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August 3, 2020

Federal Reserve Rubber Stamps Varo Into Banking On Delegated Basis As Denies FOIAs

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - CJR - PFT

South Bronx, July 28–  How corrupt has the Federal Reserve become using the COVID-19 pandemic as ground cover? Well, despite rules that substantively challenged applications can only be approved by the Board of Governors in DC, on July 28 the Fed rubber stamped on a delegated basis fintech Varo's application to form a bank holding company. It is an unprecedented now low - but happens while the Federal Reserve withholds under FOIA all information about the impact of COVID-19 on the application by Brazil-based Banco Bradesco. Something has gone dreadfully wrong on C St.

  Here's the Fed's - Federal Reserve Bank of San Francisco's - July 28 letter, sent to Inner City Press: "July 28, 2020 Via Electronic Mail Mr. Colin Walsh Varo Money, Inc. 222 Kearny Street, 9th Floor San Francisco, California 94108 RE: Varo Money, Inc., San Francisco, California (“Bancorp”), to become a bank holding company (“BHC”) through the acquisition of 100 percent of the voting shares of Varo Bank, N.A. (In Organization), Draper, Utah, pursuant to Section 3(a)(1) of the Bank Holding Company Act (“BHC Act”) Dear Mr. Walsh: The Federal Reserve Bank of San Francisco (“Reserve Bank”), acting under authority delegated by the Board of Governors of the Federal Reserve System (“Board”), and having considered the relevant statutory factors, hereby approves the subject application. In consideration of this filing, reliance was placed upon all the representations and the commitments made by or on behalf of Bancorp. No significant changes in the transaction should be made prior to consummation without our approval. Approval of the application is subject to the Board’s authority to require reports by and make inspections and examinations of BHCs and their subsidiaries, and to require such modification or termination of activities of a holding company or any of its subsidiaries as the Board finds necessary to ensure compliance with the BHC Act. Approval of the application is also subject to receipt of all other required regulatory approvals, non-objections, or consents with this transaction. The proposed transaction may be consummated upon approval. 1 Please notify the undersigned in writing when the transaction is consummated."

July 27, 2020

Filed with the Fed: "This is a FOIA appeal of the Deputy Secretary's July 17 denial in full of my and Inner City Press' June 7 FOIA request for the withheld portions of the additional information submitted by Banco Bradesco on or about May 29, 2020 as part of its challenged but still being processed amid the COVID-19 pandemic to aquire BAC including but not limited to the redaction of the entire answer to the Fed's telephonic question (not otherwise provided to ICP) about the effect of the travel ban on Brazil on the proposed transaction.    It is an outrage that every single word in this bank's response about this PUBLIC HEALTH emergency is being withheld by the Federal Reserve.  Note: processing of this application should be suspended until COVID-19 restrictions, which continue in New York, are lifted."
July 20, 2020

It took the Fed SIX WEEKS to issue this denial in full: "This is in response to your email message dated June 7, 2020, received by the Board’s Information Disclosure Section on June 8. Pursuant to the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, you request:  all withheld portions of the additional information submitted by Banco Bradesco on or about May 29, 2020 as part of its challenged but still being processed amid the COVID-19 pandemic to aquire [sic] BAC including but not limited to the redaction of the entire answer to the Fed’s telephonic question (not otherwise provided to ICP) about the effect of the travel ban on Brazil on the proposed transaction. Staff searched Board records and located information that is responsive to your request. I have determined, however, that the redacted portions of the May 29 letter and the confidential exhibits consist of confidential commercial and financial information (e.g., business plans and strategies; financial statements). This information is subject to withholding and will be withheld from you pursuant to exemption 4 of the FOIA, 5 U.S.C. § 552(b)(4). I have also determined that the information should be withheld because it is reasonably foreseeable that disclosure would harm an interest protected by an exemption described in subsection (b) of the FOIA, 5 U.S.C. § 552(b). The responsive documents have been reviewed under the requirements of subsection (b) and all reasonably segregable nonexempt information will be provided to you. The document being provided to you will indicate the amount of information that has been withheld and the applicable exemption. In addition, approximately 30 pages of information will be withheld from you in their entirety.  2  Accordingly, your request for the withheld portions of Banco Bredesco’s May 29 submission is denied in full for the reason cited above."

