Inner City Press: cit group

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Tuesday, October 13, 2015

Federal Reserve Let CIT Group Run Clock on FOIA Documents Responsive to Inner City Press' FOIA Request, Like Goldman Now to Oct 30

By Matthew R. Lee

NEW YORK, October 13 -- The lack of seriousness in US bank regulation grows from the relatively smaller to the largest banks, with CIT and OneWest a major, and Goldman Sachs the most recent, example. Goldman is trying to speed through Federal Reserve approval to buy $16 billion in insured deposits from GE Capital, and the Fed so far seems bent on helping. It began by withholding basic parts of Goldman's application, click here to view.

Inner City Press still has a pending Freedom of Information Act request; Fair Finance Watch and others, including NCRC, asked the Fed to extend its comment period, which has now been done, until October 30, with the Fed's FOIA response to Inner City Press due on October 16.

In the interim, Inner City Press is today publishing the Federal Reserve's communications with the CIT Group's outside counsel, which shows how the release of public documents is allowed by the Fed to be delayed. CIT made disingenuous requests for confidential treatment of information that could not be withheld, without any repercussion. They were rewarded with FOIA appeal denials by Fed Governor Jay Powell; now Goldman is trying to withhold information that should be public. Will there be any repercussion or accountability? Watch this site.

Revealed: Federal Reserve Asking CIT Group About Inner City Press FOIA Request: Now Goldman Sachs? by Matthew Russell Lee

After requests from Fair Finance Watch, NCRC and other NCRC members, the Federal Reserve belatedly responded:

"The Federal Reserve Board on Monday announced that the public comment period has been extended through October 30, 2015, on the application by Goldman Sachs Bank USA, New York, New York, to assume certain liabilities and acquire certain assets of GE Capital Bank, Holladay, Utah, under section 18(c) of the Federal Deposit Insurance Act... The original comment period, which closed on September 19, 2015, is being extended to allow interested persons more time to review the proposal and to provide comments... Comments regarding this application must be received at the Federal Reserve Bank of New York (Attention: Bank Applications Officer, 33 Liberty Street, New York, New York 10045; comments.applications@ny.frb.org) or the Office of the Secretary of the Board (20th Street and Constitution Avenue, NW, Washington, D.C. 20551) on or before October 30, 2015."

Just last week, the Fed told Inner City Press a comment it submitted on Goldman Sachs, with new Home Mortgage Disclosure Act data, was "untimely" --

"Dear Mr. Matthew Lee, Executive Director Inner City Press/Fair Finance Watch

We acknowledge receipt on September 22, 2015 of your email dated September 22, 2015 ("Comment Letter"), commenting on the application filed by Goldman Sachs Bank USA... The public comment period for this application ended on September 19, 2015. Since your Comment Letter was received after the end of the public comment period, it will not be made a part of the record of this application unless the Board in its sole discretion determines to consider your late comments. However, you previously submitted timely comments that have been made part of the application record that the Board will consider."

Now it must be considered. reviously, the Federal Reserve wrote to Inner City Press, extending its own time to respond under FOIA until October 16 -- all while maintaining that the comment period closed on September 19:

"Dear Mr. Lee, On September 2, 2015, the Board of Governors ('Board') received your electronic message dated September 2, pursuant to the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, for the entirely of the “Application by Goldman Sachs Bank USA for the Acquisition by Purchase and Assumption of Certain Deposit Liabilities and Certain Very Limited Non-Financial Assets of GE Capital Bank,” and for all records.... Pursuant to section (a)(6)(B)(i) of the FOIA, we are extending the period for our response until October 16, 2015, in order to consult with two or more components of the Board having a substantial interest in the determination of the request.

"If a determination can be made before October 16, 2015, we will respond to you promptly. It is our policy to process FOIA requests as quickly as possible while ensuring that we disclose the requested information to the fullest extent of the law."

But what about the request to extend the comment period? Is the Fed extending its time to rule on that, as well?

Inner City Press made a similar request to the New York State Department of Financial Services and on September 25, some information was released -- not enough -- and the NYS comment period was extended for 30 days.

