ICP's DIME SAVINGS BANK (Now WaMu) WATCH

Click here for ICP's new, ongoing WaMu Watch

ICP has published a  book about the WaMu-relevant topics of predatory lending, and corporate fraud - click here for sample chapters, here for a map, here for fast ordering and delivery, and here for other ordering information. CBS MarketWatch of April 23, 2004, says it has "some very funny moments."  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, Sept.-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  For or with more information, contact us.

Last updated April 18, 2005 --  Click here for ICP's new ongoing WaMu Watch                           Click here to Search This Site

Update of April 18, 2005: Inner City Press / Fair Finance Watch is reviewing the 2004 Home Mortgage Disclosure Act data of   Washington Mutual including the new information concerning which loans are subject to a rate spread (3% higher than comparable Treasuries on a first lien, and 5% on a subordinated lien), and has found that Washington Mutual in 2004 made 71 HOEPA loans, and imposed higher-cost rate spread loans 3.26 times more frequently on African Americans than on whites. Analysis continues; developing. Until next time, for or with more information, contact us.

(Much) earlier reports:

October 2, 2000

       On September 27, a day before North Fork was expected to call off its hostile tender offer for Dime, the Federal Reserve hauled off and approved both North Fork's and Fleet's applications. What explains the Fed's timing? Perhaps it wanted to get a precedential ruling out there, legitimizing and even encouraging hostile take-overs in the bank arena. If the Fed had waited until after North Fork's announcement, the application might have been withdrawn. Hence the September 27 Fed orders -- the day after which, the Fed finally released documents ICP has requested, months before, under FOIA. What's next for Dime? For Fleet? (Other than, as rumored, Summit Bank of New Jersey). For North Fork? We'll be watching...

September 18, 2000

      We had news, but it appears that it may be rendered moot. The news, such as it is, came to ICP in the form of two Federal Reserve Board letters. The first, dated September 5, asks North Fork to "please indicate whether, at North Fork's proposed minimum ownership level of 50.1 percent of Dime, pushdown accounting will apply when preparing separate entity financial statements. If so, indicate how pushdown accounting will be applied after North Fork's acquisition of Dime."

      But this "pushdown" may have been "pushed-back:" the American Banker of September 14 quotes the self-consciously cerebral CEO of North Fork musing that "It's time for us to make some meaningful decisions. We have to make the best use of our capital, and the question is, 'Are there easier ways to make money?' We've been sitting around for the last two months thinking about life in general. It's been a real catharsis."

      When bank CEOs starting using psychoanalytic, or Greek, terms, it's may be time to despair of any denouement to this saga -- to mix languages, but match the pretentiousness of the above.

      Also, on September 15, Dime announced it will eliminate 400 jobs. This is a large lay-off, given Dime's size. Somehow it smacks of a ship captain throwing sailors overboard...

     The second news-bit is a Fed letter to Sullivan & Cromwell, Dime's counsel, rejecting Dime's request for confidential treatment for a letter sent to the Office of Thrift Supervision in 1997, captioned "Request by Great Western Financial Corporation for Immediate Regulatory Relief in Connection with H.F. Ahmanson & Company's Consent and Proxy Solicitation to Acquire Control of Great Western Without Prior OTS Approval." Whew! The Fed deemed this as having been "required to be submitted," for purposes of the Freedom of Information test, and has given Dime ten days to sue, before the Fed releases the letter. By the time we get it, this may all be moot...

September 11, 2000

         The comment period on Fleet's application to the Federal Reserve Board to acquire a stake in Dime Savings is still open, and remains so until September 13. (While the Fed's web page sets the expiration at September 8, Fleet's newspaper notice, in the Boston Globe of August 14, sets it at September 13, and the longer one controls). We'll have more on this next week: but for now it's worth noting that Dime has already opposed Fleet's application. An August 16 letter from Dime to the Fed begins, "First, we are disappointed that FleetBoston chose not to provide us or our counsel with copies of the Notice." Getting (thankfully) more substantive, Dime "notes that the highly negative impact of FleetBoston's collaborative effort with North Fork to acquire us has become all too apparent since FleetBoston filed its initial application under Section 3. North Fork's five-month scorched earth campaign against Dime has included two proxy fights, the initiation of multiple litigations and a strident vituperative public relations campaign of vilification of Dime's board and management."

     Hot damn! If adjectives were earnings, Dime would be king. In an August 24 letter to the Fed, Dime got more detailed: "North Fork has changed its goals since March when the original application was filed. We now know that North Fork plans to acquire Dime by means of taking over Dime's board of directors... FleetBoston makes no effort to describe this new strategy and its effect on its investment." Dime even addresses "convenience and needs," writing that "recent public sources demonstrate that FleetBoston's difficulty with integrating BankBoston has caused problems for communities in New England. One recent press account, observing that 'scowling customers' are waiting in lines '10 people deep,' notes that the region's poor and middle-class consumers are especially disadvantaged...". We love it when banks start raising the issues of "the region's poor" against each other. But we note that the community lending "pledge" that Dime made in connection with its now-dead merger deal with Hudson United has not publicly been reiterated, as remaining a commitment of the bank. There's no reason, however, for Fleet or North Fork to raise that, when they're trying to acquire Dime. And the substance of these pledge is questionable: for example, Fleet's notice contains no description of its performance under the "pledge" it made while acquiring BankBoston. Developing...

* * *

August 14, 2000

    North Fork last week announced that it will propose a five-member slate to run for Dime’s board of directors. Among the five is ex-Congresswoman Geraldine Ferraro. North Fork “acquired” Ms. Ferraro along with New York Bancorp, on whose board of directors she sat. New York Bancorp’s lending record was so disparate that issued arose, reported by New York Newsday, about Ms. Ferraro’s involvement with (or oversight of) that bank. Onwards and upwards -- now North Fork proposes her for Dime’s board. The war of words (slowly by Fleet’s arrogant refusal to have earlier submitted an application to the Fed to acquire a stake in Dime) continues....

* * *

Update August 7-8, 2000: Fed Rules that Fleet Must Submit Another Application, To Acquire a Stake in Dime Savings

    On August 7, the Federal Reserve Board’s general counsel rejected Fleet Boston Corporation’s argument that it does not need to submit an application to the Fed to acquire a stake in Dime Bancorp and Dime Savings Bank, as part of Fleet’s investment in North Fork Bancorporation.

    North Fork’s ongoing hostile bid for Dime is premised on Fleet’s investment in North Fork. The Fed’s ruling means that North Fork would not be ready to acquire Dime until Fleet submits the new application, and, after a comment period, the Fed approves it. While North Fork’s bid has in some sense been delayed until the next election of Dime board members, the Fed’s ruling is significant in that ongoing takeover bid, and as a matter of precedent. In fact, the Fed’s letter cites to a prior North Fork applications proceeding for the proposition that “[t]he Board has long and consistently required the filing of a notice under Section 4 of the [Bank Holding Company] Act prior to the acquisition of more than 5 percent of a company that owns and operates a nonbanking company such as a savings association.”

    The Fed’s letter continues: “Accordingly, consistent with this practice and the terms of the BHC Act, the General Counsel has determined that a notice under section 4 of the BHC Act is required prior to the acquisition by Fleet of more than 5 percent of the shares of North Fork in connection with North Fork’s proposed acquisition of Dime and Dime Savings.”

    There will be a comment period on Fleet’s new notice...

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

* * *

August 7, 2000

    Dime last week began buying back up to 12.5 percent of its stock, through a so-called Dutch auction that lets investors specify the price within the set range at which they're willing to buy or sell. Dime is using money from Warburg, Pincus Equity Partners LP to buy the stock. Warburg will then own the 13.6 million shares, plus have the right to buy more stock at $21.50 a share in the future possibly giving it a total stake of 22 percent. It will also receive a seat on the Dime board. And Warburg’s position on community reinvestment issues? Unknown, to date... As is the status of the community lending pledge Dime made before its bid to merge with Hudson United Bank fell through. North Fork and Dime are settling in for a prolonged war...

July 31, 2000

     On July 28, Dime released the voting results from its July 14 shareholders meeting. Its five proposed directors, even though they ran unopposed... lost. Seventy percent of Dime’s outstanding shares cast votes, and 70% of these voted to “withhold support.” The directors, however, will continue on the board (there was no one else to vote FOR). Dime claims they can continue to serve until 2003; North Fork says they must stand for election again next year. The litigation continues..

July 24, 2000

     While the official results won’t be released until July 28, it appears clear that Dime’s shareholders on July 14 voted to withhold authority from the five Dime directors up for election. Whether this will push Dime into North Fork’s (cost-cutting, community-ignoring) embrace is not yet clear. Ryan Beck Southeast Research’s analyst minimized the importance of Warburg Pincus’ investment in Dime, and the appointment of Tony Terracciano as chairman, saying that since Terracciano is in a “non-executive” role, “nothing changes.” Putnam, Lovell & Thorton’s analyst, said that the moves are “simply more noise from Dime's management to avoid the North Fork offer" which "would offer much more of a long-term upside than leaving Dime independent." Ouch...

July 17, 2000

      Dime held its shareholders’ meeting on July 14, at Manhattan’s Chelsea Piers. North Fork’s CEO’s arrived on a yacht. Earlier in the week, he’d invited a Bloomberg reporter out to Melville, and tried to come off as a farmer, as concerned with John Deere tractors as his hostile bid for Dime. But at Friday’s meeting at Manhattan’s Chelsea Piers, North Fork’s CEO requested to be the last shareholder to speak, and from the podium, not from a microphone set up in the audience. Numerous attendees described his presentation as “cocky” and “arrogant,” but the fight goes on. Later on July 14, North Fork sued Dime in Delaware chancery court. And, with his tractor on a yacht, and a compliant financial journalist at his side, a prototypical New American cruises the seas of greed, singing of shareholder value, ready to cut jobs and reduce community lending where ever he goes...

July 10, 2000

     Dime last week invited Warburg Pincus to invest $238 million into Dime. If Warburg exercises its warrants, it would own 22.1% of Dime. [Note: an application for regulatory approval will be required...]. Dime has also brought in Terry Terracciano as chairman; Larry Toal will continue as CEO. Terry T., since selling First Fidelity to First Union (and didn’t that work well), has been vice chairman of American Waterworks. North Fork, seeing its hostile bid wither, called Dime’s moves “a new low watermark for bad corporate governance.” North Fork, which has itself set some “new low watermark[s]” in community relations, is expected to make some kind of move, which may include protesting Warburg’s application to acquire this stake in Dime. Stay tuned...

July 5, 2000

    On June 27, North Fork extended its tender offer for Dime’s shares until July 31, from June 30. North Fork’s CEO, in a June 27 conference call with investors and analysts, said that “the rumor du jour, today and yesterday, is that MetLife is in there and MetLife is a possible buyer. We have no idea whether that's true.” Both Dime and MetLife declined to comment on the rumor. Reuters quoted an anonymous “source close to the situation” as denying MetLife’s interest in Dime. And so it goes...

