Capital One Motion For Summary Judgment In Overdraft Fees Case Denied In SDNY

By Matthew Russell Lee, Patreon

SDNY COURTHOUSE, June 25 – Three years after Capital One Bank was sued for its overdraft fees on debit card transactions for which there were sufficient funds available in the customers' accounts, on June 25 the bank's motion for summary judgment was denied by U.S. District Court for the Southern District of New York Judge Lorna G. Schofield.    

   Judge Schofield after her ruling joked that it felt like the case began in last century. She gave the lawyers for named plaintiff Tawanna M. Roberts two weeks to file a letter presaging their motion for class certification.    

   The case has already seen one appeal to the Second Circuit Court of Appeals, which partially reversed Judge Schofield's granting of Capital One's motion to dismiss Roberts' causes of action for breach of contract and violation of New York General Business Law § 349.      

   The case has attracted interest as an example, consumer advocates say, of predatory practice, citing a Capital One account agreement which states that an overdraft occurs when it “elects to pay” a transaction that exceeds a customer’s available balance.  

  The advocates say that by charging overdraft fees on transactions that the bank elected to pay when the available balance was sufficient, but that later settled against negative funds, Capital One led consumers to believe it would do one thing while doing the opposite, inflicting significant financial hardship - that is, overdraft fees - on affected customers in the process.     

  In the run-up to the June 25 oral arguments, Judge Schofield informed the parties that she would only grant argument to lawyers graduating in 2014 or more recently. Capital One's law firm Morrison Foerster proposed a 2013 graduate, Tiffani B. Figueroa. Judge Schofield approved it, and the argument took place with Sophia Goren Gold representing Tawanna Roberts. Now she seeks class certification. The case is Roberts v. Capital One Financial Corporation, 16-cv-4841 (Schofield).

   After her June 25 ruling, Judge Schofield said that there might be material even in the transcript of the oral argument, which took place in open court, which should be redacted. This follows an entirely sealed criminal sentencing Judge Schofield held on June 17, without disclosing even the name of the case or defendant, much less the reason(s) for sealing.

     In this case, both sides quickly said no, there was nothing to redact. Like the sentencing, it is a matter of public interest. Inner City Press, which has not been told what sentencing was moved out of its view on June 17 (and which was the only media in Judge Schofield's courtroom for the Capital One oral arguments on June 25) will stay on these cases. More on Patreon, here.

Bragging of Uptick, BankUnited Excludes Poorer New Yorkers, Summers in Fed Wings?

By Matthew R. Lee

NEW YORK, July 24 -- Alongside the debate on the economy at the national level, amid President Barack Obama speeches and reports he's considering Larry Summers to replace Ben Bernanke atop the Federal Reserve, a sample bank earnings conference call Wednesday told another story.

John Kanas of BankUnited fielded questions from Deutsche Bank, Wells Fargo, Credit Suisse and Inner City Press. He bragged of construction cranes on Brickell Avenue in Miami, and of his bank's four branches in Manhattan and one in Suffolk County on Long Island.

Inner City Press asked if BankUnited's chosen assessment area for the Community Reinvestment Act, to serve low and moderate income people, was only affluent sections of Manhattan and Suffolk County, and for more detail on any plans to open branches in New York City's "outer boroughs" including The Bronx, Queens and Brooklyn.

Kanas at first asked for clarification -- Inner City Press has questioned him before on these topics, when he led North Fork Bank then at Capital One -- then said that the Suffolk branch is right near the Nassau County line.

Shouldn't BankUnited's CRA assessment area then include Nassau? And how can the lowest income sections of New York City be excluded?

This is a question being asked not only in New York, but also through NCRC by a coalition of groups in Florida.

Earlier in the call, before taking questions, Kanas had bragged that many of "his" deposits came from previous relationships in the New York market. Since North Fork bought Northside Savings Bank in The Bronx, Inner City Press on Wednesday asked if any of BankUnited's deposits come from The Bronx. Kanas said no, they are Manhattan. But is that a fact?

Until earlier this month, Inner City Press used and cited SNL Financial in stories such as these. A request to continue, and specifically about BankUnited, is pending before Christina M. Twomey of SNL's Public Relations. We hope to have more on this - and on Summers and the Fed. Watch this site.

  

In 2012, Lending Disparities Continued at Citi, Chase, BofA & Wells as Fed Lax, Inner City Press Studies and Challenges

By Matthew R. Lee

SOUTH BRONX NY, March 30, 2013 -- In the first study of the just-released 2012 mortgage lending data, Inner City Press and Bronx-based Fair Finance Watch have found that the Big Four banking behemoths Citigroup, JPMorgan Chase, Bank of America and Wells Fargo continued with high cost loans and disparities by race and ethnicity in denials and higher-cost lending.

