CIT's
Thain Met Fed
3 Weeks Before
OneWest
Merger, FOIA
Shows,
Redactions
By
Matthew
Russell Lee,
Exclusive
NEW
YORK, February
20 -- Federal
bank
regulators
remain
captured by
large and
becoming-large
banks like the
CIT Group, a
belated
Freedom of
Information
Act response
to Inner City
Press from the
Federal
Reserve on
February 20
shows. Uploaded
exclusively
here,
embedded
below.
Back on August
26, 2014,
Inner City
Press
submitted a
FOIA request
to the Federal
Reserve Board
for CIT's
application to
acquire
OneWest and
for the
Federal
Reserve's
communications
with or about
the companies
since January
1, 2014.
After Inner
City Press and
Fair Finance
Watch
repeatedly
complained
about the
withholding
even of CIT's
Community
Reinvestment
Act plan, and
after the Fed
and the Office
of the
Comptroller of
the Currency
had agreed to
ICP's and
others'
request for a
public
hearing, now
scheduled for
February 26,
only on
February 20 --
seven months
after the
request -- did
the Fed
provide the
responsive
documents,
over one
thousands
pages.
Many of the
released pages
are redacted
in full,
others have
redacts to for
example
sentences
referring to
documents
about CIT's
[REDACTED].
Inner City
Press has
submitted a
Freedom of
Information
Act appeal and
request that
the comment
period be
extended.
But even as
released, and
exclusively
uploaded today
here, the
document show
the degree of
insider
treatment CIT,
its CEO John
Thain and its
lawyers
including
Rodgin Cohen
of Sullivan
& Cromwell
are given by
the Federal
Reserve.
While the
proposed
merger was
only announced
to the public
on July 22,
2014, it
appears in
Federal
Reserve
correspondence
as far back at
April 24,
2014.
On that day,
Michael Lipman
of the Federal
Reserve
Board's
Banking
Supervision
and Regulation
(BS&R)
department
wrote to three
others that
“Based on
details from
the most
recent CIT
April BOD
meeting, there
is a
likelihood CIT
may approach
FRB in the
near term to
discuss an
acquisition of
OneWest NA
(Private,
~$23B in
assets ).
Couple points
[REDACTION]. I
will keep you
updated as
discussions
develop.
[REDACTION].”
Page 1 of ICP
upload;
appealed.
Then in June,
Rodgin Cohen
of Sullivan
& Cromwell
and CIT's John
Thain arranged
to meet with
the Federal
Reserve, to
some it
appears to
receive a form
of
pre-approval
of the
proposal.
On June 24
senior Fed
staff were
asked to hold
time to meet
with Rodgin
Cohen. On June
25, Lipman
wrote again:
“CIT
is meeting
with FRBNY
(John Ricketti
and others)
next Monday at
11am to
discuss a
potentially
large
acquisition.
CIT has yet to
send a
discussion
deck but will
have more
details later
this week
(OneWest
continues to
be the assumed
target: $22B
out of CA).
John Thain’s
secretary has
bee guided to
me to help set
up a meeting
in DC and I am
expecting to
hear from her
by Friday.
That said, it
is also
possible that
they may reach
out to one of
you; CPC
Cheatham is
under the
impression
they have a
different
contact in DC
as well (he is
not sure
who).” Page 6
of ICP
upload.
Later that day
it was said
that “the
meeting with
be in Scott's
office so
space will be
limited.”
Scott is Scott
Alvarez, the
Fed's longtime
general
counsel.
On June 30,
the Fed's
Richard Naylor
wrote to
Lipman, “ I
wouldn’t worry
about any
briefing
material for
Scott. Most
likely Rodgin
will do all
the
talking...”
Scott
Alvarez's
self-described
Gate-keeper
told Lipma who
would come:
“The Chairman
and CEO of CIT
and 6 other
guests; 3 from
One West; 1
from Wachtell,
Lipton, Rosen
& Katz and
2 from
Sullivan and
Cromwell.
Total of 13
outsiders.”
Page 163 of ICP
upload.
These
“outsiders”
sound like
insiders.
Exclusive:
CIT's Thain
Met Fed Staff
3 Weeks Before
OneWest
Merger, FOIA
Response
Shows, Loan
Loss
Redactio...
by Matthew
Russell Lee
The next day
the attendees
were
described:
Readout
of Meeting on
Proposed
Merger between
CIT and
OneWest Tue
7/1/2014
12p-1p, B-4001
Outside
Attenders: ~13
Executives
from CIT
(~7-8)
included CEO
John Thain,
formerly CEO
of Merrill
Lynch
Executives
from OneWest
(~3) included
CEO
Lawyers
(~2-3)
included
Rodgin Cohen
(Sullivan
Cromwell) and
a Wachtell
Lipton lawyer
Board
Attenders:
~10-12
So the
“outsiders”
from Wall
Street had
more attendees
that the Fed,
even insider
the Fed.
The Fed's
Alison Thro
put it in
context:
“Rodgin is
coming in to
preview the
proposed
acquisition
because it
will be the
first
transaction to
create a more
than $50
billion
institution
since
Dodd-Frank was
enacted.”
Also on June
30, the Fed's
Elizabeth
Kiser wrote to
Fed economist
Jacob
Gramlich, “I
dug a bit and
found some
materials on
CIT’s
[REDACTED].”
There follow
more than 100
pages of
redacted
material. Page
25 to 149 of ICP
upload;
appealed.
By July 9,
still before
any public
announcement
by CIT, the
project had
been
code-named
Carbon /
Oxygen and the
Fed was
reviewing (and
now apparently
redacting) the
OneWest /
Indymac / FDIC
Loan Loss
Agreements.
These will be
discussed at
the February
26 public
hearing, and
beyond.
Once they
applied for
approval and
groups like
Inner City
Press / Fair
Finance Watch,
NCRC, CRC and
others
submitted
comments in
opposition,
the Fed was
required to
follow its
rules against
ex parte
communications.
But the
extensive
communications
that took
place before
then were
withheld for
seven months,
and some are
still being
withheld.
Today, Inner
City Press /
Fair Finance
Watch exclusively
uploads these
documents,
in preparation
for the public
hearing, and
beyond. Watch
this site.
, 