July 13, 2020

The Fed asks for more time - so it can't just rubber stamp for Bradesco, can they? "FOIA Request No. F-2020-00240     Dear Mr. Lee:     On June 8, 2020, the Board of Governors (“Board”) received your correspondence dated June 7, pursuant to the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, for, “all withheld portions of the additional information submitted by Banco Bradesco on or about May 29, 2020[.]”     Pursuant to section (a)(6)(B)(i) of the FOIA, we are extending the period for our response until July 20, 2020, in order to consult with two or more components of the Board having a substantial interest in the determination of the request.     If a determination can be made before July 20, 2020, we will respond to you promptly.  It is our policy to process FOIA requests as quickly as possible while ensuring that we disclose the requested information to the fullest extent of the law."

July 6, 2020

From the Federal Reserve: "Barclays Bank PLC, London, England and Barclays Bank PLC New York Branch, New York, New York Cease and Desist Order, dated May 20, 2015 Terminated June 25, 2020" - but not announced until a full week later on July 2 - why?

June 29, 2020

From the Fed, after a long day, this: "Staff searched Board records and located the letter dated April 24 that is responsive to the first part of your request. I have determined, however, that the redacted portions of the letter contain confidential commercial and financial information (e.g., pro forma financials; projected asset quality and capital ratios; and business plans and strategies). This information is subject to withholding and will be withheld from you pursuant to exemption 4 of the FOIA, 5 U.S.C. § 552(b)(4). I have also determined that the information should be withheld because it is reasonably foreseeable that disclosure would harm an interest protected by an exemption described in subsection (b) of the FOIA, 5 U.S.C. § 552(b). The responsive document has been reviewed under the requirements of subsection (b) and all reasonably segregable nonexempt information will be provided to you. The document being provided to you will indicate the amount of information that has been withheld and the applicable exemption." All information about the impact o COVID-19 redacted. UNacceptable.

June 22, 2020

Varo Dodges on CRA and Covid Outage When Challenged on Federal Reserve Application For Banking

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - CJR - PFT

South Bronx, June 15 –  With fintechs pushing to get into banking, through now ex-Comptroller Joseph Otting who after trashing the Community Reinvestment Act left and immediately joined fintech Black Knight, and through the PPP, on June 10 Fair Finance Watch with Inner City Press on FOIA submitted timely comments to the Federal Reserve opposing Varo's application, pointing for example at Varo's service interruption in October 2019, including declined debit card transactions, which they tried to blame on their processor Galileo. See here. 

  Now on June 15 Varo's CEO Colin Walsh, as submitted by outside counsel Mitchell S. Eitel at Sullivan & Cromwell has passed the buck again on its service disruption, and sought to hide behind the OCC of Otting and Brooks, which has no credibility: "Varo Money, Inc. (“Varo”) hereby responds to the comment letter submitted by Mr. Matthew Lee of Inner City Press/Fair Finance Watch (the “Commenter”) on June 10, 2020... We strongly disagree with the Commenter’s suggestion that Varo itself was the cause of a “service interruption in October 2019, which [Varo] tried to blame on [Varo’s] processor Galileo.” On October 16, 2019, Galileo Processing experienced an impact to their systems, and it was reported that the customers of Chime, another Galileo client principally discussed in the article cited by the Commenter, were prevented “from making purchases and accessing cash"... we note that as it transitions to a bank, Varo Bank will use Visa DPS, not Galileo, as its processor after a brief transition period.... Varo has filed its Strategic Plan with the Office of the Comptroller of the Currency and believes that it will be approved in the near future. Varo respectfully submits that the OCC process is the ap- propriate forum for his comments.   Finally, with respect to the Commenter’s request that “all comment periods” for applications before the Federal Reserve be extended until “at least Phase Two of the Coronavirus restrictions in New York”, Section 262.25(b)(2) of the Federal Reserve’s Rules of Procedure state that the Secretary of the Federal Re- serve may grant a brief extension of the comment period in cases where a commenter for good cause is una- ble to send its comment within the specified comment period upon “clear demonstration of hardship or other meritorious reason for seeking additional time” to comment. In general and as it relates to Varo’s Application, we believe that the Commenter’s request is overly broad and that there is no basis to extend the com- ment period. The Comment Letter vaguely references the “COVID-19 pandemic” and “Coronavirus restrictions” without providing any clear or definite demonstration as to how such pandemic or restrictions have interfered with the Commenter’s ability to meet the specified comment period or given rise to any hardship to Commenter or other meritorious reason to extend the comment period, or how the arbitrarily chosen “Phase Two” of such restrictions would alleviate any such unsubstantiated causes for delay. To the contrary, by virtue of the scope and content of the Comment Letter itself, the Commenter has clearly demonstrated his ability to comment within the specified comment period."

