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May 20, 2013

When the Federal Reserve granted a public hearing on Bank of Hawaii's plan to close its branches in American Samoa, leaving it in the hands of ANZ, it looks like the Fed did not provide correct public notice. A search on FederalReserve.gov press releases for Samoa finds nothing. For shame...

March 11, 2013

Ah, Investors... A response from the Federal Reserve “Board’s Freedom of Information office on March 1, 2013. Board staff are currently processing the remainder of your FOIA request, which seeks the confidential portions of the Notice and seeks any and all records reflecting FRS communications with the applicant regarding the proposal. The Office of the Secretary will send you a separate response addressing the remainder of the FOIA request."

March 4, 2013

With Bank of Hawaii trying to close over 50% of the branches in American Samoa, why would the Federal Reserve Bank of San Francisco gave a post to Bank of Hawaii chairman Peter Ho. We say, to remove taint of conflict of interest, now MUST hold public hearing on the planned American Samoa branch closures....

February 25, 2013

The Federal Reserve tells Inner City Press that

“To facilitate secure email exchanges with the Federal Reserve, please see the attached file and link that contain instructions for registering with the Zix e-mail system. The web address is

https:// [THE WEB ADDRESS IS NOT RESPONSIVE TO YOUR FOIA REQUEST]”

Yes it is...

February 18, 2013

Hitting a new low, Customers Bancorp on its application to the Federal Reserve to acquire Acacia Federal Savings Bank has tried to withhold from Inner City Press the entirety of its response to Fed questions. We will be pursuing - the documents, and Customers Bancorp.

Meanwhile the Fed has reportedly sent a February 11 Q&A to Live Oak, with a confidential attachment -- but none of it, even the non-confidential portion, was sent to Inner City Press. Watch this site.

February 11, 2013

And now we know: while the Federal Reserve told community groups that the comment period on Live Oak – Government Loan Solutions, published in the Federal Register, had been in error, internally the lawyer for Live Oak asked the Fed on December 21, “Are we close on the Live Oak notice? I know the comment period has not closed quite yet, but I will be out of the office most of next week, so I thought I would check in this morning.”

The comment period still open, but the Fed “close” to deciding and approving anyway. This is shameful. An appeal is being filed with the withheld information, presumably even more shameful.

February 4, 2013

Talk about grading of the curve: last Fall Inner City Press / Fair Finance Watch began challenging Customers Bancorp, then on its proposal to buy Acacia. Now, Customers tells the Federal Reserve that "Fair Lending training is required annually of all employees with customer contact. It is administered via an online, self-paced course through the Edcomm Learning Management System. The employee is required to demonstrate adequate mastery of the course materials by completing a test at the conclusion of the course and obtaining a passing grade (minimum 80% correct).

80% is good enough for fair lending? For the Federal Reserve?

January 28, 2013

More Fed FOIA shenanigans:

This is a timely FOIA appeal to the Federal Reserve Board's January 11 partial denial of my FOIA request of some 11 weeks earlier for all portions of the applications / notices by Guido Hinojoso to acquire control of Anchor Commercial Bank for which Guido Hinojosa and his outside counsel improperly requested confidential treatment.

Some of these arrived some eleven weeks later, but with redactions to basic managerial information such as the answer to "have you ever been dismissed from past employment" including in the banking field. Biographical, 2b. Similarly, the FRB has redacted all answers about past bank merger applications, if they were denied (Biographical 5) including a paragraph answer about Change in Control (5b) and lawsuits (5e). All such information must be released.

Still partially redacted Exhibit 1G lists $500,000 purchase of shares in Sunrise Bank in 2011, and $5,500,000 for Anchor Commercial Bank in 2012. But it is now 2013. Was the gun jumped? Has this plan changed? The rest of the page is blacked out and must be released, and the comment period extended.

The "relationship to Notificant" column for both Patricio Hinojosa Jimenez and Jorge Hinojosa Jimenez is redacted - why? A member of CBIFSA's board of directors is redacted in full -- why? These must be released.

The Recitals, Definitions and much of "Subscription" of the Subscription Agreement are redacted - why? This must be released.

In "Turnaround," the "Summary of the Bank's Condition" is redacted - this must be released.

The "Commitments" (Confidential Exhibit 3) are withheld - but must be released. ICP is appealing this and all other redactions and withholdings.

The Deputy Secretary's letter (the "Denial") cites exemptions 4 and 6 and says their application to the heavily redacted pages provided is clear. It is not. Nor does the Denial state how many pages have been withheld in full.

January 21, 2013

Richmond Fed President Jeffrey Lacker has reiterated his claim that then-New York Federal Reserve President Timothy Geithner in 2007 notified Bank of America and other financial institutions that the U.S. central bank was considering lowering a critical interest rate.

January 21, 2013

Richmond Fed President Jeffrey Lacker has reiterated his claim that then-New York Federal Reserve President Timothy Geithner in 2007 notified Bank of America and other financial institutions that the U.S. central bank was considering lowering a critical interest rate.

January 14, 2013

Inner City Press has submitted a FOIA request to the Federal Reserve for all records related to the Federal Reserve System's comment period on Live Oak Bancshares' application to acquire Government Loan Solutions, Inc., of Cleveland, Ohio -- the initial comment period on which was said by the Fed to be January 4: http://www.ftc.gov/os/fedreg/2012/12/121210agencycollectionfrn.pdf

However at some later stage the Fed decided to shorten the comment period. We are specifically requesting all records concerning the change in comment date, as well as a full copy of Live Oak's application and all records reflecting the Federal Reserve System's communcations with or about Live Oak Bancshares or Government Loan Solutions for the past six months.

Watch this site.

January 7, 2013

The total lack of accountability of the Federal Reserve Board and of those it purports to regulate, for example Capital One which was fined $150 million in July 2012 for predatory practices, is on display in a Freedom of Information Act appeal denial issued on January 2 by Governor Jerome Powell, to Inner City Press.

Upholding in full the withholding of over 2000 pages of records related to Capital One's compliance or non-compliance with commitments it made during its NCRC protested purchases of ING DIRECT and HSBC's subprime credit card operations, Powell ruled that not one page, or even a portion of a page, would be released.

This is at odds, for example, with FOIA appeal responses obtained this year by Inner City Press from other Federal agencies. In other FOIA news, Inner City Press is a media amicus in this just filed brief in McBurney v. Young, No. 12-17 of the US Supreme Court.

But the Federal Reserve, along with Capital One, will have to be addressed in 2013. Watch this site.

December 31, 2012

The Federal Reserve and its Governor Jerome H. Powell have hit new lows. After delaying more than 40 days to rule on Inner City Press' FOIA appeal of withholdings about M&T - Hudson City Bancorp, Powell in a seven page ruling finds that the Fed mis-invoked FOIA exemptions 6 and 8 -- but then refuses to release the information, now invoking exemption 4. This is much worse even than previous FOIA appeal rulings -- a new low. We'll have more on this.

December 24, 2012

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

December 17, 2012

The Federal Reserve has responded thusly to a Freedom of Information Act request from Inner City Press:

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

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

https:// WITHHELD

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

December 10, 2012

Sometimes credit has to be given where it's due. The Federal Reserve increasingly grants large banks insider status, discussing their merger ideas with them before they are announced, allowing the large banks to be represented by recent Federal Reserve Board lawyers.

But now on the smaller Customers Bancorp - Acacia proposal, the Federal Reserve left Inner City Press a voice mail before they called Customers, then had information that the Fed requested sent to Inner City Press. Customers has another merger application coming up -- we'll see if the disparities and weakness in their record can be made to change.

Meanwhile, Inner City Press has filed this;

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

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

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

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

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

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

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

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

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

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

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

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

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

December 3, 2012

What is it about the Federal Reserve System, that one submits comments on a merger by e-mail, then awaits for snail mail confirmation? See, FirstMerit, Cleveland Fed.

November 26, 2012

Hudson City Savings Bank, which M&T is trying to buy, is in New Jersey but not of it. When ICP / Fair Finance Watch challenged the deal, highlighting disparities in Hudson City's record, Hudson City had no response at all. Now it has been challenged from New Jersey as well. Meanwhile the Fed has had no response to the absurdity of it providing heavily redacted records of its pre-announcement meetings with M&T, an hour before the comment period was set to expire. This is not transparency. Watch this site.

November 19, 2012

So the Fed hauled off and approved Mitsubishi UFJ to acquire UnionBanCal -- in footnote 22 it recites that ICP / Fair Finance Watch timely raise the issue of the ongoing LIBOR scandal. The Fed says that "the Board is monitoring the course of the investigations and will consider, to the extent of the Board's authority, the findings in those investigations as they develop."

To the extent of the Fed's authority??

In in footnote 44, it says that the issue ICP raised about Tax Refund Loans is a thing of the past. If so, no thanks to the Fed...

November 12, 2012

Fed Met M&T 10 Days Before Hudson Deal, FOIA Shows, Appeal & Protest

By Matthew R. Lee, Exclusive

SOUTH BRONX, November 9 -- When M&T on August 27 announced biggest bank merger deal of the year, a $3.81 billion proposal to buy Hudson City Savings Bank, it was not the first time the Federal Reserve had heard about.

  Inner City Press, which has challenged M&T's application under the Community Reinvestment Act, on November 9 got a belated Freedom of Information Act response from the Federal Reserve Board, less than two hours before the Fed said the extended comment period would close.

  The documents released to Inner City Press show that on August 17, a full ten days before the public announcement, Federal Reserve Bank of New York official John Ricketti wrote to five others within the Fed:

"Wilmers called me this afternoon to inform me that M&T is looking to acquire M&T. [sic] He will be talking to his board about the acquisition at next Tuesday's board meeting and asked to come in Wednesday to talk to us (we're setting something up for late Wednesday afternoon). I'll be up in Buffalo for the board meeting to discuss the [REDACTED] and expect to learn more from him Monday night (I have a one-on-one meeting with him)."

  After that, much is redacted. Click here to view.

   The Fed advised M&T that its application to buy Hudson would probably be protested -- accurately, given that Hudson City in 2011, for conventional home purchase loans in the New York City Metropolitan Statistical Area, to make 765 such loans to whites and only FIVE to African Americans.

  Of this, a Fed memo of August 24 said "this will require review of any issues that are raised and [REDACTED].

 To view, click on cover email, and talking points One and Two.

  After the August 17 contact but before the proposal was announced, the Fed met on August 22 from 4:30 to 5:30 with "Wilmers" and Rene Jones, Michael Pinto and outside council Rodgin Cohen.

  A slide presentation was made, much of which including on Due Diligence and Complexity has been withheld.

  After the meeting, the New York Fed's Ivan Hurwitz sent a memo to the Fed in Washington, most of which has been blacked out.

  On August 24, the Fed's John Ricketti wrote another memo, with talking points, about his meeting with Rodgin Cohen and Rene Jones, much of its redacted.

Then on August 27, Cohen [Rodge] called the Fed's Tom Baxter, and Wilmer called "Dudley," both summaries redacted.

After the deal was announced, M&T had more meetings with the Fed on September 7. Only after they submitted an application did Inner City Press submitted a FOIA request on October 2, and an initial protest, on October 7.

Now Inner City Press has timely requested a further extension of the comment period, to review the documents so belatedly released, and to appeal what is being withheld.

Withheld is the substantive part of "Confidential" Exhibit O, what M&T will actually PAY to Merger Sub, and nearly all of the anti-money laundering program, material changes and due diligence findings. The Board Resolutions and Agreement and Plan of Merger are all blacked out, which is ridiculous.

November 5, 2012

So why hasn't the Fed asked, or M&T answered, questions about its application to acquire Hudson City Savings Bank? We are waiting...

October 29, 2012

The Fed has yet to address its revolving door. The response from M&T's outside counsel to ICP's October 7 protest was signed by a former FRB staff attorney who worked on mergers, with those still there. With all due respect, how is this appropriate? ICP has asked. Watch this site.

October 22, 2012

So when push comes to shove, the Federal Reserve doesn't even enforce the HHI Index. In Madison, Indiana last week, the Fed approved: "On consummation of the proposed merger, the resulting institution would remain the largest insured depository institution in the market, controlling deposits of approximately $249.7 million, which would represent approximately 46.3 percent of the market deposits. The HHI would increase by 234 points to 3284."

It fails the stated test, but the Fed approved it...

October 15, 2012

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

On October 11, after its press release and uninformed reports of it, Trustmark answered another round of questions from the Federal Reserve. But the Fed has yet to extend the comment period. Watch this site.

October 8, 2012

Ah, if only Bernanke would apply his baseball paean to Davey Johnson to CRA, and see fit to deny a merger on CRA grounds from time to time, not least to "help in the long run"...

October 1, 2012

On appeal, and only on appeal, the Fed through Governor Jay Powell has deigned to belatedly release Trustmark's market share of deposits in Jackson, Mississippi and basic information about its anti money laundering program. Why was it withheld? What accountability is there for that?

September 24, 2012

From the troubling department of the revolving door: "Patrick M. Parkinson, former director of supervision for the Federal Reserve board, has joined Promontory Financial Group. After 31 years at the central bank, he will serve as a managing director at Promontory, consulting on regulatory and risk management issues in Washington.As the director of banking supervision and regulation from 2009 to 2011."

This should not be permitted.

September 17, 2012

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

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

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

September 10, 2012

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

September 3, 2012

The House Financial Services Committee has given the NY Fed a one-month extension, from September 1, to hand over thousands of documents related to the interest rate manipulation scandal. Many mega-banks including Citigroup, JPMorgan Chase, Barclays, UBS, Bank of America and Royal Bank of Scotland Group have been under investigation from regulators around the world over colluding to manipulate LIBOR.

Meanwhile the Federal Reserve Board has tried to withhold from Inner City Press information about the LIBOR scandal and Mitsubishi UFJ -- but Inner City Press has appealed under the Freedom of Information Act....

in its headquarters Metropolitan Statistical Area of Jackson, Mississippli in 2010, Trustmark for conventional home purchase loans had a denial rate for African Americans more than SIX TIMES HIGHER than for whites: 44.7% denial rate for African Americans, versus 7.3% for whites. It had a 100% denial rate for these and refinance loans for Latinos.

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

August 20, 2012

   Based on troubling disparities in mortgage lending in the Deep South,ICP  Fair Finance Watch has filed Community Reinvestment Act comments with the Federal Reserve on Mississippi-based Trustmark's application to acquire Mobile, Alabama based BankTrust.

  In its headquarters Metropolitan Statistical Area of Jackson, Mississippli in 2010, Trustmark for conventional home purchase loans had a denial rate for African Americans more than SIX TIMES HIGHER than for whites: 44.7% denial rate for African Americans, versus 7.3% for whites. It had a 100% denial rate for these and refinance loans for Latinos.

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

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

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

  ICP  Fair Finance Watch has requested an evidentiary hearing into these lending patterns. The Federal Reserve Bank of Atlanta has confirmed receipt and asked the Fed's Freedom of Information Act unit and more importantly Trustmark and its outside counsel for responses. Watch this site.

August 13, 2012

So what WAS the Federal Reserve System doing about Standard Chartered for all this time?

August 6, 2012

Ah, impunity. The Fed's BB&T - BankAtlantic order, issued days after Governor Jerome Powell withheld yet more information from ICP on FOIA appeal, notes its protest

"referenced an SEC lawsuit alleging that the chairman of BA Bancorp had engaged in a pattern of misleading BA Bancorp’s investors through selective and untimely disclosures with respect to problem loans. The individuals named in the lawsuit will not be associated with BB&T or BankAtlantic after consummation of the proposed transaction."

So after untold scandals and the financial meltdown, the Fed's response? "Bygones."

July 30, 2012

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

By Matthew Russell Lee, Exclusive

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

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

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

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

   The deal is still pending.

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

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

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

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

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

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

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

July 23, 2012

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

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

July 16, 2012

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

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

July 9, 2012

Just filed with the Fed:

This is a FOIA appeal to the Federal Reserve Board's "reconsideration" and partial denial, dated June 29, of my FOIA request of February 17 regarding BB&T's proposal to acquire BankAtlantic.

First, I note that I submitted an appeal -- now, rather than acknowledge the improper withholdings appealed from (and have that recorded for example in the FRB's annual FOIA report), the FRB decides to call it a "reconsideration," from which I now submit this second appeal. This record below must be addressed in the response to this (second) appeal.

The Associate Secretary's June 29 letter (the "Denial") outright withholds 53 pages, saying it's clear why. Again, it's not - this is an appeal of all those withholdings.

Why is the October 28, 2011 "update on Project Palm" being withheld? Also, information about the 12/02/2011 call, and the E-Apps notifications of 12/13/2011 and 12/16/2011, and the Thro to Seld e-mail of the latter date. Also the Cox to Smith e-mail of 01/25/2012.

ICP is explicitly challenging all withholdings concerning the extension of the comment period, including but not limited to the 02/06/2012 and 02/07/2012 emails.

July 2, 2012

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

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

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

Hello everyone -

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

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

June 25, 2012

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

Then Inner City Press filed Freedom of Information Act requests and appeals. Now, Mitsubishi related some information, while blacking out columns and columns, and most of its response on the CRA. Meanwhile, the Fed by letter dated June 18 says it is withholding 634 pages, but is providing other information, which we've yet to receive. We'll have more on this.

June 18, 2012

So the Federal Reserve, belatedly ruling on June 6 on Inner City Press / Fair Finance Watch FOIA request of February 17 regarding BB&T and BankAtlantic, says "156 full pages and portions of other pages (as will be apparent to you from the face of the documents to which redactions have been made) will be withheld from you." We aim to appeal - watch this site.

June 11, 2012

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

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

June 4, 2012

The Federal Reserve Bank of San Francisco has confirmed receipt of the comments of Inner City Press / Fair Finance Watch. While the letter of Kenneth R. Binning of the FRBSF is dated May 9, it wasn't mailed until May 29. Maybe THIS is one of the reasons the Federal Reserve didn't stop the subprime meltdown...

May 29, 2012

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

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

May 21, 2012

When the Federal Reserve approved on May 9 the applications to acquire 80% of Bank of East Asia, it did NOT require an application from or review the real party in interest: the Chinese government. Inner City Press / Fair Finance Watch raised the issue, this loophole created by the Fed, under which government's like the DPRK or Syria or Bahrain could acquire a bank in the US without any review of the risks created. The Fed merely cites the loophole it opened up itself (that governments are not companies -- an exception intended for US-based governments like states), then says that "Congress has provided other US agencies the authority to review national security issues in proposals by foreign companies to acquire US companies."

The Fed is missing, intentionally, the point: ownership of an insured bank by a foreign government that might even be subject to regime change by the US or its allies is a risk that the Fed must consider. Watch this site.

May 14, 2012

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

May 7, 2012

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

By Matthew Russell Lee

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

April 30, 2012

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

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

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

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

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

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

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

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

April 23, 2012

Who knew? The Federal Reserve, which barely enforces the Community Reinvestment Act in the US where it is the law, last week told a group of visitors from Central America that perhaps they could assist in rating banks' performance in countries outside the US. We'll see.

April 16, 2012

MetLife is one of the largest financial institutions in the world, but now it seeks to escape Federal Reserve regulation by selling its deposits to GE Capital Financial. Inner City Press / Fair Finance Watch has now opposed the transaction - watch this site.

April 9, 2012

The Fed has, so far, allowed BB&T to amend its application to acquire BankAtlantic, to tell ICP about its application late, and not yet to extend the comment period. ICP has complained:

This is a third comment on the applications by BB&T to acquire scandal-plagued BankAtlantic. BB&T has significantly amended the proposal after an adverse court ruling -- the changed structure should trigger a new public comment period.

Troublingly, while BB&T outside law firm Wachtell, Lipton send the amendments to the Fed on March 19 by courier, they were only sent to Inner City Press the follow (this) month. So Inner City Pres is requesting an extension of the comment period.

It would be ludicrous to argue that the changes to the proposal, the result of a court order, are not substantial. As such, it is unclear to ICP why no new public notice appears to have been published.

As described, BB&T would assume about $285 million of BankAtlantic Bancorp TruPS obligations in exchange for a 95% preferred interest in a newly established limited liability company, which will comprise about $423 million of loans and $17 million of other net assets. BB&T has estimated $350 million of recoverable preference value in the limited liability company. Once BB&T recovers $285 million in preference amount from the limited liability company, its interest in the company will terminate. BB&T would also have an incremental $35 million guarantee to assure BB&T's recovering within seven years of the $285 million preference amount.

ICP has recently obtained BB&T 2011 HMDA-LAR and will be commenting on its, in a week's time. The comment period must be extended.

April 2, 2012

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

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

The just released data show that Citigroup confined African Americans to higher-cost loans above this rate spread 3.38 times more frequently than whites in 2010, worse that its 2.25 disparity in 2009, Fair Finance Watch has found.

Citigroup confined Latinos to higher-cost loans above the rate spread 2.42 times more frequently than whites in 2010, worse that its 1.72 disparity in 2009, the data show.

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

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

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

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

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

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

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

March 26, 2012

Deutsche Bank was big into subprime, as lender, securitizing and foreclosing trustee. But now that the Dodd-Frank law is coming into effect, Deutsche Bank is restructuring to avoid the law's requirements. Fed Governor Tarullo has said this gives pause. And what will he and the Fed do?

March 19, 2012

So the FRB stiffly and belated went on Twitter and was greeted by... the CFPB, already there.

March 12, 2012

"The Federal Reserve is reportedly stalling some banks' proposals to pay dividends and repurchase shares, after it determined that the firms are miscalculating the potential losses on consumer debt in an event of a financial crisis." A little late, isn't it?

March 5, 2012

On the Volcker Rule, Fed board members and staff members met with JPMorgan Chase 16 times, Bank of America 10 times, Goldman Sachs 9 times, Barclays 9 times & Morgan Stanley 9 times -- what about Citigroup?

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

February 27, 2012

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

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

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

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

Footnote 10 of the FRB's approval order says

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

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

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

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

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

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

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

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

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

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

February 20, 2012

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

By Matthew R. Lee

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

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

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

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

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

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

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

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

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

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

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

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

February 13, 2012

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

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

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

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

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

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

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

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

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

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

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

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

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

February 6, 2012

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

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

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

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

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

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

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

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

January 30, 2012

Fifty days after Inner City Press filed a Freedom of Information Act request for Capital One's withholdings from its November 15, 2011 submission to the Federal Reserve, the Fed responded to ICP: withholding 590 pages in full, and providing to ICP and other commenters a mostly redacted 34 page document.

ICP has nearly immediately appealed, and commented to the Fed:

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

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

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

weaknesses in ING DIRECT (page 3);

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

small business lending (page 5);

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

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

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

and the entirety of pages 19 through 34, including the Fed's questions. This is outrageous.

The Fed cites Exemption 5, but it how an "intra-agency" exemption could be cited for what Capital One submitted is unclear. ICP opposes the invocation, too, of exemption 8 without explaining in detail the type of information in the 590 pages withheld in full. It is hard or impossible to argue about this black hole of information: the Governor charged with ruling on this appeal should review all of the information in camera, and release all portions that are not strictly exempt.

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

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

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

January 23, 2012

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

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

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

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

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

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

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

January 16, 2012

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

* * *

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

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

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

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

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

January 9, 2012

In remarks following a speech in Chicago, St. Louis Federal Reserve Bank President James Bullard called it unlikely that the central bank will need to buy more bonds to stimulate the economy, in view of recent data on holiday sales and labor market conditions. Bullard also repeated support for an explicit inflation target, which is expected to be a subject of the Fed's meeting later this month.

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

The Federal Reserve should re-open its comment period, inter alia following improper withholdings, now challenged under the Freedom of Information Act, from Capital One's (COF's) submissions to the Federal Reserve System dated January 3, 2012, with those improperly redacted by COF's law firm Wachtell, Lipton, Rosen & Katz.

All redacted information should be reviewed and provided before any decision to approve, even conditionally, COF's applications to acquire ING DIRECT. We refer most pressingly to the redacted response to the FRS' December 16 questions, sent to us by email on January 6 by WLRK under cover lever dated January 3, 2012.

COF is required to send us their submission under the FRS' ex parte rules, but has sent us significantly redacted versions.

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

This should be treated as a FOIA appeal but was submitted through the FRS' FOIA form on January 6 to gain expedited treatment. All information not clearly entitled to confidential treatment under the narrowest reading of the exemptions should be provided before any decision to approve, even conditionally, COF's applications to acquire ING DIRECT.

Even as redacted, the submission make clear that Capital One's ING proposal is related to its proposal to buy the HSBC (ex-Household) credit card platform. HSBC put out a press release bragging about accounts renewed that would to go to Capital One: even regarding this, there are issues. For inclusion in the record: http://big-lots.pissedconsumer.com/lied-to-by-racist-big-lots-worker-20080308114996.html

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

December 26, 2011

Bank of America & Federal Reserve Let Off Hook by DOJ Settlement, As BofA Bluewashed by UN

By Matthew R. Lee

SOUTH BRONX, December 22 -- The $335 million "Countrywide" fair lending settlement, as announced by the Department of Justice on December 21, went out of its way to let off the hook Bank of America and its regulator the Federal Reserve Board.

  The paper of record, without further comment, reported that the settlement was based on a referral by the Federal Reserve, covering a period before Bank of America owned Countrywide.

  But more than three years ago, over the detailed objections of Bronx-based Fair Finance Watch and others, the Federal Reserve allowed Bank of America to buy Countrywide and continue to run its predatory programs, which were slowed only by the subprime financial meltdown.

  Fair Finance Watch found, and Inner City Press reported, that "in 2006, at Countrywide and its higher-cost Full Spectrum, upper income African Americans were confined to higher cost loans over the rate spread 1.92 times more frequently than whites. In 2006, 24.70% of Countrywide's total mortgages were subprime.

  "In 2007, Countrywide Financial, which Bank of America had applied to buy, confined African Americans to higher-cost loans 1.95 times more frequently than whites, and denied the applications of Latinos 1.53 times more frequently than whites."

  The Federal Reserve approved Bank of America's acquisition of Countrywide without any conditions, despite this testimony. The disparities continues at Bank of America after the acquisition, without any action by the Fed.

  Years later comes a settlement that is, in context, a pittance, a smoke screen for a company which has received far more in government bailouts. For shame.

Footnote: Bank of America is also engaged in "blue washing," getting its chairman Charles Holliday named the co-chair of UN Secretary General Ban Ki-moon's High Level Panel on Sustainable Energy for All, despite B of A being protested as the number one funder of mountain top removeal coal mining. Now that B of A has settled charges of racial discrimination, will the UN take note?

* * *

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

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

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

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

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

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

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

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

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

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

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

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

Here is another just filed FOIA appeal:

This is a timely FOIA appeal to the Federal Reserve Board's partial denial of my FOIA request and letter of October 23, 2011 related to the proposed acquisition of US-based Bank of East Asia by the China Investment Corporation, and Central Huijin Investment Limited and Industrial and Commercial Bank of China (ICBC), owned by the Chinese government.

The Fed's response, regular mailed on December 9 -- this appeal is timely -- decides to limit ICP's FOIA request to only the portion related to the Community Reinvestment Act, because Inner City Press mentioned the CRA. And so the White & Case submission of October 17, which ICP was supposed to get under the Fed's rules against ex parte communication, has the responses to items 4, 5 and 6 withheld as "not responsive."

