Amid Targeting of Community Reinvestment Act FFW Protest of WSFS Leads to CRA Questions Here

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Amid Targeting of Community Reinvestment Act Centerstate Bank Takeover of NCC Challenged on Disparate Lending

By Matthew R. Lee, Video, story, FOIA docs

ORLANDO, January 7 – The US Treasury Department is the next stage of a process to try to weaken and take the community out of the 1977 Community Reinvestment Act. Docket file here. On January 7, Fair Finance Watch and Inner City Press filed comments and a Freedom of Information Act request with the Federal Reserve on Centerstate Bank's application to acquire National Bank of Commerce, despite Centerstate's disparate lending record: "

This is a request for a full copy of, and a timely first comment on, the Applications of Centerstate Bank Corporation, Winter Haven, Florida to merge with National Commerce Corporation, and thereby indirectly acquire National Bank of Commerce.

As an initial matter, this is a request that the FRS immediately send by email to Inner City Press all non-exempt portions of the applications / notices for which the Applicants have requested confidential treatment.

Fair Finance Watch has been tracking Centerstate Bank:

In 2017 in the Orlando, Florida MSA for home purchase loans, Centerstate made 108 such loans to whites - and only TWO to African Americans, and only ten to Latinos. Its denial rate for Latinos was 3.6 times higher than for whites, and for African Americans 2.66 times higher than for whites, both most disparate that the industry as a whole.

In 2017 in the Miami, Florida MSA for home purchase loans, Centerstate made 14 such loans to whites - and only three  to African Americans.

In 2017 in the Tampa, Florida MSA for conventional home purchase loans, Centerstate made 130 such loans to whites - and only 1 each to African Americans and to Latinos.

In 2017 in the Jacksonville, Florida MSA for conventional home purchase loans, Centerstate made 18 such loans to whites - and none to African Americans and to Latinos (it denied the only application which, based on its disparate outreach, it received from people of color, a Latino applicant.)

In 2017 in the Lakeland - Winter Haven, Florida MSA for conventional home purchase loans, Centerstate made 160 such loans to whites - and only four to African Americans and only eight to Latinos (it denied Latino applicants 2.7 time more frequently than whites.)

  This should also be address in this proceeding, including at the requested evidentiary hearing - CenterState has a history of mishandling mergers, and arrogantly ignoring consumer complaints, standing behind excuses rebutted by the consumers, for example:

"For over a day, I haven't been able to access money in my account because CenterState is having issues transferring ********* accounts in their system I was a customer of**********************, which was recently acquired by CenterState Bank.

As of May 18th, I haven't been able to access my account online. I called customer services, and they told me that I would have access by May 19. I was also told that they could not provide me any information about my balance. I still didn't have any access on May 19, so I called again and was told to wait longer and then they rudely hung up on me. I still have no information on my account and cannot withdraw my money. I searched for the nearest branch so that I can visit it, get my money and close my account, but they are all closed until Monday. I am concerned because I rely on this money for emergencies and to pay for mine and my children's food, bills, and more. 

I expect CenterState bank to comply with their obligations to their customers by 1) providing me access to my account and my money, 2) allowing me to close my account immediately upon visiting their branch next Monday, 4) apologize for the inconvenience and mistreatment from their customer service employee. 

CenterState Bank of Florida, N.A. Response 05/25/2018  CenterState Bank sincerely appreciates the account relationship that Ms.******* had established with**********************. Leading up to and during the conversion process, the two banks worked closely together to make sure the conversion process went as smoothly as possible. Customer communication regarding products, services, online banking and debit cards was mailed to the address on file with********************** to all of their customers within the required thirty day timeframe before the conversion weekend, the systems were transferring files between the two banks, which resulted in certain services (such as a account balance information) being unavailable. Communication sent to all********************** customers in at least two mailings prior to the conversion date specifically addressed that account balances would not be available until the conversion process was complete sometime over the weekend or possibly the Monday morning of the 21st. Additional staff was added to our Customer Care call center to handle anticipated call volume over the weekend and into this week. The Bank sincerely apologizes for the alleged treatment received by our Customer Care team when Ms.******* called on Saturday, May 19th to inquire about her balance. It is never our intention to be rude to any of our customers. In an effort to answer as many calls as efficiently as possible, the team was perhaps less likely to encourage additional conversation than normal. Please be advised that account balances and all other functions were working as intended on Monday morning, May 21st. It has been noted that Ms.******* did close her account with our Bank on Monday, May 21st. We would like to extend the invitation to her to consider CenterState Bank for any additional banking needs that she might have in the future. 