June 15, 2020

Varo Challenged on Federal Reserve Application For Banking After Service Outage and CRA Dodge

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - CJR - PFT

SDNY / South Bronx, June 10 –  With fintechs pushing to get into banking, through now ex-Comptroller Joseph Otting who after trashing the Community Reinvestment Act left and immediately joined fintech Black Knight, and through the PPP, on June 10 Fair Finance Watch with Inner City Press on FOIA submitted timely comments to the Federal Reserve opposing Varo's application, pointing for example at Varo's service interruption in October 2019, including declined debit card transactions, which they tried to blame on their processor Galileo. See here. 

        Fair Finance Watch has timely asked the Federal Reserve for a hearing on weakened CRA duties, and disproportionate exclusion: low and moderate consumers disproportionately have prepaid or limited data plans and face disconnections of their mobile service. And just because consumers have email addresses does not mean that they have regular internet access, and if they close or move their accounts, they may lose access to their financial records.    

Despite or perhaps because of these and the service interruptions, using OCC deregulation, "Varo Money has raised an additional $241 million in Series D funding, the company announced today. The investment was co-led by new investor Gallatin Point Capital and existing investor The Rise Fund, co-founded by TPG. Also participating in the round were Bono (yes, that one, also trying to get Ireland onto the UN Security Council in a June 17 virtual election), along with entrepreneur, impact investor and movie producer Jeff Skoll; plus HarbourVest Partners and Progressive Insurance.  To date, Varo has raised $419.4 million in funding."      

See also, for the record on which Inner City Press / Fair Finance Watch are timely requesting evidentiary hearings on this application, " NEWS Technology Finance  Unregulated Fintech Could be the Source of the Next Market Crash Posted to TechnologyFinance."   

     At to the Fed itself, currently the FRB's H2A states "The H.2A is released each Friday and will be updated at least every three days.  June 8, 2020 - Updates to current release May 29, 2020 - Current release."

June 8 and May 29 are more than three - more than ten - days apart.  As previously raised to the Board, without any response, as of December 28, 2019 the most recent application on the FRB's online H2A had a comment period ending December 20 - that is, already closed.

June 8, 2020

Federal Reserve Amid Covid Lets Banco Bradesco Go Secret On Travel Ban As Fair Finance Watch Says No

By Matthew R. Lee, Exclusive

SOUTH BRONX, SDNY, June 7 – Amid escalating attacks on the U.S. Community Reinvestment Act, Inner City Press / Fair Finance Watch back in August filed comments under the CRA opposing Banco Bradesco's application to acquire BAC Florida, see below.

 Now amid the Coronavirus pandemic, it continues to appear that the Federal Reserve is churning forward to try to rubber stamp a bank merger. On April 7 the Fed asked Banco Bradesco's New York law firm to supplement the record with how it is dealing with current economic situation. On April 24 the bank's law firm Shearman & Sterling sent an answer to the Fed - with the entire Covid section, as sent as required to Fair Finance Watch and Inner City Press, entirely redacted. Inner City Press FOIA-ed that, then was asked to narrow the request.

 So S&S submitted another filing, with even the name of the exhibits redacted. As of June 7, the Fed has simply extended its time to reply.