NYSDFS Senior Attorney George Bogdan wrote:

"Dear Mr. Matthew Lee: Your FOIL request has been granted in part. My response letter and 2 Goldman Sachs documents are attached to this e mail. Also note that the comment period for the Goldman Sachs application has been extended by 30 days. An official notice for the extension will be posted online in the DFS Weekly Bulletin for the week ending September 25, 2015."

While Inner City Press prepares a FOIL appeal, why hasn't the Federal Reserve even ruled on its FOIA request, and extended the comment period like its state counterpart? We'll have more on this.

On September 22, 2015, the Federal Reserve belatedly released the 2014 Home Mortgage Disclosure Act data. A quick review of the lending of Goldman Sachs Bank USA in the New York City Metropolitan Statistical Area shows the Goldman Sachs focus which should require publish hearings in this case.

Fair Finance Watch, hours after the data was released, has commented to the Federal Reserve at the highest level that "in the New York City MSA in 2014, for conventional home purchase loans (Table 4-2), Goldman Sachs Bank USA made 45 such loans to whites, only two to African Americans and only one to a Latino. For refinance loans (Table 4-3), Goldman Sachs Bank USA made 16 loans to whites and NONE to African American or Latinos. This is inconsistent with the demographics of the New York City MSA and with other lenders' records; it further militate for the timely requested public hearings."

Goldman Sachs has purported to respond to the comments of Inner City Press / Fair Finance Watch by releasing a small amount of the withheld information, and arguing that what the wider Goldman Sachs does cannot or will no be considered by the Federal Reserve on this Bank Merger Act application by Goldman Sachs Bank. We've put Goldman Sachs' response online, here. It says:

“FFW states that the audio released by examiner Ms. Carmen Segara requires an extension of the comment period and a public hearing... GS Bank believes the issue is outside the scope of the statutory factors for Board consideration under the Bank Merger Act... Goldman Sachs Bank USA ('GS Bank') hereby submits its response to the three comment letters, submitted on September 2, September 3 and September 9, 2015 (the 'Comment Letters'), by the Inner City Press's Fair Finance Watch ('FFW')....

"FFW makes accusations of 'predatory practices' in the 'mortgage field' and 'municipal finance,' and states that there are a number of compliance settlements that must be reviewed in connection with the Application. FFW references several articles related to lawsuits, settlements and other events, all but one of which involve Goldman Sachs but not GS Bank. GS Bank respectfully submits that such comments are not substantiated by specific arguments or facts. GS Bank notes that none of the articles relate to GS Bank itself, and believes these issues are outside the scope of the statutory factors for Board consideration under the Bank Merger Act.”

Goldman Sachs is arguing that the acts of a parent company cannot be considered when its bank applies to buy ($16 billion) in insured deposits, an absurd argument. FFW has submitted another comment to the Fed, including that

"ICP has received by mail from Goldman Sachs' counsel a purported response which claims that issues ranging from conflict of interest and under-regulation by the FRB (evidenced for example by the audio leaked by whistleblower Carmen Segarra) is not cognizable under the Bank Merger Act - an absurd argument. The FRB would be the decision maker, therefore such issues must be addressed.

"Goldman Sachs cavalierly states that since it withdrew some of its indefensible requests for confidential treatment of its application, that issues is resolved. It is not - too much is still being withheld. Significantly, Goldman Sachs has offered no explanation of the specious requests for confidential treatment it made, denying commenters access to information during the comment period. As others now argue, the comment period would be extended and hearing held."

Inner City Press will be covering this wider National (Community Reinvestment Coalition) protest, in which it joins; it has also submitted more comments to the New York State regulator, in a proceeding currently slated to come to a head on September 28, the first day of the UN General Assembly debate.

Goldman Sachs' Response to Inner City Press / Fair Finance Watch Comments on GE Capital Application, Sept 1... by Matthew Russell Lee

As Inner City Press exposed last month, Royal Bank of Canada jumped the gun and began doing business with City National Bank without any Federal Reserve approval (see Los Angeles Times, here.)

