Inner City Press Community Reinvestment Report May 29-July 17 2000

Inner City Press Community Reinvestment Reporter

May 29-July 17 , 2000 (Archive #3 of 2000)

July 17, 2000

As the deadline for commenting to the regulatory agencies on their “CRA Sunshine” proposed regulation approaches, the need for substantive modernization of the Community Reinvestment Act becomes ever more clear. This week’s focus is on the issue of CRA assessment areas, as more and more banks solicit deposits by telephone and Internet.

Among the largest Internet banks is Telebank, which was bought by E*Trade six months ago. The Office of Thrift Supervision, Telebank’s regulator, had allowed this Internet bank to limit its CRA assessment area to Arlington County Virginia, the location of its headquarters -- even as Telebank ran television advertisements soliciting deposits in New York, Los Angeles, and other cities. After the issue was raised, E*Trade made a vague nationwide commitment to purchase some low- and moderate-income loans, and to make a $1 million grant to the Boys and Girls Club, for computer training for low income children.

Subsequent to buying Telebank, E*Trade announced it was buying 8,500 automatic teller machines owned by Card Capture Services, Inc.. On March 18, 2000, ICP wrote to the OTS, questioning how this might change the bank’s CRA assessment area.

Last week, four months after writing to the OTS, ICP received a response from the OTS:

“We would like to thank you for your interest in this transaction and the information you provided. We are in constant communication with E*Trade Bank.... E*Trade Bank assured us that none of the subject ATMs currently accept deposits and that it is aware of its responsibility to comply with the assessment area delineation aspect of the CRA regulation... Again, thank you for your interest. We have made you letter a part of our record and the information contained therein will be considered at upcoming CRA examinations.”

The current CRA regulation describes CRA assessment areas only in terms of a bank’s branches and deposit-taking ATMs. Under this (clearly out-moded) test, even if a bank actively solicits deposits from other communities, with TV advertisements, directing viewers to a Web site or too-free telephone number, the bank can limit its CRA duties to the county where its headquarters is located. This must be addressed...

A similar issue arose earlier this year with respect to the planned ING Direct Internet and telephone bank. ING is the fourth largest insurer in the world; it already has similar “direct” banks in Europe and in Canada. In late 1999, it applied to the OTS to charter a U.S. “direct” bank, to be headquartered in Wilmington, Delaware. ICP and the Delaware Community Reinvestment Action Council commented on the application, stating that a CRA assessment area limited to the Wilmington MSA would be insufficient. ING responded by expanding its proposed assessment area to the Wilmington Consolidated MSA, which reaches into Philadelphia. But ING stated it would open a “marketing office” in New York City, outside of the assessment area.

On May 1, 2000, ING announced it would apply to acquire ReliaStar and its thrift, ReliaStar Bank. ICP and DCRAC commented on this application, again raising the CRA assessment area issue, and requesting an “informal meeting” under the OTS’ regulations.

The meeting was held on July 11, 2000, at the OTS’ Jersey City, NJ office. At the meeting, ING reiterated its Wilmington CMSA assessment area, but said that the comments raised deserved further consideration. The OTS representative emphasized that “assessment area” might not be the right word (ICP had reminded the OTS and ING of the nationwide commitments other non-traditional thrifts had made, following advocacy campaigns).

On July 13, ING wrote to the OTS and ICP, referring to a “nationwide lending evaluation program,” and stating that:

“As suggested by [ICP], Applicants believe that this program is more consistent with ING Direct’s philosophy and purpose of being responsive to the interests and needs of all consumers. Therefore, Applicants have decided, upon consummation of the merger, to adopt this nationwide evaluation program for all lending outside of Savings Bank’s geographic assessment area, so that all of Savings Bank’s HMDA and consumer lending will be evaluated for CRA purposes... Savings Bank will have a distribution of loans within low- to moderate-income geographies that is comparable to or better than its peers... If an inappropriate distribution of loans is determined... the Savings Bank will take corrective action to improve penetration of loans within low- to moderate-income geographies.”