This makes a mockery both of FOIA and of the Fed's rules against ex parte communication. On October 23, Inner City Press submitted including to the Office of the Secretary of the FRB a letter stating in part that

"I filed a timely challenge to the applications involving Industrial and Commercial Bank of China (and its ultimate parent the Chinese government -- since the PRC government is the ultimate controlling shareholder, this letter timely questions why the PRC government is not an applicant here) to acquire 80% of Bank of East Asia. The FRB on October 6 asked ICBC three questions, including one CRA and consumer compliance, and told ICBC to send us a copy, under the rules against ex parte communications... We note that the signatory counsel for the Industrial and Commercial Bank of Bank is the former general counsel of the Federal Reserve Bank of New York, and believe that in this context it is particularly important that the information be provided and a public hearing held. Please send all of the improperly withheld information"

Because ICP gave the example of the withheld CRA response, the Fed decided to ignore ICP's right to the rest of the submission, despite the statement about "all of the improperly withheld information" -- that is, any part of the information ICP should have gotten under the rules against ex parte communication, minus that part explicitly exempt under FOIA.

The Fed is now trying to use "non-responsive" as a way about FOIA, to withhold without even citing a FOIA exemption. It is an outrage, and on appeal ALL of the applicants' October 17 submission should be released.

December 19, 2011

The Fed governors on December 16 approved an application with the boilerplate statement that they are concerned when there are disparities in HMDA data. Well, in the Miami Metropolitan Area, Eurobank in 2009 made NONE of its conventional home purchase and home improvement mortgage loans to African Americans. And the Fed has whitewashed and given its blessing to this exclusion...

December 12, 2011

What a scam: a challenged bank, required to send a copy of its submission to the Federal Reserve to Inner City Press / Fair Finance Watch, told the Fed on November that it was forwarding a copy of its response to ICP. But despite a November 14 cover letter, it wasn't actually put in the mail to ICP until December 5. What will the Fed do? Watch this site...

December 5, 2011

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

November 28, 2011

The fraudulence of the Fed's appointment of "community" representatives to its Reserve Bank board has been made clear in New York. On a recent WNYC radio debate about Occupy Wall Street, defense of banks was left up to one Kathryn Wilde of the David Rockefeller-founded NYC Partnership. Once she fell under attack, host Brian Lehrer added to her c.v., saying she is on the board of the Federal Reserve Bank of New York. Why?

November 21, 2011

...Not only about community groups and supporters of Ron Paul or Bernie Sanders, but also on personal experience, down at Occupy Wall Street, there is a lot of criticism of the Federal Reserve and its accountability, some of it fair and some unfair. The best way to distinguish the two is by being transparent.

But when we submit FOIA requests to the Fed, the responses are often delayed, often heavily redacted, and sometimes don't come at all.

Without mentioning any particular pending applications -- I've been told we can't, even though FOIA responses show that the Fed meets with applicants, and outside counsel who used to work in the Federal Reserve System, all the time -- be aware that most community groups make FOIA requests in connection with application they want to comment on.

So to receive responsive documents after the comment period is closed, or even after the application is decided, I mean, approved, is an abuse of FOIA.

While the Federal Reserve Banks often provide the portions of application for which the applicant has not requested confidential treatment, the Fed seems to have no way or commitment to review the propriety of applicants' requests for confidential treatment. There are no repercussions for making over-broad requests for confidential treatment, and so many applicants do, even for submissions that are explicitly label "CRA" submissions.

I'd suggest that comment period not be allowed to close until at least the portions of an application which are not entitled to confidential treatment under FOIA have been provided to the public.

Then there is the matter of what the Fed withholds. The Fed overuses exemption 8 as a blanket - anything to do with regulation - and makes its own processing opaque by overusing exemption 5. Tellingly, the Fed has taken to redacting things that are not exempt from FOIA from the pages it gives out, if the material was "not responsive to the request."

This brings me to the new low the Fed has hit: denying or "rejecting" requests allegedly because the Fed doesn't know what's being requested. I asked for Fed communications by a particular Reserve Bank president -- I won't say who, but he's nominated for the FDIC -- and the response was that searching for his common first name, even with less common last name, would be to burdensome. So NO record were provided.

Each of these things can be fixed, if you and the Governors provide a minimum of oversight. And the Fed, as well as the public, would benefit.

November 14, 2011

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

Also, according to its Form 10-Q filed November 7, Capital One Financial Corp. increased its mortgage repurchase reserves for uninsured securitizations. For the reasons of record, the Federal Reserve should re-open the comment period to fully consider Capital One's related proposal to buy the ex-Household predatory lending platform from HSBC.

Meanwhile the FRB is again and again extending its time to respond to FOIA requests related to these applications. The comment period must be extended.

November 7, 2011

Capital One's October 28 submission to the Federal Reserve -- sent to ICP by regular mail on October 31 -- states at the top of page 9 that subprime lending is good -- in direct contrast with Capital One's (first) response which said that NCRC urging it to do FHA lending down to 580 FICO scores "would qualify as subprime lending" and "put taxpayers dollars at risk" -- which is it? Maybe buying the ex-Household predatory lending platform from HSBC has change Capital One's position on subprime.

October 31, 2011

And so most recently the Federal Reserve "rejected" a Freedom of Information request about Capital One - ING DIRECT based on fees. Why not just start processing the request -- the Fed often extends its time anyway -- and ASK the requester about fees? Unless of course the fee issue is just a pretext not to give information...

October 24, 2011

In the continuing saga of Industrial and Commercial Bank of China (and its ultimate parent the Chinese government) to acquire 80% of Bank of East Asia, the Federal Reserve on October 6 asked ICBC three questions, including one on CRA and consumer compliance. But ICBC's counsel's letter dated October 17 say as to CRA, "please see the confidential response separately provided." It is outrageous to withhold the entirety of a response about CRA, totally out of keeping with what other banks do. The information should be released and be allowed to be commented on. Watch this site.

October 17, 2011

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

October 10, 2011

The Federal Reserve continues to hit new lows, now refusing to process Freedom of Information Act requests even as, on camera at their public meeting in Chicago about Capital One - ING DIRECT, Fed official Thro said Inner City Press can submit a new FOIA request. Now dated October 6 comes to letter refusing to process a request, the first time the Fed has done this. And what a time to do this it is. Watch this site.

October 3, 2011--

  At the second of the Federal Reserve Board's three public meetings on Capital One's application to acquire ING DIRECT, the Federal Reserve's Allison Thro decided to "comment" on the testimony, telling Inner City Press to submit a new Freedom of Information Act request for ING's "request for a non-control determination" for its proposal to own 9.8% of Capital One. Inner City Press has said ING should apply, to allow comment on issues like ING being under investigation for violating sanctions and doing business in Sudan and Syria. Now the Fed says to request a copy of ING's "request for a non-control determination" -- on which no public comment is accepted. And the Fed has delayed responding ICP's pending FOIA requests.
 
  Nevertheless, ICP the next day submitted a new FOIA request, which has yet to even be acknowledged by the Fed. Watch this site.

September 26, 2011

As of September 25, it appears that the Fed has yet to put online the transcript of the public meeting on Capital One - ING Direct held 5 days previous, much slower than the UN, IMF and other agencies work.

September 19, 2011

After Gov. Tarullo's unprecedented speech, Inner City Press / Fair Finance Watch put in an eighth comment to the Federal Reserve on Capital One, including

"ICP has received an FRB letter of September 12, responding to ICP's August 19 FOIA request by saying "there may be delays." The comment period should, in that case, be extended. In this context it is unreasonable to expect new FOIA requests, for example for the withheld portions of the September 9 response Capital One was supposed to send. The improperly withheld portions from be provided forthwith."

September 12, 2011

So the Fed asked Capital One to respond to some questions by September 9 and send a copy to commenters. So where is the response? Watch this site.

September 5, 2011

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

It is reported that "[a]lthough Federal Reserve Board officials promised to unveil a long-awaited package of key Dodd-Frank rules by the end of the summer, the central bank is likely to need more time to complete them. The rules, which implement Section 165 of the regulatory reform law, cover some of the biggest issues in financial services, including risk-based capital requirements, leverage, resolution planning and concentration limits."

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

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

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

August 29, 2011

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

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

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

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

  We nominate Hoenig as an honest Fed officials, at least on this... Watch this site.

August 22, 2011

The Fed has withhold copious amounts of information from Capital One and ING, including the Fed's response to a stealth request by ING to have even have to apply to come to own up to 9.8% of Capital One. Inner City Press has submitted FOIA requests and appeals, asking for a ruling before the Fed's (initial?) comment period expires on August 22. But the information, and a ruling, have not be received. Arrogance or incompetence?

August 15, 2011

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

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

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

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

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

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

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

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

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

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

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

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

August 8, 2011

On July 22, Inner City Press submitted to the Fed a formal FOIA request for

"the entirety of the below-captioned applications, and for all records reflected FRS communications with the companies at issue for the past 12 months, and up until the date of your final response to this timely request. There is a comment period, currently running through August 18, and we are requesting that you response as quickly as possible to allow any necessary FOIA appeal before the comment period closes. Please advise. Here are the applications / companies:

Capital One Financial Corporation, McLean, Virginia ING Bank, FSB, Wilmington, DE, & indirectly acquire voting shares of Sharebuilder Advisors, LLC, & ING Direct Investing, Inc., Seattle, Washington - operating a fsb & investment financial advisory& securities brokerage services - 225.28 4 Richmond 08/18/2011" (Emphasis added.)

Note that the request was for "all records reflecting FRS communications with the companies" -- Capital One and ING -- NOT, as mis-recited in the Fed's August 3 denial, only communications related to the application.

While we do not have to explain the reason for a FOIA request, for the record on the appeal, since we are alleging fair lending violations at Capital One, and sanctions and money laundering violations at ING, we have stated that we wish to review all non-exempt FRS communications about these companies and issues.

The Fed Denial also improperly seeks to limit the request to communications between FRS staff and the companies, excluding communications inside the FRS (or between the FRS and other parties) ABOUT the companies. This was requested, and in responses to other identically worded FOIA requests from ICP even just this year on Industrial & Commercial Bank of China, the Fed has provided intra-FRS emails about companies.

The Denial's blatant mis-quotation of the request denied access to these important records, seemingly intentionally so. Accordingly, we have immediately appealed and requested the improperly withheld records, and a rule, by the August 22 expiration of the comment period on the application, which should be extended as also requested by NCRC. We'll have more on this.

August 1, 2011

While the Federal Reserve tries to evade its duties under FOIA, most recently by claiming that it does not have to deal with request that are made in connection with comments on mergers, the Fed has for more than a week, in the face of two separate requests from Inner City Press, failed to maintain and fix its online FOIA submission form. The Fed may not want to be transparent, but the law requires it. Watch this site.

July 25, 2011

So the Federal Reserve has received Capital One's application to acquire ING, saying the comment period runs through August 18. But on July 24, the Fed's online e-FOIA form to request the application wasn't working, and the Secretary's Office didn't confirm receipt of a separately emailed request....

July 18, 2011

When the Fed hauled off and approved Comerica's Sterling application last year, it said that 2010 Home Mortgage Disclosure Act aggregate data is not available yet. This after the Fed received a timely comment that, among other things

“In 2010 for all loans, Comerica confined African Americans 6.26 times more frequently than whites to higher cost, rate spread loans. At Comerica, 11.3 percent of loans to African Americans were over the rate spread, versus only 1.9 percent of loans to whites.”

The Fed has enough 2010 HMDA data to review these disparities, but did not. For shame.

July 11, 2011

It has become clear that there is no legal basis for the government of China to have not applied. The BHC Act excludes US governments, not foreign; the Fed has simply read in an exemption. But consider: foreign governments can be subject to asset freezes, such as the one imposed by the UN Security Council and US government on Libya.

Clearly, ownership by foreign governments poses issues that ownership by US government entities does not. The Fed has been wrong to read an exemption, and should now require an application by the Chinese government. On the current record, these applications should not be approved.

After challenging withholdings, what I received behind a White & Case cover letter of June 30, 2011 is still incomplete. ICBC's counsel's letter dated June 6 says as to fair lending, “Please see Confidential Exhibit 1 (separately provided).”

Now belatedly a portion has been provided. But it refers to a interviews, then withholds the characterization. It says actions have been taken to ensure fair lending compliance - then withholds them. But

In the New York City Metropolitan Area, Bank of East Asia in 2009 made none of its conventional home purchase and refinance mortgage loans to African Americans and Latinos. Even among its Asian refinance borrowers, all had incomes over 100% of MSA median, mostly over 120% of median. In the Los Angeles MSA, all of Bank of East Asia's refinance leading was to Asians with incomes over 120% of MSA median.

Also still withheld: HMDA, second review, even future products, which make a mockery of the Fed's rules against ex parte communications. Other banks routinely provide copies of such answers, undermining any claim of competitive harm.

The comment period should be extended and no decision made until this improperly withheld information is provided. All non exempt portions of which should be released and the comment period extended, and all improperly withheld information provided.

We note that the signatory counsel for the Industrial and Commercial Bank of Bank is the former general counsel of the Federal Reserve Bank of New York, and believe that in this context it is particularly important that the information be provided and a public hearing held.

July 4, 2011

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

June 27, 2011

The Federal Reserve's approval of Bank of Montreal to buy M&I, delivered the day BEFORE a public official's public hearing in Milwaukee, confines most of the issues to footnotes. Bailout? Note 16:

“Some commenters expressed concerns about the compensation to be paid to certain management at M&I Bank in light of M&I’s participation in Treasury’s Capital Purchase Program. As noted, M&I’s preferred shares held by Treasury under the program will be fully redeemed as part of this proposal. In addition, the Board has reviewed the financial and managerial factors in this proposal, including the compensation noted by commenters, in the context of the financial and managerial condition of the Applicants, M&I, and the resulting organization.”

Note 16: “Harris Central is a special-purpose bank exempt from performance evaluations under the CRA. 12 CFR 345.11(c)(3).”

For HMDA disparities, the Fed claims that the 2010 data, which it has yet to release, shows improvement. And on impacts on the community:

“A commenter expressed concern that the proposed acquisition would result in a loss of jobs. The effect of a proposed transaction on employment in a community is not among the factors that the Board is authorized to consider under the BHC Act, and the federal banking agencies, courts, and the Congress consistently have interpreted the convenience and needs factor to relate to the effect of a proposal on the availability and quality of banking services in a community.”

We'll have more, and soon, about the Fed's putative respect for what Congress says. Watch this site.

June 20, 2011

The Fed has hit a new low, saying it does not have to look at Morgan Stanley's Saxon ripping off military servicemembers because it's 24.9% of Morgan Stanley being acquired:

“A commenter asserted that recently announced losses at a joint venture between MUFG and Morgan Stanley reflect poorly on MUFG’s managerial capacity and its ability to avoid predatory lending. MUFG has reviewed management and controls at the joint venture and has strengthened its risk-management framework. In addition, MUFG has increased the amount of capital held by the joint venture. There appears to be no relationship between the losses at the joint venture, which engages in securities activities in Japan, and predatory lending, as asserted by the commenter.

“The commenter also referred to news reports regarding Morgan Stanley’s mortgage servicer, Saxon Mortgage Services, Inc., with respect to a class action lawsuit involving the Home Affordable Modification Program and a lawsuit under the Servicemembers Civil Relief Act. In addition, the commenter referred to a settlement by Morgan Stanley with the Office of the Attorney General of the Commonwealth of Massachusetts regarding allegedly unfair residential mortgage loans. As noted above, MUFG does not control the operations of Morgan Stanley and cannot exercise a controlling influence over its management. Moreover, as part of its ongoing supervision of Morgan Stanley, the Board monitors the status of government investigations, consults as needed with relevant regulatory authorities, and periodically reviews Morgan Stanley’s liability from material litigation.

“Finally, the commenter raised allegations that are outside the limited statutory factors that the Board is authorized to consider when reviewing an application under the BHC Act.”

A new low....

June 13, 2011

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

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

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

June 6, 2011

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

May 30, 2011

The response by former Federal Reserve Bank of New York chief counsel Ernest Patrikis to the New York Fed itself cites as authority that a foreign government need not apply to the Fed to own a bank in the US... a statement by Fed's general counsel Scott Alvarez. Talk about circular. More on this to come.

May 23, 2011

Does the Federal Reserve System have any rules about being lobbied or allowing bank representation by its previous officials? For now what we can say is that Ernest Patrikis, formerly the general counsel of the Federal Reserve Bank of New York, is sending letters to that same FRBNY, for example on May 17, 2011. It has been questioned, so far without response. Watch this site.

May 16, 2011

When the Federal Reserve hauled off and approved Hancock's application to buy Whitney, it had to ignore glaring disparities in Hancock's lending. It also had to brush over anticompetitive effects, especially but not only in the Biloxi market. Governor Tarullo issued a separate “concurring” statement, placing weight on that the institution that proposes to purchase the branches to be divested is competitive suitable. Sleight of hand? We'll see.

May 9, 2011

Thus spake Alan Greenspan: ““No one’s interests are served by the imposition of ineffective or burdensome rules that lead to excessive increases in costs or unnecessary restrictions in the supply of credit.” Except that's Ben Bernanke, last week, in Chicago...

May 2, 2011

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

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

In a return phone call to the same Federal Reserve staffer who called to announce the approval, Inner City Press has asked the Fed to state the basis for the abstention, but note the report that the Obama administration is considering Raskin (as well as former Michigan governor Jennifer Granholm) to head the Consumer Financial Protection Bureau. http://www.reuters.com/article/2011/04/06/financial-regulation-consumer-idUSN0621321820110406

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

April 25, 2011

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

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

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

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

Watch this site.

April 18, 2011

Inner City Press / Fair Finance Watch has asked both the Federal Reserve Board and Federal Reserve Bank of New York for full copies of applications, and to rule on any needed FOIA appeal before the expiration of a comment period on May 12. We'll see.

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

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

April 11, 2011

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

April 4, 2011

The Federal Reserve, which granted Inner City Press a one week extension of the comment period on Bank of Montreal / Harris - M&I due to withheld portions of BMO's application, has refused to rule on a simple FOIA demand for radically redacted fair lending information submitted by Bank on Montreal. The Fed is inconsistent and secretive, to put it mildly.

March 28, 2011

So while the Fed gave Inner City Press a one week extension of the comment period on Bank of Montreal's application to buy M&I, based on the withholding of information by Bank of Montreal, the Fed has yet to address Bank of Montreal's radical redaction of its fair lending responses. And the Fed explicitly denied extension request by other groups, apparently for not having requested the record early in the process. But if the Fed will wait to hear one group's comments, why not others'?

March 21, 2011

The Fed still doesn't seem to understand that predatory lending is not only attributable to retail lenders. In their order last week, the Fed Governors say Inner City Press

“asserted that both CMTH and STB have been involved in the subprime and predatory lending industries in the United States and that the proposal could increase such activities in the combined organization. Neither CMTH nor STB engages in any retail lending activities in the United States (including subprime lending). Although both Japanese banking organizations incurred losses before 2009 on subprime-related investments, current financial reports show that both CMTH and STB significantly reduced their holdings in these investments.”

And what about those “subprime-related investments”? Watch this site.

March 14, 2011

The Federal Reserve on March 11 hauled off and approved Goldman Sachs' application to take stake in Avenue Bank, then called Inner City Press / Fair Finance Watch to say that, as the commenter, ICP has two weeks to ask reconsideration. The Fed's Order recited for example that

“The commenter expressed concern about subprime loans originated by Fremont

Investment and Loan (“Fremont”) that the commenter has alleged were acquired by Litton. Fremont was a subprime lender whose parent, Fremont General, filed for bankruptcy in 2008. Litton acquired the servicing rights for loans originated by Fremont but did not acquire ownership of the loans and was not involved in originating them.”

The Order goes on to say that

“The Federal Reserve is conducting an in-depth review of practices at Litton and other large mortgage servicers, including a review of internal controls and processes related to all aspects of servicer operations. The Federal Reserve has supervisory authority over bank holding companies and their nonbank subsidiaries and may take supervisory or other actions in connection with those reviews, as the Board determines to be appropriate. In addition, as part of its supervisory process, the Board will continue to monitor the operations of Litton as well as other Goldman subsidiaries to ensure that their processes and procedures comply with applicable consumer protection laws and regulations.”

We'll see. Meanwhile on Hancock - Whitney

“Jean Tate, a spokeswoman for the Federal Reserve Bank of Atlanta, said that when the Fed receives comments that are material, it forwards them on to the applicant for a response and then shares that response with the commenter, who has a chance to respond. The process has the potential to become a lengthy back-and-forth, and the correspondence becomes part of the record that the Federal Reserve ultimately considers.Tate couldn't say how common it is for proposed mergers to elicit public comments, whether Fair Finance Watch's opposition to the Hancock-Whitney deal has been deemed material, or how long it might take to evaluate the group's fair lending concerns. 'It could be part of what's considered in the approval process,' she said.”

March 7, 2011

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

February 28, 2011

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

February 21, 2011

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

February 14, 2011

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

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

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

February 7, 2011

So now the Federal Reserve Bank of New York instructs “do not mix requests with comment letters.” Inner City Press replied on February 2 that

“the reason we link the FOIA request to comment on the application is that we are requesting the information in order to comment on it -- otherwise, we get FOIA responses after the comment period is close or application ruled on. Could you provide the email address (rather than form) of the Federal Reserve's FOIA office? Thanks in advance.”

But the Fed has yet to response in any way...

January 31, 2011

Several banks, and some community groups, are beefing about the Federal Reserve's Loan Officer Compensation rule, which they say may undermine CRA lending. We'll see.

January 24, 2011

Federal Reserve Bank of Kansas City President Thomas Hoenig has spoken in favor of dismantling large banks. And the other Fed officials?

January 17, 2011

M&T has now applied to the Federal Reserve to buy Wilmington Trust. Inner City Press / Fair Finance Watch has requested the application from the New York Fed, so far without response. Watch this site.

January 10, 2011

So why DID William Dudley of the New York Fed meet, during the FOMC black out period, with Jaime Dimon of JPMorgan Chase, John Mack of Morgan Stanley and Lloyd Blankfein of Goldman Sachs? Here's hoping that Congress requires answers.

January 3, 2011

Guess who has a YouTube channel? The Federal Reserve Board, of course -- but the comment function is disabled...

December 27, 2010

There's something either cheesy or endearing about the Fed putting on its website links to Bernanke's appearance on 60 Minutes, including unaired footage.

December 20, 2010

The Federal Reserve has hit a new low in the Caja Madrid case. A merger of Spanish savings banks which own, among other things, amusement parks and lenders down to the Canary Island, several banks would come to own City National Bank of Florida, whose lending to African Americans has been in decline. But the Fed rushed it through to meet a Spanish deadline, despite the lack of any response from Caja Madrid or City National Bank of Florida.

December 13, 2010

Is the Federal Reserve just a rubber stamp for mergers in other countries despite their impact in US? Caja Madrid and others are merging in Spain, including a savings bank which owns amusement parks and “other lenders... in the Canary Islands.” Meanwhile while Caja Madrid has owned City National Bank of Florida, its lending to African Americans has decreased. With this now timely raised to the Fed, and Caja claiming there's no need to response -- it wants a fast merger in Spain -- will the Fed ask the right questions?

December 6, 2010

Inner City Press / Fair Finance Watch last week commented to Federal Reserve against the applications of First Niagara to acquire and merge with NewAlliance. This followed the New York Fed delaying response to ICP's FOIA request for the application, and then trying to charge money.

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

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

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

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

November 29, 2010

The Federal Reserve is being sued by TCF in Minneapolis...

November 22, 2010

From Governor Duke last week: “the lack of certainty and price discovery created by the glut of foreclosures has further weakened property values and has contributed to a slowing in the recovery of the housing market more generally.” And on a moratorium?

November 15, 2010

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

November 8, 2010

The Federal Reserve's H2A of November 5 listed the First Niagara - New Alliance application, with comment period running through December 3:

First Niagara Financial Group, Inc., Buffalo, New York to acquire 100 percent of the voting shares of New Alliance Bancshares, Inc., and thereby indirectly acquire voting shares of New Alliance Bank, both of New Haven, Connecticut 3 New York 12/03/10

We're all over it. Watch this site.

November 1, 2010

Why isn't a Federal Reserve Board review required for this? “Citigroup Global Markets Ltd. has bought the Israeli government's entire 11.69% stake in Israel Discount Bank Ltd. (DSCT.TV) for 832 million shekels ($231 million) and will distribute those shares to other institutional investors, Discount Bank said Tuesday” of last week.

October 25, 2010

Even with new Governors installed, the Federal Reserve Board is considering fewer and fewer comments on bank expansion applications. Those protests which the Federal Reserve System does receive are increasingly bottled up at the Reserve Bank level, with cursory and incomplete summaries given to the governors. This has been raised to the new Governors. What will they do?

October 18, 2010

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

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

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

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

October 11, 2010

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

October 4, 2010

So Bernanke last week said the media ten to “make the good times too hot and the bad times too cold.” This from a man who, like his predecessor, ignored timely comments that Citigroup et al were predatory lenders...

September 27, 2010

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

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

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

September 20, 2010

Speaking at the Federal Reserve's September 24 session on HMDA are representatives of Bank of America and the American Securitization Forum. And what might they be saying?

September 13, 2010

From helicopter Ben Bernanke: "The new financial reform law and current negotiations on new Basel capital and liquidity regulations have together set into motion a three-part strategy to address too-big-to-fail." We'll see.

On July 21, the Fed met with Visa about interchange fees. After that, Bank of America Corp., J.P. Morgan Chase & Co. and American Express. Goldman Sachs Group Inc., Citigroup Inc. and others have also discussed tough rules for derivatives with government officials. Citi executives, meeting with the Fed on Aug. 18, expressed concerns about the effect of the new rules on U.S. firms. "Citigroup representatives also expressed concerns about a narrow interpretation of the definition of hedging and the importance of retaining their ability to hedge across markets," the summary prepared by the Fed said....

The Federal Reserve System announced on August 26 that it “will sponsor a national summit on September 1 and 2 to discuss methods and resources for encouraging neighborhood stabilization in the aftermath of the U.S. home mortgage foreclosure crisis.” The Fed said that “summit speakers include Governor Duke; U.S. Department of Housing and Urban Development Secretary Shaun Donovan; Federal Reserve Bank Presidents Charles Evans (Chicago), Sandra Pianalto (Cleveland), and Eric Rosengren (Boston); and representatives of various sectors involved in the foreclosure process and community stabilization efforts.” And who are those?

Federal Reserve Governor Elizabeth Duke said in Chicago, “Any changes we make to the regulation should retain the flexibility that has been integral to the CRA’s success” -- that is, leave things arbitrary...

The Federal Reserve's agenda for its CRA hearing in Los Angeles on August 17 needs but does not have several disclosures. A former Fed official is appearing for a bank and trade association. Worse, JPMorgan Chase's former CRA officer is testifying early, listed only as a professor. This type of laxity both explains the Fed's blindness to the subprime melt-down and why many would like regulatory functions stripped from the Fed...

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

Even as Wells Fargo is the subject of a governmental charge of predatory lending, by the Pennsylvania Human Relations Commission, the Federal Reserve has put David Moskowitz, Deputy General Counsel, Wells Fargo & Company on its formal panel on the Home Mortgage Disclosure Act on August 5... Discuss this: Inner City Press / Fair Finance Watch has analyzed the 2009 data, which it obtained from Wells Fargo, and has found that in 2009, Wells Fargo Bank NA confined African Americans to high cost mortgages 2.40 more frequently than whites. Its disparatiy for Latinos was 2.09. For its subprime affiliate Wells Fargo Funding, the disparities in 2009 were even worse that the bank, and those cited by the Pennsylvania Human Relations Commission: African Americans were confirmed to high cost loans four times more frequently than whites.

Here's what the Fed said last week in considering Inner City Press / Fair Finance Watch analysis of disparities in Toronto Dominion's 2009 HMDA data:

Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, or pricing among members of different racial or ethnic groups in certain local areas, they provide an insufficient basis by themselves on which to conclude whether or not TD is excluding any racial or ethnic group on a prohibited basis. The Board recognizes that HMDA data alone, even with the recent addition of pricing information, provide only limited information about the covered loans.30 HMDA data, therefore, have limitations that make them an inadequate basis, absent other information, for concluding that an institution has engaged in illegal lending discrimination.

