On Dodd-Frank, Inner City Press Asks IMF Of Proposal to Redefine SIFIs from $50 Billion to $500B, Of Somalia Remittances Cut-Off

By Matthew Russell Lee

UNITED NATIONS, June 8 -- When the International Monetary Fund released reviews and papers about the United States, complete with support of the Dodd Frank Act and mentions of anti money laundering protection on June 8 Inner City Press asked about the proposal to raise the definition of Systemically Important Financial Institution from $50 billion up to $500 billion and if tight AML strictures are to blame for cutting off remittances to Somalia.

  Aditya Narain, IMF mission chief for the Financial Sector Assessment Program and deputy director, Monetary and Capital Markets department, told Inner City Press that the IMF believes such definition should give predictability, but should be based on risk and not necessarily only asset size.

  Narain told Inner City Press, "On the first one, our general belief is that supervisory approaches should be risk based, and therefore the materiality and proportionality of institutions should be taken into account for to develop supervisory frameworks. At the same time, we also recognize that it’s important to have some clear rules, regarding a unit, in this case size of institutions, because not only does it set a aseline of expectations, but it also provides a useful framework for people to anchor their expectations on. So that’s why, in a sense we would agree that it’s important to make these approaches risk based and therefore not dependent on size alone."

  Will this be used FOR the Senator Richard Shelby draft bill?

  On remittances, Aditya Narain said it is an important question but one that the IMF is dealing with in other venues; it apparently wasn't raised to the US during this process. Why not?

   In the embargoed media conference call, two questions in a row went to the Financial Times, which opined that the IMF report takes the side of the Democratic Party. The IMF disagreed. The IMF said, in writing, “As the epicenter of the global financial crisis that began in 2008, the United States passed a major law in 2010, the Dodd-Frank Act, to reform its financial system. Officials need to complete the rulemaking under the law, while parts of reform agenda face legislative proposals to water them down.”

   Central Banking asked two questions and Reuters one, on federal insurance regulation. The underlying papers will go online on the IMF's website. Watch this site.
   

Exclusive: CIT's Thain Met Federal Reserve 3 Weeks Before OneWest Merger, FOIA Response to Inner City Press Shows, Loan Loss, Redactions

By Matthew Russell Lee, Exclusive

NEW YORK, February 20 -- Federal bank regulators remain captured by large and becoming-large banks like the CIT Group, a belated Freedom of Information Act response to Inner City Press from the Federal Reserve on February 20 shows. 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.

Exclusive: CIT's Thain Met Fed Staff 3 Weeks Before OneWest Merger, FOIA Response Shows, Loan Loss Redactio... by Matthew Russell Lee

  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.  Today, Inner City Press / Fair Finance Watch exclusively uploads these documents, in preparation for the public hearing, and beyond. Watch this site.

UNSC in Africa I: DRC-Bound, SC Delegation Which Includes Russia Meets European Group Just Back from Georgia, Diplomat Updates through Brussels Rain, Leopold's Ghost

By Matthew Russell Lee

UNITED NATIONS, October 4 -- On its way to the Democratic Republic of the Congo, the UN Security Council delegation stopped Friday in rainy Brussels and met with the Council of the EU's Political and Security Committee.

  While that body met in June with the Africa Union's better known PSC, the Peace and Security Council, its work on Africa since then has not been much reported on.

  Most recently, starting September 29 apparently through October 2, the EUPSC visited Georgia, including Gori, and discussed continued non-recognition of Abkhazia and South Ossetia. Russia's Petr Iliichev is accompanying the UNSC delegation.

  The EU, like the United States and the African Union, has its own envoy on the Great Lakes, on which we will be reporting more. But given the relative distribution for now of UN Peacekeeping resources between the DRC and collapsing Central African Republic, it seems the EUPSCcould or should be more relevant on CAR. But did the UNSC discuss CAR with them? We've asked.

  After two months of inaction, just as the UNSC trip left French Permanent Representative Gerard Araud told Inner City Press he would be distributing a draft resolution on CAR.

  After the October 2 "program of work" meeting, Inner City Press asked October's Council president Agshin Mehdiyev about the CAR draft -- as well as about DRC sanctions and why France was allowed to hand-pick the UN correspondents to accompany the Council's Great Lakes trip. UN Video here, from Minute 14:15.)

  Mehdiyev confirmed that Araud had said he WOULD distribute a draft resolution; he said that DRC Sanctions, a UNSC committee which he chairs, would not be the focus of the Great Lakes trip. 

  This might surprise the Congolese activists and supporters who met Thursday night at the NYC Bar Association discussing conflict mineral - click here for Inner City Press story on that including USUN / Dodd Frank Act question, here for UK question.

  But Mehdiyev did not answer on why France was allowed to pick (and ban) particular media to cover the trip. (This was confirmed by UN Spokesperson Martin Nesirky, see Inner City Press YouTube channel video here.)

