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

As Fed To Meet Feb 8 on Capital One's ING Deal, 600 Pages Withheld

By Matthew R. Lee

SOUTH BRONX, February 6 -- Amid mounting questions about the Federal Reserve Board's transparency, it has today scheduled a February 8 meeting to consider allowing, and probably to rubber stamp, Capital One to buy ING Direct and become the fifth largest bank in the US.

  But ten days ago the Fed 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.

  ICP immediately appealed, but the Fed has yet to respond. Instead, it withheld yet more information, from which ICP has again appealed. Then past 5 pm on February 6 the Fed redacted yet more information, trying to issue rulings to clear the way to approve the application while information is withheld.

    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). There is more.

  In the newer case, from Capital One's response to the Fed's December 15, 2011 questions, the Fed has blacked out the entirety of Footnote 1, which seemingly explains Capital One's lending in California. The Fed has blacked out on the top of Page 6 some Capital One argument about how and why it will improve the fairness of its lending.

  On Pages 11 and 12, Capital One makes representations to the Fed about with whom it will partner, representations clearly meant to argue for approval of Capital One's applications - but Capital One, and now the Fed, withheld the names and the argument. ICP has appealed.

  (In response to another request, Capital One belated released a line that "Capital One was unaware of the debtor’s bankruptcy because the debtor provided Capital One an ITIN number at the time of her application for credit, but filed bankruptcy using a social security number that she had not shared with Capital One.")

As argued in Inner City Press' FOIA appeals, rather than going forward and rubber stamping Capital One's applications, 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. This is outrageous.

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

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.

Footnote: When JPMorgan Chase executive William Daley left as President Obama's chief of staff, to be replaced by Citigroup Jacob Lew, some wondered if JPM Chase might be losing access with Obama.

But now nominated to the board of the Federal Deposit Insurance Corporation is the head of JPMC's investment bank, Jeremiah Norton.  That is, an executive of one of the largest recipients of federal bailout funds is being placed to guard the FDIC, which insures deposits.

The move is similar tothenomination in December of a hedge fund executive from the Carlyle Group, Jay Powell, for an open seat on the Federal Reserve Board.

 Beyond the obvious overtones of putting foxes to guard the chicken house, what in fact was learned from the global financial meltdown? What conflict of interest safeguards would be in place? What for example will Occupy Wall Street do? Who can still say that the Emperor has no clothes? Watch this site.