The Board is nevertheless concerned when HMDA data for an institution indicate disparities in lending and believes that all lending institutions are obligated to ensure that their lending practices are based on criteria that ensure not only safe and sound lending but also equal access to credit by creditworthy applicants regardless of their race or ethnicity. Moreover, the Board believes that all bank holding companies and their affiliates must conduct their mortgage lending operations without any abusive lending practices and in compliance with all consumer protection laws.

Because of the limitations of HMDA data, the Board has considered these data carefully and taken into account other information, including examination reports that provide on-site evaluations of compliance by TD’s subsidiary insured depository institutions with fair lending laws. The Board also has consulted with the OCC, the primary federal supervisor of TD’s subsidiary banks. In addition, the Board has considered information provided by TD about its compliance risk-management systems.

So no matter how disparate the data, the Fed will rebut it with confidential mumbo jumbo...

Governor Duke, at the HMDA hearing in Atlanta on July 15, intoned

“HMDA has three purposes. One purpose is to provide the public and government officials with data that will help show whether lenders are serving the housing needs of the neighborhoods and communities in which they are located. A second is to help government officials target public investment to promote private investment where it is needed. A third purpose is to provide data to assist in identifying possible discriminatory lending patterns and facilitate the enforcement of anti-discrimination laws, such as the Equal Credit Opportunity Act.”

Why then do Fed orders on contested merger now by rote say that HMDA doesn't prove anything?

The Federal Reserve Bank of New York said Friday that a broad legal release that was part of agreements in 2008 to cancel credit-derivative contracts between American International Group Inc. and various banks was put forth by lawyers for the insurer and accepted by the regional Fed bank.

This is another reason that Federal Reserve Board -- governmental -- decisions should be made by the non-government Reserve Banks. We'll have more on this, including regarding Morgan Stanley...

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

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

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

Good morning Mr. Lee:

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

Best,

Kimberly Hooks

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

Watch this site.

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

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

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

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

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

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

So as (for now) agreed, the Presidents of the Reserve Banks would still be selected by the Reserve Bank boards, only the three bankers on each couldn't vote. But is that enough of a safeguard?

Lame (duck) -- "Vice Chairman Donald L. Kohn announced on Friday that, at the request of Federal Reserve Chairman Ben S. Bernanke, he plans to remain on the Board until a new Governor is appointed but to leave no later than September 1. He had announced in March that he intended to resign at the expiration of his term as Vice Chairman on June 23, 2010. While he remains on the Board as a Governor, he will continue to participate in all Board and Federal Open Market Committee meetings."

The Federal Reserve's Consumer Advisory Council will meet on June 17, about the Community Reinvestment Act. A push is on to block any Congressional expansion of the CRA by saying that much can be done by regulatory moves, by the Federal Reserve. The Fed had a long time to do this, and never never moved to examine BHC subsidiary subprime lenders. Too little, too late.

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

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

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

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

So in the Senate bill that passed, and in whatever comes out of Conference, do the clearinghouses -- "designated financial markets facilities" -- have emergency access to to Fed lending and funding programs? This we aim to find out. For now, here was

May 17, 2010

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

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

May 10, 2010

The Federal Reserve is advocating for itself:

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

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

May 3, 2010

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

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

Dear Chairman Bernanke and others in the FRS:

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

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

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

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

April 26, 2010

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

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

April 19, 2010

In an otherwise bland speech in Arlington we've gone back to find, Fed governor Tarullo said CRA "requires that we, as regulators,, evaluate financial institutions' performance in meeting those credit needs and to consider that performance, as reflected in individual institutions' CRA ratings, when reviewing applications for mergers, acquisitions, and branches." The phrase that performance is reflected in CRA rating -- over 98% of which are Satisfactory or Outstanding -- makes it appear that a CRA "safe harbor" was enacted. But it wasn't...

April 12, 2010

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

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

April 5, 2010

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

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

March 29, 2010

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

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

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

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

March 22, 2010

Typical Fed lack of transparency: Matthew M. Collette, a lawyer for the Fed's board of governors, argued in January that banks would be less likely to use the discount window and other lending-of-last-resort programs if they know their use would be made public. He said at the time that accessing the window carries a negative connotation if use was made public, even when a healthy bank suffering a short-term liquidity issue does it.

"The requirement of disclosure under FOIA and its proper limits are matters of congressional policy," U.S. Circuit Judge Dennis Jacobs wrote in the Bloomberg decision. "The statute as written by Congress sets forth no basis for the exemption the Board asks us to read into it. If the Board believes such an exemption would better serve the national interest, it should ask Congress to amend the statute."

The 2d Circuit Court of Appeals has upheld the slap down of the Federal Reserve for withholding information about a portfolio of securities supporting a loan extended by the Fed in connection with J.P. Morgan Chase & Co.'s acquisition of Bear Stearns...

March 15, 2010

That the Federal Reserve's own consumer advisers said the agency is not qualified for consumer protection is damning. And some current CAC members who declined to sign did not only because they are just entering and don't want to immediately bite the hand that feeds, or at least flies, them. The Fed has put consumer financial protection on the agenda of the next meeting of its CAC...

March 8, 2010

And now the Federal Reserve (Bank of NY) doesn't even acknowledge the receipt of timely comments on the deals it's supposed to consider. And this is the agency that wants to be in charge of consumer protection?

March 1, 2010

While some are focusing on the personal profit of former NY Fed head Freidman from the AIG bail out, how about Corrigan re-surfacing flacking for Goldman Sachs on its paid Greek deceptions?

February 22, 2009

Speaking in Puerto Rico last week, Bill Dudley the new president of the New York Fed -- successor to Tim Geithner -- said while he'd visited La Isla del Encanto as a kid, this was his first visit in his "current role." He bragged about the Fed, "during CRA Week," highlighting "products especially suited to the Puerto Rican market." Are we -- or was he -- talking subprime?

February 8, 2010

In his February 3 speech barely claiming his second term as Fed chairman, Ben Bernanke bragged about the Fed's transparency, despite its withholding of information about mergers and consumer protection as well as bail outs. He said

"The Federal Reserve is already one of the most transparent and accountable central banks in the world, providing voluminous information and explanation concerning all of its activities. However, I believe that we should be prepared to do even more, to become even more transparent. It is essential that the public have the information it needs to understand and be assured of the integrity of all our operations."

Having had to litigate Freedom of Information Act cases with the Fed, which hid information about mergers and about banks' ownership of subprime lenders, we disagree.

February 1, 2010

While Inner City Press Fair Finance Watch has opposed and appealed Goldman Sachs' withholding of large portions of its submission to the New York Banking Department in response to ICP's protest of Goldman's branching application to the NYBD, it's worth making a comparison to the Federal Reserve.

Goldman Sachs must be relying on favoritism from the Fed -- while ICP has protested another Goldman application to the Fed, Goldman's response to the Fed was much more conclusory than to the NYBD. One can conclude that the Fed is a weak regulator -- and, relatedly, that it receives less information from the industry, as least on subprime questions, for that reason.

Citigroup jacked up its stake in the controlling shareholder of Banco de Chile, acquiring an additional 8.52% in LQ Inversiones Financieras for $511 million. Banco de Chile, the Andean nation's second largest bank, is controlled by the local Luksic family, which also controls U.K.-listed copper miner Antofagasta PLC (ANTO.LN) and U.S.-listed beverage company Compania Cervecerias Unidas SA (CCU), among other assets. In a 2007 deal Citigroup Inc. took a 10.44% stake in Banco de Chile, through LQ, and the Chilean bank acquired Citibank's local assets. Under the terms of the Banco de Chile-Citigroup deal, the Chilean bank took over all of Citibank's local clientele, while the U.S. bank retained control of Banco de Chile's operations on U.S. soil.

And where is Citigroup's home country regulator, the Federal Reserve?

January 25, 2010

With Geithner supposedly on the outs, and Bernanke facing more opposition -- though not enough -- in the Senate, it's not a happy time for the Federal Reserve right now.

January 18, 2010

As Obama's Bank Fees Under-Target Citigroup and AIG, Geithner;s Federal Reserve Days Questioned

By Matthew R. Lee

NEW YORK, January 14 -- The night before President Barack Obama was scheduled to unveil a scheme of fees on the three or four dozen largest financial firms, the Administration held a then embargoed conference call with the press.

  Several questions centered around why the auto manufacturers which took TARP funds would not also be fined. Others wondered, if the fee regime yielded more than what the government and taxpayers lost through TARP before it expired in ten years, would the money still be collected and how would it be used?

  The Administration representative, who the press was told could only be called a "senior administration official," replied that once the basis of calculating the fee had been decided on, car companies didn't fit it.

  Before all questions were answered, the Administration signed off, noting that Obama would be making his announcement at 11:20 the next day. Among the questions not taken or answered was this, from Inner City Press: why assess all of the financial firms under the program at the same rate, fifteen basis points?

  Citigroup, for example, received much more TARP and other payouts than other covered banks. And as South Bronx based Fair Finance Watch and others showed at the time, the government tried to help Citigroup scoop up Wachovia, until another less subpsized offer won the day. Why benefit Citigroup again by treating it like other, less subprime heavy banks? The same holds for AIG.

  The "senior Administration official" went out of his way to portray the program as a matter of principle for not only Obama but also "his" Treasury Secretary, Tim Geithner.

  To some, the timing is meant to blunt renewed bipartisan criticism of Geithner, this time only only for not paying his taxes to the IRS -- which would be collecting the fees from the financial firms -- but for having told AIG not to disclose the preferential basis of the bailouts it was receiving, while he was at the Federal Reserve Bank of New York.

  But it was hard to note that his seeming favorite, AIG, and the bank most benefited by his Federal Reserve Bank of New York, Citigroup, are benefited by the structure of this proposed Financial Crisis Responsibility Fee program.

  In fact, some say it has an aspect of a Tim Geithner bail out.

  And that's... a question that should be asked, and answered. Watch this site.

January 11, 2010

So now for his work at the New York Fed, telling AIG to withhold information from the public, Geithner's on the grill. That's all to the good. But it also reflected on the wider Fed...

January 4, 2010

In the run up to the Senate debate on Bernanke, see this on mortgage(s) - click here.

December 28, 2009

While the Federal Reserve has yet to ask Goldman Sachs the questions it should, including as triggered by Inner City Press / Fair Finance Watch's comments on Goldman's application to acquire bank stakes, now the NY Banking Department will have a chance. Will the two coordinate? Watch this site.

December 21, 2009

So Bernanke passed, 16-7, the Senate Banking Committee, with further opposition pending in the full Senate in January.

December 14, 2009

The Federal Reserve has belatedly written to Inner City Press that "You previously submitted a FOIA request for the Goldman Sachs application. Additional information on the organizational chart has become available and is attached." We'll put the chart online here. We'll have more on this.

December 7, 2009

The holds placed in the Senate on President Obama's renomination of Ben Bernanke give more leverage to the move to audit the Federal Reserve.

November 30, 2009

  Ben Bernanke has written that "the Fed played a major part in arresting the crisis, and we should be seeking to preserve, not degrade, the institution's ability to foster financial stability and to promote economic recovery without inflation." But what about the Fed's inattention to predatory lending and its role in TRIGGERING the crisis? The Fed's lack of scrutiny of the predatory lending and service issues raised against Goldman Sachs pending applications does not bode well.

November 23, 2009

The Federal Reserve Bank of New York, it turns out, is getting poorer or can't count. They claimed to have mailed a copy of Goldman Sachs' application to Inner City Press on November 3. But they did not arrive. When they did, it showed $7.30 of postage on November 3 -- then $1.15 extra on November 13, after the envelope had been returned to the Fed...

November 16, 2009

Ah, the arrogance of Goldman Sachs. Nearly a month after ICP Fair Finance Watch filed comments with the Federal Reserve, a response arrived from Goldman. They'd ignored the directions of how to send mail to Inner City Press, and hadn't bother to e-mail. And their response, while claiming that detailed reports of misdeeds, including by subsidiary Litton, by sample target Avenue Bank and in loans bought from Fremont are "replete with egregious mistakes and factual inaccuracies," does not identify a single error. They're just counting on the friendship or subservience of the Fed. Watch this space.

November 9, 2009

Long after Inner City Press filed comments and a FOIA request with the Federal Reserve on Goldman Sachs' application, it has yet to receive any responsive filing by Goldman. A Fed staffer called to say that the requested copy of the application was on its way, but it still has not arrived. Some process.

And under Dodd's proposed bill, what would happen to the Federal Reserve Banks?

November 2, 2009

Bank holding company CIT has declared bankruptcy. So what does being a BHC mean?

October 26, 2009

A week after Inner City Press' Fair Finance Watch filed a formal protest to Goldman Sachs' applications to the Federal Reserve for shares in several bank, and after the Fed has started the clock for Goldman's response, no defense has been offered.

October 19, 2009

Goldman Sachs was allowed to become a bank holding company without any public comment period or consideration of the Community Reinvestment Act, which would otherwise have been required. Since then, as simply one example, Goldman Sachs has been charged with involvement in predatory lending, including for the acts of its subprime servicing subsidiary, Litton Loan Servicing. Even Goldman's settlement left the public in the dark.

October 12, 2009

Hitting a new low, it took the Federal Reserve until September 30, 2009 to respond to Inner City Press / Fair Finance Watch's December 8, 2008 Freedom of Information Act request for the applications to become bank holding companies submitted by GMAC and the CIT Group. That's more than nine months, and even then, the Fed says it is withholding 182 pages. We will be appealing...

October 5, 2009

So one of the few proposed ways that the Fed might help CRA -- by taking on oversight power over large hedge funds, which would allow a related move to assess these funds under CRA -- Bernanke rejected last week in Q&A with Congress. Great...

September 28, 2009

As the legislation to require auditing of the Federal Reserve gather strength and supporters in Congress, the Fed sent its general council to argue that this type of accountability would just lead to higher rates. This sounds like JPMorgan Chase's argument when Georgia passed anti-predatory lending legislation...

September 21, 2009

Last week the Federal Reserve issued a letter saying it will belated begin examining non-bank subsidiaries like CitiFinancial. The Fed says in footnote one they have the legal authority to do these exams. Then why did they refuse to do them for so long? Iit's like the S&L regulator which stood by as the thrifts wasted taxpayer money -- at least its duty were passed along to the OTS.

On merger applications in the past, when community groups like ICP / Fair Finance Watch put in evidence of violations by bank's subsidiaries, the Fed would drop a footnote that the issues were being referred to the FTC and HUD -- implying that the Fed had no jurisdiction over them, certainly no commitment to do anything about them

The Fed says, "Supervisory activities will be planned based on the issues identified ...through the investigation of consumer complaints." So what has the Fed been doing to date with consumer complaints against non-bank BHC subsidiaries?

September 14, 2009

Fed Governor Tarullo on August 25 said, "there is a tendency in most organizations to fall into the habit of consulting with the same groups of actors each time a new issue arises." But look at the Fed's Community Advisory Council...

September 7, 2009

Having tangled repeatedly with the Federal Reserve about Freedom of Information Act compliance, we note Bloomberg LP v. Board of Governors of the Federal Reserve System, U.S. District Court, Southern District of New York (Manhattan), No. 08-9595. Chief District Judge Loretta Preska of the SDNY wrote in a 47-page opinion, "The Board essentially speculates on how a borrower might enter a downward spiral of financial instability if its participation in the Federal Reserve lending programs were to be disclosed. Conjecture, without evidence of imminent harm, simply fails to meet the Board's burden." Preska concluded that the Fed "improperly withheld agency records in response to a FOIA request by conducting an inadequate search." Why are we not surprised?

August 31, 2009

   President Obama's decision, announced from Martha's Vineyard, to re-nominate Ben Bernanke to chair the Federal Reserve represents even to some of Obama's most fervent supporters a sign that, at least on banks and the economy, his "Change We Can Believe In" may be no change at all. That Obama nominated and then stood behind the New York Fed's Tim Geithner, even after the public disclosure that the man he would put in charge of the Internal Revenue Service had himself neglected to pay his taxes, and even when caught only partially paid up, using the statute of limitations, these supporters excuse as a bittersweet decision made early on, when the economy was in crisis. That is no longer the case, according to Team Obama. So to give another term to the very same Fed chairman who presided over the predatory practices of Citigroup et al., and then bailed them and AIG out, can't be defended on crisis grounds. As we've noted, Bernanke's approach to the Community Reinvestment Act is that it needn't be enforced on mergers -- which is the law's only enforcement mechanism. This defanging of CRA is an idea that appears to be spreading. Watch this site.

August 24, 2009

Both Jackson Hole speeches put on the Fed's web site on August 21 cite Walter Bagehot ([1873] 1897), Lombard Street: A Description of the Money Market (New York: Charles Scribner's Sons)....

August 17, 2009

   So now the Fed requests two reports from CIT. A little late, isn't it?

August 10, 2009

A telling omission? Gov. Tarullo's August 4 testimony did not mention the concept or even phrase "consumer" protection....

August 3, 2009

On July 31, Inner City Press asked the Western Hemisphere Division Chief of the International Monetary Fund Charles Kramer about disagreements inside the U.S. Federal Reserve:

Inner City Press: The President at the Philadelphia Federal Reserve said that he thinks that it will distract the Federal Reserve System to regulate hedge funds and other nonbanks that are called system, that it may not be a good idea. Do you have any view on that?

MR. KRAMER: Again, there are a lot of different ways to organize financial supervision and regulation. We agree that there are institutions like hedge funds or like insurance companies that can be systemic, and I would again call to the broad principle that all those system institutions need to be brought under strong supervision and regulation again just to contain the systemic risks that we can emanate from those types of institutions.

July 20, 2009

  After the financial meltdown exposed the Federal Reserve's inattention to predatory lending and credit default swaps, one would expect the Fed to hold off further loosening the rules on CDS. But you'd be wrong. Last week the Fed granted an exemption to CDS dealer ICE Trust, owned by crisis loser Citigroup and predatory Goldman Sachs, among others, giving them an easier 20 percent capital treatment rather than the 100 percent applicable to uninsured banks like ICE Trust.

   Bloomberg News, notably, spun the story the other way, claiming that "the Federal Reserve determined that ICE Trust is as risky as any insured bank, according to a letter posted July 14 on the regulator’s Web site. The Fed is requiring that bank members of ICE Trust, such as Goldman Sachs and New York-based Citigroup Inc., set aside the same amount of capital as parties trading as federally-backed lenders."
 
  But this is a story yet again of the Fed making it easy for the dealer community-- the dealers sought 0% so at least the Fed is imposing 20%. Those who don't learn from the past are condemned to repeat it...

July 13, 2009

Last week Tim Geithner ham handedly telegraphed the re-appointment of Ben Bernanke at the Fed -- on a show whose poll had nearly all respondents saying that Geithner himself should go...

July 6, 2009

From the WSJ's account of Geithner's domination of the process to name his successor at the New York Fed, "The search to replace Mr. Geithner began immediately after he was tapped in late November to be Treasury secretary...By early January, the list was narrowed to six, including Kevin Warsh, a member of the Federal Reserve Board in Washington; Rodgin Cohen, who specialized in banking law at Sullivan & Cromwell LLC; and Mr. Dudley, who had been head of the New York Fed's markets division since 2007" -- and was at Goldman Sachs before that. Dudley was Geithner's choice. JPM Chase's Jaime Dimon, on the other hand, favored his lawyer Rodgin Cohen.

June 29, 2009

The June 25 hearings on Capitol Hill about the Federal Reserve's role in Bank of America's acquisition of Merrill Lynch don't auger well for Barack Obama to renominate Ben Bernanke as Fed chairman. Bernanke repeatedly said, I don't recollect that conversation. He was asked about statements by top Fed lawyer Scott Alvarez but dodged the repeated question, doesn't he work for you? He took at least some fire from the left as well as right. Even more shameful was the Fed giving away the store to GMAC, and now to PIMCO. Is this the change to be believed in?

The hearings also recounted how little confidence a Fed government had in Bank of America CFO Joe Price, who'd go on to throw the Community Reinvestment Act under the bus during the bank's April earnings call. His statements have yet to be unpacked. But Ken Lewis, and perhaps Bernanke himself, might want to start packing.

June 22, 2009 -- Obama's Proposal By Splitting Community Reinvestment Act from Mergers Could Cut Enforcement, Lost in (Fed) Sauce

Byline: Matthew R. Lee of Inner City Press: News Analysis

MILWAUKEE, June 17 -- The Obama administration's financial regulation proposal, on the issue of the Community Reinvestment Act, bears the fingerprints of the Federal Reserve, not only Tim Geithner but also Ben Bernanke. While quickly praised by, for example, Paul Krugman, since the proposal shifts CRA evaluation away from the regulators who review the mergers on which CRA is actually enforced, bankers will like it, and may be behind it.

   CRA is only enforced in connection with banks' applications for regulatory approval for mergers and expansions, as confirmed by the Department of Justice Office of Legal Counsel. Without taking this into account, the Obama administration is proposing that CRA be a core function of the Consumer Financial Protection Agency, which will not be responsible for merger review.

   Had this proposal been made under the Bush administration, CRA advocates would have howled that it weakened the CRA. Since it's Obama, the response appears generally to be, let's wait and see.

   But not only did Obama appoint and fight for Tim Geithner, who at the Federal Reserve Bank of New York oversaw some of the most predatory moves by Citigroup and others -- Obama also continues to praise Ben Bernanke.
 
  In late 2008 at the Federal Reserve in Washington, Inner City Press asked Ben Bernanke about his decision to waive any CRA public comment period when he allowed Goldman Sachs and Morgan Stanley to become bank holding companies.

Bernanke responded that it makes no sense to limit CRA review to regulatory approval time -- despite that being the only legal enforcement of CRA. Now that thinking seems to have insidiously spread within the Obama administration.

  But who will blow the whistle? Krugman for example takes the proposal as a "poke in the eye to right-wingers." To skeptics, it's a perfect post modern move: cheered by ideological but ill-informed liberals, but actually serving big business.

Postscript -- proponents of Obama's plan have noted that the CFSA would, among other things, hold public hearings on (some?) mergers. But if the power to approval or deny the mergers remains with the Federal Reserve, OCC and FDIC, the CFSA could be just a side show. The Bank Holding Company Act and Bank Merger Act would have to be amended -- first.
 
  On the other hand, a portion of Obama's proposal, to declare hedge funds which pose systemic risk to be bank holding companies, could easily be expanded to put just funds under the CRA. Whether this happens, or for now is at least quickly proposed, may be a litmus test. Watch this site.

June 15, 2009

So while supposedly recused at the Federal Reserve Bank of New York, Tim Geithner was weighing in on Bank of America, in support of the shotgun marriage with Merrill Lynch, it emerged in Congress last week. He denies it. But didn't he initially denied not paying his taxes?

June 8, 2009

Bank of America will be saved by... ex-regulators? Now on the board of directors are former Federal Deposit Insurance Corp. Chairman Donald Powell and former Federal Reserve Governor Susan Bies, routine denier of FOIA appeals while on the Board. That is to say, regulators who failed to stop predatory lending and the meltdown now benefit from it....

June 1, 2009

What a surprise: the Committee on Capital Markets Regulation, including vulture investor Wilbur L. Ross Jr. of WL Ross & Co., is proposing that the Federal Reserve become the super-regulator....

May 25, 2009

So how did the Federal Reserve explain the lack of public notice on its H2A web site for Bank of America's application for a new bank? We don't know yet: we asked the Fed to response by email, but they have not.

May 18, 2009

On May 14, Inner City Press submitted the following to the Federal Reserve:

         On behalf of Inner City Press/Community on the Move and its members and affiliates, and the Fair Finance Watch (collectively, "ICP"), this is a
petition, challenge and request under the Freedom of Information Act (5 U.S.C. § 552; "FOIA") and Community Reinvestment Act (CRA) regarding the
application by Bank of America to acquire 100 percent of the voting shares and thereby indirectly acquire Bank of America North Carolina, National
Association, and for the Federal Reserve System's (the "FRS's") communications with Bank of America in 2009 and a demand for public notice and comment, and a protest-in-advance.

  The FRS has virtually repealed banking laws, including the BHC Act and the CRA, by approving mergers and conversion with no public notice or comment.
Now, on an application by the largest and most troubled US bank, the Fed provided no notice until the last day on its H2A web site.  Yesterday, ICP
was asked about a notice seen in the Federal Register. It was not in the H2A. The undersigned called the FRB of Richmond, and noted that it was not in the H2A, requested an extension of the comment period.

  Today May 14, suddenly the proposal is in the updated H2A,http://www.federalreserve.gov/releases/h2a/h2a.cfm?view=week with the comment period ending... tomorrow. This is unreasonable, and unwise given the issues surrounding Bank of America. It is widely reported that B of A would have been required to raise more capital, but that it lobbied the Fed to knock $16 billion off what it should raise. The Fed and its governors, and B of A until recently when its CEO was under fire, have said that CRA did not cause the financial crisis. But on B of A's April 20 earnings conference call by Lewis and his Chief Financial Officer
Joe Price told analysts that the company's "Community Reinvestment Act portfolio is seven percent of the residential book, but 24% of the losses."
Yeah -- blame your bad decisions to invest in high falutin asset-backed securities on the CRA... We'll have more on this.The conference call is archived here
http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-eventDetails&EventId=2134324and CFO Price makes his statement at Minute 26:25
  ICP is requesting an evidentiary hearing to explore this public claim by B of A.

In its (and the) first study of the just-released 2008 mortgage lending data, Inner City Press / Fair Finance Watch has found that Bank of America
NA confined Latinos to higher-cost loans above the rate spread 1.51 times more frequently than whites. Countrywide Bank, which B of A acquired, had a lower disparity, at 1.22. Bank of America NA denied applications by African Americans 1.44 times more frequently than whites, while denying Latinos fully 1.57 times more frequently than whites.

ICP Fair Finance Watch was interviewed on November 7 about the use of funds by Bank of America --

"Bank of America Corp., largely through its political action committees, gave candidates and parties $3.7 million this election cycle, according to
an analysis of Federal Election Commission reports. Bank of America spent $6.5 million lobbying federal officials over the same period; Wachovia spent $2.7 million and Wells Fargo, $3.6 million."

  There is no commitment that the bailout funds will not be put to these uses...

There is more to be said, but first the comment period must be extended.

May 11, 2009

So the Fed even cooked the books on the stress tests, after Wells Fargo threatened to sue. At least $16 billion was knocked off what Bank of America has to raise. Way to regulate... Same to the Fed's use of a Goldman Sachs director, Stephen Friedman, as the president of the New York Fed. No conflict of interest there, right?

May 4, 2009

The Federal Reserve Bank of San Francisco has added to its Economic Advisory Council a vulture investor and previous M&A lawyer, Jonathan Coslet. So this is where the Fed gets it advice from...

April 27, 2009

The Federal Reserve took on more than $74 billion in subprime mortgages, depreciating commercial leases and other assets after Bear Stearns Cos. and American International Group Inc. collapsed. In its biggest disclosure of the securities accepted to stabilize capital markets, the Fed said yesterday it had unrealized losses of $9.6 billion on the assets as of Dec. 31. The bonds, swaps and notes were taken in from Bear Stearns, once the fifth-biggest Wall Street firm by capitalization, and AIG, which had been the world’s largest insurer. The losses on securities backed by assets such as home loans in Florida and California signal that U.S. taxpayers may be forced to reimburse the central bank through the Troubled Asset Relief Program...

April 20, 2009

Notably, thus far in 2009 the Federal Reserve's web site lists no notice and comment orders under the Bank Merger Act, one each under Sections 3 and 4 of the Bank Holding Company Act, and none under both. There's been a slow down -- that's an understatement -- and also, more things done without notice or comment...