This is far from ideal, but it is a change from ING’s initial position (limiting CRA responsibility to the Wilmington CMSA). Since the OTS, prior to ICP’s and DCRAC’s advocacy on the ING-ReliaStar application, had accepted ING’s Wilmington CMSA-limited assessment area, the message to community organization can only be: silence = death. Since the CRA regulation has become so outmoded, many important issues are being resolved, if at all, on a case-by-case basis. And we all know how a case goes, if the decision-maker hears only from one side (in this case, the banks)...

July 10, 2000

There’s been little follow-up to the HUD-Treasury predatory lending study. The Dallas Morning News of July 6 ran a generally supportive editorial, beginning: “Being poor or uninformed shouldn't provide an opening for unscrupulous lenders to rake in profits through deception or fraud.” The American Banker of July 7 ran a piece by a lawyer at New York’s Cadwalader, Wickersham and Taft, which advised secondary market players to verify, among other things, “what measures are instituted to ensure that borrowers who may qualify for lower rate mortgage loans are offered such products?” and to “[f]ind out if there is pending litigation against the originators from which you plan to buy loans.”

One company which clearly doesn’t do that is Lehman Brothers, which has pooled loans from (multiply-sued) First Alliance and Delta Funding. This hasn’t keep Lehman from putting in a $3 billion bid for Conseco’s Green Tree subprime unit (the other bidders are Morgan Stanley and GE Capital). Nor did it keep the Office of Thrift Supervision for giving Lehman Brothers a savings bank charter, for subprime lending.

On July 3, the OTS quietly issued a thrift charter to the Dutch company ING, the fourth-largest insurer in the world. The OTS has been backsliding on the issue of CRA assessment areas, ever since Sen. Phil Gramm (R-TX) attacked OTS Director Seidman’s 1999 speech musing that banks operating by the Internet and phone should perhaps have nationwide CRA assessment areas. Sen. Gramm charged that there is no “legislative support” in CRA for this position. Now, in mid-2000, the OTS has allowed the ING thrift to limit its CRA assessment area to the Wilmington, Delaware CMSA, despite ING’s statement that it will even have a marketing office in New York City. This issue will be pursued in connection with ING’s application (again, to the OTS) to acquire Minnesota-based insurer ReliaStar, and its savings bank. ReliaStar Bank, which has provided ICP with its 1999 Loan Application Register for Minneapolis and St. Cloud, MN, did not make a mortgage loan in low- or moderate-income census tracts in either city in 1999. Nevertheless, ReliaStar’s cover letter to ICP states that it is “proud of the Bank’s tradition of reaching out to every segment of its communities.” There will be an informal meeting at the OTS on July 11, and an update next week.

In other subprime developments, the Federal Trade Commission has recommended that the Justice Department sue Associates First Capital for predatory lending. The DOJ has declined comment, but Associates’ stock price fell seven percent on the news. At week’s end, PaineWebber downgraded the stocks of four subprime lenders: Associates, Household International, CompuCredit, and Providian. It is reported that Providian is moving toward a $300 million settlement with local officials and the Office of the Comptroller of the Currency. When Providian’s public problems began, it quickly hired two ex-OCC employees. How the Clinton administration’s supposed anti-revolving door guidelines apply to the negotiations between the OCC and Providian -- has not been answered.

Also, the case against First Alliance (FACO) and Lehman Brothers proceeds, in bankruptcy court in California. The connections between FACO and Lehman are not limited to Lehman’s underwriting of FACO’s mortgage-backed securities: Lehman provided warehouse lines of credit to FACO, and got warrants to buy FACO’s stock. And all of this after Lehman Brothers had “committed” to the Office of Thrift Supervision to implement policies to prevent predatory practices, including by its clients...