Now, even as New York regulators says their comment period on Goldman Sachs' GE Capital proposal extends at least through September 28, Goldman has published fine print notices in the New York Post and a newspaper in Utah saying the Federal Reserve will stop listening on September 19.

Really? After the Fed made Goldman Sachs a bank holding company with no public comment period at all, so Goldman could get a bail-out? After the Fed's coziness with Goldman Sachs was again demonstrated, by the audio taped by then-Fed examiner Carmen Segarra?

Inner City Press immediately submitted a Freedom of Information Act request for all of Goldman Sachs' GE Capital application and related records. The Federal Reserve has provided a heavily redacted copy, on which Inner City Press / Fair Finance Watch has commented to the FRB in Washington:

"Among many other things, Goldman Sachs believes it can withhold the volume of deposits it seeks to acquire from GE Capital Bank, WHAT is seeks to acquire (and what not to acquire) from GE Capital Bank, its number of employees in Utah, the contact people on its application, the number of non profit organizations it tells the FRB it serves on the board of -- presumptively public -- and even the NAMES of the exhibits it seeks to withhold entirely. This is abusive and unprecedented and the FRB must, in response, have the comment period begin again. Otherwise, applicants only benefit by making absurd and abusive requests for confidential treatment. There is much more to be said, including at the public hearings ICP is requesting, but it is imperative that the Board act on this as quickly as possible."

Goldman Sachs' Heavily Redacted "Confidential" Application to the FRB to Acquire GE Capital Bank Deposits by Matthew Russell Lee

When Goldman Sachs became a bank holding company literally overnight in 2008, Inner City Press / Fair Finance Watch and others including NCRC asked the Fed how this was done with no public comment period at all.

The answer, it seems, is to be found in the audio leaked by Carmen Segarra of the Federal Reserve, showing further Fed favors for Goldman Sachs.

With this history, and Goldman's history in predatory lending with Litton Servicing and as an underwriter, see Occupy Wall Street video here, and UN / migration connection here, it seems clear that the Fed must hold public hearings on Goldman Sachs' GE Capital application, when it is filed.

But with the Federal Reserve, you can never be too sure, or too careful.

When Community Bank System of upstate New York filed with the Fed nine answers to questions asked after Inner City Press' challenge, it tried to withhold fully eight of the nine responses. More here.

Inner City Press immediately filed a Freedom of Information Act request for the whole submission - and even the Federal Reserve saw through Community Bank System's absurdly -- and tellingly -- overbroad withholding, releasing all but one part of one of the eight withheld responses. But since then, all the Fed has done is seek a mere antitrust control commitment.

Here's is the Federal Reserve's letter to Inner City Press granting most of its FOIA request:

Freedom of Information Act Ruling Rejecting Community Bank System Withholding 8 of 9 Responses on Oneida Ap... by Matthew Russell Lee

here is the now unredacted version of Community Bank System's submission.

Unredacted Version of Community Bank System's Responses on Oneida, After ICP's FOIA Request by Matthew Russell Lee

We'll have more on this.

Background: The largest bank merger recently proposed, that of Royal Bank of Canada and affluent-focused Los Angeles-based City National Bank, has since April been the subject of a Community Reinvestment Act challenge by Fair Finance Watch.

The LA Times has reported on the "letter from the Fed [which] asks the banks to respond to questions raised in written comments by [FFW]. Spokesmen for the banks declined to comment.... Fair Finance Watch, a New York advocacy group for minorities, questioned a deal between the banks in a June 11 comment letter to the Fed."

Inner City Press first put that Fed letter online, here; then Canada's National / Financial Post reported without credit it had "obtained" it.

By contrast, in the pending proposal of Community Bank System - Oneida, the Syracuse Post-Standard disclosedthat "Inner City Press forwarded the letter to news outlets. Some of the Fed's questions focus on whether Community could improperly control matters at Oneida in advance of the acquisition. Community is working on Fed's questions, said Hal Wentworth, Community's senior vice president for retail banking."

