Showing posts with label ncrc. Show all posts
Showing posts with label ncrc. Show all posts

Thursday, September 24, 2015

As Hudson City Pays Discrimination Tax to Try to Revive M&T Deal, Goldman Sachs Refi-ed Only Whites in NYC, Wants to Buy GE Capital's Deposits


By Matthew R. Lee
NEW YORK, September 24 -- The lack of seriousness in US bank regulation grows from the relatively smaller to the largest banks, with Hudson City, trying to be bought by M&T, and Goldman Sachs trying to buy GE Capital Bank the most recent examples. 
  Fair Finance Watch has raised Hudson City's disparate lending record to the Federal Reserve throughout the stalled review of the M&T proposal, stating to the Fed that "Hudson City's record was even worse in 2013 than in the 2011 data cited above. In the NYC MSA for conventional home purchase loans, while Hudson City made (only) five such loans to African Americans in 2011, this fell to only FOUR such loans to African Americans in 2013, compared in 2013 to 427 such loans to whites: a more than one hundred to one ratio, totally out of step with the demographics and other lenders' records."
  Now Hudson City has announced a $32 million settlement with the Justice Department and Consumer Financial Protection Bureau. But Fair Finance Watch and Inner City Press, reviewing the just-released 2014 data, find that Hudson City did WORSE in 2014, even while it knew its deal was stalled.
  In 2014 in the New York City MSA, Hudson City made 233 home purchase loans to whites - and only ONE to an African American, denying African Americans' application 4.16 times more frequently than those of whites.
 In this context, is the $32 million anything more than a discrimination tax? Inner City Press and Fair Finance Watch have now raised to the Fed: watch this site.
  Meanwhile 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; opposition now comes from NCRC and members nationwide. It began by withholding basic parts of Goldman's application, click here to view.
  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 Sach 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.

 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."
  
  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:


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.

   
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Tuesday, July 21, 2015

As Federal Reserve Approves CIT-OneWest, Transparency Lacking, Dominguez on Way


By Matthew R. Lee
NEW YORK, July 21 -- When the US Federal Reserve approved the merger of CIT and One West on July 21, it was a year minus a day after the deal was announced to the public. But as Inner City Press discovered using the Freedom of Information Act, the Fed met with CIT about the deal before it was announced, and withheld information throughout the review, through approval. See FOIA response, here; see NCRC member CRC's BadBankMerger.com, here.
  While as reported below the Fed is now at least asking some questions about the largest bank merger recently proposed, that of Royal Bank of Canada and affluent-focused Los Angeles-based City National Bank (whichsince April has been the subject of a Community Reinvestment Act challenge by Fair Finance Watch) there are more and more questions about the Fed's transparency.
  So which way will the Fed go: more or less transparent? More or still less attuned to the consumer lending issues which triggered the meltdown? On July 20 the Obama administration announced its nomination for a seat on the Fed of
Kathryn M. Dominguez, a Professor at the University of Michigan with previous stints at the IMF and the Fed. 
  U Mich puts online several of Dominguez' publications,here, ranging from Argentina to Japan, but very little about consumer lending, much less the Community Reinvestment Act or fair lending. We'll have more on this.
 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 another pending proposal, CBSI - Oneida, the Syracuse Post-Standard disclosed that "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 CBSI does comment to the media -- if only to blame the messenger -- while larger RBC and CNB do not. Arrogance?
 On CBSI's blaming the messenger, FFW has commented to the Fed that it will "will comment again when CBSI 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, CBSI'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 CBSI 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."
  On June 6, FFW submitted into the record before the Fed:
"RBC, City National off to friendly start ahead of $5.4B takeover Globe and Mail, May 26, 2015, quoted from below.
  Now the Federal Reserve has asked RBC:
"A commenter alleged that in May 2015 RBC and CNB collaborated to extend credit to a customer of CNB.  Please address this claim. In your response, discuss in detail in detail whether RBC exercises a controlling influence over the management or policies of CNC or CNB without prior approval of the Board. In addition, discuss whether, since entering into the proposed transaction, RBC and CNB have collaborated, or plan to collaborate, on extending credit to any other borrower, and describe the nature and circumstances of those collaborations."
  There are other problems, including RBC's non-compete agreement with PNC Financial Services. But this gun-jumping should be fatal to the proposed merger. FFW put this into the record before the Fed:
“Royal Bank of Canada won’t complete its $5.4-billion (U.S.) purchase of Los Angeles-based City National Bank for months, but the two banks are already getting a jump on doing business together.

