Federal Reserve 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.

For the reasons of record, and as argued by NCRC, the Federal Reserve should reconsider the ING approval and Capital One's related proposal to buy the ex-Household predatory lending platform from HSBC. Watch this site.

As Federal Reserve Fines Wells Fargo, It's Too Little, Too Late, Focus Turns to Just-Filed Capital One - ING Application

By Matthew R. Lee

SOUTH BRONX, July 21 -- After being presented with evidence of Wells Fargo's predatory lending for years, but nevertheless approving all of Wells Fargo's merger applications, the Federal Reserve this week belatedly imposed a $85 million fine for abuses by Wells Fargo Financial.

The response by Bronx-based Fair Finance Watch, which provided the Fed with testimony for whistleblowing employees of Wells Fargo Financial, was too little, too late.

At Wells, subprime lending has already been shifted into other of the bank's units.

In 2010, the sixth year in which the Home Mortgage Disclosure Act data distinguishes which loans are higher cost, over a federally-defined rate spread of 1.5 percent over Treasury bill yields, the data show that the largest of Wells Fargo's many HMDA data reporters confined African Americans to higher-cost loans 2.56 times more frequently than whites.

Predatory lending already triggered the global financial meltdown. The Fed, it seems, is merely saving face.

But what can be learned for the future? Also this week, the Fed published notice of the proposal by another much-maligned lender, Capital One, to acquire the Internet bank ING Direct, stating that the public has only until August 18 to comment on the application. It is the middle of summer; the deal would create the nation's fifth largest bank.

One can imagine the Fed trying to haul off and approve Capital One's application, and then some years later impose some sort of fine. That makes no sense, particularly after the Fed's implicit recognition that it miss the boat for years with Wells Fargo. So let it be different this time.