One common theme is that non-control (and therefore antitrust) laws are being violated. One difference is that Community Bank System does comment to the media -- if only to blame the messenger -- while larger RBC and CNB do not. Arrogance?

On Community Bank System's blaming the messenger, FFW has commented to the Fed that it will "will comment again when Community Bank System I has provided a copy of its response to the FRS' questions of July 13. Beyond the CRA and impermissible “control” questions raised therein, we wish at this time to raise the issues that, in a public response to ICP's comments, Community Bank System's SVP for retail banking said the following, in a prepared statement no less:

'In a statement today, Hal Wentworth, Community's senior vice president for retail banking, said that Inner City Press is not a local group and pointed out that letter was the only one filed on the Oneida deal. "This activist does not do business with either Oneida or Community Bank."'

If it would be inappropriate for Community Bank System to comment on or disclose information about its customers, in this context the same applies to the above-quoted, which, separately, is reminiscent of human rights abusing countries emphasizing where the rights groups who study and report on them are based."

Now Community Bank System is trying to withhold eight of its nine responses; Inner City Press is challenging this under the Freedom of Information Act, comparing Community Bank System's outrageous withholding at the Fed with other banks, and with Community Bank System's to the OCC, more here.

Friday, February 6, 2015

With CIT OneWest Proposed Merger Under Fire, Now Public Hearing Feb 26 by Federal Reserve & OCC

By Matthew Russell Lee

UNITED NATIONS, February 6 -- The US government's ongoing corporate bailout following the 2008 meltdown triggered by predatory lending continues to reverberate in one of the largest proposed mergers of 2014 now into 2015.

Now on February 6, a public hearing has been announced:

"The Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) on Friday announced a joint public meeting on the proposal for CIT Group, Inc., Livingston, New Jersey, to acquire IMB Holdco and its subsidiary, OneWest Bank, National
Association, both of Pasadena, California. The proposal also includes the merger of CIT Bank into OneWest Bank.

"The purpose of the meeting is to collect information relating to the convenience and needs of the communities to be served, including a review of the insured depository institutions’ performance under the Community Reinvestment Act. The agencies also will consider and collect information on other factors in making a decision on the application, including the effects of the proposal on the stability of the U.S. banking or
financial system, the financial and managerial resources and future prospects of the companies and banks involved in the proposal, and competition in the relevant markets.

The public meeting will be held at the Los Angeles Branch of the Federal Reserve Bank of San Francisco, 950 South Grand Avenue, Los Angeles, California, on Thursday, February 26, 2015, beginning at 8:00 a.m. PST."

On December 22, pressing for approval of its application to acquire OneWest, CIT told the Federal Reserve, "CITB and OWB are not yet able to provide specific details about the expanded Community Reinvestment Act portfolio because this will be based, in part, on input from CITBNA’s to-be-formed Community Development Advisory Board following the closing of the Transaction."

As Inner City Press / Fair Finance Watch said at the time, that's basically saying, approve our merger (on which the Fed is required to consider CRA), and THEN we'll tell you about CRA.

Now on February 5, CIT Group has submitted a "revised" CRA Plan to the Federal Reserve. Inner City Press has put the document online, here.

Meanwhile, on the long-pending application by M&T to acquire Hudson, Inner City Press / Fair Finance Watch on February 5 submitted into the record before the Fed the complaint filed in the US District Court for the Southern District of New York charging M&T with discrimination in lending, adding "It is unreasonable and inappropriate for the Federal Reserve System to ignore or refuse to receive into the record all information since the comment period close so long ago." We'll see.

The CIT - OneWest context: here is an email that OneWest CEO Joseph Otting sent to Wall Street and other financiers, to lobby the Fed, h/t CRC:

From: Otting, Joseph M [at] owb.com
Sent: Wednesday, January 07, 2015 5:00 PM
Cc: Haas, Alesia Jeanne; Tran, Cindy; Kim, Glenn
Subject: Support For OneWest Bank

Dear Friends,

We were excited to announce on July 21, 2014, that IMB HoldCo LLC, the parent company of OneWest Bank entered into a merger agreement with CIT Group Inc. As part of the applications for regulatory approval of the transaction, our regulators are interested in the perspectives of the public. We are writing you to seek your support of the Bank and pending merger. This merger, if approved, would create the largest bank headquartered in Southern California with a full suite of banking products and services, which will allow us to better serve our customers. We would retain and grow jobs and are committed to continuing and expanding our efforts to serve the economic and development needs of our community. I would like to ask you to take a moment to click on the link below and submit a letter of support adding any of your own words or thoughts.