  2012 is the ninth year in which the data distinguishes which loans are higher cost, over a federally-defined rate spread of 1.5 percent over Treasury bill yields.

  The just released data show that Citigroup confined African Americans to higher-cost loans above this rate spread 2.09 times more frequently than whites in 2012, Fair Finance Watch has found.

  Citigroup confined Latinos to higher-cost loans above the rate spread 1.83 times more frequently than whites in 2012, the data show.

 “Even after the bailouts, lending disparities grew worse and not better," said Fair Finance Watch. "Regulatory laxity, at least on fair lending, has continued despite the financial meltdown caused by predatory lending."

  For JPMorgan Chase, the disparity for African Americans in 2012 was 1.7; for Bank of America it was 1.61; for the largest of Wells Fargo's many HMDA data reporters, the disparity for African Americans in 2011 was a whopping 2.32.

  "The Federal Reserve is becoming more and more bank-friendly, including with recent Freedom of Information Act appeal denials by Governor Jay Powell, formerly a hedge funder and Deutsche Bank official Jay Powell. It remains unclear if the Consumer Financial Protection Bureau will get to this problem," Fair Finance Watch continued. "The disparities in the 2012 mortgage data of these banks further militate for aggressively watchdogging and breaking up these banks."

  Instead, the Fed allowed the creation of a fifth mega-bank in Capital One when it acquired ING DIRECT and the subprime assets of HSBC. 

  In 2012, Fair Finance Watch has found, fully 9.93 percent of Capital One's mortgage loans to African American were higher cost loans, versus 7.61 percent of Capital One's loans to whites. To Latinos, the percentage was even higher: 10.31 percent.

  And so Fair Finance Watch and Inner City Press have re-doubled watchdogging. Challenged by the groups in 2012 and still pending, with FOIA issues, are applications by Customers Bancorp and by M&T, to acquire Hudson City Savings Bank.

  Regulators had allowed Hudson City in 2011, for conventional home purchase loans in the New York City Metropolitan Statistical Area, to make 765 such loans to whites and only FIVE to African Americans (and only 44 to Latinos). Meanwhile, Hudson City denied the applications of African Americans 3.21 times more frequently then those of whites.

  In March 2013 Inner City Press and Fair Finance Watch began a challenge to Investors Bancorp's application to acquire Roma. In the NYC MSA in 2011 for conventional home purchase loans, Investors Bank made 220 such loans to whites, and only TWO such loans to African Americans. Its denial rate for Latinos was FIVE TIMES higher than for whites.

  The Home Mortgage Disclosure Act required that the 2012 data be provided by March 31, following March 1 joint requests by Fair Finance Watch and Inner City Press. Several banks did not provide their data by the deadline, despite confirming receipt of the request. Further studies will follow: watch this site.

As Federal Reserve Rebuffs FOIA, Shields Capital One and M&T, AAd

By Matthew R. Lee

SOUTH BRONX, January 7 -- The Federal Reserve is covering up the performance of Capital One on commitments it made before getting approval for its protested acquisition of ING DIRECT.

  The Fed is withholding over 2200 pages responsive to an Inner City Press request under the Freedom of Information Act filed in April for "records concerning Capital One's compliance, since the FRB's approval order on Capital One - ING DIRECT, including with Capital One's commitments to open branches and lend $180 billion."

  After delaying ruling from April until January 2012, Governor Jerome Powell on January 2 denied access to each and every page, calling it supervisory and confidential business information and saying that no "segregable" portion could be identified or released. The FOIA appeal denial is online here.

  How can the public assess the Federal Reserve's credibility in following up on the bank commitments it relies on in its own merger approval orders, if the Fed insists on withholding every single record?

  Inner City Press, along with other members of NCRC, has put this question to the Federal Reserve Board. Governor Daniel Tarullo, previously in charge of FOIA for the Fed, told Inner City Press he understood the problem.

  But nothing was done. Now pro-industry Governor Jerome "Jay" Powell, previously of Deutsche Bank and the Carlyle Group, has been put in charge of FOIA and as forseen he is denying appeal after appeal.

  After delaying more than 40 days to rule on Inner City Press' FOIA appeal of withholdings about the proposed merger of M&T and Hudson City Bancorp, challenged by NCRC members including ICP, Powell in a seven page ruling found that the Fed mis-invoked FOIA exemptions 6 and 8 -- but then refused to release the information, now invoking exemption 4. Seems they just make it up as they go along.