Customer Response 06/07/2018  (The consumer indicated he/she DID NOT accept the response from the business.) CenterState Bank stated that "account balances and all other functions were working as intended on Monday morning, May 21st;" but it was not. Before closing my account, I was still unable to log in to my account. ... They also claim that "additional staff was added to their Customer Care call center to handle anticipated call volume over the weekend and into this week." However, their website stated that customer service were unavailable, and only branches or electronic forms were available. Please see attachment. As their response above indicates, I closed my account thereafter, but am disappointed with their service and lack of effort to try to make up for this inconvenience. Therefore, I have NO intention of recommending them or doing business with them in the future. 

CenterState Bank of Florida, N.A. Response CenterState Bank submitted a response in reference to *************'s complaint on May 25, 2018. We feel we have addressed her dissatisfaction and apologized for her inconvenience. We stand by our original response."

  This is indicative of the approach that would be taken to the new customers Centerstate is trying to acquire. Inner City Press is also concerned about the potential for branch closing(s), and loss of local accountability.

  ICP is requesting evidentiary hearings and that this proposed acquisition, on the current record, not be approved. There is no public benefit."

As to the CRA more generally the protagonist, akin to Scott Pruitt when he was at the US Environmental Protection Agency or Ryan Zinke at Interior, is Comptroller of the Current Joseph Otting. On September 12 Fair Finance Watch (and on FOIA, Inner City Press) commented to the OCC, here. At the November 19 deadline, not yet posted was Inner City Press' November 17 fourth comment, just as Otting's OCC absurdly waited 13 days to try to rule it does not have to consider Fair Finance Watch's comments on WSFS Bank's application to acquire Beneficial. Now, after the OCC gleefully closed its comment period on that, WSFS on December 13 announced it will close 25 branches. One would think Otting would have to re-open the comment period. But that's not how Otting rolls. And the Fed, on FOIA, is absurd. On January 2 the Federal Reserve unilaterally extended its time to respond to Inner City Press' FOIA request about WSFS and CRA - without any commitment to no haul off and rubber stamp the application. Here's what the Fed wrote: "Mr. Matthew R. Lee  Inner City Press   Re:       Freedom of Information Act Request No. F-2019-00040     Dear Mr. Lee,     On December 3, 2018, the Board of Governors (“Board”) received your electronic message dated December 1, pursuant to the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, for all withheld portions of the applications by WSFS to acquire Beneficial, including but not limited to presumptively mis-labeled “Confidential” exhibits about WSFS's CRA program (“Confidential” Exhibit 9)... Pursuant to section (a)(6)(B)(i) of the FOIA, we are extending the period for our response until January 16, 2019, 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 January 16, 2019, we will respond to you promptly. It is our policy to process FOIA requests as quickly as possible while ensuring that we disclose the requested information to the fullest extent of the law.     Thank you,     Freedom of Information Office  Board of Governors of the Federal Reserve System" Here from the Federal Reserve, to which FFW also commented, are the Fed's Additional Information questions sent December 18 to WSFS and FFW: "This request refers to the application by WSFS Financial Corporation (“WSFS”),
Wilmington, Delaware, to acquire Beneficial Bancorp, Inc. (“Beneficial”), and thereby
indirectly acquire Beneficial Bank (“Beneficial Bank”), both of Philadelphia,
Pennsylvania, pursuant to section 10(e) of the Home Owners’ Loan Act following the
conversion of Beneficial from a bank holding company to a savings and loan holding
company. Following the proposed acquisition, WSFS plans to merge Beneficial Bank
into its subsidiary, Wilmington Savings Fund Society, FSB (“WSFS Bank”),
Wilmington, Delaware. Based on our review of the current record, the following
information, including the information in the Confidential Appendix, is requested.
Please provide relevant supporting documentation, as appropriate.
1. Provide a description of WSFS’s current non-banking activities, including any
commercial activities referenced in Item 210.50(a), and identify the authority
upon which WSFS relies to engage in such activities, as well as any supportive
2. Provide the following required components of the H(e)-3 Application:
a. Confidential disclosure memoranda to the Merger Agreement, required as
part of Item 110.10(b)
b. Evidence of shareholder approval of the transaction, required as part of
Item 110.10(d)
c. Parent company (unconsolidated) cash flows statements, referenced in
Item 330.10(d)
d. The ages of WSFS’s and Beneficial’s directors and senior executive
officers, referenced in Item 410.10(c)-1
e. An amended charter and/or amended by-laws, if either will be revised as
a result of the proposed mergers, referenced in Exhibit B.1