June 19, 2000

    The battles around Dime Savings continue. Last week, ICP obtained copies of Fleet’s response to the Federal Reserve Board’s question about which of the 17 Dime branches that Fleet would buy from North Fork would be closed. Fleet responded that it “does not have any plans to close or consolidate any branches as a consequence of its agreement to purchase 17 Dime Savings Bank branches,” but added that “[r]eference is also made to the Confidential Attachment” (that Fleet is withholding). Dime’s lawyers at Sullivan & Cromwell quickly fired back: “In view of FleetBoston’s past record of contradicting flat statements made in the public portion of submissions in confidential filings, we urge the Board to require the disclosure of any plans by FleetBoston to close of consolidate Dime branches.” Dime’s submission concluded: “Statements such as these exemplify the need for a hearing at which sworn testimony can be taken, and we reiterate Dime’s request for a hearing.” It should be noted that this law firm routinely opposes community groups’ request for hearing on bank mergers, and opposes disclosing its clients’ branch closures plans. As the world turns...

June 12, 2000

   Dime last week once again pushed back its shareholders’ meeting, this time from June 29 to July 14. North Fork is asking Dime shareholders to vote down the five directors that Dime is proposing; Dime on June 9 issued a press release about inviting an ice skater into its Chinatown branch. And so it goes...

June 5, 2000

    Dime on June 2 announced it has bought back 2.5 million of its shares from Hudson United. Obviously, these will not be tendered to North Fork... Also on June 2, Dime put out a press release announcing its donation of tickets to Yankees baseball games to community groups, going so far as to name the groups (which include Ramon Velez Jr.’s South Bronx Community Management, and Hostos Community College, which is not a community group at all). We call this press release: desperate...

May 30, 2000

     North Fork has extended its offer for Dime until June 30; Dime in an SEC filing says it’s discussing a “strategic transaction” with an un-named party (this might only involve the sell-off of Dime’s North American Mortgage...). Meanwhile, the Department of Justice has finally taken an interest in the antitrust issues raised by North Fork’s and Fleet’s coordinated take-over bid for Dime. HSBC USA executive Youssef Nasr has been quoted (in Newsday) that HSBC is “not interested” in Dime. As previously note, ABN AMRO / EAB executives have indicated they’re looking for bank acquisitions in the Midwest, if anywhere. And so -- the mysterious party “in discussions” with Dime? Developing...

May 22, 2000

     Fleet on May 15 submitted a response to the Fed, stating that Fleet has barely begun performance under the $14.6 billion “commitment” it made to the Fed in 1999: “Given the fact that only a few months of the first year have passed for which data can be collected, we have only preliminary information covering a very short period of time,” Fleet general counsel William Mutterperl wrote. NO information, preliminary or otherwise, was provided. Fleet continued: “the corporation will be publicly accountable for meeting all aspects of the commitment. The vehicle for this accountability is the creation of the FleetBoston Community Oversight Committee... including four representatives from the Metro New York/New Jersey market.” So Fleet will be accountable to a Committee that it itself selected. Note that “Metro New York/New Jersey,” in most people’s minds, means Northern New Jersey -- but two of the four representatives that Fleet referred to are from Trenton... North Fork has now “released” Fleet from its commitment not to bid on Dime. One would think that would require the Federal Reserve to re-open its comment period on the North Fork and Fleet applications...

May 15, 2000

   The drama lurches forward. TheStreet.com of May 8 reviewed possible “white knights” for Dime, musing (through quoted analysts) that EAB’s unlikely, since it’s “expect[ed] to be sold” (this from a DLJ pundit), and that HSBC might be interested, since “[i]t would also allow [HSBC] to take some costs out.” That means -- branch closings. HSBC’s just applied to the New York State Banking Department to close five more branches; Dime would have a hard-sell presenting HSBC as a “pro-community” white knight.”

   Meanwhile North Fork, despite its spotty Community Reinvestment Act record, is now trying to gain instant community support; it’s set up a meeting with community groups on May 22. If it’s anything like the dog-and-pony show CEO John Kanas gave to Bronx groups while acquiring Northside Savings (complete with misleading slides, as if it were a stock analysts’ presentation), the sparks may fly.

     Dime has protested both North Fork’s and Fleet’s applications to the Fed, mostly in letters by Dime CEO Larry Toal. It’s interesting that Dime’s law firm, Sullivan & Cromwell, didn’t make the submissions. But what’s starting to happen is that law firms who make anti-hostile takeover arguments in one proceeding, are seeing the old quotes come back at them when they represent the aggressor in another conflict. It’s happening to Skadden Arps (which got paid to defend First Interstate in Los Angeles in 1995) right now. So the firms let the banks “speak” for themselves, except on procedural matters...

* * *

May 8, 2000

    On May 5, ICP submitted the comment below to the Fed, on Fleet’s and North Fork’s attempted hostile take-over of Dime. At 4:30 on that day, the expiration of the Fleet comment period, Fleet’s lawyer submitted a purported response to ICP’s previous comments. ICP then commented on Fleet’s response (which among other things mis-represents North Fork’s CRA record), submitting the second comment below just before 5 p.m. on May 5. Developing; this will be updated.

May 5, 2000

Board of Governors of the Federal Reserve System
Attn: Secretary Jennifer J. Johnson
20th Street and Constitution Avenue, N.W.
Washington, D.C. 20551

Dear Secretary Johnson and others at FRB:

    On behalf of Inner City Press/Community on the Move and its members and affiliates, including the Inner City Public Interest Law Center (collectively hereinbelow, “ICP”), this is a timely supplemental comment opposing the proposal of Fleet Boston Corporation (“Fleet”) to acquire a substantial stake in North Fork Bancorporation (“NFB”), to collaborate with NFB in its attempted hostile take-over of Dime Bancorp (“Dime”), to buy Dime branches from NFB, to control NFB and/or Dime, and opposing NFB’s related application to acquire Dime.

      The record on these Applications is clearly not complete. In its April 28 comment, ICP noted that it had that day received from the Board several hundred pages of documents regarding the transaction. This process has been repeated, one day before the expiration of the extended comment period. On May 4, ICP received another 486 pages of documents related to the proposal. ICP has attempted, in the one business between receipt of the 486 pages and the expiration of the comment period, to review these documents. However, it is clear that Fleet and North Fork have attempted to prevent the public (and the target institution) from being able to fully review the proposal: Fleet by making frivolous requests for confidential treatment (see ICP’s April 28 comment); Fleet’s partner North Fork by delaying its response to the Board’s letter of April 13 from the requested April 25 until May 2. See North Fork’s counsel’s letter of April 22, requesting (or demanding) such an extension; cf. North Fork’s counsel’s letter of April 4, which stated that “North Fork expects to receive additional detailed questions from the [FRB] in the ordinary course and will respond to those questions in a timely and complete manner.” Emphasis added. Despite this April 4 representation, Fleet’s partner North Fork did not, in fact, respond to the FRB’s “detailed questions” by the deadline set in the FRB’s letter (April 24, prior to the expiration of the comment period(s)); it requested an extension until past the expiration of the North Fork comment period, and only three days prior to the expiration of the extended Fleet comment period. On this record, the comment period must be further extended.

     Fleet proposes to fund North Fork to acquire Dime on a hostile basis, in exchange for what ICP contends would be a controlling stake in North Fork, and for North Fork selling 17 of Dime’s branches, 5 of them in Manhattan, to Fleet. ICP has still not received North Fork’s delayed response to the FRB’s April 13 questions (which included questions regarding the Community Reinvestment Act (“CRA”) and regarding the Dime branches proposed to be sold to Fleet. This information is crucial to any review (or commenting on) Fleet’s proposal. While some (but not all ) applicants request confidential treatment of lists of branches they would close, it is entirely illegitimate to withhold a list of branches that the applicant would acquire. Combined with Fleet’s and North Fork’s shifting descriptions of their recent communications, and of their future relationship, this has created a “cloak and dagger” applications process, with responses to requests for basic information delayed until after the expiration of comment periods, with frivolous requests for confidential treatment, and with the withholding of even the list of branches that Fleet would acquire. The applications should be dismissed, or the comment period must be extended....

     ICP refers to the Board to (and hereby incorporates into the record by reference) the following Boston Glove editorial about Fleet’s new “anti-LMI” fee policy:  "Fleet Fee Flap," Boston Globe, May 1, 2000, Pg. A18.    Also note that a reporter from the Boston Herald has been suspended, after his coverage of Fleet’s fee policy resulted in Fleet complaining to that newspaper, in which it is a major advertiser.  See, "Columnist Fights for Reinstatement," by Chris Iven, Associated Press, May 2, 2000.   Fleet’s arrogant and anti-consumer policies bode badly not only for customers of the 17 branches it would buy, for for consumers throughout the communities affected by Dime and North Fork, given the stake which Fleet proposes to take in North Fork.

   ICP also wishes to highlight to the Board certain CRA-related material in Tab C to Dime’s March 28 submission, particularly the portion of the Federal District Court decision reported in Minzer et al. v. Keegan et al., 1997 U.S. Dist. LEXIS 16445, *7, recounting North Fork’s CEO’s response to the Court’s question (“[h]ad you been criticized for closing branches or not lending in certain parts of a community?”): “Never.” The court continues: “On cross-examination, counsel for The Greater produced a December 1995 article appearing in Newsday, a Long Island newspaper, in which it was reported that North Fork had been the subject of ‘formal written protest’ under federal law alleging ‘failure to market and lend to the predominantly minority residents and local residents of The Bronx, Nassau, Rockland, and Westchester Counties.’ Mr. Kanas testified that he did not recall the specific article but did recall the protest. Mr. Kanas himself is quoted in the article.”

    For the reasons previously set forth, ICP contends that NFB’s CRA and fair lending performance remains deficient. Beyond that, NFB’s CEO’s above-quoted response (in a reported Federal case) reflects (1) one of the reasons why NFB’s performance is still deficient, and (2) adversely on the managerial factors the Board must consider in connection with these Applications. This mis-statement, on CRA, and the other mis-statements (by Fleet OR NFB, as highlighted in Dime’s counsel’s submissions), must be acted on by the Board in this proceeding.

On the current record, these Application should be denied.

Very Truly Yours,

Matthew Lee
Executive Director

cc: Counsel to Fleet
Mr. Robert L. Tortoriello, Esq.

* * *

May 5, 2000

Board of Governors of the Federal Reserve System
Attn: Secretary Jennifer J. Johnson
20th Street and Constitution Avenue, N.W.
Washington, D.C. 20551

RE: TIMELY SUPPLEMENTAL COMMENT (SECOND SUBMISSION OF MAY 5 -- SEE BELOW) OPPOSING THE APPLICATION OF FLEET BOSTON CORPORATION TO ACQUIRE A SUBSTANTIAL STAKE IN NORTH FORK BANCORPORATION (NFB), TO COLLABORATE WITH NFB IN ITS HOSTILE BID FOR DIME BANCORP, TO BUY BRANCHES FROM NFB, AND TO CONTROL NFB AND/OR DIME (AND IN OPPOSITION TO NFB’S RELATED APPLICATION TO ACQUIRE DIME)

Dear Secretary Johnson and others at FRB:

    On behalf of Inner City Press/Community on the Move and its members and affiliates, including the Inner City Public Interest Law Center (collectively hereinbelow, “ICP”), this is a second timely May 5, 2000 comment opposing the proposal of Fleet Boston Corporation (“Fleet”) to acquire a substantial stake in North Fork Bancorporation (“NFB”), to collaborate with NFB in its attempted hostile take-over of Dime Bancorp (“Dime”), to buy Dime branches from NFB, to control NFB and/or Dime, and opposing NFB’s related application to acquire Dime.