  In another pending merger case, from FirstMerit's submission to the Federal Reserve about Citizens Republic the Fed provided this to Inner City Press under FOIA:

"To facilitate secure email exchanges with the Federal Reserve, please see the attached file and link thatcontain instructions for registering with the Zix e-mail system. The web address is https:// WITHHELD"

  That is, even the way / address through which banks communicate with the Fed is withheld from the public.

  This is at odds, for example, with FOIA appeal responses obtained this year by Inner City Press from other Federal agencies, such as even, on a first appeal, the Broadcasting Board of Governors and its Voice of America.

   In other FOIA news, Inner City Press is a media amicusin this just filed brief in McBurney v. Young, No. 12-17 of the US Supreme Court.

  The advocacy, especially given the harm done to communities and taxpayers by the Fed's mis-regulation and bailouts, continues. On another pending merger, back in August, Inner City Press / Fair Finance Watch wrote to Customers Bancorp for its mortgage data, expressing some concerns.

  A month later, at the deadline, some data was provided. It was disparate and Inner City Press comments on Customers' Acacia application. There were questions from the Federal Reserve, some FOIA requests.

  Now, Customer's has passed back the drop-dead date from December 31 to January 31. But how do they know it will be approved by then? Maybe they are communicating through the Fed's "secret" window. Watch this site.

For Occupy Wall Street, Federal Reserve Police Deployed, Documents Withheld

By Matthew Russell Lee

 

WALL STREET, September 17 -- Two blocks east of Zuccotti Park, the once and perhaps future Liberty Square, the Federal Reserve Bank of New York was surrounded by police on Monday morning as the Occupy Wall Street movement celebrated its first anniversary.

  Despite the year's many changes, from Arab Spring to economic downturn in southern Europe, the Federal Reserve has remained as unaccountable and untransparent as before.

  The Fed did nothing to reign in the predatory loan trading of Citigroup and the other Big Three. It approved the formation of a Fifth, Capital One through buying ING DIRECT, then withheld from Inner City Press and others documents about its review.

  Now amid the LIBOR interest rate fixing scandal, the Federal Reserve has denied Freedom of Information Act requests from Inner City Press and others, find court challenges or reversals unlikely.

  Monday the Federal Reserve Police were parked in front of the FRBNY's slammed shut massive doors. Across the street, the New York Police Department guarded JP Morgan Chase, while arrests were made on the corner of Pine and William Streets. Former Philadelphia police Captain Ray Lewis looked on, shaking his head.

 

Back in front of Brown Brothers Harriman, OWS protesters posed with masks of Obama and Romney. Then they set off marching behind a puppet Lady Liberty, toward Wall Street again. Watch this site.

As Deutsche Bank Evades Fed, Tarullo Airbrushes "Some Private Actors," Blurs FOIA and Volcker Rulemaking

By Matthew Russell Lee

UNITED NATIONS, May 2 -- When the Federal Reserve's Daniel Tarullo spoke Wednesday at the Council on Foreign Relations about regulatory reform, he did not mention a single bank or financial institution.

  Inner City Press asked him about Deutsche Bank, which earlier this year split off its investment banking business so as to avoid Fed regulation. Tarullo on March 22 told the Senate the Fed would have to "respond" to this, that it had some impact on this thinking on regulation.

  Tarullo replied, "Matthew, what I said was it effected my thinking, not change, that implies a dramatic shift." Then he answered, six minutes in all, without once mentioning Deutsche Bank. He said that "the kind of changes some private actors are engaged in will have to effect the scope of our regulations."

  These regulations, he said, will be "under 165... to make sure we can implement Congressional concern."

  Inner City Press also asked Tarullo if he claimed the Fed has gotten more transparent since the financial meltdown, noting the Fed's recent denial in full of access to over 2000 pages responses to an Inner City Press FOIA request.

  Here now is an online copy of the Fed's FOIA denial

  Tarullo, which has previously heard of FOIA problems at the Fed, said he didn't know which FOIA request was referred to, then answered about administrative rule making. He said "for rule making, we get comments" and now distinguish "unique comments -- that is, not form letters."

He said there have been "17,000 Volcker Rule submissions... Absorbing all the comments is a substantial undertaking. If it takes longer to give due respect to comments," so be it.

  The FOIA request referred to was about Capital One's compliance, since the Fed's approval order on Capital One - ING DIRECT, including with Capital One's commitments to open branches and lend $180 billion" and about Capital One firing 490 assistant branch managers despite having made representations about increasing service.

  Amazingly, the Fed found 2200 pages responsive but provided not a single document, instead saying that "your request is denied in full," including as to each and every record "regarding with the Approval Order" of Capital One - ING DIRECT. ICP commented extensively on that application, as did NCRC, and the Fed's order cites the comments and Capital One's responses and representations. Now the Fed denies access to every record about compliance with the representations. 

