By Matthew R. Lee
NEW YORK, August 24 -- The lack of seriousness in US bank regulation grows from the relatively smaller to the largest banks like Goldman Sachs - down to Bank of North Carolina (BNC), whose proposed acquisition of High Point Bank Corporation Inner City Press has challenged and the Federal Reserve has asked questions on, and BancorpSouth, which Inner City Press protested for discrimination in 2014, and has now been charged by the Department of Justice and CFPB.
On the evening of August 24, the Federal Reserve asked BNC questions about Inner City Press' protest, including:
"The public comment submitted on the proposed merger includes assertions that Home Mortgage Disclosure Act data from several metropolitan areas indicate that both BNC Bank and High Point Bank had unfavorable levels of mortgage lending to African American and Hispanic individuals as compared to white individuals.
-Directly address the assertions of unfavorable levels of mortgage lending to those population segments identified by the commenter in each relevant geographic area referenced in the comments;
-Discuss in detail the outreach and marketing activities by BNC Bank and High Point Bank, including any contemplated changes to those activities after consummation of the proposal; and
-Describe in detail the fair lending risk management policies and procedures of BNC Bank and High Point Bank, including any contemplated changes to these policies and procedures after consummation of the proposal...
Discuss any plans to open, close, or consolidate any bank branches in connection with the proposal, or separately from the proposal, particularly in low- and moderate-income (“LMI”) areas. To the extent that any branches in LMI areas would be closed, discuss management’s plans to mitigate the impact of such closures on the affected communities."
On BNC, Inner City Press / Fair Finance Watch has raised to the Federal Reserve:
In the Charleston MSA in 2014 for conventional home purchase loans, BNC made 173 such loans to whites and only SIX to African Americans, and none to Latinos. For refinance loans, it made 68 loans to whites and only ONE to an African American, while denying the applications of African Americans 3.94 times more frequently than those of whites.
Southcoast in the Charleston MSA in 2014 for conventional home purchase loans made 136 such loans to whites and NONE to African Americans. For refinance loans, Southcase made 35 loans to whites and only TWO to African Americans. To combine these two banks would make them worse.
In the Greenville MSA in 2013 for home purchase loans, BNC made 117 such loans to whites and only SIX to African Americans, and only seven to Latinos. For refinance loans, it made 31 loans to whites and only one to an African Americans and none to Latinos.
BNC admits, as it must, that it is below-market in lending to African Americans, but paradoxically tries to use that the fact that it is subject to a compliance order as its defense to the Fed.
To Fair Finance Watch, too. FFW asked to see, in writing, what are BNC's CRA plans going forward. BNC replied that it is "unable to share this with you. It is an internal document that is only shared with our Board of Directors and the FDIC (under the Order)."
In the Charleston MSA in 2014 for conventional home purchase loans, BNC made 173 such loans to whites and only SIX to African Americans, and none to Latinos. For refinance loans, it made 68 loans to whites and only ONE to an African American, while denying the applications of African Americans 3.94 times more frequently than those of whites.
Southcoast in the Charleston MSA in 2014 for conventional home purchase loans made 136 such loans to whites and NONE to African Americans. For refinance loans, Southcase made 35 loans to whites and only TWO to African Americans. To combine these two banks would make them worse.
In the Greenville MSA in 2013 for home purchase loans, BNC made 117 such loans to whites and only SIX to African Americans, and only seven to Latinos. For refinance loans, it made 31 loans to whites and only one to an African Americans and none to Latinos.
BNC admits, as it must, that it is below-market in lending to African Americans, but paradoxically tries to use that the fact that it is subject to a compliance order as its defense to the Fed.
To Fair Finance Watch, too. FFW asked to see, in writing, what are BNC's CRA plans going forward. BNC replied that it is "unable to share this with you. It is an internal document that is only shared with our Board of Directors and the FDIC (under the Order)."
We'll have more on this.
In April 2014, Inner City Press submitted a protest to the Federal Reserve of the "Applications of BancorpSouth to merge with Ouachita Bancshares Corporation and thereby indirectly acquire Ouachita Independent Bank, and with Central Community Corporation, and thereby indirectly acquire First State Bank Central Texas, Austin, Texas - Round Two."
Fair Finance Watch's analysis to the Fed showed that "in the Jackson MS MSA for conventional home purchase loans, BancorpSouth made 258 loans to whites, only 17 to African Americans and five to Latinos. BancorpSouth's denial rate for whites was 7.4% while for African Americans it was 25.8% -- 3.49 times higher. This was troubling.
NOW, more troubling: in 2013 for conventional home purchase loans in the Jackson MS, BancorpSouth's denial rate for whites was 4.5% while for African Americans it was 26.4% -- now 5.87 times higher.
In 2012 in the Baton Rouge LA MSA for conventional home purchase loans in 2012, BancorpSouth made 60 such loans to whites; only three to African Americans and one to a Latino.
NOW, more troubling: in 2013 for conventional home purchase loans in the Baton Rouge MSA, BancorpSouth was up to 72 loans to whites - but NONE to African Americans."
NOW, more troubling: in 2013 for conventional home purchase loans in the Baton Rouge MSA, BancorpSouth was up to 72 loans to whites - but NONE to African Americans."
Now BancorpSouth is changed by the government with "redlining by placing its branches in the Memphis area outside of minority neighborhoods and directing nearly all its marketing away from such neighborhoods."
Meanwhile documents released to Inner City Press under the Freedom of Information Act (FOIA) show, is inappropriately bent on helping Goldman Sachs. The Federal Reserve belatedly responded to Inner City Press / Fair Finance Watch's September 2, 2015, FOIA request, with some of its internal documents, many heavily redacted. FOIA letter here; FOIA documents released to ICP here, and embedded below.
Even as released the documents show that Goldman Sachs through its law firm Sullivan & Cromwell reached out to Fed General Counsel Scott Alvarez in May 2015 about the transaction, and was largely able to vet it with the Fed's staff by July, even receiving an "additional information" request before any application was filed.
Since the public cannot comment or ask questions before a transaction is announced, this "pre-review" by the Fed in essence cuts public review and transparency out of the process. The Fed's rules against ex-parte communications can't be triggered before there is an application. But should Fed review be held, and apparently completed, before there is any public notice?
The deal was publicly announced on August 13, 2015 and Goldman Sachs on August 18 submitted the apparently pre-approved application. Inner City Press / Fair Finance Watch submitted a comment and FOIA request...
On Goldman Sachs, Federal Reserve's Initial FOIA Response to Inner City Press on GE Capital Bank by Matthew Russell Lee
On October 20, the Federal Reserve asked Goldman Sachs five questions, but not on the predatory lending issues raised... Only this from Goldman Sachs, only snail-mailed by its counsel:
On October 13 Inner City Press published the Federal Reserve's communications with the CIT Group's outside counsel, which shows how the release of public documents is allowed by the Fed to be delayed. CIT made disingenuous requests for confidential treatment of information that could not be withheld, without any repercussion. They were rewarded with FOIA appeal denials by Fed Governor Jay Powell; now Goldman is trying to withhold information that should be public. Will there be any repercussion or accountability? Watch this site.
Revealed: Federal Reserve Asking CIT Group About Inner City Press FOIA Request: Now Goldman Sachs? by Matthew Russell Lee
