On Money Laundering After Federal Reserve Withheld 133 Pages On Truist Inner City Press Appeal Gets 1 More Page

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On Money Laundering After Federal Reserve Withheld 133 Pages On Truist Inner City Press Appeal Gets 1 More Page

By Matthew R. Lee, FOIA docs, BB&T denial

NEW YORK CITY, July 20 – When BB&T announced a $66 billion proposal to take over Suntrust Bank, to form a subsequently named Truist, many linked it to deregulatory moves in Washington. Then two days after Federal Reserve Governor Lael Brainard was asked by Inner City Press about the Fed's lax review of previous mergers, including WSFS on which the Fed still hasn't ruled on the bank's withholding of information after rubber stamping the deal, the Fed announced public hearings. But the fix it seems it still in. On April 18, conveniently, the Fed "announce[d] termination of enforcement action with BB&T Corporation" for money laundering. So there's a public comment period on the merger, but none on the Fed's dubious move while the application is pending. Meanwhile as Inner City Press has exclusively reported, BB&T has been named in connection with sleazy debt collections in a case in the SDNY - more on all this to come. On April 29, Inner City Press submitted a FOIA request about the dubious termination of enforcement action, and a comment to the Fed and FDIC, below.

  On the afternoon of May 2, before seeking to close the comment period on BB&T - Suntrust on May 3, the Federal Reserve wrote to Inner City Press that only ONE PAGE about its BB&T money laundering enforcement termination would be provided, and 133 pages withheld in full, no even subject to the type of partial redaction that is required under FOIA. FRB 99% denial letter here.

  The one page is not even from the Federal Reserve: it is from the North Carolina regulator. Now on July 18 after Inner City Press' appeal the Fed - not even a Governor, as in the past, but Secretary Ann E. Misback, has upheld the failure to provide information, expect for one additional page, an approval letter to BB&T's Board of Directors. Secretary Misback writes: "Dear Mr. Lee:  This is in response to your email message dated May 3, 2019, and received by the Board's Information Disclosure Section on May 6, in which you appeal, pursuant to 12 C.F .R. § 26 l. l 3(i), the decision of the Deputy Secretary of the Board ("Deputy Secretary") to deny your request for information under the Freedom oflnformation Act ("FOIA"), 5 U.S.C. § 552.  Background  By email message dated and received by the Board's Information Disclosure Section on April 29, 2019, you requested records regarding "the 18 April 2019 termination of the money laundering [ enforcement] action against BB&T."  By letter dated May 2, 2019, the Deputy Secretary infonned you that staff searched Board records and located information responsive to your request. The Deputy Secretary advised that the majority of the responsive records consist of internal and inter-agency pre-decisional deliberations and recommendations as well as confidential supervisory infonnation related to the supervision and examination of a Federal Reserve-regulated financial institution. The Deputy Secretary further advised that this information is exempt and would be withheld from you under the authority of exemptions 5 and 8 of the FOIA, 5 U.S.C. §§ 552(b)(5) and (b)(8), respectively. The Deputy Secretary explained that the records had been reviewed under the requirements of subsection (b) of the FOIA, 5 U.S.C. § 552(b), and all reasonably segregable nonexempt infonnation would be made available to you. The Deputy Secretary advised that approximately one" - page, and now only one more. Outrageous.