April 13, 2009

  Following up on ICP / Fair Finance Watch's first study of 2008 HMDA data, a complaint has been filed with the Federal Reserve:

Re: Need for FRB Action on Mockery Made of HMDA, by Regions and others

Dear Ms. Johnson, Mr. Alvarez and others:

   This letter concerns attempts to avoid public review of Home Mortgage Disclosure Act information by Regions Financial and, prospectively, other financial institutions. As you know, under 12 CFR § 203.5, institutions are required to provide their HMDA Loan Application Registers to requesters. Virtually all banks provide the HMDA LAR in .dat or other analyable electronic format. In fact, searching the Federal Reserve Bulletin we find notation of only two institutions refusing to provide their data in useful form: AmSouth (now Regions Financial) and New York Community Bank. (Lehman Brothers and AIG also took this approach; significantly, the former went bankrupt and the latter survives only as a ward of the FRB.)

   Now, Regions has continued what was AmSouth's stance as a HMDA outlier, by responding to a request for its HMDA LAR in .dat format by providing the data in a PDF file of over one thousand pages, which cannot be analyzed using SPSS or other statistical program. The effect is to make Region's 2008 lending performance unanalyzable until September, unlike nearly all other large banks...

    Beyond instructing Regions, NYCB and others to move into the mainstream of HMDA reporting to the public, the FRB is encourages to revises its outmoded staff commentary on 12 CFR Part 203, Section 203.5 (which as is relevant here already encourages "mak[ing] the modified register available in census tract order... in order to enhance its utility to users."  It is imperative that the Federal Reserve, given its responsibilities under HMDA, make clear to Regions and other institutions that the HMDA LARs they are required to provide to the public should be provided in analyzable electronic format to enhance its utility, particularly following the financial meltdown and the lack of oversight it has highlighted. We await your response.

April 6, 2009

Subprime Survivors Wells, BofA and JPM Chase Were More Disparate By Race in 2008 than Wachovia or Countrywide, Trends Will Worsen Under Current Regulators

NEW YORK, April 2 -- In the first study of the just-released 2008 mortgage lending data, Inner City Press / Fair Finance Watch has found that the seeming survivors of the banking meltdown, Wells Fargo, Bank of America and JPMorgan Chase, had worse disparities by race and ethnicity in denials and higher-cost lending than the banks they acquired, Wachovia and Countrywide. Mortgage lending in the U.S. will become more and not less disparate because of the emergency mergers and bailouts engineered by the regulators, the study predicts.

   Fair Finance Watch notes that JPMorgan Chase's massive closing of branches of Washington Mutual will also make credit harder to come by, especially in poor neighborhoods.  2008 is the fifth year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of 3 percent over the yield on Treasury securities of comparable duration on first lien loans, 5 percent on subordinate liens.

            Wells Fargo Bank in 2008 confined African Americans to higher-cost loans above this rate spread 2.18 times more frequently than whites, according to Fair Finance Watch. Wachovia Mortgage FSB, the largest lender of Wachovia which Wells Fargo acquired, had a lower disparity, at 1.46.

            Bank of America NA in 2008 confined Latinos to higher-cost loans above the rate spread 1.51 times more frequently than whites, the data show. Countrywide Bank, which B of A acquired, had a lower disparity, at 1.22.

            JPMorgan Chase was even more disparate to Latinos, confined them to higher-cost loans 2.10 times more frequently than whites, almost as pronounced as its disparity between African-Americans and whites, 2.26. Citigroup, perhaps due to its shrinking, some say dying, business had disparities of 1.90 for African Americans and 1.23 for Latinos. For US Bancorp, the disparity for African Americans was 1.55 and for Latinos, 1.35.

            "The banks the regulators favored in 2008, allowing emergency takeovers like JPMorgan Chase's of Washington Mutual, Bank of America's of Countrywide and Merrill Lynch, and Wells Fargo's of Wachovia, were the most racial disparate lenders," states the Fair Finance Watch report. "The regulators did not put any conditions on the mergers or Troubled Assets Relief Program bailouts, for example allowing Chase to close dozens of Washington Mutual branches. As things are going, it will be worse and more disparate in 2009. The new administration has yet to make any substantive change to this."

            Several lenders had worse denial rate disparities in 2008 between Latinos and whites then between African American and whites, a change from previous years. Bank of America NA, for example, denied applications by African Americans 1.44 times more frequently than whites, while denying Latinos fully 1.57 times more frequently than whites. Atlanta-based SunTrust in 2008 denied applications by African Americans 1.37 times more frequently than whites, while denying Latinos fully 1.78 times more frequently than whites.

March 30, 2009

Geithner Promotes Megabanks' Monopoly, in DC as at Fed, 17 Cut to 7 on Derivatives

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

NEW YORK, March 28 -- Seven megabanks' renewed grab for monopoly power in the over the counter derivatives market shows how little Wall Street's real power has changed in the transition from the Bush to Obama administrations.

  The banks, including Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Barclays, Credit Suisse and Deutsche Bank, are paying over $1 million to p.r. firm Prism Public Affairs to "educate" the voters weary of bonus and bailouts that those who caused the crisis should benefit from it.

  Already, Congress members hungry for campaign contribution have submitted to closed door briefings by Ed Rosen of the law firm Cleary Gottlieb, who drafted the legislative language for monopoly.

  The connector in this story is Timothy Geithner, under Bush the president of the Federal Reserve Bank of New York and now Obama's Treasury Secretary. Geithner in June 2008 convened closed door meetings with 17 banks, essentially allowing them to propose and draft their own rules for the derivatives market.

    This led to advocacy by the Fair Finance Watch that Geithner's meetings were in fact rule making that excluded the public in violation of the Administrative Procedure Act, and by Inner City Press, as media, to get the meetings opened to journalists and the public.

  The Administrative Procedures Act (5 U.S.C. Section 553) and related laws require that when the government engaged in rule-making, it must provide notice to the public, and allow and weigh public comments.  The New York Fed under Geithner tried to rule-make without any involvement by the public, even the public most impacted by the subprime lending that underlies these processes. The New York Fed on June 9, 2008 met with a group of the largest banks to discuss, according to the Geithner himself

"Regulatory policy. These are the incentives and constraints designed to affect the level and concentration of risk-taking across the financial system. You can think of these as a financial analog to imposing speed limits and requiring air bags and antilock brakes in cars, or establishing building codes in earthquake zones. Regulatory structure. This is about who is responsible for setting and enforcing those rules. Crisis management. This is about when and how we intervene and about the expectations we create for official intervention in crises."

     Press accounts made clear that the financial instruments and regulatory issues discussed behind closed doors are related to issues of public interest, which in fact are disproportionately impacting low- and moderate- income people and communities of color -- subprime and predatory mortgages.

The financial institutions invited, in mid 2008, were:

Bank of America, N.A. - Barclays Capital - BNP Paribas - Citigroup - Credit Suisse - Deutsche Bank AG - Dresdner Kleinwort - Goldman, Sachs & Co. - HSBC Group - JPMorgan Chase - Lehman Brothers - Merrill Lynch & Co. - Morgan Stanley - The Royal Bank of Scotland Group - Societe Generale - UBS AG - Wachovia Bank, N.A.
Buy-Side Firms: AllianceBernstein - BlueMountain Capital Management LLC - Citadel Investment Group, L.L.C.

  Fast forward to March 2009, with Geithner despite tax evasion installed as Obama's Secretary of the Treasury, and with Lehman having failed and Wachovia been swallowed by Wells Fargo. Now he is promoting monopoly powers in the market for an even smaller group of banks, just seven: Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Barclays, Credit Suisse and Deutsche Bank -- which despite European headquarters received billions of dollars in U.S. Troubled Assets Relief Program bailout funds through AIG.

March 23, 2009

Hate to see "we told you so," but... Inner City Press / Fair Finance Watch was on the record that AIG was among the sleaziest of companies all the way back to the 1990s. When Inner City Press filed comments against AIG's acquisition of American General Insurance, AIG responded with threats. AIG hired Ernest Patrikis, the top lawyer of the Federal Reserve Bank of New York, and got its way from Timothy Geithner when he ran the New York Fed.

March 16, 2009

In DC, Officials Defend Bailouts of Citigroup and AIG -- Federal Reserve Still Refuses to Say Whom It Paid

Byline: Matthew Russell Lee of Inner City Press: News Analysis

WASHINGTON, March 13 -- The ongoing bailout of insurer AIG and its counterparties was apologized for but defended by a range of Obama administration officials this week. Treasury Secretary Timothy Geithner, until recently the president of the Federal Reserve Bank of New York and before that at the IMF, said he hated to have to bailout AIG, but "it's systemic."

   His advisor Gene Sperling, a member of President Bill Clinton's economic team, said the Obama administration took office only to find AIG too big to fail, implying that this was entirely attributable to the two terms of George W. Bush. But AIG was allowed to grow without control under Bill Clinton, just as Citigroup was increasingly unsupervised under the tenure at the New York Fed of Timothy Geithner, as CitiFinancial got deeper into predatory lending (click here for Inner City Press reports on that.)

  Friday in the White House Barack Obama met and then faced the Press with Paul Volcker, chairman of the Federal Reserve in the time before Bill Clinton. Volcker rarely used his regulatory powers, at least not to protect consumers from predatory lending. And yet now these are the people, along with Clinton's Treasury Secretary Larry Summers, who are defending massive transfers to Citigroup and AIG, all the while laying blame everywhere except upon themselves.

   Meanwhile, the Fed still refuses to say whom it paid on behalf of AIG, with Geither on March 12 saying Bernanke is still deciding.  Bad instincts...

March 9, 2009

  Congress during the debate about bailing out the banks decided that non-US banks should not be getting TARP funds. Now it emerges that of the $50 billion the Feds have given to AIG's counter-parties, Deutsche Bank for example has gotten a full $6 billion. Also receiving hand-outs were HSBC, Royal Bank of Scotland and Societe Generale. Worse, the Federal Reserve is trying to avoid providing a listing of the companies who've gotten the public money, as reiterated by Fed Vice Chair Don Kohn on March 5. This is a new low, to be followed up in DC this week.

March 2, 2009

  Rare candor: Fed government Elizabeth Duke last week said, " As a former president of the American Bankers Association, I advocated reductions in the regulatory burden." AdvocateD?

February 23, 2009

  In the flurry of non-banking companies rushing to become financial services holding companies or savings and loan holding companies in order to get bailout funds, Inner City Press has put in a number of Freedom of Information Act requests, in response to which some very basic information has been withheld. The example for this week is even the "Financial Holding Company Declaration" submitted to the Federal Reserve for the CIT Group by its outside law firm, Wachtell Lipton. The Fed followed the requests that information be withheld from the public, even as public bailout funds were being sought and doled out.

Citigroup's Pandit last week said, "The future of Citi is in emerging markets, is in Latin America, and is in Mexico with Banamex." While the last is dubious, one thing seems true: the future of Citigroup, if it has one, is not in the United States, although it might be WITH the United States (government)... Even ex-Fed Alan Greenspan is talking about nationalization...

On related FOIA shenanigans, see 53 N.Y.L. Sch. L. Rev. 299, Critical Mass: Restricting Advocates' Rights Under the Community Reinvestment Act, Inner City Press v. Board of Governors of the Federal Reserve System, 463 F.3d 239 (2d Cir. 2006). New York Law School Law Review, 2008 / 2009

February 16, 2009

  Before Congress last week, JPMorgan Chase's Jaime Dimon complained, “we have a Byzantine alphabet soup of regulators,” and that banks and lenders have to deal with the OTC, the CFTC, the SEC and so on. He pontificated that it should be a U.S. system and globally regulated, and that no one should try to create a new regulator. He suggested the Federal Reserve -- and why not, since the Fed delivered Bear Stearns to him and Chase, which then got WaMu as well... The Fed's been good to Morgan Chase.

February 9, 2009

After Bailout, ING's Kok Blames Regulators, including Federal Reserve, for pumping up subprime, food inflation

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, February 4 -- Wim Kok, the chairman of the audit committee of Dutch bank ING, which received a $14 billion bailout, Wednesday at the UN blamed "the institutions entrusted with regulating" for not having "prevented financial speculation." While Kok's criticism of the Federal Reserve -- he cited Alan Greenspan's belated admission to Congress -- was deserved, Inner City Press asked Kok how to allocate blame for the crisis between the regulators and the banks and their directors. Did the regulators make ING buy, and Kok to presumably oversee the buying of, subprime mortgage and other derivative securities? Video here, from Minute 19.

  Kok acknowledged that he saw the crisis and bailouts "like all of us," but also "from a special position," then blamed not only the U.S. regulators but also the "climate" and the "bonus and compensation culture." Video here, from Minute 20:02.

   But what was Kok's own compensation? Kok said that "in all fairness, it is too early to give an accounting of how it happened." But why then did the UN, and its Commission on Social Development, present Kok as the one to read out the blame-the-regulators speech?  Yes, Kok served as Dutch prime minister. But a director of a bank receiving a multi-billion dollar bailout should not be surprised to be questioned about it.

  "In all fairness," to use Kok's own phrase, Inner City Press asked him about the role of financial speculation in driving up food prices in part of 2008. Kok replied that while prices have declined, they could rise again due to inflation caused by, yes, the bailouts. As to how speculation could be stopped by the UN system, he did not answer. Whether ING itself speculates in food or agribusiness stocks, as with Kok's compensation, is not known at deadline.

February 2, 2009

Banker Allison of BB&T in Meltdown Misdirection, Subprime Loans Were Shielded from CRA by Federal Reserve

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

SOUTH BRONX, February 1 -- Given the hundreds of billions of dollars being thrown at banks in response to the subprime lending-triggered meltdown, holding accountable those who turned American finance down the subprime path would seem to be important. Conservatives blame the Community Reinvestment Act, saying that this law enacted in 1977 to combat the redlining of and refusal to lend in inner city areas was something of a time bomb, set to explode 30 years later.

    But the explosive growth of subprime lending took place in parts of financial holding companies which are not covered by CRA, like Citigroup's CitiFinancial and similar consumer finance subsidiary in Wells Fargo and HSBC, purchased as Household International. The subprime loans were securitized by investment banks not only like the defunct or swallowed Lehman Brothers, Bear Stearns and Merrill Lynch, but also Goldman Sachs and Morgan Stanley, entirely outside of CRA, before they ran to the Federal Reserve to get their bailout money.

  One tier down the world of finance, the chairman of regional bank BB&T John Allison gave a speech on January 29 in which he blamed the CRA for the financial crisis. This is more than a little ironic, given BB&T's engagement under Allison in subprime lending.  When the Bronx-based Fair Finance Watch documented to the Federal Reserve that BB&T's banks referred turned-down loan applicants to their high-cost subprime affiliate Lendmark Financial Services, during the public comment period on BB&T's application for approval to acquire Georgia's Main Street Banks, the Federal Reserve ignored the issues.

  Click here for the Federal Reserve approval order, which recited from the comments of Fair Finance Watch

  "concern about referrals of loan applicants to Lendmark Financial Services ('LFS'), a nonbank subsidiary of BB&T that makes subprime loans. BB&T has represented that it might refer to LFS applications denied by a BB&T subsidiary bank that do not meet the bank's underwriting guidelines. Before making a referral, however, these applications undergo an internal second-review procedure. In addition, BB&T notes that LFS has a policy to refer applicants who meet the Freddie Mac underwriting guidelines to BB&T's subsidiary banks."

   But as Inner City Press noted, BB&T's referrals up and down do not use the same standard. On fringe finance the Federal Reserve said that Fair Finance Watch

"expressed concern about BB&T's relationships with unaffiliated pawn shops and other nontraditional providers of financial services. As a general matter, the activities of the consumer finance businesses identified by the commenter are permissible, and the businesses are licensed by the states where they operate. BB&T has stated that it does not focus on marketing credit services to such nontraditional providers and that it makes loans to those firms under the same terms, circumstances, and due diligence procedures applicable to BB&T's other small business borrowers."

   BB&T admitted in its responses into the record before the Federal Reserve relationships with 45 payday and other fringe financiers. BB&T under Allison ran headlong into subprime -- as Fair Finance Watch and then the Fed noted, in its order

"A commenter asserted that the Board should, in the context of the current proposal, review BB&T's recently announced plans to acquire the assets of FSB Financial Ltd. ('FSB'), Arlington, Texas, a nonbanking company that purchases automobile-loan portfolios. The FSB acquisition is not  related to the current proposal. Moreover, if the FSB acquisition is consummated under authority of section 4(k) of the BHC Act, the acquisition would not  require prior approval of the Federal Reserve System. BB&T would require prior Federal Reserve System approval if the acquisition were proposed under sections 4(c)(8) and 4(j) of the BHC Act, and the transaction would be reviewed in light of the requirements and standards discussed above."

  The Gramm-Leach-Bliley Act of 1999 amended the Bank Holding Company Act of 1956 and made it easier for subprime lenders to be acquired with no prior review by the Federal Reserve, no public comment period, no CRA review. BB&T John Allison's fulimations notwithstanding, that deregulatory GLB Act, passed in part to legalize after the fact the merger that created Citigroup, is the statute investigators should be looking at. And the acts of subprime-hungry bankers like John Allison of BB&T. We'll have more on this meltdown misdirection, in the spirit of accountability.

  For now, consider this buzz about Lendmark in 1997, this 2006 BB&T investor relations presentation (also of its subprime Liberty Mortgage Corporation), and again, Lendmark's own website, still reciting "non-conforming mortgage loans" from "104 branch locations throughout Georgia, Tennessee, Virginia, Maryland, Florida, North Carolina, South Carolina, Kentucky, West Virginia, and Delaware."

January 26, 2009

As JPMorgan Chase Shutters WaMu Branches, Regulators Missing, Commitments Gone

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

NEW YORK, January 23 -- JPMorgan Chase is moving to closed down dozens of the Washington Mutual bank branches the government allowed it to acquire last year with no public notice or comment period. In Dallas, Chase has targeted 23 WaMu branches for closure, and another six in Fort Worth. In the Chicago area, Chase says it will shutter 57 WaMu locations. More branch closings will follow across the nation.

  Community and consumers groups are belated protesting the acquisition, which was a one of a slew of so-called emergency transactions on which no Community Reinvestment Act comments were considered, including the accession of Goldman Sachs and Morgan Stanley to bank holding company status, and Bank of America's now discredited acquisition of Merrill Lynch.

   JPMorgan Chase benefited from regulator-protected acquisitions not only of WaMu but, before that, of Bear Stearns. As first reported by Inner City Press, Bronx-based Fair Finance Watch submitted to the Federal Reserve Board comments on these transactions, but was told that emergency did not allow consideration of the issues raised, including prospective branches closings.

  JPMorgan Chase has now told groups who have asked if it will continue Washington Mutual's CRA programs and commitments that since there is no more Washington Mutual, there is no more commitment.

 This comes in the wake of JPMorgan Chase's Jaime Dimon reversing himself from a stated commitment to mortgages through brokers to abruptly shutting down Chase's wholesale mortgage unit. While groups are told this will give Chase more control over the terms of loans, brokers point out that Chase ultimately had control in the wholesale business, too.  Commitments are made to be broken, apparently, particularly those by companies the federal regulators bailed out or merged out of existence. What, the question grows, is Timothy Geithner's position on this Main Street issue?

Update: later on January 23, community groups were told that JPMorgan Chase plans to close over 40 WaMu branches in New York State...

January 19, 2009

    So the Fed puts in charge of AIG Chester Feldberg, former chairman of Barclays Americas, and Douglas Foshee, owner of El Paso Corp. Can you say, conflict of interest?

  And the Fed's purported advisor on community issued, fresh from CCC, is not allow to talk to the press -- and he accepts it?  Geithner-gate is in this week's CRA Report...

January 12, 2009

  A new low -- as of 10:20 p.m. on Sunday, January 11, 2009, the Federal Reserve Board's web site  http://www.federalreserve.gov was down, "This link appears broken. DNS error - cannot find server."

January 5, 2009

  To show how unserious the Fed was about banks' transparency, before before the Fall, we note that while New York Community Bancorp was one of the institutions which insisted on providing Fair Finance Watch with its Home Mortgage Disclosure Act data only in paper or PDF form, so that it couldn't be analyzed, the Fed has on its Thrift Institution Advisory Council the CEO of NYCB, Joseph Ficalora. Talk about impunity...

December 29, 2008

  So let's get this straight -- the Fed didn't provide any formal public notice or comment period on CIT's application to become a bank holding company, but because Inner City Press wrote in for a copy of the application and initially requesting a hearing, the Fed's approval order was mailed to Inner City Press, with a paragraph denying the hearing and making it appear that there was a fair process. But there was not.... The same applies to GMAC. The Fed has become lawless.

December 22, 2008

 The Fed's PNC - National City approval order is contemptuous of the public, including the local member of Congress. Why favor PNC over NatCity? It's not explained. And the Fed is trying to deny FOIA requests for basic information about who they lend to. Perhaps there needs to be a HMDA law for the Fed...

  Who knew? Morgan Stanley, which the Federal Reserve let become a bank holding company with no public comment, now applies on an expedited basis for its Greenwich, Connecticut-based subsidiary Frontpoint to own a stake in a start-up bank that says it will serve Manhattan, Brooklyn and parts of Long Island: Heritage Bank. Then, there is a China-related application by Morgan Stanley, on which the comment period is still open. Expect more on this.

December 15, 2008

Swept Under the TARP by the Federal Reserve, Grabs by GMAC, PHH and CIT, Wachovia's Sewers

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

NEW YORK, December 8 -- After most big banks and even many non-banks have already drawn down their bailout funds from the government's Troubled Assets Relief Program, there's belated interest in Congress in what banks have been doing. Monday afternoon on the Senate floor, Byron Dorgon of North Dakota expressed shock at Wachovia's purchase and lease-back of German sewer system, just so it could use the depreciation of the German pipes to avoid its U.S. taxes. 

  Now that Wachovia is being bought -- by Wells Fargo and not as Washington wanted Citigroup -- is it easy  to finally criticize it and its outgoing management. But how about Citigroup and its entrenched officials Robert Rubin andVikram Pandit, who right after its second bailout serving spent eight billion Euros buying the highway business of Spanish construction firm Sacyr Vallehermoso?

  The TARP program is full of abuses. Focus only on some pending ones, the conglomerate PHH says it is applying for TARP funds, without owning any bank or thrift. Its application is not even on the Office of Thrift Supervision's website. Nor, on the Federal Reserve's website, can any notice be found for the applications of GMAC and CIT.  The Fed has sent Inner City Press a copy of GMAC's -- but why is the required public notice  not on the Fed's web site?

December 8, 2008

  Fair Finance Watch has put in comments requesting public hearings on PNC's application to buy National City, in a deal the regulators cooked up and now must be the judge of. National City asked for TARP funds but was denied. PNC was given the funds, to buy National City; the regulators will then buy the troubled assets from PNC. It's called unexplained favoritism: save Citigroup and AIG but let Lehman Brother go under. Turn down National City, then buy its bad loans from PNC. Maybe Tim Geithner will explain.

Meanwhile the subprime bottom-feeder Ocwen is trying to line up for the Troubled Asset Relief Program bail-out funds. Ocwen has applied to buy Kent County State Bank in Jayton, Texas.  More on this anon.

December 1, 2008

  Let's compare two holding company regulators. "The Office of Thrift Supervision, which regulates savings and loans, has levied 34 cease-and-desist orders this year, with 23 coming since June. The Federal Reserve issued two such orders this month after issuing only one in the year through October." The Fed -- some tough regulator... To bend over backwards to be fair, if it is the Fed's strategy to regulate without public cease and desist orders, the Fed has to stop being so resistant to providing documents under the Freedom of Information Act. Bernanke knows best? Where's the evidence of that?

November 24, 2008

  The choice of Tim Geithner as Treasury Secretary put a protege of Citigroup's Robert Rubin in charge of the economy, just as Citigroup teeters near failure due to its predatory lending. Rubin did nothing to stop Citi's gouging practices, just as Geithner did little as head of the Federal Reserve Bank of New York to regulate and reign in the lenders under his jurisdiction. How, some are asking, is this is change one can believe in?

November 17, 2008

  Under the headline, "Economists offer support for Bernanke," this weekend's Wall Street Journal Europe quotes without qualification JPMorgan Chase economist Bruce Kasman that "Bernanke has done a good job." No mention that Bernanke gave Bear Stearns l and then Washington Mutual to JPM Chase, with no public comment period. Sure, if you were JPMC or Jaime Dimon, you'd lavish praise on Bernanke for these moves. But others?

November 10, 2008

   AP breathlessly reported that "the Federal Reserve says banks and investment firms borrowed from its emergency lending program over the past week at a slightly slower -- but still brisk -- pace. The Fed's report shows commercial banks averaged nearly $110 billion in daily borrowing over the past week.  For the week ending Wednesday, investment firms drew $77 billion. This category was recently broadened to include any loans that were made to the U.S. and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch."

  So the Fed by allowing all three in the world of bank holding companies, in all three cases with no public comment period at all, has creates business for itself...

November 3, 2008

At UN, Stiglitz Slams Chase For Misuse of Bailout, Federal Reserve for Predatory Lending

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, October 30 -- The $700 billion bank bailout should not be used for mergers to increase market share, economist Joseph Stiglitz told the Press on Thursday. Following a UN panel discussion about the global financial crisis, Inner City Press asked Stiglitz about predatory lending and, as an aside, if he would consider the post of Secretary of the Treasury. While not directly answering the latter, Stiglitz said that the current Secretary, Henry Paulson, is ignoring the Congressional intent of the bailout and is allowing the funds to be misused by the banks.

  Stiglitz specifically cited a conference call by JPMorgan Chase, in which an executive bragged that the $25 billion it is claiming from the bailout will make Chase "more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment." Stiglitz called that an abuse, and also took a jab at the Federal Reserve, which he said had the power to crack down on predatory lending since 1994 but did not. Video here, from Minute 19:31.

October 27, 2008

From Dow Jones on the Fed's self-approval of Wells Fargo - Wachovia: " The Fed said a commenter had requested a public meeting, but the Bank Holding Company Act does not require the board to grant that request. A Federal Reserve spokeswoman wouldn't disclose the name of the group that had requested the hearing." So now, like North Korea, the Fed tries to cover up even who has commented. For the record, ICP Fair Finance Watch made the request...

  So GE has signed up for the Fed's commercial paper program. It's evasions of the CRA, or limitations to a single credit card bank and Utah industrial loan company, should end... Better late than never, we suppose, for Alan Greenspan to apologize for ignoring evidence of predatory lending.

October 20, 2008

  The Fed's Caja Madrid approval order is one of the most superficial and conclusory to date, ignoring several of the adverse issued raised, and merely pasting in a boiler plate paragraph about fair lending concerns...

It's telling, in terms of how sloppy the corporate giveaways have been, that the Fed did not think through how buying warrants in the big banks would put them in the position of reducing book value or recording a loss. What a regulator...

October 13, 2008

Tales for a time of lawless regulators giving rubber stamp bank merger approvals without any public notice or comment, Chase and now Wachovia --

On October 10, the Federal Reserve Board sent Inner City Press a partial response to a Freedom of Information Act request made back in March, about the Fed voting without public notice or comment to bail out JPMorgan Chase's acquisition of Bear Stearns without even following the law requiring the involvement of Fed governors. Six months after the fact, the Fed releases an April letter to Congress saying the Governor Mishkin, who has since left the Board, was in the air on a flight from Finland to the U.S. and therefore couldn't be involved. Click here to view. And now he's gone...

  There are other responsive records, still not given or denied, which Inner City Press will be pursuing.

 Meanwhile, while Inner City Press / Fair Finance Watch has already commented to the Fed demanding they hold a comment period on Wells Fargo's proposal to buy Wachovia, now Wachovia says it will bypass its own shareholders -- with the NYSE's rubber stamp. Note to Fed: this doesn't make it an emergency to bypass the public too. But the Fed on Friday said, vaguely, that it will begin "immediate consideration" of Wells Fargo's application.  But no FDIC involvement = no emergency.

