another much-maligned lender, Capital One, to acquire the Internet bank ING Direct, stating that the public has only until August 18 to comment on the application. It is the middle of summer; the deal would create the nation's fifth largest bank.

One can imagine the Fed trying to haul off and approve Capital One's application, and then some years later impose some sort of fine. That makes no sense, particularly after the Fed's implicit recognition that it miss the boat for years with Wells Fargo. So let it be different this time.

And now Capital One has applied to the Fed to acquire ING, with an initial comment period to August 18. We'll have (much) more on this - watch this site.

July 18, 2011

As Obama Taps Cordray Over Warren for CFPB, Retreat From Protection on Mergers Like Capital One's?

By Matthew R. Lee

SOUTH BRONX, July 17 -- On July 21 the Consumer Financial Protection Bureau takes responsibility for complaints against the large banks which caused the global financial meltdown with their murky trade in predatory loans.

  On July 17 President Obama moved to nominate to head the agency not its founder Elizabeth Warren but former Ohio Attorney General Richard Cordray, who is said to have displayed a lack of commitment to go after large banks, at least when they merge.

  Back in April Inner City Press covered, and this author was on an NCRC three person panel with, Cordray on the topic of the CFPB, including how it is make sure that the consumer complaint information is becomes in charge of is considered when banks apply to regulatory approval for mergers, including review under the Community Reinvestment Act.

  Cordray dodged the question, finally saying it could be dealt with down the road. By contrast on a conference call Warren answered a question posed by Inner City Press about the relation of the Bureau's complaint data base and CRA review of mergers by the Federal Reserve Board and other regulators by saying this would have to be addressed. Now, will it be?

  An upcoming example is the proposal by Capital One, the credit card company with a slew of consumer complaints against it including the credit score floor to its Federal Housing Administration lending, to acquire the Internet bank ING Direct for $9 billion and move into the top five owners of US consumers' deposits, according to SNL Financial.

  While Capital One will not be applying to the CFPB for the required approvals, if the CFPB does not make sure the consumer issues are part of the merger review, things will have gotten worse than before the CFPB was created as part of the Dodd Frank Act.

  One wonders if these questions will even be raised as Cordray is presented by the White House on July 18, and then for Senate confirmation. Watch this site.


July 11, 2011

During the July 7 conference call by HUD's Shawn Donovan, he spoke of mortgage servicers delivering this new relief: but no one called on ask about the three (or four) big bad servicers identified by Treasury less than a month before: Chase, Wells, BofA and Ocwen...

Even the NYT Magazine of July 10 says that Timothy Geithner wanted to give Wachovia to Citigroup, despite Wells stronger bid. Yet Geithner remains in office...

July 4, 2011

Four weeks after Industrial & Commercial Bank of China and its ultimate parent the Chinese government withheld the fair lending and future products portions of their submissions to the Federal Reserve, and Inner City Press complained, portions have now been released and the comment period on them extended though July 11. We will have more on this -- for now, consider this op-ed in the American Banker: http://www.americanbanker.com/bankthink/china-investment-corporation-bank-holding-company-act-1039482-1.html

June 27, 2011

Consumers and analysis have heaped scorn on Capital One's proposal to buy ING Direct. Even from a purely financial point of view, it's said to only make sense if Capital One intends on another acquisition, for example of HSBC's credit card business, the kind HSBC acquired along with the predatory Household International. But there's a $270 million break-up fee in the Capital One deal, and ING will not want to pay it. Game on.

With the OTS going out of business on July 21, NJ-based Clifton Savings Bancorp has withdrawn its conversion application which was stalled at the OTS due to a rare Needs to Improve CRA rating, and says it will just re-apply with the OCC when it replaces the OTS. We'll be watching...

June 20, 2011

So now it is official, Capital One will be applying for regulatory approval to acquire ING Direct for $9 billion. And we'll be there.

It's also as of this writing on June 19 looking like PNC will be the applicant to buy Royal Bank of Canada's 400 US branches, the old Centura Bank. And the BNP Paribas will be under pressure, due to its exposure to Greece, to sell off its US operations. Watch this site.

June 13, 2011

Industrial and Commercial Bank of China, already asking that the plain language of the Bank Holding Company Act be ignored, is now further thumbing its nose at the public and the Fed's normal process. After a CRA challenge to its application to acquire 80% of Bank of East Asia, the Fed asked ICBC six questions, including one on fair lending and another on CRA.

ICBC is required to send a copy of its answers to those who protested. But what Fair Finance Watch got is a letter that quotes the Fed's questions, then says as to fair lending, “Please see Confidential Exhibit 1 (separately provided).” As to CRA (Question 2), ICBC says “Please see Confidential Exhibit 2 (separately provided).”

ICBC's lawyer Ernest Patrikis used to be the General Counsel of the Federal Reserve Bank of NY. Other banks routinely provide answers to such questions to those who have commented. Watch this site.

June 6, 2011

Another merger has been announced, with Bank United proposing to buy Herald National Bank, with a strange non-compete clause in which CEO John Kanas couldn't manage the bank he'd be buying. This should not be approved.

Also, Cincinnati-based First Financial Bank inked an agreement to acquire all 16 of the retail banking branches of Liberty Savings Bank located in Ohio. And on the seamier side, Gaddafi's favor bank Goldman Sachs Group is close to selling Litton Loan Servicing to Ocwen Financial, with an announcement possible within days.

So the Federal Reserve has a rule against ex parte communication, in which a protested bank is required to send copies of its communications to the Fed to the protester. But when Comerica and its law firm wrote to the Fed on May 25, the copy they sent to Fair Finance Watch by regular mail mostly referred to a separate letter that they did not provide. They wrote, in response to a question about fair lending, that “Comerica Inc has provided detailed information regarding Comerica Bank's fair lending policies, procedures and practices in the April 5, 2001 letter.” So where's that letter?

May 30, 2011

It's been a strange week in CRA, what with Bank of America foreclosing on itself in Florida, and Zion's California Bank & Trust moving to close its branch in East Palo Alto. But strangest to Inner City Press was the response by former Federal Reserve Bank of New York chief counsel Ernest Patrikis to the New York Fed itself, citing as authority that a foreign government need not apply to the Fed to own a bank in the US... a statement by Fed's general counsel Scott Alvarez. Talk about circular. More on this to come.

May 23, 2011

HSBC bought the subprime lender Household, then faced predatory lending charges and moved away from it. Now the buzz is that HSBC aims to sell off its US branches

in more than 26 metropolitan statistical areas nationwide but are heavily concentrated in New York with locations in 15 MSAs across the state. There are 214 branches in the New York City/Long Island/Northern New Jersey MSA and 58 branches in the Buffalo/Niagara Falls MSA.But the bank also has a presence in major cities in California, including 20 in the Los Angeles MSA and nine in the San Francisco MSA. There are also 17 branches in the Miami/Fort Lauderdale MSA in Florida.

Also said to be on the block are HSBC credit card lines, to Discover or Capital One. For the branches, the buyer names circulated include JPMorgan Chase, M&T Bank Corp., First Niagara Financial Group Inc., Toronto-Dominion Bank, PNC Financial Services Group Inc., Fifth Third Bancorp, or for a purely upstate New York deal, Community Bank System Inc., Northwest Bancshares Inc. and Financial Institutions Inc. unit Five Star Bank. We'll be there.

May 16, 2011

After Fair Finance Watch commented to the Federal Reserve and Office of the Comptroller of the Currency in connection with the applications to acquire up to 24.9% of Morgan Stanley by Mitsubishi UFJ Financial Group, it gave rise to a slew of responses and denial, from three separate law firms.

A letter on Morgan Stanley letterhead came in an envelope from the Davis Polk law firm. It downplayed litigation against Morgan Stanley's subprime servicer Saxon, while saying that a Servicemembers Civil Relief Act case was “settled on March 11, 2011 on confidential terms.” Shouldn't the Fed want to know more about this? Shouldn't the public know?

The same spin was provided to the OCC by the Goodwin Procter law firm, on a related application to merge Morgan Stanley Trust Interim National Association into Morgan Stanley Private Bank based in Purchase, New York.

Mitsubishi UFJ Financial Group sent its own letter to the Fed, in an envelope from the Sullivan & Cromwell law firm. Beyond the Saxon cases, it defends against comments of funding of the Nam Theun 2 Dam project in Laos, claiming that it “meet[s] various social and environmental standards.” The argument is that the Fed should ignore the entire issue. We'll see.

May 9, 2011

That Deutsche Bank and the subprime subsidiary it bought, Mortgage IT, have been sued by the Justice Department for $1 billion in mortgage fraud is one thing. But now the Los Angeles District Attorney has sued Deutsche Bank for being a slumlord, for creating blight and engaging in illegal evictions. Deutsche Bank does this all over the country, and the time to take them on is now -- watch this site.

May 2, 2011

Ah, Bank of America. Now they want to jack up the interest rate on future balances on credit cards to 29.9% based on a single late payment...

The Federal Reserve on April 26 approved M&T's application to acquire Wilmington Trust, with largely the same boilerplate about HMDA data not proving anything, and the Fed not requiring (or considering) CRA commitments.

Interestingly, esp. in light of the Fed's new claims of transparency exemplified by Bernanke's first press conference last week, the Fed's April 26 M&T order in footnote 39 says that Governor Sarah Raskin abstained from the vote on the application. http://www.federalreserve.gov/newsevents/press/orders/orders20110426a1.pdf

In a return phone call to the same Federal Reserve staffer who called to announce the approval, Inner City Press has asked the Fed to state the basis for the abstention, but note the report that the Obama administration is considering Raskin (as well as former Michigan governor Jennifer Granholm) to head the Consumer Financial Protection Bureau.

But days later, the Fed has not responded. Watch this site.

April 25, 2011

With Fed chairman Ben Bernanke set to take questions on April 27, it's amazing how limited it is to monetary policy. The Fed had a bank regulation role, negligence in which allowed for the financial meltdown. So how about these questions:

Why is the Fed limiting its review of financial conglomerates' involvement in subprime lending to their retail lending, even now, and not their investment banking roles that allowed for the financial meltdown?”

This was done by the Fed, on the record in its orders, on recent applications by Japanese banks -- and prospectively, other Asian banks.

Since the Fed allowed Goldman Sachs and Morgan Stanley in the world of commercial banking on an “emergency” basis with no public comment or review under the Community Reinvestment Act, what have you done since to review their CRA compliance?”

Watch this site.

April 18, 2011

Buzz in Washington last week was the total elimination of HUD housing counseling funds in the $$38 billion cutting Continuing Resolution. Visits to Capitol Hill with NCRC found a variety of Democrats claiming they had “been blindsided,” didn't know, would try to do something about it in the 2012 budget. We'll see.

Sleaziest response we've seen in a while: Bank of Montreal's law firm Sullivan & Cromwell argued to the Federal Reserve, in an April 13 response to Inner City Press / Fair Finance Watch's comments, that “Commenter's challenge to the redactions in the Comment Letter is misplaced and not the proper subject of the public comment process, which is focused on the statutory factors the Board must consider under the BHC Act in evaluating the Application.”

But the information Bank of Montreal has blacked out is fair lending information that the Fed requested after the Application was protested. Bank of Montreal was required to send its response to Inner City Press, but withheld most of it. To argue that it's not related to the Application is ridiculous. But this is why we resist the Fed trying to disconnection FOIA from the Application (and CRA challenge) process...

Also in Washington, the International Monetary Fund's Antonio Borges unqualifiedly promoted bank mergers, like BNP Paribas acquiring Fortis. Inner City Press asked him about criticism that the acquisition of local banks -- and deposits -- by megabanks based far away results in less responsiveness to the community. Borges claimed that the IMF prevents banks from doing this. We haven't see it. See this article:

IMF Promotes Bank Mergers, Says Bigger is Better, Politics & Portugal Dodged

By Matthew Russell Lee

WASHINGTON DC, April 15 -- The International Monetary Fund is unabashedly promoting the takeover of small banks by large ones, claiming that its own work in “Emerging Europe” since the financial meltdown shows that communities are better served by large banks, even if based far away or in other countries.

  IMF European Department Director Antonio Borges told reporters on Friday that Belgium was smart to have pushed Fortis to being acquired by BNP Paribas. He urged more such mergers.

  Inner City Press asked Borges if the IMF proposed any safeguards at all, given that concerns exist that when a local bank is acquired by one based far away, there will be less reinvestment and accountability.

  Borges, while calling this an “interesting question,” bragged that the IMF organized a coordinated effort to get large banks to treat communities, particularly in Emerging Europe, fairly, and that this had worked. See IMF transcript, below.

  Inner City Press began to ask about attempts to encourage or require reinvestment, for example in the UK -- but moderator Simonetta Nardin said there was no time for follow up questions.

  Meanwhile, Borges took but refused to answer two questions about Portugal, citing an IMF policy against officials working on their own countries, and also claiming that the IMF does not get involved in politics. What -- encouraging bank mergers is not political? Watch this site.

From the IMF's transcript:

Inner City Press: you seem to be saying that bank mergers—small banks being bought by big ones sort of unqualifiedly may be a good thing. In some countries people think that local banks are more accountable, that if you move the assets to a faraway headquarters that there's less responsive. What do you say to that critique and is that something that the IMF takes any account of?

MR. BORGES: you ask a very interesting question, because this is a problem we were faced with over the last few years. In many of the countries of emerging Europe, you find banks that actually are owned by other banks elsewhere and there were concerns that, as there might be problems in the domestic countries of those banks that assets would be pulled out from emerging Europe and they might suffer. And the Fund, the IMF, invested quite a bit of effort to organize a coordinated effort on the part of all these banks to behave in the best possible interests of those economies, and I must say this was quite successful, because as a result, these countries are now recovering very well and their banks are operating well. So, if anything, the experience of emerging Europe demonstrates that having large, solid banks operate in your country may be an important source of stability if things are properly managed.

April 11, 2011

Comerica has submitted a response to Inner City Press/ Fair Finance Watch's comments on its Sterling application, which purports to address the range of consumer complaints ICP put into the record. In one case, Comerica throws its own customer under the bus, seeming to violate privacy laws. Then, they response with platitudes. Will the Federal Reserve put up with it?

Well, the Fed has STILL not ruled on Inner City Press' March 20 Freedom of Information challenge to Bank of Montreal withholding whole chunks of its fair lending response in connection with its CRA challenged M&I application. Meanwhile the Fed let the comment period close.


April 3-4, 2011

In 2010 Subprime Lending Grew More Disparate at Citi, Chase, Wells & BofA

By Matthew R. Lee

BRONX, NEW YORK, April 3 -- In the first study of the just-released 2010 mortgage lending data, Bronx-based Fair Finance Watch has found that the Big Four survivors of the banking meltdown, Citigroup, JPMorgan Chase, Wells Fargo and Bank of America, continued with high cost loans and had even worse disparities by race and ethnicity in denials and higher-cost lending than in 2009.

   2010 is the seventh year in which the data distinguishes which loans are higher cost, over a federally-defined rate spread of 1.5 percent over Treasury bill yields.

   The just released data show that Citigroup confined African Americans to higher-cost loans above this rate spread 3.67 times more frequently than whites in 2010, worse that its 2.25 disparity in 2009, Fair Finance Watch has found.

  Citigroup confined Latinos to higher-cost loans above the rate spread 2.92 times more frequently than whites in 2010, worse that its 1.72 disparity in 2009, the data show.

   JPMorgan Chase was even more disparate to Latinos, confined them to higher-cost loans 2.08 times more frequently than whites in 2010, worse than its own 1.98 disparity in 2009 and almost as pronounced as its 2.69 disparity between African-Americans and whites in 2010, worse than its 2.17 disparity in 2009.

  For Bank of America NA, the disparity for African Americans in 2010 was 2.59; for the largest of Wells Fargo's many HMDA data reporters, the disparity for African Americans in 2010 was 2.56.

   “Regulatory laxity, at least on fair lending, has continued despite the financial meltdown caused by this predatory lending,” said Fair Finance Watch. “When these four banks were allowed to buy up others with very little oversight, the regulators did not put any conditions on the mergers or Troubled Assets Relief Program bailouts.  These worsening disparities are the result.

   "Now it is not clear if the new Consumer Financial Protection Bureau will get to this problem. As things are going, it will be worse and more disparate in 2011. The disparities in the 2010 mortgage data of the Big Four further militate for aggressively watchdogging and breaking up these banks," Fair Finance Watch concluded.

  Regional bank Keycorp in 2010 confined African Americans to higher-cost loans above the rate spread 2.24 times more frequently than whites.

  U.S. Bancorp in 2010 confined African Americans to higher-cost loans above the rate spread 2.12 times more frequently than whites, and confined Latinos to higher-cost loans above the rate spread an even worse 2.2 times more frequently than whites.

   Huntington in 2010 confined African Americans to higher-cost loans above the rate spread 2.2 times more frequently than whites, and confined Latinos to higher-cost loans above the rate spread an even worse 2.8 times more frequently than whites.

Growing Southern bank Regions in 2010 denied applications by African Americans 2.56 times more frequently than whites. BanCorpSouth in 2010 denied applications by African Americans 2.6 times more frequently than whites.

  Fair Finance Watch has begun an enforcement project in the South, most recently raising issues under the Community Reinvestment Act on Hancock of Mississippi's application to acquire Louisiana-based Whitney, see “Flag raised on merger of Hancock, Whitney banks,” New Orleans Times Picayune, March 13, 2011.

   Fair Finance Watch has also been active in raising issues concerning Bank of Montreal / Harris and their proposal to buy M&I. In response, while the Federal Reserve Board asked some fair lending questions, the majority of the banks' response has been blacked out, which Inner City Press is challenging under the Freedom of Information Act.

   Using the 2010 HMDA data, Fair Finance Watch has commented that Bank of Montreal's Harris confined African Americans to higher cost, rate spread loans 2.35 times more frequently than whites.

  M&I Federal Savings Bank confined African Americans to higher cost, rate spread loans 2.1 times more frequently than whites. Bank of Montreal's Harris denied the applications of African Americans 2.35 times, and Latinos two times more frequently than those of whites. The Fed extended the comment period on the merger once, but now seeks to close it with the fair lending information still outstanding.

   Fair Finance Watch has submitted another timely comment, that Comerica, which is seeking to acquire Houston-based Sterling, in 2010 confined African Americans 6.26 times more frequently than whites to higher cost, rate spread loans. At Comerica, 11.3 percent of loans to African Americans were over the rate spread, versus only 1.9 percent of loans to whites.

   The law required that the 2010 data be provided by April 1, following March 1 joint requests by Fair Finance Watch and Inner City Press. Several banks did not provide their data by the deadline. Trustmark provided its data at the deadline but only in paper format, such that it could not yet be computer-analyzed. Further studies will follow: watch this site.

March 28, 2011

On Bank of Montreal's application to buy M&I, the Federal Reserve on March 24 granted a one week extension of the comment period to Inner City Press / Fair Finance Watch (ICP), which has protested the proposed merger under the Community Reinvestment Act since January 2011, including challenging the withholding of documents under the Freedom of Information Act.

CRA challenges have also been filed by the National Community Reinvestment Coalition and various of its members including the Metropolitan Milwaukee Fair Housing Council, Northwest Indiana Reinvestment Alliance, the St. Louis Equal Housing and Community Reinvestment Alliance and others.

Bank of Montreal, though its law firm Sullivan & Cromwell, has sought to withhold large portions of its submissions to the Fed from ICP and the public. On March 20, Inner City Press challenged the “radical redaction” of information by Bank of Montreal under the Freedom of Information Act, and argued that the comment period, set to close on March 22, could not close while this information was being withheld.

On March 24, Inner City Press received a letter from the Federal Reserve Board, stating in part that the “Secretary of the Board has decided to extend the period of time in which to receive your comments on the proposal to the close of business on Thursday, March 31, 2001.” Click here for the letter.

On CRA ratings, Harris has a “Low Satisfactory” rating in lending, investment and service in Wisconsin, M&I's headquarters, and a Low Satisfactory under the service test in adjacent Indiana.

Fair Finance Watch notes that the official whom Bank of Montreal has assigned to merger integration, Cecily Mistarz, was previously in charge of strategy for “Harris Private Bank, a unit that provides wealth management services to affluent individuals and families” -- giving rise to concerns that if run by Bank of Montreal, the resulting bank would turn away from low and moderate income communities.

Fair Finance Watch also notes that despite M&I not having paid its TARP bail out back, the CEO of M&I stands to get a $18 million payout from the proposed acquisition.

ICP has raised to the Fed, for example, that in the Chicago area “Bank of Montreal's Harris Bank in 2009, the most recent year for which Home Mortgage Disclosure Act data is available, denied the conventional home purchase loan applications of Latinos 2.52 times more frequently than those of whites. An even more extreme disparity exists for African Americans in the Gary Indiana MSA.”

The 2010 HMDA data has just been obtained by Fair Finance Watch, and analysis will be submitted to the Federal Reserve during the extended comment period. Watch this site.

March 21, 2011

As Bank of Montreal Hides Reply to M&I Merger Protest Under CRA, Fair Finance Watch Challenges

by Matthew R. Lee

NEW YORK, March 20 -- Faced with Community Reinvestment Act protests to the proposed acquisition of M&I by Bank of Montreal and its Harris Bank, the Federal Reserve earlier this month asked for a description of the banks' “policies, procedures and practices to ensure compliance with the fair lending laws.”

  Inner City Press / Fair Finance Watch had raise to the Fed, for example, that in the Chicago area “Bank of Montreal's Harris Bank in 2009, the most recent year for which Home Mortgage Disclosure Act data is available, denied the conventional home purchase loan applications of Latinos 2.52 times more frequently than those of whites. An even more extreme disparity exists for African Americans in the Gary Indiana MSA.”

  But when Bank of Montreal's law firm Sullivan & Cromwell sent its answer to the Fed to Inner City Press, as required, it blacked out more than half of the response, including the entire section entitled “Self-Assessment and Monitoring,” more than a page long. Click here to see banks' response as provided to Inner City Press.

  Inner City Press has challenged the “radical redaction” of the fair lending and branch closing response of Bank of Montreal under the Freedom of Information Act, and argues that the comment period, set to close on March 22, cannot close while this information is being withheld.

  Applicable banking law requires the Federal Reserve to consider the Community Reinvestment Act (CRA). On CRA ratings, Harris has a “Low Satisfactory” rating in lending, investment and service in Wisconsin, M&I's headquarters, and a Low Satisfactory under the service test in adjacent Indiana.

  Fair Finance Watch notes that the official whom Bank of Montreal has assigned to merger integration, Cecily Mistarz, was previously in charge of strategy for “Harris Private Bank, a unit that provides wealth management services to affluent individuals and families” -- giving rise to concerns that if run by Bank of Montreal, the resulting bank would turn away from low and moderate income communities.

  Harris Bank performed relatively worse than all lenders, as a group, in the Milwaukee MSA in 2009 with respect to lending to African-American borrowers. Harris Bank issued only 0.30 percent of its prime loans to African-American borrowers, compared to 2.69 percent of all lenders' prime loans to the same borrower group. In addition, Harris Bank's market share of loans to African-American borrowers was just 11 percent of its market share to white borrowers. Harris effectively made zero percent (just one loan) of all loans to African-American borrowers and 0.62 percent of all loans to white borrowers in the Milwaukee MSA.

  In small business lending, Harris Bank's performance in 2009 was significantly worse compared to all lenders in the Milwaukee MSA as a group, in providing small business loans less than $100,000. Harris Bank issued 65 percent of its small business loans as loans less than $100,000; in contrast, all lenders in Milwaukee, as a group, issued 85 percent of their small business loans as loans less than $100,000.

  Fair Finance Watch also notes that despite M&I not having paid its TARP bail out back, the CEO of M&I stands to get a $18 million payout from the proposed acquisition.

  The 2010 HMDA data has just been obtained by Fair Finance Watch, and analysis will be submitted to the Federal Reserve and other regulators, in Wisconsin and elsewhere.

  Inner City Press is aware of comments being submitted or prepared in Missouri, Indiana, Wisconsin and beyond, and argues that the comment period, set to close on March 22, cannot close while this information is being withheld. Watch this site.


March 14, 2011

The New Orleans Times Picayune of March 13 reports that

The proposed bank merger between Hancock Holding Co. and Whitney Holding Corp. has been challenged on fair lending grounds, with critics saying that Hancock's record for making home loans to African-American borrowers is worse than Whitney's.

A New York watchdog group, Inner City Press/Fair Finance Watch, declared its opposition to the deal in a March 6 letter to the Federal Reserve, which must sign off on bank combinations, citing gaps in how frequently Hancock makes home loans to African-American customers compared with white customers in lending data reported to federal banking regulators.

"It's worse," Fair Finance executive director Matthew Lee said of Hancock's record compared with Whitney's. "It doesn't look like Hancock has put much energy into diversity of lending."

Hancock spokesman Paul Maxwell said in a statement that the data Fair Finance relied upon "provides a very limited view of covered loans or conditions such as factors related to creditworthiness.”

Regulators also need to sign off on the deal, and as part of that process, the public is given a chance to comment. In this case, Fair Finance Watch's complaints were the only ones filed.

In checking out the merger, Lee's group looked at data that Hancock reported under the Home Mortgage Disclosure Act, a 1975 law that requires banks to report loan data so that the Federal Reserve can monitor whether banks are serving their communities' housing needs and whether they're discriminating.

The protest highlights six Gulf Coast markets where there are racial gaps in Hancock's lending.

In Hancock's hometown of Gulfport, Miss., for example, the bank denied conventional home loans to African-American and Hispanic applicants twice as often as those of white applicants, Fair Finance Watch said.

In New Orleans, Whitney's hometown, Hancock made 55 conventional home purchase loans to white applicants in 2009, the most recent year for which data is available, but only three to African-American applicants and none to Hispanic applicants, the group said.

"To impose this record on Whitney's service area, including New Orleans, would have adverse impacts, which militate for public hearings and the denial of Hancock's applications," Fair Finance Watch wrote in its letter.

The group does not list comparable statistics for Whitney in the six markets. Lee said that Hancock's record is worse than Whitney's, but he didn't want to say that Whitney's record was good.

Because Hancock is the company acquiring Whitney, Lee said, its policies will be the surviving ones, so its lending practices are the ones that bear scrutiny.

After the 2008 bank bailouts, Lee said, it's especially important to make sure that lenders are serving diverse communities appropriately. Lee said mergers are really the only opportunity to enforce the Community Reinvestment Act, a 1977 law designed to discourage credit "red-lining" and encourage banks to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.

"Our hope is that the Fed has hearings," Lee said. "Everyone can't be above average."

March 7, 2011

Sleazefest: Chris Dodd, after taking sweetheart mortgages from predatory lender Countrywide, will now take $1.5 million a year to be the chief lobbyist for the Motion Picture Association of America...

Sleazefest II: not only did Gaddafi's Libyan Investment Authority have a stake in HSBC -- now HSBC makes money from this, by not having to pay out any divident on the frozen stake....

Note that the Connecticut Banking Department is holding hearings on First Niagara's application to acquire NewAlliance, on March 8 and 9 -- while the Federal Reserve closed its comment period with many questions unaswered, and hasn't ruled on any bank merger proposal this year, preferring to rubber stamp at the Reserve Bank level...

Attorney Lee –

Banking Commissioner Howard Pitkin has scheduled a hearing on the proposed merger of NewAlliance Bank and First Niagara Bank. For your information, I have attached a copy of the hearing notice.

Kathleen E. Titsworth
Banking Education Coordinator
Connecticut Department of Banking

February 28, 2011

M&I CEO Mark Furlong would not get paid a $18 million "golden parachute" package that he has written into his contract with M&I if the company changes control (aka, he leaves) while it still has to pay back TARP. The same would happen to these M&I executives: Greg Smith, who has a $5.5 million parachute, president Tom Ellis ($4.1 million), wealth management head Ken Krei ($5.5 million), and senior vice president Thomas O’Neill ($5.1 million)....

