By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - CJR - PFT
SOUTH BRONX / SDNY, June 26 – The proposed merger of Webster Financial Corp. and Sterling Bancorp has now been challenged, on disparate lending and regulatory evasions, first to the Federal Reserve and the OCC.
On June 25, the Fed asked the banks a series of questions, below and full letter on Patreon here
Fair Finance Watch has found that in 2019 in its home state of Connecticut, Webster National Bank made 3147 mortgage loans to whites, with 1364 denial to whites - while making only 71 loans to African Americans with fully 99 denials to African American. This is significantly worse than other banks in the state; the merger must be denied.
The Fed on June 25 wrote, copying Fair Finance Watch: "The application references a new mobile banking platform being developed by Sterling Bank that will be adopted by the combined organization. a. Describe any due diligence conducted by Webster Bank regarding the new mobile banking platform and the extent to which the development is taking place in-house or via a third party.
b. Describe in greater detail the intended uses of the mobile banking platform and the data collected therefrom, the specific features and products that will be offered by the platform, and the ability of customers to opt in or out of its use, and to limit the data that will be collected through the platform. c. To the extent not already addressed in your responses to the previous questions, discuss efforts to ensure that the mobile banking platform will be offered in compliance with consumer protection laws, including fair lending laws. Your discussion should include (i) the extent to which technology-based data that is alternative to data traditionally used in credit decisions would be used to underwrite loans offered through the platform, (ii) any anticipated efforts to ensure such alternative data is used in compliance with fair lending laws, and (iii) how proprietary customer information would be safeguarded. d. To the extent not already addressed in your responses to the previous questions, describe any anticipated changes to the Community Reinvestment Act (“CRA”) plans for the combined institution that would result from the implementation of the mobile banking platform.
2. The application states that “Webster Bank and Sterling Bank are carefully evaluating their current consumer products and community development programs and services so that the combined bank may incorporate the strongest components of both banks’ community reinvestment activities.” a. Provide an update on this review process including, if it is not yet complete, an anticipated timeframe for completion. . As this information becomes available, discuss whether any consumer products or community development programs and services of either bank are expected to be discontinued and whether, to the extent not already described in the application, any products, programs or services will be made available in either bank’s market that are not currently offered. 3. Page 36 of the application indicates that Webster Bank made more than 11,000 PPP loans. Pages 37 and 73 of the application indicate that Webster Bank funded more than 18,000 PPP loans totaling more than $2.0 billion. Page 57 of the application indicates that Webster Bank has participated in funding nearly $1.98 billion in PPP loans to over 17,350 customers. Confirm the latest figures for number and dollar volume of PPP loans.
4. Respond to the public comment opposing the transaction, submitted June 3, 2021. Among other things, the public comment generally criticizes Webster Bank’s fair lending performance. The commenter also asserts that the CRA data of Sterling Bank is unreliable. 5. Provide pro forma asset and liability concentrations for Webster Bank as of March 31, 2021. (Indicate if such analysis would be substantially similar for Webster at the consolidated level). Pro forma asset or credit concentrations should be compared to pro forma tier 1 capital plus allowance for loan and lease losses for Webster Bank as of March 31, 2021. a. Provide further breakdown of pro forma concentrations by portfolio (retail, commercial, and related subsectors) and by industry category (retail, restaurant, hotels, office, etc.). b. Discuss key processes that are currently employed and/or whether any enhancements are needed to effectively monitor and manage asset or credit concentrations following the proposed bank merger. This may include any de-risking initiatives or recalibration of lending thresholds or risk tolerance limits. c. Provide a pro forma asset composition mix for Webster Bank and discuss any meaningful change relative to the bank’s actual balance sheet, with both profiles (pro forma and actual) as of March 31, 2021. Please provide your written response and supporting documentation via E-Apps to Michael Sumrell at the Federal Reserve Bank of Boston. In addition, in accordance with the Federal Reserve’s ex parte procedures, provide a copy of the public portion of your response (together with any attachments) directly to the commenter." Watch this site.
Fair Finance Watch has found even worse disparities for Webster in New York, and on June 3 filed a formal protest with the Federal Reserve in DC and Boston, and then with the Office of the Comptroller of the Currency. The comments and FOIA request (to the Fed) have been acknowledged. But still no formal response to the charges from Webster. Maybe to game the system they have snail mailed it? Watch this site.
Webster's record in New York State is even more disparate. In 2019 in NYS, Webster Bank based on its disparate marketing made 356 mortgage loans to whites, with 178 denial to whites - while making only EIGHT loans to African Americans with fully 10 denials to African American.
Webster has also under performed in PPP lending: "the head of Waterbury-based Webster Bank admitted his company can improve its performance in getting money into the hands of loan applicants. “Certainly we wanted to help every small business borrower and customer of Webster that we could,” said CEO John Ciulla, speaking Tuesday on a conference call. “We got through approximately 30 percent applications approved (and) 30 percent funded, plus or minus a few percentage points on both sides of that." This and Webster's dubious "health savings accounts" which it wants excluded from CRA, must be reviewed in this proceeding, including in public hearings As to Sterling, Inner City Press previously exposed it as having unreliable CRA data, see, here. There is no public benefit to this proposal.
Among the comments on the Community Reinvestment Act submitted to the Federal Reserve recently is one from Webster Bank, arguing that Health Savings Account "deposits should not be considered when determining whether the requirement would apply or when delineating such assessment areas" and should be excluded from the definition of "retail domestic deposits."Consequently, HSAs should also be excluded from Community Development Financing Metric.
This is scam.
Back on May 2, 2020 Fair Finance Watch, and Inner City Press on FOIA, filed a formal challenge with Otting's OCC to the application by Webster Bank to acquire State Farm Bank FSB, its problematic health savings accounts, no less.
Webster has also under performed in PPP lending: "the head of Waterbury-based Webster Bank admitted his company can improve its performance in getting money into the hands of loan applicants. “Certainly we wanted to help every small business borrower and customer of Webster that we could,” said CEO John Ciulla, speaking Tuesday on a conference call. “We got through approximately 30 percent applications approved (and) 30 percent funded, plus or minus a few percentage points on both sides of that." On the CRA comments to the Fed, see NCRC's dashboard, here.
Sterling has other issues, which Inner City Press previously documented to the OCC leading to delay. Now what will the Fed do, with Powell and Brainard competing to be the next Chair? Watch this site.
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