City National chief executive officer Russell Goldsmith got a call earlier this month from a long-time customer who wanted speedy approval of a loan worth hundreds of millions of dollars to do an acquisition.

“But he was familiar with RBC, knew about the merger and asked whether RBC could help get this done.”“The client knew it was an amount of money beyond what we would normally lend,” the 65-year-old Harvard-educated lawyer said in an interview.

Working closely with Blair Fleming, head of RBC’s U.S. capital markets unit, the two banks signed off on the loan within 72 hours.

'It’s typical of what we do,” explained Mr. Goldsmith, whose grandfather co-founded City National in 1954 and whose father, Bram, is chairman emeritus. “We have a relationship [with the client]. …We already had the financial information. So we could do what we needed to do. On top of it, having RBC Capital Markets come into it meant we could do it with greater scale.'”
  FFW has told the Fed: This is entirely inappropriate and the FRB must act, publicly.  The Federal Reserve sent the letter.


 Please note that RBC's belated release of some documents it improperly sought confidential treatment for does not resolve ICP's FOIA request - we are awaiting an FRB ruling in order to, if need be, appeal. The comment period, including for the reasons set forth above, must be extended and on the current record, the application must be denied and enforcement action(s) taken.
   The Federal Reserve Board granted FFW an extension of the comment period on the proposed merger, through June 11, FRB letter here, due to RBC improperly withholding information which was subsequently released after a Freedom of Information Act (FOIA) request by Inner City Press.
   FFW comment on June 11 - but submitted to the Fed an objection dated June 6 noting the two banks admitted they are already working together on transactions, without any authorization.
  This all comes after the M&T - Hudson City merger stalled after similar filings by FFW, NCRC and others. On Royal Bank of Canada / City National, FFW's filing to the Federal Reserve says
City National Bank is known as a bank directed at the (most) affluent. RBC is that as well:
In the New York City MSA in 2013, for conventional home purchase loans, RBC made no loans to African Americans or Latinos. It made one loan to a white applicant (for $1.8 million) and six to “race not available” applicants, for a total of over $36 million.
RBC Bank (Georgia), in the Atlanta MSA in 2013 for conventional home purchase loans made one such loan to an African American, six to whites, and none to Hispanics. In the Raleigh NC MSA in 2013, RBC Bank (Georgia) made two loans to whites, none to African Americans or Latinos.
City National Bank, in the NYC MSA in 2013 for home purchase loans, made no loans to African American or Latino borrowers. It made 10 loans to whites - none denied -- and 35 to “race not available.” By income, there were 36 loans to upper income borrowers, and only one to the other income tranches.
City National Bank, in the Los Angeles MSA in 2013 for home purchase loans, made two loans each to African Americans and Latinos. It made fully 45 loans to whites.
City National Bank, in the Nashville MSA in 2013 for home purchase loans, made no loans to African American or Latino borrowers. It made one loan to a white borrower - none denied -- and six to “race not available.” FFW contests City National Bank's compliance with HMDA.
How is this consistent with the CRA? For the record, RBC previously bumbled in the USA with Centura and Alabama BanCorporation. Now it returns, only for the affluent. Hearings are necessary.
 Under the Freedom of Information Act, Inner City Press / FFW  submitted a
"a formal request under FOIA for the exhibits that Royal Bank of Canada has claimed are confidential and that the Federal Reserve has withheld from Inner City Press on its April 8 response to Inner City Press / Fair Finance Watch's April 4 request, including but not limited to the 'RBC Bank (Georgia), N.A. CRA Plan,' the list of subsidiaries, information pertaining to the U.S. structure of Royal Bank."
The withholding of this CRA plan - hearkening to the Federal Reserve rejected CIT's request to withhold such a plan, and extension of the comment period and holding of public hearing(s) - is outrageous; it must be released sufficiently before any closing of the comment period such that ICP can comment on it. We are therefore requesting all of the withheld exhibits (listed below)

AND all Federal Reserve communication with or about Royal Bank of Canada or City National since July 1, 2014.