Please submit your letter by clicking here, or by visiting our website at www.OneWestBank.com/merger-support (if the link isn't clickable or part of the link is cut off, please copy and paste the entire URL into your browser's address bar and press Enter)

Thank you for your support. Best wishes for a successful 2015 and please call on me if I can ever be of assistance.

Joseph M. Otting
President and CEO
OneWest Bank N.A.
888 East Walnut Street
Pasadena, CA 91101

Now Inner City Press / Fair Finance Watch, along it's sure with the California Reinvestment Coalition, has submitted this to the Fed demanding that public hearing in fact be held, after what an independent bank consultanttold Bloomberg News is "unusual" outreach to Wall Street contacts by OneWest. What will the Fed do?

The Fed had asked CIT to "provide the final version of the document 'CIT Bank N.A. Community Reinvestment Act Plan,' the draft of which was included as Annex C to the letter responding to the public comments submitted to the Federal Reserve Bank of New York."

One question is, will the Federal Reserve Board in this case and in others coming up, and fast, require the actual submission for CRA plans and allow for public comment on them?

On December 18 CIT gave the Fed statements from the FDIC, in essence not to worry about the Loss Share Agreements OneWest has won from the FDIC:

"OWB acquired assets from three failed banks — IndyMac Federal Bank, FSB ('IMFB'), First Federal Bank of California, and La Jolla Bank, FSB (the 'Failed Banks'). The FDIC entered into Shared-Loss Agreements with OWB in these acquisitions with respect to certain of the acquired assets."

Now the regulators say, don't worry as CIT seeks to take these loss-shares over, although their value will not for now be disclosed:

“The FDIC's Division of Resolutions and Receiverships does not release shared-loss payment information on individual acquirers or assets because those records often contain material, non-public information, and their release could harm the negotiating posture of the acquirer with respect to a particular borrower or asset, thereby potentially increasing the amount of a covered loss to the FDIC.”

This is called stonewalling, or a cover-up. We'll have more on this.

* * *

Back on November 17, four days before a rare Senate hearing on the regulatory capture of the Federal Reserve, the Federal Reserve Bank of New York posed a series of questions to CIT Group, trying to buy OneWest.

CIT provided Inner City Press with a copy of its answer to the Fed's November 17 questions (answers to the Fed's November 25 questions have not yet been provided.)

CIT says "OneWest has discussed the Transaction with staff of each of FannieMae and FreddieMac (the 'GSEs') and will be filing an application in connection with the change of control of OWB in order for OWB to continue as a seller/servicer for the respective GSE. OneWest is now in the process of preparing the appropriate applications, which it expects to submit as soon as possible, and no later than year-end."

But will OneWest provide notice of these applications to the GSEs to the groups which have timely protested its applications to the Fed and OCC? The OCC heard much about OneWest, and CIT, at a December 2 EGRPRA hearing in Los Angeles. Why not just hold public hearings on this proposed mega-merger? And on another one, announced but not yet applied for?

On November 21, Federal Reserve Bank of New York President Dudley described anti revolving door safeguards and a desire for "good culture" at banks.

Good culture? How then did the predatory lending meltdown take place? And anti-revolving door? How can it be, then, that a former Federal Reserve Legal Division supervisor is writing for BB&T's deals to those who used to work under her?

As soon as Dudley left the stand, a more serious anti revolving door protection was proposed.

Dudley was asked about Goldman Sachs' warehouses, and JPM Chase's abuse of the energy markets, but didn't directly answer. Since then he has toured The Bronx - we'll see what if any difference it makes.