Here's an example of why the Federal Reserve trying to separate FOIA requests related to applications from the comment period: the Fed had extended its time to respond to Inner City Press / Fair Finance Watch's January 13 FOIA request about M&T / Wilmington Trust -- until long after the comment period. And when WILL we get the documents?

February 21, 2011

Following Bank of Montreal's announcement of its proposal to acquire M&I Banks, Inner City Press / Fair Finance Watch wrote to Canadian regulators OSFI raising issues and requesting public hearings and a copy of the application.

We noted as simply one example, in its Chicago Metropolitan Statistical Area headquarters, Bank of Montreal's Harris Bank in 2009, the most recent year for which US Home Mortgage Disclosure Act data is available, denied the conventional home purchase loan applications of Latinos 2.52 times more frequently than those of whites.

OSFI's “manager of approvals” Robert Mitchell replied that “for acquisitions of this nature, the Bank Act (Canada) does not provide a legal process for the public to formally object to a proposed transaction nor for the Superintendent of Financial Institutions to initiate a public hearing in this regard under the Act. In addition, all applications for regulatory approval are confidential in nature under the OSFI Act.”

We have just on February 18 received a copy of the portion of Bank of Montreal's application to the US Federal Reserve Board for regulatory approval for which Bank of Montreal has not requested confidential treatment. This public portion states that BoM is seeking OSFI approval -- it is difficult to understand in this context your statement that the OSFI process and application are confidential.

Furthermore, as the comprehensive, consolidated home regulator of Bank of Montreal, we contend that OSFI has responsibility for BoM and its performance, and for the foreseeable impacts of this proposal.

By contrast to M&I, Bank of Montreal's Harris Bank has a Low satisfactory rating in lending, investment and service in Wisconsin, M&I's headquarters, and a Low Satisfactory under the service test in adjacent Indiana.

As so we have just made a second submission to OSFI...

The Federal Reserve Board hasn't ruled on a single bank merger proposal so far in 2011. The pace of mergers slowed, sure -- but also the Fed has tried to confine more and more decisions to the Reserve Banks, which can ONLY approve applications. And on the First Niagara - NewAlliance proposal, now the Connecticut regulator, unlike the Fed, has scheduled public hearings. Will the Fed send anyone? And will it grant the requests for public hearings on Bank of Montreal / Harris - M&I?

February 14, 2011

Now it can be said: Bank of Montreal has now submitted its application to the Federal Reserve Bank of Chicago for its proposed acquisition of M&I. On February 11, Tom Naughton of the Chicago Fed left Inner City Press a message that the application had been received, and would be send out Monday. It can be requested via

Federal Reserve Bank of Chicago, Attn: S&R Applications Unit - 14 C, Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, Illinois 60604, Fax 312-322-5894

A 30 day comment period is about to begin...

In other CRA news: when New Jersey's Clifton Savings Bank just got a rare Needs to Improve CRA rating, it had an even rarer business impact: Clifton's application to the Office of Thrift Supervision for a “second step conversion and public offering of stock” (essentially, going public) cannot be approved, Clifton had to tell the SEC and the public. Now if only regulators like the Federal Reserve and OCC would enforce CRA against some of the larger banks...

February 7, 2011

The Subprime Virus” Omits the Activist Cure, and the CRA: Book Review

By Matthew Lee

SOUTH BRONX NY, February 6 -- Given the role of predatory lending in the financial meltdown that still haunts the global economy, the February 10 publication by Oxford University Press of a book on the topic, “The Subprime Virus” by law professors Kathleen Engel and Patricia McCoy seemed likely to counter revisionism and re-focus on the decade long fight against loan sharks.

Alas, the book makes scant mention of community or even consumer activism, much less the Community Reinvestment Act protests to banks' applications which results in some of the Federal Reserve Board's few enforcement orders and fines.

For example, the authors write about HSBC's seminal and fated acquisition of Household International without mentioning all of the community based challenges to Household and to the deal, and to HSBC afterward.

The book is like writing about the civil rights laws without mentioning how and why they were passed. It is a form of mystification.

Instead of political and social explanation, we have yet another narrative of the economic stations of the cross leading to the seizing up of global markets. At this point, such re-telling is no longer what is needed: it is like another book about the moment to moment flight plans of the 9/11/01 hijackers, and views of airport safety experts. That said, this one is told in some detail.

In the book's lengthy index, the Community Reinvestment Act is not mentioned once. Meanwhile, the “Solutions” chapter of the book has a four paragraph section entitled “Ensuring Access to Affordable Credit,” the purpose of the CRA.

Patricia McCoy has recently been appointed to the Consumer Financial Protection Bureau, from which CRA enforcement powers were stripped. If the book is an indication of awareness of, or respect for, the Community Reinvestment Act and the grassroots groups which use it, perhaps the stripping is a blessing in disguise.

The lack of focus not only on past activism that that needed in the future, including the near future, might be attributable to an inordinate faith in the Obama administration and the CFPB. But even with a President like Barack Obama, it is not law professors who are going to protect consumers and communities. Everything is politics: but “The Subprime Virus” seems to miss this.

By contrast, the 2009 book “Busted” by journalist Edmund Andrews does not purport to be an expert account. In fact, much of Edwards' story is about how he fell into foreclosure on a home he bought for his second wife and their blended family, and how that marriage fell apart. The story shoots lower, but ends of higher. We recommend it, and “The Big Short.”

An update on Bank of Montreal (BMO) and M&I: William Downe, BMO's president and CEO, said Feb. 2 that BMO has a bias toward “contiguous acquisitions” and sees a lot of fill-in opportunities in the states where M&I is operational. "We can grow in St. Louis, we can grow in Kansas City, we can grow in Indianapolis," he said. We'll see.

January 31, 2011

Even with tax Refund Anticipation Loans under fire, they continue to be offered, often misleadingly. Take for example a come-on by Liberty Tax Service, stating that its RAL lender Republic Bank & Trust Co. is “part of Bank of America.” This was said to Inner City Press on January 30 while it was testing a Liberty Tax Service storefront at 37-16 Broadway in Astoria, Queens.

Inner City Press asked the Liberty Tax Service person who presented RALs as legitimated by Bank of America for his business card, which said his name was Freddy Alvatorre, running at least three other Liberty Tax Services office in Queens, in Corona and Jackson Heights, one of the most diverse neighborhoods in the United States.

All of this information has now been turned over to the New York Banking Department and other regulators. Watch this site.

January 24, 2011

Bank of Montreal will be applying to buy M&I, the largest bank in Wisconsin, with 374 branches also in Arizona, Indiana, Florida, Kansas and Minnesota. One predictor of how Bank of Montreal would perform is what its Harris Bank has done. Inquiry has begun, and now some outreach. It has been raised to OSFI in Canada that, as simply one example, in its Chicago Metropolitan Statistical Area headquarters, Bank of Montreal's Harris Bank in 2009, the most recent year for which Home Mortgage Disclosure Act data is available, denied the conventional home purchase loan applications of Latinos 2.52 times more frequently than those of whites. The shareholders who've already come out against the deal are arguing not only that Bank of Montreal should be paying more, but also that there would be layoffs and branch closings. One wonders at what stage Bank of Montreal may try to find buyers for the branches in Kansas or Arizona or the branch listed on M&I's website in Las Vegas. Let the games begin.

January 10, 2011

It's a good thing that Massachusetts' highest court has stuck down the type of shadowy transfer of subprime mortgages that Wells Fargo and US Bancorp engaged in here. The underlying loans were made by predatory lender Option One. With the type of transfers that followed, often borrowers don't even know who owns their loans. As this decision is cited in other states' courts, the process could be made more transparent.

The proposal to merge the New York Banking and Insurance Departments, made by new governor Andrew Cuomo, is not only about the alleged convergence of the industries, but about the marginalization of the NY Banking Department. One after one, large New York based banks switches from state to national regulation as the Office of the Comptroller of the Currency offered preemption of all state laws. Citibank NA -- national association -- was followed by JPMorgan Chase and HSBC all switching to national charters. The result was a Banking Department largely concerned with small mortgage companies and even check cashiers. Now comes Andrew Cuomo, proposing to put behemoths like AIG under the NYBD's jurisdiction. We're ready.

January 3, 2011

Following CRA protests, First Niagara put out a press release announced “more than $1 billion” in what it characterized as CRA lending, the vast majority of its “small business” lending that it would be doing anyway. When asked for details, NewAlliance said “we did issue a press release about that.” Not surprisingly, the calls for public hearings are only mounting, including in light of the 230 announced layoffs which would result. An architect of the sell out, Peyton R. Patterson, now plans to resurface as a director of the Connecticut Business & Industry Association...

December 27, 2010

We take issue with the WSJ story on Christmas Eve entitled “Payday Lenders Go Hunting: Operations Encroach on Banks During Loan Crunch.” It implies that payday lenders are competing WITH JPMorgan Chase. But Chase is in fact lending to, enabling and profiting from the payday lenders. You'd think the WSJ would know.

December 20, 2010

We will begin Watching the proposal by Bank of Montreal to acquire M&I, and probably sell off its branches in Arizona, Florida and Kansas...

December 13, 2010

On First Niagara - New Alliance, the challenge Inner City Press / Fair Finance Watch filed last week has now been joined by the Mayor of New Haven and Connecticut AG. First Niagara continues to be dismissive, as they were when they bulled into Pennsylvania. There, groups say First Niagara is a second rate bank with bad systems and a “bad attitude.” Will the Federal regulators - the OCC and the Fed - ask the right questions, and hold the requested hearings?

December 6, 2010

Inner City Press / Fair Finance Watch last week commented to the OCC (and the FRB) against the applications of First Niagara to acquire and merge with NewAlliance. FFW is opposed to this merger, and is requesting a public hearing.

First Niagara's acquisitions have resulted in a decrease in availability of credit, especially to low and moderate income people and communities of color. It has seemingly been allowed to make acquisitions, for example its still undigested entry into Pennsylvania, due to the financial meltdown (and, we assert, the regulatory agencies' concerns about their own role in allowing the business practices that led to the meltdown).

Now, it is imperative that First Niagara's actual record, including on all recent acquisitions, be fully reviewed including at the requested public hearings, before another set of communities is subjected to First Niagara's practices.

Inner City Press raised some of these concerns when First Niagara went into Pennsylvania. At that time, the target bank was so weak it arranged by stealth a loan from First Niagara before any regulatory approval had been granted: gun-jumping. While the exigencies of the financial meltdown and First Niagara's representation by a highly connected white shoe law firm got it over that hump, in the time since First Niagara has not performed anywhere near adequately in the communities which it was allowed to enter.

To the degree that First Niagara may try to emphasize the alleged performance of NewAlliance rather than its own, we note previous issues regarding NewAlliance, including extensive opposition to its formation from New Haven Savings Bank, the “golden parachute” of its top leadership and CRA issues regarding its performance, to be explored and documented at the requested public hearing.

As regards the OCC, we note both that the OCC's Weekly Bulletin is significantly less useful and public friendly than, for example, the Federal Reserve Board's online Form H2A, which in a comprehensive location (nationwide) lists all applications open for public comment, and that the OCC, unlike the FRB, does not make it easy to submit public comments by e-mail. While the FRBNY provides a dedicated e-mail address for public comment, the OCC's online presence appears directed at banks and not the public. Comments to this email address have been accepted in the past; this comment should immediately be acknowledged by email, and the OCC should fix these problems going forward.

November 29, 2010

The Prospect: the “federal government is not tracking foreclosures. The numbers you hear--that one in 75 houses in Las Vegas is in foreclosure, say--likely come from RealtyTrac, 'the leading online marketplace of foreclosure properties.' It's also the country's main source of foreclosure data. Governmental foreclosure-prevention efforts rely on numbers collected by a company whose mission is to help people 'locate, evaluate, buy and sell properties.' Unsurprisingly, that's not working very well. HAMP was projected to save 3 million to 4 million homes, but as of September, it had permanently modified mortgages for just over 468,000 homeowners. The financial-reform bill included a provision creating a foreclosure database, featuring comprehensive stats on distressed mortgages. The bill, however, didn't specify exactly what the database would track or how it would be paid for. Anecdotal evidence suggests evictions, too, are on the rise. NLIHC estimated in 2009 that 40 percent of foreclosed properties had renters, who were often tossed out by banks when they took ownership. President Obama signed a bill giving such renters certain rights, but without any baseline numbers on pre-crisis evictions and no plan for ongoing measurement, assessing the law's impact is nearly impossible.”

November 22, 2010

We note the retirement at 67 of Bill Brennan in Atlanta, and this from an exit interview:

Q: How would you describe the government's response to the foreclosure crisis?

A: Whereas Congress and the Treasury bailed out the banks --- a crisis that evolved directly from the banks making millions of unaffordable mortgage loans --- the public policy response for homeowners has been totally inadequate.

Q: How would you describe it?

A: The response has been to let most of these homeowners lose their homes and further weaken the economy.

Q: You are critical of the Obama administration's loan-modification program. Why?

A: The program has been described as a failure and rightfully so. It is voluntary --- the lenders don't have to do it if they don't want to. Those lenders that participate often refuse to follow the procedures correctly. They erroneously believe they can make more money foreclosing.

We wish him well.

November 15, 2010

Now First Niagara has applied to the Federal Reserve to buy NewAlliance, with a comment period running through December 3. Both in New Haven, NewAlliance's base, and in the communities ostensibly served by First Niagara, there are concerns. First Niagara has until now been allowed to grow quickly, but has barely integrated or served the areas it has move into. Its systems are weak. In terms of a CRA a single officer, based in Buffalo, runs the show. A request has been made for complete copy of the application. Watch this site.

J.P. Morgan and its Washington Mutual Bank and Chase Home Finance LLC divisions are facing suits in Illinois and California that are seeking class-action status. The lawsuits allege "common law fraud and misrepresentation, as well as violations of state consumer fraud statutes."

November 8, 2010

This week we'll be analyzing the November 2 election results -- for example, who will take over from Barney Frank in the House Banking Committee, Bachus or Royce? -- and fraudulent foreclosures by Deutsche Bank, an institution we'd like to hear more readers' experiences with...

November 1, 2010

Focus in the foreclosure scandal has begun to shift to Deutsche Bank. In Colorado's Douglas County for a foreclosure filed last month, the “Post found a certification on behalf of Deutsche Bank National Trust, based in Santa Ana, Calif. But the holder's address on the certification lists the location of Bank of America Home Loans in Simi Valley, California.” According to Germany's Der Spiegel, Deutsche Bank “manages around a million real estate properties in the United States... Besides, the bank packaged collateralized debt obligations (CDOs) worth $25 billion.” We'll have more on this.

Citigroup's Vikram Pandit last week threatened the closure of branches in lower income and rural areas, blaming it on regulation. He said, “As old revenue streams from overdraft fees and debit interchange shrink, retail banks are going to have to reinvent their business models to remain profitable. Banks may respond by not serving less-profitable communities and customers, or by serving them less. We could see the retail branch footprint of some banks shrink--particularly in lower-income and more rural areas." Is this a threat?

October 25, 2010

Advocacy for a foreclosure moratorium was met by opposition not only from banks but also the Obama administration this month. The administration's argument is that a moratorium will “freeze up” the economy, since as their talking points say over 40% of home sales in Nevada are of foreclosed upon homes. The churn is necessary, they say. Other say: disgusting.

October 18, 2010

The six Federal Reserve Board governors were confronted last week with their failure to inquire into the facts of applications for Fed approval which are subject to protest under the Community Reinvestment Act and otherwise.

Inner City Press / Fair Finance Watch has raised the way the Federal Reserve Bank of New York has bottled up protests about Morgan Stanley and now the Middle East by rubber stamping deals at the local level, with no Board review.

Fed chairman Bernanke for the second time said that it's “perverse” that CRA is enforced on merger applications. But it is the law, and the person charged with following the law shouldn't brush it off.

Also raised was the way that, even when protested applications go to the Board, Fed staff omit from their summaries issues they think are not relevant or can be excluded - including for example involvement in predatory lending by a bank's affiliates. Even wonder why the Fed is blind?

October 11, 2010

Even District Judge Ellen Huvelle sees Citigroup's settlement with the SEC as a sell out of consumers. The SEC said in a letter to this U.S. district judge that Citigroup Inc. will be required to have stringent reforms that would ensure the bank's disclosures are adequate for investors. The judge has had expressed concerns about the $75 million proposed settlement between Citigroup and SEC, saying she needed assurance that the bank would maintain improved disclosure practices. Oh that there had been judicial oversight over CitiFinancial's $75 million settlement on the cheap with the Federal Reserve, whcih reformed near to nothing...

October 4, 2010

Even in Japan, predatory lenders are falling. Takefuji like Acom and Aiful made loans at 29% interest, recently cut back to 20% by legislation. Apparently this level of usury didn't work for Takefuji: they have declared bankruptcy. Good riddance. But what about the other loan sharks?

For now celebrated in Buffalo:

Leisha Gordon, vice president and community reinvestment officer for First Niagara Bank. She is responsible for regulatory reporting of lending, service and investment test activities in seven market centers under the Community Reinvestment Act for a $20 billion, 255-branch regional network.”

Will this love fest continue? Watch this site.

September 27, 2010

From Federal Reserve Governor Elizabeth Duke's September 24 statement on the Home Mortgage Disclosure Act:

the recent mortgage crisis has highlighted the potential ramifications of a mortgage market that is not functioning well. HMDA data do not create the market or solve all market problems, but they do help us understand what is happening in the market. The time is certainly ripe for reviewing and revising the data elements, standards, and reporting formats.”

But the Fed was presented, repeatedly, with showings based in significant part of HMDA data, of Citigroup's CitiFinancial, Wachovia, New Century, Ameriquest and the like, that predatory and discriminatory lending was taking off. And the Fed did nothing...

Speaking of Citigroup, now they're getting sued by a government - as investor:

Norway's central bank has sued Citigroup Inc. over alleged misstatements about the company's financial condition during a two-year period leading up to and during the global financial crisis, and which it claims caused it to buy Citi shares at inflated prices. Norges Bank claims that it lost more than $735 million on its investments in Citigroup common stock and more than $100 million on its investments in Citi bonds and preferred shares. The stocks and bonds were purchased between January 2007 and January 2009, according to the lawsuit. The lawsuit, filed in Manhattan federal court Sept. 17, alleges that Citi made a series of misstatements about its financial health, particularly its exposure to subprime mortgages and other toxic assets.”

The word “exposure” makes it sound passive, like Citigroup was a victim. But Citi TOOK ON this exposure, screwing many, many people in the process...

September 20, 2010

On First Niagara's proposal to acquire New Alliance, questions are being raised in at least three states. First Niagara, it emerges, it lower tech than the banks that it buys and seeks to buy. First Niagara is resistant to even trying to increase diversity. And so there will be opposition.

Meanwhile in Washington there is renewed talk, including from unexpected quarters, of safe harbors to make some banks untouchable. We will have more on this.

September 13, 2010

Regarding the too-small $75 million proposed fine of Citigroup, the SEC's now said "The proposed $75 million penalty represents less than 0.3% of Citigroup's revenue for the most recent quarter, and should not cause an undue negative financial impact on the company's business, or significant harm to current Citigroup shareholders," the SEC said. The agency estimates the impact equals less than one-third of one cent per share. This is a defense of the weak settlement?

September 6, 2010

We said we would be covering First Niagara - New Alliance, and we will, starting this coming week. New Alliance has always been trying to get over on New Haven, its putative hometown. First Niagara, when it recently bought its way into Pennsylvania, jumped the gun, then used a white shoe law firm with an inside track to the Fed to cover up its tracks. Now they seek to combine, and others seek to keep them apart. Watch this site.

August 30, 2010

HAMP as scam, JPM Chase and Geithner: J.P. Morgan Chase said last week that the number of mortgage modifications it has offered its customers since the start of 2009 has topped 900,000 as the lending giant looks to stem potential loan losses. One of the nation's largest mortgage servicers, J.P. Morgan has offered modifications on 913,309 mortgages in 19 months ended July 31. But just 270,361 have been approved for permanent modification and 214,529 have completed the process, highlighting the ongoing difficulties in permanently lowering monthly payments for struggling borrowers and taking other steps in efforts to prevent home foreclosures. Nearly one-fourth of J.P. Morgan's modifications have come through the federal government's Home Affordable Modification Program-- regarding which, on a meeting between Geithner et al. an bloggers, see http://www.interfluidity.com/v2/933.html

August 23, 2010

Who knew - the FDIC has continued to extend “final settlement” of JPMorgan Chase's sweetheart deal to buy Washington Mutual, most recently to August 30, 2010, see document here. While those most interested as seeking a higher price from Morgan Chase, could there be CRA and anti-predatory lending possibilities?

August 16, 2010

Unintended consequences? From CJ “ fallout from the Dodd-Frank Act, the financial-overhaul legislation passed this summer. Customers rejected by banks for being unprofitable or risky under the weight of new regulations could migrate to consumer lenders, who have more experience underwriting and pricing subprime risks.On a conference call last month, responding to a question about the viability of CitiFinancial, Citigroup Chief Executive Vikram Pandit said, 'My God, you don't want to shut this down.'”

Oh but some DO want to shut it down...

And on AIG's sale of 80% of American General to Fortress -- will AIG still have to file American General's HMDA data? Or is that subject to some sort of “control” test? We aim to find out.

August 9, 2010

Timothy Geithner, the Treasury Secretary who didn't pay his taxes, is now thumbing his nose at the portions of the Volcker Rule that Sen. Levin and others managed to enact. Hey, if you don't like the laws --- and you don't -- maybe it's time to leave?

August 2, 2010

Wells Fargo was the target of a governmental charge of predatory lending last week, by the Pennsylvania Human Relations Commission, based on 2004 and 2008 Home Mortgage Disclosure Act data. Inner City Press / Fair Finance Watch has analyzed the 2009 data, which it obtained from Wells Fargo, and has found that in 2009, Wells Fargo Bank NA confined African Americans to high cost mortgages 2.40 more frequently than whites. Its disparatiy for Latinos was 2.09. For its subprime affiliate Wells Fargo Funding, the disparities in 2009 were even worse that the bank, and those cited by the Pennsylvania Human Relations Commission: African Americans were confirmed to high cost loans four times more frequently than whites.

July 26, 2010

Now the US Government buys into subprime, in a field left unregulated by the financial reform bill: “Government-owned General Motors is acquiring Fort Worth’s AmeriCredit in a $3.5 billion deal. AmeriCredit gives GM something it sorely lacked: a lender that can reached car buyers of all stripes, including subprime borrowers.”

Through the revolving door, in a move that should be illegal, from regulating Citigroup to getting paid to work for them: Citigroup last week bragged “it has hired Irene Fang, a long-time veteran of the U.S. Treasury's bank regulatory agency, as the New York bank's corporate fair lending director. Fang most recently served as a division head in the Economics Department of the Office of the Comptroller of the Currency. The Economics Department contributes to the fair lending reviews that the OCC conducts in banks of all sizes, Citigroup said in a statement. Fang, who has a doctoral degree in economics, will report to Lloyd Brown, Citi's director of community reinvestment, Citi said.”

Isn't it a conflict of interest, to be in charge of reviewing Citigroup, then getting rewarded with a job at the company?

Goldman Sachs' “Tax Evasion” Hit by Rep. Doggett, Citi's and Transocean's Offshoring

By Matthew R. Lee

SOUTH BRONX, July 20 -- Goldman Sachs, recently let off the hook by the Securities and Exchange Commission with a mere $550 million fine, dropped its tax rate in one recent year from 34% to 1%. On July 20, Inner City Press asked Rep. Lloyd Doggett (D-Tx) what he thought of Goldman's decline in tax rate, and of the SEC deal.

Rep. Doggett replied that this was “outrageous,” that Goldman Sachs' decrease in tax rate “suggests a company among the most profitable on the Street is not paying its fair share” and is using “gimmicks.” But what's going to be done?

Inner City Press asked the question on a media conference call including Senator Carl Levin (D-Mich) and several “responsible investors” including Amy Domini. Ms. Domini recounted how she had to pull funds recently from Chicago-based Shorebank, and that some of her customers then pulled funds from her.

Doggett was asked about Citigroup, with more than 400 offshore subsidiaries. He said this should be investigated, as should Transocean, owner of the leaking Gulf oil platform, which shifted business to the Cayman Islands and then Switzerland to evade U.S. taxes.

   Senator Levin spoke out against companies shifting their patents and other intellectual property offshore to evade taxes. The loopholes should be closed -- but will they? Watch this site.

July 19, 2010

While even in the vaunted financial reform bill, U.S. banks are hardly pushed to lend to small businesses, in the UK they are being summoned. Bosses of the U.K.'s biggest banks last week had to push back against government claims they aren't doing their part to grow the economy by lending more to small businesses, at a meeting held between top executives and Treasury officials to discuss lending and coming regulatory reforms. “It was a very constructive meeting that will help inform the Government's Green Paper on business finance which will be published shortly," said Chancellor of the Exchequer George Osborne and Secretary of State for Business Innovation and Skills Vince Cable in a joint statement following the meeting. Also at the meeting were Financial Secretary of the Treasury Mark Hoban, Lloyds Banking Group CEO Eric Daniels, Barclays PLC boss John Varley, Royal Bank of Scotland Group's post-Shred CEO Stephen Hester and HSBC Holdings' still chairman Stephen Green...

July 12, 2010

By Toronto Dominion's own admission, in response to Inner City Press / Fair Finance Watch's comments opposing its South Financial application, TD in 2009 denied 74% of mortgage applications from African Americans, and 65% of applications from Latinos. Despite this, and the subprime loans it admits it makes, it says no issues are raised by its attempts to expand, including by converting fast food restaurants into bank branches serving up... 74% denial rates to African Americans and 65% denial rates to Latinos. TD's worse for you than burgers...

July 5, 2010

On June 30, the Federal Reserve System approved a Morgan Stanley application which Fair Finance Watch had challenged in April, based on Morgan Stanley's subprime Saxon Mortgage subsidiary and Morgan Stanley, among other things, funding makers of cluster bombs.

Amazingly, the day AFTER the Fed sent its conclusory approval letter, it released improperly withheld information to FFW:


Date: Thu, Jul 1, 2010 at 10:08 AM
Subject: Morgan Stanley Application
From: Federal Reserve
To: fairfinancewatch.org

Good morning Mr. Lee:

Previously, you'd requested a copy of Morgan Stanley's Section 3 application.  The business plan was not properly redacted by Morgan Stanley.  I have attached the application below for you.

Best,

Kimberly Hooks

This information should have been released during the comment period, and certainly prior to approval. In fact, “Mortgage” activities are still improperly redacted. On this basis alone, the approval should be rescinded...

Watch this site.

June 28, 2010

Game on: Inner City Press / Fair Finance Watch has filed a timely challenge with the Federal Reserve to the pending applications of The Toronto-Dominion Bank to acquire The South Financial Group and its Carolina First Bank.

FFW obtained TD's 2009 HMDA-LAR, which has not been reviewed or taken into account in any regulatory review of TD. The data are troubling, showing for example that in 2009 Toronto Dominion denied fully 83% of mortgage loan applications from African Americans, versus only 42% of applications from whites. TD's denial rates for Latinos and Native Americans, both 68%, were also troubling. Public hearings should be held and the applications not approved.

TD in fact makes rate spread or subprime loans, but not in a fair manner. African Americans at TD are 1.93 times more likely to be confined to higher cost loans than whites.

While the FRB, despite the stated purpose of HMDA in helping to identify discrimination, has shifted to a dismissive approach to HMDA, it will be hearing different at its upcoming HMDA hearings, testimony at which should be considered by the FRB in connection with this application.