At 4:35 p.m. on May 5 (after ICP’s 4:00 p.m. transmission to the Board), ICP received from the Federal Reserve Bank of Boston (the “FRBB”) a copy of Fleet’s counsel’s response to ICP’s previous comments. ICP’s 4:00 p.m. transmission set forth why the comment period should be extended. Fleet’s counsel’s submission of a CRA response an hour before the comment period expires further supports the requested extension of the comment period. Hereinbelow, ICP timely submits into the record an interim reply to Fleet’s purported response.

     Fleet’s Response states that “the basis of ICP’s objections is not entirely clear” -- but then neglects to Respond to the extremely straight-forward issues raised and questions posed in ICP’s previous timely comments, for example:

   --How many of the 17 Dime branches would Fleet close? Fleet’s focus in New York State is clearly on more affluent markets. See, e.g., Wall Street Journal of April 10, 2000, B4, as reported on Bloomberg newswire of April 10 (Fleet “is planning to open 5 to 10 new branches in Manhattan.” Emphasis added). [ICP’s April 24 comment, emphasis added]; and

    ---ICP finds it significant that the April 13 response to the FRS’ April 3 inquiry about “products and services targeted to low and moderate income individuals and geographies” is no more than a re-presentation of the same vague “Community Investment Commitment” that Fleet unfurled while applying to buy BankBoston. No presentation is made of what Fleet has done to date specifically in fulfillment of the “Commitment” it made to the Board (and to the public) last July, nine months ago (the presentation mixes activities from early 1999, etc.). Since this proposed acquisition is in New York (as well as New Jersey), it’s worth noting that while Fleet puts the percentage of the “Commitment” to be directed to New York at “20-30%,” in fact 32% of FleetBoston’s branches are in New York, so that even the high end of the “20-30%” spectrum seems to represent a form of disinvestment from New York. Particularly in this light, it is essential that Fleet be required to enter into the record a report on its performance under this “Commitment” it made to the Board and to the public nine months ago [ICP’s April 28 comment, emphasis added].

    Fleet does not address the ramifications of its proposed controlling investment in North Fork (for purposes of a hostile take over in New York and New Jersey). Fleet does not identify which Dime branches it would buy, much less which it would close. Nor is any meaningful report of performance under the commitment Fleet made to the Board and to the public presented. Fleet concludes its non-responsive response by stating that “North Fork’s depository institution subsidiaries have recently achieved CRA ratings of ‘Outstanding.’”

     To ICP’s knowledge, North Fork Bank’s most recent CRA performance evaluations (by the FDIC and NYSBD) are from 1997, and are not “Outstanding” (in fact, North Fork has been required, not only by the FRB, but also by the FDIC and NYSBD, to report data quarterly, based on deficiencies previously identified). Perhaps, at to North Fork Bank, Fleet is referring to some more recent exam (if this is the case, the exam must only recently have been released). In any event, NFB also controls, as a “depository institution subsidiar[y]” (Fleet’s Response used the plural) a savings bank in Connecticut, the deposits and lending of which are declined precipitously, and which is hardly “Outstanding” for CRA purposes. Therefore ICP contests the above-quoted Fleet statement (which, if incorrect, further reflects Fleet’s lackadaisical and counter-factual approach to CRA, and the ramifications of its current proposal).

     ICP’s 4:00 p.m. submission (and previous comments) directly contest Fleet’s Response’s claimed “strong... continuing commitment to low- and moderate-income customers and the letter and spirit of CRA.”

    For the reasons of record, the comment period must be extended, and, these Applications should not be approved.

Very Truly Yours,

Matthew Lee
Executive Director

cc: Counsel to Fleet
Mr. Robert L. Tortoriello, Esq.

* * *

May 1, 2000

    On April 28, Dime announced that its merger agreement with Hudson United has been terminated (Hudson is set to receive $50-90 million, if Dime does another deal). The same day, the Fed’s comment period on North Fork’s application to buy Dime on a hostile basis was set to expire. ICP submitted a comment letter, summarized below. At day’s end, Fed staff called ICP to state that the comment period on Fleet’s related application was extended to May 5 (unclear if this is only for ICP; Dime itself has also protested Fleet’s application). ICP’s April 28 comment is primarily focused on Fleet, because it is clear that absent Fleet’s financing and support, North Fork is unable and unqualified to acquire Dime.

    On April 28, ICP received from the Board several hundred pages of documents related to the proposal, documents that were responsive to ICP’s March 28 Freedom of Information Act (“FOIA”) request. ICP also received a letter from the Associate Secretary of the Board, denying ICP’s April 24 request for an extension of the comment period on the Application. This letter emphasizes that “interested persons will have had approximately 43 days to prepare and submit comments,” and that “a copy of the applications... was... sent to you on March 29.” The letter misses the point: information material to the proposal was not included in the Application, was subsequently requested by the FRS, and the Applicants made a frivolous request for confidential treatment of the entirety of their response to these questions. Dime’s various letters to the Board (all but one of which ICP has only received today) point out the frivolous nature of the request for confidential treatment. Then, Dime’s counsel’s April 19 letter contests the withholding. Dime’s April 20 letter states that “[y]esterday afternoon, the Board brought FleetBoston’s Confidential Attachment to the light of day.” Why was this improperly withheld document, provided to Dime on April 19, only provided to ICP on April 28, the very day the comment period expires? ICP reiterates: the comment period must be extended.

While it is impossible to review and provided final comment on several hundred pages of documents in the mere hours between the FRB’s provision of the documents, and the expiration of the comment period, ICP finds it significant that the April 13 response to the FRS’ April 3 inquiry about “products and services targeted to low and moderate income individuals and geographies” is no more than a re-presentation of the same vague “Community Investment Commitment” that Fleet unfurled while applying to buy BankBoston. No presentation is made of what Fleet has done to date specifically in fulfillment of the “Commitment” it made to the Board (and to the public) last July, nine months ago (the presentation mixes activities from early 1999, etc.). Since this proposed acquisition is in New York (as well as New Jersey), it’s worth noting that while Fleet puts the percentage of the “Commitment” to be directed to New York at “20-30%,” in fact 32% of FleetBoston’s branches are in New York, so that even the high end of the “20-30%” spectrum seems to represent a form of disinvestment from New York. Particularly in this light, it is essential that Fleet be required to enter into the record a report on its performance under this “Commitment” it made to the Board and to the public nine months ago.

ICP is also struck by the incongruity highlighted in Dime’s submissions between North Fork’s CEO statements to investment analysts, and the response made to the Board, that there was no coordination between Fleet and North Fork. This is a most serious matter, and militates for a suspension, and perhaps dismissal, of the Applications, as well as other appropriate actions.

The comment period cannot legitimately close, on this record (including late provision of documents due to the Applicants frivolous requests for confidential treatment, followed by different treatment by the FRB of the for-profit and not-for-profit Protestants, in terms of timely provision of documents and otherwise...

    ICP will be submitting another comment on Fleet's application on May 5, 2000; this page will continue to be updated as this tawdry saga plays out...

Update of April 24, 2000

     In Delaware’s Court of Chancery on April 17, Dime’s lawyers claimed that Hudson’s waiving of the “don’t-talk-to-other-bidders” provision in the (now virtually moot) Dime-Hudson doesn’t mean Dime actually has to, or will, talk with North Fork. Reuters characterized it as the “smoked-but-didn’t-inhale” defense (4/17); it’s important to note, however, that Dime isn’t the first company to resist even talking to North Fork, given NFB’s focus on cost-cutting (and, of import to communities, on reducing mortgage lending, and small-business lending, in low income neighborhoods).

    ICP on April 24 filed comments with the Fed on both North Fork’s and Fleet’s applications, for their collaborative hostile bid for Dime. The North Fork comment is below.  For or with more information, you can contact us.

                                                                                April 24, 2000

Board of Governors of the Federal Reserve System
Attn: Secretary Jennifer J. Johnson
20th Street and Constitution Avenue, N.W.
Washington, D.C. 20551

RE: TIMELY COMMENT OPPOSING THE APPLICATION OF NORTH FORK BANCORPORATION FOR PERMISSION TO ACQUIRE DIME BANCORP, TO SELL DIME’S NAMC, AND TO SELL DIME BRANCHES TO FLEET

Dear Secretary Johnson and others at FRB:

     On behalf of Inner City Press/Community on the Move and its members and affiliates, including the Inner City Public Interest Law Center (collectively hereinbelow, “ICP”), this is a timely comment opposing the proposal of North Fork Bancorporation (“NFB”) for permission to acquire Dime Bancorp (“Dime”), to sell-off Dime’s mortgage lending arm, North American Mortgage Corp. (“NAMC”), to sell Dime branches to Fleet Boston Corporation (“Fleet”), and to impermissible coordinate its activities with Fleet.

     This is an unprecedented joint hostile take-over attempt, in which a large bank holding company (“BHC”) headquartered outside of the affected community, Fleet, seeks to fund and control a smaller BHC in the affected community, with a spotty Community Reinvestment Act (“CRA”) record and a history of seeking “greenmail” from the targets of its investments, to acquire a savings and loan holding company (“S&LHC”) and thereafter “bust it up,” selling its mortgage lending arm, and selling 17 branches back to the funder / controller, Fleet. One is supposed to pretend that thereafter, North Fork and Fleet would actually compete (despite the clear conflict of interest for Fleet, whose investment in North Fork would produce a return that would be affected by the vigor [or lack thereof]of Fleet’s competition with North Fork).

    Even beyond the branch closing and CRA issues sketched below, approval of this proposal would set a negative precedent for the banking industry, and for banking services to consumers of moderate means. Hostile acquisitions in banking, of the kind that North Fork and Fleet here propose, are rare in banking, and there is a reason: not that the Board hasn’t historically approved virtually any applications that comes before it, but that such combinations result in chaos and a lack of service for customers (see, e.g., Wells Fargo-First Interstate in California, 1996 through 1998, when Wells was so debilitated it had to in turn sell itself off).

At least in the Wells-First Interstate, Wells could theoretically afford to make the purchase. Here, North Fork is making a hostile bid / tender offer for an institution much larger than its own size, and can only make the bid with substantial (and controlling) financial support from another institution, complete with side deals to sell Dime branches back to Fleet, an opening of its books on an ongoing basis to Fleet (a purported competitor), etc.. The proposal portends badly for the convenience and needs of the communities to be served.