The Fed on November 17 asked for answers to four questions it sent to the CIT Group, with a copy to Inner City Press.

Inner City Press and others have challenged CIT's application to acquire OneWest; as previously set forth below, Inner City Press / Fair Finance Watch has been challenging BB&T, showing the disparities in BB&T's lending record.

On BB&T's application to acquire 41 branches in Texas from Citibank, Fair Finance Watch showed the FDIC for example that for conventional home purchase loans in the Houston Metropolitan Statistical Area in 2013, BB&T made 65 such loans to whites, and NONE to African Americans.

The FDIC's Acting Deputy Regional Director for Compliance replied that "the FDIC deems your correspondence to constitute a protest."

BB&T through law firm Wachtell, Lipton, Rosen & Katz submitted a response which admitted that in Houston “the percentage of Mortgage Loans made to low and moderate income borrowers during the first six months of 2014 was also below the 2013 aggregate industry average.” BB&T Response at Page 11, which also notes at 10 that at least one of the Citibank branches BB&T seeks to acquire, it would shutter.

And so on November 10 Fair Finance Watch submitted more extensive comment opposing BB&T's application to acquire Bank of Kentucky, including that bank's disparities in the Cincinnati regional area and BB&T's in the Louisville MSA, where in 2013 BB&T made 229 conventional home purchase loans to whites, and only 12 to African Americans and only six to Latinos, while denying 41.7% of applications from Latinos versus only 17.5 of application from whites, a disparity of 2.38 to 1.

How will the Fed's precedent(s) on CIT - OneWest be applied?

The secret recordings of then Federal Reserve examinerCarmen Segarra about Goldman Sachs and regulatory capture have given rise to calls for oversight hearings by at least two US Senators. Their hearing will now occur on November 21. Relatedly, BB&T's response from the law firm of Wachtell, Lipton, Rosen & Katz is penned by a former Federal Reserve Board Legal Division supervisor.

On November 7, Inner City Press was sent a redacted copy of CIT Group's "Cash Flow Projections" and "Risk Management" from its application to acquire OneWest and go above the $50 billion, Too Big Too Fail threshold. Inner City Press immediately put the partially redacted document online on its website, here.

First, how could such information be withheld for a bank seeking to become Too Big To Fail?

Second, how could the Federal Reserve insist that the comment period is closed, while information that was improperly withheld is belatedly released?

On October 10, Inner City Press was sent heavily redacted copies of two letters from the CIT Group concerning its proposed acquisition of OneWest to the Federal Reserve Bank of New York, supposedly in compliance with the Freedom of Information Act - nowuploaded to Scribd here and here.

On October 18, Inner City Press & Fair Finance Watch challenged these redactions under FOIA, and submitted comments on CIT's mockery of the Community Reinvestment Act to both the Federal Reserve and the Office of the Comptroller of the Currency.

CIT sought to withhold even its CRA plan. Inner City Press raised the issue to Fed Chair Yellen in Washington - and on October 15, the Federal Reserve called Inner City Press and left a voice mail to say its request for extension of the comment period, because of the incorrectly withheld CIT documents, has been granted until October 22.

While appreciating the Fed's comment period extension, the context and public policy questions recently raised must be noted.

For now, on October 18 Inner City Press & Fair Finance Watch submitted a fourth timely comment to the Fed, critiquing the belatedly released CRA Plan, and demanding release of still - withheld information:

The CIT CRA Plan which CIT improperly withheld states, in Section III, that “the Bank has lending and support operations primarily located in Florida, New York and New Jersey” -- then states its CRA Program is in Salt Lake City, Utah and “the western United States.”

This is makes a mockery of CRA, explicitly separating the bank's lending operations from its “CRA” operations.

In Section IV, CIT makes claims about outreach and “public participation” in its CRA Plan - but in outreach and participation excluded the communities in which CIT has its lending operations (FLA, NY and NJ) and from which, on information and belief, it collects insured deposits.

This is makes a mockery of CRA, explicitly separating the bank's deposit taking from its “CRA” operations and outreach. See limited list of contacts in Appendix C, and proof of publication in (only) the Salt Lake Tribute and Deseret News.

