In Other Media-eg New Statesman, AJE, FP, Georgia, NYT,  Azerbaijan, CSM Click here to contact us     .

By Matthew R. Lee, Video, 7/31 story

SOUTH BRONX, September 12 – The US Treasury Department has begun a process to weaken and take the community out of the 1977 Community Reinvestment Act. The protagonist, akin to Scott Pruitt until recently at the US Environmental Protection Agency, is Comptroller of the Current Joseph Otting. On September 12 Fair Finance Watch (and on FOIA, Inner City Press) commented to the OCC, the 14th comment so far, here. From the comment: "Fair Finance Watch (and where applicable Inner City Press) appreciate the opportunity to comment on the Office of the Comptroller of the Currencys (OCC) Advance Notice of Proposed Rulemaking (ANPR) regarding the Community Reinvestment Act (CRA). CRA has leveraged significant amounts of loans and investments for low- and moderate-income communities.

We began enforcing the CRA in the South Bronx then beyond starting in 1994, in connection with the applications for mergers or expansions on which banks' records are considered. Numerous banks excluded the South Bronx and Upper Manhattan from their CRA assessment areas even though, as we proved, they collected substantial deposits from area residents. We got six banks to open branches and make lending commitments, in the Bronx and beyond.

We concerned that the OCC's proposal threatens to weaken CRA, see below. As as relevant here, we commented along with others on the CIT - OneWest proceeding, and were concerned both by OneWest's record under now-Comptroller Otting and by what emerged as the gaming of the system with pre-fabricated comments Otting openly solicited. We may comment in more detail on this later in his ANPR proceeding.

For now we wish raise particular concern about the approach signaled by Questions 21 and 15 and to emphasize that public participate is key to CRA, on performance evaluations and crucially on bank merger and expansion applications. Inner City Press, which often submits FOIA requests to the OCC (which is, frankly, slow), the Federal Reserve, FDIC and even non-USA regulators many of whom are faster than the OCC, emphasizes that comment periods should never close while information that is not specifically exempt from disclosure under FOIA is being withheld. Inner City Press has pending with the OCC, but not yet responded to, FOIA requests related to this proceeding / process, that should be responded to in full, including any necessary appeal, during this proceeding.

If the OCC proceeds to significantly diminish the importance of assessment areas on CRA exams, the progress in increasing lending to low- and moderate-income neighborhoods will be halted. NCRC estimates that low- and moderate-income neighborhoods could lose up to $105 billion in home and small business lending nationally over a five year time period. We join in the comments of NCRC, of which we are members... We urge the OCC to go back to the drawing board and develop reform proposals with the Federal Reserve Board and the FDIC.

And, for the reasons above and yet to be submitted, we contend Comptroller Otting should be recused from this process. Thank you for your attention to this."

While Reuters blandly noted that he is "a former banker," the bank he headed, OneWest, was accused of predatory lending and when its acquisition by the CIT Group was challenged by Fair Finance Watch, CRC and others Otting arranged for seemingly counterfeit or compelled comments supporting the merger. In this light, Question 11 of his "Advanced Notice of Proposal Rulemaking" or ANPR is noteworthy: "11. How can community involvement be included in an evaluation process that uses a
metric-based framework?" How, indeed. Here's what Otting wrote as a banker, already long public, in support of his merger:

"From: Otting, Joseph M [at] owb.com
Sent: Wednesday, January 07, 2015 5:00 PM
Cc: Haas, Alesia Jeanne; Tran, Cindy; Kim, Glenn
Subject: Support For OneWest Bank
 
Dear Friends,
 
We were excited to announce on July 21, 2014, that IMB HoldCo LLC, the parent company of OneWest Bank entered into a merger agreement with CIT Group Inc. As part of the applications for regulatory approval of the transaction, our regulators are interested in the perspectives of the public. We are writing you to seek your support of the Bank and pending merger. This merger, if approved, would create the largest bank headquartered in Southern California with a full suite of banking products and services, which will allow us to better serve our customers. We would retain and grow jobs and are committed to continuing and expanding our efforts to serve the economic and development needs of our community. I would like to ask you to take a moment to click on the link below and submit a letter of support adding any of your own words or thoughts.
 
Please submit your letter by clicking here, or by visiting our website at www.OneWestBank.com/merger-support (if the link isn't clickable or part of the link is cut off, please copy and paste the entire URL into your browser's address bar and press Enter)
 
Thank you for your support.  Best wishes for a successful 2015 and please call on me if I can ever be of assistance.
 
