By Matthew R. Lee
NEW YORK, February 16 -- The lack of seriousness in US bank regulation grows from the relatively smaller to the largest banks like Goldman Sachs - through those in the upper bulge like KeyCorp, seeking to buy First Niagara and close a lot of branches, down to Kentucky-based Republic Bank, back in the tax loan business including in New York City.
On Republic, Inner City Press / Fair Finance Watch in late 2015 challenged its proposal to acquire Cornerstone Bank, stating among other things:
" In the Louisville MSA in 2014 for home purchase loans, Republic made 651 such loans to whites and only 22 to African Americans, and only13 to Latinos. It denied the applications of African Americans 2.15 times more frequently than those of whites. For refinance loans, it made 215 loans to whites and only 10 to African Americans; for home improvement loans it made 129 loans to whites and only ONE to an African American, while denying 7 of 10 applications received from African Americans.
In Nashville in 2014, Republic made 13 home purchase loans to whites, NONE to African Americans or Latinos.
“Washington-based Fenway Summer LLC, in January reached a deal with Louisville, Ky.-based Republic Bancorp Inc. to offer a credit card that is being pitched as a more affordable alternative to payday loans, which are short-term loans that often charge triple-digit interest rates. The Build Card, which is being rolled out later this year, will charge an annualized interest rate of 25% to 30% and will cap borrowers’ initial credit lines at $500.”
“Washington-based Fenway Summer LLC, in January reached a deal with Louisville, Ky.-based Republic Bancorp Inc. to offer a credit card that is being pitched as a more affordable alternative to payday loans, which are short-term loans that often charge triple-digit interest rates. The Build Card, which is being rolled out later this year, will charge an annualized interest rate of 25% to 30% and will cap borrowers’ initial credit lines at $500.”
Thirty percent interest? In New York, that's called usury."
And, in fact, Inner City Press has photographed Republic's high cost tax loan posters in New York City. Now the Fed has asked:
In Republic’s letter to the Federal Reserve Bank of St. Louis dated December 17, 2015 (the “Letter”), Republic asserted that, “[RepublicBank] no longer offers refund anticipation loans and will not provide tax refund anticipation loans as a result of the proposed transaction. The fact that [RepublicBank] previously provided refund anticipation loans does not relate to the
competitive effects of the transactions contemplated by the [a]pplication, does notrelate to Republic’s financial and managerial resources, does not have any bearing on Republic’s ability to meet community needs, does not relate to compliance with the Bank Secrecy Act, and does not affect the financial stability of the United States. Consequently, we respectfully submit that the fact that [Republic Bank] previously provided refund anticipation loans is simply not relevant to any of the
statutory factors the FRB is required to consider under the Bank Holding Company Act.”
competitive effects of the transactions contemplated by the [a]pplication, does notrelate to Republic’s financial and managerial resources, does not have any bearing on Republic’s ability to meet community needs, does not relate to compliance with the Bank Secrecy Act, and does not affect the financial stability of the United States. Consequently, we respectfully submit that the fact that [Republic Bank] previously provided refund anticipation loans is simply not relevant to any of the
statutory factors the FRB is required to consider under the Bank Holding Company Act.”
But now it does...
So the Fed asks, "consumer advocates have expressed
concern that tax preparers may pass along RAL fees to customers. Please respond to this concern. Your response should include a description of Republic Bank’s monitoring and auditing plans."
concern that tax preparers may pass along RAL fees to customers. Please respond to this concern. Your response should include a description of Republic Bank’s monitoring and auditing plans."
Back on December 16, Inner City Press filed a Freedom of Information Act request with the Federal Reserve about the Key / First Niagara proposal. On January 20, the Fed extended its time to reply -- to February 2, AFTER the comment period was set to expire on January 31.
As of February 16, the Fed has still not provided the FOIA response it said it would on February 2...
Inner City Press commented to the Fed:
Inner City Press commented to the Fed:
"This is a timely first comment opposing and requesting an extension of the FRB's public comment period on the Application by KeyCorp to Acquire First Niagara.
First, the comment period must be extended. All the way back on December 16, 2015, Inner City Press submitted a FOIA request for documents related to this proposal. It was assigned number F-2016-00073 by the Federal Reserve.
But on January 20 the Manager of the FRB's Freedom of Information Office wrote to Inner City Press that “pursuant to section (a)(6)(B)(i) of the FOIA, we are extending the period for our response until February 2, 2016, in order to consult with two or more components of the Board having a substantial interest in the determination of the request.”
The comment period was set to expire on January 31 -- six weeks after ICP's FOIA request, but days BEFORE the Fed's response. This request to extend the comment period is being submitted on January 30 and must in context be granted.
The comment period was set to expire on January 31 -- six weeks after ICP's FOIA request, but days BEFORE the Fed's response. This request to extend the comment period is being submitted on January 30 and must in context be granted.
