By Matthew R. Lee
SOUTH BRONX, July 27 – Amid attacks on the U.S. Community Reinvestment Act this month Inner City Press / Fair Finance Watch has filed comments under the CRA opposing Hancock Whitney Bank's applications to acquire MidSouth Bank, see below. Now comes this news: "A Japanese FinTech company is applying for a banking charter in the United States. The eCommerce firm Rakuten currently runs a shopper rewards program in the States, and said would file the necessary paperwork on Friday (July 26) with Federal Deposit Insurance Corp. (FDIC) and the state of Utah for an industrial loan company (ILC) charter. Rakuten has about 13 million active users who earn rewards for purchasing products from participating merchants. The bank would be headquartered in Utah and could handle users’ deposits, according to Lee Carter, Rakuten head of banking and potential ILC CEO. The company also wants to give members a credit card to make purchases in the future and also earn rewards. Carter said he’s “kept a close eye on Square’s application.” He also said the company would provide a complete plan for the Community Reinvestment Act with the application, because some groups are worried that FinTechs won’t be held accountable for certain rules. “We have thought about that very, very carefully,” Carter said. “We’ll have specific goals for community service and investments back into the community." We'll have about that.
For now, here's some of the comments of Inner City Press / Fair Finance Watch on Hancock - MidSouth's application: "This is a timely first comment opposing and requesting documents about and an extension of the FRB's public comment period on the Application by Hancock Whitney to acquire MidSouth. Fair Finance Watch has been reviewing the Home Mortgage Disclosure Act (HMDA) data for 2017 for Whitney and finds, troublingly, that for home purchase loans in the New Orleans, Louisiana MSA in 2017 Whitney denied the applications of African American 3.35 times more frequently than whites - and denied Latinos a whopping 4.68 times more frequently than whites. Despite the demographics including of home ownership in the NOLA MSA, Whitney in 2017 made 507 home purchase loans to whites and only 52 to whites (and only 13 to Latinos). An evidentiary hearing should be held and the 2018 data should immediately be made available, including through the HMDA Explorer site and format, which appears to be being terminated by the CFPB. In support of the request for an extension and a hearing, "There is no word on whether there will be any layoffs or branch closings. Trisha Voltz Carlson, spokesperson for Hancock Whitney, said it is premature to discuss branches or employees at this time. “While there is some overlap in our footprint with MidSouth, we are not ready to discuss consolidation of branches or costs at this time,” Carlson said by email." These must be disclosed and comment allowed including at a hearing. On the current record, Hancock Whitney's applications should be denied." We'll have more on this.
The US Treasury Department is in a process to try to weaken and take the community out of the 1977 Community Reinvestment Act. Docket file here. The protagonist, akin to Scott Pruitt when he was at the US Environmental Protection Agency, is Comptroller of the Current Joseph Otting. On September 12 Fair Finance Watch (and on FOIA, Inner City Press) commented to the OCC, here. Now on October 11, more on Otting's assault on the CRA has become known. In April 2018 his OCC approved an application by E-Trade Saving Bank which Fair Finance Watch had challenged based on the bank having no fewer than six states rare "Needs to Improve" CRA ratings. FFW noted rare Needs to Improve ratings for the entire states of Arizona, Colorado, Florida, Georgia, Michigan and Oregon, and an undeserved “Satisfactory” for New York. Otting's OCC, after the approval, helpfully contacted E-Trade Bank to tell it that upon (Otting's) reflection, it was no longer even subject to the Community Reinvestment Act.
Back in October 2018 Inner City Press asked the OCC for documents about this under FOIA - while the OCC has sought to evade by accessing fees, to this day. But in May 2019 while withholding 1000 pages the OCC released to Inner City Press, like a needle in a hay stack, its June 16, 2018 letter from Assistant Deputy Comptroller for Midsize Bank Supervision William Russell to E*TRADE's Karl Roessner telling him that E*TRADE's banks are exempt from CRA, here. We'll have more on this.
