Inner City Press -- Investigative Reporting From the Inner City to Wall Street to the United Nations

With Fed Mulling Capital One's ING Deal, 590 Pages Withheld, Blacked Out

By Matthew R. Lee

SOUTH BRONX, January 29 -- Amid questions about the Federal Reserve's transparency as it considers allowing Capital One to buy ING Direct and become the fifth largest bank in the US, the Fed last week responded to a Freedom of Information Act request by Inner City Press by withholding 590 pages in full, and at least half of the single 34 page document it did provide.

  Click here to view the Fed's FOIA Denial, from which Inner City Press has already appealed, and click here to view the heavily redacted 34 page document that the Fed provided to Inner City Press (and Capital One to NCRC and the other protesters from which it had withheld this information).

  As argued in Inner City Press' FOIA appeal, the Fed should re-open its comment period, inter alia following its now appealed under the Freedom of Information Act denial of January 24, 2012 of ICP's FOIA request of December 4, 2011, for "all withheld portions of Capital One's November 15, 2011 submission to the Fed on the pending ING DIRECT application."

  It took 50 days for the Fed to respond. Worse, 590 pages are being withheld in full, and of the single 35 page document subsequently sent to Inner City Press, much has been redacted, including how Capital One would pay for the acquisition,

- weaknesses in ING DIRECT (page 3);

- all information about Capital One's credit card lending to people with FICO scores below 660, and subprime card lending (page 4);

- small business lending (page 5);

- due diligence on HSBC's card platform, previously of the predatory lender Household (page 13);

- forward sale agreements (page 14 - even the Fed's question is withheld, we appeal that);

- mortgage lending (page 16); swaps (page17);

- and the entirety of pages 19 through 34, including the Fed's questions.

  The Fed cites Exemption 5, but it how an "intra-agency" exemption could be cited for what Capital One submitted is unclear. ICP opposes the invocation, too, of exemption 8 without explaining in detail the type of information in the 590 pages withheld in full.

   It is hard or impossible to argue about this black hole of information: the Governor charged with ruling on this appeal should review all of the information in camera, and release all portions that are not strictly exempt.

  The Fed is increasingly abusing and evading FOIA and this must be not only reversed, but explained and accountability imposed in response to this appeal.

 This information must be reviewed, and released and comment allowed there, before the Fed considers approving the Capital One - ING proposals.

  For the reasons of record, and as argued by NCRC, the Federal Reserve should re-open the comment period to fully consider Capital One's related proposal to buy the ex-Household predatory lending platform from HSBC, and the related stealth ING proposals.

Fed governors, nominated hedge funder not yet shown

When Capital One applied to the Fed to acquire ING Direct, the US Internet banking subsidiary of Amsterdam-based ING, community groups like ours around the country and Washington-based NCRC began to file protests, based on Capital One's anti-consumer practices.

But the impending addition to Capital One of the predatory lending platform HSBC bought along with Household International, while Household was being pursued by state Attorneys General around the country, would make matters worse.

With these two acquisitions, Capital One could become a fifth "too big to fail" bank in the US, after JP Morgan Chase, Bank of America, Wells Fargo and Citigroup. The anachronistic gang in Capital One's television ads, along with Alec Baldwin, may be funny, but less so if considered too big to fail, possibly requiring bailouts.

ING quietly sought a ruling from Fed General Counsel Scott Alvarez that ING should not have submit any application subject to public comment to own up to 9.9% of Capital One. This would exclude public comment and consideration of ING doing business with the likes of Sudan, Iran, Cuba, Syria and others on the US state sponsors of terrorism list. ING had admitted being under investigation for, and negotiating with the US Department of Justice about, such violations, and there have been expressions of Congressional concern.

Now, even the Office of the Comptroller of the Currency which is considering Capital One's HSBC application has taken to withholding in full information concerned Capital One, then making it difficult to appeal. But that's another story - watch this site.