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By Matthew Russell Lee, Patreon Story
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FED COURT / S Bronx, Nov 2 – Whether or not the U.S. Community Reinvestment Act will actually be enforced under the Administration and its regulators remains an open question. Consider: Inner City Press immediately reported that BMO Harris' application to buy Bank of the West and its more than 500 branches from BNP would be a litmus test.

 Fair Finance Watch noted, from Day 1, that in 2020 BMO Harris denied many more mortgage applications from African Americans than it approved: 509 denied versus only 223 loans made to African Americans, nationwide. BMO's numbers for whites were the reverse: 9270 loans made, versus less then six thousand denials. As noted, there are also climate and secrecy issues. Fair Finance Watch and other raised branch closings.

This is outrageous. The Fed itself should make these exhibits public.

On October 17, the Fed sent Fair Finance Watch a copy of letter to "Ro" - "Dear Ro: Please provide a response including supporting documentation, to the following request: 1. Provide the cover page for the FR Y-3F and responses to any questions that were not already covered in the initial FR Y-3 filing. Provide your response by October 25, 2022, eight business days from the date of this letter."

On October 26, belatedly more formal, the Fed asked: "Dear Rosemary:  Please provide responses to each of the following requests. Supporting documentation, as appropriate, should be provided... Describe whether the combined banking organization would expand upon each bank’s community development activities if the proposal is consummated, and identify those community development activities."

On November 2, to that, this: "Describe whether the combined banking organization would expand upon each bank’s community development activities if the proposal is consummated, and identify those community development activities. BHB is in the final stages of completing a Community Benefit Plan that will cover the first five years after consummation of the Proposed Transaction. In connection with that plan, BHB will increase its overall level of community development lending, investments and philanthropic giving above current levels. When considering its qualified community development lending, investments and philanthropy during the five year plan period, BHB will prioritize investments in affordable housing, rural housing needs, economic development, workforce development, sustainability, digital inclusion and financing for homeowners and small businesses. BHB will be in a position to share the Community Benefit Plan shortly.  3  The Proposed Transaction will expand the combined organizations community development activities in a number of ways. BHB has an experienced community development team that lend to and invest in affordable housing and economic development projects and will bring their expertise and innovative approach to affordable housing, revitalization and economic development to the BOTW markets. With respect to community development lending, BHB and BOTW both provide loans in connection with Low Income Housing Tax Credit (“LIHTC”) financing products. However, BHB also owns a “qualified Community Development Entity” (“CDE”), which allocates federal new market tax credits (“NMTC”) for economic development and social service projects. As a combined organization, BHB’s CDE would expand its allocation focus to BOTW’s footprint and surrounding rural markets. BHB will also continue to support government, non-profit and middle market lending that benefit LMI communities and communities of color. BHB will continue to expand its investments in bonds to school districts and municipalities that assist with infrastructure for LMI communities or constituents, and loans to municipalities to aid with infrastructure and other needs, especially those that benefit LMI geographies or other underrepresented groups. With respect to community development investments, both BHB and BOTW currently invest in LIHTCs, which BHB will continue following closing. BHB is also an active investor in asset classes beyond those of BOTW’s, with investments in CRA-qualified private equity funds, Small Business Investment Company-licensed funds, loan funds and Community Development Financial Institutions. The combined organization will increase BHB’s current investment activity in these asset classes to target BOTW’s CRA assessment areas. In addition to the foregoing, BHB recognizes that organizations led by women and persons of color face obstacles in attracting funding and investments, and BHB will prioritize its philanthropic giving to these organizations where possible. In connection with the upcoming Community Benefit Plan, BHB will reserve 75% of its philanthropic commitment for endeavors that serve minority organizations or communities, or are led by people of color or women. In connection with the Community Benefit Plan, BHB will support at least 75 organizations it has not supported in the past over the five years of the plan, with at least 10 new philanthropic partnerships in BHB’s top three states by deposits (IL, CA and WI) and five new philanthropic partnerships in next four top states by deposits (MN, AZ, CO and IN). BHB also will work to increase the average size of CRA-qualified grants from an average of approximately $32,000, to an average of $40,000-50,000 by the end of the five year plan period."

Watch this site.

The banks in an August 3 letter belatedly admitted: "One commenter requested that certain confidential exhibits to the April 12, 2022 responses to the Federal Reserve as well as certain confidential exhibits to the initial Federal Reserve application be made public. The parties have reviewed this information and have concluded that some of this information can be public." So why did they mislabel it, and the Fed allow it? The comment period must be reopened. Especially in light of this:

The banks now claim: "Commenters criticized BNP Paribas S.A.’s15 and BMO’s efforts related to climate resiliency and lending to the fossil fuel industry...Similarly, BNP Paribas and BOTW have some of the financial services industry’s most restrictive financing policies concerning the most damaging forms of fossil fuel extraction and have minimal exposure to the fossil fuel exploration and extraction sectors."

But consider: "Following the UK government's decision  to give "final regulatory approval" to Shell's Jackdaw gas field in the North Sea, a coalition of climate organizations  sent a letter to the oil major's biggest bankers calling for a halt to the project. The letter was sent to 25 financiers of Shell, including the top five financiers in the period 2016 - 2021: BNP Paribas... Almost all of the bank recipients of the letter have commitments to reach “Net Zero” in their financed emissions by 2050, including the top five – all members of the Net Zero Banking Alliance (NZBA). The letter highlights the incompatibility between these banks’ financial relationship with Shell and their own climate commitments, potentially exposing them to significant reputational, legal, financial and other risks."

We'll have more on this- watch this site.

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

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