 And there is a request to the FDIC about three pages. Just after the Federal Reserve's FOIA "response," the FDIC wrote to Inner City Press to say its comment period would closed on May 3, and has not responded how it and the Fed's May 3 public meeting, replete with singing for supper, can be viewed. On May 3 before 5 pm Inner City Press raised the bogus FOIA response to the Fed governors and FDIC: "Dear Chair Powell, Secretary Misback and others in the FRS:      This is a timely second comment opposing and requesting an extension of the FRB's public comment period on the Application by BB&T Corporation to merge with SunTrust Banks, Inc. and indirectly acquire SunTrust Bank Holding Company, Orlando, FL, and SunTrust Bank.       As Fair Finance Watch was reviewing the Home Mortgage Disclosure Act (HMDA) and other data of the banks with an eye toward commenting or not commenting by the current May 3 expiration of comment period on this proposed mega-merger, it and Inner City Press were shocked to see the Federal Reserve Board's cynical April 18 termination of the enforcement action against BB&T for money laundering.       Money laundering is, along with redlining, one of the most serious crimes a bank can engage in. For example currently in the SDNY there are numerous AML prosecutions, resulting for example in the conviction of CEFC's Ho for UN-related bribery. Even the Fed had historically acknowledged the primacy of full AML compliance over the rush toward corporate combination, for example in connection with M&T Bank.       Yet here, for the convenience of and in collusion with a proposed mega merger, the Fed without transparency has terminated the BB&T AML enforcement action during the public comment period on the merger, without taking any public comment on it.     Inner City Press has submitted a Freedom of Information Act request to the Federal Reserve for records related to this troubling de-regulatory action. It requested expedited treatment and formally requests that the comment period be kept open until the FRB has made these records available.        Cynically, the Fed responded just before deadline with one page, withholding 133 pages in full in contravention of FOIA. Inner City Press has timely appealed:  an mmediate FOIA appeal of FRB absurd denial by providing only one page and withhold 133 pages in full - in response to Inner City Press' FOIA request regarding the FRB's decision to terminate the money laundering enforcement action against BB&T during the pendency of its application to acquire Suntrust.      As you must know, agencies are request to provided all reasonably segregable information and are not allow mass withhold, as here, over 99% of responsive pages, in full.      Troublingly, just as the Fed acquiesced to BB&T and lifted the enforcement action to facilitate this merger, now it provide a shameful FOIA (non response), to claim it is legitimate to close its comment period on this, the largest merger proposal since 2008.        This is a demand that on this record the comment period must be extended. Inner City Press also timely notes that it asked the FDIC how to view today's public meeting and was told it is only live streamed INSIDE the Federal Reserve Bank. This should be explained - it is far from the best practice, of smaller regulators, on smaller proposed mergers. Something is dreadfully wrong here - the comment period must be extended.     Again, Fair Finance Watch has reviewed BB&T's HMDA data for 2017, the most recent year for which such disclosure data is available, and for now note that for example in the Houston Texas MSA in 2017, BB&T made 56 conventional home purchase loans to whites and only four to African Americans and only six to Latinos. In the New York City MSA in 2017, BB&T made four such loans to whites and none at all to people of color. In Charleston, WV in 2017 it made 57 such loans to whites and none to people of color. From the first of what should now be more than two public meetings, in West Virginia, SunTrust has already closed all of its branches; over the past four years, BB&T has closed more than 10 branches in the state.       We note on the FDIC's web page no sign of an application for this merger. The Federal Reserve should not rule until the FDIC board is full, and to coordinate its review with such a full FDIC board.   On the current record, BB&T's applications should be denied." We'll have more on this. 
Watch this site.

  Recent deregulatory moves  include an assault on the Community Reinvestment Act, being led by Comptroller of the Currency Joseph Otting, who while at OneWest Bank led a false commenting process to push through a merger with CIT Group. (Otting is trying to change the OCC's practices on FOIA fee waivers and is even refusing to consider comments on some Business Combinations. But this BB&T proposal will go to the Fed whose Jerome Powell has vowed, credibly or not, to conduct a full review. And so consider this:  BB&T has been ordered to return $5.2 million to investors, according to the Securities and Exchange Commission, over charges it it acquired misled clients about the cost of advisory services.  The SEC said the firm that BB&T acquired with Susquehanna Bancshares, known then as Valley Forge Asset Management, misled about 1,200 clients into believing they were receiving full service brokerage services at a discount. We'll have more on this.

 Fair Finance Watch, which has been tracking BB&T as well as Otting's and the Federal Reserve's anti-CRA moves, finds that for example in the Atlanta Metropolitan Statistical Area in 2017 BB&T denied the home purchase mortgage applications of African Americans 2.2 times more frequently than whites, while making only 50 such loans to African Americans, and 23 to Latinos, compared to 458 to whites, all more disparate that other lenders in the market.

  While some portray the proposed merger as a fait accompli, the Fed and OCC must hold public comment periods and consider the banks' CRA records, even as they race to undermine the law. Inner City Press will submit requests under the Freedom of Information Act, as it has on OneWest - CIT and now for Otting's schedule as Comptroller.