In the interim, in support of ICP's request for public hearings, consider that in 2014, the most recent year for which Home Mortgage Disclosure Act data is available, Key Bank National Association in the Buffalo Metropolitan Statistical Area made 258 home purchase loans to whites but only seven to African Americans, while denying the applications of African Americans 2.56 times more frequently than those of whites. For refinance loans, Key's denial rate disparity for African Americans was 2.28.
In the New York City MSA, Key Bank National Association made 21 home purchase loans to whites and only ONE to an African American applicant. Key made 43 refinance loans to whites and NONE to African Americans. These disparities are not acceptable.
Nor is the lack of transparency, as the comment period is set to close, on branch closures or 'consolidations.' The comment period must be extended and public hearings held."
In the New York City MSA, Key Bank National Association made 21 home purchase loans to whites and only ONE to an African American applicant. Key made 43 refinance loans to whites and NONE to African Americans. These disparities are not acceptable.
Nor is the lack of transparency, as the comment period is set to close, on branch closures or 'consolidations.' The comment period must be extended and public hearings held."
We'll have more on this. There's also those in the middle, seeking to become a Systemically Important Financial Institution like New York Community Bancorp is, applying to buy Astoria Bank.
After Inner City Press / Fair Finance Watch filed a timely protest, the Federal Reserve On January 8 asked NYCB 14 questions. Inner City Press has put the Additional Information letter online here, including a request to know which branches NYCB would close, how it would try to sell of Astoria's loans, etc. Inner City Press said, there should now be more fair lending questions, and the comment period should be extended.
On January 21, the Federal Reserve informed Inner City Press / Fair Finance Watch that the Fed is re-opening and extending its comment period on NYCB - Astoria until Tuesday, February 16. We'll have more on this (see here).
Back on January 15, after Inner City Press / Fair Finance Watch also filed comments with the FDIC, that agency has written to NYCB's Joseph Ficalora asking for a response, and stating that
"We are writing in reference to the enclosed e-mail that we received from Executive Director Matthew Lee, of Inner City Press/Fair Finance Watch concerning your institution's application to acquire Astoria Bank. We reviewed the subject e-mail in accordance with the guidelines of 12 C.F.R. Section 303, and deemed it a Community Reinvestment Act (CRA) protest for the purpose of your application. The subject e-mail raises issues regarding your institution's record of lending to African American and Latino persons. The anticipated time and research required to investigate these issues has contributed to the removal of your institution's application from expedited processing."
NYCB's home mortgage lending is extremely disparate; its multi-family lending, some to slumlords, is no defense. Inner City Press / Fair Finance Watch has filed this with the Fed:
“On behalf of Inner City Press / Fair Finance Watch, this is a timely first comment opposing and requesting a complete copy of an and an extension of the FRB's public comment period on the Application by New York Community Bancorp ('NYCB') to acquire 100% of the voting shares of Astoria Financial Corp and indirectly acquire Astoria Bank.
The applicant NYCB in the New York City MSA in 2014 made 109 home purchase loans to whites -- and only THREE to African Americans. For refinance loans, NYBC in the the NYC MSA in 2014 made 27 loans to whites and only ONE to an African American.
While NYCB may attempt to minimize these severe disparities by pointing to multi-family loans, there are significant complaints about that lending; note also this account of the CFPB which lists the ostensibly mostly multi-family NYCB with more complaints against it than banks that are both larger and more “retail."
In the Nassau Suffolk (Long Island) MSA in 2014 NYCB made 107 home purchase loans to whites -- and only ONE to an African American, while denying African Americans 4.7 times more frequently than whites. For refinance loans, NYBC in the the Long Island MSA in 2014 made 52 loans to whites and only three to African Americans and only TWO to Latinos, while denying Latinos 2.32 times more frequently than whites.
In the Cleveland, Ohio MSA (where NYCB bought Ohio Savings), NYCB in 2014 made 17 refinance loans to whites in 2014 and only one to an African American, while denying African Americans, while denying African Americans three times more frequently than whites. Similar disparities exist for NYCB in New Jersey, Arizona and Florida -- ICP is requesting public hearings on this ill-conceived proposed merger.
As the Federal Reserve surely knows, this proposal was driving by activist investor pressure on Astoria (by Basswood Capital Management LLC); both institutions' securities fell significantly in price when it was announced. The price to consumers would include the closure of branches, disclosure of which should be demanded during the extended comment period and at the requested public hearing(s).
The comment period should be extended; evidentiary hearings should be held; and on the current record, the application should not be approved.”
The applicant NYCB in the New York City MSA in 2014 made 109 home purchase loans to whites -- and only THREE to African Americans. For refinance loans, NYBC in the the NYC MSA in 2014 made 27 loans to whites and only ONE to an African American.
While NYCB may attempt to minimize these severe disparities by pointing to multi-family loans, there are significant complaints about that lending; note also this account of the CFPB which lists the ostensibly mostly multi-family NYCB with more complaints against it than banks that are both larger and more “retail."
In the Nassau Suffolk (Long Island) MSA in 2014 NYCB made 107 home purchase loans to whites -- and only ONE to an African American, while denying African Americans 4.7 times more frequently than whites. For refinance loans, NYBC in the the Long Island MSA in 2014 made 52 loans to whites and only three to African Americans and only TWO to Latinos, while denying Latinos 2.32 times more frequently than whites.