In other CRA news, FDIC Chairman Tanoue, in a June 19 speech to a Bank Administration Institute conference in Arlington, Virginia, repeated her earlier apologies about awarding “Outstanding” CRA ratings to “only” 18% of banks (the most substantive question is why the FDIC and the other agencies now rate over 98% of banks “Satisfactory” or “Outstanding”). Ms. Tanoue also called for a “re-thinking” of the CRA investment test. Bankers quickly applauded this (see, e.g., American Banker of June 20, 2000). While Ms. Tanoue’s speech emphasized again and again how she listens to and gives a “fair hearing” to banks, we would compare Ms. Tanoue’s statements to the letter that Sen. Phil Gramm (R-Tx) sent to the Federal Reserve (and, apparently, to the other agencies, including the FDIC) earlier this year (ICP obtained this under the Freedom of Information Act earlier this month; see below):

March 24, 2000

Dear Chairman Greenspan:

The purpose of the Community Reinvestment Act of 1977 (CRA) is to encourage insured depository institutions to lend in their local communities. The only reference in the Act with regard to investments by insured depository institutions concerns investments by “majority-owned institutions” undertaken in cooperation with “minority- and women-owned financial institutions and low-income credit unions.” Further, such investments can be considered for CRA purposes only if the activities “help to meet the credit needs” of the local communities. However, the Federal banking agencies are consistently reported to have regulatorily expanded their CRA reviews to include investment activities.

I have directed the Chief Counsel of the Committee to undertake a detailed review of the extent to which the Federal banking regulators, either formally or in effect, are evaluating investments in CRA reviews beyond what is provided for in the statute. To assist in that effort, I would have that you provide by May 1, 2000, the following information for the period beginning January 1, 1996 and ending March 15, 2000, in connection with CRA reviews (either a scheduled CRA examination or a review in connection with an application for a deposit facility):

1. The total number of such reviews in the period, broken down by year;

2. The number of cases for each such year in which investment issues/concerns were raised by examiners;

3. The specific nature of such issues/concerns;

4. The total asset size and location of the institution to which such issues/concerns related;

5. The CRA ratings achieved by the institutions to which the investment issues/concerns were raised -- (I) at the time of their immediately preceding CRA review and (ii) as a result of the CRA review in which investment issues/concerns were raised; and

6. The resolution of the investment issue/concern.

Thank you for your cooperation.

Yours respectfully,

PHIL GRAMM
Chairman

June 12, 2000

First, a round-up of the week’s Community Reinvestment Act-related news; then an Inner City Press exclusive, based on a Freedom of Information Act response ICP received from the Federal Reserve Board last week.

On June 5, the Office of the Comptroller of the Currency’s Julie Williams gave a speech on predatory lending, stating that while most of the worst practices aren’t being done by banks, national banks should try to appear responsible, so that Congress doesn’t “overslide the base” with legislation. Ms. Williams’ supposition that banks aren’t the problem ignores, for example, the involvement of the affiliates of Wells Fargo Bank, N.A. (and other national banks, like Bank of America, First Union, Citibank and others) in questionable subprime lending. And the lobbying and campaign contributing power of the financial services industry virtually ensures that no meaningful legislation will be passed. Just last week, the city of Chicago weakened its local legislation, raising the threshold for “high cost low” to loans with fees of five full points or higher. Also last week, a federal bankruptcy judge in California slowed down the litigation against predatory lender First Alliance, so that its “assets won’t be depleted.”

The American Banker of June 9 ran an interview with Sen. Phil Gramm, in which the Senator claims that the agencies’ proposed rule implementing the “CRA Sunshine” provision of the financial deregulation law don’t go far enough. Gramm promises to “talk personally to the heads of the various agencies that are involved” (as set forth below, Gramm has been in near-constant communication with the Federal Reserve in the past few months). Gramm’s critiques of the regulation include that:

--there must be detailed reporting, including by community groups, on banks’ “unilateral” CRA pledges;

--any meeting between a bank and a non-governmental party (NGP) about the CRA is a “CRA contact,” requiring the NGP to report the use of any bank funds received; and

--any CRA contact, no matter how longer ago, should trigger the reporting requirement.

ICP’s continuing review of the regulation, beyond the problems it raises under the First Amendment (intended, as it is, to problematize petitioning the government for redress of grievances), has led to some surprising conclusions:

Law firms which get paid by banks to write responses to CRA protests, after meeting with the bank to discuss the response, fall under the reporting requirement, not only as to the amount of fund received, but how the funds were used. The same is true of CRA “consultants,” like KPMG Peat Marwick and companies selling CRA and Home Mortgage Disclosure Act software to banks.