    North Fork has a spotty CRA record, with the NYSBD, FDIC and FRB repeatedly stating that they expect NFB to improve its record. See, e.g., North Fork Bancorporation, Inc., 84 Federal Reserve Bulletin 290 (1998) ("New York Bancorp Order"). As the Board has noted, “[i]n the New York Bancorp Order, the Board stated that it expected North Fork to address the lending areas criticized by the NYSBD in the State Examination, and that the Board would consider North Fork's progress in this regard when considering future applications by North Fork.” The Board has also acknowledged that “[i]n the Nassau-Suffolk Metropolitan Statistical Area, however, North Fork Bank's denial disparity ratios in 1998 were 2.27:1 for African Americans and 2.92:1 for Hispanics, compared with denial disparity ratios of 1.82:1 and 1.48:1, respectively, for lenders in the aggregate.” Perhaps more troubling (and rebutting any claim that North Fork’s higher than aggregate denial rate disparities are attributable to greater than aggregate outreach, the Board found that “North Fork Bank received a significantly smaller percentage of HMDA-related loan applications from minority and LMI individuals than did lenders in the aggregate, and that the bank made a correspondingly smaller percentage of its HMDA-related loans to minority and LMI borrowers. For example, in 1998, North Fork Bank made 3.3 percent of its HMDA-related loans to African Americans and 2.6 percent of such loans to Hispanics, compared with rates of 10 percent and 5.8 percent, respectively, for lenders in the aggregate.” See 86 Federal Reserve Bulletin 226 et seq.. ICP urges the FRB to request and analysis North Fork’s 1999 HMDA and CRA data, and notes that in 1998, of its $491 million of deposits collected in Bronx County (the lowest income, most predominantly minority county in New York State), North Fork lent less then $4 million in 1998 to Bronx businesses with sales of or below $1 million (for purposes of this analysis, “small businesses”). North Fork has a higher market share of deposits from the Bronx than it has of loans to small businesses in the Bronx.

  Compare this to North Fork’s performance in more affluent, less predominantly minority Nassau County. While North Fork’s Bronx deposits are nearly one-half of its Nassau deposits ($954 million in North Fork deposits in Nassau, versus $491 million in the Bronx), North Fork lends nearly ten times as much to small businesses in Nassau County: $33,562 in Nassau in 1998, versus only $3,748 in the Bronx. A possible defense -- that Nassau has more small businesses than the Bronx -- can be dispensed with by market-share comparison. North Fork has only 2.9% of Nassau deposits, but made 11% of loans (by dollar volume) to small businesses in Nassau County in 1998. In Suffolk County, North Fork has 10.4% of deposits, but made 18.4% of loans (by dollar volume) to small businesses in 1998. In the more predominantly minority Bronx County, North Fork has a lower market share of loans to small businesses than it does of deposits.

     As the Board knows, Fleet in 1999 conducted a large acquisition, of BankBoston. Community groups throughout the region commented to the Board that Fleet’s lending to low and moderate income communities had and has been decreasing for years. The Board acknowledged the decreases, and acknowledged that Fleet’s lending record contains disparities by race and income. See 85 Federal Reserve Bulletin 747, et seq.. The Board accepted Fleet’s arguments that Sovereign could afford to buy the divestiture branches, and that Sovereign would meaningfully compete with FleetBoston in the future. Well, the Office of Thrift Supervision, Sovereign’s regulator, found that Sovereign could not afford to buy the branches, in the way and on the time schedule the Board has assumed. That divestiture was been slowed down; Sovereign has suffered various snafus in customer service (see, e.g., The Providence Journal-Bulletin, March 28, 2000, Pg. 1A, “Glitches hinder Sovereign conversion”), Fleet outrageously began turning certain customers in its service area away (see, e.g., The Providence Journal-Bulletin, March 26, 2000, Pg. 1A, “Fleet won't accept business from Sovereign bank customers;” the policy may have been rescinded, but remains significant), etc.. Most recently, Fleet has announced the closure of at least 26 branches. See, e.g., The Providence Journal-Bulletin, April 11, 2000, Pg. 4E, “FleetBoston closing branches in Mass. and N.H.”

A combination of North Fork with Fleet (whose lending to low and moderate income communities has been in decline, and which just announced, inter alia, 26 branch closings), to acquire Dime would not be in the public interest and would ill-serve the convenience and needs of the community. ICP urges the Board to dismiss North Fork’s (and Fleet’s) Applications; if the Board does not, ICP notes that the record is not complete. How many of the Dime branches would North Fork close, and where? How many of the 17 Dime branches that North Fork would sell to Fleet would Fleet close? Fleet’s focus in New York State is clearly on more affluent markets. See, e.g., Wall Street Journal of April 10, 2000, B4, as reported on Bloomberg newswire of April 10 (Fleet “is planning to open 5 to 10 new branches in Manhattan.” Emphasis added). Why should anyone accept Fleet’s argument that it would not control the institution (North Fork) in which it would have an eight percent stake, with rights to review the books more frequently than other shareholders, as by far the largest shareholder in one of its purported competitors? None of these questions are answered in North Fork’s (or Fleet’s) applications. The record is incomplete; the Application should be dismissed, or the comment period must be extended.

Very Truly Yours,

Matthew Lee
Executive Director

* * *

Update of April 17, 2000

    The three stooges routine surrounding Dime Savings Bank continues. Dime claimed it couldn’t talk to hostile bidder North Fork, due to a commitment it made in its now virtually moot merger agreement with Hudson United. Hudson United then said Dime was free to talk, as long as Hudson remains assured of getting 20% of Dime’s shares, or $50 million. Meanwhile North Fork’s funder (and, apparently, puppet-master), Fleet, has been asked by the Federal Reserve Board why its proposed $500 million stake in North Fork, and arrangement to buy 17 of Dime’s branches from North Fork, if North Fork acquires Dime, wouldn’t constitute “controlling” North Fork. Local concerns have arisen the Fleet would close some of these 17 branches, particularly those that even arguably “overlapped” with Fleet’s outer borough branches. Showing its focus, Fleet, even while its North Fork application pends, says it plans to open five to ten NYC branches: all in Manhattan.

    Even though the Dime - Hudson deal is for all intents and purposes dead, the Fed went ahead and considered it on April 12. While approving, the Fed found that

“...the HMDA data reflect disparities in the rate of loan applications, originations, and denials by racial group and income level. For instance, Dime Savings’ percentage of loan originations in predominantly minority and LMI tracts lagged the aggregate in all its assessment areas by almost 50 percent, and Hudson’s percentage of loan originations to African-Americans lagged the aggregate in all but one of its assessment areas in New Jersey and New York State. In Connecticut, Hudson received too few applications in 1998 from African-Americans, Hispanics, and applicants in predominantly minority tracts to be statistically relevant.”

    So wait a minute: Dime “lag[s] the aggregate in all of its assessment areas,” in terms of lending to people of color and in low and moderate income communities -- but still passes CRA tests? What does CRA mean, then? The Fed’s statement that Hudson passes because it “receive[s so] few applications... from African-Americans, Hispanics and applicants in predominantly minority tracts [that it is not] statistically relevant” is a new low in Fed analysis. The message to banks seems to be, “Don’t market to minorities at all, that way the Fed won’t even analyze your performance.” The FDIC is scarcely better, writing on April 13 (the day after the Fed’s order) that “Hudson United Bank and Dime Savings Bank of New York have demonstrated overall satisfactory lending records and CRA performances. In addition, the bank has voluntarily agreed to report certain lending activities to the FDIC on a quarterly basis...”. Ah, voluntary data reporting. We’ll be there with Freedom of Information Act requests. In any event, the Dime - Hudson deal is dead; scrutiny turns to North Fork and Fleet. Developing..

* * *

April 2, 2000

      On March 29, Dime filed suit against Citigroup unit Salomon Smith Barney, claiming that Solly cannot advise North Fork on its take over offer for Dime, since Solly previously advised Dime and had access to confidential information. There may be more litigation to come -- for example, again Credit Suisse First Boston, for the now-clearly-irresponsible “fairness opinion” it gave Dime in connection with Hudson’s $12 a share offer... A follow-up to last week’s report of Dime soliciting community group support: on March 28, Dime bought full-page ads in the New York newspaper, for “An Open Letter In Support of Dime,” with 74 signatures, ranging from Queens Assemblyman Jeffrion Aubry through various churches to the director of the New York Grand Opera. The letter was clearly intended (by Dime) to support its now-dying deal with Hudson, which has a weak CRA record. Dime has been asked if the vague $2.5 billion CRA “pledge” it made in connection with the Hudson deal still stands, even as that deal dies; the indication is “yes.” Developing...

March 27, 2000

    The Dime Savings saga continued to unfold. On March 20, Vice Chancellor Stephen Lamb of the Delaware Court of Chancery reminded North Fork’s lawyers that they’d already claimed to have enough votes to defeat the Dime-Hudson merger. On March 21, Dime moved its shareholders’ meeting back again, this time from March 24 to May 17. North Fork responded on March 24, extending its tender offer for Dime’s shares until May 31. It would seem that Dime is looking for a white knight. More obscurely (but also more concretely), Inner City Press has learned that Dime has been requesting open-ended letters of support from community organizations. How Dime would use such letters in this fight -- is unclear.

March 20, 2000

    Dime Savings continues to press its shareholders to vote for its board-favored merger with Hudson United (worth $12 a share), over North Fork’s hostile bid (worth $17 a share). Dime’s shareholder meeting was originally scheduled for March 15 at Chelsea Piers in Manhattan; after North Fork’s hostile bid, Dime rescheduled it (though without providing full notice, see below) for March 24.

     On the 15th, many Dime shareholders showed up at Chelsea Piers, and looked up, befuddled. The rescheduling notice was only given on the Internet, despite Dime’s many mailings in the interim urging shareholders to continue to support its board’s proposal. The new scuttlebutt is that Richard Parson, who ran Dime until he left for Time Warner, will return to Dime to save the day. We’ll see... You have to wonder about the “fairness opinion” that Dime got, and whether it, like the one Zions (see 3/20 Bank Beat) got from Goldman Sachs, will or should be pulled... Developing....

* * *

March 13, 2000

     The New York - New Jersey bank M&A market exploded in acrimony this week, as North Fork Bank announced a hostile bid for Dime Savings, which had been trying for a “merger of equals” with Hudson United Bank. North Fork’s $1.88 billion was supported by a commitment from FleetBoston to inject $250 million in capital into North Fork. Dime’s board of directors quickly rejected North Fork’s bid, referring to it as a “1980s-style hostile bust-up attempt.” North Fork has filed suit against Dime and its board, for having committed to not talk to other suitors, and to not terminate the Hudson merger agreement until June 30, even if Dime’s shareholders vote against the Hudson deal.

    Dime’s shareholder meeting had been scheduled for March 15; on March 9, however, Dime filed an 8-K with the SEC, moving the meeting date back to March 24. On March 10, Dime filed suit against North Fork and Fleet, claiming that their collusion is only intended to block the formation of a stronger competitor. The suit also claims that a Dime-Fleet-North Fork combination would violate antitrust laws in Suffolk County, NY and New Haven, CT, and that North Fork’s and Fleet’s arrangement is improper because it precludes Fleet from bidding on Dime. In other words, an everything-but-the-kitchen-sink lawsuit...

