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By Matthew Russell Lee, Patreon Story
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FEDERAL COURT / S Bronx, Feb 11 – Whether or not the U.S. Community Reinvestment Act will be again enforced until the new Administration and its regulators remains an open question. On February 11, despite disparities raised in a CRA protest by Inner City Press in 2021, the Fed rubber stamped South State's merger.

The acquisition by South State of Atlantic Capital Bank in Georgia has been a litmus test. South State is so disparate that in South Carolina in 2020 for mortgage loans to African Americans it had more denials (147) than loans made (133) - while making six loans to whites for every denial to a white applicant.

On August 17, 2021 Fair Finance Watch and Inner City Press on the FOIA) filed a comment with the Federal Reserve Board, below.

 On February 11, 2022 in a Friday afternoon news dump the Fed rubber stamped the merger, stating (without name, to try to avoid judicial review) "One commenter objected to the proposal based on South State Bank’s record of home purchase lending to minority and LMI borrowers based on publicly available data reported under the Home Mortgage Disclosure Act (“HMDA”)29 for 2020. The commenter also alleged that South State Bank engages in disparate marketing efforts." Yeah.

On September 4, Fair Finance Watch commented to the Office of the Comptroller Currency, which some say has changed for the better. We'll see - now on September 7, South State has written to Fair Finance Watch, cc-ing the OCC and Fed: "Dear Mr. Lee... In the matter regarding the concerns of the Bank’s disparate marketing, the Bank is committed to providing equal access to credit throughout our footprint. The Bank takes a multi-layered approach to ensure that marketing of credit products reach all communities within the Bank’s Assessment Area and each application is underwritten without consideration of a prohibited basis. The Bank has undergone reviews by independent audit firms with reports dated June 30, 2020 and June 30, 2019 where marketing efforts have been reviewed. The reviews did not yield any fair lending concerns."

Then something is very wrong with those audits.

The Fed briefly extended the comment period - but then on December 17 asked this of South State and its outside counsel: "This correspondence relates to the application filed by South State Corporation, Winter Haven, Florida (“South State”), parent of South State Bank, National Association (“South State Bank”), to merge with Atlantic Capital Bancshares, Inc. (“Atlantic Capital”), and thereby acquire its subsidiary, Atlantic Capital Bank, National Association (“Atlantic Capital Bank”), both of Atlanta, Georgia, pursuant to sections 3(a)(3) and 3(a)(5) of the Bank Holding Company Act of 1956, as amended. Please respond in full to the following additional information items, including those listed in the confidential annex, and provide supporting documentation as appropriate. 1) In a response to a public comment dated September 17, 2021, South State indicated that South State Bank “annually engages an independent audit firm and conducts quarterly internal comparative file reviews of approved/declined loans to identify if there is inequitable pricing or underwriting of loans based on the prohibited basis found under the Equal Credit Opportunity Act and/or the Fair Housing Act.” a. Clarify whether the independent annual audit is separate from the quarterly internal comparative file review and discuss the types of information reviewed by both processes. Also discuss the role, if any, that South State or South State Bank staff have in the independent annual audit. b. Provide the most recent independent audit report. 2) At the time of its most recent Community Reinvestment Act (“CRA”) evaluation, Atlantic Capital Bank operated a network of branches in Georgia and Tennessee. Describe the process by which Atlantic Capital Bank reduced its branch network to its current two branches, including any steps that were taken to ensure continued compliance with the CRA." But that's after the close of the ("extended") comment period...

As to the Fed, which denies FOIA requests after five months, here, on August 25, this strange response: "Dear Mr. Lee,     This is to acknowledge receipt of your email to the Office of the Secretary for the Board of Governors of the Federal Reserve System (Board) dated August 17, 2021, regarding the proposal of South State Corporation to merge with Atlantic Capital Bancshares, Inc., and thereby indirectly acquire Atlantic Capital Bank, NA.  To date, South State Corporation has not filed an application with the Federal Reserve System.  Currently, the public comment period for the proposal will end on September 20, 2021. 

   If an application is filed within the next three months from the date your comment was sent, your correspondence will be made part of the record, and the Board will evaluate your comment.  We will also send a copy of the public portions of the application as soon as possible after the application is received.     Sincerely,     Jennifer Snow  Senior Examiner  Supervision, Regulation, and Credit  Federal Reserve Bank of Atlanta     Integrity. Excellence. Respect."

How can there be a comment period with expiration date, if there is no application? Inner City Press asked, and on August 26 is told:

"Our procedures provide that advance notice in the Federal Register may be requested in advance of a filing. The comment period end date applies to the Federal Register notice, which was filed in advance of the application being filed."

   What - the comment period running to its conclusion, before any application to comment on is available? This seems far too bank-friendly. How does it relate to the administration's Antitrust Memo? Watch this site.

Dear Chair Powell, Secretary Misback and others in the FRS:   This is  a timely first comment opposing the Applications of South State Corporation to merge with Atlantic Capital Bancshares, Inc., and thereby indirectly acquire Atlantic Capital Bank, NA .

 Fair Finance Watch has been tracking South State Bank NA:  The applicant's South State Bank NA in 2020 in Florida based on its disparate marketing made 5721 mortgage loans to whites, with 1019 denials to whites -- while making only 143 loans to African Americans, with 48 denials. This is far out of keeping with the demographics, and other lenders, in Florida - this is outrageous. 

This is a pattern. South State Bank NA in 2020 in South Carolina based on its disparate marketing made 3048 mortgage loans to whites, with 537 denials to whites -- while making only 133 loans to African Americans, with fully 147 denials. This is far out of keeping with the demographics, and other lenders, in South Carolina. The denials to African Americans are... outrageous.   

Perhaps most relevant, South State is disparate in the state it is trying to make this acquisition to impose and expand its practices. South State Bank NA in 2020 in Georgia based on its disparate marketing made 4068 mortgage loans to whites, with 451 denials to whites -- while making only 494 loans to African Americans, with 120 denials. This is far out of keeping with the demographics, and other lenders, in Georgia - this is outrageous.

 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 (and Fair Finance Watch, on the HMDA) will have more to say about this. Watch this site.

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