3. To the extent not already provided, provide an update on WSFS Bank’s Community Reinvestment Act (“CRA”) activities since its August 2017 CRA Performance Evaluation and Beneficial Bank’s CRA activities since its July 2017 CRA Performance Evaluation, in assessment areas in which the banks operate. This response should include any significant CRA initiatives undertaken, particularly with respect to credit and deposit products and retail banking services targeted toward low- and moderate-income (“LMI”) geographies and individuals, as well as information on community development lending, investments, and services WSFS Bank and Beneficial Bank have made since the banks’ last evaluation period, including the total
number, dollar amount, and service hours, and a brief description of the banks’ most significant community development loans, investments, and services.
4. Revise the pro forma financial statements that were submitted on November
27, 2018, to reflect actual reported balance sheet information for Beneficial
(total assets balance should match the balance reported on FR-Y9C) and
update the relevant footnote adjustments based on information as of September
30, 2018 (footnote adjustments related to accumulated other comprehensive
income and retained earnings are currently based on information as of June 30,
5. Provide a parent company only (unconsolidated) balance sheet as of the end of
the most recent quarter, showing separately each principal group of assets,
liabilities, and capital account components (e.g., common stock and preferred
stock, surplus, accumulated other comprehensive income, and retained
earnings), debit and credit adjustments (explained by detailed footnotes)
reflecting the proposed transaction; and the resulting pro forma parent
company balance sheet. The pro forma balance sheet should reflect the
adjustments required under business combination and fair value accounting
6. Clarify whether any of WSFS’s Integration Plan activities discussed in
WSFS’s response to Question 5 of the OCC’s Additional Information Request
(dated November 15, 2018) would include integration of any of WSFS’s and
Beneficial’s IT systems prior to WSFS’s receipt of the Federal Reserve’s
approval of the transaction.
7. Provide a breakdown of the branches that the combined bank intends to retain
after the merger, including whether any will be in low- or moderate-income or
majority-minority census tracts.
8. In the H(e)-3 application, WSFS states that it will seek “to incorporate
Beneficial Bank’s highly successful strategies for meeting the needs of its
communities into the combined institution’s CRA programs.” Please elaborate
on this statement, including a discussion of what strategies WSFS plans to
incorporate. Please indicate whether the incorporated strategies will be utilized across the entire footprint of the combined bank or in the current footprint of Beneficial Bank.
9. Please confirm that, upon merger, WSFS will commit to comply with 12 CFR 239.62, as that section may be amended from time to time by the Board of Governors of the Federal Reserve System (the “Board”) with respect to
Beneficial’s liquidation account.
Please submit your response within ten business days, addressed to Eddy Hsiao at
the Federal Reserve Bank of Philadelphia. In addition, to facilitate more timely
distribution of information, please submit your full response on E-Apps, the Federal
Reserve’s web-based system for electronic submission of regulatory applications and
related documents.
In accordance with the Federal Reserve’s ex parte procedures, provide a copy of the public portion of your response (together with any attachments) directly to the commenter, Mr. Matthew Lee of Fair Finance Watch. In addition, please send a copy of your response to your application contacts at the Office of the Comptroller of the Currency." But wasn't the OCC's comment period closed? Here's WSFS: "WSFS Financial Corporation (Nasdaq: WSFS) (“WSFS”) and Beneficial Bancorp, Inc. (Nasdaq: BNCL) (“Beneficial”), jointly announced a retail banking office optimization plan that aligns with the previously reported intent to merge Beneficial Bank into WSFS Bank.  The plan includes the consolidation of 25% of the combined Beneficial and WSFS retail banking offices due to an overall decline in branch transactional activity, Customers’ rapid adoption and usage of digital services, geographic overlap and optimization opportunities.  To continue delivering on its mission of “We Stand For Service” amidst evolving Customer expectations, WSFS also committed to reinvest an incremental $32 million of the estimated cost savings from the retail office optimization plan into a five-year transformational investment in technology and delivery systems to create a top-tier physical and digital servicing platform that will significantly enhance Customer experiences across all business lines.