On January 16 Inner City Press asked the OCC on the expedited basis for records to disclose Otting's meetings with the banking industry and others:  "Dear OCC FOIA Officer: Inner City Press / Fair Finance Watch (ICP) makes this request for records pursuant to the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, and OCC regulations. ICP requests copies of records sufficient to show all of Comptroller Otting's scheduled meetings, appointments, and scheduled events from the date he became Comptroller to the date of your response including but not limited to Outlook calendar entries and daily briefing books for Comptroller Otting on those dates... ICP requests that you expedite the processing of this request. There is media interest and there exist possible questions concerning the OCC's integrity, which affect public confidence. See e.g. this article and the CRA ANPR since." We'll have more on this.

 Bigger picture, or on the club BB&T is trying to join, Otting's OneWest colleague and now boss, US Treasury Department Steve Mnuchin on December 22 from Cabo called six big US banks: "Brian Moynihan, Bank of America; Michael Corbat, Citi; David Solomon, Goldman Sachs; Jamie Dimon, JP Morgan Chase, James Gorman, Morgan Stanley; Tim Sloan, Wells Fargo. The CEOs confirmed that they have ample liquidity available for lending to consumer, business markets, and all other market operations...  Here are some of the documents, for (still) free download on Patreon.

 On October 1 Inner City Press / Fair Finance Watch submitted the documents obtained under FOIA into the record before the OCC, stating that "These documents, which must be considered as part of this ANPR and any subsequent formal rulemaking, show that fraudulent comments supporting Otting's OneWest were submitted to the OCC - presumptively attributable to Otting.
The documents show that the OCC sought an explanation from Otting's / OneWest's outside counsel - and the OCC's and Justice Department's response to date reflect that no such explanation was ever provided. The OCC nevertheless approved the merger and even gave weight to the fraudulent comments. On this record we again insist that Otting be recused from this ANPR and any related rulemaking or proceedings. We have other substantive concerns about this ANPR but view the question of Mr Otting's recusal (and of with whom he has met, on which Inner City Press has another long-pending FOIA request) as threshold matter than must be addressed as quickly as possible."

 The FOIA document as provided by the OCC and US Department of Justice reflect that the OCC never followed up on its lone (and wan) question to Otting's counsel as Sullivan & Cromwell to explain the fraudulent comments. Nor did this counsel respond to questions from The Intercept's David Dayen, who reports: "AFTER A YEARLONG effort to obtain the information, which included ongoing litigation, the OCC made available 15 pages. They contain emails to and from David Finnegan, an OCC senior licensing analyst who was a point of contact for public comment on the merger.

Four individuals contended in emails to Finnegan that they never sent the comment letters supporting the merger. “This is to bring to your attention that I received an email from the office of OCC regarding a subject I am completely unaware of,” wrote one individual (the OCC redacted the emailers’ identifying information). “I DID NOT send the email below that you responded to. This is a fraudulent use of my email account.” The other three sent similar complaints.

The letter of support attributed to these individuals was identical to the letter posted at the OneWest Bank website.

Matthew Lee of Inner City Press expressed outrage at the fake comments. “There’s nothing more offensive of speech rights than artificially presenting someone as saying something you don’t believe,” Lee said. “You have the right to be silent. It’s so beyond the pale.”

FOIA Finds: OneWest CIT Ban... by on Scribd

Finnegan responded to these emailers, thanking them for letting him know. He also sent two emails to Stephen Salley, an attorney with Sullivan & Cromwell, who was representing OneWest in the merger. “FYI and review. We would appreciate any information you can provide regarding this submission,” Finnegan wrote to Salley on both occasions.

Presumably, Finnegan reached out to OneWest’s lawyer about the fake comments because they featured the same form letter that OneWest had written to encourage public support. But the two emails are the only record that OCC did any investigation of the fake comments. There is no reply from Salley or Sullivan & Cromwell to the OCC, at least not in written form. “By reaching out to the attorneys immediately, it suggests something serious, and yet there’s no follow-up that’s apparent whatsoever,” said Kevin Stein of the California Reinvestment Coalition...Olivia Weiss, a spokesperson for CIT, forwarded a request for comment to her colleague Gina Proia, who declined to comment. Salley did not respond when asked whether he or his law firm responded to the OCC.... In his public comment for Inner City Press, Lee asked for Otting to recuse himself from the new rule-making, highlighting the fake comment controversy. “Public participation is key to CRA, on performance evaluations and crucially on bank merger and expansion applications,” Lee wrote. He added that it’s unclear whether the OCC has improved its processes to prevent fake comments from being submitted again in the CRA rule-making

We'll have more on this - watch this site.  


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