Even in its artificial limited assessment area, CIT's “New CRA Assets” are less than 1% of its Assets.

While still improper, the above provide a motive for CIT's attempt to withhold its CRA Plan from the public...

As to CIT's October 8 letter, ICP has already timely commented “there is also the question of the agreement the FDIC reached with IndyMac / OneWest, and whether wannabe SIFI CIT would assume it, as a windfall. These are important questions militating for both the required extension of the comment period, and for public hearings.”

In the October 8 letter, CIT begins a sentence on page 3 “Clawback provisions exist for the First Fed and La Jolla portfolios [REDACTED.]” CIT also redacts, on page 6, information related to the OnWest / IndyMac Consent Order; HAMP (Page 7); deposits collected over the Internet (Page 8); Lending (Page 9); Governance and Risk Management (page 10-12); and Resolution Plan (Page 12). CIT also heavily redacts what it calls “confidential questions” (pages 14-16), and exhibits. This information must be released, and the comment period extended. In an abundance of caution, ICP has submitted a FOIA request to this effect.

The Fed's secrecy is endemic. The head of the FRBNY since 2009, William Dudley, has insisted that supervision by the Fed and its regional banks is "completely in the public interest." He cites, in support of this, something he calls "horizontal" supervision, which to many has the context of being supine.

And the Federal Reserve Banks are, in fact, owned by the banks they ostensibly regulate. And as Inner City Press has previously reported, while merger applications go in the first instance to the Federal Reserve Bank, they have only the power to approve, not deny or even impose conditions, the applications.

Horizontal, indeed.

This horizontal position is the rule, not the exception. Inner City Press routinely submits Freedom of Information Act requests for communication between the Fed and banks applying for mergers.

Most recently, the Fed has extended its deadline for responding to Inner City Press' request on CIT - OneWest, on which it purported to close its public comment period on September 24:

FOIA Request No. F-2014-00380

Dear Mr. Lee,

On August 27, 2014, the Board of Governors ("Board") received your electronic message dated August 26, pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552... On August 28, 2014, the Board’s Freedom of Information Office made an interim production of responsive documents consisting of the public portion of the application by CIT Group Inc. and Carbon Merger Sub LLC to acquire and merge with IMB HoldCo LLC, and thereby indirectly acquire voting shares of OneWest Bank... Pursuant to section (a)(6)(B)(i) of the FOIA, we are extending the period for our response until October 9, 2014, in order to consult with two or more components of the Board having a substantial interest in the determination of the request. If a determination can be made before October 9, 2014, we will respond to you promptly.

How can the public be shut out before it has the basic information it has requested? Now, only because CIT mis-published public notice, the Fed's comment period has been extended to October 10. (A new Office of the Comptroller of the Currency comment period has opened, through October 24.)

The Federal Reserve Board has asked CIT some questions, including “discuss CIT Group's plans to manage OneWest Bank's mortgage servicing assets and nontraditional mortgage loan portfolio." Nontraditional mortgages - that would be, subprime.

Tellingly, when lawyers leave the Federal Reserve's Legal Division, many go to white shoe law firms that submit bank merger applications to the same people they until recently worked with or supervised.

Inner City Press, Bronx-based Fair Finance Watch and NCRC have repeatedly raised this to the Fed, without meaningful response.

So here's hoping that Carmen Segarra's courage, in secretly making the recordings and then releasing them, leads to increased oversight of and reform at the Fed.

The problem is, while some in Congress are willing to criticize the Fed, the real parties in interest here are the largest banks and investment banks in the country. Who in Congress will directly challenge those? Watch this site.

Thursday, February 5, 2015

With CIT OneWest Merger Under Fire, It Submits Revised Community Reinvestment Act Plan to Federal Reserve, Ears Closed on M&T

By Matthew Russell Lee

UNITED NATIONS, February 5 -- The US government's ongoing corporate bailout following the 2008 meltdown triggered by predatory lending continues to reverberate in one of the largest proposed mergers of 2014 now into 2015.