RBS is pleading for a bailout from the UK... When Inner City Press / Fair Finance Watch commented, at length and over years, about RBS' involvement in and exposure to predatory subprime lending, RBS always said it wasn't true...

October 6, 2008 -- for an angry debate by Inner City Press on the bailout, click here

  From what are now the Fed's regulators, " Taiwan's Financial Supervisory Commission said late Sunday the three investment units of American International Group Inc. (AIG) on the island have sound fundamentals, but it will monitor their operations closely. 'The commission will monitor closely the three companies' financial and operation changes, and will take appropriate measures when needed,' the island's top financial regulator said in a statement. AIG said Friday all of its non-insurance businesses are for sale. Outside the U.S., AIG said it wants to keep at least a majority stake in American International Assurance Co., which sells life insurance and retirement products in China, Thailand, South Korea, Australia, New Zealand, Vietnam, Indonesia and India." Has the Fed signed off on this?

September 28, 2008

  First on the fringes and now on Fox News, the Community Reinvestment Act is being blamed by some for today's financial crisis. The argument is that by encouraging FDIC-insured banks to lend in lower income neighborhoods, the government -- read, Democrats, from Jimmy Carter to Bill Clinton -- created the explosion in high interest rate subprime loans.

   There's a major factual problem, though: with a single exception, no bank sought CRA credit for its subprime loans. And the investment banks which were purchasing, bundling and securitizing the loans were not covered by CRA. Bear Stearns was not covered by CRA, but was bailed out by the Federal Reserve Board for $30 billion dollars. AIG, an insurance company, was not covered by CRA, but its subprime activities have led to a $75 billion loan from the Federal Reserve, which claimes that it does not control AIG, despite owning warrants for 79% of its stock...

September 22, 2008

  So with its $85 billion bailout of AIG, the Federal Reserve will come to run a predatory lending operation. Click here for some Inner City Press / Fair Finance Watch comments. And see here.  But it goes beyond that -- shouldn't the Fed have to apply to the Office of Thrift Supervision to come to control AIG's savings bank? We'll be raising this issue this week.

September 15, 2008

  As the Federal Reserve through the New York Fed is involved in trying to set up yet another bail-out, the two most recent speeches on the Fed's web site are Bernanke on historically black colleges, and Kohn on academic articles...

September 8, 2008

  Incoming Freddie Mac chief David Moffett previously served as chief financial officer of U.S. Bancorp, which beyond its own subprime lending was a 25% investor in the now-bankrupt subprime lender New Century. When Inner City Press investigated U.S. Bancorp's stake in New Century, the company argued to the Federal Reserve that despite having two seats on the board of directors it did not control the lender. The Fed dodged the question until U.S. Bancorp eventually sold the stake...

September 1, 2008

  The WSJ has pegged New York Federal Reserve President Timothy Geithner to be Treasury Secretary in an Obama administration. Oh the profits of bail-outs...

  How to explain Citigroup changing former Treasury Secretary Bob Rubin's title to Senior Counselor? Here's our guess -- as the company has gone downhill, the finger has focused on Rubin. He doesn't like it -- just as he denied having any role in Citigroup's predatory lending, saying it wasn't under his "aegis" -- and so he changes his title. But under whose aegis is it?

August 25, 2008

  Bernanke's spin: "the Federal Reserve took actions that facilitated the purchase of Bear Stearns and the assumption of Bear's financial obligations by JPMorgan Chase & Co. This experience has led me to believe that one of the best ways to protect the financial system against future systemic shocks, including the possible failure of a major counterparty, is by strengthening the financial infrastructure, including both the "hardware" and the "software" components. The Federal Reserve, in collaboration with the private sector and other regulators, is intensively engaged in such efforts. For example, since September 2005, the Federal Reserve Bank of New York has been leading a joint public-private initiative to improve arrangements for clearing and settling trades in credit default swaps and other OTC derivatives."

  So, the lesson learned from a bailout with no public comment is a rulemaking with the industry with no input from the public...

August 18, 2008

  Like a coup leader trying to ex post facto legalize their seizure of power, the Federal Reserve has included in its "Legal Developments 2nd Quarter 2008" publication released last week its Orders - with no public comment allowed -- bailing out Bear Stearns and letting JPM Chase buy it, available at http://www.federalreserve.gov/Pubs/Bulletin/2008/pdf/legalq208.pdf .All the patina of legality with none of the content...

August 11, 2008

 So Elizabeth Duke was sworn in as a Governor -- the man from Capital One, not so much...

August 4, 2008

  Ah, FBSEA-- " The Federal Reserve Board on Thursday announced the approval of an application by International Bank of Azerbaijan, Baku, Azerbaijan, to establish a representative office in New York"....

July 28, 2008

  So in fairness we can note that the Fed doesn't only do favors for JPMorgan Chase (on Bear Stearns) and Citigroup (on any and everything, including the Group's formation) -- last week the Fed belatedly released a ruling favoring SunTrust in its dealings with its presumptively illegal but "grandfathered" holdings of Coca-Cola story - click here to view.

  The Fed justifies its favor as reducing the mixing of banking and commerce. Coke as a mixer?

July 21, 2008

The Wall Street Journal.com reports that the Boston Fed's foreclosure-fest at Foxboro's Gillette Stadium will include Countrywide (now BofA) and... IndyMac. From beyond the grave? Or will the FDIC be (Eli) manning the tables?

July 14, 2008

    Approvals with no prior public notice, much less comment: In a letter dated July 1, the Fed granted a request to allow JPMorgan Chase Bank to purchase a $44 billion portfolio of Bear Stearns derivative transactions and hedges acquired by the holding company when it bought Bear Stearns. The portfolio includes Bear Stearns Forex Inc. and Bear Stearns Credit Products Inc. The Fed spun that "the proposed transaction in this case is a byproduct of a one-time corporate reorganization and would facilitate the integration of recently merged companies," and granted the waiver. The Fed also granted JPMorgan's request to exempt from Fed rules certain transactions between the firm and Maiden Lane LLC - the limited liability company set up with the Federal Reserve Bank of New York to hold some Bear Stearns assets.  "Although (JPMorgan Chase) has a substantial subordinated exposure to Maiden Lane, the (New York Fed) has the predominant economic interest in Maiden Lane," the letter from the Fed to JPMorgan, dated June 26, stated.  "Granting the exemption also appears to be in the public interest because it will facilitate the consummation of the (New York Fed) facility," the Fed letter said. So the Fed considers consummation of its own transaction to be in the public interest. But did they hear from the other sides?

  Annals of oversight:  "Bernanke said the Fed consulted Congressional leaders during the weekend in March when it decided to facilitate the Bear Stearns rescue, and that he didn't get the sense that there was any objection."

July 7, 2008

  Here is an outrage on which action must be taken -- the purportedly "off the record" speeches given to audiences of select investors by Federal Reserve personnel. They are sent out by email to journalists, but not to write about. Hedge fund artists get insider knowledge from the Fed, and trade on it. Doesn't this violate, at least in spirit, Reg FD, Financial Disclosure?

 But look for Ben Bernanke to on the record defend the bailouts before Congress on July 10. Who actually questions him will be interesting to see.

June 30, 2008

   Weeks late, the Federal Reserve has written to Inner City Press that

This is regarding your FOIA request for documents related to the JP Morgan / Bear Stearns transaction. We have interpreted your request to include the Board meeting minutes from Mar. 14 and 16. The minutes are now available online on the Board's public website:
http://www.federalreserve.gov/newsevents/press/other/20080627a.htm
We will be contacting you shortly about the scope of the remainder of your request.

   For now, as even the Dow Jones story on the minutes reports, "four Fed board members were involved in making the decision to come to the rescue of Bear, the Fed's minutes show."

June 23, 2008

The filing on June 15 by Inner City Press / Fair Finance Watch against the Federal Reserve Bank of New York's closed-door meetings and rule-making with 18 investment banks has given rise to questions about whether or not the Fed is a government agency with any duties to the public. On Daily Kos, for example, various commenters say that the Fed is owned by banks. We note that's the Federal Reserve Banks; the BOARD had governmental duties, including compliance with the Administrative Procedures Act. Expect more comments to the Fed.

June 16, 2008

   This week with the Federal Reserve, Inner City Press / Fair Finance Watch filed comments against the applications by Spain's Caja Madrid, funder of biofuel projects and 23% owner of Iberia airlines, to acquire City National Bank of Florida, and against the Federal Reserve Bank of New York's secret process with banks, in essence a rule-making excluding the public even those the topic, credit derivatives, has come up because of the subprime lending crisis. The financial institutions invited -- and now challenged -- are listed below.

Bank of America, N.A., Barclays Capital - BNP Paribas - Citigroup - Credit Suisse - Deutsche Bank AG - Dresdner Kleinwort - Goldman, Sachs & Co. - HSBC Group - JPMorgan Chase - Lehman Brothers - Merrill Lynch & Co. - Morgan Stanley - The Royal Bank of Scotland Group - Societe Generale - UBS AG - Wachovia Bank, N.A.
Buy-Side Firms: AllianceBernstein - BlueMountain Capital Management LLC - Citadel Investment Group, L.L.C.

  The Administrative Procedures Act (5 U.S.C. Section 553) and related laws require that when the government engaged in rule-making, it must provide notice to the public, and allow and weigh public comments.  Here, the FRBNY has tried to rule-make without any involvement by the public, even the public most impacted by the subprime lending that underlies this FRBNY process. Rather, for example, the FRBNY on June 9 met with a group of the largest banks to discuss, according to the FRBNY's president,

"Regulatory policy. These are the incentives and constraints designed to affect the level and concentration of risk-taking across the financial system. You can think of these as a financial analog to imposing speed limits and requiring air bags and antilock brakes in cars, or establishing building codes in earthquake zones.
"Regulatory structure. This is about who is responsible for setting and enforcing those rules.
"Crisis management. This is about when and how we intervene and about the expectations we create for official intervention in crises."

 But when rules are being set, to use Mr. Geithner's own analogies, for air bags, brakes, speed limits or building codes, the agencies at issue are not allowed to and do not only take input from the industry.

     Press accounts make clear that the financial instruments and regulatory issues discussed behind closed doors are related to issues of public interest, which in fact are disproportionately impacting low- and moderate- income people and communities of color -- subprime and predatory mortgages.  AFP of June 9 reported that

"those swaps are designed to transfer the credit exposure of fixed income products between parties and often have been linked to US subprime, or high-risk, mortgages... Trading in derivatives, financial securities whose value is derived from other financial securities, was a major factor in the subprime, or high-risk, mortgage crisis that rocked markets last August and has spread through the global markets... Geithner defended the Fed's decision to finance the Bear Stearns - JP Morgan Chase merger in March, saying it was done only with great reluctance and only because there seemed to be no other choice as Bear Stearns reeled from soured mortgage-related investments. 'It was the only feasible option available to avert default,' he said, and 'we did not believe we had the ability to contain the damage that would have been caused by default.' The Fed acted only to 'facilitate an orderly transition,' not 'to preserve the company,' Geithner said."

   Here, it appears that the FRBNY is trying to take the closed-door, no public notice Bear Stearns - JPM Chase process several troubling steps further, providing access to 17 mega-banks but still not the public. 

This closed-door, industry top-heavy process is unacceptable and, Inner City Press has now timely contended, is contrary to law, under 5 USC 553 and otherwise. Watch this site.

June 9, 2008

 So would whoever's the new President ask Bernanke to suggest four replacements on the Federal Reserve Board? Gov. Frederick Mishkin announced on May 28 that he would leave the board at the end of the summer. Two other Fed governor positions have been open since last year and Gov. Randall Kroszner has remained in his seat even though his term expired Jan. 31.

  Whatever happened to checks and balances?

June 2, 2008

  Econ-talk: Fed Vice Chair Kohn has been pitching the idea of giving Wall Street securities firms permanent access to Federal Reserve loans. Permanent bailout? Note to the Fed: Citigroup and JP Morgan Chase have been wildly understating their borrowing costs for LIBOR calculations, in order to hide what those in the know think of these two companies and their prospects...

May 26, 2008

  In a May 9 meeting in which he was criticized for the Bear Stearns bail-out, the Fed's Ben Bernanke expressed interest in local concessions from banks on interest rates, but little desire to clamp down on predatory lending, or extend the Community Reinvestment Act to non-banks...

May 19, 2008

In a speech on May 15, Federal Reserve Governor Frederic Mishkin said, “Our regulatory framework should be structured to address failures in information or market incentives that contribute to credit-driven bubbles." But where was he when the other Fed governors rubber-stamped the first part of the Bear Stearns bail-out by JPM Chase, which required unanimity?

May 12, 2008

 From Gov. Kroszner's speech last week --

"The cost of foreclosures is not limited to individual homeowners.  Communities in which a high number of foreclosures have occurred are increasingly faced with large numbers of properties held by lenders or servicers as "real estate owned," or "REO."  REO is costly to hold, and many lenders are not well equipped to handle large REO inventories.  As a result, the number of vacant homes in some neighborhoods has increased markedly.  After averaging about 1.7 percent starting in 1990 through 2006, the home-vacancy rate rose sharply in 2006 and hit 2.9 percent in the first quarter of 2008, according to the U.S. Census Bureau. Properties left vacant for long periods have many negative effects on a community.  Research indicates that foreclosures tend to reduce the value of nearby properties; the magnitude of these price declines appears to differ, depending on the presence of variables such as the strength of the local housing market or the distance between a foreclosed home and other surrounding homes."

  And that's why cities like Baltimore and Cleveland are suing predatory lenders, like Wells Fargo -- click here for a report this week to Inner City Press from a whistleblower..

May 5, 2008

  Some savvy analysts last week portrayed Bernanke and the Fed as faced with a choice between further bail-out of Wall Street for the subprime sleaze, or trying to mitigate food prices leading to famine in the developing world. Guess which way Bernanke and his rubber-stampers went?

April 28, 2008

 From Scott Alvarez' April 24 testimony -- "Citigroup recently received a capital infusion from the Kuwait Investment Authority (KIA), the Abu Dhabi Investment Authority (ADIA), and the Government of Singapore Investment Corporation (GIC), one of Singapore's two sovereign investment funds.  None of these funds acquired more than 5 percent of Citigroup's total equity.  Three sovereign wealth funds, the Korea Investment Corporation (KIC), Temasek, and KIA, each made similar noncontrolling investments in convertible preferred stock in Merrill Lynch and Co.  These are all passive investments that have not triggered formal review under U.S. banking law."  And is that wise?

April 21, 2008

  The Federal Reserve continues to hit new lows.  In an order dated April 1 (mailed out on April 11), the Fed purported to review -- with no public input -- and approve JPMorgan Chase's proposal to acquire Bear Stearns and its New Jersey-based bank, Bear Stearns Bank & Trust. "Based on all the facts and circumstances, the Board has determined that an emergency exists requiring expeditious action on the proposal." So much for CRA... To be continued.

April 14, 2008

   Delaware vice-chancellor Donald Parsons has stayed litigation challenging the proposed acquisition of Bear Stearns by JPMorgan Chase, deferring to a similar court case in New York. Parsons noted that the Delaware lawsuit mirrors five lawsuits that have been consolidated on an expedited basis by the New York Supreme Court. That court has scheduled a May 8 hearing on a preliminary injunction barring a shareholder vote to approve the deal. "The judge also noted the unique circumstances of the planned government-assisted merger" -- so now, the Federal Reserve's outrageous exclusion of any public review of the deal is used by court to avoid judicial review...

  And this is not even dealing yet with the Fed's sleazy deal with Blackrock, answers on which are due on April 18...

  There's something positively ghoulish, in Greg Ip's Greenspan story last week, about letter extracted on his death bed from Ned Gramlich, that "I truly wish the press would stop kicking you around on this subprime supervision issue. What happened was a small incident." The reference, as Ip tells it, was to

"In 2000, then-Fed governor Edward Gramlich, who was in charge of the Fed's consumer affairs, proposed to Mr. Greenspan that the Fed's staff examiners look for abusive lending practices in banks' lightly regulated mortgage affiliates. In an interview with The Wall Street Journal last June, three months before his death, Mr. Gramlich said that at the time, he generally considered subprime loans a good thing. He didn't then know the extent to which the loans would become a problem, but he wanted the 'Fed to be a leader' in cracking down on predatory lending. Mr. Greenspan recalls that he demurred, saying that the Fed shouldn't have oversight of these lenders. Shady operations could portray their Fed-regulated status as a seal of approval, he suggested, giving them unearned credibility with customers."

            But if Gramlich was pushing for exams of BANK-AFFILIATED lenders, like CitiFinancial, these were already benefiting from a bank- and FRB-affiliated status...

April 7, 2008

            The U.S. Federal Reserve Board, while still trying to avoid any public comments on or review of the controversial Bear Stearns - JPMorgan Chase bail-out, has agreed to hold public hearings on Bank of America's Countrywide application, in Los Angeles on April 22 and in Chicago on April 29. Inner City Press and Fair Finance Watch had requested the public hearings, and in preparation are submitting to the Federal Reserve that Countrywide in the Los Angeles MSA in 2007 confined 18.91% of its African American borrowers to higher cost loans over the rate spread. Countrywide in the Chicago MSA in 2007 confined African Americans to higher-cost loans 1.93 times more frequently than whites, while confining Latinos to higher-cost loans 1.35 times more frequently than whites.

March 31, 2008

  Ironic in light of the Fed's highly-questionable bail-out of Bear Stearns via JPM Chase, the Minneapolis Fed's Gary Stern last week intoned "A final TBTF comment: Recent events have likely reaffirmed and strengthened some creditors' expectations of support, or have created those expectations for the first time. I think one would be hard pressed to dismiss our analyses or proposals by claiming that such expectations do not exist. On the opposite end of the spectrum, some might dismiss our suggestions, arguing that we cannot influence creditors' expectations. I reject that view as equally untenable. We simply cannot allow widespread perceptions of government support to pervade the financial system."

  So what is the Fed going to do about it?

March 24, 2008

   Since the Fed is essentially a participant in the JPM Chase-Bear Stearns deal, how can it purport to regulate it? And since the Fed is now an interested party in how Bears' portfolio of subprime loans performs, how can it be objective?

March 17, 2008 WashPost - Guardian (UK)

            The day after news of the Federal Reserve's murky bailout of Bear Stearns through JPMorgan Chase, Inner City Press / Fair Finance Watch filed with the Federal Reserve Board in Washington, and the Federal Reserve Bank of New York, a petition, complaint and series of requests, portions of which are available by clicking here. So where was Gov. Mishkin?

            On Fed chair Bernanke's way to the podium for his speech in DC on Friday, Inner City Press asked him if he would be taking any questions. "No," he said, remaining expressionless as Inner City Press called after him, "Bear Stearns?  JPMorgan Chase? Why?" His speech, purportedly on the subprime lending crisis, did not even mention the role of securitizers.  And when it was over, his entourage decamped in two large black cars, license plate BJ 3135, out onto D Street with siren lights on top...

March 10, 2008

  Sources tell Inner City Press that the Federal Reserve Bank of New York placed online zip code specific foreclosure data, then quickly pulled it back. But too late, as we intend to cover, quantitatively, going forward...

March 3, 2008

  As far back as February 18, the Federal Reserve Bank of Richmond said it had Bank of America's application to acquire Countrywide. But for days, no notice was published by the Federal Reserve in DC. Finally it was posted, with a comment period to March 31. Let the commenting begin!

February 25, 2008:

        As the beginning of the 2007 HMDA data season approached, the Fed has let another year go by without providing simple guidance. Soon there will be requests to extend comment periods on Bank of America - Countrywide, until each institutions provides its 2007 data. And that will only be the beginning...

February 18, 2008

  Last week at the UN, several states' pension funds and other institutional investors spoke of pushing the SEC to deal with companies' exposure to climate change. Inner City Press asked if they were also pushing the Federal Reserve in this regard. No, was the answer. Not YET, that is...

February 11, 2008

On Royal Bank of Canada and the pawnshops and quick cash joints, the Fed had this to say, that ICP Fair Finance Watch

"expressed concern about RBC Centura's relationships with unaffiliated pawn shops and other nontraditional providers of financial services. As a general matter, the activities of the consumer finance businesses identified by the commenter are permissible, and the businesses are licensed by the states where they operate. RBC Centura has stated that it conducts substantial due diligence reviews of its customers who provide alternative financial services, including reviews of anti-money laundering and Bank Secrecy Act compliance, and that it does not play any role in the lending practices, credit review processes, or other business practices of those firms."

  Sounds like the Fed's approach to subprime mortgage lending, before the fall..

February 4, 2008

  In quiet Fed political news, Paul Volcker last week was reported to endorse Barack Obama. And what of Alan Greenspan, now advising Deutsche Bank?

January 28, 2008

            How shameful that the Fed got spooked by Societe General's sell-off, and won't even criticize them publicly... And ex-FRBNY Ernie Patrikis, now through the revolving door a partner at Pillsbury Winthrop Shaw Pittman, was quoted last week that mortgage "servicers must act in the best interest of investors"...

January 21, 2008

            On Toronto Dominion's application to buy Commerce Bank, despite an evasive purported response from TD's law firm Simpson Thatcher, TD has had to re-apply to the Federal Reserve, opening up a new comment period...

            Try this on for irony -- Paulson & Co., the New York-based hedge fund which made massive money off the foreclosure frenzy in which predatory lender culminated, has put Alan Greenspan, who at the Federal Reserve allowed it all to happen, on its advisory board...

January 14, 2008

    The Fed has appointed to its "Consumer" Advisory Council Kevin Rhein, a representative of Wells Fargo, which was sued last week by the City of Baltimore for predatory and discriminatory lending...

January 7, 2008

The communication policy of the Federal Reserve is currently a work in progress, Fed Vice Chair Donald Kohn told the American Economic Association. Ya don't say...

December 31, 2007 

            "We want consumers to make decisions about home mortgage options confidently, with assurance that unscrupulous home mortgage practices will not be tolerated," Fed chairman Bernanke said. But why then allow five year prepayment penalties, and yield spread premiums?

December 24, 2007

  Speaking like a supplicant in Charlotte, Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, last Wednesday defended the Fed's plans to belatedly clean up predatory lending. In a brief Q&A session, Lacker said the Fed is offering a "set of significant measures," but not banning Yield Spread Premiums, only required that they be disclosed. Eliminating such practices, Lacker said, "could raise mortgage borrowing costs." But what of the costs of predatory lending?

December 17, 2007

  With the Fed slated to announce its long overdue predatory lending rules this week, as early as Tuesday, December 18, and with the rules expected to leave prepayment penalty abuse unreformed, it's worth remember this quote from Roger T. Cole, the Fed's director of banking supervision and regulation, to the Senate Banking Committee in March: "Given what we known now, yes, we could have done more sooner." Yeah....

December 10, 2007

  Governor Kroszner last week told the House, "We would recommend that the amount of such civil money penalties, if imposed, be given a ceiling as well as a floor because of the market uncertainty that can be introduced by open-ended liability. We would also suggest that some discretion in the actual amount of the penalty, within such a range, be given to the enforcing agencies. This sort of flexibility in enforcement would help the agencies adjust the punishment to fit the infraction." So, the Fed wants to cap predators' liability, and to be given discretion even under the cap...

December 3, 2007

   Story of the week, capturing the decade, is the Charlotte Observer's Sunday overview, "Banks fail to escape sting of subprime." The subtitle is "They pulled back from scrutinized loans, but investment arms didn't," and the two main banks covered are the Charlotte twins, Bank of America and Wachovia. Both claimed to have gotten out of subprime, BofA all the way back in 2001. Then this quarter they have announced subprime-related write-downs of $3 billion and $1.1 billion, respectively. Clearly, they were not out of subprime. And what of the Federal Reserve, which repeatedly ignored detailed comments on mergers and accepted the banks' statements, now shown to have been incorrect, about their business?

November 26, 2007

 Another regional president of the Federal Reserve, which stood by while the subprime mess gathered force, has now cautioned against over-regulation. "Some reforms might impose significant costs and contribute to outcomes we would prefer to avoid. Ultimately, policymakers could find themselves relearning old lessons rather than improving social welfare," Minneapolis Fed President Gary Stern said last week in Singapore...

November 18, 2007

  The Fed's defenders claim that in its Consumer Advisory Council, real work is getting done. From the outside, there's been nothing -- no enforcement action on disparities in HMDA data and high cost lending, no enforcement through the merger review process, nothing...

  In the Senate, a red flag has been raised about the attempt to give Gov. Kroszner a new 14-year terms. And still not action on Elizabeth Duke of Towne Bank and Larry Klane of Capital One Financial Corp, the high-cost card and mortgage lender...

November 12, 2007

  Fed Governor Randall Kroszner has focused on an molehill while the mountain of subprime sleaze collapses around him.  To the Consumer Bankers Association Kroszner boldly took on lenders' failure to escrow for taxes and insurance, saying these can lead to a situation "akin to payment shock for borrowers. It is a common practice for these payments to be escrowed in the prime markets, and I see no reason that escrows should not be standard practice in the subprime markets too," he said.   His Fed-chosen boosters cheered, You go, Randy!  "Given the substantial number of resets from now through the end of 2008, however, I believe it would behoove the industry to join together and explore collaborative, creative efforts to develop prudent loan modification programs and other assistance to help large groups of borrower systematically," he said. A bit better...

November 5, 2007

   From the WSJ last week: "On Aug. 8, Mr. Rubin called Mr. Bernanke. The Citigroup executive said he suspected a lot of people were telling Mr. Bernanke he should have cut rates. Yet Mr. Rubin said he thought the Fed had done the right thing, say people familiar with the call."

  Questions: is it appropriate for the head of the largest bank's office of the chairman to just dial up the main regulator and shoot the breeze? When that largest bank has massive bets on predatory subprime? What else was said?

October 29, 2007

            The Fed through Kroszner last week defended sleazy securitizers: "The securitization market is critical to increasing the resources available to fund home purchases and great care should be taken to ensure that investors in the securitization market can quickly and accurately assess and mitigate the risks, including the compliance risks, of mortgages sold in this market. Such laws should be very clearly delineated to ensure that they do not have a detrimental impact on the ability of lenders to securitize loans." Kroszner echoes the ABA's criticism that the bill "would increase costs and decrease choices for consumers."

October 22, 2007

  Miller-Watt-Frank, it is reported, may exclude the Fed from rulemaking. Use it or lose, it, Rep. Frank had said. The American Banker quotes an ex-Fed lawyer spinning that the Fed's exclusion may be inadvertent. Yeah, right...

October 15, 2007

  So Alan Greenspan spent $25,000 to fly himself and one staffer back and forth to London. He says he never know about the subprime problems, despite activist wagging their jaws in front of him for meeting after meeting. Maybe he was mind-dialing rich man's Travelocity while they spoke...

October 8, 2007

  The Federal Reserve's general counsel Scott Alvarez, in testimony to Congress last week about Industrial Loan Companies, offered rare plug for CRA, which some say the Fed's actual practice, of review of CRA in mergers, does not justify: "The ILC exception undermines these requirements by allowing financial firms to own and operate an FDIC-insured bank without abiding by the capital, managerial, and CRA standards established in the GLB Act." But if the Fed wanted there to be CRA standards, they wouldn't rubber stamp approvals, increasingly with less and less detailed review. This point was lost amid the focus on commercial companies owning ILCs. Cynics say that the Fed just wants jurisdiction over everything -- that the Fed has no problem with loopholes, only with those that it doesn't control...

  Meanwhile, south of the border approval has been procured for Banco Wal-Mart de Mexico Adelante, which Citigroup says will open 10 to 12 branches in the next year. Then again, in the 12 months to June 2007, Citigroup in Mexico opened 207 retail bank and consumer finance / Citifinancial branches.

