| BMO Harris
BNP Gets Fed OK Despite Peters Case With
Climate and Job Loss Dismissed
By Matthew
Russell Lee, Patreon Story
FED COURT / S
Bronx, Jan 17 – Whether or not
the U.S. Community
Reinvestment Act will actually
be enforced under the
Administration and its
regulators remains an open
question, or one answered in
the negative, at least by the
Federal Reserve. 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.
On October 14, the banks' counsel sent
Fair Finance Watch what purported to be a copy
of its submission to the Fed under the Ex
Parte Rules -- but the entire thing was
withheld, under this cover message: "Attached
is the public portion of the BMO response to
the Federal Reserve Bank of Chicago’s request
for additional information received on October
3, 2022. Please
feel free to reach out to me with any
questions. Best,
Ro Ro Spaziani
Wachtell, Lipton, Rosen & Katz." No
substance was attached, just a request for
confidential treatment
This was
outrageous. The Fed itself
should make these exhibits
public.
On January 17,
the Fed approved the merger,
without the word "ponzi"
appearing in the order, but
these did appear: " The
potential for job losses
resulting from a merger is
outside of the limited
statutory factors that the
Board is authorized to
consider when reviewing an
application or notice under
the BHC Act. See Western
Bancshares, Inc. v. Board of
Governors, 480 F.2d 749 (10th
Cir. 1973); see also U.S.
Bancorp, FRB Order No. 2022-22
(October 14, 2022); BB&T
Corp., FRB Order No. 2019-16
(November 19, 2019); KeyCorp,
FRB Order No. 2016-12 (July
12, 2016); Community Bank
System, Inc., FRB Order No.
2015-34 (November 18, 2015);
Wells Fargo & Co., 82
Federal Reserve Bulletin 445
(1996);" and
"Some commenters
expressed concerns regarding
the amount of funding that BNP
Paribas and Bank of Montreal
have provided to fossil-fuel
companies, while one commenter
requested that the combined
organization publish annual
disclosures related to
environmental issues. In
addition, one commenter
expressed concern that BOTW
had not disclosed information
regarding the diversity of its
employees. These comments
concern matters that are
outside the scope of the
limited statutory factors that
the Board is authorized to
consider when reviewing an
application under the BHC Act.
See Western Bancshares, Inc.
v. Board of Governors, 480
F.2d 749 (10th Cir. 1973)."
The Fed sure
loves that 1973 case. It's
time to amend the BHC Act and
CRA to provide a private right
of action and of judicial
review.
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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