Joseph M. Otting
President and CEO
OneWest Bank N.A.
888 East Walnut Street
Pasadena, CA 91101"

   There will be fight-back, under NCRC's TreasureCRA campaign. Watch this site - including on actual enforcement of CRA. A bank that was sued by the US Justice Department in 2017 for redlining and discrimination is trying to sell itself to Old National, and Fair Finance Watch has formally challenged it under the Community Reinvestment Act in a filing to the Federal Reserve on the last day of the comment period. From the filing: "This is a timely first comment opposing the Applications of Old National Bancorp to merge with Klein Financial, Inc., Chaska, Minnesota, and thereby indirectly acquire KleinBank, also of Chaska, Minnesota.

As an initial matter, this is a request that the FRS immediately send by email to Inner City Press all non-exempt portions of the applications / notices for which the Applicants have requested confidential treatment.

  It was only last year that “the U.S. Justice Department accused Chaska-based KleinBank of redlining, the illegal practice of denying mortgage loans to minority residents. Lawyers from the department's civil rights division said KleinBank engaged in discrimination in Minneapolis and St. Paul by failing to market its services and open bank branches in areas dominated by minorities. KleinBank, which operates 21 branches in mostly outer-ring suburbs of the Twin Cities, is one of Minnesota's largest community banks. 'KleinBank's discriminatory practices … have been intentional and willful, and implemented with reckless disregard for the rights of individuals on the basis of their race and/or national origin,' the complaint said.”

   Now, attempting to cash in / out of that discrimination, Klein Bank seeks to sell, to Old National which has its own insufficient records. Fair Finance Watch has been tracking Old National:
In 2012 in its Evansville (Headquarters) MSA for conventional home purchase loans back in 2012, Old National Bank made only six such loans to African Americans. In 2016, the most recent year for which data is available, Old National made only THREE such loans to African Americans.  In Table 4-1, in 2012 it made three such loans to African Americans. In 2016 this fell to one.
Old National has gotten worse. It cannot be allowed to acquire Klein so recently prosecuted for discrimination.
 (Separately, note that in Evansville MSA in 2016, Old National reported a 100% approved and originated rate for both African Americans and Latinos, until in other MSAs - this is not credible, presumptively indicates pre-screening and should be investigated in connection with this Klein proposal.)