Gramm’s insistence that any past discussion of CRA, no matter how far in the past, triggers a reporting requirement is absurd -- at earliest, it could run from November 12, 1999 (when the law was passed), or, more reasonably, from whenever this regulation is finalized (and before it is challenged in court).

Several banks, in private, have expressed their interpretation of the law as triggering disclosure by any group they place on an “advisory” committee, like Fleet’s supposed “pledge accountability” committee, and First Union’s grandiosely named “Ambassadors’ Council” (First Union reported, very vaguely, its 1999 CRA lending last week, before dropping out, at the last minute, from an investors’ conference. We trust Sen. Gramm will be demanding a more specific report from First Union...).

While Gramm doesn’t specifically critique the agencies’ vague proposal to accept IRS Form 990s (that all non-profits already file) as sufficient reporting, his insistence that “sunshine is how did I spend the money” is a predictor of his comments to the agencies, in writing and in person. Then again, if, as should happen, law firms and consultants also have to report, no non-profit’s travel budget will exceed theirs...

At the same time that Sen. Gramm is demanding detailed reporting by grassroots non-profit community groups, his Texas Congressional colleague, Rep. Tom DeLay (R-Tx), is fighting proposal to require disclosure by non-profits which run “issue advertisements” to support particular candidates for office. DeLay said last week: "People have the right to support causes without ending up on government lists." Phil? Are you listening?

What’s most interesting is that Gramm did not express concern about th e two carve-outs the agencies invented, in the reg: “CRA contacts” would NOT include comments that the regulatory agencies themselves directly solicited, and would not include comments at “widely attended conference or seminar regarding a general topic.” Apparently, Gramm feels that he has the agencies “running scared” enough (or, in the case of the Fed, ideologically “in synch” enough) that the agencies will not solicit comments from the (types of) groups that Gramm seeks to target and harass with this law.

Gramm’s inter-actions with the agencies about CRA, even since passage of the deregulation bill last November, are reflected by a response Inner City Press received on June 6 from the Fed, to ICP’s April 14, 2000 Freedom of Information Act request about the Fed’s CRA-related communications with the Senate Banking Committee, particularly Senator Gramm. The documents that the Fed provided, after a seven week delay, include:

--various requests by Sen. Gramm’s staff for lists of all community groups which have commented on bank merger applications, copies of their comments and all of their correspondence with banks;

--a request by Sen. Gramm for the Fed’s estimate of how much it costs to file a CRA protest;

--various internal e-mails among the Fed staffers assigned to respond to Sen. Gramm’s many requests; and

-- a March 24, 2000 letter from Senator Gramm to Alan Greenspan, calling into question the validity of the CRA “investment test,” one of the three criteria for CRA evaluation contained in the 1994 CRA regulation, for which the Clinton Administration takes so much credit. Sen. Gramm’s letter reads:

Dear Chairman Greenspan:

1. The total number of such reviews in the period, broken down by year;

2. The number of cases for each such year in which investment issues/concerns were raised by examiners;

3. The specific nature of such issues/concerns;

4. The total asset size and location of the institution to which such issues/concerns related;

6. The resolution of the investment issue/concern.

Thank you for your cooperation.

Yours respectfully,

PHIL GRAMM
Chairman

On April 14, 2000, Fed staffer Shawn McNulty sent a memo to all “Officers in Charge of Community Affairs,” stating that “after discussion with Senator Gramm’s senior staff and our Congressional staff to come to a common understanding of the information that is being requested... [i]tems 1 and 3 will be assembled by Board staff and delivered to Senator Gramm by May 1, 2000. Three paragraphs of this memo have been whited-out by the Fed. Because the Fed, despite waiting seven week to respond to ICP’s April 14, 2000 FOIA request, cut off its response at documents created on or before April 14, ICP does not yet have the Fed’s response to Sen. Gramm’s letter. The intent / effect of the letter, however, will foreseeably be to decrease the agencies’ scrutiny of banks’ community development investments, under the 1994 CRA regulation.