  Off camera, other Council members have told Inner City Press they had not been informed that France would monopolize (and we'll say, abuse) the media selection process, which has become more outrageous with Araud dropping out from the trip. (Araud has been replaced at the last minute by his recently installed Deputy, Alexis Lamek, who one would think will be answering and updating on this, listed as a "co-head of mission.")

  The US leads the Rwanda leg of the trip; the UK leads on Uganda. Even as P5 / P3 members, they played no role? If not, this is dysfunction. While we will have more on this, for now we will appreciate and cover what updates are sent, like this one. So far from the media hand-picked by France, there is nothing. NOTHING. Watch this site.

   

DRC Conflict Minerals Asked About at NYC Bar Association by Inner City Press as French Led UNSC Trip Stops in Belgium, Samantha Power Q

By Matthew Russell Lee

UNITED NATIONS, October 3 -- The Democratic Republic of the Congo conflict mineral disclosure provisions of the US Dodd-Frank Act were debated Thursday night in New York. Meanwhile, the UN Security Council and scribes hand-picked by France headed to the DRC, by way of former colonial power Belgium.

  The law and 100-page SEC rule are being challenged by the US Chamber of Commerce in the DC Court of Appeal. Tom Quaadman of the Chamber, a former chief of staff for Rep Vito Fossella, mocked the law as having no "de minimus" exception; he said it would cost business from $6 to $8 billion. 

  He said gold is now being sold through Uganda; he referred off-handedly to "the M23 coming out of Rwanda."

  Julie Murray, representing Amnesty International, called the SEC's rule well reasoned. She regretted that Sasha Lezhnev of the Enough Project had not been able to make it up to New York from DC.

  Inner City Press asked the panel about UN Security Council sanctions, and the impact of the UN peacekeeping mission(s) there. Julie Murray said the case is only about administrative law and the First Amendment. Quaadman said the Chamber is pointing to a lack of clarity in cost / benefit analysis (something the UN rarely engaged in.) Video here and embedded below.

  A representative of Friends of the Congo pointed out that UN Peacekeepers in the Congo had, for example, sold guns for gold; he raised questions about the roles of the UK and the US (he specifically named Susan Rice.) We'll have more on this.

  Inner City Press, which applied through UN Secretary General Ban Ki-moon's Office of the Spokesman to go on and cover the Security Council trip, as it did in 2010 and 2008. But this time it was denied. Ban's Spokesperson Martin Nesirky told Inner City Press, on camera, that the decision was made "in consultation" with France, the lead mission on the entire trip.

  Why does the UN let a colonial powerhouse, alone, pick which media get to cover Central Africa and the DR Congo, where the UN has a billion dollar peacekeeping mission ultimately run by former French diplomat Herve Ladsous, the fourth Frenchman in a row to head UN Peacekeeping?

  France, whose Permanent Representative Gerard Araud ended up not even going on the trip, chose Reuters, along with a procedural Council reporter and, ironically, Voice of America. John Kerry is on VOA's Broadcasting Board of Governors; a State Department official gushed about the VOA correspondent heading to Africa. For what?

  And while waiting for answer to those, and what information goes from the trip, we ask if for example US Ambassador Samantha Power will be checking on this issue while on the trip? Will the Security Council visit Minova, site of 135 rapes by the UN's partners in the Congolese Army in November 2012? Watch this site.

   

Senate to Consider for Fed Seat Powell of Deutsche Bank, Dodd Frank Evader

By Matthew R. Lee

SOUTH BRONX, March 28 -- When the Obama administration in December nominated Jay Powell formerly of Deutsche Bank to fill Kevin Warsh's seat on the Federal Reserve Board, Inner City Press called it putting a fox in charge of a hen house. Now on the eve of the Senate Finance Committee's hearing on Powell, the conflict of interest has gotten worse.

Deutsche Bank, Powell's former employer, recently moved to decertify at the Federal Reserve in order to evade the capital and other requirements of Dodd-Frank. Pressed on the matter on Capitol Hill last week, another Fed Governor Daniel Tarullo said he and the Fed would be looking into this.

But why put a former Deutsche Bank official on the Federal Reserve Board at this time? Would Powell recuse himself? He should be asked that by the Senate Finance Committee. But will he be?

Meanwhile Kevin Warsh who left the Federal Reserve Board in April appeared last night spinning on the Charlie Rose show. Click here to view.

Inner City Press through a Freedom of Information Act request showed that Warsh before leaving the Fed traveled to Beijing and engaged in "ex parte" communications with the Chinese government about ICBC's protested application to acquire Bank of East Asia. This is what the "designated Wall Street representative" on the Fed Board is supposed to do?

Nothing was said about Warsh's current employment. Conflicts of interest of former and prospective Federal Reserve Board governors are wildly under-covered, even in this time of Occupy Wall Street. This should end - watch this site.