    Community groups in New York and New Jersey have been opposing the Dime - Hudson proposal (see below) -- it is important to note, however, that even the Federal Reserve Board has expressed concerns about the exclusionary patterns of North Fork’s lending. The Fed, in its Jan. 10, 2000 Order on North Fork’s application to acquire JSB, stated that “[t]he record... reflects that North Fork Bank received a significantly smaller percentage of HMDA-related loan applications from minority and LMI individuals than did lenders in the aggregate, and that the bank made a correspondingly smaller percentage of its HMDA-related loans to minority and LMI borrowers. For example, in 1998, North Fork Bank made 3.3 percent of its HMDA-related loans to African Americans and 2.6 percent of such loans to Hispanics, compared with rates of 10 percent and 5.8 percent, respectively, for lenders in the aggregate.” By the Fed’s own numbers, North Fork is 66% below the aggregate in lending to African Americans.

    The outcome here will be determined by the banks’ shareholders, in a process that will apparently be set by the courts. It’s worth noting that among the top ten institutional shareholders in both North Fork and Dime is yet another bank, J.P. Morgan & Co.; Mellon Bank is on the top ten list of both Dime and Hudson (Citigroup is also on the Hudson owners’ list). How’s THAT for antitrust?

     Inner City Press has for some time surmised that North Fork is trying to build up a big enough franchise in and around New York City to make itself an attractive target for a larger bank, like First Union, BankAmerica -- or Fleet. This is simply one round in a much longer fight: Dime/Hudson, if it forms, would soon be putting itself up for sale, as would North Fork/Dime. Customers and consumers come last in all this. From a community perspective, however, North Fork should not be rewarded for its long-time evasion of the CRA and fair lending laws. Developing...

* * *

       On January 10, 2000, Inner City Press / Community on the Move filed a 17-page comment with the Federal Reserve Board and the Federal Deposit Insurance Corporation, opposing the merger of Hudson United Bancorp and Dime Bancorp, based on Hudson’s and Dime’s / North American Mortgage Co.’s weak fair lending and Community Reinvestment Act performance. The comment is reproduced below; updates will also be posted on this page, stay tuned. Until then, for or with more information, you can contact us.

 * * *

Update of February 22, 2000

    Earlier this month, Federal Reserve Board staff in Washington questioned Dime Savings Bank and Hudson United Bank about their subprime lending practices. The Fed’s Feb. 4 letter to the banks, responded to Feb. 15, asked: “If either Dime or Hudson have a referral program for loan applicants who do not meet the standards for the credit products offered by either institution, please describe the referral program, including the circumstances under which referrals are made and the entities to which such loan applicants are referred. In addition, provide a copy of the fair lending policies governing the referral process.”

    Dime’s response reveals that its North American Mortgage Company (“NAMC”) “currently has a program to refer declined mortgage loan applicants to its own, in-house subprime lending unit.... Dime FSB’s Consumer Lending Division began a pilot program in October, 1999 to refer declined home equity loan applications to NAMC for underwriting, as agent for Dime FSB, as subprime loans. This pilot program is similar to the program described above, with the exception that the application form for a Dime FSB home equity loan contains a box with the applicant can check to have the application referred to an alternative lender in the event that the application is declined.” Dime then withholds its fair lending policy.

   Hudson United’s response is shorter and (even) more mysterious: “With the customer’s consent, Hudson Bank refers loan applicants who do not meet standards for residential mortgage products to either Option One or Residential Funding Corp., RFC. Applications from potential borrowers who do not qualify for standards for residential mortgages are advised of the availability of the subprime programs. If the applicant approves, the loan application is sent to these investors for consideration.” Ignoring Hudson’s grammar (“qualify[ing] for standards,” “Applications... are advised”), the response does not even claim that the referred (or would that be, “steered”?) customers receive the required notices of adverse action. Also mysterious: why are Option One and RFC described as “investors”?

    The next question is whether the Fed (and FDIC) will accept this garbled and ambiguous answer, on the important question of subprime lending. This is an issue that the Fed continues to ignore, as even the GAO’s November 1999 report documented. Last week, FDIC Chairman Donna Tanoue announced that the FDIC will “review our CRA examination practices to ensure that a bank’s purchase of loans containing predatory terms from low- and moderate-income areas does not serve to improve the bank’s CRA rating.”  Will the FDIC accept Hudson's evasive response of subprime lending?   Will the Fed?  Developing...

Update of Jan. 31, 2000

    On Jan. 21, Dime’s lawyers at Sullivan & Cromwell submitted a purported response to the Federal Reserve Board. ICP’s reply is set out below...

January 31, 1999

Board of Governors of the Federal Reserve System
Attn: Secretary Jennifer J. Johnson
20th Street and Constitution Avenue, N.W.
Washington, D.C. 20551

RE: SUPPLEMENTAL COMMENT / REPLY TO DIME’S JAN. 21, 2000 SUBMISSION, IN FURTHER OPPOSITION TO THE MERGER APPLICATIONS AND NOTICES OF HUDSON UNITED AND ITS SUBSIDIARIES AND OF DIME BANCORP

Dear Secretary Johnson and others at FRB:

On behalf of Inner City Press/Community on the Move and its members and affiliates, including the Inner City Public Interest Law Center (collectively hereinbelow, “ICP”), this is a supplemental comment opposing the merger applications and notices of Hudson United and its subsidiaries (collectively, “Hudson”) and Dime Bancorp and its subsidiaries, including North American Mortgage Co. (“NAMC;” collectively, “Dime”), including a reply to Dime’s and Hudson’s submission dated January 21, 2000.

After a lengthy preamble, Dime’s Response (the “Resp.”) claims that “the lending pattern of NAMC in Dime FSB’s assessment area is not representative of the lending efforts of Dime FSB... Lending by NAMC in Dime FSB’s assessment area is minimal.” Resp. at 4. However, Home Mortgage Disclosure Act (“HMDA”) data reflects, for example, that in the New York City Metropolitan Statistical Area (“MSA”) in 1998, NAMC originated fully 527 refinance loans (and 167 conventional home purchase loans), with the disparities noted in ICP’s initial comment. (These numbers are only for loans to whites, African Americans and Hispanics). This volume -- over 690 originated loans for just these two categories -- is hardly “minimal.” Dime’s Resp. also states that “[l]oans made by NAMC in the assessment area arise most often by direct telephone application to NAMC or by applications submitted to NAMC offices located outside the assessment area.” Id. It is doubtful that NAMC generated, for example, 527 refinance loans in the NYC MSA based on applications submitted “outside the assessment area.” That loans result from “direct telephone application” does not make them any less relevant -- in fact, the Board should compare Dime’s claim (and the number of NAMC’s loans that are race-specified) to most telephone lenders’ claims that they cannot record and report the race of telephone applicant. NAMC’s lending, and the disparities therein, are also “relevan[t]” (contra Resp. at 4) because it appears clear that Dime would count NAMC’s loans toward its “CRA Pledge,” which was apparently filed with the Board, and made part of the Application, on December 16, 1999. In fact, in ICP staff’s discussion of this proposal with Dime’s CRA Officer, NAMC’s “significant” volume of lending was explicitly raised by Dime’s CRA Officer. And so it is disingenuous for Dime’s written response to the Board to claim that NAMC’s lending is irrelevant, minimal, and the like.

Next, Dime attempts to limit the evaluation of Dime FSB and NAMC to only other depository institutions. Resp. at 4. But (1) NAMC is a nonbank mortgage company, and (2) the FRB itself, in its recent North Fork - Jamaica Savings Bank Order, explicitly compared North Fork’s lending to “the aggregate” -- all reporting lenders in the NYC MSA.

Dime then attempts to “call into question the credibility of ICP’s submission” by presenting an alternative view of the breakdown between Dime and Hudson executives in the “DimeBank’s Senior Executive Officers” table, FDIC App. at 7. ICP stands by its initial comment, which noted that as presented by the banks themselves, six of the top seven executives are currently with Hudson, including the proposed President and COO (#2), Chief Credit and Risk Management Officer (#3), Corporate Secretary (#5), Commercial Banking / Lending General Manager (#6), and Chief Marketing Officer (#7).

This is why the FRB must closely consider not only Dime’s and NAMC’s, but also Hudson’s, fairness of lending. Dime’s argument (Resp. at 5) that ICP’s comments on Hudson “in the present case should not be considered,” citing Regulation Y, is laughable. Attached hereto is a January 13, 2000 letter to ICP from the FDIC, stating that the FDIC “reviewed [ICP’s Jan. 10, 2000] correspondence....and consider it to have sufficient merit to constitute a protest for purpose of this application.” Dime argues that because the FDIC has previously considered comments from ICP, the FRB should not. But the FDIC itself has determined that ICP’s Jan. 10, 2000 comments “have sufficient merit to constitute a protest for purposes of this application” -- note also that in response to ICP’s comment on a previous Hudson application, the FDIC required Hudson to commit to a CRA Plan in New York and Connecticut, and to report data quarterly to the FDIC. Significantly, ICP’s Jan. 10, 2000 comment to the FRB raises issues about Hudson’s “post-commitment” performance in both Connecticut and New York, and thereby “calls into question the credibility” (Dime’s phrase, at 5) of Hudson’s and Dime’s purported new CRA commitment.

Dime’s and Hudson’s Jan. 21, 2000 purported Response to the Board limits its discussion of Hudson’s record to an attachment: Hudson’s August 23, 1999 letter to the FDIC (hereinbelow, the “Hudson Resp.”). ICP presents the following reply that that perfunctory and outdated “Response:”

The Hudson Resp. inter alia neglects to compare Hudson United’s 1998 lending record to previous years. At 2 of the Hudson Resp., Hudson United states that “Minority applications represented approximately... 3% of the total received in Lafayette American Bank [in 1998].” Hudson previously claimed to the FDIC that LAB’s 1997 lending record was an improvement over 1996, because in 1997 “6.5% of [LAB’s] applications were received from minority applicants.” Previous Hudson Resp. to FDIC, at 2. As set forth below, even 6.5% is far below market averages -- but in 1998, LAB’s percentage of minority applications declined to only THREE PERCENT. Industry-wide in 1996, fully 11.68% of the industry’s HMDA-reported originations in the Bridgeport MSA (LAB’s headquarters) were to minorities (including, as HUBCO does, Asians and “other”). In the New Haven MSA in 1996, fully 11.49% of the industry’s originations were to minorities. LAB’s 1997 record, of only 6.5% of applications from minorities, was a red flag that a pattern and practice of discrimination may exist at LAB and Hudson United. These banks’ decrease in 1998 to only THREE PERCENT is a second, more serious red flag, and militates for denial of these Applications. LAB’s actual number of HMDA-reportable loans in 1998 by racial group is striking: 338 loans to whites, and only THREE loans to African Americans, and only SEVEN loans to African Americans (compare to industry data, supra).

In previous discussions with Hudson United, ICP was told that Hudson United loan officers offer not only Hudson United’s loan products, but also subprime (high interest rate) loan products offered by some other, unnamed, lender, which closes these loans in its own name. The FRB should inquire into this, including but not limited into whether minority loan seekers (very few of whom Hudson United lends to, see supra) are disproportionately offered subprime loans by Hudson United, loans that Hudson United does not report in its own HMDA data.