 

Inner City Press' request included a specific reference to branch closings, for example, which are not confidential. Additionally, information submitted and reviewed about compliance with Capital One's representations would contain HMDA data, which is public and not withholdable.

Even since the April 10 request, ICP on April 22 submitted to the Fed information about an admission by Capital One of fraud on consumers:

"Earnings power of HSBC card deal to drown out near-term noise, says Capital One CEO," April 19, 2012

Fairbank also reported a $75 million accrual for customer refunds stemming from what he described as 'instances in which phone sales people didn't adhere to our scripts and sales policy when cross-selling products to our credit card customers.' He said it is very important that Capital One ensures customers bought the unspecified products in the manner the company intended."

Just because it SOUNDS like the responsive records might include some withholdable information, it is outrageous to withheld each and every responsive record, citing the catch-all Exemption 8. The Fed is increasingly abusing and evading FOIA. Watch this site.

In 2011 Subprime Lending Continued Disparate at Citi, Chase & Wells as Fed Lax

By Matthew R. Lee

SOUTH BRONX NY, April 2, 2012 -- In the first study of the just-released 2011 mortgage lending data, Inner City Press and Bronx-based Fair Finance Watch have found that banking behemoths Citigroup, JPMorgan Chase and Wells Fargo continued with high cost loans and disparities by race and ethnicity in denials and higher-cost lending.

2011 is the eighth year in which the data distinguishes which loans are higher cost, over a federally-defined rate spread of 1.5 percent over Treasury bill yields.

The just released data show that Citigroup confined African Americans to higher-cost loans above this rate spread 3.38 times more frequently than whites in 2011, worse that its 2.25 disparity in 2009, Fair Finance Watch has found.

Citigroup confined Latinos to higher-cost loans above the rate spread 2.42 times more frequently than whites in 2011, worse that its 1.72 disparity in 2009, the data show.

“Even after the bailouts, lending disparities grew worse and not better," said Fair Finance Watch. "Regulatory laxity, at least on fair lending, has continued despite the financial meltdown caused by predatory lending."

For JPMorgan Chase, the disparity for African Americans in 2011 was 2.21; for the largest of Wells Fargo's many HMDA data reporters, the disparity for African Americans in 2011 was 2.28.

"The Federal Reserve is becoming more and more bank-friendly, including with the recent nomination of former hedge funder and Deutsche Bank official Jay Powell for a seat on the Federal Reserve Board. It is still not clear if the new Consumer Financial Protection Bureau will get to this problem," Fair Finance Watch continued. "The disparities in the 2011 mortgage data of these banks further militate for aggressively watchdogging and breaking up these banks."

Regional bank Keycorp in 2011 confined African Americans to higher-cost loans above the rate spread 1.70 times more frequently than whites -- more than a third of Keycorp's loans to African American were rate spread or high-cost loans.

U.S. Bancorp in 2011 confined African Americans to higher-cost loans above the rate spread 2.13 times more frequently than whites, worse than in 2010.

Regions Financial in 2011 denied applications by African Americans 2.44 times more frequently than whites.

Comerica, not yet including its Texas-based purchase Sterling, in 2011 confined African Americans to higher-cost loans above the rate spread 2.81 times more frequently than whites

Growing Southern bank BB&T, even absent its subprime unit Lendmark, in 2011 confined African Americans to higher-cost loans above the rate spread 2.59 times more frequently than whites

Fair Finance Watch has continued its enforcement project in the South, most recently raising issues under the Community Reinvestment Act on BB&T's proposal to acquire BankAtlantic. In response, the Federal Reserve Board extended the comment period. Much of BB&T's application has been blacked out or withheld in full, which Inner City Press is challenging under the Freedom of Information Act.

Another acquisition, that of MetLife's deposits by General Electric, has proceeded stealthly with the Office of the Comptroller of the Currency belatedly stating that it plays no role in the review since GE is using a Utah-based "non-bank bank." These loopholes, like GE, played a role in the subprime meltdown.

Inner City Press & FFW have also joined others concerned with Deutsche Bank's decertification as a financial services holding company to escape Dodd Frank including its capital adequacy rules -- particularly given Deutsche Bank's role in the subprime scandal, as lender, securitizer and now major forecloser.

Expect these issues to be increasingly scrutinized by Occupy Wall Street and others, given their link to the global meltdown.

The Home Mortgage Disclosure Act required that the 2011 data be provided by March 31, following March 1 joint requests by Fair Finance Watch and Inner City Press. Several banks did not provide their data by the deadline, most notably Capital One and Bank of America, despite confirming receipt of the request. Further studies will follow: watch this site.