Teams from both institutions conducted an extensive analysis of the combined franchise to study market overlap, transaction trends, space considerations, cost of ownership, business opportunities, the brand experience, visibility from high-traffic roadways, and the accessibility of each location.  WSFS leveraged this due diligence to determine that it will consolidate 14 Beneficial and 11 WSFS retail banking offices of the combined network.  WSFS also plans to sell five additional  retail banking offices located on the outer edges of the combined core footprint. Most closures will occur at the conversion of Beneficial Bank into WSFS Bank, which is expected to occur in August 2019.

Eighty percent (80%) of the consolidating retail offices are less than three miles from remaining locations, including nearly a third that are less than a mile away.  WSFS is offering jobs to all Beneficial and WSFS team members of the consolidating banking offices within the Retail Division of WSFS Bank.  WSFS will also raise the minimum wage across the combined organization to WSFS’ current minimum of $15 an hour.

The planned combination and ongoing delivery transformation will make WSFS the largest, premier, longest-standing, locally-headquartered community bank for the Greater Delaware Valley with approximately $13 billion in assets and growing.

“We have worked quickly, but diligently, on our plan to combine our two institutions, which included identifying the retail space that will best help us deliver top-tier quality services and solutions for Customers across the Delaware Valley,” said Rodger Levenson, WSFS’ Executive Vice President and Chief Operating Officer, who will become President and Chief Executive Officer on January 1, 2019.  “This retail banking office optimization initiative and our planned technology reinvestment, combined with a larger balance sheet and an intimate knowledge of the market, affirms our unique position to fill a long-standing gap between big banks and smaller community banks in the Philadelphia-Camden-Wilmington MSA.”

WSFS has posted on its website ( the 25 retail banking offices that are slated to consolidate as part of the retail banking office optimization plan.  WSFS will begin communicating these consolidations and other merger-related information to Beneficial and WSFS Customers in the first quarter of 2019 after the combination receives regulatory approval and the deal closes."  The lists are by country, only for download. We'll have more on this. A fifth comment submitted including that "the OCC is already undermining CRA. Our comments to the OCC on WSFS - Beneficial have yet to be acted on. That comment was submitted on November 6. Now on November 19, two weeks later, the OCC has tellingly said it will not consider it - despite a Federal Reserve Board comment period on the same transaction remaining open until at least November 27. The OCC's attempt to ignore substantive criticism of some banks' performance, while Comptroller Otting previously solicited false comments support his OneWest Bank, are a symbol all what is wrong with this process, and today's OCC.
   While if the past is any guide the OCC will forwarded ICP's comment to the FRB by the FRB, we note in this connection that WSFS' comments on the ANPR favor, as Otting clearly does, dulling the LMI focus of CRA to make it easier for banks.  We oppose all of this.
   Since October 11 the OCC has denied expedited process to our FOIA request(s) for records essential in order to comment on this proposal. OCC Deputy Chief Counsel Charles Steele on November 7 wrote on that “merger between One West Bank and CIT Bank. You do not demonstrate how your request concerns a matter of current exigency to the American public or how a delay in the OCC's response to your request would compromise a significant recognized interest.” Now Inner City Press has submitted an unquestionably timely comment to the Federal Reserve Bank of Philadephia, with more for example that "In the Salisbury MD-DE MSA in 2017, WSFS for conventional home purchase loans based on its outreach got two applications from African Americans - and denied them both. It got two from Latinos and denied. From whites it approve seven of ten applications." And see below. Given the false commenting issues in the OneWest - CIT proceeding, and the importance of CRA to our communities, this denial is insulting and further makes this ANPR commenting process, ostensibly closing now on November 19, illegitimate."  Among them, as reviewed by Inner City Press:
Fulton Financial, on which ICP has previously comment, perhaps understandably given its lending record urges “De-couple CRA from Fair Lending... CRA and Fair Lending have complementary but different social and policy objectives. CRA ratings should not be downgraded based on the results of a bank's fair lending performance and exam results.” FFW disagrees: racial discrimination in lending means a bank is NOT meeting the credit needs of its entire community.

