| With
Flagstar's NYCB Bid Stalled at FRB Amid
Wisp of Fair Lending Action OCC
Jumps Gun
By Matthew
Russell Lee, Patreon
BBC
- Guardian
UK - Honduras
- CJR -
PFT
SOUTH BRONX /
SDNY, Oct 28 – Back in April
2021, Fair Finance Watch and
Inner City Press predicted
that the proposed merger of
New York Community Bank and
Flagstar would flounder, on
disparate lending and
regulatory evasions.
Fair
Finance Watch found that in
2019 Flagstar made 60,982
mortgage loans to whites, with
13,963 denial to whites -
while making only 3799 loans
to African Americans with
fully 1777 denials to African
American. This was
significantly worse than other
lenders.
New York
Community Bank's record as an
enabler of and profiteer off
slumlords led Inner City Press
file a Community Reinvestment
Act challenge to its
then-proposed merger with
Astoria Bank, which fell
apart.
Now more than a
year a half later, the
proposed merger is still not
done amid talk of, as we
predicted, fair lending
action.
But with the Fed
not yet ruling, the Office of
the Comptroller of the
Currency this week hauled off
and handed out an approval.
(This while the OCC brags
about a February 2023
symposium on mergers - more on
this to follow). These two
banks immediately extended
their drop dead date, and said
"The Fed Approval is not
expected to have any
associated waiting period."
They talk about the Fed
approval as a fait accompli.
And why no waiting period?
Inner City Press
has gone back to find
Flagstar's comments on the
proposed and still pending
Community Reinvestment Act
regulations - tellingly, full
of resistance: "Because
Flagstar supports the goals of
the CRA, the Bank submits this
comment letter to highlight
concerns about the Agencies'
proposed reforms to the CRA
framework. This Proposal would
undermine the objectives of
the CRA and run contrary to
the Agencies' stated effmts to
ensure that the law continues
to be an effective force for
strengthening banks and the
communities they serve, which
j: intludes (i) low- and
moderate-income ("LMI")
individuals, families, and
neighborhoods; (ii) small
businesses and farms; and
(iii) communities in need of
financial services and
economic development. Flagstar
is particularly concerned
about the proposed retail
lending assessment area
requirements, which would
impose significant regulatory,
operational, and staffing
burdens on banks (especially
when coupled with the proposed
data collection requirements);
force banks to spread limited
CRA resources thin and
undermine the effectiveness of
their CRA programs; and place
banks at a competitive
disadvantage to nonbanks and
other lenders not subject to
the CRA. In our view, these
challenges will discourage
banks from engaging in retail
lending and other CRA
activities that could
otherwise benefit local
communities, contrary to the
spirit of the law. Moreover,
as applied to Flagstar, the
proposed retail lending
assessment requirements would
be so overly burdensome and
unworkable that they would
likely cause us to question
and rethink our business
model. 1. There is
insufficient data to justify
abandoning longstanding
interpretations of the CRA to
require the delineation of
lending-based assessment
areas; Requiring the
delineation of a lending-based
assessment area would go
beyond the text and purpose of
the CRA." Yeah.
Both companies'
stock prices are down. CRA and
fair lending sometimes do have
an impact. Watch this site.
Watch
this site.
***
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