October 1, 2007

  As Capital One's Larry Klane is slated to join the august (?) Federal Reserve Board, the Detroit News of Sept. 28 lists Capital One as one of top three lenders for cosmetic surgery --  Capital One Healthcare Finance: www.capitalonehealthcarefinance -- How do you think they foreclose? Nip/Tuck, is this predatory lending? Maybe Ben Bernanke will ask...

September 24, 2007

  This month has seen the spectacle of Alan Greenspan claiming he wasn't told what was happening with predatory lending. But community groups, in ceremonial (or window-dressing) meetings with Greenspan raised the issues in detail, about securitization of toxic loans and who was buying them. Greenspan nodded and did nothing. And now he sells his book, and defends his right to sell advice and access. Shameful...

September 17, 2007 -- As Fed Releases Mortgage Study, Subprime Disparities Worsen at Citigroup, HSBC, Wells

In the same week that Bank of America set a record, jacking up its surcharge for the use of ATMs to three dollars, the Federal Reserve hauled off and delivered an approval, of BofA's takeover of LaSalle. The Fed seems to have ignored most of the issues raised. For example, the Fed states that ICP and Fair Finance Watch

"expressed concerns about Bank of America’s relations with unaffiliated third parties engaged in subprime lending. The commenters provided no evidence that Bank of America has originated, purchased, or securitized 'predatory' loans or otherwise engaged in abusive lending practices."

            Did the Fed even consider BofA's re-entry into originating subprime, with its propping up of Countrywide, which has settled charges of racial discrimination in its subprime lending? The Fed also makes light of BofA's mounting compliance violations:

"A commenter opposing the proposal expressed concern about Bank of America’s connection to investigations and lawsuits related to the bankruptcy of Parmalat SpA, Parma, Italy. The commenter also expressed unsubstantiated concerns about Bank of America’s student loan policies [and] the handling of certain money transfers through the New York branch of Bank of America, National Association."

            To be continued. 

Meanwhile, Citigroup's Mexican banking arm Banamex and a group of Mexican investors said Wednesday they plan to launch a $150.7 million counter offer for airline Consorcio Aeromexico SA (AMEXICO.MX), which is currently the target of a takeover bid by two local businessmen.  Banamex said the group has requested authorization from the National Banking and Securities Commission and the Federal Competition Commission.

            What about the U.S. Federal Reserve, putatively Citigroup's comprehensive supervisor? Citigroup can own airlines outside of the U.S.?

September 9, 2007

    In Larry Klane's ongoing drive to join the Federal Reserve Board, now this DJNS quote: "Mr. Klane's involvement in subprimes raises questions, but we'll withhold judgment until we get answers," said Sen. Charles Schumer.

            The Capital One unit at issue used to be called eSmartLoan before Cap One bought it. As previously analyzed by Inner City Press, in 2004 eSmartLoan made 144 super high cost HOEPA loans (loans subject to the Home Equity and Ownership Protection Act, in essence costing at least eight hundred basis points over comparable Treasury securities). The HMDA-LAR file included 2193 higher cost, rate spread loans  (loans three hundred basis points or more over Treasuries on a first lien, five hundred on a subordinate lien). All of these high cost loans were reported, as to race, “Information Not Provided.”  The originations in the file for which race was reported are predominantly in Missouri and Kansas. ICP takes these to be the retail loans of National Bank of Kansas City, from which Capital One acquired eSmartLoan, which is a subprime lender directed at many more states.  Of the over 6000 race-not-reported loans, one-third of them rate spread, only four were in Kansas, and only four in Missouri. The rest were all over the country -- high cost and race not reported...

September 3, 2007

  While Fed watchers make much of if and when Bernanke will move to cut the fed-funds rate, his hands-off approach to consumer protection, and even the provision of information to consumers, strike us as more indicative...

August 27, 2007

From Sen. Dodd's press conference after meeting with Fed chair Ben Bernanke:

Q You helped during the predatory lending -- (off mike) -- legislation. But why has the Senate failed to act of any of the -- (off mike)?

 SEN. DODD: Well, again, look, the Fed is moving on this. We have HOEPA legislation, which passed in 1994, which mandated that the Fed assume responsibility of dealing with deceptive and fraudulent practices. I have been critical of the Fed for not acting, particularly when we're -- we know that three and a half years ago, Fed staff was becoming aware of this emerging problem. They tell me they're going to have these regulations in place by this fall. If that's the case and they're moving, then I'm satisfied that that's going to be done. But I'm also simultaneously going to be looking at the possibility of legislating this area. But I don't want it made more confusing by taking that action prematurely.

 Q Why hasn't the Senate considered this legislation sooner?

 SEN. DODD: Well, again, I think because of existing laws here, you could deal with it here, and it seems to me the regulatory body has the responsibility of developing the regulations in this area. So we've established the law 13 years ago. The Fed was charged 13 years ago with adopting regulations. It wasn't a request of them; it was a mandate of them to do so. And so, in a sense, the power exists there for them to do what we'd be doing with legislation, I assume, anyway.

            So, according to Dodd, the Fed is "moving on this" -- we and logic disagree, but it's noteworthy that the Fed has no problem with those who meet Bernanke speaking out afterwards. Why then the off the record lunch with Reuters reporters? We'll see.

August 20, 2007

  Why is it that the Federal Reserve's sudden interest rate cut has the feel of a cover-up? That is, after having allowed predatory lending to flourish, and then the resulting financial chaos (two months ago, the Fed dismissively called the subprime problem "contained), it finally acted to prop up the markets, because too many fingers were starting to point back at 20th Street and Constitution Avenues...

  From the august (15) Argus Leader in South Dakota:

The court of public opinion already appears polarized on what critics call predatory lending practices - companies charging exorbitant interest rates and penalty fees. "'It's not illegal, but it's very unethical,' said Richard Cook, a former federal government analyst and author who lives in College Park, Md. 'It's legalized loan-sharking. It was one of the specialties of the Mafia. But that's one organized crime doesn't have to do now because it's legalized.' Sioux Falls Mayor Dave Munson, who worked 18 years for Citibank, calls that criticism unfair."  So, from Citibank to mayor in the city Citi ran to, to export high rate, which are called "unethical" by an ex-Fed consultant...

On an entirely different note, there is the sadness of learning about Ned Gramlich's sickness, in Saturday's NY Times. Here's hoping that his decision to eschew treatment works out for the best...

August 13, 2007 -- Greenspan's Shameless Cash-Out to Deutsche Bank Is a Sub-Crime, Consumers Complain

            The Federal Reserve, intent on seeming earnest, more quietly claims to be bereft of power. Case in point? The Fed, when asked about banks which refuse to provide their mortgage data in electronic format, pretends to be surprised. Later, more quietly, the Fed claims it has no authority to tell banks to be reasonable, and not opening evade the spirit of the rules. But isn't that the problem? As the House Banking Committee is saying, "use it or lose it."

August 6, 2007

  Larry Klane of Capitol One, charged with fraudulent marketing by several state attorneys general, told the Senate last week that, if confirmed, he "would bring my energy, focus, and experience to vigorously fulfilling the Fed's consumer protection responsibilities." Why don't we believe that?

July 30, 2007

   Banco Santander was reported last week to have continued to do business with sanctioned Bank Sepah until at least March 2007.  How this might impact the Santander - RBS - Fortis bid for ABN Amro, including their pending applications before the U.S. Federal Reserve, remains to be seen. Federal Reserve, take notice...

July 23, 2007

  Before the House of Representatives last week, Fed chairman Bernanke said:

"the recent rapid expansion of the subprime market was clearly accompanied by deterioration in underwriting standards and, in some cases, by abusive lending practices and outright fraud.... Rising delinquencies and foreclosures are creating personal, economic and social distress for many homeowners and communities; problems that likely will get worse before they get better. The Federal Reserve is responding to these difficulties at both the national and the local levels.  
   "In coordination with other federal supervisory agencies, we are encouraging the financial industry to work with borrowers to arrange prudent loan modifications to avoid unnecessary foreclosures.  Federal Reserve banks around the country are cooperating with community and industry groups that work directly with borrowers who are having trouble meeting their mortgage obligations."

  Meanwhile, William Poole, president of the Federal Reserve Bank of St Louis, said that poor decisions led to the losses and the funds that have suffered losses got what they deserved. A number of hedge funds have suffered significant losses, including Australian fund Basis Capital. Ben Bernanke, chair of the Federal Reserve Board, warned that sub-prime losses could increase to as much as $100 billion...
   Bernanke also said the Fed is "conducting a top-to-bottom review of possible actions we might take to help prevent recurrence of these problems."  An independent review, Volker-style, as they say, should be conducted into how and why the Fed was so hands-off as this happened....   

July 16, 2007

  Countdown on the Fed: Rep. Frank told Federal Reserve Board Governor Randall Kroszner at a committee hearing four weeks ago, "If the Fed doesn't start to use that authority to roll out the rules, then we'll give it to somebody who will." Now at the conference of the National Alliance to End Homelessness in Washington, Frank's said of the Fed, "If they haven't begun to spell out the rules under their authority, then we will take it away from them." Clear?

July 9, 2007

  The Mortgage Bankers Association's SVP for president for government affairs and public policy last week said that the Fed has "been doing exactly what it should be doing." The mortgage bankers would say that...

   This week, an ex-Fed regulator who monetize his expertise and access, first at Citi and now GE: "If it's now 2007 and the control failure occurred in 2005, 2004 ... is there going to be any value to law enforcement, any value to the government in finding things that happened two or three years ago and reporting it now?" The speaker of these words was identified by the American Banker newspaper as "Richard Small, the global anti-money-laundering leader at GE Money, the consumer and small-business financial services division of General Electric Co., and a former top anti-laundering official at Citigroup Inc. and the Federal Reserve Board, where he was a deputy associate director in the division of banking supervision."

  Then again, the American Banker newspaper also has a revolving door. From North Carolina, Citi's live checks: "a 78-year-old resident of Carolina Spring Apartments received a notice in the mail... appeared to be a real check from CitiFinancial Auto Corporation in Irving, Texas, a company that lends money for car loans over the Internet. Rob Julavits, spokesman for CitiFinancial Auto, saw a copy of the check that the Carolina Spring resident received, and said it was a fake. 'It is not a legitimate CitiFinancial Auto check,' he said. 'We are looking into the matter.'" Whether the check was authentic or not does not answer whether CitiFinancial continuing to send live checks to senior citizens is legitimate. And Julavitz... used to report on Citigroup for the American Banker, until Citigroup hired him...

   On the fortieth anniversary of FOIA implementation, a bill to restore some vitality to the law has been subject to a secret block -- by Arizona's Senator Kyle, media watcher can now report. For shame...

July 2, 2007

 From Fed Governor Randall Kroszner: "The guidance on adjustable-rate mortgages underscores that the Federal Reserve and other banking regulators expect lenders to make sure subprime borrowers not only can afford their monthly payments while the introductory rate is in effect but also after the interest rate resets."  We note that at the latest Fed Consumer Advisory Council, Bernanke skipped, while Kroszner attended. Meanwhile, Bernanke is slated for an "off the record" lunch at a wire service this coming week. Priorities, priorities...

Just after the Federal Reserve's rubber stamp approval, Mellon Bank has agreed to pay $16.5 million to the federal government to settle claims that it allowed overwhelmed employees to destroy thousands of federal tax returns and payments in 2001. Mellon had a contract with the Internal Revenue Service to process income tax returns and tax-payment checks. Mellon employees, feeling overworked and unable to meet deadlines imposed by the contract, destroyed more than 77,000 returns and checks totaling $1.3 billion ....

 Treasury's Paulson defense last week of using the Federal Reserve System to get around the Patriot Act was that "in April, the Macanese made the decision to release the funds. The Treasury supported that as a way to move the six-party talks forward." Now the Government Accountability Office is going to evaluate whether the U.S. government ran afoul of its own anti-money-laundering rules. Paul Anderson, a spokesman for the GAO, said Congress's investigative arm will decide whether to proceed with an investigation within the next week to 10 days. Molly Millerwise, Treasury spokeswoman, said, "we appreciate Congress's interest in safeguarding the U.S. financial system from abuse. The transaction the U.S. government helped to facilitate is fully consistent with all applicable laws and regulations." We'll see...

June 25, 2007

  At the Federal Reserve Bank of Cleveland, which has been protested, President Sandra Pianalto acknowledged that in "the fourth quarter of 2006, Ohio had the highest foreclosure rate of any state in the nation. We know that Cuyahoga County itself has been particularly hard hit. It is unfortunate that at a time when many people are rediscovering the hidden potential of our urban neighborhoods, the current trend in foreclosures might compromise some of the real progress that has been made." Then she said -- "Please understand that the Federal Reserve Banks are not rule-makers; that authority rests with the Board of Governors in Washington."

  In Washington, the Chairman and a Governor made a point of sitting down with flown-in activists, but committing to nothing. "It's very politically savvy on the part of the Fed" to hold such a meeting, even mortgage industry analyst Howard Glaser questioned. "Whether it translates into action remains to be seen."

June 18, 2007

   A new low for the Federal Reserve, it prosecutes money laundering while allegedly engaging in it, since unlike banks it is not subject the USA Patriot Act: " The decision to use the Federal Reserve Bank to return the [North Korean] money to the original account holders came after government lawyers concluded that the Federal Reserve was not subject to the same legal provisions as the commercial banks." LAT....

   Fed Governor Randall Kroszner last week said the Fed was struggling to figure out "how we can help to weed out abuses while also preserving incentives for responsible lenders."

   The Federal Reserve on June 14 hauled off and approved BONY - Mellon, saying in footnote 19 that ICP / Fair Finance Watch as

A commenter expressed concern about BONY’s relationships with unaffiliated third parties engaged in subprime lending. BONY has represented that it provides corporate trust and custody services relating to some issuances backed by subprime loans or involving issuers who originate or securitize subprime loans. BONY also indicated that it provides commercial credit to some originators of subprime mortgages. In addition, BONY noted that it acts as a swap counterparty in connection with some subprime loan securitization transactions and that its proprietary treasury portfolio, and some funds for which BONY acts as investment manager, include securities that may be partially backed by subprime assets. BONY has represented that it does not play any role in the lending practices or credit review processes of its customers who engage in subprime lending. The Board expects all banking organizations to conduct their operations in a safe and sound manner with adequate systems to manage operational, compliance, and reputational risk.

   CRA staff at the Fed as of mid-Thursday afternoon didn't know the application was being approved. This implies that no in-person meeting was even held on this major merger -- just "notational" voting. What a joke...

June 11, 2007

 Citigroup complains that in India it can only set up branches in Akola and Nanded in Maharashtra and Kurnool in Andhra Pradesh, and not in the metros or the big cities where it wants to expand its presence much faster. India had decided to block proposals for fresh licenses from American banks since the US has been sitting on applications submitted by State Bank of India, Bank of Baroda and ICICI Bank for many years. Live by the sword, die by the sword... US Trade Representative Susan Schwab promised that she would help the treasury department, the Federal Reserve and the Indian banks sit across the table and discuss the issue. Fed politics... Reportedly, the commerce ministry as well as RBI were against granting any concessions to US banks but it was the finance ministry which suggested that a different strategy could be tried and then leave it to the US to act. So the Fed operates for Citigroup, again...

  We'll report on / from Fed's June 14 hearings...

June 4, 2007

  The WSJ blogs that "Four of next year’s Federal Open Market Committee meetings will last two days instead of one, the newly released schedule shows. That’s the same as in 2007. Before Ben Bernanke became chairman, in 2006, it was rare for the Fed to have more than two such meetings per year....The continued use of two-day meetings could signify that debate will go on a while longer, or perhaps officials anticipate moving next year from releasing forecasts twice a year to three or four times, instead; that may require additional time to hash things out behind closed doors. Or maybe they just enjoy spending more time together."

   Whatever the rationale, consumers and communities sure haven't benefited from Bernanke's increased meeting times. In fact, on merger reviews the Fed is going less...

May 28, 2007

            Along with its bogus pronouncements about HOEPA and what it's done on subprime lending, the Federal Reserve appears to have in essence repealed or much limited the Community Reinvestment Act, most recently with regard to FDIC-insured institutions on Guam. Issues were timely raised to the Federal Reserve Bank of New York, on ANZ's application to a bank on Guam. In any other previous case, the comments would have been referred to the Board in Washington, which would have asked ANZ to answer questions and then weighed the answers. But in a break with precedent, another diss to CRA and consumer protection, now the FRBNY takes it on itself to approve such applications without even asking any questions.

  Here's a sampling of what the Fed ignored:

            Note that in New Zealand, ANZ and its subsidiary National Bank have when added together received the most consumer ombudsman complaints (259), see, New Zealand Press Association of November 29, 2006 --

"Commission chair Sir Ian Barker noted a recent review showed a ``worryingly high'' number of bank staff knew little or nothing about their own bank's complaints procedures. And more than half of bank branches in a recent survey did not display the Banking Ombudsman leaflet. He endorsed a key recommendation on accessibility by a former ombudsman, now Governor-General, Anand Satyanand, in his review of the 14-year-old scheme this year. Ms Brown said an increasing number of complaints were about consumer finance and Internet fraud or Internet banking."

            See also, "Lenders warned on limits, "The Australian Financial Review, November 14, 2006. ANZ's record in New Zealand, Australia, American Samoa, Cook Islands, Fiji, Kiribati, New Caledonia, Papua New Guinea, Samoa, Solomon Islands, Vanuatu, Tonga and Timor Leste should be reviewed, including at a public hearing, as a predictor of the impacts ANZ would have on Guam if allowed to acquire CSB.

            There are other questions, and not only related to the environment and weapons, see also, "Your loss not our problem, bank tells duped investor; ANZ Bank won't discuss 'personal matter,'" The National Business Review (New Zealand), September 16, 2005.

  That is, the Fed ignored consumer protection as well as environmental / managerial issues. The regular-mailed May 18 letter of the FRBNY's Ivan J. Hurwitz says by rote that the Fed is not required to consider consumer protection or other issues outside of the United States. As one of the common sense rebuttals, what if an applicants consumer protection record where it does business, outside the U.S., is the only predictor of how it would run a bank in the U.S.? By this Fed logic, it would approve an application by an international loan shark to buy a bank in the U.S.. It is a new low for the Fed -- if the Board does nothing, the rot has re-spread to the top.

  Fed governor nominee Elizabeth "Betsy" Duke listed major holdings of a previous employer, Wachovia Corp., in financial disclosure forms filed in conjunction with her nomination to join the Fed Board. According to the disclosure forms, released Friday by the Office of Government Ethics, Duke reported holdings of Wachovia stock valued at between $5,000,001 and $25 million. She also reported holding Wachovia stock options.

  Note: mere divestiture would not cure this conflict...

May 21, 2007 -- Banker Described As Predatory May Join Federal Reserve, a Test for Senators, (c) Inner City Press

NEW YORK, May 20 -- The newest nominee to the U.S. Federal Reserve Board, recently under fire for inaction leading to the subprime lending and foreclosure crisis, comes from a notorious subprime lender, Capital One.

    Larry Allan Klane, whose nomination was announced on May 15, before that worked at Deutsche Bank, whose involvement with lenders sued for predatory lending such as New York's Delta Funding has like Capital One's record been an issue considered but not acted on by the Fed.

   With Fed chairman Ben Bernanke alternately promising greater scrutiny of and calling for restraint in restricting the subprime lending field, there are serious questions raised by the nomination of a longtime subprime lender to the Board. Whether these questions will arise in or even derail Klane's consideration by the U.S. Senate remains to be seen.

            The May 15 personnel announcement stated that "Mr. Klane currently serves as President of Global Financial Services of Capital One Financial Corporation.  Prior to this, he served as Managing Director of Corporate Trust and Agency Services at Deutsche Bank / Bankers Trust."

    The connection to Capital One, but not Deutsche Bank, was reported without comment in the Washington Post and financial news wire services. Even casual television watchers associate Capital One with advertisements featuring Nordic or medieval rampaging hordes along with the promise of no- to low-fee loans from Capital One, regardless of one's credit history.

            Capital One has been sued for these ads, and for the underlying business practices, by the state attorneys general in at least West Virginia and Minnesota. According to staff involved in these cases, Capital One has managed to get records of other enforcement actions against it sealed, as if the cases had never existed.

            Sometimes the traces of Capital One's cover-ups are still available. A filing obtained by Inner City Press from the West Virginia Supreme Court of Appeals, for example, recites that "on June 8, 2005, Capital One Bank filed an action... to seal all records, pleadings and matters in Civil Action Nos. 05-C-71 and 05-C-72 and to enjoin the Attorney General from issuing press releases or public disclosures regarding any matter relating to its litigation against Capital One Bank."

            In fact, in March 2005 when Capital One announced a proposal to buy Hibernia National Bank in (pre-Katrina) New Orleans, public records of state anti-predatory lending enforcement actions against Capital One were raised, regarding West Virginia and elsewhere. Associated Press on March 10, 2005 reported that

"Capital One's troubling practices were reflected most recently in Minnesota Attorney General Mike Hatch's lawsuit against the company. In the suit, filed in December, Hatch said Capital One's ads indicate that interest rates on its 'No Hassle' credit cards would remain at 4.99 percent. However, he says many consumers wind up paying higher rates, and those who miss payments or exceed credit limits could see rates in excess of 25 percent. Capital One said it continues to work with Hatch's office."

            A Louisiana business publication noted Capital One's same-day public relations action:

"Spokeswoman Tatiana Stead emailed an additional statement this afternoon in response to the Minnesota lawsuit against the company: 'Capital One has cooperated fully with the Attorney General’s investigation, and believes it has acted properly and in full compliance with the law. Capital One regrets that the Attorney General has chosen to proceed with this lawsuit, but intends to continue to work with the Attorney General’s office to address the issues raised.'"

            Whether because of this "work with Hatch's office" or not, comment has not been able to be obtained from office since Klane's nomination. The West Virginia attorney general's office, however, has indicated shock that an executive vice president from Capital One would be nominated to a seat on the Federal Reserve Board, which along with setting interest rates is charged with consumer protection.  From another state, a regulator explicitly concerned about retaliation called this a nomination of a fox to serve as a hen-house's overseer.

            Mr. Klane involvement with Capital One has extended beyond high-rate credit cards. He was a point-name when Capital One in 2005 bought the subprime mortgage lender eSmartloan. See, e.g., Card Line of Dec. 17, 2004.

   A review of the last publicly-available Home Mortgage Disclosure Act (HMDA) data including eSmart;oan's information found 144 super high cost loans subject to the Fed-implemented Home Ownership and Equity Protection Act -- loans at rates more than eight percent higher than prime -- and  2193 loans over the Fed-defined subprime rate spread, of three percent over prime.  While a purpose of HMDA is to allow for fair lending assessment by including racial and ethnic data, these eSmart (now Capital One) subprime loans were all were reported, as to race, "Information Not Provided." 

    The same might be said of the announcement and reporting of Mr. Klane's nomination: relThe seriousness of Senators' and the financial press' recently claimed concern about the subprime lending crisis will be tested during the consideration of Mr. Klane's qualifications for serving on the Federal Reserve Board.

* * *

  The Fed's chairman Ben Bernanke, in some places described as finally taking predatory lending seriously, was in fact dismissive in his May 17 Chicago Fed speech. ''We must be careful not to inadvertently suppress responsible lending or eliminate refinancing opportunities for subprime borrowers,'' he said, adding that the Fed -- or he -- sees ''no serious broader spillover.''

      As we predicted last week, and will cover going forward, the predatory lending industry is spilling over into the Federal Reserve Board...

            Meanwhile, the Bank of New York, enabler of predatory lenders, has been asked by the Federal Reserve about the scope of its subprime support, in response to ICP Fair Finance Watch's challenge the BONY - Mellon merger application. BONY responded, a month after the request -- and redacted even the number of subprime lenders it helps. Inner City Press has contested the redactions. We'll see.

May 14, 2007

   Who will fill the two empty seats at the Fed? According to Dow Jones -- on which Murdoch's News Corp has bid -- under consideration is one Larry Klane, Capital One Financial Corp.'s president of global financial services since 2000 and previously worked at Deutsche Bank. Bad combo -- Capital One has been challenged by state attorneys general for credit card shenanigans, and Deutsche Bank, beyond its enabling and now direct role in predatory lending, last week admitted to its long-concealed role for the recently expired dictator Turkmenbashi. What are Mr. Klane's views on these matters, both of which have been and will be raised to the Fed? Would Klane recuse himself?

May 7, 2007

            The Fed says it doesn't know what it can do under HOEPA, it doesn't know the extent of its jurisdiction. It never had such doubts when it allowed banks to get into securities, and then outright broke the Glass Steagall Act to benefit Citibank. The Fed only gets cautious when it's about consumers...

April 30, 2007

  Look who's jumping in -- Edward Gramlich, Federal Reserve governor from 1997 to 2005 now identifies himself as author of the forthcoming book "Subprime Mortgages: America's Latest Boom and Bust." This in a Knight Ridder article that reports that "at least 21 non-bank lenders have filed for bankruptcy protection or shut down since early last year. And the stocks of investment banks with large subprime holdings, such as Merrill Lynch and HSBC, are taking a hit as mortgage defaults and foreclosures climb." Uh, HSBC is hardly an "investment" bank. And HSBC was the largest subprime lender in the U.S. in 2006. The article also ran as a correction: "A story on problems in the subprime mortgage market suggested that First Franklin Financial Corp. was not subject to federal regulation. Before its recent sale to Merrill Lynch, it belonged to National City, which as a nationally chartered bank was regulated by the Office of the Comptroller of the Currency." Who would have an interest in pointing this error out?

April 23, 2007

            From the Federal Reserve Bank of NY, Inner City Press on April 21 received a copy of Bank of New York's heavily redacted application to acquire Mellon. BONY revised its still-too-extensive redactions to its application on April 16; ICP has a right to comment on this material.  ICP contends that this proposed combination would be anti-competitive. BONY apparently disagreed, but the bases of its argument are still being hidden, with entire pages of its antitrust memo blacked-out. BONY repeatedly cites the case Inner City Press v. FRB, then redacts even portions of its argument. ICP has contested these redactions and withholdings, and requested an extension of the comment period until the information to which ICP and the public have a right is released.

April 16, 2007

Federal Reserve chairman Ben Bernanke spoke on Wednesday, April 11 at New York University, intoning that "market-based regulation has proven an effective supplement to (or substitute for) conventional command-and-control approaches." On the other hand, we're told that at the Gridiron Club event on the last day of March, Bernanke yawned and took his leave while Dick Cheney was speaking...

April 9, 2007

In a study of the just-obtained 2006 mortgage lending data, ICP & Fair Finance Watch have identified disparities by race and ethnicity in the higher-cost lending of some of the nation's largest banks. 2006 is the third year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens. Among other findings, Wells Fargo, 19.23% of whose 2006 mortgage were subprime, denied the applications of African Americans 1.72 times more frequently than whites, while denying those of Latinos 1.57 times more frequently than whites. Wells Fargo in 2006 made 889 super high-cost HOEPA loans.

  Wells Fargo's response was to hide behind the Federal Reserve. "The Federal Reserve has repeatedly emphasized that the limited data analyzed in the report cannot support a conclusion that lending practices are discriminatory," a spokesman for Wells Fargo said.  "Banks Prone to Sell Minorities Pricy Loans," Reuters / Washington Post

The Federal Reserve has also said that

”black and Hispanic borrowers taken together are much more likely than non-Hispanic white borrowers to obtain credit from institutions that report a higher incidence of higher-priced loans. On the one hand, this pattern may be benign and reflect a sorting of individuals into different market segments by their credit characteristics. On the other hand, it may be symptomatic of a more serious issue. Lenders that report a lower incidence of higher-priced products may be either less willing or less able to serve minority neighborhoods. More troubling, these patterns may stem, at least in part, from borrowers being steered to lenders or to loans that offer higher prices than the credit characteristics of these borrowers warrant. Reaching accurate determinations among these alternative possible outcomes is one goal of the supervision system."

