by Matthew Russell Lee, Patreon Book Substack
FEDERAL COURT, Jan 16 – Amid welcome focus on Federal Reserve independence, from a community perspective Fair Finance Watch and Inner City Press have raised a different question to the Federal Reserve Board:
How is it that Federal Reserve Banks which review and approve banks' mergers, and decide what questions to ask, who to send copies to and what information can be withheld from the public, have the very banks they regulate on their boards of directors?
The question arose this month on the protested application by Fulton Financial to buy Blue Foundry Bank. FFW filed comments with the Federal Reserve Board on December 8, after the proposal was announced but before the banks applied. (FFW has adopted this new comment-early policy in light of regulators including Fed Governor Michelle W. Bowman saying applications will be reviewed and approved more quickly).
It was the Federal Reserve Bank of Philadelphia that responded, when Fulton applied on December 23. On January 7, Fulton sent FFW a copy of its response to December 23 questions from the Federal Reserve Bank of Philadelphia, a copy of which was not sent to FFW on December 23, as required by the Federal Reserve's rules against ex-parte communications.
Fulton's response sought to withhold, about branch closings, even the timing for decision. But in response to a recent FFW / Inner City Press FOIA request, Fifth Third was required to disclose the street addresses of the 80 branches it would close if allowed to acquire Comerica. So why did the Federal Reserve Bank of Philadelphia not send timely protester FFW a copy of its question or "Additional Information" letter - and why is it allowing Fulton to be more secretive even than other banks?
Well, Inner City Press looked at the Board of Directors list of the Federal Reserve Bank of Philadelphia and finds on it "Curtis J. Myers, President and Chief Executive Officer, Fulton Bank and Fulton Financial Corporation, Lancaster, Pennsylvania."
Isn't this a conflict of interest? Or, what safeguards have the Federal Reserve put in place?
Further cursory review by Inner City Press finds bank representatives on the boards of directors of all 12 of the Federal Reserve Banks, and of their branches - including Huntington Bank, which the Fed recently allowed to do a $7 billion merger without even applying to the Fed, and including National Bank Holdings Corporation (recipient of a recent merger approval), M&T Bank (represented on two separate boards), Stockyard Bank & Trust and many others, including:
Peapack Private Bank & Trust; First Financial Bancorp Cincinnati, Ohio ; First Horizon Bank; BankUnited, Inc.; Northern Trust, Renasant Bank, United Community Bank; Southern Bancorp, Inc.; Home BancShares, Inc.; First National Bank of Omaha; National Bank of Texas; Columbia Banking System, Inc., and Chief Executive Officer Columbia Bank; and Cathay Bank - again, among others.
Inner City Press has submitted a Freedom of Information Act request to the Board, alongside its second timely comment opposing Fulton - Blue Foundry, for " all records reflecting FRS including FRB of Philadelphia considering of possible conflicts of interesting in having Fulton's CEO on the FRB of Philadelphia's Board of Directors while the FRB of Philadelphia considers Fulton's merger applications including deciding how to treat adverse comments and whether to send copies of AI letters and allow withholding of answers to AI letters. The request, for context, includes FRS consideration of bank and bank holding company representation on the boards of the other Reserve Banks."
On January 16 the Fed granted expedited treatment to the FOIA request: "I have granted your request for expedited processing because (1) you are primarily engaged in disseminating information, and (2) the application you seek is pending with the Board. Accordingly, your request will be processed as soon as practicable and ahead of other FOIA requests."
Watch this site.
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