Beyond the request for communications, including emails and text messages, these exhibits:

City National Corporation Subsidiaries; Information Pertaining to the U.S. Structure of Royal Bank; Integration Framework; Due Diligence Summary; Royal Bank of Canada Organizational Chart; RBC USA Holdco Corporation Organizational Charts; City National Corporation Organizational Chart; Pro Forma Financial and Related Information; Asset Quality Information; Risk Management Information; Royal Bank of Canada BSA/AML Compliance Program; Information pertaining to BSA/AML Integration; Interconnectedness Analysis;RBC Bank (Georgia), N.A. CRA Plan; Source of Funds; City National Corporation Dividend Information; Principal Information Information Pertaining to Item 3(2) and Item 12 of Form FR Y-3F

None of this information has been provided, even the CRA plan. The comment period must be extended and on the current record, the application must be denied.

  Inner City Press previously reported that filing by FFW with the Federal Reserve against M&T's application, that Hudson City in the New York City Metropolitan Statistical Area in 2011 made only five home purchase loans to African Americans, compared to hundreds to whites while denying the applications of African Americans 3.21 times more frequently than whites.
  That 2011 data was quoted by Bloomberg News earlier this month reporting that now the Department of Justice and Consumer Financial Protection Bureau are investigating Hudson City, putting the M&T deal, also challenged by NCRC and others, in doubt. Click here for that, here for the NJ Bergen Record, also citing Inner City Press / Fair Finance Watch.
 But there's more, and its worse. FFW has filed this comparison to 2013 with the Federal Reserve:
"Hudson City's record was even worse in 2013 than in the 2011 data cited above. In the NYC MSA for conventional home purchase loans, while Hudson City made (only) five such loans to African Americans in 2011, this fell to only FOUR such loans to African Americans in 2013, compared in 2013 to 427 such loans to whites: a more than one hundred to one ratio, totally out of step with the demographics and other lenders' records.
"For refinance loans in the NYC MSA, while Hudson City in 2011 made 8 such loans to African Americans in 2011, this fell to only SEVEN such loans to African Americans in 2013, compared in 2013 to 801 such loans to whites: again a more than one hundred to one ratio, totally out of step with the demographics and other lenders' records.