   For refinance loans in Evansville in 2012, Old National made eight such loans to African Americans. This fell to four in 2016.
   For home improvement loans in the Evansville MSA, Old National in 2012 made five such loans to African Americans. This fell to four in 2016.
   For refinance loans in Indianapolis in 2012, Old National made 18 such loans to African Americans. This fell to a mere seven in 2016, when Old National denied 62% of applications from African Americans (see above). 
Old National has gotten much worse. It cannot be allowed to acquire Klein so recently prosecuted for discrimination.
  Also troubling regarding Old National is its history of branch closings. According to its hometown newspaper the Evansville Courier News & Press
 "since 2004 Old National has purchased 175 banking offices, either through acquiring smaller financial institutions or buying selected office locations. Old National has also shed 140 banking offices by consolidating 121 locations and by selling 19 other offices."
 Old National is a bank with a disparate lending record that specializes in buying and closing bank branches - now it seeks to acquire Klein Bank prosecuted only last year for redlining.
  ICP is requesting evidentiary hearings and that this proposed acquisition, on the current record, not be approved. There is no public benefit." We'll have more on this - and this: the US Comptroller of the Currency Joseph Otting, who said he's never witnessed discrimination and is poised to attack the Community Reinvestment Act, yesterday announced he'll be giving out "fintech" bank charters. CRA won't apply. Instead, the announcement vaguely says, "The expectations for promoting financial inclusion will depend on the company’s business model and the types of planned products, services, and activities." But what to expect of the OCC of Otting? When at OneWest, he arranged for Astro-turf and even fake public comments supporting its acquisition by the CIT Group. In other comment period news, we like it when banks challenge each others. Like this, today: "The Independent Community Bankers of America (ICBA) today called on the Federal Deposit Insurance Corp. to deny Nelnet Bank’s deposit insurance application for its proposed industrial loan corporation and impose a two-year moratorium on future ILC applications. Like the since-withdrawn applications of SoFi Bank and Square, Nelnet’s is designed to avoid the legal restrictions of the Bank Holding Company Act, ICBA wrote in a letter to the agency. “The ILC loophole allows commercial interests to own full-service banks while avoiding the legal restrictions and regulatory supervision that apply to other bank holding companies—threatening the financial system and creating an uneven regulatory playing field,” ICBA President and CEO Rebeca Romero Rainey said. “To support a safe and sound financial system and to maintain the separation of banking and commerce, the FDIC should impose a two-year application moratorium and Congress should close the ILC loophole for good. Our deposit-insurance system was created to protect depositors—not commercial firms.” Regulation under the Bank Holding Company Act entails consolidated supervision of the holding company by the Federal Reserve and restricts the activities of the holding company and its affiliates to those that are closely related to banking. Because of a loophole in the law, companies that own ILCs are not subject to BHCA supervision even though the ILC charter is a full-service banking charter. As a result, companies that own FDIC-insured ILCs are not subject to consolidated supervision and can engage in non-banking commercial activities. Citing several previous moratoriums on ILC applications, ICBA’s letter notes that Nelnet Bank is applying as an ILC—not a commercial bank—so its parent company can retain its commercial activities. These include investing in start-ups, and maintaining telecommunications, investment and sports-software businesses. Nelnet Inc. should be subject to the same restrictions and supervision as any other bank holding company, ICBA wrote."  Later on July 31 New York regulator Maria T. Vullo issued this: "The New York State Department of Financial Services fiercely opposes the Department of Treasury’s endorsement of regulatory ‘sandboxes’ for financial technology companies. The idea that innovation will flourish only by allowing companies to evade laws that protect consumers, and which also safeguard markets and mitigate risk for the financial services industry, is preposterous. Toddlers play in sandboxes.  Adults play by the rules. Companies that truly want to create change and thrive over the long-term appreciate the importance of developing their ideas and protecting their customers within a strong state regulatory framework. DFS also strong opposes today’s decision by the Office of the Comptroller of the Currency to begin accepting applications for national bank charters from nondepository financial technology (fintech) companies.  DFS believes that this endeavor, which is also wrongly supported by the Treasury Department, is clearly not authorized under the National Bank Act. As DFS has noted since the OCC’s proposal, a national fintech charter will impose an entirely unjustified federal regulatory scheme on an already fully functional and deeply rooted state regulatory landscape." Sounds good -- but NYS DFS has for example allowed First Republic Bank to redline The Bronx, and hasn't even confirmed receipt of a timely comment opposing it. We'll have more on this - and on this: First Republic Bank, which excludes The Bronx as well as Brooklyn and Queens from its assessment area while funding outer borough slumlords, has applied to New York bank regulators to open another branch in Manhattan. Fair Finance Watch has filed opposition, along with Inner City Press, also citing FRB's record of displacement in California:  On behalf of Inner City Press / Fair Finance Watch (ICP), this is a timely comment opposing the application by First Republic Bank to open a new insured deposit-taking facility at 329 Tenth Avenue, Borough of Manhattan, City of New York 10001. First Republic Bank is engaged in redlining. Its branches in New York are entirely in Manhattan, and only in the most affluent sections. It excludes from its CRA Assessment Area, in their entirety, the boroughs of The Bronx, Brooklyn, Queens and Staten Island. This is an outrage, and that ICP had thought was no longer allowed by regulars. (ICP previously challenged and got changes such exclusionary Assessment Areas at Bank of New York, HSBC, predecessors of Bank of America and others). Cynically, while excluding the outer boroughs from its assessment area, First Republic Bank does business with landlords who have been described as slumlords, such as Moshe Piller. See, e.g., Daily News, “Moshe Piller, owner of the Hunts Point Ave. building in the Bronx where two children died when a faulty radiator spewed steam into their bedroom.” (ICP also takes note of the San Francisco analysis of its fellow NCRC member CRC). Fair Finance Watch has reviewed First Republic Bank's most recent publicly available HMDA data for the NYC MSA and, for home purchase loans, find that FRB made 283 such loans to whites, and only three each to Latino and  African American applicants. Its denial rate disparity is astronomical: 20% denial rate for African American, less than 1% for whites. Again: First Republic Bank is a redliner. For all of these reasons, First Republic Bank's applications should be denied." We'll have more on this - and this: People's United Bank, which has applied to buy Farmington Bank in Connecticut, has become more and not less disparate in its lending, as shown by analysis of U.S. Home Mortgage Disclosure Act data by Fair Finance Watch submitted to the US Office of the Comptroller of the Currency by Inner City Press in opposition to the proposed merger. From the timely July 27 filing: "This is a timely first comment opposing and requesting an extension of the OCC's public comment period on the Application by People's United Bank to acquire Farmington Bank.
  In the the New York City MSA in 2014, People's United made 82 home purchase loans to whites and NONE to African Americans or Latinos.   We note that People's has been in these markets since 2010 -- NOT “recently” -- and that New York City is not the “Lower Hudson Valley. Then we found that in 2015 in the New York City MSA, People's United made 110 home purchase loans to whites and only ONE to an African American and only four to Latinos.
  In 2016, the most recent year for which HMDA data is publicly available, People's got even worse: in the NYC MSA it made 144 home purchase loans to whites (more than in 2015) and still only one to an African American.
   For refinance loans in the New York City MSA in 2014, People's United made 24 loans to whites, 1 to an African American and four to Hispanics. By 2016, it was again worse: 165 loans to whites and only two to African Americans.
This is systematic redlining; this proposed acquisition could not legitimately be approved and People's United should be referred for prosecution for redlining by the Department of Justice and CFPB.
   People's United record is hardly sufficient in the Hartford MSA where it now proposes to acquire Farmington Bank. In 2016 in the Hartford MSA, People's United made 162 home purchase loans to whites and only 10 to African Americans and only 14 to Latinos.
  Again, this is systematic redlining; this proposed acquisition could not legitimately be approved and People's United should be referred for prosecution for redlining by the Department of Justice and CFPB.
     In this context, the comment period should be extended so that public evidentiary hearings can be held, and the application should be denied." Bank of America has been sued for failure to maintain properties it forecloses on in communities of color. Nationwide, the lawsuit contends, 45 percent of the Bank of America properties in communities of color had 10 or more maintenance or marketing deficiencies, while only 11 percent of the Bank of America properties in predominantly white neighborhoods had 10 or more maintenance or marketing deficiencies. 64 percent of the Bank of America properties in communities of color had trash or debris visible on the property, while only 31 percent of the Bank of America properties in predominantly white neighborhoods had trash visible on the property. 37 percent of the Bank of America properties in communities of color had unsecured or broken doors, while only 16 percent of the Bank of America properties in predominantly white neighborhoods had unsecured or broken doors. 49.6 percent of the Bank of America properties in communities of color had damaged, boarded, or unsecured windows, while only 23.5 percent of the Bank of America properties in white neighborhoods had damaged, boarded or unsecured windows.

