By
Matthew
Russell Lee
UNITED
NATIONS,
October 15 --
The secret
recordings of
then
Federal
Reserve
examiner
Carmen Segarra
about Goldman
Sachs and
regulatory
capture have
given rise to
calls for
oversight
hearings by at
least two US
Senators, and
to spin from
the Federal
Reserve Bank
of New York.
On October 10,
Inner City
Press was sent
heavily
redacted
copies of two
letters from
the CIT Group
to the Federal
Reserve Bank
of New York,
supposedly in
compliance
with the
Freedom of
Information
Act - now uploaded
to Scribd here
and here.
CIT sought to
withhold even
its Community
Reinvestment
Act plan.
Inner City
Press raised
the issue to
Fed Chair
Yellen in
Washington -
and today,
October 15,
the Federal
Reserve called
Inner City
Press and left
a voice mail
to say its
request for extension
of the comment
period,
because of the
incorrectly
withheld CIT
documents, has
been granted
until October
22.
While
appreciating
the Fed's
comment period
extension, the
context and
public policy
questions
recently
raised must be
noted.
The head of
the FRBNY
since 2009,
William
Dudley, has
insisted that
supervision by
the Fed and
its regional
banks is
"completely in
the public
interest." He
cites, in
support of
this,
something he
calls
"horizontal"
supervision,
which to many
has the
context of
being supine.
And the
Federal
Reserve Banks
are, in fact,
owned by the
banks they
ostensibly
regulate. And
as Inner City
Press has
previously
reported,
while merger
applications
go in the
first instance
to the Federal
Reserve Bank,
they have only
the power to
approve, not
deny or even
impose
conditions,
the
applications.
Horizontal,
indeed.
This
horizontal
position is
the rule, not
the exception.
Inner City
Press
routinely
submits
Freedom of
Information
Act requests
for
communication
between the
Fed and banks
applying for
mergers.
Most
recently, the
Fed has
extended its
deadline for
responding to
Inner City
Press' request
on CIT
- OneWest,
on which it
purported to
close its
public comment
period on
September 24:
FOIA
Request No.
F-2014-00380
Dear
Mr. Lee,
On
August 27,
2014, the
Board of
Governors
("Board")
received your
electronic
message dated
August 26,
pursuant to
the Freedom of
Information
Act ("FOIA"),
5 U.S.C. §
552... On
August 28,
2014, the
Board’s
Freedom of
Information
Office made an
interim
production of
responsive
documents
consisting of
the public
portion of the
application by
CIT Group Inc.
and Carbon
Merger Sub LLC
to acquire and
merge with IMB
HoldCo LLC,
and thereby
indirectly
acquire voting
shares of
OneWest
Bank...
Pursuant to
section
(a)(6)(B)(i)
of the FOIA,
we are
extending the
period for our
response until
October 9,
2014, in order
to consult
with two or
more
components of
the Board
having a
substantial
interest in
the
determination
of the
request. If a
determination
can be made
before October
9, 2014, we
will respond
to you
promptly.
How
can the public
be shut out
before it has
the basic
information it
has requested?
Now, only
because CIT
mis-published
public notice,
the Fed's
comment period
has been
extended to
October 10. (A
new Office of
the
Comptroller of
the Currency
comment period
has opened,
through
October 24.)
The Federal
Reserve Board
has asked CIT
some
questions,
including
“discuss CIT
Group's plans
to manage
OneWest Bank's
mortgage
servicing
assets and
nontraditional
mortgage loan
portfolio."
Nontraditional
mortgages -
that would be,
subprime.
Tellingly,
when
lawyers leave
the Federal
Reserve's
Legal
Division, many
go to white
shoe law firms
that submit
bank merger
applications
to the same
people they
until recently
worked with or
supervised.
Inner City
Press,
Bronx-based
Fair Finance
Watch and NCRC
have
repeatedly raised
this to the
Fed,
without
meaningful
response.
So
here's hoping
that Carmen
Segarra's
courage, in
secretly
making the
recordings and
then releasing
them, leads to
increased
oversight of
and reform at
the Fed.
The
problem is,
while some in
Congress are
willing to
criticize the
Fed, the real
parties in
interest here
are the
largest banks
and investment
banks in the
country. Who
in Congress
will directly
challenge
those? Watch
this site.
, 