In the Cleveland, Ohio MSA (where NYCB bought Ohio Savings), NYCB in 2014 made 17 refinance loans to whites in 2014 and only one to an African American, while denying African Americans, while denying African Americans three times more frequently than whites. Similar disparities exist for NYCB in New Jersey, Arizona and Florida -- ICP is requesting public hearings on this ill-conceived proposed merger.
As the Federal Reserve surely knows, this proposal was driving by activist investor pressure on Astoria (by Basswood Capital Management LLC); both institutions' securities fell significantly in price when it was announced. The price to consumers would include the closure of branches, disclosure of which should be demanded during the extended comment period and at the requested public hearing(s).
The comment period should be extended; evidentiary hearings should be held; and on the current record, the application should not be approved.”
Inner City Press / Fair Finance Watch, which also opposes NYCB's requests for approvals from the FDIC, New York and other regulators, has prepared this comparison of NYCB to other lenders:
“In the Nassau Suffolk (Long Island) MSA in 2014 NYCB made 107 home purchase loans to whites -- and only ONE to an African American, while denying African Americans 4.7 times more frequently than whites.”
While NYCB made 107 home purchase loans to whites for one to an African Americans (ratio of 107-to-1), the aggregated in 2014 for home purchase loans on Long Island had a ratio of 13.41 loans to whites for every loan to an African American (15,081 loans to whites, 1125 loans to African Americans). NYCB is eight times more disparate than other lenders.
Also on Long Island, compared to NYCB's 4.7 denial rate disparity between African Americans and whites, the aggregate denied African Americans 1.66 times more frequently than whites. NYCB is 2.83 times more disparate than other lenders.
NYCB in the New York City MSA in 2014 made 109 home purchase loans to whites -- and only THREE to African Americans.
While NYCB made 109 home purchase loans to whites and three to African Americans in NYC (ratio of 36.3-to-1), the aggregated in 2014 for home purchase loans in the New York City MSA had a ratio of 11.39 loans to whites for every loan to an African American (47,166 loans to whites, 4,140 loans to African Americans). NYCB is 3.19 times more disparate than other lenders in the New York City MSA.
While NYCB made 107 home purchase loans to whites for one to an African Americans (ratio of 107-to-1), the aggregated in 2014 for home purchase loans on Long Island had a ratio of 13.41 loans to whites for every loan to an African American (15,081 loans to whites, 1125 loans to African Americans). NYCB is eight times more disparate than other lenders.
Also on Long Island, compared to NYCB's 4.7 denial rate disparity between African Americans and whites, the aggregate denied African Americans 1.66 times more frequently than whites. NYCB is 2.83 times more disparate than other lenders.
NYCB in the New York City MSA in 2014 made 109 home purchase loans to whites -- and only THREE to African Americans.
While NYCB made 109 home purchase loans to whites and three to African Americans in NYC (ratio of 36.3-to-1), the aggregated in 2014 for home purchase loans in the New York City MSA had a ratio of 11.39 loans to whites for every loan to an African American (47,166 loans to whites, 4,140 loans to African Americans). NYCB is 3.19 times more disparate than other lenders in the New York City MSA.
Meanwhile Goldman Sachs is trying to speed through Federal Reserve approval to buy $16 billion in insured deposits from GE Capital, and the Fed, documents released to Inner City Press under the Freedom of Information Act (FOIA) show, is inappropriately bent on helping, including by closing its comment period... The Federal Reserve has belatedly responded to Inner City Press / Fair Finance Watch's September 2 FOIA request, with some of its internal documents, many heavily redacted. FOIA letter here; FOIA documents released to ICP here, and embedded below.
While Inner City Press is appealing, even as released the documents show that Goldman Sachs through its law firm Sullivan & Cromwell reached out to Fed General Counsel Scott Alvarez in May 2015 about the transaction, and was largely able to vet it with the Fed's staff by July, even receiving an "additional information" request before any application was filed.
Since the public cannot comment or ask questions before a transaction is announced, this "pre-review" by the Fed in essence cuts public review and transparency out of the process. The Fed's rules against ex-parte communications can't be triggered before there is an application. But should Fed review be held, and apparently completed, before there is any public notice?
The deal was publicly announced on August 13 and Goldman Sachs on August 18 submitted the apparently pre-approved application. Inner City Press / Fair Finance Watch submitted a comment and FOIA request (delayed until now); the end of the FOIA response has a redacted reaction to the "public comment." Now others have commented and a campaign has begun. But has the Fed already made up its mind?
On Goldman Sachs, Federal Reserve's Initial FOIA Response to Inner City Press on GE Capital Bank by Matthew Russell Lee
On October 20, the Federal Reserve asked Goldman Sachs five questions, but not on the predatory lending issues raised... Only this from Goldman Sachs, only snail-mailed by its counsel:
On October 13 Inner City Press published 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