  In Milwaukee, for example, recently profiled in the book "Evicted," the lawsuit cites 134 Bank of America REO properties. Of these 134 REO properties, 74 were located in African American neighborhoods, 21 were located in predominantly Latino neighborhoods, eight were located in predominantly nonwhite
neighborhoods, and 31 were located in predominantly white neighborhoods. 83.9% of the REO properties in predominantly white neighborhoods had fewer than five maintenance or marketing deficiencies, while only 21.4% of REO properties in neighborhoods of color had fewer than 5 maintenance or marketing deficiencies. 78.6% of REO properties in neighborhoods of color had 5 or more marketing or maintenance deficiencies, while only 16.1% of the REO properties in white neighborhoods had 5 or more marketing or maintenance deficiencies. 8.7% of REO properties in neighborhoods of color had 10 or more marketing or maintenance deficiencies, while none of the REO properties in white neighborhoods had 10 or more marketing or maintenance deficiencies. Some including the Fair Finance Watch notice similar disparities in Milwaukee when it comes to the placement of the Bublr bike share program. Maybe Bank of America will want to put its name on the disparate network, as Citibank has in New York with disparately placed CitiBike.

  At the UN on June 4, when Citigroup managing director Michael Eckhart appeared, it was to talk about renewable energy with the UN Environment Program. Inner City Press asked Eckhart about Citigroup's role in the Dakota Access Pipeline.

He paused and admitted it was a lender, than said that the outcry against the pipeline, on indigenous human rights and other issues, was entirely unexpected. He said they had not protested early enough. Video here. But what about free prior informed CONSENT? Is silence consent? Or, as is too often the case, is the UN a place of hypocrisy?

As Inner City Press has shown, UNEP paid money to Volvo Ocean Races, and appears to have engaged in pay-for-prize with MoBikes. Inner City Press also asked about the UN bribery scandal in which China Energy Fund Committee - oil money - bribed UN President of the General Assembly Sam Kutesa, but CEFC remains in special consultative status with UN ECOSOC. Video here. We'll have more on this - and on Citigroup. Watch this site.

***

Feedback: Editorial [at] innercitypress.com

UN Office: S-303, UN, NY 10017 USA

Reporter's mobile (and weekends): 718-716-3540

Search innercitypress.com  Search WWW (censored?)

Other, earlier Inner City Press are listed here, and some are available in the ProQuest service, and now on Lexis-Nexis.

 Copyright 2006-2015 Inner City Press, Inc. To request reprint or other permission, e-contact Editorial [at] innercitypress.com for