By Matthew R. Lee
NEW YORK, October 21 – Seven months after Wells Fargo Bank's Community Reinvestment Act rating was dropped two levels to "Needs to Improve," barring it from acquisitions, the Office of the Comptroller of the Currency has quietly said, in a footnote to a Bulletin issued on October 12, that "The OCC’s policy is not to lower a bank’s CRA composite or component rating by more than one rating level."
See here, footnote 8.
So when did this become the OCC's policy, after it dropped Wells by two levels? Call it a stealth sop to Wells Fargo - and seemingly a violation of the Administrative Procedures Act. We'll have more on this. In July it emerged that over 800,000 people who took car loans from Wells were charged for needless auto insurance, pushing 274,000 Wells Fargo customers into delinquency and triggering nearly 25,000 wrongful vehicle repossessions. So much for the industry having cleaned itself up after the predatory lending meltdown. New York City announced it will not enter any new relationships with the bank, also suspending Wells Fargo's role as a senior book-running manager for NYC General Obligation and Transactional Finance Authority bond sales. A statement by Mayor Bill de Blasio and Controller Scott Stringer noted that "Currently, Wells Fargo holds contracts with the City to provide banking services, including to operate 'Lock Box' services that hold taxes and fees collected by the City. There is approximately $227 million of City dollars held in Wells Fargo accounts." Bu will they get involved in opposing Sterling National Bank, which Inner City Press and Fair Finance Watch have exposed as having "unreliable" CRA data, notwithstanding the OCC's scam "Satisfactory" rating on May 30? Click here. We'll have more on this. Back in late March, the bank settled for $110 million a class action lawsuit for having opened fake accounts without customers' knowledge or approval. But will Wells Fargo, which Inner City Press has covered through its acquisition of First Union and even before, from Washington to Alaska, still be allowed to go forward with its reported plan to close 400 bank branches, including in low and moderate income areas? The question reverberated, with others, on Capitol Hill on March 29 - and we'll have more on it.
Meanwhile the US Federal Reserve Board, which bears more than a little responsibility for the global financial crash from 2008 due to inattention to predatory lending including on mergers, has now further reduced its scrutiny of bank mergers, with little notice to date. Now Fair Finance Watch and Inner City Press has timely challenged the Federal Reserve's stealth reduction of scrutiny, in a timely request for reconsideration filed with the Federal Reserve on the evening of March 27, below. FFW and others including NCRC protested, and Inner City Press has Freedom of Information Act requests pending regarding, the application by People's United to acquire Suffolk County National Bank.
FFW showed that in the the New York City MSA, "People's United made 82 home purchase loans to whites and NONE to African Americans or Latinos. This is redlining; this proposed acquisition could not legitimately be approved and People's United should be referred for prosecution for redlining by the Department of Justice and CFPB."
When the Fed ruled on People's application, it added this: "In 2012, in its order approving Capital One Financial Corporation’s acquisition of certain U.S. operations of ING, the Board stated that a proposal that involves an acquisition of less than $2 billion in assets, that results in a firm with less than $25 billion in total assets, or that represents a corporate reorganization may be presumed not to raise material financial stability concerns absent evidence that the transaction would result in a significant increase in interconnectedness, complexity, cross-border activities, or other risk factors. Since establishing this presumption, the Board’s experience has shown that proposals involving an acquisition of less than $10 billion in assets, or that result in a firm with less than $100 billion in total assets, are generally not likely to create institutions that pose systemic risks. Transactions below either of these asset thresholds have typically not involved, or resulted in, firms with activities, structures, and operations that are complex or opaque. Such transactions have also not materially increased the interconnectedness or complexity of the financial system. Accordingly, the Board now presumes that a proposal does not raise material financial stability concerns if the assets involved fall below either of the aforementioned size thresholds, absent evidence that the transaction would result in a significant increase in interconnectedness, complexity, cross-border activities, or other risk factors." Why wasn't this subject, at least, to notice and comment rulemaking?