   What the Federal Reserve, which missed the foreseeable crisis in the subprime lending industry, hasn't yet disclosed is that these disparities are most stark at the largest conglomerate in the country, Citigroup, including in its headquarters city's lowest-income borough.  

 Where the rubber will meet the road will be in how the Federal Reserve and other agencies act on specific disparities at specific lenders, including as these are formally raised to them in timely comments on merger applications, Fair Finance Watch concludes.

April 2, 2007

  Ben Bernanke and the CRA: Narrow views. Last week the Fed chairman said, "Some observers have suggested extending the CRA to nonbank providers, but this proposal neglects a fundamental premise of the CRA legislation - that banks incur special obligations in exchange for the advantages conferred by their charters, such as deposit insurance."  He also said, "To date, defining 'local community' for the purposes of CRA assessment has been manageable as most banks still lend in local communities where they have deposit-taking facilities or branches. However, if these trends continue, defining a 'local community' may become increasingly difficult, and the concept eventually may require reconsideration by regulators or even the Congress."

  So in Bernanke's view, the CRA must remain limited to its initial "premises," but to help the banks, the regulators or Congress should reconsider its initial focus. If it's Congress that considers it, they'd be free to change the premise too, and extend CRA to the non-bank providers...

March 26, 2007

            To the Dodd hearing last week, the Federal Reserve sent regulator Roger T. Cole, who finally acknowledged that "we could have done more sooner," while making much of the less than a handful of actions the Fed has taken, including its $70 million fine of Citigroup in 2004. But again, why was Citigroup not invited by Senator Dodd?  And as noted, the Federal Reserve bent logic to deem U.S. Bancorp's holding to be only 24.99 percent, in order to ignore New Century issues. Now the Fed is mumbling about the fundamental strength of the economy.

March 19, 2007

   Fed chairman Ben Bernanke has weighed in on whether, as with mortgages, the racial demographics of small business lending should be reported. And his answer is: no...

  On the hand, Inner City Press wishes to thank the Fed legal staffer who looked into whether Comerica will need to apply for any approvals to move its headquarters from Detroit to Dallas. Apparently, while such filings are required for national bank, they are not, for state banks which are members of the Federal Reserve System, under the Federal Reserve Act.

March 12, 2007

  Federal Reserve Governor Randall Kroszner said last week that his own research about larger banks suggests that as a whole U.S. banks have managed to avoid conflicts of interest that could arise from relationships such as links between boards of directors.

  Uh, heard of Citigroup's Sandy Weill and AT&T?

 March 5, 2007

  From a Ben Bernanke speech last week: " I have foreshadowed my conclusions." That the case with Federal Reserve reviews of protested merger in their approval orders, too...

From FinancialWire: "Bank of America Corp.'s $3.3 billion acquisition of Charles Schwab Corp.'s wealth management subsidiary U.S. Trust will take about three months longer to complete than originally estimated.  Charles Schwab expects to close the all-cash sale early in the third quarter instead of the early second-quarter target established late last year when the stock brokerage announced the deal with Bank of America."  So now there'd be no reason for the Fed to rush on BofA's application, including on 10% deposit cap issues....

February 26, 2007

  Outgoing Fed governor Susan Bies, signer of numerous FOIA denial letters, gave a speech last week about mortgage lending abuse: "There's a real transaction-based mentality in the industry today that you didn't have 20 years ago," she said. "To make a decision faster, and try to get the customer to say yes to you before they go and shop anywhere else, they'll waive terms." Now you tell us...

February 19, 2007

  The Fed on Friday spoke out against a devious CRA scam:

The Federal Reserve has received inquiries and complaints from recipients of direct mail solicitations that suggest there is a "Community Reinvestment Act (CRA) program" that entitles certain homeowners to cash grants or equity disbursements. Some of these solicitations may be read to indicate that the Federal Reserve endorses or supports the offers they contain. These solicitations appear to be a deceptive effort to encourage consumers to apply for a mortgage loan secured by the consumer's home. The Federal Reserve cautions the public about loan solicitations or other offers from lenders or mortgage brokers that offer consumers cash grants or equity disbursements as part of a "CRA Program." No such federal programs exist and these programs are not required by the CRA.

            Actually, under the Fed, virtually nothing is required by the CRA...

February 12, 2007

  Last week the Fed announced a new head for its Atlanta Reserve Bank. It's Dennis Lockhart, of whom the Fed said he "served as managing partner at the private equity firm Zephyr Management L.P., based in New York, and held various positions with Citicorp/Citibank, which is now Citigroup Inc."  Great....

            We can also report, only in skeletal form for now, that there has been a development in the litigation sparked by the Federal Reserve's withholding of information concerning Wachovia's subprime connections, and refusal to conduct a search of public records to make sure it is not withholding information that is otherwise publicly available. The Federal Reserve has agreed, at the federal District Court's suggestion, to reconsider whether it should have made the search (and in implication should conduct such searches in the future before issuing blanket denials of FOIA requests). The Fed has 20 working days to decide; we'll see.

February 5, 2007

  We're told of a paper by the Federal Reserve Bank of San Francisco, arguing that credit card small business lenders should be included in bank merger antitrust analysis, so that even more mergers could be approved, without any divestitures. Already, the Fed defined geographic markets so broadly that the only market in which it has denied a merger in years was in rural Georgia. The 10% deposit cap, then, is needed because the Fed refuses to effectively apply antitrust to the banking field...

January 29, 2007

            And now the payday lenders' trade association heaps praise on the Federal Reserve for lending its perceived legitimacy to the fringe financial industry, most recently in a report called "Defining and Detecting Predatory Lending," by Federal Reserve Bank of New York Research Officer Donald P. Morgan. CFSA quotes the Fed report that "the problem of high prices may reflect too few payday lenders, rather than too many."  Just what we need -- MORE payday lenders. The Fed has hit a new low.

            Inner City Press / Fair Finance Watch has filed with the Federal Reserve a timely challenge to  Bank of America's application to acquire U.S. Trust, click here for Charlotte Observer article. Now what will the Fed do? We'll see.

January 14, 2007

            The arrogance of PNC, which has proposed to buy Baltimore-based Mercantile, is striking. In response to the timely challenge ICP Fair Finance Watch filed with the Federal Reserve under a Community Reinvestment Act, PNC's "chief regulatory officer," John Wixted, just by a coincidence a former Federal Reserve official, responded as tersely and conclusorily as possible. The Federal Reserve asked such questions as, describe PNC's plans to merge Mercantile's 11 banks into PNC, and describe the due diligence performed -- a foreseeable questions, since as noted in the protest, Mercantile negligently leaked many consumers' personal information. PNC answered both: "PNC's response to this item is contained in the Confidential Supplement," and didn't send this portion to ICP Fair Finance Watch. Finally the Fed asked questions about fair lending, in response to which PNC writes that "In order to meet this requirement, PNC current intends to [   ]," with four lines then whited-out and withheld. The Federal Reserve is required to review the propriety of these absurd proposed withholdings. But PNC's secrecy and arrogance, along with its disparate lending record, bode badly for communities. Developing...

January 8, 2007

            On PNC - Mercantile, the Federal Reserve Bank of Cleveland has confirmed receipt of the timely protest of Fair Finance Watch. We'll see.

January 1, 2007

 The Federal Reserve set December 26 as the expiration of its comment period of the $6 billion proposed acquisition of Baltimore-based Mercantile by Riggs-heir PNC. As Fair Finance Watch has had concerns about both institutions, a comment was quickly prepared. When submitted by email, auto-responders came back from both Cleveland and DC: "out of office." But if the past is any guide, if the absurd deadline had been missed, the Fed would stand on "principle" and deem the comment untimely and not to be considered. In this case, it's timely, including that in the most recent year for which HMDA data is publicly available, 2005, PNC Bank in the Washington DC MSA, where it bought Riggs, denied the conventional home purchase mortgage applications of African Americans 3.78 times more frequently than whites. In Pittsburgh, PNC's headquarters, PNC Bank in 2005 denied the conventional home purchase mortgage applications of African Americans twice as frequently than whites. We're waiting for PNC's response.

December 25, 2006

  The Federal Reserve makes announcements it doesn't want you to understand. For example last week it announced that it had terminated an enforcement action against Citigroup. But it didn't say what the enforcement action had been about, only the date on which it was entered. From you, only through research, you find "the Written Agreement follows a special review of transactions involving Citigroup and its subsidiaries and the Enron Corporation, Houston, Texas. The Written Agreement requires Citigroup on its own behalf and on behalf of its subsidiaries to continue to strengthen risk-management practices, particularly those associated with complex structured-finance transactions."

December 18, 2006

  In the UK, "there has been a lot of fallout following the Financial Services Authority's statement that many brokers' sub-prime mortgage advertising is misleading clients... More than 200 brokers have been forced to withdraw or amend misleading sub-prime advertising."

            Why doesn't the US Federal Reserve work on these issues, with even half the energy and independence?

December 4, 2006

  Last week the Federal Reserve put on its Thrift Advisory Counsel the CEO of the nation's largest savings bank, Washington Mutual. Kerry Killinger is added to a group including representatives from American Express and ING. What is the purpose of the Thrift Advisory Counsel? If it's to get a view of savings (as opposed to commercial) banking views, why put on an European insurer like ING?

November 27, 2006

   In the hoopla about Fed chairman Bernanke agreeing to ride shotgun with Hank Paulson on his trip to pressure Beijing, something missed was the Federal Reserve's duty to scrutinize the China moves of U.S.-based holding companies like BofA and Citigroup.  For these, the Fed is home country supervisor. And yet there's no public scrutiny, and little at the Fed, of the deals these banks are making. Citi buying into Guangdong will have no comment period. The Fed will issue no order describing what it considered. Citi may give notice along after the fact. Will Ben Bernanke ask? We'll see.

November 20, 2006

            Of the Federal Reserve System, what can be said? They're getting worse and worse, more open in their contempt for public comment. A recent example is the Federal Reserve Bank of New York's decision to disregard detailed comments about HSBC's predatory lending and alleged money laundering, for being a few days late. In fact, there was no way to know what HSBC's application to the Fed was about, until a copy of HSBC's related application to another agency came in. Meanwhile the Federal Reserve Bank of Atlanta tried to demand money for copy of the Regions - AmSouth application. And as set forth below, when the Fed does get paid, for HMDA data on disk, it takes more than a month to get it.

            We've held off but now it must be said: the Federal Reserve is one of the worst order-processors in the United States. Last week when Inner City Press ordered up the HMDA data, it took the Fed weeks to send. This year, they sent the wrong year's data, then apologized, saying they'd Fed Ex the correct data the next day at their expense. This never happened, not even close.

Maybe *this* is why the Fed is so reluctant to criticize abuses of consumers by banks -- the Fed itself misserves consumers, with one of the few products it sells...

November 13, 2006

            In Washington, the (CRA) talk is of oversight hearings, more likely in the House than Senate, on the agencies' non-enforcement of the Community Reinvestment Act and consumer protections. Examples given include last week's Federal Reserve approval of Capital One buying North Fork, in which the Fed's order ignores the Cap One predatory lending issues including not only in timely comments to the Fed, but even Business Week, in its November 6 expose. The Fed's rubber-stamp approval of the Regions - AmSouth merger, despite the banks' records in the Katrina Zone, is exhibit number two.

            There is also the question of Dodd, Chris Dodd, and where he stands on consumer protection. He has spoken of credit cards, but less of insurance. In anti-predatory lending he has largest been unseen. Will Capital One, and the Fed's velvet glove treatment of Cap One's gouging of consumers, trigger some Dodd deeds? We'll see.

November 6, 2006

  For those following the delay on the Capital One - North Fork deal, Business Week of Nov. 6 explains some of the issues, including that "according to Cap One's regulatory filings, 30% of its credit card loans are subprime. Representatives of 32 credit counseling agencies contacted by BusinessWeek say that Cap One has long stood out for the number of cards it's willing to give to subprime borrowers." As Fair Finance Watch raised in its comments to the Fed, " Last year, West Virginia Attorney General Darrell V. McGraw Jr. filed an action in state court seeking documents from Cap One related to its issuance of multiple cards, as well as other credit practices. Other than that, however, Cap One's practices do not appear to have drawn regulatory scrutiny. A spokesman for the Federal Reserve, Cap One's primary federal overseer, declined to comment about Cap One, but said that in general the regulator doesn't object to multiple cards."

  Increasingly typical, that the Fed would try to provide comfort to a predator...

October 30, 2006

  Fed governor Susan Bies last week at the agency's Consumer Advisory Board -- fewer than one half of whose members are consumer advocates -- promised those present that the Fed will "reconsider" its guidance on exotic mortgages, issued only last months. "We will go through a process to clarify exactly what the terms are, what the scope is," she said, adding that the Fed's lawyers "have heard from some of the folks ... Apparently we do need to make some technical corrections to make this more 'principle' based as opposed to 'detail' based." Sort of like the Fed's recent merger approval orders -- why get bogged down in the detail of lending disparities and even adverse CRA sub-ratings, when the Fed can recite generalities and then approve a merger? And the mysterious limbo of Capital One - North Fork continues...

October 23, 2006

            The Fed on Friday hauled off and approved Regions - AmSouth. Of CRA the Fed said:

"Several commenters expressed concern about the less-than-satisfactory ratings the bank received for its CRA performance in some of its assessment areas. The bank received an overall rating of 'needs to improve' in the Chattanooga multistate metropolitan area, and received 'low satisfactory' ratings under the lending test for Louisiana and the Augusta and Texarkana multistate metropolitan areas. In each of these assessment areas, examiners noted that there are a relatively high proportion of families below the poverty level and that these families may not qualify for residential real estate loans because of their lower capacity for debt repayment. Examiners indicated that these conditions may have hindered the bank's efforts to lend to LMI individuals in these assessment areas. The bank received higher ratings under the lending and other tests in other areas, and examiners concluded that the bank’s record of CRA performance during the review period, when viewed as whole, merited a rating of 'satisfactory.'"

            How nice, to explain away even adverse CRA sub-ratings. Meanwhile inquiring minds increasingly wonder what is up with Capital One - North Fork...

October 16, 2006

  Last week the Federal Reserve handed an approval to National City to buy Harbor Federal, noting "that on September 5, 2006, National City signed an agreement to sell its principal subsidiary that originates subprime mortgage loans, First Franklin Financial Corporation to Merrill Lynch & Co., and also announced its intention to sell to Merrill Lynch $5.6 billion of loans originated by First Franklin." Of course, the Fed won't be reviewing that transaction...

October 9, 2006

  Becoming evermore perfunctory, the Federal Reserve on September 19 asked Wachovia to "discuss the extent of any subprime loans in the World Savings Bank loan portfolio." Wachovia's Courtney D. Allison's misleading answer, dated September 25 but mailed only days later to Inner City Press, was received after the Fed had approved the merger, and it had been consummated...

  Similarly, in an email of September 26 to National City that was not cc-ed to Fair Finance Watch, the Fed has apparently asked questions about Harbor Florida Bankshares' appraisal company, with an eye toward allowing National City to continue in the business. Since the Fed in violation of its own rules on ex parte communications didn't send Inner City Press a copy of the questions it posed to National City, and Nat City's curt answer didn't repeat the questions, there's no way to know...

October 2, 2006

  The Federal Reserve's approval on Sept. 25 of Wachovia - Golden West reaches new loans. The Fed writes for example that ICP Fair Finance Watch

"also alleged that World Savings directs customers to low- or no-documentation loan products as a means to exaggerate the customer’s income and places the customers in loan products that exceed their ability to repay, which ultimately results in foreclosures. According to information provided by Wachovia and Golden West, World Savings requires low- or no-documentation on 90 percent of the loan applications it processes and uses the same underwriting standards for all applications."

  But ICP Fair Finance Watch pointed out that this absurd level of no- and low-doc lending results in forced sales of homes, not foreclosures. The Fed recites that ICP Fair Finance Watch

"expressed concern about Wachovia’s relationships with unaffiliated pawn shops and other nontraditional providers of financial services. As a general matter, the activities of the consumer finance businesses identified by the commenter are permissible, and the businesses are licensed by the states in which they operate when so required. Wachovia stated that it makes loans to these types of nontraditional providers under terms, circumstances, and due-diligence procedures that are more stringent than those it applies to other borrowers."

  But again the information was withheld. The Fed gives weight to

"more than 200 comments supporting the proposed transaction. These commenters stated that Wachovia and Golden West have been responsive to the needs of their communities through innovative mortgage products designed for LMI borrowers and have provided significant financial, technical, and personnel support for community development projects."

   None of these were sent to Inner City Press, despite its timely challenge to the deal.

September 25, 2006

  The Federal Reserve, which despite its own internal rules no longer sends commenters a copy of its letters to banks requesting additional information on protested application, does still suggest to banks that they send copies of their responses to the commenters. And so last week National City Corporation's terse answer to the Fed's September 8 questions -- which are not reproduced in Nat City's answer -- arrived, in connection with the challenge of Fair Finance Watch of Nat City's proposal to acquire Harbor Florida Bankshares. The response included Cincinnati foreclosure data, 2004 and 2005:

"For the year 2005, National City has sixty-seven (67) mortgage loan foreclosures in Hamilton County, Ohio with sixty-six (66) of those foreclosures being within the City of Cincinnati. Therefore, for 2004, the number of National City foreclosures in Hamilton County amounted to 1.11% of the total of National City's loans in that County, and 1.16% of the total number of National City loans in Cincinnati. For the year 2005, National City has eighty-nine (89) mortgage loan foreclosures in Hamilton County, Ohio with eighty-four (84) of those foreclosures being within the City of Cincinnati. Therefore, for 2005, the number of National City foreclosures in Hamilton County amounted to 1.21% of the total of National City's loans in that County, and 1.24% of the total number of National City loans in Cincinnati."

   As it is clear, the foreclosure trend is up... 

September 18, 2006

  From the Sept. 11 speech of the Boston Fed's Cathy Minehan to the National Association of Business Economists"

"In our estimation, the run-up in housing values over the past several years did not spur much of a bigger-than-expected increase in consumer spending - if anything, the response was a bit on the low side compared to the historical average. So we wonder about how large a spending effect one should expect to accompany a fall in housing prices, if that were to occur. Clearly mortgage equity withdrawals have been sizable during the housing 'boom,' but many of these withdrawals were used to reduce other forms of consumer debt and to make one-time improvements in the housing stock. Indeed, as a result, overall household balance sheets today continue to look fairly strong. That is not to say, however, that rising mortgage interest rates are not negatively affecting borrowers. It also does not mean that new types of mortgages won't contain more than a few nasty surprises. Of particular concern are sub-prime borrowers and perhaps some depository institutions specializing in subprime lending."

  Then why has there been virtually NO inquiry by the Fed into Regions Financial's subprime lending, which makes up seventy-some percent of all its mortgages to African Americans? And why is the Fed withholding virtually all antitrust information from Regions on AmSouth? The Fed continues hitting new lows...

September 11, 2006

  Welcome to the world of the lawless. Last week's Federal Reserve order on Credit Agricole, Boetie, et al., recites in footnote 12 that ICP Fair Finance Watch

"asserted that Boetie violated the BHC Act by acquiring the voting shares of Credit Agricole before submitting the proposal to the Board for approval. In addition, the commenter complained that Boetie and Credit Agricole violated the BHC Act through the acquisition of all the shares of Credit Lyonnais in 2003 without the Board’s prior approval for the acquisition of Credit Lyonnais’s nonbanking operations. The commenter asserted that the Board lacked authority to waive the BHC Act’s application filing requirements with respect to such transactions and inappropriately shielded such transactions from comment. As noted above, Boetie and Credit Agricole have operated the U.S. subsidiaries under the temporary authority granted by the Board under section 4(c)(9) of the BHC Act, which does not provide for public notice."

   So the Fed says it can grant temporary approvals to transactions without even telling the public... The next footnote, 13, is on money laundering, that FFW

"cited various news and congressional reports from 2003 through 2005 regarding allegations that ES Bank concealed assets and money laundering in connection with accounts held for the benefit of certain international individuals, including former Chilean President Augusto Pinochet."

   What a generous description, "international individuals."  And how kind the Fed is to Espiritu Santo Bank, of which FFW

" questioned the veracity of ES Bank’s reporting of no denials of home mortgage applications in 2001 and 2002 and generally alleged that the bank prescreened its home mortgage applications. Specifically, the commenter contended that ES Bank violated HMDA by not accurately reporting its home mortgage applications and violated the Equal Credit Opportunity Act (“ECOA”) (15 U.S.C. § 1691 et seq.) by not providing adverse action notices when required. ES Bank has represented that it reported no denials because it is a wholesale bank engaged primarily in international private banking and that its residential mortgages are generally extended as an accommodation to private banking customers where a mortgage loan approval would be expected. The commenter also questioned ES Bank’s characterization of loans generated by brokers as accommodation loans. Applicants represented that ES Bank began using two licensed mortgage brokers in 2001 in an effort to increase its loan portfolio during a period when internal referrals had slowed. Applicants also represented that ES Bank’s brokers referred a small number of mortgage loans to the bank in 2005."

    In footnote 16, the Fed doesn't even bother spelling correctly, writing that FFW

"alleged Credit Agricole and Credit Lyonnais are signatories to international human rights and environmental agreements and that the organizations have exhibited a lack of envirnonmental and human rights standards."

   Much care went into this Order, it's clear...

September 4, 2006

            Will the Federal Reserve take note, while it considers Wachovia's application to buy Golden West, of Money Marketing of August 31, reporting that Wachovia will specifically target the sub-prime and non-conforming home loan sector via intermediaries, adding to the commercial mortgage operation it is building. A spokesman says: "We will be looking at mortgages, sub- prime, non-conforming as well as consumer loans and credit cards." If only Wachovia were nearly as honest in the USA, or in the portions of its filings with the Fed that get provided to commenters like Fair Finance Watch...

August 28, 2006

            In the run-up to the Federal Reserve's spin of the 2005 Home Mortgage Disclosure Act data, Inner City Press can this week report on the Fed's partial Freedom of Information Act response to its request for all records concerning the Fed's list of lenders with disparate 2004 HMDA data. The Fed withheld "five linear feet of documents," and has so far sent only a fax of parts of a single document, the required mailed copy of which Inner City Press is awaiting in order to file its FOIA appeal. (The Fed is far behind in its FOIA responses, then because sending garbled faxes which do not comply with the regulation.) This particular fax, which the Fed's cover letter describes as "a description of the methodology used in generating the HMDA lenders list," is in fact a manual directed at the Fed's examination staff. It states that

"The purpose of the Federal Reserve's matched-pair analysis is to compute lender-specific racial or gender disparities in denial rates, high rate pricing incidences and average APR spreads for loans above the threshold controlling for other factors including, market, income and loan amount. Each minority (or female) is matched to as many non-minority (or male) applicants (or borrowers) as meet the matching criteria. The outcomes of the minority (female) is compared with the average outcome of the non-minority (males) matched to it. The difference is the individual minority's (female's) 'matched pair disparity.' The disparities of all matches minorities (females) are averaged by product area or for sub areas such as MSAs...

  "Optionally, the matched pair procedures can be used to test for 'steering' within an organization such as a holding company. The outcome variable is the selection of a particular subsidiary of an organization (say a subprime lender) over another (say a prime lender) and the analysis tests whether this choice is related to the race of gender controlling for other factors including, market, income and loan amount. The user needs to specify how to classify lenders into the 'subprime' and 'prime' groups."

            While Inner City Press will have more once it receives the required mailed version of this document, we now we note Citigroup's recent announcement that it will merge its subprime CitiFinancial into its mostly-prime CitiMortgage, thereby evading this "optional" steering analysis....

  On Regions - AmSouth, the sleazing has begun. Regions has provided Fair Finance Watch with a copy of a CRA submission, with the names of all groups it funds blacked out. Meanwhile Regions solicits letters of support from such groups. Separately, Regions writes to thank such groups, starting "Thank you for taking the time to write a letter of support for the application by Regions Financial Corporation to merge with AmSouth Bancorporation... We at Regions very much appreciate your positive attitude toward our organization."  But the identity of funded groups must be unmasked to weigh their testimony. Developing...

August 21, 2006

            The Federal Reserve has received, via Wachovia, a response from World Savings to comments FFW filed "with respect to World's Quick Qualifier (QQ) loan process."  The purported response states that under World's QQ, "the customer may specify his or her income without necessarily having to pull together the documentation traditionally associated with the mortgage loan application process."

            Yeah -- like a form W-2...

            The letter continues that "turning to the specific questions asked by FFW in its letter, we are glad to provide the following information. FFW first asked what percentage of World's loans are QQ loans. To date in 2006, approximately 94% of World's loan originations have been submitted as QQ loans... FFW questions why World would allow a loan applicant who can produce a W-2 for earned wages to apply on a QQ basis." Yes, FFW is asking that -- as the Federal Reserve should. Developing.... 

August 14, 2006

  Hitting a new low, the Federal Reserve on August 11 telephone Fair Finance Watch for the second time denying any extension of that day's expiration of the comment period on Wachovia's application to acquire Golden West. Then at 5:36 p.m. on August 11, the Federal Reserve faxed FFW documents responsive to its FOIA request of July 16, including various support letters that Wachovia solicited. A new low... 

August 7, 2006

   A specific indication of the Federal Reserve's lackadaisical approach to enforcing even the antitrust laws is to be found in Florida in the Punta Gorda market. As presented by the Sarasota Herald-Tribune in a July 31 report on Fair Finance Watch's opposition to Wachovia's application to acquire Golden West, the group also notes the bank will wind up with an 'anti-competitive' market share in Charlotte. As of Dec. 31, Wachovia's 11 branches held $763.8 million in deposits in Charlotte, a 22.17 percent market share. Adding World's single  office and $184 million in deposits in Punta Gorda would boost its market share to 27.51 percent.... Wachovia isn't even the largest bank in Charlotte County right now. Bank of America's seven branches held $775.9 million in deposits, a 22.52 percent market share, as of Dec. 31." Talk about duopoly... 

July 31, 2006

  The Fed's FOIA sleaze continues. Responding to Inner City Press' complaint last week that, after for years granting ICP a FOIA fee waiver, as all other bank regulatory agencies do, the Fed suddenly responded with a letter that fees are expected -- this in the midst of ICP's Wachovia FOIA litigation against the Fed, and the Fed having delayed six to eight months on ICP's subsequent FOIA requests.  Last week the Fed provided a slightly amended acknowledgement letter, not granting the always-previously-granted fee waiver, but rather stating:

This will acknowledge receipt of your letter dated 7/16/2006, and received by the Board on 7/17/2006, in which you request, pursuant to the [FOIA] records pertaining to the application by Wachovia Corporation to acquire Golden West and thereby indirectly acquire the voting shares of World Savings... unless a request for a fee waiver is granted, this letter also confirms our assumption that you will pay all fees incurred in the processing of your request. 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. Please feel free to contact the Board's FOIA Requester Service Center at (202) 452-3684 to obtain information about the status of your FOIA request. 

    Well, given how many of Inner City Press' FOIA requests have been delayed six to eight months, that newly provided phone number must be busy...

July 24, 2006

            Hitting yet another new low, the Federal Reserve last week after for years granting Inner City Press / Fair Finance Watch fees waivers under FOIA, tried to charge fees, even for processing requests. Substantively, ICP has contested the withholding of the exhibits Wachovia has unilaterally deemed "confidential," and continues to await the other records responsive to the July 16, 2006, FOIA request. The Board's response states that it "confirms our understanding that you will pay all fees incurred in the processing of your request." The FRB has granted ICP and its affiliates fee waivers for years. An observer, a court, even the Department of Justice, could easily surmise that the FRB's attempt to impose fees is no more than retaliation for having dared to challenge in the Federal District Court for the Southern District of New York the FRB's withholding of Wachovia's subprime lending information. Ever since that case was filed, the FRB has begun delaying up to eight months on FOIA requests, and now seeks to impose fees. We'll see.