On a recent investors' conference call, TD bragged about its “FDIC-assisted transactions” -- which , significantly, were not reviewed for CRA, and on which there was no comment period. A public hearing is needed on this one. FFW's request in this letter for a complete copy of the applications includes also any and all information in the possession of the FRS concerning TD's “FDIC assisted transactions.”

Meanwhile, shareholders of South Financial have filed suit against the deal. See, e.g., Greenville (SC) News, June 22, 2010. TD has told its shareholders it will somehow convert fast food restaurants into bank branches. See, e.g., Globe & Mail, June 17, 2010. Before serving up its disparate lending, public hearings should be held. These issues must be explored, under managerial and financial factors, in connection with these applications. FFW has requested public hearings.

June 21, 2010

Under the shadow of the Volcker Rule, Citigroup is trying to raise $3.5 billion for investment funds. Also fighting Volcker are J.P. Morgan Chase, owner of hedge-fund manager Highbridge Capital Management, and Morgan Stanley, owner of Greenwich, Conn., hedge fund FrontPoint Partners.

June 14, 2010

Here's a trend: as troubled loans in communities of color are bulk-sold by Wall Street titans, the neighborhoods are more and more undervalued and local wealth destroyed...

Meanwhile, to take the lead on Community Reinvestment Act modernization, Barney Frank has designed Maxine Waters of Los Angeles. We'll see...

June 7, 2010

Now it's reported that CitiFinancial hopes to expand its subprime lending in at least 45 US states later this year -- while General Electric's GE Money has already picked up subprime lending overseas. We had predicted both. Citigroup claims it only seeks to grow in subprime in order to sell the business off, while GE downplays its subprime growth. Thou dost protest too much?

May 31, 2010

So Morgan Stanley has purported to respond to comments Fair Finance Watch filed with the Federal Reserve, opposing Morgan Stanley applications subject to the Community Reinvestment Act. It is an arrogant response, largely that FFW's points about predatory mortgage servicing and "other predatory practices, including 'land grabs' and the financing of 'cluster bombs.'"

Its vague response on these last two is that "Morgan Stanley and its subsidiaries engage in corporate underwriting and lending activities for various clients, including those involved in national defense related activities. Morgan Stanley also engages in real estate investment activities on a global basis."

It's Morgan Stanley which put "cluster bombs" in quotation marks. To those impacted, air quotes will not help. Same with the victims of the predatory loans services by Morgan Stanley's Saxon, or of loans enabled by Morgan Stanley as an investment bank.

Morgan Stanley admits to a Saxon settlement in Missouri, and to not timely responding to consumer complaints. Yet it argues that none of this is relevant to the Federal Reserve. Like we said, arrogant. And to be continued.

Protests of JPM Chase on Wall St, of Predatory Loans and Mining, Laissez Faire

By Matthew R. Lee

WALL STREET, May 18 -- Of the Big Four American bank, JPMorgan Chase has perhaps benefited more than any other from the financial meltdown. While having securitized many and made some of the most predatory mortgage loans, it was given Bear Stearns, and then Washington Mutual on the cheap. It proceeded to close scores of WaMu branches.

Tuesday in lower Manhattan outside JPMorgan Chase annual shareholders meeting, environmentalists sang songs about the bank's support of mountain top removal mining. As Inner City Press has reported, JPMorgan Chase pays former UK prime minister Tony Blair as an environmental consultant.

  The bank's security officers handed out leaflets about less than living wages from Chase's subcontractors Allied Barton and Summit Security. A protest of predatory lending by Chase was right around the corner, including NYRL, CRA-NC and, in from West Coast including wtih wronged borrowers, the California Reinvestment Committee. "What do we want? No redlining! When do we want it? Now!"

  Fair Finance Watch got an early copy of JPM Chase's 2009 mortgage lending on disk. Its analysis, the first in the country, found that in 2009 JPMorgan Chase was even more disparate to Latinos, confined them to higher-cost mortgage loans as defined by the Federal Reserve 1.98 times more frequently than whites, almost as pronounced as its disparity between African-Americans and whites, 2.17.

Still Chase and its CEO Jaime Dimon lobby against regulatory reform, and call it unfair that they are tarred with the stigma of the bailout they accepted. Dimon's speech last weekend at Syracuse University was protested, although some spun it as a success, with cheers for his commencement speech about free thinking. Laissez faire is more like it. Private profits, socialized risk.

JPMorgan Chase helped cause the collapse of Lehman Brothers Holding Inc. by demanding more collateral and changing guarantee agreements, the bankruptcy examiner said last week. “The demands for collateral by Lehman’s lenders had direct impact on Lehman’s liquidity pool,” said Anton Valukas, the U.S. Trustee-appointed examiner, in a 2,200-page report filed in federal court, also in lower Manhattan.

Footnote: Simultaneous with the protest and shareholders' meeting, Chase's previous Community Reinvestment Act officer organized a CRA breakfast talk. At least two activists were asked to skip the protest in order to speak, but declined. Willis is known to oppose any legislation to expand CRA to cover, for example, investment banking including the securitization of subprime mortgages.

  Rather, he is promoting a more limited regulatory fix to CRA, on such matters as expanding the areas in which banks are assessed. Whether legislators like House Banking Committee chair Barney Frank, who argued CRA should not be under the Consumer Financial Protection Agency, will now move forward with the CRA modernization bill is not yet known. Watch this site.

May 17, 2010

Too little, too late: After demanding last year that Citi fill its board with more financially savvy directors and improve its risk management, Fed officials in Washington pressed the New York Fed to follow up with tough oversight, people familiar with the matter said.

"The supervision program for Citigroup has been less-than-effective," the Fed board said in a draft of a review of the New York Fed's performance last year, according to documents released by the bipartisan Financial Crisis Inquiry Commission. The final review said Mr. Dudley's staff "did not take timely and appropriate action" to follow up on the Fed's demands in a memo of understanding with a big bank. A Citi representative declined to comment.

May 10, 2010

The Federal Reserve is advocating for itself:

"Charles Plosser of the Philadelphia Fed, Thomas Hoenig of the Kansas City Fed, Jeffrey Lacker of the Richmond Fed and Narayana Kocherlakota of the Minneapolis Fed have met with the Joint Economic Committee of Congress opposing the proposal under which the Federal Reserve would oversee banks with more than $100 billion in assets, while smaller institutions would be regulated by other agencies. The Fed banks also oppose a provision that would make the president of the New York Fed a presidential appointee, calling it an attempt to politicize the agency appointee, calling it an attempt to politicize the agency."

What -- so it's better to have banks, which own stock in the Federal Reserve Banks, regulate themselves?

May 3, 2010

As Goldman Sachs is belatedly grilled in Congress, so to at the Federal Reserve. Last week Inner City Press ' Fair Finance Watch put in a comment that began this way:

RE: Timely Opposition and Hearing Request on the Applications The Goldman Sachs Group to acquire, inter alia, up to 24.9 percent of SKBHC Holdings LLC, Corona del Mar, California, which is applying to become a bank holding company, & thereby indirectly acquire Starbuck Bancshares, Inc.& The First National Bank of Starbuck

Dear Chairman Bernanke and others in the FRS:

On behalf of Inner City Press' Fair Finance Watch, this is a timely comment opposing and requesting public hearings on Goldman Sachs' above captioned pending applications, which were re-noticed on the Board's H2A.

As you know, Goldman Sachs was allowed to become a bank holding company without any public comment period or consideration of the Community Reinvestment Act, which would otherwise have been required. Since then, and since 2009, Goldman Sachs has been charged with misrepresentation by the SEC. The emails which recently emerged, about the failure of little subprimes and selling toxic bonds to widows and orphans, militate for public hearings on these Goldman applications. See also, since October, the NY Times' ""Testy Conflict With Goldman Helped Push A.I.G. to Edge."

We are requesting, in connection with this application, a full disclosure of any and all assistance Goldman Sachs received from the Federal Reserve System in the past four years.

On the consumer side, Goldman Sachs has been charged with involvement in predatory lending, including for the acts of its subprime servicing subsidiary, Litton Loan Servicing. Even Goldman's settlement left the public in the dark. See, e.g., Bloomberg News, May 17, 2009, "Deal in Goldman probe leaves public in dark."

April 26, 2010

As financial reform comes to a boil in DC, Inner City Press / Fair Finance Watch filed timely comments with the Federal Reserve Board opposing applications by Morgan Stanley, moving its banking around. The grounds are its subprime affiliate Saxon, as well as general sleaze, from land grabs to financing cluster bombs. Will the Fed care? Watch this site.

April 26, 2010 - click here for BloggingHeads.tv debate on Afghanistan cover up, Bhutto, Iran, Sudan and the UN's Love Boat in Haiti, by Inner City Press

April 19, 2010

So Goldman Sachs has finally been accused by the SEC -- not with enabling predatory lending, for which it should be charged, but for setting up for John Paulson to short a pool of dubious subprime securities and then selling it to others as a legitimate and objective investment. Well, just like Al Capone's Achilles Heel was tax evasion, perhaps misrepresentation is Goldman's. But we doubt the SEC's stomach to follow this fight through. We'll see.

We have reported on the banks which left The Bronx, snooping for example around old Chase Manhattan branches turned into churches. But it's time to mention Melrose Credit Union, which runs radio advertisements during Yankee games. Perhaps you've seen their sign, if you drive to or from JFK airport. The institution says, right on its website, that

"since 1922. Melrose was initially established to provide financial resources for individuals and small business owners from the Bronx, NY. Through the Credit Union, community residents were afforded the means to pursue their American Dreams. The success of Melrose Credit Union has not diminished its original mission statement: Empower the community by offering affordable financial products and services. Today that community commitment has helped transform Melrose into an over $1 billion credit union with over 20,000 members residing across the country and around the world."

Melrose is a neighborhood in the South Bronx, which this "successful" credit union left behind. It has no branch in The Bronx; it left the borough but speaks about empowerment of (presumably other) neighborhoods. What was that again, about there being no need for a Community Reinvestment Act on credit unions?

April 12, 2010

Too Big To Be Fair, Citi, Wells, BofA & JPM Chase Disparate in Subprime Loans in 2009

By Matthew R. Lee, Inner City Press

NEW YORK, April 11 -- In the first study of the just-released 2009 mortgage lending data, Bronx-based Fair Finance Watch has found that the Big Four survivors of the banking meltdown, Citigroup, Wells Fargo, Bank of America and JPMorgan Chase, continued with high cost loans and had worse disparities by race and ethnicity in denials and higher-cost lending than before 2009, Fair Finance Watch concluded.

 The just released data show that Citigroup confined African Americans to higher-cost loans above this rate spread 2.25 times more frequently than whites, according to Fair Finance Watch. Citigroup confined Latinos to higher-cost loans above the rate spread 1.72 times more frequently than whites, the data show. 2009 is the sixth year in which the data distinguishes which loans are higher cost, over a federally-defined rate spread.

 JPMorgan Chase was even more disparate to Latinos, confined them to higher-cost loans 1.98 times more frequently than whites, almost as pronounced as its disparity between African-Americans and whites, 2.17. HSBC, perhaps due to its shrinking, some say dying, business had disparities of 2.57 for African Americans and 1.61 for Latinos.

 For Bank of America's Countrywide Bank FSB, the disparity for African Americans was 2.11 and for Latinos, 1.95.

 For Wells Fargo Bank NA, the disparity for African Americans was 2.40 and for Latinos, 2.09. For its subprime affiliate Wells Fargo Funding, the disparities were even worse: African Americans were confirmed to high cost loans four times more frequently than whites.

"Call them 'too big to be fair' -- the banks the regulators have favored, allowing emergency takeovers like JPMorgan Chase's of Washington Mutual, Bank of America's of Countrywide and Merrill Lynch, and Wells Fargo's of Wachovia, were the most racially disparate lenders," said Fair Finance Watch. "The regulators did not put any conditions on the mergers or Troubled Assets Relief Program bailouts. As things are going, it will be worse and more disparate in 2010.  Global predatory lending seems unlikely to be discussed at the G-20 finance ministers' meeting in Washington later this month. The disparities in the 2009 mortgage data of the big four militate for breaking up these banks."

The weakness of the Federal Reserve as regulator on this was highlighted by the March 24 settlement by CitiFinancial when non-reporting of loans under HMDA was discovered by Massachusetts authorities - and not the Fed, which is putatively regulating CitiFinancial.

 Regional bank BB&T in 2009 confined African Americans to higher-cost loans above the rate spread 1.90 times more frequently than whites, and confined Latinos to higher-cost loans above the rate spread 1.43 times more frequently than whites.

U.S. Bancorp in 2009 confined African Americans to higher-cost loans above the rate spread 1.72 times more frequently than whites, and confined Latinos to higher-cost loans above the rate spread 1.71 times more frequently than whites.

 Regions in 2009 confined African Americans to higher-cost loans above the rate spread 1.68 times more frequently than whites, and confined Latinos to higher-cost loans above the rate spread 1.33 times more frequently than whites.

  Several lenders, including a large credit union, exhibited disparities denial rate beween African and Latinos compared to whites in 2009. Citigroup, for example, denied applications by African Americans 1.45 times more frequently than whites, while denying Latinos 1.35 times more frequently than whites. JPMorgan Chase denied applications by African Americans 1.54 times more frequently than whites, while denying Latinos 1.41 times more frequently than whites. The Pentagon Federal Credit Union denied applications by African Americans 2.04 times more frequently than whites, while denying Latinos 1.84 times more frequently than whites.

  The law required that the 2009 data be provided by April 1, following March 1 requests by Fair Finance Watch and Inner City Press. Several banks did not provide their data by the deadline. Trustmark and Bank of Hawaii provided their data at the deadline but only in paper format, such that it could not yet be computer-analyzed. Further studies will follow.


April 5, 2010

This week the Angelides Commission will hear from Alan Greenspan, Robert Rubin and Chuck Prince. This goes back to the Citicorp - Travelers merger, about which Inner City Press was asked this week:

When Travelers met and swallowed Citicorp in 1998, the Federal Reserve didn't just approve an illegal merger -- it illegally pre-approved an illegal merger. Sandy Weill and John Reed and their lawyers got the green light from the Alan Greenspan Fed before even announcing the merger. The group I worked and work with, Inner City Press/Fair Finance Watch, demanded all records of the meetings, but got only two cryptic letters, talking about the marriage of "Red" and "Blue." The Fed approved, and predatory lending took off. And now in the aftermath, even the Chris Dodd bill would house consumer protection inside the same Federal Reserve, a huge mistake. Red and Blue indeed...

March 29, 2010

The Fed is belatedly concerned -- but not too concerned. Following Inner City Press / Fair Finance Watch's comments, the Fed conducted an after the fact inquiry and in an approval order last week included this footnote:

A comment from the public expressed concern that FNF Group acquired control over Harleysville before obtaining Board approval of the application because of an extension of credit FNF Group made to Harleysville. In December 2009, and after FNF Group filed its application with the Board to acquire Harleysville, FNF Group loaned Harleysville $50 million, secured by the shares of Harleysville Bank. Harleysville invested the loan proceeds in Harleysville Bank to increase the bank's capital.

The Board is concerned when a banking organization seeking to acquire . another banking organization makes a loan to the acquiree in advance of the Board's approval of the acquisition. Those types of loanss raise concern thatthe transactionon would ~e, in substance, the acquisitioof af a controlling interest or would provide the acquirer with the ability to exercise a controlling influence over the management and policiof thethe bank holding company before receiving Board approval. The Board has reviewed carefully the loan to Harleysville, including the circumstances and terms of the loan, the merger agreements, the purpose of the loan, and the relationships of the organizations after the loan transaction. Based on all the facts of recordd, the Board does not believe that the loan resulted in FNF Group acquiring voting securities of, or a controlling equity interest in, Harleysville, or in FNF Group exercising, or having the ability to exercise, a controlling influence 'over Harleysville in this case. The Board continues to believe that loans made by an acquirer to a target organization before agency approval of its acquisition proposal raise important issues, and it will review these arrangements critically and carefully.

But the Fed apparently didn't know about the loan until it was raised in comments, and it let the deal go forward, after reams of arguments by banking insider H. Rodgin Cohen. This is another example of Fed lassitude, another reason that consumer protection should not be put under the Fed....

From the WSJ, we annotate in italics: "CitiFinancial, a consumer lender, has a business model that is similar to CIT Group Inc., which suffered as wholesale funding dried up and sought bankruptcy-court protection last year, exiting in December. CitiFinancial used to be known as Commercial Credit Corp. and was the cornerstone of the empire Sanford Weill built into Travelers Group before merging with Citicorp in 1998 to form Citigroup. As a stand-alone firm, CitiFinancial could have trouble getting access to cheap credit, some analysts said."

It's also a widely known predatory lender. Could that have something to do with the difficulty in selling it?

"Another business up for sale: a credit-card portfolio with an estimated $40 billion in receivables and private-label cards pitched through retailers like Sears Holdings Corp."

And that business repeatedly calls people, even those on the Do Not Call list, just as CitiFinancial does...

March 22, 2010

Wal-Mart plans to open 500 more of its MoneyCenters. Asked for comment, Inner City Press opined

"Wal-Mart's proliferation of check cashing and $4.50 for bill payment (same day) into 500 more stores must be seen in the context of the company's recent gender discrimination settlement, use of tainted cotton from Uzbekistan, and standardless sale of the resources of the Democratic Republic of the Congo. We are still monitoring Wal-Mart, as it become more banklike without any of the regulation. We would suggest that the Consumer Financial Protection Agency, wherever housed, also look at Wal-Mart."

The domestic and CFPA portion of the comment appeared in the Charlotte Observer and elsewhere.

"Wal-Mart adding financial sites," by Christina Rexrode, Charlotte Observer, March 16, 2010

March 15, 2010 -- As Congress Dithers for Payday Lenders, CRA Activists Raise Stakes in St. Louis

By Matthew R. Lee

WASHINGTON, March 10 -- As legislators from both political parties dally on Capitol Hill, considering handing consumer protection to the Federal Reserve like Democratic Senator Chris Dodd or leaving enforcement over payday lenders off to the side like Republican Bob Corker, the real work of protecting consumers is done by grassroots groups.

Inner City Press learned on Wednesday of an all too rare Community Reinvestment Act challenge filed recent in Missouri, which has delayed the recalcitrant bank's application for regulatory approval for several months. The Metropolitan St. Louis Equal Housing Opportunity Council, which filed the protest, says that CRA has been largely moribund in St. Louis for the last 20 to 30 years.

Now, in the face of the economic meltdown, it is back. On the sidelines of the NCRC conference, three EHOC staffers spoke of pouring over list of regulatory approvals, commenting on CRA performance evaluation, reaching out for allies to Kansas and Jefferson City.
 
  The applicant is Central Bancompany, based in Jefferson City, to buy Bank of Belton. It is not the biggest deal, but a fresh CRA protest is a big deal. We'll have more on these.


March 12, 2010 -- As HUD Shut Subprime Taylor Bean, What of Its Larger Financiers? Annals of Impunity

By Matthew R. Lee

WASHINGTON, March 12 -- While Congress continues to resist holding the financial institutions responsible for the meltdown accountable, five blocks from the Capitol on March 12, Federal Housing Administrator David Stevens bragged of having "shut down 356 lenders." He focused on Florida-based Taylor, Bean & Whitaker, the third largest FHA lender in the country until it filed bankruptcy in August 2009. At that time, Inner City Press / Fair Finance Watch noted that TBW had given it the run around to obtain its Home Mortgage Disclosure Act data, perhaps a clue to more fundamental illegality.

What Stevens didn't follow up on was the banks which enabled and did business with Taylor Bean and its ilk. There was, of course, Alabama-based Colonial Bank, which have been intertwined with Taylor Bean was seized by the FDIC, its branches sold to BB&T and many of them shut down.

But there were bigger players at the trough. As Inner City Press reported back in November 2009:

"Deutsche Bank AG and a unit of BNP Paribas SA separately sued Bank of America Corp. on Wednesday, alleging that the bank has failed to repay about $1.7 billion in secured notes issued by a special-purpose entity. The breach-of-contract lawsuits, filed in U.S. District Court in Manhattan, allege that Bank of America has failed to redeem $480.7 million in secured notes held by BNP Paribas and $1.2 billion held by Deutsche Bank. The notes were issued by Ocala Funding LLC, a special-purpose entity that provided short-term liquidity funding to Taylor, Bean & Whitaker Mortgage Corp..."

This a a sample of the chicanery behind the global financial crisis, and players who have not been held accountable.

Footnote: Stevens was preceded in the NCRC conference by another HUD official, John D. Trasvina, head of fair housing and fair lending. He was asked about HMDA data, but noted its time lag, that one can't get study disparities in rates of restructuring of mortgages. This publication has requested more recent data: watch this site.

March 11, 2010 -- Dodd's Bumbling Portends More Watering Down for Fed, of Groucho Marx in Reverse

By Matthew R. Lee


WASHINGTON, March 10 -- After watering down financial reform legislation in weeks of concessions, now Senator Chris Dodd says that while a draft bill will be "unveiled" on Monday, it and he will not have any Republican co-sponsors. Insiders predict then another round of concessions, from a bill that will, they say, place consumer protection in or at the Federal Reserve.

 "Sell out city," said one consumer advocate visiting Washington this week, expressing a lack of surprise that Timothy Geithner so quickly gushed with praise for lame duck Dodd. Some consumer advocacy insiders have been defanged into supporting the Federal Reserve by the threat that if not at the Fed, the financial protection unit could be placed in the Office of the Comptroller of the Currency. Thus they resist going public with their dissatisfaction with the Fed's track record, on the "lesser of two evils" theory.

The Fed itself has placed the Consumer Financial Protection Agency issue on the agenda of the next meeting of its own Consumer Advisory Committee, half made up of bankers. Of the other half, some are in the Fed's sway on a reverse Groucho Marx theory.

Groucho said he didn't want to join any club that would accept the likes of him. The insiders won't oppose any club that has issued them an invitation. It would be funny if it weren't so sad, ill-serving consumers. Those who were previously invited but who've now left may have more freedom to speak. We will have more on this.
March 8, 2010

  While opposing the proposal to put consumer financial protection under the Federal Reserve, it's worth noting that the Treasury Department's OCC also continues to allow predatory lending, including tax refund anticipation loan (RAL) lending.

The two biggest RAL lenders are national banks of JPM Chase and HSBC (which continues "partnering" with H & R Block). Rather than publicly or even privately urging these big banks to stop RALs -- as even the FDIC has done with smaller institutions like Republic -- the OCC issued a vague policy guidance that provides no penalties, http://www.occ.gov/ftp/bulletin/2010-7a.pdf

While JPM Chase claims its fees are clear -- $32 plus one percent of the loan -- it also has a $10 technology access fee. This is a trillion dollar institution, engaged in usurious lending. And the band played on...

March 1, 2010

Bottom feeding subprime lender World Acceptance, charging interest rates up to 215%, is enabled by credit lines from JPM Chase and Bank of America, among others. It feasts off repeated refinances and roll overs, using the rule of 78s to fleeces its borrowers. Do Chase and BofA have any standards for the subprime lenders they will lend to? JPM Chase was previously exposed by Inner City Press / Fair Finance Watch for extensive lending to pawn shops and high cost check cashers. Even post crisis, the sleaze just continues. Watch this site.

February 22, 2009

Public Comment Period on Merger Only a "Technicality," Bank Law Insider Argues

When is a Federal Reserve public comment period not public? When banking law insider H. Rodgin Cohen says so, he seems to feel. In a February 17 letter copied to the Fed's general counsel Scott Alvarez, H "Can We Call You Rodge" Cohen urges the Fed to disregard a timely comment on lending disparities and other irregularities, arguing that the comment period was only open due to a "technicality."

While some would think this beneath ol' Rodge, perhaps Sullivan & Cromwell markets him as truly full service.

February 15, 2010

Subprimers from Fremont resurface as bottom feeders buying foreclosed home: Impunity

Once subprime, always subprime. Or, subprime never dies -
"Kyle Walker, a former top executive at Fremont Investment & Loan - a once-high-flying subprime lender - has a new firm that is buying distressed homes, some for as little as $1,000... 'We have a pitch book out with Cohen Financial and hope to raise between $6 million and $7 million,' said Mr. Walker. The company he owns and manages is called Home America. His management team includes Bob Clafford, a former executive vice president in charge of wholesale lending at FI&L." NMN
Our first run-in with Fremont was when, despite a timely request for the Home Mortgage Disclosure Act (HMDA) data in electronic format, they refused and gave it in a format that could not be analyzed. Later, Fremont settled predatory lending charges for $10 million with Massachusetts Attorney General Martha "Don't Go There" Coakley.

Now Fremont's Walker and Clafford resurface, buying foreclosed homes and renting or "land contracting" them back to lower income people while holding the note or deed in portfolio.

Some might call this impunity. And they would be correct.

February 8, 2010

  So what did and does Hammering Hank Paulson think of the Community Reinvestment Act? He was Secretary of the Treasury, in charge of the Office of the Comptroller of the Currency and Office of Thrift Supervision, which regulate national banks and saving banks, respectively, including for CRA. But on February 2 on the Larry Kudlow show, when Kudlow included CRA among the causes of the economic crash, Paulson said nothing, then agreed, "That's right... you had all of this going on."

Mr. PAULSON: Well, what you need to understand is what had happened before even the middle of '07, which is you'd had these excesses had been building up for some times. You'd had a--we had been overstimulating housing. So if you look at the combined weight of all of our policies in the US government...

KUDLOW: Wait. It's HUD-backed, unaffordable mortgage loans, Fannie and Freddie?

Mr. PAULSON: What you have--yeah, yeah, Fannie and Freddie, the FHA, various state programs.

KUDLOW: Community Reinvestment Act.

Mr. PAULSON: You know, mortgage interest deduction. I'm not saying of them were...

KUDLOW: Zero capital gains tax on home sales.

Mr. PAULSON: That's right. And so you had--so you had all of this going on

   Meanwhile, click HERE for an InnerCityPress.com article last week about Paulson's book.


February 1, 2010

  Now, Goldman Sachs has blacked out large portions of its supposed response to the protest by Inner City Press Fair Finance Watch to the NY Banking Department, on issues of compliance by and regulatory review of its subprime subsidiary, Litton Loans. Inner City Press has appealed, specifically contesting that in the letter as provided to ICP by Goldman Sachs, under "Litton's Compliance Program," four full paragraphs are redacted. Under "Prior Regulatory Reviews of Litton," two paragraphs are redacted - the entirety of the section.Inner City Press is putting it online here. And so:

Dear FOIL Appeals Officer, Superintendent of Banks and others at NYBD:

On behalf of Inner City Press and its Fair Finance Watch (collectively 'ICP") , this is a timely FOIL appeal of your Department's denial of access to the redacted portions of Goldman Sachs' Response to ICP's Protest of the Applications by Goldman Sachs Bank USA.

Goldman Sachs unilaterally redacted large portions of the copy of its response which it mailed to ICP.

For example -- and ICP is hereby specifically contesting -- in the letter as provided, under "Litton's Compliance Program," four full paragraphs are redacted. Under "Prior Regulatory Reviews of Litton," two paragraphs are redacted - the entirety of the section.

Since it is the NYBD's duty to review the propriety of such withholdings, ICP has awaited a ruling by the NYBD -- anticipating based on the past practices of the NYBD and other regulators, and applicable law that much of the blacked out information would be released. In the interim, ICP appealed the withholding of portions of the Application.

But the NYBD has not ruled yet on Goldman Sachs' extensive and abusive redactions. Particularly given the massive public support Goldman received through TARP and otherwise, to withhold from the public its response to protests of its requests for expedited regulatory approval is inappropriate. Hence, prior to your Department making any decision on Goldman's contested application, this appeal.