Hudson United’s own tables reflect other racial disparities. The tables (Hudson Resp. at 2) show, for example, that Hudson United Bank (in New Jersey) in 1998 denied the applications of Hispanics 2.45 times more frequently than those of whites -- significantly higher than the industry aggregate’s denial rate disparity. Hudson United’s denial rate disparity for African Americans was also over 2-to-1. Bank of the Hudson denied the applications of Hispanics 2.15 times more frequently than the applications of whites -- significantly higher than the industry aggregate’s denial rate disparity.

The paragraph on pages 2-3 of the Hudson Resp. is decidedly unclear -- “CRA reportable loans” generally refers to small business (and/or small farm) lending data, but Hudson United apparently uses it to mean mortgage and small business. Even accepting this definition, Hudson United’s point is unclear. The bank tries to minimize the significance of its home mortgage lending disparities by claiming that mortgage lending is not a major part of its business. But mortgages constituted 16% of its “CRA reportable loans” (see supra) in 1998, the year for which ICP’s protest analyzed data. That mortgages only represented 7% of Hudson United’s loans in 1999 hardly militates for approval of the Applications -- in fact, it reflects that Hudson United does not meet community credit needs in this important category of lending, and decreases mortgage lending by the banks that it buys.

The Hudson Resp. concludes by referring to “a comprehensive CRA Program” and a “CRA Plan.” Hudson Resp. at 4. As noted above, and in ICP’s August 5 analysis of Hudson United’s HMDA-reported (and disparate) 1998 lending (entered into the record by Dime), Hudson United’s record of actual performance is disparate, increasingly so. No “Plan” or purported “Program” rebuts this. ICP has, however, now reviewed the “Community Reinvestment Plans” that Hudson United appended to its Applications. First, note that while these have the appearance of CRA Strategic Plans, to ICP’s knowledge, Hudson United never followed the CRA Regulation and published these “CRA Plans” for public comment and input. The Plans are rag-tag, and most provisions are entirely procedural, following the categories of the old, since superseded CRA regulation.

The size of the CRA Plans are laughable, given the volume of deposits that Hudson United collects in these communities. For all of Connecticut, Hudson United’s “goal is to provide $35 million over the next three years” -- only seven million dollars of which is for mortgages, only five million of which is for home improvement loans.

Hudson United’s New York State “CRA Plan” is even more laughable -- it commits no more than $7 million to Residential Mortgages, and there does not appear to be any small business lending commitment (contrary to Hudson United’s Resp.’s presentation of the centrality of small business lending to its portfolio). Note that in 1998 in the Newburgh Metropolitan Statistical Area (“MSA”) for conventional home purchase loans, Hudson United denied the applications of African Americans 4.67 times more frequently than applications from whites, and denied the applications of Latinos 2.74 times more frequently than applications from whites. In the Dutchess County MSA in 1998 for conventional home purchase loans, Hudson United denied the applications of Latinos 4.08 times more frequently than applications from whites. These denial rate disparities are much higher than the industry aggregate in this MSA.

The FDIC appears to have tried to resolve previous complaints about (and deficiencies in) Hudson United’s record by encouraging the bank to mechanically extend its New Jersey “CRA Plan” (which, again, was never put out for public comment) to Connecticut and New York. (Note also that Hudson United has not even submitted a CRA Plan for the Philadelphia market, which it seeks to enter). More substantively, the numbers adopted (in New York and Connecticut) are laughably low (when compared to the deposits Hudson United collects in these states), and, Hudson United’s lending patterns have grown even more racially disparate in 1998 (as simply one example, see supra: LAB in 1997 got 6.5% of its applications from minorities; in 1998, the figure fell to only 3.0%, even after LAB made its Connecticut CRA Plan).

Dime’s and Hudson’s new, vague CRA commitment would not address these issues. For all the reasons set forth above, and in ICP’s initial comment, on the current record, these Application should be denied.

If you have any questions, please immediately telephone the undersigned, at (718) 716-3540.

Very Truly Yours,

Matthew Lee
Executive Director

cc: Mr. Hugh C. Conroy, Esq.
Sullivan & Cromwell

      Messrs. Stum and Pazerackas, Regional Directors, FDIC   (ICP has not       received any copy of any Hudson / Dime response to the FDIC, and will reply upon receipt)

* * *

Update of Jan. 22, 2000

     While the FDIC on Jan. 13 gave Hudson United and Dime ten days to respond to ICP’s Jan. 10 protest, and stated that “a copy of the response should be forwarded to the protestant,” as of Jan. 22, ICP had not received a copy of any response. In the interim, ICP sent the following letter to the FDIC, in Washington and New York:

Federal Deposit Insurance Corporation
Attn: FOIA Officer
Washington, D.C. 20439

RE: Request under the Freedom of Information Act for (1) documents related to the FDIC’s approval of the applications of Hudson United Bank to acquire Jefferson Bank, Jefferson Bank of New Jersey, and The Farmer’s and Merchant’s National Bank of Bridgeton, which acquisitions closed Nov. 30 and Dec. 1, 1999; and (2) all records reflecting the FDIC”s discussions with Hudson United and/or Dime regarding branch closings and their proposed merger

Dear FDIC FOIA officer:

On behalf of Inner City Press/Community on the Move and its members and affiliates, including the Inner City Public Interest Law Center (collectively, "ICP”), this is a request, under the Freedom of Information Act (“FOIA;” 5 U.S.C. 552), for (1) documents related to the FDIC’s approval of the Applications of Hudson United Bank to acquire Jefferson Bank, Jefferson Bank of New Jersey, and The Farmer’s and Merchant’s National Bank of Bridgeton, which acquisitions closed Nov. 30 and Dec. 1, 1999; and (2) all records reflecting the FDIC”s discussions with Hudson United and/or Dime Savings Bank regarding branch closings and their proposed merger.

As to (1), it is my understanding that when the FDIC processes an application subject to a protest that the FDIC has deemed to be substantial, DCCA staff conduct analyses and make recommendations. ICP filed a protested, deemed by the FDIC to be substantive, to the above-referenced Applications. ICP is particularly requesting all documents in the FDIC’s possession that relate to the Community Reinvestment Act (“CRA”) and fair lending issues that the FDIC considered in connection with the Applications, including all analyses and recommendations by the FDIC”s Division of Compliance and Consumer Affairs (“DCCA”), whether at the FDIC’s New York office, or in Washington, at least for all portions of these analyses and/or recommendations that do not fall directly within a FOIA exemption (even as to those, we request discretionary release, to increase the public’s understanding of the operations of the government, in this case of the FDIC).

As to (2), ICP submitted a previous FOIA request, at the beginning of the year, for the Hudson/Dime application, and for all information regarding possible branch closings. By letter dated January 10, FDIC Regional Director Daryl Stum wrote to ICP that “[t]he information on potential branch closings or consolidations is included in the public file, which was sent to you on January 4, 2000.” I telephoned the FDIC’s New York office with a question; a Mr. Eagan (or Egan) returned the call, and stated inter alia that the FDIC has had communications with Hudson and/or Dime regarding possible branch closures, eliciting more detailed information than in included in the Hudson / Dime application (which, for example, does not even list street addresses of possible closings). Among other things, I was told that Hudson and/or Dime had made representations to the FDIC regarding whether or not any planned closings would be in low- or moderate-income census tracts, etc..

I noted (and note) that in previous cases (e.g. North Fork Bank’s most recent applications, and even in the applications referenced in (1), supra), the FDIC has asked applicants to submit letters specifying possible branch closings, by street address, and distance to nearest branch. For some reason, that has not been done in this case, other than in communications no documents concerning which have yet been provided to ICP. Hence, the instant FOIA request.

ICP has submitted an initial comment on Hudson’s application to acquire Dime, but wishes the review the documents requested herein as quickly as possible.

If you have any questions, please immediately telephone the undersigned at (718) 716-3540. Thank you for your attention.

Very Truly Yours,

Matthew Lee, Esq.
Executive Director

cc: Messrs. Stum and Pazerackas, Regional Directors, FDIC - New York

* * *

Update of January 17, 1999 (Martin Luther King Day)

     On January 11, ICP received from the FDIC a letter declining to extend the comment period on the Dime - Hudson United merger application. ICP had requested from the FDIC a listing of the branches that would be closed if the merger were approved -- the type of list that the FDIC has requested and received from Hudson United, and North Fork Bank, in previous mergers. The FDIC’s January 11 letter states that “[t]he information on potential branch closings or consolidations is included in the public file, which was sent to you on January 4, 2000.” But the only reference to branch closings in this “public file” is the cursory statement that “[p]otential branch overlaps within concentrated geographic areas, generally one-half mile apart or less, have been identified in six New Jersey communities and one community in Rockland County, New York.” ICP staff telephoned the FDIC, to confirm that this was the “information on potential branch closings” that the FDIC’s letter referred to. Yes, ICP was informed. No explanation was offered as to why other applicant have been required to file lists including the street addresses of branches. The bigger the proposed merger, the less review, apparently....

    The FDIC wrote ICP a second letter, on January 13, stating that “we reviewed your correspondence... and consider it to have sufficient merit to constitute a protest for purposes of this application.” The FDIC also sent a letter to Hudson’s CEO, Ken Neilson, stating that “the issues raised regarding the bank’s lending activities require further analysis... You may respond to the protest until January 24, 2000.” Updates forthcoming... Until then, for or with more information, you can contact us.

    See also, “Dime-Hudson United Merger Deal Protested,” by Katharine Fraser, American Banker, January 12, 2000, Pg. 3

“Group Opposes Hudson United Deal,” by Louis Lavelle, Bergen Record (Hackensack, NJ), January 12, 2000, Pg. B1

“Consumer Advocacy Group Opposes Dime - Hudson,” Bureau of National Affairs, BNA Banking Daily, January 11, 2000

* * *

PETITION TO DENY AND HEARING REQUEST BY INNER CITY PRESS / COMMUNITY ON THE MOVE AND THE INNER CITY PUBLIC INTEREST LAW CENTER IN OPPOSITION TO THE MERGER APPLICATIONS AND NOTICES OF HUDSON UNITED AND ITS SUBSIDIARIES AND OF DIME BANCORP

JANUARY 10, 2000

I. PRELIMINARY STATEMENT

On behalf of Inner City Press/Community on the Move and its members and affiliates (collectively, “ICP”) this is a timely comment opposing the merger applications and notices of Hudson United and its subsidiaries (collectively, “Hudson”) and Dime Bancorp and its subsidiaries, including North American Mortgage Co. (“NAM;” collectively, “Dime”).

As set forth below, Hudson and, and NAM / Dime, have troubling fair lending and Community Reinvestment Act (“CRA”) records, militating for denial of this merger proposal. In New York State, in the Newburgh Metropolitan Statistical Area (“MSA”) in 1998, Hudson’s bank denied the conventional home purchase mortgage applications of African Americans 4.67 times more frequently than those of whites. Hudson’s bank denied Latinos’ applications 2.74 times more frequently than whites in the Newburgh MSA, and 4.08 times more frequently in the Dutchess County MSA.