The response to Gramm that the Fed has provided include a list of all CRA protested applications, names of commenters, etc.. An April 6, 2000 e-mail from Federal Reserve Bank of Boston staffer Bonnie Bauman to Fed CRA head Beverly Smith describes that Reserve Bank’s work in connection with what’s called “the Sen. Gramm project.” David Inada of the San Francisco Fed sent Ms. Smith an e-mail with an attachment called “Gramm2000San FranciscoRB.xls;” handwritten on this e-mail, as provided to ICP, is “not attached to this copy.” Ms. Smith’s March 9 e-mail to Fed staffer William Bissenas asks about which “applications subject to CRA... had been approved, denied, withdrawn or otherwise disposed of.” Ms. Smith adds, “I don’t think any were denied last year.” That would be correct -- and the best way, apparently, for the federal bank regulators to stay on Senate Banking Committee Chairman Phil Gramm’s “good side.”

Ms. Smith’s February 25, 2000 e-mail to Fed lawyer Tom Corsi (and five others), says “we have also included some information on the pending Dime/Hudson case... per Dina Ellis’ request... once the documents are cleared for release, a 2nd copy must be made & sent to the FOIA office for the inevitable FOIA request...”. The NERVE of the public, asking for the documents that the Fed has been providing Senator Gramm for his anti-CRA campaign!

A March 20, 2000 e-mail from Ms. Smith to all of the Reserve Banks says that “we need to use exactly the same file [format] because the analysts hired by Sen. Gramm have specifically requested the exact same data, but w/ these added fields.” Beneath that is another paragraph whited-out by the Fed. How many “analysts” has Sen. Gramm “hired”? And where, in this process, is Sen. Sarbanes (D-MD) and other Democrats on the Committee?

Well, Patience R. Singleton, “Democratic Counsel” to the Committee, on February 7 asked for the number of applications to the Fed subject to CRA, and the number that received adverse CRA comments. Here are the results:

CRA App’s CRA Prot’s

1998 1190 24

1999 950 15

For comparison’s sake, here’s the Fed’s reporting of CRA protests per year: 1989: 11; 1990: 18; 1991: 20; 1992: 18; 1993: 44; 1994: 50; 1995: 56; 1996: 43; 1997: 24; 1998: 24; 1999: 15.

At the bottom of the 500 pages provided to ICP by the Fed on June 6, 2000 was an e-mail dated January 18, 2000 (which the Fed should have provided to ICP in response to its previous FOIL request), from Beverly Smith to Win Hambley and three others, including the Fed’s Glenn Loney, stating: “Hill staffers (Dina Ellis and Joe Cwiklinski) indicated that Sen. Gramm is interested in finding out just how much it costs for community groups and/or individuals to file protests. We had responded to their initial question that we had no idea because we have never asked for that information nor did we see the reason to ask for it. Win and I both told them (separately) that it would be a matter of costing out what it took for the protestant to conduct his/her research and then putting a stamp on a letter or paying for express delivery.” Below that, a full paragraph has been whited-out by the Fed.

Perhaps Senator Gramm’s plan is to make it more expensive to file a CRA protest. That the Fed is whiting-out portions of a document such as this is hard to understand. Developing...

Also provided to Inner City Press on June 6 was the Fed’s response to ICP’s April 18, 2000 FOIA request about the “Mizuho” application. Included were time-line sheets, indicating the Fed’s plan to “circulate[]” a “draft/Legal memo” by May 6, “final memos” by May 21, “Order and Record Released” (to the Governors) by May 27, “Date of Press Release/Order June 2.” Also reflected is that the Federal Reserve System held a closed-door meeting with the applicants and their lawyers on January 27, 2000. The memorandum on this meeting has been heavily redacted by the Fed. The Fed has, however, released (after the close of the comment period) exhibits that the applicants improperly withheld -- for example, a list of the Principals of DKB (including Tadashi Kudo, Nobuhiro Mori and Akira Miyagawa -- while still withholding their ownership percentages in other depository institutions); and the “Regulatory History of DKF (USA).” The Fed even redacted the length of the “grace period for noncomforming nonbanking activities” that the applicants are requesting. The Fed is doing the public’s business -- but in an increasingly non-public way... Developing...