The ABA writes that “'needs to improve' CRA rating and should clarify that such a rating will not be a de facto bar to opening new branches or engaging in other activities requiring regulatory approval.” FFW disagrees: a bank with a rare NTI (or Substantial Non-compliance) record should be barred from merging or expanding. This is the enforcement mechanism of CRA.

Th Association of Military Banks of America urges, “Because the financial challenges military communities face are less dependent on income distinctions than in geographically-defined communities, we recommend that all financial services to the military community should be presumed to qualify for CRA credit, regardless of whether the recipient fits within a classic LMI category.” FFW disagrees with this blurring of the lines. Loans to five star generals are not CRA loans.

Heartland Tri State Bank says “Any bank with assets less than One Billion Dollars should not be subject to CRA examinations.” FFW disagrees, precisely because such banks play (or don't play) such a role in the economies of some communities.

   Meanwhile the OCC is already undermining CRA.  The OCC has denied expedited process to our FOIA request(s) for records essential in order to comment on this proposal. OCC Deputy Chief Counsel Charles Steele on November 7 wrote on that “merger between One West Bank and CIT Bank. You do not demonstrate how your request concerns a matter of current exigency to the American public or how a delay in the OCC's response to your request would compromise a significant recognized interest.” Given the false commenting issues in the OneWest - CIT proceeding, and the importance of CRA to our communities, this denial is insulting and further makes this ANPR commenting process, ostensibly closing on November 19, illegitimate, we contend - while joining in NCRC's comments, see below. On November 6 at 5 pm, before any midterm elections results came in, Fair Finance Watch filed comments at deadline with Otting's OCC, on Wilmington Savings Fund Society (WSFS) Bank's application to acquire Beneficial Bank in Philadelphia and closed 30 branches, despite WSFS' disparate lending record: "This is a timely first comment opposing and requesting an extension of the OCC's public comment period on the Application by WSFS Bank to Acquire Beneficial Bank. In the the Wilmington MSA in 2017, WILMINGTON SAVINGS FUND SOCIETY, FSB (WSFS Bank) had a denial rate for the home purchase loan applications of African Americans that was 5.48 times higher than for whites - an outrage, significantly more disparate that other banks in the market. For Latinos, WSFS Bank was and is worse, with a denial rate for home purchase loans 7.43 times higher for Latinos than for whites.
   This is not a lending record and pattern to impose on Philadelphia. And consider this: if approved, WSFS “plans to close 30 WSFS and Beneficial Bank offices, a quarter."
   See, “WSFS bosses Mark Turner and Rodger Levenson plan to close 30 of the combined companies’ 120 branches and eliminate around 350 of their 2,100 jobs.”
   There is more to say, and there are more markets. But concerned as we are about the OCC seeming to take outrageous disparities even less seriously than before, we ar timely submitting this one, for your action. This is systematic redlining; this proposed acquisition could not legitimately be approved and WSFS Bank should be referred for prosecution for redlining by the Department of Justice and the CFPB. But will today's OCC do it? The branch closings provides a second ground for the requested evidentiary hearing." What will Otting's OCC do? On October 17, yet more on Otting's assault on the CRA became known. He has taken to devaluing or lumping together and not putting in the docket or online the comments of community groups, calling them mass comments or form letters - when he himself not only solicited mass comments for the OneWest - CIT merger from which he personally profited, but even got some fraudulent comments.
Inner City Press / Fair Finance Watch submitted the documents obtained under FOIA into the record before the OCC. Now, on a ten day delay, the OCC has put into the file a cursory memo of its October 12 meeting with bankers ranging from Citigroup (Lloyd Brown and Devika Murray Bacchus), Capital One (James Matthews), TIAA and Regions to Wells Fargo, Fifth Third, Huntington and PNC, among others. This has the trappings of transparency, but none of the substance. Topics of discussion are purportedly listed - but what was said, particularly by the OCC participants: Grovetta Gardineer, Senior Deputy Comptroller
for Compliance and Community Affairs
Beverly Cole, Deputy Comptroller for
Compliance Supervision
Donna Murphy, Deputy Comptroller for
Compliance Risk Policy
Allison Hester-Haddad, Counsel, Chief
Counsel’s Office
Daniel Sufranski, Law Clerk, Chief Counsel’s
Office. Listed but without further detail is, for example, "Logistical issues, including the interrelated nature of the issues raised by the ANPR, the timing of the rulemaking process, participation by the other federal banking
agencies, and whether concepts not discussed in the ANPR would remain under a new rule." So what was said? And where is the OCC's response to Inner City Press' previous FOIA request?
We will have more on this.
Inner City Press has previously commented 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.  But via the OCC and websites, we are told "This count refers to the total comment / submissions received on this document, as of 11:59 PM yesterday. Note: Agencies review all submissions, however some agencies may choose to redact, or withhold, certain submissions (or portions thereof) such as those containing private or proprietary information, inappropriate language, or duplicate/near duplicate examples of a mass-mail campaign. This can result in discrepancies between this count and those displayed when conducting searches on the Public Submission document type." At least ten comments, all under the name Ceiba, were bundled as one. Otting is trying to have it both ways, or worse.