  Next the Fed telephoned Bradesco to ask about the impact of the US travel ban on Brazil on the proposed transaction and integration. The question was not conveyed to Inner City Press until Bradesco's entirely redacted answer. This is Orwellian. Inner City Press has written to the Fed: "This is a FOIA request for the all withheld portions of the additional information submitted by Banco Bradesco on or about May 29, 2020 as part of its challenged but still being processed amid the COVID-19 pandemic to aquire BAC including but not limited to the redaction of the entire answer to the Fed's telephonic question (not otherwise provided to ICP) about the effect of the travel ban on Brazil on the proposed transaction. This follows up on our previous and still outstanding FOIA request which we voluntarily narrowed on April 30 in response to the inquiry by Katrina Allen-Austin of the Legal Division dated the same date and the FOIA after that. Note: processing of this application should be suspended until COVID-19 restrictions, which continue in New York after June 8, are lifted." Watch this site.

June 1, 2020

What is the Fed going to do about this?

LIBOR Case Against JPMorgan and Bank of America Settled As SDNY Judge Buchwald Signs Off

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - The Source

SDNY COURTHOUSE, May 26 – In a multi-district antitrust case about LIBOR dating back to 2011, on May 26 U.S. District Court for the Southern District Judge Naomi Reice Buchwald held a short proceeding, covered by Inner City Press, then signed off on a settlement ending the case: "FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE, GRANTING FINAL APPROVAL OF SETTLEMENT BETWEEN LENDER PLAINTIFFS, JPMORGAM CHASE & CO. AND JPMORGAN CHASE BANK, N.A. ("JPMORGAN") AND BANK OF AMERICA CORPORATION AND BANK OF AMERICA, N.A. ( "BOA") AND UBS AG ("UBS"): NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT: Unless indicated otherwise, capitalized terms used herein have the same meanings defined in each of the Agreements. For purposes of finally approving the Settlements, the Court has jurisdiction over the subject matter of the Lender Action, Lender Plaintiffs, all Lender Class Members, and, solely for purposes of effectuating the Settlements and subject to the limitations contained in the Agreements, the Settling Defendants.

Lender Plaintiffs' Counsel are awarded attorneys' fees in the amount of $1,120.000 plus interest at the same rate as earned by the Settlement Funds, and expenses in the amount of $11,688.47 plus interest at the same rate as earned by the Settlement Funds, if such amounts are not paid from out of the Settlement Funds within five (5) business days following the entry of this Final Judgment and Order of Dismissal with Prejudice. Plaintiff The Government Development Bank for Puerto Rico is awarded the sum of $ 15,000 plus interest at the same rate as earned by the Settlement Funds, as reasonable costs and expenses and as a service award directly relating to the representation of the Lender Class. 

All agreements made and orders entered during the course of this Lender Actionrelating to the confidentiality of information shall survive the Settlements and be binding on the Parties, including but not limited to the Stipulation and Protective Order entered on March 21, 2016 (ECF No. 1347). And as set forth herein., Bank of America Corporation, Bank of America Corporation, Bank of America N.A., Bank of America, N.A., J.P. Morgan Chase & Co., J.P. Morgan Chase Bank, N.A., JPMorgan Chase & Co., JPMorgan Chase Bank National Association, JPMorgan Chase Bank, National Association, JPMorgan Chase Bank, National Association, UBS AG, UBS AG, UBS AG, UBS AG, Bank Of America Corporation and Bank of America Corp. terminated. (Signed by Judge Naomi Reice Buchwald on 5/26/2020) (ama) (Entered: 05/26/2020)."

May 25, 2020

  Now the Fed takes 12 days to acknowledge an emailed FOIA request, while preparing to rubber stamp the underlying bank merger application - UNacceptable. From May 22: "May 22, 2020   FOIA Request No. F-2020-00214   Dear Mr. Lee:     This will acknowledge receipt of your correspondence dated May 10, 2020 and received by the Board’s Information Disclosure Section on May 11, 2020, in which you request, pursuant to the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, “all withheld portions of the additional information submitted by Banco Bradesco on or about May 6, 2020.”     The Board makes every effort to fulfill requests in a timely manner; however, there may be delays in fulfilling complex requests or those that require consultation." Really?
May 18, 2020

As US Bank Regulators Suspend Non Critical Exams Or Go 95% Off-Site New Project on Abuses

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - CJR - PFT