Watch this site.

January 25, 2010--

As Obama Proposes Goldman De-Bank and Liability Cap, of Dodd and BofA's Evasions

By Matthew R. Lee

NEW YORK, January 21 -- Two hours before President Barack Obama unveiled additions to his financial reform proposals, limiting the mix of banking and proprietary trading and setting a cap on liabilities and not only deposits, several of his senior officials briefed the press.

  They were relentlessly "on message," emphasizing how comprehensive the package is, how they are "working with Senator Dodd" without mentioning that he will not run for re-election.

  They repeatedly referred to the proposed Consumer Financial Protection Agency (or "Consumer Protection Agency," as one of them called it), without address that Dodd himself is said to be moving away from the proposal, eager some say to have his name on a bill, any bill.

  The new proposals would, by barring a company that owns a bank from forms of proprietary trading or owning, investing in or advising a private equity or hedge fund, seem to require Goldman Sachs and Morgan Stanley to de-bank. Two questions directly raised Goldman, but the senior administration officials dodged both of them. One asked if the timing of the announcement is tied to Goldman's release of earnings. This was denied.

  A second proposal, not clearly spelled out in the briefing, would set a cap on liabilities similar to the 10% deposit cap ostensibly in place since 1994. That cap has been evaded. As South Bronx based Fair Finance Watch and Inner City Press have repeatedly shown, Bank of America has been at or over the cap but still allowed to make acquisitions.

  B of A simply reduces the visible level of deposits by pricing, and then picked them up afterwards. The regulators helped evade the cap by including deposits outside of the United States in the denominator calculating the 10%. Why would this be any different?

Inner City Press on BloggingHeads.tv about Haiti, Sri Lanka, Afghanistan... and Massachusetts, here.

January 18, 2010

On Goldman Sachs, the New York Banking Department has belatedly provided to Inner City Press portions of Goldman's application. But key sentences are blacked out with magic marker. Inner City Press has submitted an FOI appeal; watch this site.

January 11, 2010

There is a wave of bank branch closings, as yet unacted on by the regulators. Two examples are Regions Financial, closing 121 branches in over a dozen states, and PNC which is closing three dozen branches in Ohio. On the former, HEED in Jackson, Mississippi fought back and kept their branch open. But from Florida to Tennessee, communities have not been so lucky. What will the regulators do?

January 4, 2010

From an SEC Form 8-K filed on New Years Eve: "In February of 2010, Republic Bank & Trust Company (the “Bank”), a subsidiary of Republic Bancorp, Inc., expects to meet with the Federal Deposit Insurance Corporation (the “FDIC”), at their request, to review the future viability of the Bank’s Refund Anticipation Loan program beyond the upcoming tax season."

These tax RALS are so predatory, one wonders how the FDIC considers this tax season's victims: cannon fodder? If the FDIC knows it's wrong, why allow another season of victims?

Meanwhile, beginning this week in Kentucky, payday loans cannot exceed $500, and the service fees are not to be more than $15 per $100 borrowed during a two-week period...

In India, despite public statements that Citigroup and CitiFinancial would be getting out of their subprime lending, now Citi has decided to continue: "Shriram Transport Finance Company (STFC), which has acquired the assets of GE Transportation Financial Services, a part of GE Capital, is looking aggressively for more such acquisitions, R Sridhar, managing director, said. Sridhar added that talks of acquiring assets of Citi Financial have not fructified. 'We have been negotiating with Citi Financial for a while now, but the company is not up for sale anymore as they want to enter the market again.'"

So Citi's predatory lending will continue...

December 28, 2009

Goldman Sachs, which has evaded regulatory scrutiny at every turn, has applied to open a branch of Goldman Sach Bank USA at 200 West Street in New York City. Inner City Press' Fair Finance Watch has just submitted to the New York State Banking Department a timely comment opposing and requesting public hearings on Goldman Sachs' pending application:

We wish to emphasize that Goldman Sachs Bank USA, a New York State chartered bank, is the direct parent of controversial subprime services Litton: "Goldman acquired Litton from C-BASS on Dec. 10, 2007. Litton is headquartered in Houston, Texas and is a wholly owned subsidiary of Goldman Sachs Bank, USA a New York state chartered bank."

As the regulator of Goldman Sach Bank USA, the NYBD has a responsibility, including in response to this timely comment, to closely examine and solicit public comments on Litton's performance.

As you know, Goldman Sachs was allowed to become a bank holding company without any public comment period or consideration of the federal or state Community Reinvestment Act, which would otherwise have been required. Since then, as simply one example, Goldman Sachs has been charged with involvement in predatory lending, including for the acts of its subprime servicing subsidiary, Litton Loan Servicing. Even Goldman's settlement left the public in the dark. See, e.g., Bloomberg News, May 17, 2009, "Deal in Goldman probe leaves public in dark." Watch this site.

December 21, 2009

Of a possible CRA in the UK, "ministers are to 'explore options' with banks on improving the information available on banking services available in disadvantaged areas, the chancellor announced. The Pre-Budget Report said it is 'important to understand how banks are supporting our broader community regeneration work'. The document added: 'The Government will therefore explore options with the banks to improve the information available on services delivered in deprived communities.' Earlier this year, Liam Byrne, the chief secretary to the Treasury, said the Government was 'earnestly exploring' the possibility of US-style legislation that prevents banks from discriminating in their lending practices against individuals and businesses in deprived areas (R&R, 12 October, p4). But last month the Treasury moved to play down reports that it is exploring the idea of introducing a UK version of the US Community Reinvestment Act."

So which is it?

December 14, 2009

  The Federal Reserve has written not to Goldman Sachs but to its target Avenue Financial, asking for information necessary to complete the Board's record of information with respect to the filing by The Goldman Sachs Group, Inc., New York, New York, to retain its interest in Avenue Financial Holdings Inc., Nashville, Tennessee.Discuss Avenue Bank's policies and procedures for ensuring that its lending activities comply with applicable consumer protection laws and regulations, in particular, the Equal Credit Opportunity Act, the Fair Housing Act, the Truth-in-Lending Act, the Real Estate Settlement Procedures Act, the Home Mortgage Disclosure Act, and the Home Ownership and Equity Protection Act. Discuss Avenue Bank's activities to serve the credit needs of its low- and moderate-income communities throughout its CRA assessment area, since the reorganization of the bank and the change in its business model."

  The response is that one in four of Avenue's branches serves moderate income. What about low income?

December 7, 2009

  The FDIC's study of the un- and under-banked, released last week, was heard around the world, via the Financial Times, here.

  In repurchases from Fannie Mae and Freddie Mac, Wells Fargo said in the third quarter it set aside an additional $146 million for its repurchase reserve "due to higher defaults, anticipated higher repurchase demands and overall deterioration in the market." But of course it didn't spell out the actual size of the reserve.

  Bank of America disclosed in the third quarter that it bought back, through Sept. 30, $922 million of mortgages tied to faulty underwriting. Of course B of A also doesn't break down the size of its repurchase reserve. J.P. Morgan, as of the third quarter, had $1.1 billion set aside to meet repurchase claims from investors, including those from Fannie and Freddie, because of problematic underwriting. The repurchase reserve "won't run at that high level," claimed Michael Cavanagh, J.P. Morgan's chief financial officer, in October during the quarterly earnings conference call, but "looking ahead it will still be something though." Yep...

  The Federation of Community Development Credit Unions is canceling its seminar on CRA this week. The seminar, "Credit Union Outreach, Community Reinvestment, and Credit Unions: Facts. Resources. Strategies" was scheduled for Thursday in Alexandria, Va. "A labor dispute at our planned location forced us to cancel," said federation President/CEO Cliff Rosenthal. "It also became apparent to us that urgent legislative priorities were taking the attention of many of our presenters and attendees, so we have decided to postpone this session." Hmm...

November 30, 2009

  While in Dublin last week a conference heard a call for the "introduction of a Community Reinvestment Act, similar to the one which operates in the US. It rates banks negatively if they engage in unfair lending or other discriminatory practices. British social justice activist Karen Chouhan said banks with low ratings would not be allowed to expand or develop their businesses until their rating went up," a UK Treasury spokesman in London said CRA is not needed, it was designed for a unique American problem. Really?

Thanksgiving question "what about the 150 workers at the Stella D'Oro cookie factory in the Bronx? They lost their jobs and their healthcare when a company owned in part by Goldman Sachs bought Stella D'Oro and closed the factory down."

Ben Bernanke has written that "the Fed played a major part in arresting the crisis, and we should be seeking to preserve, not degrade, the institution's ability to foster financial stability and to promote economic recovery without inflation." But what about the Fed's inattention to predatory lending and its role in TRIGGERING the crisis? The Fed's lack of scrutiny of the predatory lending and service issues raised against Goldman Sachs pending applications does not bode well.

November 23, 2009

In the midst of a Community Reinvestment Act challenge, amid protests in the street, Goldman Sachs announces the payment of three percent of what it doles out in bonus to small businesses. Most in the mainstream press offer nothing but praise. What about, for example, Goldman's ownership of subprime servicer Litton Loans?

November 16, 2009

Ah, the arrogance of Goldman Sachs. Nearly a month after ICP Fair Finance Watch filed comments with the Federal Reserve, a response arrived from Goldman. They'd ignored the directions of how to send mail to Inner City Press, and hadn't bother to e-mail. And their response, while claiming that detailed reports of misdeeds, including by subsidiary Litton, by sample target Avenue Bank and in loans bought from Fremont are "replete with egregious mistakes and factual inaccuracies," does not identify a single error. They're just counting on the friendship or subservience of the Fed. Watch this space.

November 9, 2009

Primerica, a consumer complaint challenged business even by Citigroup's standards, is slated to be spun off via an initial public offering. Like CitiFinancial, Primerica targets "lower end consumers," as the WSJ diplomatically puts it. Many of those recruited to pay to work for it also complain, including to the Federal Trade Commission, from which Inner City Press receipt a slew of complaints under the Freedom of Information Act. Now the spin off. But Citi's predatory heart continues to beat...

November 2, 2009

JP Morgan Chase's CEO James Dimon has trashed the proposed Consumer Financial Protection Agency, saying it "would create cumbersome, costly restrictions and the banks will likely pass those costs onto the consumers." Let's see how it work for Chase...

One TARP-er hypes the stock of another, per WSJ: The recent selloff in BofA shares creates a good chance to buy into the bank, say Citigroup analysts. Bank of America shares are down some 17% from their most recent closing peak of $18.59 hit on Oct. 14. "Given the ongoing CEO search, fear of a capital raise only adds to the uncertainty hitting the stock, which creates a very attractive entry point."

October 26, 2009

A week after Inner City Press' Fair Finance Watch filed a formal protest to Goldman Sachs' applications to the Federal Reserve for shares in several bank, and after the Fed has started the clock for Goldman's response, no defense has been offered. Perhaps Goldman is too busy paying bonus and getting paid for doing nothing, as in New Jersey. It was reported last week that the Garden State, run by Jon Corzine formerly of Goldman Sachs, is paying for interest rate protection is no longer needs, and will keep paying until 2019, even as the state engages in other cut-backs. Ah, what a socially responsible institution....

J.P. Morgan Chase & Co. made nearly $50,000 in political donations through its PAC in September, counted by WSJ. The company donated $2,000 to Alabama Sen. Richard Shelby, the senior Republican on the Senate Banking Committee. The company also donated $1,000 to Pennsylvania Rep. Paul Kanjorski, the No. 2 Democrat on the House financial-services panel...

Citigroup canceled a planned $4.5 million renovation of its main office in Brazil that included an area for entertaining clients and a landscaped terrace called a "suspended garden." Can you say, Babylon?

"We need it to compete," a senior executive told the WSJ about about the project last week, describing it as an important way to impress banking clients and use Citigroup's real estate more efficiently. But on Tuesday afternoon, a person familiar with the situation said the renovation had been reviewed by senior executives, who decided to shelve the project. The reversal underscores the sensitivity inside Citigroup about its spending habits, since the bank has gotten $45 billion from the U.S. government, a 34%-owner of the company's common stock. on said the renovation had been reviewed by senior executives, who decided to shelve the project.

October 19, 2009

Inner City Press' Fair Finance Watch has just filed timely comments opposing and requesting public hearings on Goldman Sachs' pending applications to acquire, inter alia, Atlantic Capital Bank, Avenue Bank, Union Federal Savings Bank and Doral Bank.

Goldman Sachs was allowed to become a bank holding company without any public comment period or consideration of the Community Reinvestment Act, which would otherwise have been required. Since then, as simply one example, Goldman Sachs has been charged with involvement in predatory lending, including for the acts of its subprime servicing subsidiary, Litton Loan Servicing. Even Goldman's settlement left the public in the dark.

October 12, 2009

Citifinancial continues with its sleaze. From last week's Charlotte Observer:

"Donna and Ronnie Fruia learned firsthand how difficult it can be to get help modifying a mortgage. The couple from Troutman were in the midst of a series of health crises, and three members of the family - the couple's son, Donna's mother and Ronnie - were in the hospital. That's when Donna got a call that somebody from her mortgage company, CitiFinancial, had shown up in her husband's hospital room, where he was recovering from a stroke. 'At the time, I couldn't even really talk that good," Ronnie said. "But he wanted me to sign a bunch of papers.' The Iredell County couple had been trying to get a mortgage modification from CitiFinancial. The company, however, was pushing them to accept a modification that wouldn't have cut their interest rate, they said. Only after the episode in the hospital room and the involvement of state regulators did CitiFinancial cut the mortgage's interest rate from 11.5 percent to 5 percent, lowering their monthly payment from $985 to $602. The process took from the start of the year until July."

So what are the regulators going to do? Tim Geithner called Citigroup's chairman 17 times in the first half of this yet...

Hitting a new low, it took the Federal Reserve until September 30, 2009 to respond to Inner City Press / Fair Finance Watch's December 8, 2008 Freedom of Information Act request for the applications to become bank holding companies submitted by GMAC and the CIT Group. That's more than nine months, and even then, the Fed says it is withholding 182 pages. We will be appealing...

October 5, 2009

Reports that Citigroup is planning to cut back its retail banking presence to six cities -- New York, Washington, Miami, Chicago, San Francisco and Los Angeles -- and ditch branches in Texas, Boston and Philadelphia has some community activists asking how Citi would comply with the Community Reinvestment Act if it makes these cut backs. But Citi with its Citibank has the worst customer service ratings, while its Citifinancial has long engaged in predatory lending. So others thing cutting Citi back is a step in the right direction. If they collect deposits beyond these six cities, they should have a CRA duty there. But subprime loans, even personal loans, is not the way to comply with CRA. Watch this site.

September 28, 2009

  Accused recently of predatory lending are Deutsche Bank -- the unaccountable king of subprime foreclosures -- and SunTrust, on a larger than normal loan.

 As the legislation to require auditing of the Federal Reserve gather strength and supporters in Congress, the Fed sent its general council to argue that this type of accountability would just lead to higher rates. This sounds like JPMorgan Chase's argument when Georgia passed anti-predatory lending legislation...

  As Citigroup moves to ditch its Portugal credit card business to Barclays -- Pandit deemed it "non core" -- it becomes clearer that Citi's focus is in emerging markets, where it can still get away from unfettered predatory lending.

  Meanwhile, HSBC's CEO says he's moving from London to Hong Kong. Same game?

September 21, 2009

Last week the Federal Reserve issued a letter saying it will belated begin examining non-bank subsidiaries like CitiFinancial. The Fed says in footnote one they have the legal authority to do these exams. Then why did they refuse to do them for so long? Iit's like the S&L regulator which stood by as the thrifts wasted taxpayer money -- at least its duty were passed along to the OTS.

On merger applications in the past, when community groups like ICP / Fair Finance Watch put in evidence of violations by bank's subsidiaries, the Fed would drop a footnote that the issues were being referred to the FTC and HUD -- implying that the Fed had no jurisdiction over them, certainly no commitment to do anything about them

The Fed says, "Supervisory activities will be planned based on the issues identified ...through the investigation of consumer complaints." So what has the Fed been doing to date with consumer complaints against non-bank BHC subsidiaries?

Meanwhile, PNC's National City is moving to close its branch on the East Side of Youngstown, Ohio, in the McGuffey Mall. It has no other branch within a mile. What will be done?

September 14, 2009

We note the Malibu partying of Cheronda Guyton, Wells Fargo bank's senior VP for foreclosed properties....

Meanwhile, on another beach, HSBC is banking on the bloodbath on the beach: in Sri Lanka, with people still interned in the camps in Vavuniya, HSBC has bragged it is looking to open branch offices in Jaffna and elsewhere in the North. "HSBC is looking at opening branches in strategic locations in the North and East," its CEO for Sri Lanka and Maldives Nick A Nicolaou said. Some call it "banking on the bloodbath on the beach," and wonder how HSBC has to date escaped the boycott calls that have been directed at Victoria's Secret -- will it be exposed? -- and GAP, including its ironically named Banana Republic brand. We'll see.

September 7, 2009

Despite all the talk about Citigroup moving away from subprime and predatory lending, even in Indonesia its high-cost unit CitiFinancial continues to grow, having just "opened two new branches in Makassar and Palembang. Djamin Nainggolan, consumer finance business head at Citi Indonesia, said: "The expansion of CitiFinancial to Makassar and Palembang reinforces our commitment to growth and development in Indonesia. Within four years, we have grown from 16 branches to a 69-outlet network." Predatory lending in Indonesia...

Having tangled repeatedly with the Federal Reserve about Freedom of Information Act compliance, we note Bloomberg LP v. Board of Governors of the Federal Reserve System, U.S. District Court, Southern District of New York (Manhattan), No. 08-9595. Chief District Judge Loretta Preska of the SDNY wrote in a 47-page opinion, "The Board essentially speculates on how a borrower might enter a downward spiral of financial instability if its participation in the Federal Reserve lending programs were to be disclosed. Conjecture, without evidence of imminent harm, simply fails to meet the Board's burden." Preska concluded that the Fed "improperly withheld agency records in response to a FOIA request by conducting an inadequate search." Why are we not surprised?

August 31, 2009

  President Obama's decision, announced from Martha's Vineyard, to re-nominate Ben Bernanke to chair the Federal Reserve represents even to some of Obama's most fervent supporters a sign that, at least on banks and the economy, his "Change We Can Believe In" may be no change at all. That Obama nominated and then stood behind the New York Fed's Tim Geithner, even after the public disclosure that the man he would put in charge of the Internal Revenue Service had himself neglected to pay his taxes, and even when caught only partially paid up, using the statute of limitations, these supporters excuse as a bittersweet decision made early on, when the economy was in crisis. That is no longer the case, according to Team Obama. So to give another term to the very same Fed chairman who presided over the predatory practices of Citigroup et al., and then bailed them and AIG out, can't be defended on crisis grounds. As we've noted, Bernanke's approach to the Community Reinvestment Act is that it needn't be enforced on mergers -- which is the law's only enforcement mechanism. This defanging of CRA is an idea that appears to be spreading. Watch this site.

As IMF Funds Latvia, It Evades Questions of Conditions and Props Up Swedish Banks

By Matthew Russell Lee

UNITED NATIONS, August 28 -- As the International Monetary Fund, after haggling with the government in Riga, decided to release an additional $280 million to Latvia, the IMF's Dominique Strauss-Kahn offered canned praise that "authorities have made good progress in stabilizing the financial sector. Important measures include strengthened intervention capacity, an enhanced financial supervision and monitoring framework, and steps to contain risks in Parex Bank. Looking ahead, in light of binding fiscal constraints, the authorities should minimize contingent liabilities from domestic banks."

  On an IMF press conference call that followed, Inner City Press asked for an explanation of Strauss-Kahn's directive on Latvian banking, whether the IMF expects more bank failures and merger in the country, and whether the measures taken are, at least indirectly, meant to benefit as well Sweden's banks, absolving them of exposure to the Latvian market.

  Anne Marie Gulde, Senior advisor in the IMF's European Department, began by saying, "That's a lot of questions." Then she proceeded to dodge most of them. She said, "we are looking at how the budget can be made consistent with the economic realities in the country. This will involve possible further structural reform in spending and possibly revenue measures." The "we" presumably means the IMF.

  She went on, "the authorities are working on improving their bank resolution framework, so we are reasonably confident that any problems that will be emerging in this improved framework can be addressed." There was the matter of the Parex Bank; in the U.S., there was the sale by the FDIC of Colonial Bank to BB&T with very little transparency. The IMF opines on Latvia because they need the money. But does the IMF opine on the U.S.?

  Mark Griffith, the IMF's Latvia mission chief, added that "a number of banks have taken measures to increase capital to strengthen their position in Latvia." Was this the response to the question of whether the IMF's demand in Latvia benefit Swedish banks?

Footnote: at least in this case the IMF provided notice to the Press of a conference call on the decision. In the more controversial case of Sri Lanka, where at least four countries abstained on human rights and / or war crimes grounds, no such notice was given. Afterwards the IMF told Inner City Press that the Sri Lanka call had been only for journalists in Colombo. Here, priority was given to questioners from Riga, and at the end it was said that the IMF wants to engage more about Latvia with the press, especially in Riga. Does the IMF play politics on how it provides notice of conference calls? Watch this site.

From the IMF's transcript:

Inner City Press: Mr. Strauss-Kahn's statement talked about additional fiscal consolidation. I was wondering if, one, you could explain that, and two, separately whether the IMF expects any further bailouts of banks or mergers of Latvian banks. Also the effect of this program on not only Latvian banks, but let's see the Swedish banks that are exposed there and whether the idea of the government helping consumers pay banks, is it a matter of the banks restructuring the debt of consumers or of funds going to consumers in order to have the banks receive 100 percent of what's owed to them.

MS. GULDE-WOLF: Those are a lot of questions. Let me start maybe on the fiscal consolidation. Clearly, this is a part of the program as we had explained before. The decline in economic output in Latvia following a boom has a severe impact on the way the budget has to be structured and in looking at the next budget we are looking at how the budget can be made consistent with the economic realities in the country. This will involve possible further structural reform in spending and possibly revenue measures.

Clearly the issue of banks and possible further banking problems is critical in the forward-looking strategy of where we are going to go. There has already been significant progress made in stabilizing the financial sector. At this stage, the sector as a whole is well capitalized and liquid. With the continuing economic problem it is very important to keep vigilance in the financial sector. Also it cannot be ruled out that there might be problems emerging. The authorities are working on improving their bank resolution framework, so we are reasonably confident that any problems that will be emerging in this improved framework can be addressed.

MR. GRIFFITHS: I think the financial sector has really stabilized since the end of last year, and a number of banks have taken measures to increase capital to strengthen their position in Latvia, so I think they are making a lot of progress there and I think the authorities have worked very hard there. So I think things are getting better there.

* * *


August 24, 2009

What an outrage-- now the FDIC, when it chooses which bidder to award a bailed out bank to, refuses to release even the names of the rejected bidders, and information about their bids. Why was one chosen over the other? There's no way to know. This change in policy should not be allowed to stand.

August 17, 2009 -- As Colonial Bank is Handed to BB&T, Regulators Ignore Community Reinvestment Act and BB&T's Predatory Lending, G-20 Preview

By Matthew R. Lee

SOUTH BRONX, NY -- Lost in the late Friday coverage of the handover of Colonial BancGroup to BB&T was the way that this acquisition of a $25 billion bank was shielded from any public comment or consideration of the Community Reinvestment Act. The CRA of 1977, which requires that regulators consider public comments on banks' records of serving low and moderate income neighborhoods when they apply for approval for mergers or expansion, has been ignored on a number of large acquisitions, such as JPMorgan Chase's pick-up of Washington Mutual.

At that time, the regulators were in crisis mode, so to some the waiver of applicable law was more understandable. Now under a new administration which says the recovery has begun, the law is again waived, for a bank whose chairman has ridiculed the CRA while engaging in predatory lending through BB&T's Lendmark subsidiary, sure to expand into new markets through this acquisition. There has been no mention of any post consummation consideration of BB&T's record or any CRA plan it might have. If this is the new era of financial regulation, it is worse not better than what came before.

August 10, 2009

 Sleazy mortgage lender Taylor, Bean & Whitaker, which gave Inner City Press / Fair Finance Watch the run around about getting its HMDA data, has been raided by law enforcement and finally stopped lending. In March, after the Treasury Department told Colonial to come up with capital before it would get TARP funds, home-loan provider Taylor, Bean, "which had close ties to Colonial, led a group that pledged to provide the troubled bank with a $300 million equity life line. The financing deal fell apart last week, just days before U.S. federal agents on Monday raided the Florida offices of Colonial and Taylor Bean. On Wednesday, Taylor Bean closed its mortgage lending business. Lawyers suspect that the incestuous relationship between Colonial and Taylor Bean attracted the attention of regulators and the Justice Department." The HMDA run around was a clue, too...

August 3, 2009 -- Predatory Lending Persists, Despite Rosy Views from DC and IMF, CitiFinancial's Dark Side in Knoxville

By Matthew R. Lee

SOUTH BRONX, August 1 -- In Washington and New York, there is talk of an uptick in the national housing market and a curtailment of controversial subprime lending by such wounded giants as Citigroup. On July 31, Inner City Press asked the International Monetary Fund about the regulation of subprime lending in the United States, yielding a rosy answer about consumer protection.

   But a mortgage broker in Knoxville, Tennessee long known to Inner City Press tells a different story on both fronts. He has in the past been sued for whistleblowing about Citigroup, and so will remain nameless in this article. But he knows Citigroup's subprime business well, having worked for and then against its consumer finance subsidiary CitiFinancial.

    Reflecting the collapse of the housing market, he compares 2006, when he closed over 100 home purchase loans, with the year to date 2009, in which he has closed only six such loans.

   His income from fees has plummeted, and he faces a car repossession by Wells Fargo (which he calls Hells Fargo). Still he laments others' problems more than his own, describing to Inner City Press a sample CitiFinancial loan in Knoxville.

"They raked her at twelve and a half percent," he said, referring to a 63 year old African American woman who was also charged $7,000 in fees. "This is after they took TARP bailout funds, they won't show any flexibility and she's about to lose her house."

  He describes another borrower who has a $1700 personal loan from Citifinancial at 25.5% interest, and a $6,000 loan at 16% from Washington Mutual Finance, which CitiFinancial bought. The loans were consolidated at the higher CitiFinancial rate of 25%. "They're still up to their predatory lending," the maverick broker says. Even with the go-go years over.

   On July 31, Inner City Press asked the Western Hemisphere Division Chief of the International Monetary Fund Charles Kramer about U.S. regulation of subprime lending, current and proposed:

Inner City Press: What do you think of the proposal [of] separating prudential regulation of banks from consumer protection? It's pending in the House. I was told that the IMF will have some view on that and you are the guys to ask. What can you say to that?

MR. KRAMER: There are two observations we'd make on that. First of all, the key principle is that prudential regulation needs to be strengthened and be uniformly strong across the board, and a clear message coming out of the crisis is that prudential regulation needs to be enhanced significantly. Part of your question goes to an organizational issue, and looking around the globe we see financial supervision and regulation organized in a number of different ways. In some places we see it organized along functional lines where you have regulators for insurance companies and securities companies individually and so forth, and in some countries we have regulation along conceptual lines you could say, so you have prudential regulation and consumer and investor protection regulation. We're not of the view that there is any one sort of magic bullet or any one formula for this. Again the key thing is that you need strong and sound prudential regulation across the system.

Inner City Press: To the degree that unregulated subprime lending in some cases by bank affiliates at least triggered or started the rumblings of this. What protection do you think should be in place so that that doesn't happen again?