Under him, the OCC has ignored the rare racial redlining settlement by Klein Bank, rubber stamping Old National's acquisition of the bank over the timely and detailed objection and public hearing request of Fair Finance Watch. Otting doesn't like public hearings.  In April 2018 his OCC approved an application by E-Trade Saving Bank which Fair Finance Watch had challenged based on the bank having no fewer than six states rare "Needs to Improve" CRA ratings. FFW noted rare Needs to Improve ratings for the entire states of Arizona, Colorado, Florida, Georgia, Michigan and Oregon, and an undeserved “Satisfactory” for New York. Otting's OCC, after the approval, helpfully contacted E-Trade Bank to tell it that upon (Otting's) reflection, it was no longer even subject to the Community Reinvestment Act. Another institution was similarly contacted - the OCC under Otting is going through its roster of banks seeing which ones it can "free" from CRA even if they hadn't requested in. In one case, some in the bank still didn't want Otting's freedom and move more business into the bank to get a second reversal of Otting's orders. But it shows where Otting is coming from, beyond the unexplained comment-fraud for which he should be recused. Inner City Press on October 11 raised the E-Trade (and another bank) issue into the record on the Advanced Notice of Proposed Rulemaking. But, Otting being Otting, his OCC denied expedited processing for Inner City Press' Freedom of Information Act request bout his deregulation move, ruling that "You requested all records in the OCC's possession concerning the applicability of the Community Reinvestment Act to - or exemption there from - any affiliate of E-Trade or Bank of America California NA for the time period of October 11, 2016 to October 11, 2018. You also requested expedited processing of your request on the basis that the ANPR on CRA is open through November 19, 2018. Your request for expedited processing does not meet the criteria provided for in 5 U.S.C. 552(a)(6)(E) and Treasury disclosure regulations at 31 C.F.R. 1.5(e)." And that regulation... requires a formal certification. So Inner City Press has appealed: "As a  a person primarily engaged in disseminating information, I am appealing the denial of expedited processing of my FOIA request, summarized by the OCC as for all records in the OCC's possession concerning the applicability of the Community Reinvestment Act to - or exemption there from - any affiliate of E-Trade or Bank of America California NA for the time period of October 11, 2016 to October 11, 2018.
...The OCC under Joseph Otting's actions to try to find banks to exempt from CRA outrageous and something on which there is an  urgency to inform the public concerning actual or alleged Federal Government activity. As noted in my request, this is particularly the case given the OCC's unilateral moves regarding the CRA. I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge and belief. Executed on October 16, 2018." Watch this site. Many more are resisting Otting, but Federal Reserve Bank of Cleveland President Loretta J. Mester on October 3 said that "the OCC, a part of Treasury, has put out an advance notice of proposed rule-making (ANPR) seeking comment on ways to modernize the CRA regulations. The Federal Reserve is also undertaking efforts aimed at ensuring that the CRA regulations continue to meet the goals of the legislation amid the evolving financial services environment" - with these as her footnotes for that: "Brainard, Lael, “Community Development in Baltimore and A Few Observations on Community Reinvestment Act Modernization,” Baltimore, Maryland, April 17, 2018a and Brainard, Lael, “Keeping Community at the Heart of the Community Reinvestment Act,” New York, NY, May 18, 2018b. Both of those Brainard speeches were before Otting's proposals. And since? Well, the Fed after comments from FFW and NCRC has asked Synovus, "Synovus Bank received a “Needs to Improve” rating in the Tennessee state assessment area for the service test. Describe how Synovus Financial is addressing, or has addressed, this rating." That's on its now protested application to the Fed to acquire FCB Financial Holdings, Inc. (“FCB Financial Holdings”) and thereby indirectly acquire Florida Community Bank, N.A. In the OCC's ANPR docket file is the President of  First National Bank & Trust in Elk City, Oklahoma who writes, "I firmly believe that this form of oversite was meant for metropolitan areas and banks with multiple branches. There’s got to be a better way of monitoring and locating those banks that aren’t helping the population it serves. I would be surprised to find there are very many banks that fail the CRA examination." It's called grade inflation. On September 29 The Intercept has dug into it, citing FFW's formal request that Otting recuse himself - and so here now are some of the Freedom of Information Act documents. On October 2 in the Senate Banking Committee, Otting insisted he is not trying to weaken the CRA; he called the ANPR an "Advanced Notice of Public Rulemaking" instead of Proposed. He said he met with 1100 individuals - still undisclosed - and expects five to ten thousand comments on the ANPR. (So far there are 33 listed but only 29 visible). Senator Sherrod Brown began by asking him indirectly about the blogs at CFPB of Eric Blankenstein. We'll have more on this. And this - as obtained by Inner City Press and fellow NCRC member CRC, here are more of the documents, for (this time) 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. The public comment period ends in November.