"This is presumptive discrimination and the reported DOJ and CFPB investigations are entirely appropriate and should be deferred to by the FRB. What does this say, as well, about M&T's due diligence and managerial resources?"
  Why has the Federal Reserve not dismissed M&T's application?
  The Office of the Comptroller of the Currency, part of the US Treasury, is scarcely better, releasing to Inner City Press on March 9 a redacted copy of Sterling's CRA presentation, here.
 Now on April 17 the Federal Reserve has asked Sterling questions about inconsistencies in its previous responses, and about Green Campus Partners. We'll have more on this.
  See here on the CIT Group and another belated Freedom of Information Act response to Inner City Press from the Federal Reserve on February 20. Uploaded exclusively here, embedded below.
   Back on August 26, 2014, Inner City Press submitted a FOIA request to the Federal Reserve Board for CIT's application to acquire OneWest and for the Federal Reserve's communications with or about the companies since January 1, 2014.
  After Inner City Press and Fair Finance Watch repeatedly complained about the withholding even of CIT's Community Reinvestment Act plan, and after the Fed and the Office of the Comptroller of the Currency had agreed to ICP's and others' request for a public hearing, now scheduled for February 26, only on February 20 -- seven months after the request -- did the Fed provide the responsive documents, over one thousands pages.
  Many of the released pages are redacted in full, others have redacts to for example sentences referring to documents about CIT's [REDACTED]. Inner City Press has submitted a Freedom of Information Act appeal and request that the comment period be extended.
  But even as released, and exclusively uploaded today here, the document show the degree of insider treatment CIT, its CEO John Thain and its lawyers including Rodgin Cohen of Sullivan & Cromwell are given by the Federal Reserve.
   While the proposed merger was only announced to the public on July 22, 2014, it appears in Federal Reserve correspondence as far back at April 24, 2014.
  On that day, Michael Lipman of the Federal Reserve Board's Banking Supervision and Regulation (BS&R) department wrote to three others that “Based on details from the most recent CIT April BOD meeting, there is a likelihood CIT may approach FRB in the near term to discuss an acquisition of OneWest NA (Private, ~$23B in assets ). Couple points [REDACTION]. I will keep you updated as discussions develop. [REDACTION].” Page 1 of ICP upload; appealed.
   Then in June, Rodgin Cohen of Sullivan & Cromwell and CIT's John Thain arranged to meet with the Federal Reserve, to some it appears to receive a form of pre-approval of the proposal. 
   On June 24 senior Fed staff were asked to hold time to meet with Rodgin Cohen. On June 25, Lipman wrote again: 
“CIT is meeting with FRBNY (John Ricketti and others) next Monday at 11am to discuss a potentially large acquisition. CIT has yet to send a discussion deck but will have more details later this week (OneWest continues to be the assumed target: $22B out of CA). John Thain’s secretary has bee guided to me to help set up a meeting in DC and I am expecting to hear from her by Friday. That said, it is also possible that they may reach out to one of you; CPC Cheatham is under the impression they have a different contact in DC as well (he is not sure who).” Page 6 of ICP upload.
  Later that day it was said that “the meeting with be in Scott's office so space will be limited.” Scott is Scott Alvarez, the Fed's longtime general counsel.
  On June 30, the Fed's Richard Naylor wrote to Lipman, “ I wouldn’t worry about any briefing material for Scott. Most likely Rodgin will do all the talking...”
   Scott Alvarez's self-described Gate-keeper told Lipman who would come: “The Chairman and CEO of CIT and 6 other guests; 3 from One West; 1 from Wachtell, Lipton, Rosen & Katz and 2 from Sullivan and Cromwell. Total of 13 outsiders.” Page 163 of ICP upload.
    These “outsiders” sound like insiders.


  The next day the attendees were described:
Readout of Meeting on Proposed Merger between CIT and OneWest Tue 7/1/2014 12p-1p, B-4001
Outside Attenders: ~13
Executives from CIT (~7-8) included CEO John Thain, formerly CEO of Merrill Lynch
Executives from OneWest (~3) included CEO
Lawyers (~2-3) included Rodgin Cohen (Sullivan Cromwell) and a Wachtell Lipton lawyer
Board Attenders: ~10-12
  So the “outsiders” from Wall Street had more attendees that the Fed, even insider the Fed.
    The Fed's Alison Thro put it in context: “Rodgin is coming in to preview the proposed acquisition because it will be the first transaction to create a more than $50 billion institution since Dodd-Frank was enacted.”
  Also on June 30, the Fed's Elizabeth Kiser wrote to Fed economist Jacob Gramlich, “I dug a bit and found some materials on CIT’s [REDACTED].” There follow more than 100 pages of redacted material. Page 25 to 149 of ICP upload; appealed.
   By July 9, still before any public announcement by CIT, the project had been code-named Carbon / Oxygen and the Fed was reviewing (and now apparently redacting) the OneWest / Indymac / FDIC Loan Loss Agreements. These will be discussed at the February 26 public hearing, and beyond.
  Once they applied for approval and groups like Inner City Press / Fair Finance Watch, NCRC, CRC and others submitted comments in opposition, the Fed was required to follow its rules against ex parte communications.
  But the extensive communications that took place before then were withheld for seven months, and some are still being withheld. Watch this site.

   
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