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By Matthew Russell Lee, Patreon Story
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FED COURT / S Bronx, Nov 30 – 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." But will the Fed play a hands-off role, like the OCC on US Bank, not even providing a copy of the bank's "commitment" letter? Even after the public announcement, the Fed's next (last?) question letter did not ask into that - but it did ask "Provide complete financial statements as of September 30, 2022, as well as pro forma financial statements in the format previously presented, for Bank of Montreal worldwide, BFC, and BHB. The financial statements as of September 30, 2022, would be pre-merger. The pro forma financial statements would be both pre- and post-merger, with both including estimates of all anticipated changes in financial condition, including the effects to financial condition from increases in reserves pertinent to the Petters lawsuit judgment1 (if any). 2. In support of this pro forma statement, also provide the following: a. A detailed breakdown of the revised reserve in response to the Petters lawsuit jury award (if any), itemizing respective amounts that comprise the total (expected judgment

1  Kelley v. BMO Harris Bank, N.A., No. 19-CV-1756 (D. Minn. Nov. 8, 2022) (“Petters lawsuit jury award”).

 after appeal, interest, and fees, etc.), and a description of why these amounts are reasonably sufficient; b. Details on the effects of the Petters lawsuit jury award on capital adequacy; and c. Detailed calculations in support of any other changes in capital, overall financial condition, or earnings, with an explanation of the reason for the changes." Full letter on Inner City Press' DocumentCloud here.

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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