In the Philadelphia MSA (where Hudson made more mortgages loans in 1998 than in any other MSA), Hudson in 1998 made 178 home purchase loans to whites, and only three such loans to African Americans, and two such loans to Latinos. The aggregate of lenders in the Philadelphia MSA in 1998 made 7.0% of their conventional home purchase loans to African Americans, and 2.2% to Latinos. For Hudson, the percentages were 1.6% of such loans to African Americans, and 1.1% to Latinos. Hudson excludes African Americans and Latinos from its lending; these Application should be denied.

While in this holding company application, Dime is the Applicant, ICP notes, inter alia, that fully six of the top seven positions at the proposed DimeBank would be filled by current executives of Hudson (see FDIC Application at 7). Market observers similarly viewed the initial announcement of the proposed merger: see, e.g., Bloomberg newswire of Sept. 15, 1999, quoting Tucker Gull analyst Gerald Cassidy that “Dime is a cheap stock and Hudson United didn’t have to pay a premium for it.” For these reasons, the Federal Reserve Board (“FRB”) should inquire into and closely consider Hudson’s CRA and fair lending record... The lending records of Dime and its mortgage company, North American Mortgage, are also troubling, however.

In the New York City MSA in 1998, for conventional home purchase loans, Dime’s North American Mortgage Co. made 143 loans to whites, only 10 loans to Latinos, and only 14 loans to African Americans. For these race-specified groups, only 8.4% of NAM’s lending was to African Americans, compared to the industry aggregate’s figure of 12.2%. Only 6.0% of NAM’s lending was to Latinos, compared to the industry aggregate’s figure of 9.0%.

Significantly, Dime FSB itself is also below industry average in serving African Americans and Latinos in the NYC MSA, with conventional home purchase loans. Using the same methodology as above, in 1998 in the NYC MSA, only 9.8% of Dime FSB’s conventional home purchase loans were to African Americans, compared to the industry aggregate’s figure of 12.2%. Only 5.3% of Dime FSB’s lending was to Latinos, compared to the industry aggregate’s figure of 9.0%.

In 1998 on Long Island, NY MSA, for conventional home purchase loans, NAM denied the applications of African Americans 8.57 times more frequently than the applications of whites. For the above-described race-specified groups, only 2.2% of NAM’s lending was to African Americans, compared to the industry aggregate’s figure of 4.7%.

Again, Dime FSB itself is also below industry average in serving African Americans and Latinos in the Long Island MSA, with conventional home purchase loans. Using the same methodology as above, in 1998 in the Long Island MSA, only 2.7% of Dime FSB’s lending was to Latinos, compared to the industry aggregate’s figure of 4.4%.

In the Philadelphia MSA (where, as set forth above, Hudson already has a strikingly disparate CRA and fair lending record), Dime’s NAM in 1998 originated 601 conventional home purchase loans to whites, and only 34 such loans to African Americans, and only eight such loans to Hispanics. NAM’s lending record is worse than the industry aggregate in this MSA: for conventional home purchase loans in the Philadelphia MSA in 1998, the aggregate made 3,184 loans to African Americans, 993 loans to Latinos, and 41,370 loans to whites. For these race-specified loans, 7.0% of the aggregate’s loans were to African Americans, and 2.2% of the aggregates loans were to Latinos.

Dime’s NAM not meet even the industry aggregate: for these race specified loans, only 5.3% of NAM’s loans were to African Americans (versus the aggregate’s 7.0%), and only 1.2% of NAM’s loans were to Hispanics (versus the aggregate’s 2.2%). NAM was almost 50% below industry average, in terms of reaching Hispanic home borrowers.

The Applicants on December 14, 1999, issued a press release purporting to announce a “Post Merger Community Reinvestment Program.” It does not appear that this “Commitment” has been entered into the record before the FRB -- it was not part of the Application, as provided to ICP by the FDIC on January 4, 2000. The press release “commitment” is not even state-specific. As set forth below, Hudson’s previous “CRA Plans” have not resulted in any improvement in its lending record -- in fact, Hudson’s lending record has been deteriorating (see Section II, infra). Note also that much of the “commitment” is based on loans made of North American Mortgage, which is inter alia a subprime lender (see, e.g., “Subprime Bedfellows,” Asset Sales Report, Sept. 14, 1998; “Subprime Volumes Up 58% For Top Lenders in Quarter,” National Mortgage News, Sept. 15, 1998 (“top subprime volume gainers include North American Mortgage / Dime, Tampa, Fla. (up 418%);” Mortgage Banking, April 1998 (“Key Trends in Subprime” and “Assessment of Subprime Mortgage Market”); and Crain’s New York Business of March, 1998). These issues need to be inquired into and addressed. And see infra, Section II, analysis of NAM’s and Dime’s lending practices. On this record, these Applications could not legitimately be approved.

Furthermore, this proposed merger would ill-serve the convenience and needs of communities. The Applicants would inter alia close bank branches, to meet their cost cutting projections. ICP anticipates the FDIC following its recent precedents, and releasing to ICP information regarding the branch closures that would result if these Applications were approved; ICP will be submitting further comment on this issue once it receives the timely-requested information.

See Section IV, infra.

II. Hudson United

ICP has reviewed the 1998 HMDA data for Hudson United, including its recently renamed subsidiaries in New York (the erstwhile Bank of the Hudson) and Connecticut (Lafayette American Bank), and find the disparities in lending as pronounced, if not more so, than in previous years.

Hudson United’s New York State HMDA data (reported in 1998 as Bank of the Hudson) reveals that in 1998 in the Newburgh Metropolitan Statistical Area (“MSA”) for conventional home purchase loans, Hudson United denied the applications of African Americans 4.67 times more frequently than applications from whites, and denied the applications of Latinos 2.74 times more frequently than applications from whites. In the Dutchess County MSA in 1998 for conventional home purchase loans, Hudson United denied the applications of Latinos 4.08 times more frequently than applications from whites. These denial rate disparities are much higher than the industry aggregate in this MSA.

At times, some banks try to defend high denial rate disparities between people of color and whites by claiming to do greater-than-normal outreach to minorities communities. Hudson United, however, does not do greater-than-normal outreach to minorities. In the Newburgh MSA, for example, Hudson United in 1998 made 33 home improvement loans to whites, and NONE to African Americans or Latinos. Similarly, Hudson United did not make a single home improvement loan to a minority in the Dutchess County MSA in 1998.

Hudson United’s record is no better for refinance loans: in 1998 in the Dutchess MSA, Hudson United made 47 such loans to whites (while denying 13 applications from whites, for a denial rate of 20%), only two to African Americans (while denying two applications from African Americans, for a denial rate of 50%), and no loans to Latinos. In the Newburgh MSA, Hudson United made 210 such loans to whites, and only six such loans to Latinos, and only three such loans to African Americans. Hudson United’s marketing and lending in minority and low- and moderate-income (“LMI”) communities is sub-par and insufficient. On this record, Hudson United’s applications to expand should not be approved.

Hudson United’s exclusion and denial of protected classes is also pronounced in Connecticut. Its 1998 HMDA data (reported as Lafayette American Bank) reveals that in this most recent year, for conventional home purchase loans, Hudson United in the diverse Bridgeport MSA made no loans to African Americans or Latinos. Nor did it make any conventional home purchase loans to African Americans or Latinos in the Hartford, Stamford or Danbury MSAs. Hudson United reported making conventional home purchase loans in five MSAs in Connecticut in 1998 -- and reported, in these five MSAs, only one conventional home purchase loan to an African American, and none whatsoever to Latinos. Hudson United reported making home improvement loans in six MSAs in Connecticut in 1998 -- and reported, in these six MSAs, only one home improvement loan to an African American, and none whatsoever to Latinos. Given the deposits it collects, Hudson United is insufficiently serving the credit needs of these communities. On this record, Hudson United’s applications to expand should not be approved.

Strikingly, even in New Jersey, Hudson United’s conventional home purchase lending appears weak. In the Newark MSA in 1998, Hudson United made only two such loans to African Americans, while making 51 such loans to whites -- a ratio of 25.5 to one. The industry as a whole in the Newark MSA in 1998 made 1319 conventional home purchase loans to African Americans, and 15,487 such loans to whites -- a ratio of 11.74 to one.

In the Bergen-Passaic MSA in 1998, Hudson United made only one such loan to an African American household, while making 88 such loans to whites -- a ratio of 88 to one. The industry as a whole in the Bergen-Passaic MSA in 1998 made 403 conventional home purchase loans to African Americans, and 10,433 such loans to whites -- a ratio of 25.88 to one. (In this MSA in 1998, Hudson United reported receiving 103 such applications from whites, and denying none -- 14 applications were reported as “incomplete,” given rise to a presumption of HMDA violation in this and other MSAs). In the Jersey City MSA, Hudson United denied the only conventional home purchase loan application it received, based on its marketing, from an African American. The industry as a whole in the Jersey City MSA in 1998 made 169 conventional home purchase loans to African Americans, and 1,758 such loans to whites -- a ratio of 10.40 to one. Hudson United made no conventional home purchase loans to African Americans or Latinos in the Middlesex, Monmouth-Ocean, and Atlantic City MSAs in all of 1998. On this record, these Applications should not be approved.

Hudson United made more conventional home purchase loans in the Philadelphia MSA in 1998 than in any other MSA. But its lending in the Philadelphia MSA is strikingly disparate: in 1998 in this MSA, Hudson United made 178 conventional home purchase loans to whites, and only three such loans to African Americans, and only two such loans to Latinos.

For conventional home purchase loans in the Philadelphia MSA in 1998, the aggregate made 3,184 loans to African Americans, 993 loans to Latinos, and 41,370 loans to whites. For these race-specified loans, 7.0% of the aggregate’s loans were to African Americans, and 2.2% of the aggregates loans were to Latinos.

Hudson United, on the other hand, for conventional home purchase loans in the Philadelphia in 1998, made 178 loans to whites, and only three loans to African Americans, and only two loans to Latinos. For these race-specified loans, only 1.6% (compared to the aggregate’s 7.0%) of Hudson United’s loans were to African Americans, and 1.1% (compared to the aggregate’s 2.2%) of Hudson United’s loans were to Latinos. On this record, these Applications should not be approved.

Hudson’s performance, far from improving, as deteriorating through time. Hudson’s Connecticut subsidiary, then called Lafayette American Bank (“LAB”), in 1996 made 712 mortgage loans to whites, and only EIGHT loans to African Americans, and only FOUR loans to Hispanics -- entirely out of proportion (as demonstrated for particular MSAs infra) to the demographics of, and other institutions’ lending in, its markets. LAB’s denial rate for whites was 9%; LAB’s denial rate for African Americans was 40% -- 4.44 times higher.

In 1996 in the Bridgeport MSA, LAB originated 177 mortgage loans to whites, and only two mortgage loans to Hispanics, and NO LOANS to African Americans. In context in this MSA, LAB had a 1.95% market share of loans made to whites, and only a 0.43% market share of loans made to Hispanics. LAB had a ZERO PERCENT market share of loans to African Americans in this MSA. The industry as a whole was able to make fully 662 HMDA-reported loans to African Americans in this MSA in 1996; Hudson United’s LAB had 1.95% market share of ALL originations in the MSA -- but did not make a single loan to an African American.