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A correction from an item we ran last week, chiding the American Banker newspaper for not identifying Robert A. Cook as an advisor to the Federal Reserve. Mid-week, we received the following from Robert E. Cook, of the Fed:

Subj: Error in your CR Reporter Page for 6/5/00
Date: 6/7/00 3:07:53 PM EST
From: robert.e.cook [at] frb.gov (Robert E. Cook)
To: innercity1 [at] aol.com, cookr [at] frb.gov

Paragraph 2, page 1 of the above-captioned report includes the sentence:

"The Banker also quotes lawyer Robert Cook as an analyst, without ever mentioning that he's been the Federal Reserve's 'senior advisor' on fair lending - - a conflicted watchdog if ever there was one."

This is at least the second appearance of this particular error on yourwebsite. You should know that there is a Robert A. Cook, partner in the law firm of Hudson, Cook and, quite separately, myself, Robert E. Cook, a senior attorney specializing in fair lending and employed solely by the Federal Reserve Board. I don't know the other Mr. Cook all that well, but I think it safe to say that we both take as much care to avoid conflicted positions as we do to avoid making erroneous public statements.

We responded to Mr. Cook, an hour after his complaint was received:

Mr. Cook --

Thanks for pointing out the error -- we’ll run a correction, at latest, Monday June 12. Looking back into it, I’ve realized the source(s) of the mis-perception:

(1) some references don’t include middle initial (for example, an announcement of the Consumer Bankers Association’s 1998 conference);

(2) that Robert A. Cook has been on the FRB’s Consumer Advisory Council is a coincidence that also made mis-apprehension more likely; and

(3) some references to you state that you are a “consultant” to the FRB, or an “advisor” to the FRB:

USA Today, Nov. 16, 1995: “...Robert Cook, senior fair lending adviser at the Federal Reserve...”

Regulatory Compliance Watch, Nov. 25, 1996: “...Robert Cook, a fair lending consultant at the Federal Reserve Board...”.

In retrospect, it’s these two referenced (as “adviser” and “consultant”) that were the source of our misunderstanding. Were you “solely employed” by the FRB at those times (1995 and 1996)? Why did the two publications identify you as “adviser” and “consultant”? (I’m assuming that neither reference was to Robert A...).

Anyway, I want to apologize for the error; the June 5th (and the earlier one, which I’ll track down) will both be corrected, by June 12th at latest.

You may remember (or have been contacted in connection with) a Freedom of Information Act request we made last year, for fair lending-related documents you’d referred to as “having to go dig through” (that’s a paraphrase). We remain hopeful that the FRB, under your advice and consultation, will begin taking a closer look at holding companies’ involvement in questionable subprime lending, whether as underwriter, trustee / custodian, warehouse lender, debtor-in-possession lender, or as end-purchaser of mortgage-backed securities.

So far, we haven’t heard back. But, that’s the correction...

May 30, 2000

The Doctor Jekyll and Mr. Hyde nature of many large U.S. banks was made clearer last week. We’ll begin by considering the hearing on predatory lending held by the House Banking Committee on May 24. After various Congressmen beat their chest about their commitment to consumer protection (Rep. John LaFalce, D-NY, went so far as to say he was glad to have repealed the Glass Steagall Act last year, so now Congress can get around to protecting consumers), Fed Governor Gramlich spoke briefly about the Fed’s limited efforts to examine subprime and predatory lenders. Even Rep. Leach, R-IA, criticized the Fed for its inaction. Most strikingly, Rep. Schakowsky (D-IL) asked the representative of the Financial Services Roundtable what Bank of America (which owns NationsCredit and EquiCredit), First Union (which owns the Money Store) and Citigroup (which owns CitiFinancial) are doing. The trade group representative hemmed and hawed, saying he doesn’t “know specifically what companies those companies own;” there seems to be a consensus, however, that no legislation will pass this year.

But consider these companies: Bank of America is now said to be trying to sell NationsCredit -- but only because it is less profitable than BofA’s larger subprime lender, EquiCredit. Inner City Press has questioned a BofA “community development” executive about the practices of EquiCredit, and was told (after the preface, “you can quote me on this”) that BofA will finally institute a system of referral up (to lower cost credit) in “mid-2000.”