July 17, 2006

  The Federal Reserve, which has spent many hours of legal work trying to withhold information about Wachovia's assistance to subprime lenders, now has before it an application by Wachovia to acquire Golden West and World Savings. Inner City Press / Fair Finance Watch has submitted a FOIA request which "includes a complete copy of the application, it also includes all other communications and records during the time frame that relate to the issues, including managerial issues, that the FRB must consider in connection with the application.  We specifically refer to Wachovia's engagement with subprime lenders, regarding which the Federal Reserve has previously withheld information from Inner City Press, giving rise to FOIA litigation, a partial chiding of the FRB by District Court Judge Cote, and the recently-heard appeal in the Second Circuit. We note as part of this request the arguments in the FRB reply brief in that case is that Wachovia's provision of a list of the subprime lenders it assists was "voluntary" because Wachovia submitted it early in the process. The FRB acknowledges that in cases "prior to Wachovia" SouthTrust, it asked for the names of subprime lenders assisted, but that Wachovia include this in its application, making it voluntary. That sleight of hand cannot legitimately be used to evade FOIA."

July 10, 2006

   Seven months ago, Inner City Press submitted to the Federal Reserve Board a Freedom of Information Act request, for records "regarding the Federal Reserve System having compiled a list of lenders with disparate 2004 Home Mortgage Disclosure Act data and transmitting such lists beyond the FRS."

            Under the Freedom of Information Act, the Fed is supposed to provide records within twenty business day.  But with a single letter six months ago, the Fed unilaterally extended its time to respond.  Now, as it prepares its required annual FOIA report to the Department of Justice, the Fed begrudgingly sends a second letter, which states that "approximately five linear feet of documents will be withheld from you... no reasonably segregable nonexempt information was found."

            An appeal will follow...  Also last week, Synovus' Columbus Bank & Trust along with CompuCredit were forced to pay $11 million in restitution to residents of New York State for failing to disclose activation fees of up to $179 on Aspire Visa cards. Inner City Press has raised Synovus' consumer abuse to the Federal Reserve a number of times in recent years. Now what will the Fed do?

July 3, 2006

            This now from the Fed, dated the 21st of June: "This is in response to your letter, dated and received by the Board's Freedom of Information office on October 3, 2005... In an October 20, 2005, telephone conversation with Ms. Alison Thro of the Board's Legal Division, you clarified..."

            Why then did it take EIGHT MONTHS to act on Inner City Press' clarified and narrowed request? And what will DOJ say?

Given the disparities in Citigroup's 2005 HMDA data, the Federal Reserve's wordless lifting of its 2004 cease-and-desist predatory lending order against CitiFinancial is shameful. So too was Citigroup's meeting with the Office of Management and Budget in June, to lobby about Basel II...

June 26, 2006

            In the Second Circuit Court of Appeals on June 22, thee Federal Reserve lawyers appeared, to defend the Fed's withholding despite Inner City Press' Freedom of Information Act request a list of subprime lenders assisted by Wachovia. Since the arguments on both sides involved whether the names on the list are "otherwise publicly available" in SEC documents, the Fed was asked who thought of checking the SEC database. Rather than acknowledge that the issue was raised in ICP's comments on the Wachovia - Southtrust merger, the Fed's lawyer claimed that the District Court judge in the subsequent FOIA case thought it up. But that wasn't true....

    Inner City Press has been informed that the Federal Reserve's long-time fair lending guru Robert Cook now works at and for Countrywide, which has the subprime unit Full Spectrum. When Inner City Press asked about anti-revolving door provisions, noting that even the OCC prohibits a bank's examiner from going to work for the bank for a year after leaving the OCC, it was noted that Mr. Cook recently attended a Federal Reserve meeting with and for Countrywide. That is to say, he appeared, quite literally, for Countrywide, which was and is a bank holding company regulated by the Fed...

June 19, 2006

            The Federal Reserve hits new lows daily. Last week we reported that the Fed has for months stopped responding to Freedom of Information Act requests, including a request Inner City Press filed months ago about the Fed's actions (or inaction) on disparities in the 2004 Home Mortgage Disclosure Act data.

            Now the Fed is turning a blind eye to glaring disparities in the 2005 data. For example, in its BB&T Order last week, the Fed ignores the issues raised about BB&T's refers-down to its subprime unit Lendmark. BB&T's response to Inner City Press / Fair Finance Watch's comments included the volume of loans referred up in 2005, but no such figure for referrals-down. Nor did the Fed request it. Despite the speechmaking about HMDA data, the Fed is hitting new lows daily.

            And this coming week, on June 22, the Fed will be in the Second Circuit Court of Appeals in New York, on the cross-appeals concerning the Fed's withholding of the names of subprime lenders assisted by Wachovia and SouthTrust. While the case has been pending, the Fed has stopped responding to ICP's FOIA requests, and has stopped asking application for the names of the subprime lenders they assist. Like we said, the Fed is hitting new lows daily...

June 12, 2006

            From Inner City Press / Fair Finance Watch's just-filed comment to the Federal Reserve just after receiving from the FDIC a copy of HSBC's related tax Refund Anticipation Loan (RAL) application, which ICP timely requested: Note for the record on this request that ICP made its FOIA request for the application to the FDIC and not the FRB because the FRB has allowed fully 22 FOIA request from ICP to remaining pending, some for over eight months -- ICP recently waived and limited some, to get at least some documents -- in the interim, ICP directs its FOIA request to other, non-FRS agencies -- for shame...

June 5, 2006

  Among the slipperier of the Fed's arguments in its reply brief in the ICP v. FRB Second Circuit FOIA case is that Wachovia's provision of a list of the subprime lenders it assists was "voluntary" because Wachovia submitted it early in the process. The Fed acknowledges that in cases "prior to Wachovia" SouthTrust, it asked for the names of subprime lenders assisted, but that Wachovia include this in its application, making it voluntary. What's worse, the Fed since the District Court decision no longer asks for any names. So secretive it has stopped regulating (at least on this point).

            The Fed also complains that neither it nor applicants should have to make sure that withheld information is not otherwise publicly available, that it should fall to requesters to show that names they have not seen are, in fact, publicly available. Too much burden for a multi-billion dollar bank to certify that the information it is trying to withhold is not contained in its own SEC filings...

May 29, 2006

  In the Fed's Santander-Sovereign rubber stamp last week, this, from footnote 30: ICP "expressed concerns about Santander’s acquisition of Island Finance Puerto Rico Inc. ("Island Finance"), an entity engaged in subprime lending. As a general matter, the activities of the consumer finance business identified by the commenter are permissible and the commenter did not provide evidence that Santander or Island Finance had originated, purchased, or securitized "predatory" loans or otherwise engaged in abusive lending practices."  Hmm -- what ICP raised what Island Finance's practice of charging 25% on consumer loans, targeted at Latinos, without even checking people's credit histories. If that's not predatory, what is?

  The Fed also recites that ICP "expressed concern about Santander’s ability to share information for purposes of complying with applicable U.S. anti-money laundering laws." The reference here is to the fact that Santander refused to disclose, even to its own US affiliates, the owner of accounts into which money was wired (as described in Senate's Riggs report, the owner was the dictator of Equatorial Guinea). So how can the Fed go on to "note[] that Santander has committed to make available to the Board information on the operations of Santander and any of its affiliates that the Board deems necessary to determine and enforce compliance with applicable laws"?  Does that mean that the Fed endorses the type of no-name offshore wiring (that is, money laundering) as is described in the Senate's Riggs report? We'll see...  

May 22, 2006

A deafening no-comment, and lack of action by the Fed  -- following the Wall Street Journal's May 11 article on the continuing investigation into the billions looted from Nigeria by ex-dictator Sani Abacha, which named as a conduit for Abacha's Transnational Bank's nostro accounts Citigroup and only one other institution (Deutsche Bank), nothing said by Citigroup, or the Fed...

  While the Federal Reserve fights on appeal to keep confidential the list it has of subprime lenders helped by Wachovia, on March 24, 2006, subprime lender NovaStar simultaneously announced the purchase of a $940 million pool of payment option adjustable rate mortgages, and plans to structure its first securitization of the year as an on-balance sheet transaction. The $1.35 billion on-balance sheet deal closed April 28, led by Wachovia Securities -- enabler of predatory lending, as is coming to a head in the FOIA litigation now in the 2d Circuit Court of Appeals in New York...

 A non-bank deal we see as significant was last week's announcement by Deutsche Bank that it intends to acquire California-based subprime mortgage lender Chapel Funding LLC. The idea is to cut out the middle man. The head of Deutsche Bank's Global Markets Americas unit, Phil Weingord, said that "the integration of a mortgage originator will provide significant competitive advantages, such as access to a steady source of product." Deutsche Bank is not only a trustee on subprime loans, it is also a securitizer. It has begun subprime lending in the United Kingdom, and last December bought a mortgage lender in Mexico, to securitize. And what is the Federal Reserve doing to review these moves? Nothing, that we can see...

  And here's a development -- on Credit Agricole SAS Rue La Boetie, on which ICP commented long ago, finally the Fed has asked questions, about the glaring lack of denials in the lending of Espiritu Santo Bank. Credit Agricole (under a Caylon cover letter) tried to claim that the borrowers are "mostly" individuals with a Private Banking relationship with ESB. But in one of the years reviewed, non-clients were 75% of the borrowers. Something's fishy (and not only on this) -- we'll see what the Fed does.

May 15, 2006

  For the attention of the Federal Reserve, which has given its rubber stamp approval to the anti-money laundering regime in Japan, despite scandal after scandal, including that involving Citigroup -- Regarding money laundering in Japan: "Banker off hook in loan shark money-laundering," blared The Japan Times on March 23. The Yomiuri Shimbun chimed in with "Court ruling could make Japan a money-laundering haven", questioning the Tokyo District Court ruling that experts say undermines claims that Japan is making progress on due diligence compliance.  The case behind the headlines involved Susumu Kajiyama - the "loan-shark king" of the Yamaguchi-gumi underworld group - hiding $659.47 million raised from loaning money at illegally high interest rates.  The funds were transferred to accounts opened at Credit Suisse in May 2003, in transactions completed by Atsushi Doden, an employee of the Hong Kong branch. A report on the transfer led to Kajiyama being sentenced to 61/2 years in prison in November. The judge ruled on March 22 that "reasonable doubt" existed that Doden knew the money was profits from criminal activities and that testimony from another gangster about a conspiracy with Doden was not trustworthy.  Observers are quoted in the SCMN that while "suspicious transaction reports" are being filed, but that those identified by Japanese watchdog Financial Intelligence Unit as requiring further investigation by the National Police Agency cannot all be examined adequately. In 2005, there were 98,935 STRs filed by financial institutions in Japan, of which 66,812 were referred to the police for investigation.  In 2003, the number of STRs stood at 43,768 and, in 1998, just 13 such reports showed up on the authorities' radar. The FIU still employs only about 20 staff, including financial intelligence analysts examining suspicious transactions.  Japan's anti-money laundering regime is covered by The Law Concerning Confirmation of Client Identity of Fiscal Institutions, The Organized Crime Punishment Law and The Foreign Exchange and Foreign Trade Law. These laws have remained substantially unchanged over the past two years, despite the scandals, including the one involving Citigroup.  Good place to launder -- will the Federal Reserve reconsider its FBSEA rubber stamp? We'll see.

  Inner City Press / Fair Finance Watch has filed its reply brief in the ongoing case about the Federal Reserve's withholding of information about the subprime lenders enabled by Wachovia. The Fed's arguments have been shifting; we'll see what they say at oral argument next month. Developing...

May 8, 2006

  In a May 3 letter faxed to Inner City Press, the Federal Reserve states that "under the terms of the proposal, JPMC is to sell its corporate trust assets to BNY, and BNY is to sell its retail and middle-market banking business to JPMC... prior approval of the Federal Reserve System is not required to effect the proposal. The FRS therefore does not expect to receive any application in connection with the proposed transactions."

  This is the same Federal Reserve which just found Bank of New York money laundering for the second time...  And what will the Fed do on this -- on May 2, BofA announced a proposal to acquire a $2.2 billion stake in Banco Itau through an asset-swap, which would involve Itau taking control of BofA's BankBoston unit in Brazil, which has about 140 offices and $9 billion of assets under management. Itau has also been given exclusive rights to buy subsidiaries of BankBoston in Chile and Uruguay. For a U.S.-based holding company to buy such a stake in a bank in another country -- does the Fed even review these acquisitions?

May 1, 2006

  Here's a variation on the revolving door -- the repeat settlement. Bank of New York, which the Federal Reserve hit with a $38 million money laundering fine in 2000 (for having moved $7 billion in hot Russian money), has now settled again, without even paying a fine. The Fed and the New York Banking Department have slapped Bank of New York on its BONY wrist for  new deficiencies in the bank's money laundering controls, giving it 60 days to comply with yet another order.And if it doesn't?  Well, it can just settle again. This will be raised, and reviewed, in connection with JPMorgan Chase's application[s] to acquire 338 (presumably money laundering) branches from BONY...

April 24, 2006

  The Federal Reserve has let AmSouth off the hook, releasing it from anti-money laundering scrutiny. We'll see how that works. AmSouth is a lender which refused to provide it mortgage data in analyzable form, and the Fed did nothing about it. Meanwhile at the Citigroup annual shareholders' meeting on April 18, CEO Chuck Prince said that if the Fed has removed the block on significant expansions, Citi must be good.  Hmm...

April 17, 2006

            The Fed continues contorting its bank supervision in order to keep the public in the dark. We now have an April 13 response from Santander (and Sovereign, apparently) to questions posed by the Federal Reserve. The first question is about Sovereign's connections with "alternative financial providers" such as "pawn shops, check cashers, or money service businesses." Santander admits that Sovereign has such connections, specifically confirming exhibits submitted by ICP about Century Pawnbroker and Cash Advance System, and implying there are more but leaving these unnamed.  The Fed, of course, is striving not to ask for names, since a Federal court has said these can't be withheld.

Click here to view Inner City Press / Fair Finance Watch's challenge to JPMorgan Chase's proposal to buy 338 branches from Bank of New York (and to close at least 50 of the branches)....

April 10, 2006

     Last week the Federal Reserve Board filed a 59-page brief in the Second Circuit Court of Appeals, continuing it defend its withholding of information about assistance to subprime lenders provided by banks -- in this case, Wachovia and its SouthTrust. The Fed continues to argue that it can withhold the names of subprime lenders with which an applicant bank does business, even if these business connections and names are required to be public in SEC filings, as long as the requester doesn't read the Board's mind and name the precise names, without having seen them. Earlier the Fed had argued that it should be entitled to withhold names that must be public because most requesters don't have access to professional searches of public records like Lexis, and free searches like Edgar are unlikely to dig up the connections.  The Fed has become a defender of questionable subprime lenders and the banks which enable them -- in fact, during the pendency of this case, and now the Fed's appeal, the Fed has stopped asking applicants to provide the names of subprime lenders they assist, but rather only their "policies."  This shows that, in order to protect and coddle banks, the Fed will even forego information that it previously made clear it needed, in order to appropriately regulate. For shame...

            Amazing too that the Federal Reserve System last week gave Citigroup the gift of saying, "go forth for large acquisitions," just as Citigroup got sued for insider trading by the Australian regulator, and while the Fed already had Citigroup's 2005 mortgage lending data, which is even more disparate than in 2004.

            Inner City Press / Fair Finance Watch has just released a study of the new 2005 Home Mortgage Disclosure Act data, click here for more.

April 3, 2006

  The Federal Reserve approval order last week approval to BB&T - Main Street Bank noted that Inner City Press / Fair Finance Watch

  "expressed concern about referrals of loan applicants to Lendmark Financial Services ('LFS'), a nonbank subsidiary of BB&Tthat makes subprime loans. BB&T has represented that it might refer to LFS applications denied by a BB&T subsidiary bank that do not meet the bank's underwriting guidelines. Before making a referral, however, these applications undergo an internal second-review procedure. In addition, BB&T notes that LFS has a policy to refer applicants who meet the Freddie Mac underwriting guidelines to BB&T's subsidiary banks."

"expressed concern about BB&T's relationships with unaffiliated pawn shops and other nontraditional providers of financial services. As a general matter, the activities of the consumer finance businesses identified by the commenter are permissible, and the businesses are licensed by the states where they operate. BB&T has stated that it does not focus on marketing credit services to such nontraditional providers and that it makes loans to those firms
under the same terms, circumstances, and due diligence procedures applicable to BB&T's other small business borrowers."

 BB&T admitted in its responses into the record relationships with 45 payday and other fringe financiers. BB&T is growing in subprime -- as ICP and then the Fed noted, in its order

"A commenter asserted that the Board should, in the context of the current proposal, review BB&T's recently announced plans to acquire the assets of FSB Financial Ltd. ("FSB"), Arlington, Texas, a nonbanking company that purchasesautomobile-loan portfolios. The FSB acquisition is not  related to the current proposal. Moreover, if the FSB acquisition is consummated under authority of section 4(k) of the BHC Act, the acquisition would not  require prior approval of the Federal Reserve System. BB&T would require prior Federal Reserve System approval if the acquisition were proposed under sections 4(c)(8) and 4(j) of the BHC Act, and the transaction would be reviewed in light of the requirements and standards discussed above."

  Thanks to the GLB Act, subprime lenders can be acquired with no prior review by the Federal Reserve (which is at the same time fighting for greater regulatory rights with regard to Industrial Loan Companies, for example the ILC proposed be Wal-Mart). ICP/Fair Finance Watch will be continuing its watchdogging of BB&T and its growing (and murky) involvements in subprime lending.

March 27, 2006

  The Federal Reserve has now asked about Santander's acquisition of the subprime lender Island Finance from Wells Fargo, seeking confirmation that Santander "intends to file a post-transaction notice under section 225.87 of Regulation Y" and asking generically for information on Santander's due diligence on Island. Santander responds that it will file by March 29. Why let a company buy a controversial subprime lender and only "notify" the Fed of the acquisition a month after it is consummated?

  Meanwhile in response to Federal Reserve questions, BB&T has disclosed that it has made at least 45 loans to subprime lenders, including to pawn shops, rent to own businesses and even to a "pay day loan provider"...

  Speaking March 20 at the Economic Club of New York, new Fed chairman Ben Bernanke began with advice from his daddy back in South Carolina: "if you ever get the opportunity to keep your mouth shut, take advantage of it."

    But United States anti-money laundering, or at least FinCEN, has devolved into a revolving door. Two months after Bill Fox cashed out to Bank of America, now FinCEN's William D. Langford jumps to JP Morgan Chase. “I have an absolutely incredible opportunity with an incredible institution – it’s that simple,” Langford said in a telephone interview. Again - if the Treasury Department's OCC has adopted anti-revolving door safeguards in the wake of the Riggs Bank scandal, why hasn't FinCEN?

March 20, 2006

   Now the Federal Reserve doesn't care if an investment for which it gave Community Reinvestment Act credit turns out to be fraudulent and to benefit not a single low or moderate income person. In its M&I - Gold Bank order last week, the Fed said that Inner City Press / Fair Finance Watch

"criticized Gold Bank's investment-performance record and investment rating because of credit Gold Bank received in its 2005 CRA Evaluation from the Kansas City Reserve Bank for making an investment in multifamily housing revenue bonds that were ultimately intended to benefit LMI residents. The Board has consulted with the Kansas City Reserve Bank on this matter. Through no fault of Gold Bank, the bonds were called and no multifamily housing was constructed. Gold Banc made various, timely public disclosures regarding the impairment of the bonds"...

            That sure is friendly to Gold Bank. As the old saw has it, when something sounds too good to be true, it's usually fraudulent. In this case, the bond Gold Bank bought had a 30% return. ICP has also been told, by a knowledgeable source, that Gold Bank's management knew of the problems with the bonds well before it told the Fed. And in any event, the Fed never amended the CRA credit it gave, for an investment that did not benefit a single low or moderate income person.

   On mortgage lending, the Fed in its M&I - Trustcorp order said that ICP commented, "based on 2004 HMDA data, M&I FSB imposed higher-cost loans to Latinos as compared to nonminority borrowers in Missouri. M&I FSB has no assessment areas in Missouri." But M&I FSB does M&I's subprime lending all over the country, and is an insured financial institution. So now, according to the Fed, it can ignore subprime affiliates not only if they are mortgage companies, but even if they're insured financial institutions, as long as they keep their headquarters (and limited assessment areas) away from the merger zone. By this logic, banks that are affiliated should trade lending and reporting such that all problematic subprime lending is done by the affiliated headquarters out-of-market.  Is this how the Fed is assessing and acting on the economy?

Question: why didn't the Fed include Santander in its March 17 cease-and-desist orders against three (other) Puerto Rico banks which had to restate their earnings? Could it be because Santander has a contested application pending, and a cease-and-desist order would only add fuel to the fire?

March 13, 2006

   The U.S. Federal Reserve, despite its talk about anti-money laundering and fair lending, is even more committed to doling out approvals to any proposed merger or acquisition. On fair lending, the Fed last week approved an application by Whitney to buy 1st National, reciting that Inner City Press / Fair Finance Watch
"alleged, based on 2004 HMDA data, that Whitney Bank and 1st Bank disproportionately denied applications for HMDA-reportable loans by minority applicants in several Metropolitan Statistical Areas... Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, or pricing among members of different racial or ethnic groups in certain local areas, they provide an insufficient basis by themselves on which to conclude whether or not
Whitney Bank or 1st Bank is excluding or imposing higher credit costs on any racial or ethnic group on a prohibited basis."

   The "certain disparities" alluded to by the Fed includes these, identified to the Fed by ICP: In the New Orleans MSA in 2004, Whitney National Bank denied the conventional home purchase applications of African Americans fully 3.53 times more frequently than whites. These disparities at Whitney extend into each of its other footprint states: In Mississippi, in the Gulfport - Biloxi MSA, Whitney National Bank in 2004 denied the refinance loan applications of African Americans 5.48 times more frequently than whites. In Alabama, in the Mobile MSA, Whitney National Bank in 2004 denied the conventional home purchase applications of African Americans 3.22 times more frequently than whites.The Fed's approval order also notes that ICP

"expressed concern about Whitney Bank's relationship with a rent-to-own company, which is an unaffiliated, nontraditional provider of financial services. As a general matter, the activities of this type of business are permissible, and such businesses are licensed by the states where
they operate. Whitney Bank has implemented a policy for its commercial credit facilities to finance companies or other consumer lenders to fund consumer loans. This policy provides for an evaluation of the practices of such borrowers to identify any potentially predatory lending practices and for ongoing monitoring and management of relationships with such borrowers."

   But it's not at all clear in the record what practices or safeguards Whitney has -- and in previous cases, the Fed has tried to withhold such information (leading to a brief ICP filed last week in the Second Circuit Court of Appeals in the ongoing ICP v. FRB Freedom of Information Act case about Wachovia's enabling of predatory lenders).

  Also last week, In the face of public reports of Bank Hapoalim's involvement in ongoing money laundering investigations, the Fed gave Bank Hapoalim an approval.  The Fed's order noted the comments of ICP Fair Finance Watch that

"expressed concern about the proposal based on news reports of investigations by Israeli authorities into allegations of money laundering at Bank Hapoalim. As a matter of practice and policy, the Board generally has not tied consideration of a proposal to the scheduling or completion of an investigation if, as in this case, the applicant or notificant and reviewed reports of examination from the appropriate federal and state supervisors of the U.S. operations of Bank Hapoalim that assessed its managerial resources. Based on all the facts of record, the Board has concluded that considerations relating to the financial and \managerial resources of Notificants are consistent with approval."

   So the Fed's policy is to ignore active investigations? And to ignore reports of its sister agency, the State Department? The Fed's Hapoalim order says that ICP/FFW

"expressed concern about Israel's anti-money laundering policies and procedures [but] in June
2002, the FATF recognized that Israel had addressed the deficiencies identified in its 2000 report. FinCEN withdrew its advisory in July 2002, noting that Israelhas in place a counter-money laundering system that generally meets international standards." FinCEN Advisory Withdrawal Issue 17A."

  But the U.S. State Department's more recent 2006 report, also released last week, states that in Israel, "there is a continuing need for more effective bank supervision and proactive investigations of money laundering associated with criminal activity, especially on the part of organized crime figures and syndicates." Oh but don't let that get in the way of a merger...

March 6, 2006

  At Howard University on March 3, the exiting Roger Ferguson played econo-nerd to a generally befuddled audience, saying for example, in answer to a question read by Mr. Diallo, "You know that an economist will predict either the direction or the timing or never both," and musing about housing costs in Australia. One was left wondering why there are never any dissents, on the Federal Reserve Board… Meanwhile back in the real world, in a response just filed with the Federal Reserve, BB&T among other things claims that the questions that the Fed has asked other banks about due diligence conducted before lending to pawn shops and payday lenders are "unreasonable and overbroad." But the Fed has asked NC-based Wachovia exactly these questions, and Wachovia answered. BB&T's response is essentially ideological -- not surprising, perhaps, given the bank's CEO's recent fulminations on the AP that his favorite writer is Ayn Rand. Then again, ex-chairman Greenspan was also once a fan… 

February 27, 2006

   Last week we reported on and raised to the Federal Reserve a Community Reinvestment Act scam, in which Gold Bank, which M&I is trying to buy, was given CRA credit by the Federal Reserve for buying bonds which in fact never resulted in a single unit of housing, low- or moderate-income or otherwise.  In response, M&I and Gold Bank filed letters with the Fed specifying at least the names and dates of the bonds, while admitting that no housing was built, and that the CRA credit has never been withdrawn or corrected --

“On July 19, 2001, Gold Bank purchased the City of Lee’s Summit, Missouri, Multifamily Housing Revenue Bonds, Series 2001C, for $4,600,000 (the ‘Missouri Bonds’). On February 28, 2002, Gold Bank purchased the Oklahoma Housing Development Authority, Multifamily Housing Revenue Bonds, 2002 Series C, for $5,000,000 (the ‘Oklahoma Bonds’). On August 15, 2002, Gold Bank purchased the Community Development Authority of the City of Manitowoc, Wisconsin Multifamily Housing Revenue Bonds, 2002 Series C, for $4,600,000 (the ‘Wisconsin Bonds’)… In August and September 2005, in large part because no housing projects were funded with the proceeds of the Bonds, the [IRS] notified Gold Bank that it had made preliminary determinations that the interest which the Issuers previously paid Gold Bank on the Bonds was not excludable from the gross income of Gold Bank for tax purposes. On October 17, 2005, Gold Bank paid approximately $3.5 million to settle the IRS claim…

  “Gold Bank purchased the Bonds based upon representations from the Issuers that the proceeds of the Bonds would be used by the Issuers to make loans for low and moderate income multifamily housing projects… Notwithstanding such Issuer representations, the Issuers subsequently did not fund any low and moderate income multifamily housing projects with the proceeds of the Bonds… In fact, prior to the CRA examination, Gold Bank had disclosed to the Kansas City Federal Reserve… the impairment in the value of the Bonds and the reasons for such impairment.”

CRA credit given (and not retracted) for a fraudulent investment which never resulted in a single unit of housing. Is this what the Federal Reserve has come to?

February 20, 2006

            At new chairman Bernanke’s testimony to the House of Representatives last week, the Community Reinvestment Act was mentioned, albeit a single time. Mr. Bernanke said

“my very first trip as a governor of the Federal Reserve was to Brownsville, Texas, to see how a set of nonprofit organizations were using funds provided under the Community Reinvestment Act from banking institutions to rede

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July 23, 2012

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

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