Inner City Press on October 11 raised the E-Trade (and another bank) issue into the record on the Advanced Notice of Proposed Rulemaking. Many more are resisting Otting, but Federal Reserve Bank of Cleveland President Loretta J. Mester on October 3 saidthat "the OCC, a part of Treasury, has put out an advance notice of proposed rule-making (ANPR) seeking comment on ways to modernize the CRA regulations. The Federal Reserve is also undertaking efforts aimed at ensuring that the CRA regulations continue to meet the goals of the legislation amid the evolving financial services environment" - with these as her footnotes for that: "Brainard, Lael, “Community Development in Baltimore and A Few Observations on Community Reinvestment Act Modernization,” Baltimore, Maryland, April 17, 2018a and Brainard, Lael, “Keeping Community at the Heart of the Community Reinvestment Act,” New York, NY, May 18, 2018b. Both of those Brainard speeches were before Otting's proposals. And since? In the docket file as of October 8 are 42 comments, now including the President of First National Bank & Trust in Elk City, Oklahoma who writes, "I firmly believe that this form of oversite was meant for metropolitan areas and banks with multiple branches. There’s got to be a better way of monitoring and locating those banks that aren’t helping the population it serves. I would be surprised to find there are very many banks that fail the CRA examination." It's called grade inflation. On September 29 The Intercept has dug into it, citing FFW's formal request that Otting recuse himself - and so here now are some of the Freedom of Information Act documents. On October 2 in the Senate Banking Committee, Otting insisted he is not trying to weaken the CRA; he called the ANPR an "Advanced Notice of Public Rulemaking" instead of Proposed. He said he met with 1100 individuals - still undisclosed - and expects five to ten thousand comments on the ANPR. (So far there are 33 listed but only 29 visible). Senator Sherrod Brown began by asking him indirectly about the blogs at CFPB of Eric Blankenstein. We'll have more on this. And this - as obtained by Inner City Press and fellow NCRC member CRC, here are more of the documents, for (this time) free download on Patreon.
On October 1 Inner City Press / Fair Finance Watch submitted the documents obtained under FOIA into the record before the OCC, stating that "These documents, which must be considered as part of this ANPR and any subsequent formal rulemaking, show that fraudulent comments supporting Otting's OneWest were submitted to the OCC - presumptively attributable to Otting.
The documents show that the OCC sought an explanation from Otting's / OneWest's outside counsel - and the OCC's and Justice Department's response to date reflect that no such explanation was ever provided. The OCC nevertheless approved the merger and even gave weight to the fraudulent comments. On this record we again insist that Otting be recused from this ANPR and any related rulemaking or proceedings. We have other substantive concerns about this ANPR but view the question of Mr Otting's recusal (and of with whom he has met, on which Inner City Press has another long-pending FOIA request) as threshold matter than must be addressed as quickly as possible."
The documents show that the OCC sought an explanation from Otting's / OneWest's outside counsel - and the OCC's and Justice Department's response to date reflect that no such explanation was ever provided. The OCC nevertheless approved the merger and even gave weight to the fraudulent comments. On this record we again insist that Otting be recused from this ANPR and any related rulemaking or proceedings. We have other substantive concerns about this ANPR but view the question of Mr Otting's recusal (and of with whom he has met, on which Inner City Press has another long-pending FOIA request) as threshold matter than must be addressed as quickly as possible."
The FOIA document as provided by the OCC and US Department of Justice reflect that the OCC never followed up on its lone (and wan) question to Otting's counsel as Sullivan & Cromwell to explain the fraudulent comments. Nor did this counsel respond to questions from The Intercept's David Dayen, who reports: "AFTER A YEARLONG effort to obtain the information, which included ongoing litigation, the OCC made available 15 pages. They contain emails to and from David Finnegan, an OCC senior licensing analyst who was a point of contact for public comment on the merger.
Four individuals contended in emails to Finnegan that they never sent the comment letters supporting the merger. “This is to bring to your attention that I received an email from the office of OCC regarding a subject I am completely unaware of,” wrote one individual (the OCC redacted the emailers’ identifying information). “I DID NOT send the email below that you responded to. This is a fraudulent use of my email account.” The other three sent similar complaints.
The letter of support attributed to these individuals was identical to the letter posted at the OneWest Bank website.
Matthew Lee of Inner City Press expressed outrage at the fake comments. “There’s nothing more offensive of speech rights than artificially presenting someone as saying something you don’t believe,” Lee said. “You have the right to be silent. It’s so beyond the pale.”
Four individuals contended in emails to Finnegan that they never sent the comment letters supporting the merger. “This is to bring to your attention that I received an email from the office of OCC regarding a subject I am completely unaware of,” wrote one individual (the OCC redacted the emailers’ identifying information). “I DID NOT send the email below that you responded to. This is a fraudulent use of my email account.” The other three sent similar complaints.
The letter of support attributed to these individuals was identical to the letter posted at the OneWest Bank website.
Matthew Lee of Inner City Press expressed outrage at the fake comments. “There’s nothing more offensive of speech rights than artificially presenting someone as saying something you don’t believe,” Lee said. “You have the right to be silent. It’s so beyond the pale.”
FOIA Finds: OneWest CIT Ban... by on Scribd