For several years now, ICP and others have pointed out that while Bank of America was referring applicants denied loans by its banks down for higher price loans at its subprime affiliates, it wasn’t referring anyone, even those with pristine credit histories, up from the subprime companies to the bank. In 1998, Bank of America said it would begin referrals up; this never happened. The explanation now given is that BofA was “too busy doing mergers.” The new promise is “mid-2000.” We’ll see.

But even while even Congresspeople were asking questions about Bank of America’s subprime units, the New York Times on May 21 ran a puff-piece on BofA CEO Hugh McColl, calling him “Clinton’s favorite banker.” The Times included no information about BofA’s questionable subprime lending, nor any analysis of campaign contributions. The supposed basis of Clinton’s pro-BofA stance is that Clinton “was happy to find a banker committed to financing inner-city and minority-owned businesses. Bank of America announced this month that it made $39 billion in such community reinvestment loans last year.” As previously noted, BofA is counting any business loan below $1 million. A $750,000 loan to a law firm in San Francisco, for example, would be presented as a “community development” loan by BofA.

BofA’s main West Coast rival, Wells Fargo, no longer even pays lip service to CRA lending commitments. Long-time Wells CRA officer Karen Wegmann, only 50, “retired” a few months ago; Wells issued no announcement or explanation. Earlier this month at the Consumer Bankers Association meeting in Washington, Wells’ CRA numbers-cruncher Virginia Greene told attendees that Ms. Wegmann will not be replaced, that, going forward, Wells will let each state bank runs (and defend) its own CRA record. This is why the “old” (pre-Norwest) Wells’ lending commitment was not expanded to the Norwest states, nor to the states in which the new Norwest-run “Wells” is expanding: Alaska, Utah, New Mexico, Idaho. What IS being expanded into these states is Wells subprime lending, through Directors Acceptance and Norwest Financial. Because neither of these business units separately report Home Mortgage Disclosure Act data, Wells name never came up at the House Banking Committee hearing. Nor, for the same “mix-in” reason, did Chase Manhattan. The level of scrutiny and analysis in these hearings (including the HUD-Treasury Task Force Hearings) has been superficial. The next step appears to be some watered-down “best practices” being announced, and then a lot of back-slapping and congratulations. Developing...

Chase’s ex-CRA officer, Carol Parry, was reported by Goldman Sachs on May 23 to have withdrawn herself from consideration (such as it’s been) for a seat on the Federal Reserve Board. From the White House, NEC chairman Gene Sperling quickly denied the report, and Goldman Sachs retracted it. While Senate Banking Committee Chairman Phil Gramm (R-TX) has frozen the confirmation process for any Democrat nominees, you can still apparently buy your way into Congress. Ex-Goldman Sachs managing partner Jon Corzine has already spend over $25 million on television ads in New Jersey, and has seen his poll numbers climb. While ex-NJ Governor Jim Florio was hardly a champion of lower income Jerseyites, at least there’s more to his campaign than “Look, ma -- I have $25 million to spend!” And the beat goes on...

Footnote: Rep. LaFalce’s quote, paraphrased at the beginning of this Report, is worth quoting in full: “One of the great benefits of having passed repeal of Glass-Steagall, one of the reasons I was so cooperative, was so that we could get it behind us and concentrate on the problems and plight of consumers in the future.” Ah, the New Democrats -- justifying their “cooperation” in deregulating the entire financial services industry as an attempt to just get that pro-corporate step “behind us and concentrate” on consumers. As if the deregulation itself might not affect consumers...

Second footnote, and gratutious link: click here for a fragmentary treatment of the controversial urban renewal proposal for downtown Pittsburgh, headquarters to Mellon Bank and PNC.

Until next time, for or with more information, contact us.

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Copyright 1999 - 2003 Inner City Press/Community on the Move, Inc.. All rights reserved. As should be clear, but in an excess of caution: under no circumstances does the information in this column (or web site) represent a recommendation to buy or sell securities. For further information, or to request reprint or other permission, contact: Permissions Coordinator, Legal Administration, Inner City Press, P.O. Box 580188, Mount Carmel Station, Bronx, NY 10458. Phone: (718) 716-3540. Fax: (718) 716-3161. E-mail: CRA [at] innercitypress.org