MR. KRAMER: Again I think the issue is that you need strong prudential regulation across the board. Consumer products are obviously one area, but there are a lot of others. You mentioned nonbanks, for example. We think it's very important that the administration has proposed to bring nonbanks under a stronger regulatory net to the extent that they're systemic, so we think that the proposal in particular to designate certain banks and nonbanks as tier one financial holding companies that would come under stronger regulation is a very good thing.

   Whether these moves will help people for example in Knoxville with 12.5% mortgages and 25.5% personal loans from CitiFinancial remains to be seen.

July 27, 2009

"Robert Joss is leaving the board of directors at Wells Fargo to join the board of Citigroup" - WTF? Who is it, that offered him the Citigroup position? How isn't it a conflict of interest, given Citigroup's and Wells' fight for Wachovia? What about the other conflicts of interest on the Citigroup board?

July 20, 2009

  After the financial meltdown exposed the Federal Reserve's inattention to predatory lending and credit default swaps, one would expect the Fed to hold off further loosening the rules on CDS. But you'd be wrong. Last week the Fed granted an exemption to CDS dealer ICE Trust, owned by crisis loser Citigroup and predatory Goldman Sachs, among others, giving them an easier 20 percent capital treatment rather than the 100 percent applicable to uninsured banks like ICE Trust.

   Bloomberg News, notably, spun the story the other way, claiming that "the Federal Reserve determined that ICE Trust is as risky as any insured bank, according to a letter posted July 14 on the regulator’s Web site. The Fed is requiring that bank members of ICE Trust, such as Goldman Sachs and New York-based Citigroup Inc., set aside the same amount of capital as parties trading as federally-backed lenders."
 
  But this is a story yet again of the Fed making it easy for the dealer community-- the dealers sought 0% so at least the Fed is imposing 20%. Those who don't learn from the past are condemned to repeat it...

    JPMorgan Chase has a Community Reinvestment Act duty in West Virginia and Kentucky, for example, and in neighboring states. Meanwhile, Chase is funding 6 out of the top 8 corporate producers of MTR coal in Appalachia. (Massey, International Coal Group, Arch Coal, Consol Energy, TECO and Foundation Coal.), per RAN. Chase was a co-lead arranger and underwriter for more than $1 billion in new financing to Massey Energy less than 12 months ago. Massey Energy is the biggest and most controversial MTR mining company in Appalachia, and is responsible for nearly 20% of all MTR coal mined. Others have stopped funding it -- why not Chase?

July 13, 2009

While the fate of the CRA in the CFSA legislation remains in the air -- or in the hands of Barney Frank -- we recommend this week two articles in the Charlotte Observer, both about Home Mortgage Disclosure Act. Inner City Press / Fair Finance Watch published its analysis of the 2008 data back in early April. But as in previous years, the Observer beat up other daily newspapers with its detailed story. Notably, the Observer story -- and that of ICP / Fair Finance Watch? -- does not include the 2008 loans of Washington Mutual. JPMorgan Chase is claiming that it had no duty to file the data, because of the structure of how the regulators let JPMC buy WaMu. This is a major loophole that should and will be pursued.

The Observer reports that "the HMDA data supplied by banks, for example, doesn't currently include borrowers' credit scores, the down payment amount and other details that would give a clearer picture of a lenders' decisions to make or deny a particular loan" and goes on to note that Inner City Press / Fair Finance Watch "has long argued the public needs more information about the role race plays in lending. Now that many banks are recipients of federal bailout dollars, [ICP] says they should submit to stricter HMDA requirements. 'It's the least they can do,' [ICP] said."

On the West Coast, JPM Chase, Citigroup, Wells Fargo and Bank of America are all refusing to help Californians in their time of need, announcing they will not accept the State's IOUs. As noted by the longtime DC watchdog of the Associated Press, "clearly, the federal government has leverage over these institutions," said [ICP]. Hundreds of banks have received aid from the government as part of its $700 billion rescue plan last fall."

July 6, 2009

Citigroup, with $45 billion in bailout funds, one third publicly owned, has jacked up credit card rates more sharply than other banks, the FT reports. It has also raised salaries by 50%. Ditech continues TV ads for mortgages. And from the WSJ's account of Geithner's domination of the process to name his successor at the New York Fed, "The search to replace Mr. Geithner began immediately after he was tapped in late November to be Treasury secretary...By early January, the list was narrowed to six, including Kevin Warsh, a member of the Federal Reserve Board in Washington; Rodgin Cohen, who specialized in banking law at Sullivan & Cromwell LLC; and Mr. Dudley, who had been head of the New York Fed's markets division since 2007" -- and was at Goldman Sachs before that. Dudley was Geithner's choice. JPM Chase's Jaime Dimon, on the other hand, favored his lawyer Rodgin Cohen....

June 29, 2009

The June 25 hearings on Capitol Hill about the Federal Reserve's role in Bank of America's acquisition of Merrill Lynch don't auger well for Barack Obama to renominate Ben Bernanke as Fed chairman. Bernanke repeatedly said, I don't recollect that conversation. He was asked about statements by top Fed lawyer Scott Alvarez but dodged the repeated question, doesn't he work for you? He took at least some fire from the left as well as right. Even more shameful was the Fed giving away the store to GMAC, and now to PIMCO. Is this the change to be believed in?

The hearings also recounted how little confidence a Fed government had in Bank of America CFO Joe Price, who'd go on to throw the Community Reinvestment Act under the bus during the bank's April earnings call. His statements have yet to be unpacked. But Ken Lewis, and perhaps Bernanke himself, might want to start packing.


June 22, 2009 -- Obama's Proposal By Splitting Community Reinvestment Act from Mergers Could Cut Enforcement, Lost in (Fed) Sauce

Byline: Matthew R. Lee of Inner City Press: News Analysis

MILWAUKEE, June 17 -- The Obama administration's financial regulation proposal, on the issue of the Community Reinvestment Act, bears the fingerprints of the Federal Reserve, not only Tim Geithner but also Ben Bernanke. While quickly praised by, for example, Paul Krugman, since the proposal shifts CRA evaluation away from the regulators who review the mergers on which CRA is actually enforced, bankers will like it, and may be behind it.

   CRA is only enforced in connection with banks' applications for regulatory approval for mergers and expansions, as confirmed by the Department of Justice Office of Legal Counsel. Without taking this into account, the Obama administration is proposing that CRA be a core function of the Consumer Financial Protection Agency, which will not be responsible for merger review.

   Had this proposal been made under the Bush administration, CRA advocates would have howled that it weakened the CRA. Since it's Obama, the response appears generally to be, let's wait and see.

   But not only did Obama appoint and fight for Tim Geithner, who at the Federal Reserve Bank of New York oversaw some of the most predatory moves by Citigroup and others -- Obama also continues to praise Ben Bernanke.
 
  In late 2008 at the Federal Reserve in Washington, Inner City Press asked Ben Bernanke about his decision to waive any CRA public comment period when he allowed Goldman Sachs and Morgan Stanley to become bank holding companies.

Bernanke responded that it makes no sense to limit CRA review to regulatory approval time -- despite that being the only legal enforcement of CRA. Now that thinking seems to have insidiously spread within the Obama administration.

  But who will blow the whistle? Krugman for example takes the proposal as a "poke in the eye to right-wingers." To skeptics, it's a perfect post modern move: cheered by ideological but ill-informed liberals, but actually serving big business.

Postscript -- proponents of Obama's plan have noted that the CFSA would, among other things, hold public hearings on (some?) mergers. But if the power to approval or deny the mergers remains with the Federal Reserve, OCC and FDIC, the CFSA could be just a side show. The Bank Holding Company Act and Bank Merger Act would have to be amended -- first.
 
  On the other hand, a portion of Obama's proposal, to declare hedge funds which pose systemic risk to be bank holding companies, could easily be expanded to put just funds under the CRA. Whether this happens, or for now is at least quickly proposed, may be a litmus test. Watch this site.

June 15, 2009 -- Tales from the Subprime Meltdown Resonate from Coast to Coast as Regulators Spins

Byline: Matthew R. Lee of Inner City Press: News Analysis

SOUTH BRONX, NY, June 11 -- As subprime enabler Larry Summers prepares to belatedly propose new regulation in a speech Friday in New York, Thursday in the Midwest one of the beneficiaries of Summers' deregulation and the meltdown, Wells Fargo, was protested by workers and consumers. Employees of Quad City Die Casting employees in Moline, Illinois called on Wells Fargo to restore financing before the plant is closed and their jobs lost on July 11.

The protest was part of a nationwide day of action by NCRC members, from California to New York. Meanwhile, Wells Fargo Bank in 2008 confined African Americans to higher-cost loans above the Federally defined rate spread 2.18 times more frequently than whites, according to this (organization's) study.

In North Hollywood, for example, according to organizers there, "sixty community activists and a horde of media outlets gathered in North Hollywood for a press conference in front of a four unit apartment building from which tenants were being evicted. Lizette Guevara, a ten year resident of the building, who with her children and a blind neighbor are being evicted, spoke about her efforts to stay in her home... Participants included community organizations and neighbors from the nearby dog park."

In North Carolina, numerous groups participated in a "Financial Freedom Fest Day of Action." In the Detroit Council Chambers, it was standing room only. In Indiana, they "talked about the foreclosure mitigation counseling program and had 2 families there to give testimonials about how they were helped by the program."

There were rip-roaring events in Milwaukee, Wisconsin, but we'll have more on that next week after a visit to Beer City.

At an event in Mississippi, a representative of the City Jackson deplored "wrongful eviction of tenants being told by landlords that they do not need to show up in court and being offered to 'work something out' only to be evicted five days later."

And that was a consistent theme from coast to coast: lower income people are bearing the brunt of the financial crisis, and the bailouts are not helping them, despite what Larry Summers says, despite some banks now paying back the TARP. When people feel that their champion's in power, and still they have no justice, what do they do? Watch this site.

June 8, 2009

Questions, questions: Bank of America will be saved by... ex-regulators? Now on the board of directors are former Federal Reserve Governor Susan Bies and former Federal Deposit Insurance Corp. Chairman Donald Powell. That is to say, regulators who failed to stop predatory lending and the meltdown now benefit from it....

So the regulators' idea of change at Citigroup would be to hand the reigns from Pandit to former U.S. Bancorp CEO Jerry Grundhofer, who bought a 25% stake in now-failed predatory lender New Century? Plus ca change, plus c'est la meme chose.

On June 11, there will be Community Reinvestment Act-relevant events by NCRC members across the USA, including New York, Alabama, California, Washington DC, Delaware, Florida, Indiana, Iowa, Maryland, Michigan, Missouri, New Jersey, North Carolina, Ohio, South Carolina, Texas, West Virginia and Wisconsin....

June 1, 2009

In the UK, according to a new study by the New Local Government Network, "There is evidence that the pernicious trend of illegal unsecured lending at extremely high rates of interest, or 'loan sharking,' is making a comeback At least 165,000 people already use loan sharks in the UK and we can expect the number to rise sharply." An additional 35,000 people, or an even higher number, are likely to use loan sharks during the recession, the report predicts.

The race for governor in Florida pits bad banker against worse pro-bank blowhard. Bill McCollum, who while in Congress promoted every form of deregulation and promoted predatory lending, now faces off against Alex Sink, the former CFO of NationsBank now Bank of America, who oversaw the former's purchase of Barnett Banks which set negative fair lending precedents. How to choose between them? We don't envy Floridians on this one...

What a surprise: the Committee on Capital Markets Regulation, including vulture investor Wilbur L. Ross Jr. of WL Ross & Co., is proposing that the Federal Reserve become the super-regulator...

May 25, 2009

Banco Bilbao Vizcaya Argentaria SA is looking to acquire a U.S. bank up to half its size in 2010... So how did the Federal Reserve explain the lack of public notice on its H2A web site for Bank of America's application for a new bank? We don't know yet: we asked the Fed to response by email, but they have not....

May 18, 2009

On May 14, Inner City Press submitted the following to the Federal Reserve:

         On behalf of Inner City Press/Community on the Move and its members and affiliates, and the Fair Finance Watch (collectively, "ICP"), this is a
petition, challenge and request under the Freedom of Information Act (5 U.S.C. § 552; "FOIA") and Community Reinvestment Act (CRA) regarding the
application by Bank of America to acquire 100 percent of the voting shares and thereby indirectly acquire Bank of America North Carolina, National
Association, and for the Federal Reserve System's (the "FRS's") communications with Bank of America in 2009 and a demand for public notice and comment, and a protest-in-advance.

  The FRS has virtually repealed banking laws, including the BHC Act and the CRA, by approving mergers and conversion with no public notice or comment.
Now, on an application by the largest and most troubled US bank, the Fed provided no notice until the last day on its H2A web site.  Yesterday, ICP
was asked about a notice seen in the Federal Register. It was not in the H2A. The undersigned called the FRB of Richmond, and noted that it was not in the H2A, requested an extension of the comment period.

  Today May 14, suddenly the proposal is in the updated H2A,http://www.federalreserve.gov/releases/h2a/h2a.cfm?view=week with the comment period ending... tomorrow. This is unreasonable, and unwise given the issues surrounding Bank of America. It is widely reported that B of A would have been required to raise more capital, but that it lobbied the Fed to knock $16 billion off what it should raise. The Fed and its governors, and B of A until recently when its CEO was under fire, have said that CRA did not cause the financial crisis. But on B of A's April 20 earnings conference call by Lewis and his Chief Financial Officer
Joe Price told analysts that the company's "Community Reinvestment Act portfolio is seven percent of the residential book, but 24% of the losses."
Yeah -- blame your bad decisions to invest in high falutin asset-backed securities on the CRA... We'll have more on this.The conference call is archived here
http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-eventDetails&EventId=2134324and CFO Price makes his statement at Minute 26:25
  ICP is requesting an evidentiary hearing to explore this public claim by B of A.

In its (and the) first study of the just-released 2008 mortgage lending data, Inner City Press / Fair Finance Watch has found that Bank of America
NA confined Latinos to higher-cost loans above the rate spread 1.51 times more frequently than whites. Countrywide Bank, which B of A acquired, had a lower disparity, at 1.22. Bank of America NA denied applications by African Americans 1.44 times more frequently than whites, while denying Latinos fully 1.57 times more frequently than whites.

ICP Fair Finance Watch was interviewed on November 7 about the use of funds by Bank of America --

"Bank of America Corp., largely through its political action committees, gave candidates and parties $3.7 million this election cycle, according to
an analysis of Federal Election Commission reports. Bank of America spent $6.5 million lobbying federal officials over the same period; Wachovia spent $2.7 million and Wells Fargo, $3.6 million."

  There is no commitment that the bailout funds will not be put to these uses...

There is more to be said, but first the comment period must be extended.

May 11, 2009

Over 500 tenants a month in New York City alone are served with eviction papers due to their landlords being foreclosed on. The number one evicter? Deutsche Bank... So the Fed even cooked the books on the stress tests, after Wells Fargo threatened to sue. At least $16 billion was knocked off what Bank of America has to raise. Way to regulate... Same to the Fed's use of a Goldman Sachs director, Stephen Friedman, as the president of the New York Fed. No conflict of interest there, right?

May 4, 2009

So at Bank of America's shareholders' meeting last week in Charlotte, Ken Lewis was ousted as chairman. This same a week after he and his CFO Joe Price fingered the bank's “Community Reinvestment Act porfolio” as having much higher delinquency rates than other loans. Cynically, Lewis arranged for some community groups to lobby for him to remain as chairman. He's still the CEO -- shareholders couldn't vote on that. Yet.

Amazingly, CitiFinancial continues to sponsor a Ford car -- NASCAR TARP.

April 27, 2009

   Bank of America calls itself a major supporter of the Community Reinvestment Act. But as Ken Lewis comes ever-closer to his termination date, apparently everything must go. On B of A’s April 20 earnings conference call by Lewis and his Chief Financial Officer Joe Price told analysts that the company’s “Community Reinvestment Act portfolio is seven percent of the residential book, but 24% of the losses.” Yeah -- blame your bad decisions to invest in high falutin asset-backed securities on the CRA... We'll have more on this.

 The conference call is archived here

http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-eventDetails&EventId=2134324

and CFO Price makes his statement at Minute 26:25

And now, from the mail bag, on Wells Fargo and US Bank

Subj: My Plight with Wells Fargo Auto Financial
From: [Name withheld in this format]
To: Inner City Press
Sent: 4/17/2009 6:59:57 P.M. Eastern Daylight Time
Hello Matthew,
I've been referred to you by a family member to contact you about some trouble I've been having with Wells Fargo Auto Financial. I'd like to share my story with you, in hopes that you will promote awareness regarding Predatory and Discriminatory Lending Practices.

I myself, am a young, black female; have always been a part-time worker, and full-time student (until recently as of 4/06/09); and a single mother. At the time I contracted with WF, these same characteristics applied.

December 2007, I was deceived into a contract for an auto loan that did not state the terms that was initially discussed. Based on my good credit history, I was told that Wells Fargo would pay off all of my credit card debt, and buy out my car loan from Bank of America and I would end up paying a low monthly payment each month. Right before it is time to sign the contract, Wells fargo change the terms, and decided it was best to give me a check in the amount of $2000 to pay off my own debt, and buy out my car loan ($18K). This was a little fishy to my then, but I felt pressured to go ahead with the deal because (1) I spent almost 3 hours in this office, and I had to leave quickly; (2) I needed the money to pay off some debt and bills; (3) Wells Fargo offered an additional line of credit (as an incentive) for $1000, and (4) I didn't have to start paying for another month and a half.

The terms were $505.77 per month, which was far less than what I was paying for the bills separately. He told me where to sign, and I left. Things were fine for the first couple of months.

May 2008, I had a life changing event occur. My daughter had chronic bronchitis due to Chicago's weather and I had to move to Arkansas for a better climate environment. Upon my move I had certain job leads that fell through and was out of work for at least 4 months. During the entire time, Well Fargo called everyday, at least 3 or 4 times a day. My credit score dropped tremendously, and no one was willing to help. Once I did find a job, I paid all I could to Wells Fargo to get things back on track, but all the money was going torward the interest and not the principle of the load, which kept me at a standstill with paying it down.

I now landed a job where I currently make $30K. As I discussed to Wells Fargo, I've worked in the $505.77 in my monthly budget; but I know that I don't have the money to pay a past due balance, late charges, the current monthly payment, and rolocation expenses in preparation for this new job. I've kept them up to date with all of the changes, and yet they continue to threaten me with repossession, despite the fact that I paid out over $1500 within the last month and a half.

I've called numerous times to see if my loan can be restructured, and been given countless run arounds. Finally, Wells Fargo Bank explained that neither them nor Wells Fargo Auto Financial work with customers (new or existing) that live in Arkansas.

Bottom line, there was absolutely nothing they could do to help me. All the while, I owe $505.77 for March payment, $272.99 in late charges, $505.77 for April, and the $505.77 in May. My credit score is shot, so no other bank will loan me anything, and no car dealership is willing to take a trade in for a car only worth $8000 but a loan attached to it for $20,000.

I've contact the CEO, John G. Stumpf, who had someone else send me a letter back explaining that since I signed the contracted there was nothing they could do. I'm seeking justice in that, Well Fargo needs to be stopped. They thought it was best for my financial situation to require a full-time student, part-time worker, single parent, young black lady to pay them $33,380.82 on a car worth $8000. Tack on a 19.24% interest rate to a loan, which would have me pay them $13,035.13 outright.

This is ridiculous, and something must be done. I trusted Wells Fargo in that they were charged to help me. They initially told me that there was something they can do to help, and made me believe that this is what was best for my situation. Now that I am a customer of theirs, there is nothing they can do to assist me. I am enraged!

Us too. On US Bank --

And on US Bank --

Subj: Attn: Matthew Lee, Executive Director or appropriate staff
From: [Name withheld in this format]
To: Inner City Press
Sent: 4/17/2009 10:37:28 P.M. Eastern Daylight Time

I'm in a fix with US Bank as they have attempted to keep me in perpetual debt to them by using late fees, or overdraft fees. Lately I've moved my account to a credit union, and closed my account with US Bank. I paid in full the negative amount in doing so, and now they claim I own them $795.50 in a negative balance. Again, "overdraft fees".It has been hard to shake these people off. They almost had me lose my apartment, my electricity was off for a week, my phone was off for 4 months. During that time, I had an auto deposit I could not stop because of a perpetual negative balance they claimed even when the deposit was well over the negative. Is there any law I can use to stop these idiots? I doubt I'm the only one having this problem with there predatory practices. And can't the state pull their charter?

April 20, 2009

When Cash America International has its annual general meeting in Fort Worth on April 22, there will be a long overdue shareholders' resolution to “request that the board of directors of Cash America form an independent committee of outside directors to oversee the amendment of current policies and the development of enforcement mechanisms to prevent employees or affiliates from engaging in predatory lending practices.” The company, engaged in payday lending, needless to say opposes the resolution...

In other predatory lending news, Pacific Capital Bancorp -- TARP funds for tax refund anticipation loans: TARP for RAL.

In the run-up to its annual shareholders' meeting, this time in the Hilton and not Carnegie Hall, Citigroup has been criticized for misleadingly offering $5,000 loans and not disclosing in the advertising the interest rate -- 30%. But CitiFinancial has been doing that for a long time...

Of Chris Dodd, former Congressman John LaFalce said "I would tell him to run as a populist - run on the side of the consumer.” LaFalce, as we've noted, went from Congress to... working for noted predatory lender Household International, bought by HSBC...

April 13, 2009

  Following up on ICP / Fair Finance Watch's first study of 2008 HMDA data, a complaint has been filed with the Federal Reserve:

Re: Need for FRB Action on Mockery Made of HMDA, by Regions and others

Dear Ms. Johnson, Mr. Alvarez and others:

   This letter concerns attempts to avoid public review of Home Mortgage Disclosure Act information by Regions Financial and, prospectively, other financial institutions. As you know, under 12 CFR § 203.5, institutions are required to provide their HMDA Loan Application Registers to requesters. Virtually all banks provide the HMDA LAR in .dat or other analyable electronic format. In fact, searching the Federal Reserve Bulletin we find notation of only two institutions refusing to provide their data in useful form: AmSouth (now Regions Financial) and New York Community Bank. (Lehman Brothers and AIG also took this approach; significantly, the former went bankrupt and the latter survives only as a ward of the FRB.)

   Now, Regions has continued what was AmSouth's stance as a HMDA outlier, by responding to a request for its HMDA LAR in .dat format by providing the data in a PDF file of over one thousand pages, which cannot be analyzed using SPSS or other statistical program. The effect is to make Region's 2008 lending performance unanalyzable until September, unlike nearly all other large banks...

    Beyond instructing Regions, NYCB and others to move into the mainstream of HMDA reporting to the public, the FRB is encourages to revises its outmoded staff commentary on 12 CFR Part 203, Section 203.5 (which as is relevant here already encourages "mak[ing] the modified register available in census tract order... in order to enhance its utility to users."  It is imperative that the Federal Reserve, given its responsibilities under HMDA, make clear to Regions and other institutions that the HMDA LARs they are required to provide to the public should be provided in analyzable electronic format to enhance its utility, particularly following the financial meltdown and the lack of oversight it has highlighted. We await your response.

April 6, 2009

Subprime Survivors Wells, BofA and JPM Chase Were More Disparate By Race in 2008 than Wachovia or Countrywide, Trends Will Worsen Under Current Regulators

NEW YORK, April 2 -- In the first study of the just-released 2008 mortgage lending data, Inner City Press / Fair Finance Watch has found that the seeming survivors of the banking meltdown, Wells Fargo, Bank of America and JPMorgan Chase, had worse disparities by race and ethnicity in denials and higher-cost lending than the banks they acquired, Wachovia and Countrywide. Mortgage lending in the U.S. will become more and not less disparate because of the emergency mergers and bailouts engineered by the regulators, the study predicts.

   Fair Finance Watch notes that JPMorgan Chase's massive closing of branches of Washington Mutual will also make credit harder to come by, especially in poor neighborhoods.  2008 is the fifth year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of 3 percent over the yield on Treasury securities of comparable duration on first lien loans, 5 percent on subordinate liens.

            Wells Fargo Bank in 2008 confined African Americans to higher-cost loans above this rate spread 2.18 times more frequently than whites, according to Fair Finance Watch. Wachovia Mortgage FSB, the largest lender of Wachovia which Wells Fargo acquired, had a lower disparity, at 1.46.

            Bank of America NA in 2008 confined Latinos to higher-cost loans above the rate spread 1.51 times more frequently than whites, the data show. Countrywide Bank, which B of A acquired, had a lower disparity, at 1.22.

            JPMorgan Chase was even more disparate to Latinos, confined them to higher-cost loans 2.10 times more frequently than whites, almost as pronounced as its disparity between African-Americans and whites, 2.26. Citigroup, perhaps due to its shrinking, some say dying, business had disparities of 1.90 for African Americans and 1.23 for Latinos. For US Bancorp, the disparity for African Americans was 1.55 and for Latinos, 1.35.

            "The banks the regulators favored in 2008, allowing emergency takeovers like JPMorgan Chase's of Washington Mutual, Bank of America's of Countrywide and Merrill Lynch, and Wells Fargo's of Wachovia, were the most racial disparate lenders," states the Fair Finance Watch report. "The regulators did not put any conditions on the mergers or Troubled Assets Relief Program bailouts, for example allowing Chase to close dozens of Washington Mutual branches. As things are going, it will be worse and more disparate in 2009. The new administration has yet to make any substantive change to this."

            Several lenders had worse denial rate disparities in 2008 between Latinos and whites then between African American and whites, a change from previous years. Bank of America NA, for example, denied applications by African Americans 1.44 times more frequently than whites, while denying Latinos fully 1.57 times more frequently than whites. Atlanta-based SunTrust in 2008 denied applications by African Americans 1.37 times more frequently than whites, while denying Latinos fully 1.78 times more frequently than whites.

  The law required that the 2008 data be provided by April 1, following March 1 requests by Fair Finance Watch. Some lenders did not provide their data by the deadline. Regions Financial provided its data at the deadline but only in paper format, on over 2000 pages, so that it could not yet be computer-analyzed. Further studies will follow.

March 30, 2009

Geithner Promotes Megabanks' Monopoly, in DC as at Fed, 17 Cut to 7 on Derivatives

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

NEW YORK, March 28 -- Seven megabanks' renewed grab for monopoly power in the over the counter derivatives market shows how little Wall Street's real power has changed in the transition from the Bush to Obama administrations.

  The banks, including Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Barclays, Credit Suisse and Deutsche Bank, are paying over $1 million to p.r. firm Prism Public Affairs to "educate" the voters weary of bonus and bailouts that those who caused the crisis should benefit from it.

  Already, Congress members hungry for campaign contribution have submitted to closed door briefings by Ed Rosen of the law firm Cleary Gottlieb, who drafted the legislative language for monopoly.

  The connector in this story is Timothy Geithner, under Bush the president of the Federal Reserve Bank of New York and now Obama's Treasury Secretary. Geithner in June 2008 convened closed door meetings with 17 banks, essentially allowing them to propose and draft their own rules for the derivatives market.

    This led to advocacy by the Fair Finance Watch that Geithner's meetings were in fact rule making that excluded the public in violation of the Administrative Procedure Act, and by Inner City Press, as media, to get the meetings opened to journalists and the public.

  The Administrative Procedures Act (5 U.S.C. Section 553) and related laws require that when the government engaged in rule-making, it must provide notice to the public, and allow and weigh public comments.  The New York Fed under Geithner tried to rule-make without any involvement by the public, even the public most impacted by the subprime lending that underlies these processes. The New York Fed on June 9, 2008 met with a group of the largest banks to discuss, according to the Geithner himself

"Regulatory policy. These are the incentives and constraints designed to affect the level and concentration of risk-taking across the financial system. You can think of these as a financial analog to imposing speed limits and requiring air bags and antilock brakes in cars, or establishing building codes in earthquake zones. Regulatory structure. This is about who is responsible for setting and enforcing those rules. Crisis management. This is about when and how we intervene and about the expectations we create for official intervention in crises."