In the New Haven MSA in 1996, LAB made 201 loans to whites, and only seven loans to African Americans, and only one loan to a Hispanic applicant. In context in this MSA, LAB had a 2.19% market share of loans to whites, and only a 0.97% market share of loans to African Americans, and only a 0.26% market share of loans to Hispanics.

The next year, in 1997, Hudson United’s LAB reported 252 application for mortgage credit received by LAB in 1997. Strikingly only eleven of these applications, or 4%, were from African American or Hispanic applicants. LAB originated only ONE home purchase loan to an African American or Hispanic borrower in all of 1997. This one origination was for only $23,000. A similar application by an African American for a home purchase loan in Meriden, for only $33,000, was reported as “withdrawn,” as was another home purchase loan application from an African American in Hamden.

This compared to industry aggregate figures reflecting that in 1996 Industry-wide in 1996 fully 11.68% of the industry’s HMDA-reported originations in the Bridgeport MSA (LAB’s headquarters) were to minorities (including, as Hudson United apparently does, to inflate its presentation of its “minority” lending, Asians and “other”). In the New Haven MSA in 1996, fully 11.49% of the industry’s originations were to minorities. By its own presentations, Hudson United as at barely half of these percentages in 1997.

The FDIC then required from Hudson United a CRA plan, and the quarterly reporting of data. Sadly, Hudson United’s record in full-year 1998 was again strikingly disparate, in fact, worse so. On this record, these Applications should not be approved.

Hudson has stated to the FDIC that “[m]inority applications represented approximately... 3% of the total received in Lafayette American Bank [in 1998].” But previous Hudson submissions claimed that LAB’s 1997 lending record was an improvement over 1996, because in 1997 “6.5% of [LAB’s] applications were received from minority applicants.” As set forth above, even 6.5% is far below market averages -- but in 1998, LAB’s percentage of minority applications declined to only THREE PERCENT. LAB’s 1997 record, of only 6.5% of applications from minorities, was a red flag that a pattern and practice of discrimination may exist at LAB and Hudson. These banks’ decrease in 1998 to only THREE PERCENT is a second, more serious red flag, and militates for denial of these Applications. LAB’s actual number of HMDA-reportable loans in 1998 by racial group is striking: 338 loans to whites, and only THREE loans to African Americans, and only SEVEN loans to African Americans (compare to industry data, supra). This militates for denial of these Applications.

Hudson’s submissions have also acknowledged that its bank in New Jersey in 1998 denied the applications of Hispanics 2.45 times more frequently than those of whites -- significantly higher than the industry aggregate’s denial rate disparity. Hudson’s denial rate disparity for African Americans was also over 2-to-1. Bank of the Hudson denied the applications of Hispanics 2.15 times more frequently than the applications of whites -- significantly higher than the industry aggregate’s denial rate disparity...

Annexed at Exhibit 4 to the FRB Application is what purports to be “Hudson United Bank’s Community Reinvestment Plan[s].” The size of the CRA Plans are laughable, given the volume of deposits that Hudson United collects in these communities. For all of Connecticut, Hudson United’s “goal is to provide $35 million over the next three years” -- only seven million dollars of which is for mortgages, only five million of which is for home improvement loans.

Hudson United’s New York State “CRA Plan” is even more laughable -- it commits no more than $7 million to Residential Mortgages, and there does not appear to be any small business lending commitment (contrary to Hudson United’s Resp.’s presentation of the centrality of small business lending to its portfolio). Note again that in 1998 in the Newburgh MSA for conventional home purchase loans, Hudson United denied the applications of African Americans 4.67 times more frequently than applications from whites, and denied the applications of Latinos 2.74 times more frequently than applications from whites. In the Dutchess County MSA in 1998 for conventional home purchase loans, Hudson United denied the applications of Latinos 4.08 times more frequently than applications from whites. These denial rate disparities are much higher than the industry aggregate in this MSA.

To date, the regulators (particularly the FDIC) appear to have tried to resolve previous complaints about (and deficiencies in) Hudson United’s record by encouraging the bank to mechanically extend its New Jersey “CRA Plan” (which was never put out for public comment) to Connecticut and New York. But the numbers adopted (in New York and Connecticut) are laughably low (when compared to the deposits Hudson United collects in these states), and, as set forth above, Hudson United’s lending patterns have grown even more racially disparate in 1998.

The Applicants on December 14, 1999, issued a press release purporting to announce a “Post Merger Community Reinvestment Program.” It does not appear that this “Commitment” has been entered into the record before the FDIC, nor, presumably, before the FRB. The press release “commitment” is not even state-specific. Hudson’s previous “CRA Plans” have not resulted in any improvement in its lending record -- in fact, Hudson’s lending record has been deteriorating, as set forth above. Note also that much of the “commitment” is based on loans made of North American Mortgage, which is inter alia a subprime lender (see, e.g., “Subprime Bedfellows,” Asset Sales Report, Sept. 14, 1998; “Subprime Volumes Up 58% For Top Lenders in Quarter,” National Mortgage News, Sept. 15, 1998 (“top subprime volume gainers include North American Mortgage / Dime, Tampa, Fla. (up 418%);” Mortgage Banking, April 1998 (“Key Trends in Subprime” and “Assessment of Subprime Mortgage Market”); and Crain’s New York Business of March, 1998). In the following Section, ICP analyzes NAM’s 1998 lending record, apparently for NAM’s non-subprime products.

III. Dime’s North American Mortgage and Dime Itself

Dime’s North American Mortgage subsidiary is a substantial component of Dime, and would be responsible, inter alia, for a substantial portion of the Applicant’s purported “Community Reinvestment Program,” announced on Business Wire on December 14, 1999.

ICP’s review of Dime’s North American Mortgage’s (“NAM’s”) 1998 HMDA data, in the MSAs in which the proposed Dime United would have a CRA responsibility, raises troubling questions, which militate for a formal hearing, and, on the current record, for the denial of these Applications.

For example, in the Philadelphia MSA (where, as set forth in Section II, Hudson already has a strikingly disparate CRA and fair lending record), NAM in 1998 originated 601 conventional home purchase loans to whites, and only 34 such loans to African Americans, and only eight such loans to Hispanics. NAM’s lending record is worse than the industry aggregate in this MSA.

For conventional home purchase loans in the Philadelphia MSA in 1998, the aggregate made 3,184 loans to African Americans, 993 loans to Latinos, and 41,370 loans to whites. For these race-specified loans, 7.0% of the aggregate’s loans were to African Americans, and 2.2% of the aggregates loans were to Latinos.

Dime’s NAM not meet even the industry aggregate: for these race specified loans, only 5.3% of NAM’s loans were to African Americans (versus the aggregate’s 7.0%), and only 1.2% of NAM’s loans were to Hispanics (versus the aggregate’s 2.2%). NAM was almost 50% below industry average, in terms of reaching Hispanic home borrowers.

For refinancing loans in this (and other) MSA(s), NAM was even worse. In 1998 in the Philadelphia MSA, for refinancing loans, NAM made 1038 loans to whites, and only 38 loans to African Americans, and only four loans to Hispanics. NAM’s lending record is worse than the industry aggregate in this MSA.

For refinance loans in the Philadelphia MSA in 1998, the aggregate made 6,042 loans to African Americans, 809 loans to Latinos, and 66,502 loans to whites. For these race-specified loans, 8.2% of the aggregate’s loans were to African Americans, and 1.1% of the aggregates loans were to Latinos.

Dime’s NAM not meet even the industry aggregate: for these race specified refinance loans, only 3.5% of NAM’s loans were to African Americans (versus the aggregate’s 7.0%), and only 0.37% of NAM’s loans were to Hispanics (versus the aggregate’s 2.2%). NAM was more than 50% below industry average, in terms of reaching both African American and Hispanic refinance applicants.

Similarly, in the New York City MSA in 1998, for conventional home purchase loans, NAM made 143 loans to whites, only 10 loans to Latinos, and only 14 loans to African Americans. For these race-specified groups, only 8.4% of NAM’s lending was to African Americans, compared to the industry aggregate’s figure of 12.2%. Only 6.0% of NAM’s lending was to Latinos, compared to the industry aggregate’s figure of 9.0%.

Significantly, Dime FSB itself is also below industry average in serving African Americans and Latinos in the NYC MSA, with conventional home purchase loans. Using the same methodology as above, in 1998 in the NYC MSA, only 9.8% of Dime FSB’s conventional home purchase loans were to African Americans, compared to the industry aggregate’s figure of 12.2%. Only 5.3% of Dime FSB’s lending was to Latinos, compared to the industry aggregate’s figure of 9.0%.

For refinance loans in the NYC MSA in 1998, the aggregate made 8,245 loans to African Americans, 2,965 loans to Latinos, and 34,292 loans to whites. For these race-specified loans, 18.1% of the aggregate’s loans were to African Americans, and 6.5% of the aggregates loans were to Latinos.

Dime’s NAM not meet even the industry aggregate: for these race specified refinance loans in this MSA in 1998, only 8.5% of NAM’s loans were to African Americans (versus the aggregate’s 18.1%), and only 5.5% of NAM’s loans were to Hispanics (versus the aggregate’s 6.5%). NAM was more than 50% below industry average, in terms of reaching African American refinance applicants.

In 1998 on Long Island, NY MSA, for conventional home purchase loans, NAM denied the applications of African Americans 8.57 times more frequently than the applications of whites. For the above-described race-specified groups, only 2.2% of NAM’s lending was to African Americans, compared to the industry aggregate’s figure of 4.7%.

Significantly, Dime FSB itself is also below industry average in serving African Americans and Latinos in the Long Island MSA, with conventional home purchase loans. Using the same methodology as above, in 1998 in the Long Island MSA, only 2.7% of Dime FSB’s lending was to Latinos, compared to the industry aggregate’s figure of 4.4%.

For refinancing loans in this Long Island MSA, NAM was even worse. In 1998 in the Long Island MSA, for refinancing loans, NAM made 309 loans to whites, and only six loans to African Americans, and only nine loans to Hispanics. NAM’s lending record is worse than the industry aggregate in this MSA.

For refinance loans in the Long Island MSA in 1998, the aggregate made 2,025 loans to African Americans, 1,119 loans to Latinos, and 34,441 loans to whites. For these race-specified loans, 5.4% of the aggregate’s loans were to African Americans. Dime’s NAM not meet even the industry aggregate: for these race specified refinance loans in this MSA in 1998, only 1.9% of NAM’s loans were to African Americans (versus the aggregate’s 5.4%). NAM was more than 50% below industry average, in terms of reaching African American refinance applicants.

Furthermore, it is clear that this proposed merger would result in the closure of branches. ICP anticipates the FDIC following its recent precedents, and releasing to ICP information regarding the branch closures that would result if these Applications were approved; ICP will be submitting further comment on this issue once it receives the timely-requested information.

IV. CONCLUSION

On the current record, this Application could not legitimately be approved.

If you have any questions, please telephone the undersigned at (718) 716-3540.

Respectfully submitted,

_________________
Matthew Lee, Esq.
Executive Director
Inner City Press/Community on the Move
1919 Washington Avenue
Bronx, NY 10457
Tel: (718) 716-3540
Fax: (718) 716-3161


    NOTE:  For or with more information, contact us.  This will be updated; stay tuned...


 

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