By Matthew Russell Lee, Patreon Maxwell Book
BBC-Guardian UK - Honduras - ESPN NY Mag
SOUTH BRONX / SDNY, May 14 – With the mega-merger horse largely out of the barn in the US, Citibank too big to question for its business in Russia even as JPMorgan Chase admits gambling a billion dollars they while closing branches in NYC, the smallest of regulators had started a review. But where is the Community Reinvestment Act in mergers?
The Federal Deposit Insurance Corporation, with jurisdiction mostly over small banks not members of the Federal Reserve System with the exception of the ironically named Truist, has a public comment period on mergers.
With the FDIC's request for information comment period set until May 31, here, Fair Finance Watch on April 11 submitted a first comment, now online here and below.
The OCC through Comptroller Hsu has spoken of taking a harder look at mergers, but has yet to put out even the RFI that the FDIC did. The Federal Reserve, needless to say, is nowhere on this. Will the new Governors make a difference? Watch this site.
Here's the comment to the FDIC:
April 11, 2022
Via Email
FDIC Attn: James P. Sheesley, Assistant Executive Secretary Comments—RIN 3064–ZA31, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429 Re: Comments to the FDIC on improving merger reviews (RIN 3064–ZA31)
Dear Secretary Sheesley: On behalf of Inner City Press / Fair Finance Watch, this is a first timely comment on the FDIC's Request for Information about merger review.
All three Federal bank regulatory agencies need to improve their merger review to more fulsomely include review of performance under the Community Reinvestment Act and fair lending laws, as well as other negative impacts of recent mergers, from branch closings to raised prices to, yes, layoffs. Some responses:
Question 1. Does the existing regulatory framework properly consider all aspects of the Bank Merger Act as currently codified in Section 18(c) of the Federal Deposit Insurance Act?
No - the FDIC (and Federal Reserve and OCC) does not sufficient consider "the probable effect of the transaction in meeting the convenience and needs of the community to be served." When the effect of a transaction includes further denuding lower income communities of branches, that is NOT meeting the convenience or needs of these communities.
Question 2. What, if any, additional requirements or criteria should be included in the existing regulatory framework to address the financial stability risk factor... Q 3.
The regulators are far too narrow. One recent example: Fair Finance Watch raised to the FRB and OCC that merger partner MUFG still does business in Russia amid its invasion of Ukraine. This is clearly risky (as well as immoral) and yet the Fed and OCC have not even asked MUFG or its proposed partner about it.
Question 4. To what extent should the convenience and needs factor be considered...
COMMENT: It would be absurd to simply defer to CRA ratings, when the regulators rate over 95 of banks Satisfactory or Outstanding. Also, employees are clearly "stakeholders" as the question puts it - yet the Federal Reserve had a footnote implying that no level of job loss is relevant to it in reviewing a merger. The CFPB should be consulted, as should legal data bases of discrimination cases. It must be made easier for the impacted public to comment, and to get copies of the regulators questions to the banks, and the banks answers.
Question 5. In addition to the HHI...
The HHI understates the anticompetitive effects of recent mergers, with small banks being considered competitors to the Top Ten. More public comments, and more public hearings, are needed.
Question 6. How and to what extent should the following factors be considered in determining whether a particular merger transaction creates a monopoly or is otherwise anticompetitive? Please address the following factors....
The examples the FDIC gives here imply that it thinks that current antitrust review is too strenuous - but the opposite is the truth. Unless the Antitrust Memo of the administration is meaningless, antitrust review must become more robust.
Question 7. Does the existing regulatory framework create an implicit presumption of approval? If so, what actions should the FDIC take to address this implicit presumption?
The FDIC rubber stamps nearly all mergers. The bottom line is, some transactions should be denied. For example, when Investors Bank with its weak fair lending record got a conditional approval from the FDIC, it should have been a denial. The Federal Reserve absurdly allows Reserve Banks, which have no power to deny, to approve applications even by banks with rare Needs to Improve CRA ratings (Berkshire Bank).
Question 8. Does the existing regulatory framework require an appropriate burden of proof from the merger applicant that the criteria of the Bank Merger Act have been met? If not, what modifications to the framework would be appropriate with respect to the burden of proof?
COMMENT: The applicants should have to carry their burden and THEN a public comment period open, with sur-reply to the banks' response.
Question 9. The Bank Merger Act provides an exception to its requirements...
These emergency powers have been abused, routinely on work-outs, and especially for example on the Fed allowing Goldman Sachs and Morgan Stanley (now a monopolist) into banking without any public comment period.
Question 10. To what extent would responses to Questions 1–9 differ for the consideration of merger transactions involving a small insured depository institution?
These banks are key to some communities. There should be more review, and more public participation. There should be (automatic) public hearings. You will be hearing more from Fair Finance Watch, and other organizations including those of which it is a (proud) member [i.e., NCRC] Matthew R. Lee, Esq., Executive Director Fair Finance Watch / Inner City Press South Bronx, NY 10458 USA
Inner City Press notes that former Federal Reserve government has chimed in for / on Brookings - mentioning Truist and Morgan Stanley, but not even once the CRA. Fair Finance Watch says by contrast, CRA must be at the center, it is communities loses to the mergers.
Ohio Senator Sherrod Brown has written to the Fed's Jay Powell and to national bank overseer Michael Hsu, the Comptroller of the Currency who himself came from the Fed, to ask them to get involved.
They have much more to answer for.
The FDIC in the face of a Community Reinvestment Act challenge to Investors Bank by Fair Finance Watch imposed conditions on the bank.
But the Fed, with Investors being gobbled up by Citizens Bank, refused to review Investors compliance with even those tame conditions. Inner City Press' FOIA requests languish for months at the Fed.
The OCC, despite the issue being raised to Hsu, has yet to implement even back transparency measures in its merger reviews, such as sending copies of its questions, and the banks' answers, to public commenters.
So things are worse, it seems, than Senator Brown and his colleagues know.
The public, particularly affected communities, much comments and comment now. Watch this site.
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