     Press accounts made clear that the financial instruments and regulatory issues discussed behind closed doors are related to issues of public interest, which in fact are disproportionately impacting low- and moderate- income people and communities of color -- subprime and predatory mortgages.

The financial institutions invited, in mid 2008, were:

Bank of America, N.A. - Barclays Capital - BNP Paribas - Citigroup - Credit Suisse - Deutsche Bank AG - Dresdner Kleinwort - Goldman, Sachs & Co. - HSBC Group - JPMorgan Chase - Lehman Brothers - Merrill Lynch & Co. - Morgan Stanley - The Royal Bank of Scotland Group - Societe Generale - UBS AG - Wachovia Bank, N.A.
Buy-Side Firms: AllianceBernstein - BlueMountain Capital Management LLC - Citadel Investment Group, L.L.C.

  Fast forward to March 2009, with Geithner despite tax evasion installed as Obama's Secretary of the Treasury, and with Lehman having failed and Wachovia been swallowed by Wells Fargo. Now he is promoting monopoly powers in the market for an even smaller group of banks, just seven: Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Barclays, Credit Suisse and Deutsche Bank -- which despite European headquarters received billions of dollars in U.S. Troubled Assets Relief Program bailout funds through AIG.

  Now the idea is to formalize the monopoly through legislation, not rule making. Industry friendly Congress people like Connecticut's Chris Dodd are supporting the monopoly for the privileged. The fig leaf policy argument is that derivatives should runs through regulated banks. The push is made now, before it is formalized that non-banks, too, are regulated.  It is a pure power grab, with Timothy Geithner as the connector. And who is fighting this monopoly of the morally if not financially bankrupt? To be continued.

March 23, 2009

  Hate to see "we told you so," but... Inner City Press / Fair Finance Watch was on the record that AIG was among the sleaziest of companies all the way back to the 1990s. When Inner City Press filed comments against AIG's acquisition of American General Insurance, AIG responded with threats. When Inner City Press requested that the Office of Thrift Supervision hold a public hearing, AIG got the OTS to change its own rules. AIG hired Ernest Patrikis, the top lawyer of the Federal Reserve Bank of New York, and got its way from Timothy Geithner when he ran the New York Fed.

  Now Geithner is reaching out, for his senior advisor, to the top economist of... Citigroup.

March 16, 2009

In DC, Obama Officials Defend Bailouts of AIG and Citigroup, Summers Speaks of Fear

Byline: Matthew Russell Lee of Inner City Press: News Analysis

WASHINGTON, March 13 -- The ongoing bailout of insurer AIG and its counterparties was apologized for but defended by a range of Obama administration officials this week. Treasury Secretary Timothy Geithner, until recently the president of the Federal Reserve Bank of New York and before that at the IMF, said he hated to have to bailout AIG, but "it's systemic."

   His advisor Gene Sperling, a member of President Bill Clinton's economic team, said the Obama administration took office only to find AIG too big to fail, implying that this was entirely attributable to the two terms of George W. Bush. But AIG was allowed to grow without control under Bill Clinton, just as Citigroup was increasingly unsupervised under the tenure at the New York Fed of Timothy Geithner, as CitiFinancial got deeper into predatory lending (click here for Inner City Press reports on that.)

  Friday in the White House Barack Obama met and then faced the Press with Paul Volcker, chairman of the Federal Reserve in the time before Bill Clinton. Volcker rarely used his regulatory powers, at least not to protect consumers from predatory lending. And yet now these are the people, along with Clinton's Treasury Secretary Larry Summers, who are defending massive transfers to Citigroup and AIG, all the while laying blame everywhere except upon themselves.

Footnote: For a local study by ICP Fair Finance Watch, see http://www.nydailynews.com/ny_local/bronx/2009/03/09/2009-03-09_the_south_bronx_is_a_banking_wasteland.html
 
  See also the readers' comments on that page. There's a need for work on and under the Community Reinvestment Act...

Click here for an Inner City Press debate last week from Washington, here about AIG's secret bailout beneficiaries...

March 9, 2009

  Congress during the debate about bailing out the banks decided that non-US banks should not be getting TARP funds. Now it emerges that of the $50 billion the Feds have given to AIG's counter-parties, Deutsche Bank for example has gotten a full $6 billion. Also receiving hand-outs were HSBC, Royal Bank of Scotland and Societe Generale. Worse, the Federal Reserve is trying to avoid providing a listing of the companies who've gotten the public money, as reiterated by Fed Vice Chair Don Kohn on March 5. This is a new low, to be followed up in DC this week.

March 2, 2009

  With Citigroup partially nationalized, who would join the board of directors? According to the WSJ, more of the same: James Hance formerly of Bank of America, Jerry A. Grundhofer the ex-CEO of U.S. Bancorp; and Robert K. Steel, who the Journal describes as "CEO of Wachovia Corp. when it was acquired by Wells Fargo & Co. and now is a director at Wells Fargo." Yeah, and just before that he was with the Treasury Department. This is no change that can be believed it, much less with Citi's argument that re-treads "Robert Ryan and Lawrence Ricciardi, who joined in 2007 and 2008, respectively, count as 'new' and don't necessarily need to be replaced." Oh yes they do...

Eye of the beholder: the Teamsters last week came out against KeyCorp for lending to a company they planned to go on strike against, and cited Key's (mis) use of TARP funds and abuse of consumers, including a consumer advocate's quote. But one report drew, at least initially, entirely negative response, including a comment that the underlying strike had been called off. Still the TARP was mis-used...

The Journal sings HSBC's praises, that "gains from growth in Asia have helped HSBC offset deep losses from HSBC Finance Corp., the bank's largely subprime U.S. lender." According to the strategy, some of that Asia lending was subprime, too...

Rare candor: Fed government Elizabeth Duke last week said, " As a former president of the American Bankers Association, I advocated reductions in the regulatory burden." AdvocateD?

February 23, 2009

  In the flurry of non-banking companies rushing to become financial services holding companies or savings and loan holding companies in order to get bailout funds, Inner City Press has put in a number of Freedom of Information Act requests, in response to which some very basic information has been withheld. Examples for this week include even the "Financial Holding Company Declaration" submitted to the Federal Reserve for the CIT Group by its outside law firm, Wachtell Lipton, and fully 156 pages of the application submitted to the Office of Thrift Supervision for Genworth, by its outside firm Sidley & Austin.  Both the Fed and OTS mechanically followed these firms requests that information be withheld from the public, even as public bailout funds were being sought and doled out.

On related FOIA shenanigans, see 53 N.Y.L. Sch. L. Rev. 299, Critical Mass: Restricting Advocates' Rights Under the Community Reinvestment Act, Inner City Press v. Board of Governors of the Federal Reserve System, 463 F.3d 239 (2d Cir. 2006). New York Law School Law Review, 2008 / 2009

  Citigroup's Pandit last week said, "The future of Citi is in emerging markets, is in Latin America, and is in Mexico with Banamex." While the last is dubious, one thing seems true: the future of Citigroup, if it has one, is not in the United States, although it might be WITH the United States (government)...

February 9, 2009

After Bailout, ING's Kok Blames Regulators, Food Inflation and Social Inclusion Questioned

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, February 4 -- Wim Kok, the chairman of the audit committee of Dutch bank ING, which received a $14 billion bailout, Wednesday at the UN blamed "the institutions entrusted with regulating" for not having "prevented financial speculation." Inner City Press asked Kok how to allocate blame for the crisis between the regulators and the banks and their directors. Did the regulators make ING buy, and Kok to presumably oversee the buying of, subprime mortgage and other derivative securities? Video here, from Minute 19.

  Kok acknowledged that he saw the crisis and bailouts "like all of us," but also "from a special position," then blamed not only the U.S. regulators but also the "climate" and the "bonus and compensation culture." Video here, from Minute 20:02.

   But what was Kok's own compensation? Kok said that "in all fairness, it is too early to give an accounting of how it happened." But why then did the UN, and its Commission on Social Development, present Kok as the one to read out the blame-the-regulators speech?  Yes, Kok served as Dutch prime minister. But a director of a bank receiving a multi-billion dollar bailout should not be surprised to be questioned about it.

  "In all fairness," to use Kok's own phrase, Inner City Press asked him about the role of financial speculation in driving up food prices in part of 2008. Kok replied that while prices have declined, they could rise again due to inflation caused by, yes, the bailouts. As to how speculation could be stopped by the UN system, he did not answer. Whether ING itself speculates in food or agribusiness stocks, as with Kok's compensation, is not known at deadline.

As Royal Bank of Scotland, bailed-out by UK taxpayers, tries to pay bonuses to its second layer of executives, the UK's Gordon Brown says the Government would only support any bonus payments to RBS staff through UKFI if they were consistent with the taxpayers’ interest. Business Secretary Lord Mandelson added that RBS risked alienating the public by offering “exorbitant” bonuses to its traders and senior bankers.

  But note that in New York, JPMorgan Chase has just awarded bonuses, on the theory that particular units didn't lose money. Your tax dollars at work...


February 2, 2009

Banker Allison of BB&T in Meltdown Misdirection, Subprime Loans Were Shielded from CRA by Federal Reserve

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

SOUTH BRONX, February 1 -- Given the hundreds of billions of dollars being thrown at banks in response to the subprime lending-triggered meltdown, holding accountable those who turned American finance down the subprime path would seem to be important. Conservatives blame the Community Reinvestment Act, saying that this law enacted in 1977 to combat the redlining of and refusal to lend in inner city areas was something of a time bomb, set to explode 30 years later.

    But the explosive growth of subprime lending took place in parts of financial holding companies which are not covered by CRA, like Citigroup's CitiFinancial and similar consumer finance subsidiary in Wells Fargo and HSBC, purchased as Household International. The subprime loans were securitized by investment banks not only like the defunct or swallowed Lehman Brothers, Bear Stearns and Merrill Lynch, but also Goldman Sachs and Morgan Stanley, entirely outside of CRA, before they ran to the Federal Reserve to get their bailout money.

  One tier down the world of finance, the chairman of regional bank BB&T John Allison gave a speech on January 29 in which he blamed the CRA for the financial crisis. This is more than a little ironic, given BB&T's engagement under Allison in subprime lending.  When the Bronx-based Fair Finance Watch documented to the Federal Reserve that BB&T's banks referred turned-down loan applicants to their high-cost subprime affiliate Lendmark Financial Services, during the public comment period on BB&T's application for approval to acquire Georgia's Main Street Banks, the Federal Reserve ignored the issues. Click here for 2006 coverage from Inner City Press, and here in 2009 for Lendmark's own website, still reciting "non-conforming mortgage loans" from "104 branch locations throughout Georgia, Tennessee, Virginia, Maryland, Florida, North Carolina, South Carolina, Kentucky, West Virginia, and Delaware."

  Click here for the Federal Reserve approval order, which recited from the comments of Fair Finance Watch

  "concern about referrals of loan applicants to Lendmark Financial Services ('LFS'), a nonbank subsidiary of BB&T that makes subprime loans. BB&T has represented that it might refer to LFS applications denied by a BB&T subsidiary bank that do not meet the bank's underwriting guidelines. Before making a referral, however, these applications undergo an internal second-review procedure. In addition, BB&T notes that LFS has a policy to refer applicants who meet the Freddie Mac underwriting guidelines to BB&T's subsidiary banks."

   But as Inner City Press noted, BB&T's referrals up and down do not use the same standard. On fringe finance the Federal Reserve said that Fair Finance Watch

"expressed concern about BB&T's relationships with unaffiliated pawn shops and other nontraditional providers of financial services. As a general matter, the activities of the consumer finance businesses identified by the commenter are permissible, and the businesses are licensed by the states where they operate. BB&T has stated that it does not focus on marketing credit services to such nontraditional providers and that it makes loans to those firms under the same terms, circumstances, and due diligence procedures applicable to BB&T's other small business borrowers."

   BB&T admitted in its responses into the record before the Federal Reserve relationships with 45 payday and other fringe financiers. BB&T under Allison ran headlong into subprime -- as Fair Finance Watch and then the Fed noted, in its order

"A commenter asserted that the Board should, in the context of the current proposal, review BB&T's recently announced plans to acquire the assets of FSB Financial Ltd. ('FSB'), Arlington, Texas, a nonbanking company that purchases automobile-loan portfolios. The FSB acquisition is not  related to the current proposal. Moreover, if the FSB acquisition is consummated under authority of section 4(k) of the BHC Act, the acquisition would not  require prior approval of the Federal Reserve System. BB&T would require prior Federal Reserve System approval if the acquisition were proposed under sections 4(c)(8) and 4(j) of the BHC Act, and the transaction would be reviewed in light of the requirements and standards discussed above."

  The Gramm-Leach-Bliley Act of 1999 amended the Bank Holding Company Act of 1956 and made it easier for subprime lenders to be acquired with no prior review by the Federal Reserve, no public comment period, no CRA review. BB&T John Allison's fulimations notwithstanding, that deregulatory GLB Act, passed in part to legalize after the fact the merger that created Citigroup, is the statute investigators should be looking at. And the acts of subprime-hungry bankers like John Allison of BB&T. We'll have more on this meltdown misdirection, in the spirit of accountability.

  For now, consider this buzz about Lendmark in 1997, this 2006 BB&T investor relations presentation (also of its subprime Liberty Mortgage Corporation), and again, Lendmark's own website, still reciting "non-conforming mortgage loans" from "104 branch locations throughout Georgia, Tennessee, Virginia, Maryland, Florida, North Carolina, South Carolina, Kentucky, West Virginia, and Delaware."



January 26, 2009

Behind Bank of America's Toxic Assets, Subprime Links Obscured But Continued

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

NEW YORK, January 21 -- Bank of America is now headed down a Citigroup-like path.  A second serving of TARP bailout funds, government insurance for a widening range of toxic assets, a chief executive on the ropes. While Ken Lewis claimed to have gotten BofA out of the world of subprime, its investment banking arm continued to buy and trade subprime mortgages, and to prop up subprime lenders. Now Lewis implies that the $108 billion in toxic assets being insured by the government came from Merrill Lynch. But a quarter of them come from BofA itself.

    As reported by Inner City Press, Bronx-based Fair Finance Watch documented this to the Federal Reserve in Communiuty Reinvestmeent Act comments filed in opposition to Bank of America's applications for regulatory approval to merge and expand. In its responses to FFW's comments, BofA begrudgingly acknowledged that it did business with, among others:

Ameriquest Mortgage Corporation, since defunct; Saxon, through which Morgan Stanley tells FFW it has stopped lending, Option One, Centex, New Century, bankrupt; Metris (a subprime card lender HSBC later acquired), Delta Financial, First Franklin, WMC (subprime lender owned by GE), Fremont Investment & Loan, rogue subprime lender which told FFW it would only give its Home Mortgage Disclosure Act data if one signed a confidentiality agreement), Capital One, CIT, WFS -- and Ownit, regarding which Bank of America blacked-out a column labeled "ABS/MBS Underwriting," after elsewhere publicly admitting it performs those functions for Ownit’s loans.

 BofA wrote:

"Bank of America indirectly owns 24.9% of the voting common equity of Ownit... In August 2005, Bank of America, N.A. transferred the Ownit residential mortgage loan portfolio purchased during March 2005 to Asset Backed Funding Corporation (‘ABFC’). ABFC is an affiliate of Bank of America Corporation that is a limited purpose corporation that securitizes residential mortgage loans... ABFC securitized these Ownit loans, along with similar loans from another loan originator, in its approximately $1.2 billion ABFC Asset-Backed Certificates, Series 2005-HE2 transaction. Banc of America Securities LLC served as the underwriter in that transaction....

 In two separate transactions on March 9 and March 14, 2005 Bank of America N.A. purchased Ownit residential mortgage loans in an aggregate amount of approximately $265 million. These loans were held for the account of Bank of America, N.A. until they became part of the August 2005 securitization described at Item 2.b above. These loans were purchased in a competitive, arms-length process at fair market terms" -- followed by more than half a page blacked out.

  This was the level of secrecy in the time leading up to the subprime lending meltdown. Now Ken Lewis implies that the assets being insured by the government all came from Merrill Lynch, when 25% are from BofA itself. Will Ken Lewis go the way of Citigroup's Chuck Prince and Robert Rubin?  Many say that he should.

January 19, 2009  

Fed's Geithner Evaded Taxes at IMF, Used Statute of Limitations Later, Mishandled Citigroup

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, January 14 -- While working for the UN-affiliated International Monetary Fund earlier this decade, Treasury Secretary-nominee Timothy Geithner did not pay required taxes to the Treasury Department's Internal Revenue Service. This would seem to be problematize, to be diplomatic, Geithner's ability to gain confirmation by the U.S. Senate to oversee the IRS.

This would seem to be problematize, to be diplomatic, Geithner's ability to gain confirmation by the U.S. Senate to oversee the IRS. But Democratic Senators and Barack Obama himself are calling Geithner's an "innocent mistake" which should not impinge on confirmation. Some ask how a financial whiz, head of the Federal Reserve Bank of New York, would claim ignorance of basic tax law as a defense.

  Worse, Geithner initially hid behind the statute of limitations to refuse to pay $25,000 in taxes for 2001 and 2002: "A three-year statute of limitations had precluded the [IRS] from auditing the 2001 and 2002 tax returns." But his supporters argue that Geithner's expertise is needed to confront the global financial crisis.

  But what of Geithner's role, as the President of the New York Fed, in mis-regulating Citigroup, an institution which has already swallowed $45 billion in Troubled Assets Relief Program funds, and billions more in guarantees for toxic loans still on its books? Said otherwise, how can those who oversaw -- or turned a blind eye to -- the origins of the financial meltdown be presented as the only ones who can now save the day?

 Also on Citigroup, sources say that the Feds are pushing Richard Parsons to take over as the embattled company's chairman. He ran Dime Savings Bank, part of the now-collapsed Washington Mutual franchise. At Citigroup's annual meetings, at Inner City Press asked questions about predatory lending from the floor of Carnegie Hall, Parsons never spoke up.  What did he think of the questions, of Citigroup's venture into predatory lending with Commercial Credit, Associates First Capital and CitiFinancial? The questions should be answered.

  Leaving the Federal Reserve Board is Randy Kroszner, who had served the Fed's point Governor on community and consumer issues. A new Fed advisor on these issues was recently withheld from the press without explanation by the Fed's public relations office. Fed chairman Ben Bernanke hides behind the Federal Open Markets Committee news blackout requirements in order to skip speaking to non-financial audiences, but disagrees with and ignored the requirement of public notice and comment while granting bank holding company status to Morgan Stanley, CIT, Goldman Sachs and GMAC.

  A cavalier approach to the law, by both Bernanke and Geithner -- is this what would help to solve the financial crisis?    Let Citigroup fall apart, let it fail without further bailout. For sale: "CitiFinancial, which does real estate lending, personal and auto loans, had 3,799 locations, compared to Citi's 4,057 Citibank branches, as of the third-quarter. Though CitiFinancial does not offer the same range of products as the Citibank branches, it does cross-sell Citi credit cards through most of its locations. " Terminate it - it is rotten.

  So JPMorgan Chase has closed its wholesale mortgage business, after virtually promising not to. They claim this way they can better control the terms of loans. But the ones they made through brokers, they made decisions on. Back on Nov. 6, 2007, David Lowman, CEO of JPMorgan Chase's home lending division, and Patrick Sheehy, business-to-business channel
executive at Chase Home Lending, told mortgage brokers of “an unwavering commitment to our wholesale … lending” business. Jamie Dimon made this type of about-face and close-down before. It's just what he does.

  BofA is making layoffs, BofA is getting sued. And yet BofA is getting more and more billions of TARP, including the share that would have been Merrill's. For shame. 
Bank of America Corp. filed a letter with Charlotte, N.C., Mayor Pat McCrory verifying that it is laying off about 139 employees in the city’s Ballantyne neighborhood. The layoffs are expected to be completed by March 10. The bank is also laying off about 85 workers at a Preferred Services site in Dallas. Meanwhile, a group of Washington state homeowners filed a lawsuit against Bank of America Corp. unit Countrywide Financial Corp., alleging that the company illegally manipulated the appraisal process in a plan to increase profits at the expense of homeowners and independent appraisers. The lawsuit, filed in the U.S. District Court in Seattle under the Racketeering Influenced and Corrupt Practices Act, claims that the company forced homeowners to use its unit, LandSafe, for appraisals, while subcontracting the work to independent appraisers and charging homeowners as much as 200% of the actual cost of the appraisal. 

   HSBC has significant exposure to toxic assets, including U.S. subprime mortgages that aren't marked to market, either because they are held directly on its loan book or because the U.K. regulator absurdly allows unrealized losses on certain assets to be written back for capital purposes. It is estimated that HSBC's true leverage is closer to 50 times and Tier 1 is 4.6%, making it one of the most highly leveraged banks in the world. How's that Household now?

 Here are properties in The Bronx, New York on which Wells Fargo has foreclosed:

  2096 RYER AVE BRONX 2862 Multi-family $374,900 N

  5730 POST ROAD BRONX 1809 Multi-family $599,000 N

  605 WALES AVE BRONX 2700 Duplex TBD N

  2194 WASHINGTON AVE BRONX 2403 Multi-family $325,000 N

  4027 EDSON AVE UNIT 1 & 2 BRONX 1848 Duplex $339,900 N

  2782 CRESTON AVE BRONX 2000 Multi-family TBD N


January 12, 2009

 The chickens have come home to roost at Citigroup, with Robert Rubin leaving, and regulators encouraging something of a break-up of the illegally formed financial supermarket, brought low by involvement in predatory lending. Good riddance...

A new low -- as of 10:20 p.m. on Sunday, January 11, 2009, the Federal Reserve Board's web site  http://www.federalreserve.gov was down, "This link appears broken. DNS error - cannot find server."

  More chickens coming home to roost for HSBC -- "European shareholder group Deminor said Friday it may take legal action against ... HSBC Holdings PLC on behalf of investors who bought products from disgraced asset manager Bernard Madoff."

January 5, 2009

  Trying to make favoritism appear to be part of a program, the Treasury Department has given named and even post-hoc guidelines for its second bailout of Citigroup. The "Asset Guarantee Program," we're told, might be offered to other bans on a "case-by-case basis."  In its required filing with Congress, Treasury pontificates that "the objective of this program is to foster financial market stability and thereby to strengthen the economy and protect American jobs, savings, and retirement security." And we thought it was just to prop up Citigroup. The $20 billion purchase of preferred Citi stock now has the high-sound moniker, "Targeted Investment Program," and Treasury has belated enunciated five principles of the unprincipled program to determine eligibility, beyond just who you know: the extent to which the "destabilization of the institution could threaten the viability of creditors" and whether or not an institution is "sufficiently important to the nation's financial and economic system that a loss of confidence in the firm's financial position could potentially cause major disruptions to the credit markets." That's called, too big to fail. But wasn't Lehman Brothers?

Click here for Inner City Press' review-of-2008 UN Top Ten debate

December 29, 2008

  So not only did Citigroup lose out to Wells Fargo to buy Wachovia -- it was beaten to Chevy Chase by Capital One. How low can you go?

So let's get this straight -- the Fed didn't provide any formal public notice or comment period on CIT's application to become a bank holding company, but because Inner City Press wrote in for a copy of the application and initially requesting a hearing, the Fed's approval order was mailed to Inner City Press, with a paragraph denying the hearing and making it appear that there was a fair process. But there was not.... The same applies to GMAC. The Fed has become lawless.

December 22, 2008

   A jingo-ist America might ask, so the U.S. bails out Citigroup for $45 billion and untold more in guarantees, then Citigroup turns around the lends $8 billion to Dubai. So the U.S. is direct lending to Dubai? And what of Citigroup's name on the Mets new baseball field, and on "The Pond" skating extravaganza in New York's Bryant Park?  Is this the supposed new rigor of examination of Citigroup?

The Fed's PNC - National City approval order is contemptuous of the public, including the local member of Congress. Why favor PNC over NatCity? It's not explained. And the Fed is trying to deny FOIA requests for basic information about who they lend to. Perhaps there needs to be a HMDA law for the Fed...

Click here from Inner City Press' December 12 debate on UN double standards

December 8, 2008

Citi Sleaze with Bail-Out, of Junkets and Spanish Highways, PNC and Ocwen Need Hearings

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

NEW YORK, December 2 -- How has Citigroup used its fresh billions in government bail-out funds? On November 30, it was exposed as sponsoring a Congressional junket to the Caribbean. On December 1, it announced it is spending over seven billion Euros to buy the highway business of Spanish construction firm Sacyr Vallehermoso.

   Meanwhile, Robert Rubin who pulled in over $100 million from Citigroup began a counter-offensive, saying none of the collapse was his fault. He had no operational responsibilities, he said. Call him the Stephon Marbury of high finance, motoring down a Spanish highway without a care in the world. More seriously, the public record shows Rubin's role in Citigroup's deal with the predatory lender Ameriquest. Still he keeps on trucking.
 

  At deadline, consumer group Fair Finance Watch has put in comments requesting public hearings on PNC's application to buy National City, in a deal the regulators cooked up and now must be the judge of. National City asked for TARP funds but was denied. PNC was given the funds, to buy National City; the regulators will then buy the troubled assets from PNC. It's called unexplained favoritism: save Citigroup and AIG but let Lehman Brother go under. Turn down National City, then buy its bad loans from PNC. Maybe Tim Geithner will explain.

Meanwhile the subprime bottom-feeder Ocwen is trying to line up for the Troubled Asset Relief Program bail-out funds. Ocwen has applied to buy Kent County State Bank in Jayton, Texas.  More on this anon.

  Royal Bank of Scotland, following its bail-out by the UK government, has suddenly announced a six month moratorium on foreclosures. It applies only in the UK. In the U.S., where RBS owns Cleveland-based Charter One and Citizens Banks in the Northeast, the government has imposed very few requirements for its funds. There's now a proposal in the Senate, sponsored by Senator Durbin, which would tell TARP-recipients that they cannot pay out more in dividends than in the previous year.  Since one would expect dividends to be decreasing, even keeping them at last year's level implies using the bail-out funds to keep dividends up, to the previous year's level.

   Reportedly, Suntrust and Regions Bank, along with Morgan Stanley, are eying RBS' Charter One and Citizens, to buy them with TARP funds. Morgan Stanley, which the Fed declared to be a financial holding company with no public notice or comment or Community Reinvestment Act review, has now applied to buy up to 9.9% of something called Heritage Bank. On this one, Fair Finance Watch has commented, requesting public hearing on Morgan Stanley's subprime Saxon and the other issues swept under the carpet so that Morgan Stanley could get TARP.  What double-standards and sleaze are being swept under this TARP? Public hearings are needed.

December 1, 2008

   Robert Rubin has tried to defend his $115 million in payola from Citigroup since 1999 by minimizing his role, while now saying, "I have told Vikram that I will remain part of this and try to be helpful." So the people who caused the problem just stay on and keep getting paid. Contrary to his claim to be uninvolved, Rubin helped hook up Citigroup's purchase of notorious predatory lender Ameriquest.

Flashback to March 2007, from Deval Patrick, following his $360,000 a year part-time service on the board of directors of the predatory lender Ameriquest / ACC: "As a former board member, I was asked by an officer of ACC Capital to serve as a reference for the company and agreed to do so. I called Robert Rubin, a former colleague from the Clinton administration and an executive at Citigroup, to offer any insight they might want on the character of the current management... I appreciate that I should not have made the call."

  A "senior person who has no ax to grind," Rubin calls himself. It's time to face the axe, some say...

From the mail bag --

Subj: Reporting a Wells Fargo Issue 

From: [Name withheld in this format]

To: Inner City Press

Date: 11/15/2008 12:39:20 P.M. Eastern Standard Time

Hi, after reading your “Wells Fargo Watch” page I wanted to share a Wells Fargo story with you, in hopes that you will post it. I am most curious to find out if other Wells Fargo employees have suffered the same fate as my husband. I am trying to write this account carefully so as not to reveal my husband’s identity. However, should you need more details to confirm the story, please let me know.

 My husband is – or was -- a personal banker with Wells Fargo. Over a month ago, one of his regular customers presented a $4,000 check for deposit to her account. My husband followed Wells Fargo security procedures to deposit the check to the woman’s account, cautioning her that the funds would not be available to her for at least 4 business days. Unfortunately, the check proved fraudulent, part of the widespread and apparently sophisticated “mystery shopper” scam. The customer, who claims to have been duped by the offer she received in the mail, had already sent $3,500 to the scammers’ account.

 Despite the fact that Wells Fargo employees all over the U.S. and Canada have accepted these fraudulent checks for deposit, my husband was singled out – as far as we know – by Wells Fargo, and accused of complicity in the mystery shopper scheme. Wells Fargo immediately placed him on “paid administrative leave, pending investigation”. He was instructed not to contact any Wells Fargo team member, but to await a call from a local Wells Fargo Human Resources representative. Twelve days later, Wells Fargo stopped his paycheck. To this day, four weeks later, Wells Fargo has still not contacted us, and the Human Resources representative has not returned any of my husband’s numerous phone calls.

Needless to say, this has been a financial disaster for our family. Not only have we lost my husband’s paycheck, as far as we know he has also lost his job. If he is terminated under these conditions he will be unable to “bond” to work as a banker ever again, so in that case he’s lost his career as well. Worse, without an official termination from Wells Fargo, he cannot apply for unemployment compensation, or request payment for his accrued paid leave, etc. He is essentially in limbo.

We consulted an attorney, only to learn that there is absolutely nothing we can do about this situation, we can’t force Wells Fargo to respond to us. And if Wells Fargo does eventually terminate him, we cannot challenge it: we reside in an “employ at will” state, in which a company may terminate any employee at any time for any reason, or for no reason at all.

I’m writing this because I’d like to know if any other Wells Fargo employees have been terminated for accepting these mystery shopper scam checks.

November 24, 2008

  PNC's proxy statement to acquire National City raises the question, why would NCC's regulators rule that TARP funds were unavailable to it, but then turn around and give them to PCC? Some are alleging that the Comptroller's connections to PNC played a role here. Crony capitalism, indeed...

 The WSJ of November 18 reported that in February 2007 "to modify loans, HSBC tried a strategy called 're-aging.'  If a borrower fell behind on payments by two months or more, HSBC effectively allowed some to catch up by declaring the loan current and adding the delinquent amount to the balance owed."  But re-aging began far earlier -- in fact, it was done at Household during the run-up to its sale to HSBC, to make the already dubious predatory business model look better. "Lipstick on the pig," whistleblowers called it them to Inner City Press, who reported it at the time. Plus ca change...

November 17, 2008

LONDON, November 14, global fragments of the predatory lending meltdown -- Even in Brazil, bank mergers are considers emergencies today. Rural banks are being snatched up by their big-city brethren, with regulatory approvals expedited in the name of the global financial crisis.

  In Japan, in the face of mounting numbers of suicides by borrowers behind on their loan payments, the maximum allowable interest rate has been reduced to twenty percent. This has led U.S.-based Citigroup to move to leave the country. Citigroup's CFJ subsidiary is selling loans it holds to "illegal companies." General Electric left Japan but did not go far, having re-established a subprime beachhead in Taiwan.

  In Israel,  "gray lenders" charge interest rates up to two hundred percent. They are allowed to discriminate against Arab Israelis. Entreaties to reign these practices in have been directed to Israeli top regulator, former Citigrouper Stanley Fischer, without results.

Asked at NCRC's Responsible Lending conference in London on November 14: How will the UK run RBS, which owns subprime lenders in the US, and securitizes subprime loans through its subsidiary Greenwich Capital Markets?  What oversight will be given to Deutsche Bank and HSBC and BNP Paribas and their involvement in subprime lending?

November 10, 2008

   How will the bailout funds be used? For opportunistic mergers, as we noted last week. And now we can say, for political contributions and lobbying. ICP Fair Finance Watch was interviewed on November 7 about the use of funds by Bank of America, Wachovia and Wells Fargo:

"Bank of America Corp., largely through its political action committees, gave candidates and parties $3.7 million this election cycle, according to an analysis of Federal Election Commission reports. Wachovia Corp. PACs gave $1.2 million. Wells Fargo & Co., which announced a deal for Wachovia last month, gave out nearly $1 million through its PAC.... Bank of America spent $6.5 million lobbying federal officials over the same period; Wachovia spent $2.7 million and Wells Fargo, $3.6 million."

  There is no commitment that the bailout funds will not be put to these uses.  In fact, if Wachovia is any indication, the banks are entirely smug:

“'These are … voluntary, employee funded, nonprofit and nonpartisan committees,' said Wachovia spokeswoman Carrie Ruddy. PACs, she added, give to candidates and groups 'that promote responsible government and support effective financial legislation important to Wachovia and its stockholders.'

Lee sees little difference in money from a bank or its employee PAC. 'It's a fig leaf,' he said Friday. 'When people are through their place of employment giving funds, you'd have to be pretty naive to think that there's not some corporate influence involved.' 

  More than a little corporate influence...

And see this November 7 debate: http://bloggingheads.tv/diavlogs/15731#

November 3, 2008

At UN, Stiglitz Slams Chase For Misuse of Bailout, Federal Reserve for Predatory Lending

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, October 30 -- The $700 billion bank bailout should not be used for mergers to increase market share, economist Joseph Stiglitz told the Press on Thursday. Following a UN panel discussion about the global financial crisis, Inner City Press asked Stiglitz about predatory lending and, as an aside, if he would consider the post of Secretary of the Treasury. While not directly answering the latter, Stiglitz said that the current Secretary, Henry Paulson, is ignoring the Congressional intent of the bailout and is allowing the funds to be misused by the banks.

  Stiglitz specifically cited a conference call by JPMorgan Chase, in which an executive bragged that the $25 billion it is claiming from the bailout will make Chase "more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment." Stiglitz called that an abuse, and also took a jab at the Federal Reserve, which he said had the power to crack down on predatory lending since 1994 but did not. Video here, from Minute 19:31.

  Flanking  Stiglitz at the press conference were Belgian sociologist Francois Houtart -- who spoke against the "logic of capital accumulation" -- and General Assembly President Miguel d'Escoto Brockmann, to whom Stiglitz and Houtart are two of 15 special senior advisers. The other advisers include Slobodan Miosevic's lawyer Ramsey Clark and Noam Chomsky, who has denounced the UN for, among other things, supporting Indonesia's invasion of East Timor (Failed States, page 87).

  Father d'Escoto, a former Sandinista foreign minister of Nicaragua, spoke last and equated the United States' blocking of economic reforms with its "dilatory tactics" against attempts to end apartheid.

  Afterwards, Inner City Press asked Stiglitz about the International Monetary Fund's predatory lending. Stiglitz said that the IMF has made its money of late from lending to countries in crisis, and thus has an incentive for their to be crises. He said that countries like Mexico, rather than going to the IMF, may seek capital from China, which has $1.9 trillion available, Stiglitz said, or Japan or India. He didn't mention the scandals surrounding IMF chief Strauss-Kahn. "There'll be a new President on January 20," he said, then was gone.

Footnote: a last minute addition to the panel was economist Calestous Juma, who close Inner City Press readers may remember as declining to characterize Ban Ki-moon's consolidation of the Office of the Special Advisor on Africa with another post, while encouraging Inner City Press to keep reporting on it. We have -- click here for a recent story about conflicts of interest and corporate entree by Microsoft into the UN -- but were glad to see Juma in the Trusteeship Council chamber speaking about economic diplomacy, using a green and white "One Laptop Per Child" computer. We note in closing that Microsoft, among others, problematized the idea of a $100 computer. Oh, intellectual property and corporate abuse.

   Heading to the UK, where the War on Want continues: in terms of shareholdings in Britain's largest arms companies, Royal Bank of Scotland has a stake worth £36.4 million. There is a contradiction between RBS's claimed commitment to human rights and sustainable development and its support for the arms industry. HSBC  has a stake worth  £483.4 million, HSBC invests in companies that produce cluster munitions and depleted uranium. Since 2000, there has been no significant downward trend in HSBC lending to the arms sector. In 2005, there was a major rise in HSBC's lending...


October 27, 2008

From Dow Jones on the Fed's self-approval of Wells Fargo - Wachovia: " The Fed said a commenter had requested a public meeting, but the Bank Holding Company Act does not require the board to grant that request. A Federal Reserve spokeswoman wouldn't disclose the name of the group that had requested the hearing." So now, like North Korea, the Fed tries to cover up even who has commented. For the record, ICP Fair Finance Watch made the request...

   The announcement that PNC will use over $7 billion in the U.S. bailout funds to buy National City just proves the point of Inner City Press' October 21 article, below

US Bailout Will Subsidize Bank Monopolies, Chase and Goldman, Excluding CRA and Public Review

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

SOUTH BRONX, October 21 -- Banks now plan to use the Federal bail-out funds to acquire other banks, in a government-subsidized and -protected process of monopolization shielding from public comment or application of the antitrust laws or Community Reinvestment Act.

  Executives from such banks as BB&T and Zions have stated that the cheap bail-out funds will help them acquire other banks. JPMorgan Chase, which the Federal Reserve already helped to acquire Bear Stearns and Washington Mutual, is understood to also plan acquisitive use of its bail-out allocation.

  The Federal Reserve and other regulators, however, have shielded each of their moves in recent months from any public much less judicial review. Even such non-FDIC proposals as Wells Fargo's proposal to acquire Wachovia are deemed emergencies, and applicable laws of public notice and comment are over-ridden.  Now the deals will be government-funded.

Consider that Hank Paulson's Goldman Sachs, deemed a smart institution not in need of a bailout, has veered into subprime via Litton Servicing and now what's called Sendera. Given low-cost funds by the government, it's foreseeable Goldman will snap up additional subprime firepower, to deploy after the shakeout.

  The regulators' failure to consider predatory lending and other bank-specific issues on mergers is one for the causes or determinants of the present crisis. Rather than bring about increased scrutiny, the Fed's Ben Bernanke and Treasury's Hank Paulson are increasingly dispensing with any scrutiny at all.  And now they'll be using government to subsidize and speed up the mergers.

Footnotes:
  Better late than never, we suppose, for Alan Greenspan to apologize for ignoring evidence of predatory lending. But pointing the other way, Canada's National Post / Financial Post of October 25 blames "the 1970 U. S. Community Reinvestment Act, forcing banks to lend equally to all geographic areas, regardless of risk."  Ever heard of the safety and soundness requirement?

October 20, 2008

   It's telling, in terms of how sloppy the corporate giveaways have been, that neither the Fed nor Treasury thought through how buying warrants in the big banks would put them in the position of reducing book value or recording a loss. They plan to pumps a combined $125 billion in Bank of America Corp. (BAC) - including Merrill Lynch & Co. Inc. (MER) - as well as JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C), Wells Fargo Corp. (WFC), Goldman Sachs & Co. (GS), Morgan Stanley (MS), Bank of New York Mellon Corp. (BK) and State Street Corp. (STT). 

  Meanwhile --

As FDIC Offers Bail-Out, Its Conference Calls Are Full Then Off the Record

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

SOUTH BRONX, October 14 -- If the way the FDIC dealt with the Press on Tuesday is any indication of how they will offer guarantees as part of the bank bail-out process, the corner may not yet be turned. The FDIC emailed the press corps at 9:57 Tuesday morning, announcing a briefing  at 10:45 a.m. to "provide details of the FDIC’s plan, what it includes, how it will be funded and who will be eligible to participate." A phone number was provided, but when called the message was that the conference call was full.

  Then at 11:22, the same notice of 10:45 press conference was sent out, this time with a new phone number and pass code. But even if one called immediately, the call was ending, with some anonymous participant griping that only JPMorgan Chase, Wells Fargo, Citigroup and Bank of America will benefit.

   This was followed at 1:48 on Tuesday afternoon with a notice of a new conference call, at 3:15. Once on, an FDIC official said it would all be not for attribution.  Inner City Press asked two questions. First, why are some savings and loan holding companies being excluded from the guarantee program? Because some were grandfathered in and engage in commercial activity was the answer. No list of excluded S&L holding companies was provided.

  Inner City Press then asked if the FDIC believes that the proposal to acquire Wachovia by Wells Fargo is an emergency transaction, or that requirements of public notice and comment should be adhered to. The official said the FDIC is "not prepared to comment on particular institutions." Inner City Press asked, Why will you be? But the phone line had been cut off. The masters of the universe moved on, corporate welfare in their wake.

 And see this Oct 17 (UN) debate, including Musing of One-Term Limit for Ban by Obama, at http://bloggingheads.tv/diavlogs/15262# 

October 13, 2008

   Tales for a time of lawless regulators giving rubber stamp bank merger approvals without any public notice or comment, Chase and now Wachovia --

On October 10, the Federal Reserve Board sent Inner City Press a partial response to a Freedom of Information Act request made back in March, about the Fed voting without public notice or comment to bail out JPMorgan Chase's acquisition of Bear Stearns without even following the law requiring the involvement of Fed governors. Six months after the fact, the Fed releases an April letter to Congress saying the Governor Mishkin, who has since left the Board, was in the air on a flight from Finland to the U.S. and therefore couldn't be involved. Click here to view. And now he's gone...

  There are other responsive records which Inner City Press is pursuing.

 Meanwhile, while Inner City Press / Fair Finance Watch has already commented to the Fed demanding they hold a comment period on Wells Fargo's proposal to buy Wachovia, now Wachovia says it will bypass its own shareholders -- with the NYSE's rubber stamp. Note to Fed: this doesn't make it an emergency to bypass the public too. But the Fed on Friday said, vaguely, that it will begin "immediate consideration" of Wells Fargo's application.  But no FDIC involvement = no emergency.

RBS is pleading for a bailout from the UK... When Inner City Press / Fair Finance Watch commented, at length and over years, about RBS' involvement in and exposure to predatory subprime lending, RBS always said it wasn't true...

The WSJ transcribes for Citigroup that "Citi will mainly seek to expand overseas, particular in Asia and Eastern Europe, which has long been a major focus of Citi's growth strategy. Retail banking and consumer lending returns there by far outweigh the returns in the U.S., Citi has long argued. Citi has 'exactly the same strategy as before,' the source said." And that strategy includes predatory lending -- now in Asia and Eastern Europe...

  Click here for Inner City Press in Wash Post and Miami on CRA, here in Charlotte on the mergers, and here even praising the FDIC (on other grounds)

In Wachovia War, Wells Fargo Would Require Public Notice and Comment, No Emergency

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

NEW YORK, October 3, 5 -- With Wells Fargo's announcement that is it outbidding Citigroup for Wachovia, and would consummate its proposal, without FDIC assistance, by the end of the year the question arises: how could the regulators bypass public notice and comment on a transaction that has no FDIC involvement?  Since this still hasn't been answered as of October 5, Citigroup's announcement that it's gotten a judge to restrain the deal is much more sizzle than steak.

  Citigroup's low-ball $2.16 billion supposed deal, announced Monday, had rubberstamp approval with no public notice or comment, including under the Community Reinvestment Act on CitiFinancial's widespread involvement in controversial subprime lending. Click here for Monday's story by Inner City Press. Now, in the face of Wells Fargo's announced, the regulators have rushed out a strange press release:

Statement by the Board of Governors of the Federal Reserve and the Office of the Comptroller of the Currency

A new proposal to acquire Wachovia has emerged from Wells Fargo.  The Citigroup proposal has undergone extensive review by the Federal Reserve and the Office of the Comptroller of the Currency.  We have not yet reviewed the new Wells Fargo proposal and the issues that it raises.  The regulators will be working with the parties to achieve an outcome that protects all Wachovia creditors, including depositors, insured and uninsured, and promotes market stability. 

  The scuttlebutt is that the regulators, although having no basis to waive public participation this time, are considering doing it, among other things to equalize the playing field between Citigroup's and Wells Fargo's bid.

 It is clear which bid is financial superior -- but Wells Fargo, too, has been involved in predatory lending, through Wells Fargo Financial and overseas.  Some advocates are saying they prefer the Wells proposal on the basis that it should finally allow some public process in the spate of supposedly emergency mergers and conversions.

September 29, 2008

Subprime Stoked By Deregulation and Bipartisan Greed, not CRA,  Community Reinvestment Act

Byline: Matthew R. Lee of Inner City Press in the South Bronx: News Analysis

SOUTH BRONX, September 28 -- First on the fringes and now on Fox News, the Community Reinvestment Act is being blamed by some for today's financial crisis. The argument is that by encouraging FDIC-insured banks to lend in lower income neighborhoods, the government -- read, Democrats, from Jimmy Carter to Bill Clinton -- created the explosion in high interest rate subprime loans.

   There's a major factual problem, though: with a single exception, no bank sought CRA credit for its subprime loans. And the investment banks which were purchasing, bundling and securitizing the loans were not covered by CRA. Bear Stearns was not covered by CRA, but was bailed out by the Federal Reserve Board for $30 billion dollars. AIG, an insurance company, was not covered by CRA, but its subprime activities have led to a $75 billion loan from the Federal Reserve, whose chairman Ben Bernanke nevertheless claimed to Inner City Press that  the Fed does not control AIG, despite owning warrants for 79% of its stock, click here for that story.

  In fact, community advocates had been telling the Federal Reserve about the dangers of subprime lending since the 1990s.  For example, Bronx-based Fair Finance Watch commented to the Federal Reserve about the practices of now-defunct non-bank subprime lender New Century, when U.S. Bancorp bought warrants for 24% of New Century's stock. The Fed, rather than take any action on New Century, merely waited until U.S. Bancorp sold off some of the warrants, and then said the issue was moot.

  Likewise, when community groups from all over the country complained to the Office of Thrift Supervision about the subprime practices of Washington Mutual's affiliate Long Beach Mortgage, the OTS responded that is was only concerned with WaMu's savings bank, not its finance company. WaMu never got CRA credit for Long Beach's loans, but now WaMu has failed and been bought at fire sale prices by bottom-feeder JPMorgan Chase.

  The list goes on and on. Non-U.S. institutions that now stand to benefit from the bailout bill being quickly considered in Congress are not covered by the CRA: UBS of Switzerland, Nomura of Japan, even some sovereign wealth funds that bought subprime securities.

  Deregulation and a lack of business ethics are major causes of the subprime meltdown; these have been bipartisan. Republicans are more closely identified with deregulation, but it was Clinton who oversaw the breakdown of the wall between investment and commercial banking, for example. Several Clinton administration officials went to work or advocate for subprime lenders, defending their cashing-in as in support of the democratization (literally) of credit.  While Republican Phil Gramm went to work for UBS as it got more and more into subprime, Democrat Robert Rubin went to work for subprime-heavy Citigroup and did nothing to reform its practices. It is notably that Citigroup has not yet showed up for bailout funds.

  Citigroup's grown in subprime had nothing to do with the CRA. Rather, insurer Travelers Group, controlled by Sandy Weill and Chuck Prince (and Robert Willumstad who would later drive AIG into the ground), which already owned subprime lender Commercial Credit, bought Citicorp and then subprime lender Associates. They renamed the operation CitiFinancial, but never sought CRA credit for Citibank for its operations. And when Inner City Press asked Chuck Prince of Ciitgroup's securitization of loans by Ameriquest, Prince said that had nothing to do with the CRA.

   There is more than enough blame to discredit both political parties. But it's not the Community Reinvestment Act statute that's to blame. If anything, the CRA provided a venue by which many of the problems were raised, and some were even solved. When Atlanta-based SunTrust, for example, applied to the Federal Reserve for approval of a merger in Memphis, Fair Finance Watch showed the Fed that SunTrust was lending to a slew of predatory lenders. SunTrust ultimately committed to get out of some of these fields, and had its application approved. That was CRA at work, in a way conveniently not mentioned in the sloppy arguments being advanced.

September 22, 2008

  So with its $85 billion bailout of AIG, the Federal Reserve will come to run a predatory lending operation. Click here for some Inner City Press / Fair Finance Watch comments. And see here. But it goes beyond that -- shouldn't the Fed have to apply to the Office of Thrift Supervision to come to control AIG's savings bank? We'll be raising this issue this week.

  On the rumors of Wachovia looking to buy Morgan Stanley, just as its bigger sibling Bank of America bought Merrill Lynch (click here for Inner City Press' 10% deposit cap analysis), consider that both deals involve Utah-based industrial loans companies, which are covered by the Community Reinvestment Act, but whose acquisition, it is argued, is not subject to CRA scrutiny and public comment. This is something that should be fixed, clearly, in the pending bail-out legislation...

How did Citigroup slip the bit? Now they're listed as a possible bidder for WaMu... HSBC finally ended its pact for Korea Exchange Bank, denied rumors of interest in Morgan Stanley and Halifax...

September 15, 2008

  When asked on September 12 if it was making an offer for Lehman Brothers, HSBC through a spokesperson said, " "We have made it clear that our strategy relies on focusing on emerging markets and businesses with a genuine global connectivity."  Yeah, like Household International and predatory lending...

Citigroup said last week that it expects a $450 million quarter-to-date pretax impact on revenue from trading losses and write-downs of Fannie Mae and Freddie Mac securities...

  Radio piece of the week, on NPR, concerned how little Chris Cox at the SEC has done during the subprime meltdown. His own act? To impose a temporary ban on naked short selling of the stock of 19 financial institutions. Woop Dee Damn Doo.

September 8, 2008

Subcrime Questions As Freddie Mac Handed to Moffett of Carlyle and US Bancorp

Byline: Matthew Russell Lee of Inner City Press: News Analysis

NEW YORK, September 7 -- U.S. Treasury Secretary Hank Paulson's announcement today that he is unilaterally appointing Carlyle Group advisor David Moffett to replace Richard Syron as chief executive of Freddie Mac is more than a little ironic, and troubling. The Carlyle Group invested in and lost on subprime mortgage, it admitted earlier this year. In fact, Carlyle invested in bonds issued by Freddie Mac, as well as Fannie Mae.

  In March 2008, the Carlyle Group's mortgage-bond fund, having received more than $400 million in margin calls since earlier in the month, said it couldn't reach an agreement with it lenders, who would "promptly'' take over all of its remaining assets. Through March 12, the company had defaulted on over $16.6 billion of debt. On the news, the dollar fell to the weakest since 1995 against the yen and a record low versus the Euro. How then, sources are asking Inner City Press, can Moffett be put in charge of Freddie Mac?

  In fact, Carlyle beyond its investments in military contractors has been accused of other slash and burn tactics, for example by workers at the nursing home chain Manor Care. Its buy-out of Home Depot's contractor supply unit nearly fell apart, as its lenders balked.

  Moffett previously served as chief financial officer of U.S. Bancorp, which beyond its own subprime lending was a 25% investor in the now-bankrupt subprime lender New Century. When Inner City Press investigated U.S. Bancorp's stake in New Century, the company argued to the Federal Reserve that despite having two seats on the board of directors it did not control the lender. The word subcrime began to become applicable. The Fed demurred, and eventually the stake was sold off. But Moffett's companies' involvement in the subprime field is hardly a basis for confidence in him to lead at Freddie Mac. In fact, the choice calls into question Paulson's judgment. To be continued. Watch this site, and this (UN) debate.

September 1, 2008

  Citigroup, predatory lending and whistleblowers -- saga continues. Citi last week agreed to pay a $3.5 million penalty for sweeping more than $14 million from customers' credit card accounts into the bank's own funds.  Citigroup "knowingly stole from its customers, mostly poor people and the recently deceased, when it designed and implemented the sweeps," the California Attorney General said in a press release. "When a whistleblower uncovered the scam and brought it to his superiors, they buried the information and continued the illegal practice."  Sounds like CitiFinancial.... The whistleblower was subsequently fired and filed a sealed wrongful dismissal law suit. Citi did not cooperate with the Attorney General's investigation...

  How to explain Citigroup changing Bob Rubin's title to Senior Counselor? Here's our guess -- as the company has gone downhill, the finger has focused on Rubin. He doesn't like it -- just as he denied having any role in Citigroup's predatory lending, saying it wasn't under his "aegis" -- and so he changes his title. But under whose aegis is it?

  GE Money narrowly avoided serious legal action when it agreed to an unprecedented enforceable undertaking with the Australian Securities and Investments Commission in May. As part of the undertaking, the company agreed to a review of how it deals with customers who are behind in their repayments. The first confidential report on the company's practices was handed to ASIC on Friday. GE Money has already agreed to compensate at least 2000 customers for intimidating tactics, which included ensuring debts were paid by urging staff to repeatedly phone or send letters to borrowers. So far no customer has received compensation.

August 25, 2008

 This week, more subprime fall-out, at Citigroup and Huntington, and continued predatory servicing by Wells Fargo.

   In Iowa, the home mortgage division of Citigroup is closing its operations in Des Moines, eliminating 190 positions, it emerged on August 21. CitiMortgage plans to close the site by the end of November. Of these, 146 workers will only be offered counseling, outplacement services and severance "based on position, length of service and other qualifying considerations," spokesman Mark Rodgers said. CitiMortgage laid off 185 Des Moines employees in March and another 100 in January. The company said it was reorganizing the division and working to reduce expenses by $200 million. Citigroup  bought Principal Financial Group's home mortgage operations in July 2004, which then had 800 employees. Citi in Iowa employs about 650 workers throughout the state in its credit card operations and about 120 at CitiFinancial loan operations.

   Yes, that's the predatory lending...

   Market-watchers note that "Shares of Huntington Bancshares were under pressure Monday after a major commercial client of the bank said Friday that it will take a second-quarter loss on higher credit provisions, and an analyst downgraded its stock. Shares of Huntington Bancshares fell 11% at the open and recently traded 6.4% lower at $7.47. The stock is down almost 60% from the year-ago period when it was trading above $18. Franklin Credit Management Corp  -- of which Huntington has lent $1.1 billion -- said Friday it will delay its financial filing and report a second-quarter loss of $280 to $285 million."

  From the mailbag -

Subj: Wells Fargo Mortgage Complaint 

From: [Name withheld in this format]

To: Inner City Press

Date: 8/15/2008 12:58:48 P.M. Eastern Daylight Time

Hello, I found your website today. My dealings with America's Servicing Company owned by Wells Fargo has been a constant struggle. Today, I am mailing a complaint to the Texas Dept. of Banking and Mortgage Lending as well to Barney Frank, Chairman of the House Committee on Financial services. The committee passed HR 5579 which directed lenders to speed the loan modification process. I made my request to ASC/Wells Fargo in April 2008. I have yet to receive a response. Also, I have been unable to speak to anyone who might be 'working' on the loan modification.

 Yep, that's Wells Fargo...

August 18, 2008

   Why did Citigroup's two predatory lending settlements escape the belated calls to "gross-up" Citi's proposed $600 million settlement for auction-rate securities improprieties to cancel Citi's ability to just take a tax write-off for misdeeds? "If the SEC decides that Citigroup should pay $600 million in connection with Citigroup's representations regarding auction-rate securities, Citigroup may be allowed to deduct this $600 million payment from its taxable income," Sen Charles Grassley has written to the SEC. "To prevent Citigroup from receiving this potential tax windfall at the expense of American taxpayers, the SEC should consider 'grossing-up' the payment by Citigroup to an amount of $923 million." The grossed-up amount would take into account that Citigroup would save $323 million in taxes if it deducted the full payment, based on a 35% tax rate.

  This should have been done on Citigroup's two predatory lending settlements...

August 11, 2008

  Subprime chickens continue to come home to roost. Now National City has admitted that the SEC is demanding "certain documents concerning its loan underwriting experience, dividends, bank regulatory matters and the sale of First Franklin Financial Corporation" to Merrill Lynch for $1.3 billion in 2006. And Royal Bank of Scotland Group announced a first-half net loss of $1.56 billion), its first loss since the bank listed in the 1960s and one of the largest losses ever posted by a U.K. bank. Can you say, Greenwich Capital Markets?

August 4, 2008

  Talk about a conflict of interest, and regulatory capture -- last week, the regulators and four big banks issued coordinated press releases. "Officials from banking giants Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. issued a joint statement saying, 'We look forward to being leading issuers as the U.S. covered bond market develops.'" And those they issued the statement with and for are supposed to objectively oversee them...

July 28, 2008 -- a week of shenanigans by Citigroup (in London), HSBC (in South Korea)  and GE (in Abu Dhabi).  And this --

  From the mail bag, a story involving JPMorgan Chase and Wachovia's HomEq --

Subj: JP Morgan Chase 
From: [Name withheld in this format]
To: Inner City Press
Date: 7/22/2008 9:29:41 P.M. Eastern Daylight Time

Dear Mr. Lee,

I am wondering if there are any other people who have had a similar problem to mine with JP Morgan Chase.  I am a 68 year old senior who lost her home to these vultures in an unbelievable manner.  In brief this is what happened to me.

Leon D. Black had just purchased WMC Mortgage Corp. when I did a refi with WMC in March 1998.... Loan was equity based.  I never received any copies of the loan documents and had  statements from WMC saying they were lost or destroyed.  Even had inter office communications at WMC as late as July 1998 referencing the loan documents.

 The loan was a bait and switch.  The reason for the refi was to permanently get rid of a loan I had with, The Money Store.  WMC was to be the new first mortgagor AFTER they paid, The Money Store ("TMS").  Loan was to be conventional fixed rate.  Instead payments went from 2900.00 a month to 4800.00 a month by September 2000.  I had little recourse but to try and save my home of 18 years and its tons of equity and so, I filed Bankruptcy.  Big mistake!

 I was never told that the loan was sold to Fairbanks four months before I filed BK.  WMC fraudulently represented themselves throughout my BK as the first mortgagor when they were not.

 I had a Confirmed Plan in Bk that was current yet WMC somehow managed to have the Stay Lifted in January 2005.  My home was sold at Trustee Sale by JP Morgan Chase on June 22, 2005.... In June, 2006....I was sent a thank you letter from HomEq on behalf of TMS who unknown to me had closed their doors a month after my loan closed with WMC.  Oddly, during my Bk I would get Notices from FirstUnion who could never find any reference to me, not even by my social security number.  Turned out WMC used someone else's SS number for my loan, I don't know why but they did.  First Union had taken over TMS which was ultimately taken over by HomEq. The HomEq letter also contained the cancelled Note & Deed of trust for TMS.  In short, my home was ultimately sold by JP Morgan Chase who knew there was always a question that TMS was never paid and none of these vultures had any standing to sell my home on June 22, 2005 and as noted in the Trustee Guaranty Report which clearly showed the only first mortgage to be TMS for 281,000.00.  They paid the TMS mortgage off in full three months after they sold my home at trustee sale, using a company called ALTA which  turned out to be another alias of Fairbanks.

So in fairness we can note that the Fed doesn't only do favors for JPMorgan Chase (on Bear Stearns) and Citigroup (on any and everything, including the Group's formation) -- last week the Fed belatedly released a ruling favoring SunTrust in its dealings with its presumptively illegal but "grandfathered" holdings of Coca-Cola story - click here to view.

  The Fed justifies its favor as reducing the mixing of banking and commerce. Coke as a mixer?

July 21, 2008

  The Wall Street Journal.com reports that the foreclosure-fest at Foxboro's Gillette Stadium will include Countrywide (now B of A) and... IndyMac. From beyond the grave? Or will the FDIC be (Eli) manning the tables?

 More annals of financial journalism -- from Iowa last week, we have this: "Having never 'played in' the subprime lending industry, Donohue said U.S. Bank actually stands to benefit somewhat during a time of economic downturn." What? U.S. Bancorp owned 25% of notorious predatory lender New Century, and makes its own subprime loans...

GE Money is still a major forecloser in Ireland, drawing the ire of the Financial Regulator there "on their repossessions policies, to ensure they treat homeowners who fall behind on their repayments fairly."

  And in Australia, "at least 2000 customers owed compensation by the nation's biggest consumer credit provider, GE Money, are still awaiting payment for harassment by the company's debt collection department. GE Money agreed to pay them as part of a deal with the Australian Securities and Investments Commission, which found staff had used high-pressure tactics to intimidate customers into making up for missed credit card and car-finance payments. But nearly two months after it signed an unprecedented enforceable undertaking with ASIC, GE Money spokesman Geoff Lynch said he was still unsure when it will be ready to make the first payments to victims, some of whom first complained to ASIC four years ago."

July 14, 2008

  Shouldn't it be illegal for Robert Steel to go directly from the Treasury Department, which regulates Wachovia Bank, N.A., to become CEO of Wachovia, complete with $10 million in stock and a $38 million pay package? Wasn't this revolving door supposedly closed in the wake of the Riggs Bank scandal?

 More intra-corporate revolving doors: Chuck Prince, whose subprime snafus at Citigroup led to his unceremonious departure, has resurfaced on the board of Xerox, whose CEO Anne Mulcahy is on Citigroup's board...

  Another "we told you so" -- Synovus' Columbus Bank and Trust, which Inner City Press has challenged for its weak Community Reinvestment Act record, has now been awarded a rare Needs to Improve CRA rating, which less than three percent of banks get...

July 7, 2008

   In a low-point in financial journalism, Business Week's Mara Der Hovanesian in the July 7 edition ladled praise on subprime lender HSBC, quoting as the only semi-critical voice... a mortgage broker. Nary a mention of Knight Vinke's call to sell off the subprime operation, either. We do, however, learned that Brendan McDonagh "favors pin-striped suits with bright ties." That's important information. The piece is sub-headed, "In Depth, the Housing Crisis."

  Here is an outrage on which action must be taken, although you will never see it covered, yet, in the mainstream media -- the purportedly "off the record" speeches given to audiences of select investors by Federal Reserve personnel. They are sent out by email to journalists, but not to write about. Hedge fund artists get insider knowledge from the Fed, and trade on it. Doesn't this violate, at least in spirit, Reg FD, Financial Disclosure?

 But look for Ben Bernanke to on the record defend the bailouts before Congress on July 10. Who actually questions him will be interesting to see.

 So Chuck Schumer trashed IndyMac. In one sense he's to be congratulated, as IndyMac is, to be charitable, an enabler of predators. But Schumer's motives are always in question.  Some asked, did he cause a run on the bank only to promote himself? He's already a Senator. When, oh when, does he think he'll run for President? He'll lose, of course. But how many Sunday press conferences will be called before that becomes clear?

June 30, 2008

   Weeks late, the Federal Reserve has written to Inner City Press that

This is regarding your FOIA request for documents related to the JP Morgan / Bear Stearns transaction. We have interpreted your request to include the Board meeting minutes from Mar. 14 and 16. The minutes are now available online on the Board's public website:
http://www.federalreserve.gov/newsevents/press/other/20080627a.htm
We will be contacting you shortly about the scope of the remainder of your request.

   For now, as even the Dow Jones story on the minutes reports, "four Fed board members were involved in making the decision to come to the rescue of Bear, the Fed's minutes show."

  California's Countrywide lawsuit names President David Sambol as well as Angelo Mozilo. The AG of Illinois also filed a lawsuit alleging deceptive practices, Governor Gregoire of Washington said the state will seek to fine the company for predatory lending -- she went easy on Household and then hit the documents, so we'll see -- and Countrywide shareholders approved Bank of America 's pending $3 billion acquisition. But the combination could face legal costs as high as $2 billion, according to a report from CreditSights Inc.. BofA says it will lay off 7,500...

  On global issues, click here for hour-long debate...

June 23, 2008

The filing on June 15 by Inner City Press / Fair Finance Watch against the Federal Reserve Bank of New York's closed-door meetings and rule-making with 18 investment banks has given rise to questions about whether or not the Fed is a government agency with any duties to the public. On Daily Kos, for example, various commenters say that the Fed is owned by banks. We note that's the Federal Reserve Banks; the BOARD had governmental duties, including compliance with the Administrative Procedures Act. Expect more comments to the Fed.

HSBC will start banking operations in the republic of Georgia on Monday, from a six-story building on Rustaveli Avenue in Tbilisi. The move means HSBC and concurrently or prospectively its predatory lending operation are now present in 84 countries and territories. In March, HSBC received approval to incorporate a business in Vietnam and announced a $200 million cash injection to fuel expansion in Russia and open three new offices there.  In December last year it bought the Chinese Bank in Taiwan and also started operations in central China. In October it established a branch network in Peru and acquired Grupo Banistmo in Panama in July 2006.

   The State Bank of Vietnam has announced that it has allowed GE Money, to start operating in the country. "The SBV has issued a license to establish GE Money Vietnam Finance Co. Ltd, or GEMVF, with its office in Ho Chi Minh City," the SBV said in a statement published on its Web site.  GEMVF, which has a 50-year license, will have a registered capital of $18.2 million, it said. The company will be permitted to issue bills and bonds, issue credit cards and provide loans in Vietnam, the SBV said.  GEMVF will be the fourth foreign financial firm to operate in Vietnam. The other firms are owned by U.K.'s Prudential Insurance, France's Societe Generale and Czech's PPF Group. From GE, watch out for predatory lending...

June 16, 2008

   First, we're glad to see that CompuCredit, and First Bank of Delaware, are getting sued by the government for $200 million. Inner City Press / Fair Finance Watch filed comments opposing CompuCredit as a predatory lender.

   This week, Inner City Press / Fair Finance Watch filed comments against the applications by Spain's Caja Madrid, funder of biofuel projects and 23% owner of Iberia airlines, to acquire City National Bank of Florida, and against the Federal Reserve's secret process with banks, in essence a rule-making excluding the public even those the topic, credit derivatives, has come up because of the subprime lending crisis. The financial institutions invited -- and now challenged -- are listed below.

Bank of America, N.A. - Barclays Capital - BNP Paribas - Citigroup - Credit Suisse - Deutsche Bank AG - Dresdner Kleinwort - Goldman, Sachs & Co. - HSBC Group - JPMorgan Chase - Lehman Brothers - Merrill Lynch & Co. - Morgan Stanley - The Royal Bank of Scotland Group - Societe Generale - UBS AG - Wachovia Bank, N.A.
Buy-Side Firms: AllianceBernstein - BlueMountain Capital Management LLC - Citadel Investment Group, L.L.C.

  The Administrative Procedures Act (5 U.S.C. Section 553) and related laws require that when the government engaged in rule-making, it must provide notice to the public, and allow and weigh public comments.  Here, the FRBNY has tried to rule-make without any involvement by the public, even the public most impacted by the subprime lending that underlies this FRBNY process. Rather, for example, the FRBNY on June 9 met with a group of the largest banks to discuss, according to the FRBNY's president,

"Regulatory policy. These are the incentives and constraints designed to affect the level and concentration of risk-taking across the financial system. You can think of these as a financial analog to imposing speed limits and requiring air bags and antilock brakes in cars, or establishing building codes in earthquake zones.
"Regulatory structure. This is about who is responsible for setting and enforcing those rules.
"Crisis management. This is about when and how we intervene and about the expectations we create for official intervention in crises."

 But when rules are being set, to use Mr. Geithner's own analogies, for air bags, brakes, speed limits or building codes, the agencies at issue are not allowed to and do not only take input from the industry.

     Press accounts make clear that the financial instruments and regulatory issues discussed behind closed doors are related to issues of public interest, which in fact are disproportionately impacting low- and moderate- income people and communities of color -- subprime and predatory mortgages.  AFP of June 9 reported that

"those swaps are designed to transfer the credit exposure of fixed income products between parties and often have been linked to US subprime, or high-risk, mortgages... Trading in derivatives, financial securities whose value is derived from other financial securities, was a major factor in the subprime, or high-risk, mortgage crisis that rocked markets last August and has spread through the global markets... Geithner defended the Fed's decision to finance the Bear Stearns - JP Morgan Chase merger in March, saying it was done only with great reluctance and only because there seemed to be no other choice as Bear Stearns reeled from soured mortgage-related investments. 'It was the only feasible option available to avert default,' he said, and 'we did not believe we had the ability to contain the damage that would have been caused by default.' The Fed acted only to 'facilitate an orderly transition,' not 'to preserve the company,' Geithner said."

   Here, it appears that the FRBNY is trying to take the closed-door, no public notice Bear Stearns - JPM Chase process several troubling steps further, providing access to 17 mega-banks but still not the public. 

This closed-door, industry top-heavy process is unacceptable and, Inner City Press has now timely contended, is contrary to law, under 5 USC 553 and otherwise. Watch this site.

June 9, 2008

   In Australia, the Minister for Corporate Law, Nick Sherry, last week released a green paper on the replacement of "disjointed state regulation" by a Federal Government regulator. "The current regulation in these areas is either duplicated, patchy, confusing, very hard to change or even non-existent," Sherry said. The minister has proposed changes that will push the regulation of mortgages towards disclosure and advice regimes similar to other financial products available through financial planners. This is also an option being considered for margin loans. The green paper highlights the situation in which home loan lenders have no requirement to be licensed and there is no Corporations Act regulation of advice about mortgages. It also referred to "predatory lending" by fringe players in the mortgage industry, who target borrowers who are in default on their mortgage repayments. The paper refers to one example in which a "refinancing expert" charged $22,340 to refinance a $220,000 loan on a property valued at $310,000. This charge was more than 22 times higher than the industry average and did not address the borrowers' fundamental problem: the repayments in the refinanced loan were higher than the original loan. The green paper also noted that some fringe players had circumvented state regulation, known as the Uniform Consumer Credit Code, by describing consumer home loans as business loans....

  In the U.S., Massachusetts' attorney general Tuesday accused H&R Block and its former Option One Mortgage Corp. subsidiary of discriminating against black and Latino borrowers as it made allegedly predatory loans to them. Massachusetts Attorney General Martha Coakley said the suit filed in Suffolk Superior Court alleges that Option One and Block engaged in unfair and deceptive conduct by offering many Massachusetts borrowers risky subprime loans that the lenders knew or should have known would fail. Last month, Block sold Option One's remaining loan servicing operations to billionaire Wilbur Ross, whose American Home Mortgage Servicing Inc. affiliate in Texas continues servicing old mortgages. American Home Mortgage is also named as a defendant in the Massachusetts lawsuit...

   Profiles in spin, in Ad Age, "Citigroup's head of marketing Lisa Caputo... leading the strategy to unify Citigroup 's numerous brands into one master brand: Citi.  Citigroup  previously used Citi  as a prefix in many of the company's businesses-such as Citibank, CitiFinancial, CitiMortgage and Citi  Smith Barney-but Citi  now refers to the company overall. Leveraging the logo's red arc as a symbol of Citi 's capacity to turn financial dreams into realities, 'we've positioned Citi  as a partner in helping you achieve financial success in whatever way you define it,' says Ms. Caputo."

  Yeah, getting ripped off by CitiFinancial is how many people define success... Let's remember that Citigroup is the only company to twice settled charges of predatory lending with federal authorities...

June 2, 2008

  Hedge funds profit from the subprime meltdown. In Germany, state-owned development bank KfW is looking to sell off its 45.5 percent stake in IKB, which announced big losses from investments in subprime mortgages. Among the bidders? US investment funds Ripplewood, Lonestar and Texas Pacific Group...

At HSBC's annual general meeting last week, the company was urged to consider selling off its "losing" subprime lender in the U.S.. Managers were urged give back their bonuses. CEO Green dissed Knight Vinke accusations that the bank had poured more than $62 billion into HFC and said the business was "funding itself perfectly satisfactorily." That is, blood continues to be sucked from a stone...

  More on rats leaving a sinking ship. After much fanfare in putting him in charge of Citi's mortgages, Bill Beckmann, the president of CitiMortgage, is now leaving Citi at the end of this month "to spend more time with his family." In the memo, Citi's Steve Freiberg says he'll work with Mr. Beckmann, meanwhile, "on a new leadership structure." New leadership is certainly needed, all the way to the top...

May 26, 2008

In a motion filed last week, Baltimore says Wells Fargo  uses predatory lending practices in Baltimore's predominantly African American neighborhoods "to make a quick profit because it believes it can successfully exploit those communities" by

Charging higher interest rates;
Underwriting certain types of adjustable-rate mortgages without regard for whether the borrower can repay after the initial "teaser" rate expires;
Stripping borrowers' equity through unnecessary refinancings;
Paying rebates to mortgage brokers for inflating interest rates;
Requiring prepayment penalties that prevent borrowers from getting help through refinancing;
Charging excessive points and fees with no corresponding benefits to the borrower.

  Yep, that sounds like Wells Fargo...

In the UK, after Citigroup infuriated customers by sending out warnings to customers that it would end their agreements in 35 days because they had a "higher than acceptable risk profile," Citi hit another new low, firing employees by conference call. Staff were told to listen in while the business's UK divisional head John Wiggins told them they were fired. Citi under Vikram Pandit: very classy...

  Annals of impunity: Hugh Miller, who ran Delta Funding when it settled charges of predatory lending, is now opening a new mortgage lending firm. Reliance First Capital Llc will be based in Woodbury, Long Island, Miller wrote in a May 8 posting on dfcconnect.com, a Web site for Delta's ex-employees. Reliance has also bought about $40,000 in assets from the defunct subprime lender.  "We did sell some assets, equipment and furniture, to Reliance ... computers, office furniture, things like that," said Mark Power, partner in the Manhattan-based Hahn & Hessen law firm, which represents the creditor committee in Delta's bankruptcy case.

May 19, 2008

   Attempts to buy time for homeowners facing foreclosures have reached a peak in New York State, where an Assembly-passed a bill with a one-year moratorium on foreclosure is stalling in the state Senate.  To the north, Massachusetts Governor Deval Patrick, previously on the board of directors of predatory lender Ameriquest, a part of which has been sold to Citigroup, has spoken of a six-month foreclosure moratorium. New York's one-year proposal is being undercut by new governor Patterson's alternative proposal, which includes only a sixty day notice to borrowers that they are being foreclosed on.

  At a hearing last week in Albany, the rate of foreclosures on Long Island was the buzz among legislators and advocates, but surprisingly not of the two-county region's newspaper, Newsday. Could it have been Rupert Mudoch's interest, or Cablevision's seemingly winning bid? Will the Dolans do for journalism watch they've done for basketball with the Knicks?

Broadcasting Citigroup's firm commitment to global predatory lending, the CEO of Citi India Sanjay Nayar said Citi has no plans of exiting its consumer finance business in India. "We have a large portfolio in CitiFinancial  which offers finance to low and middle-income consumers. We are not exiting the business but there will be some repositioning, re-segmentation of some consumer base," said Nayar, adding Citigroup  had recently infused capital of $250 million into its Indian operations for 2008.

  Closer to home base, and in a field where Citigroup is also active, a group of students in California say they were ripped off by KeyBank which teamed up with dubious vocational schools to leave students deep in debt. KeyBank Education Resources and Great Lakes Educational Loan Services allegedly sought to defraud students at sham vocational schools by offering loans, and when the schools' Ponzi schemes collapse, the students are left in debt and have no new job skills, according to a class action lawsuit filed last week in Alameda County Court. The lawsuit, filed on behalf of California students who enrolled in Silver State Helicopters vocational school, accuses Cleveland-based KeyBank of predatory lending and enabling fraud to be perpetrated. The plaintiffs say, "The Bank, in complicity with the sham schools, has preyed on unsuspecting California resident students."The complaint claims that tuition and lending scams at unlicensed and unregulated trade schools have become common in recent years. "Their growth has been fueled by unscrupulous lenders that have willingly and irresponsibly 'partnered' with these sham operations to provide expensive private loans to the high-risk students these schools tend to attract," the complaint says. The lawsuit charges that KeyBank USA partners with the Silver State Helicopters vocational school as the school's preferred lender "and followed its usual script from which it has reaped millions of dollars over the years," the complaint said. "Like KeyBank's previous failed vocation school 'partners', SSH was unregulated and unaccredited and, when its Ponzi scheme collapsed, SSH filed bankruptcy filed bankruptcy, leaving its students with nothing but KayBank's threats to enforce the loans," the complaint reads. The lawsuit claims the defendants deliberately based themselves in Ohio because state laws there "exempt Ohio-domiciled banks from that state's consumer protection laws."

May 12, 2008

   This week we reach into the mailbag, from inside Wells Fargo Financial, and about Citigroup's auto lending and JPMorgan Chase --

Subj: Attention Inner City Press

Date: 5/2/2008 2:10:09 P.M. Eastern Daylight Time
From: [Name withheld upon request]
To: Inner City Press

I am currently a Wells Fargo Financial employee.  I didn't know if you would be interested or not but I have some interesting information you may want to look into further.  I've been with Wells Fargo Financial since [redacted to preserve confidentiality of whistleblower].  I came right out of school and landed what I thought was a great career with a great company.  Little did I know that I am actually a consumer lender in the subprime mortgage industry.  Our main product is our Real Estate refinance which is subprime.  The average rate is about 10.5%.  My belief is that wells fargo financial is now downsizing and have found a clever way to lay off a lot of employees without getting into headlines as officially laying people off.  We have seen a huge decline over the last six months.  I come from a smaller state, last year around march of 2007 we had 50-some full time selling employees.  We are now down to 20-some.  People are leaving left and right and I am hoping to get out of here by the end of summer.  I am an assistant branch manager.  I have two points of interest that I would like to let you in on to see what your opinion is about the situation.

Point number 1:  New Performance Improvement Plan process (The PIP process as it is referred to here regarding the process of terminating a team member)

The process used to be that if you did not book 100k of new money lent over a 2 month period you were given a month to do at least 50k and over the next three months to book 150k total of new money to get off of the PIP. If you did not reach this, the company could recommend termination.  It has only happened to two team members since I have been with the company. 

The new pip process is as follows, if you have one month without doing 50k of new money you can be recommended for termination.  You have the following month to do 50k and if you do not you are out basically.  Another process that has changed recently that leads me to believe that we are currently downsizing is that processor role in our branches.  A processor processing all of the payoffs, paid outs, deals with title work, and insurance as well as ordering supplies for the branch and maintaining the current loan pipeline.  Every branch had one processor, until this month.  There are only 3 main processors in our district now, (there are 7 branches in our district)  the other 4 have now been placed into part time, glorified secretary rolls.  A processor now has up to 2-3 branches each to process for and did not receive any type of pay increase as a result outside of performance branch based bonuses.  Some of the part-timers have already decided to quit and there isn't any rush to replace them.

Point Number 2: Sub-Prime loans and Prime loans or (A-Paper Loans)

Our business model is confused.  We are supposed to be subprime lenders, we sell to customers with 620 or below fico scores, that is our target market.  Anyone who has been in a sales position knows that sales is about persistence, hard work, and of course leads.  Our lead base is mainly retail sales finance accounts (ex: tractor supplies financing, heating and cooling, carpet, furniture stores etc.)  Most of these customers usually finance with 12 months same as cash periods or 24 months same as cash periods etc.  Lately things are tight you basically have to have at least somewhat decent credit to get approved for this financing.  Somewhat decent credit is above 620 fico score.  Most of these retail sales accounts are 700 credit score customers and so forth.  Our job is to call these customers and service those accounts and cross sell, credit cards, auto loan refinancing to pay off credit cards, and most importantly real estate restructuring.  Taking the equity you have in your home to combo other bills to put them into one ultimate loan with a lower payment and hopefully an overall lower total payback (which is rare).

Most of these customers could go to their bank and do the same thing at a much lower interest rate. Our company doesn't want us selling prime loans because we don't make money on these loans.  If we book a loan and it ends up going prime we do not receive credit for it as a unit or a loan.  We do get paid 175 bucks for each prime loan we book but if you do nothing but prime loans you will show no new money credit for these loans and zero units thus making it look like you didn't do anything.  As a result you would be pipped and begin the process of termination.  There is a way for us to keep a prime customer from going prime, if we can convince the credit grade A, no matter what the fico score it could be and 850, to take a loan over 91% of the total loan value (example 100k home value, 91k loan amount) it will not go prime. 

The tricky part is this, we as team members do not know what rate the customer will qualify for, we have a matrix, every customer falls into a certain pricing non-prime grade meaning a 720 credit score can come up and it will show up as a 10% rate but if you go below 91% ltv it will show that it can be recommended for prime pricing. 

Let me give you a recent example:

I had a 736 fico customer coming in wanting to do a 124k total loan on a home he just had appraised about 6 months ago for 137k.  The appraisal itself was done by a friend of the customers to purposefully bring it down because the loan he was trying to complete was the result of a divorce.  I still took the chance and put in the total value as 137k.  At a 124k total loan his total interest rate quoted was 9.38%.  He had no choice, because of the way he was paid the bank would not cash flow him but we are very conservative as well but we were able to legitamitly cash flow him for the loan.  (wells fargo doesn't mess around when it comes to cash flowing loans, we get heavy documentation) We got an appraisal done (wells fargo also doesn't mess around when it comes to appraisals, we have absolutely no contact with the appraisers, we have a separate company that we pay to have the contact) the appraisal came back for 185k.  So obviously at this point, it would be tough for me to get this loan up to 91% ltv.  For me it was simple, i want to do the right thing but at the same time i have to book loans, they put pressure on you to book it subprime, i tried like hell to sell 91% loan and nearly succeeded.  The customer ended up only taking an extra 15k which still kept it below the 91% required to keep it from going prime.  Still at this point i am not able to disclose to the customer that all he had to simply do was take any loan under 91% and he would simply sign the final pricing disclosure showing a 9.38% rate but after a final review it will come back and give him a 5.5% -7% loan.  I still had to sell with the customer having the intentions he would be getting a 9.38% rate.  We sent up the final pricing disclosure it was recognized as prime and the customer ended up with a 5.5% fixed rate for 30 years to his surprise and glee.  That turned out great, of course it looks like I never booked a loan.  Second scenario would have been if the customer had agreed to take an extra 60k out putting him over the 91% ltv mark and thus keeping the loan at 9.38% for a 720 fico customer.  We can never inform them of this until after they agree to a higher rate like that is what they are getting and they get a prime loan.  If i would have booked this loan subprime in that particular month i would have received over 1k in total bonus money.  Instead, I didn't hit the mark required for bonus money and only received the 175k for booking a prime loan. 

This is of course a Cover Your Ass scenario for wells fargo but believe me, it is not a good thing to book a prime loan, i had my district manager yelling at me for not being able to sell the extra 60k because once it is prime it doesn't count for the branches records, or the districts record or the regions record.  No one gets credit. 

That is my fundamental reason for wanting to leave wells fargo financial.  I know we are in business to make money, but not at the expense of humanity. 

   We aim to have more on this... Now, about Citigroup's little known auto lending --

Re: Your Website

Date: 5/1/2008 4:27:46 P.M. Eastern Daylight Time

From: [Name withheld in this format]

To: webstaff@innercitypress.org

I, too found your website from the Google search, but only after my situation and grown extremely bad. I had a car financed with Arcadia Financial, which was bought out by Citi. I thought things were ok, I am a single mom and have had my problems financially, but always came through.  Last year, I had a $530 a month decrease in monthly income.&nbs