Otting is scheduled to appear at a Senate Banking Committee hearing on October 2, where his CRA push could be a topic of discussion." We'll have more on this Why didn't the OCC more seriously look into this fraud? What has been improved since? Shouldn't Otting be recused, as Fair Finance Watch has already timely requested? One analogy, also noted by The Intercept, is to the gaming of the FCC's process on net neutrality, when even Senator Jeff Merkley and Pat Toomey's identities were borrowed, as reported by the Washington Post's Hamza Shaban.  Unlike Otting to date, at least the FCC's Ajit Pai responded, if only to blame David Bray, as reported by Adam Jacobson in RBR. Otting simple refuses to answer - for now. From the Fair Finance Watch / Inner City Press comment: "Fair Finance Watch (and where applicable Inner City Press) appreciate the opportunity to comment on the Office of the Comptroller of the Currencys (OCC) Advance Notice of Proposed Rulemaking (ANPR) regarding the Community Reinvestment Act (CRA). CRA has leveraged significant amounts of loans and investments for low- and moderate-income communities.

We began enforcing the CRA in the South Bronx then beyond starting in 1994, in connection with the applications for mergers or expansions on which banks' records are considered. Numerous banks excluded the South Bronx and Upper Manhattan from their CRA assessment areas even though, as we proved, they collected substantial deposits from area residents. We got six banks to open branches and make lending commitments, in the Bronx and beyond.

We concerned that the OCC's proposal threatens to weaken CRA, see below. As as relevant here, we commented along with others on the CIT - OneWest proceeding, and were concerned both by OneWest's record under now-Comptroller Otting and by what emerged as the gaming of the system with pre-fabricated comments Otting openly solicited. We may comment in more detail on this later in his ANPR proceeding.

For now we wish raise particular concern about the approach signaled by Questions 21 and 15 and to emphasize that public participate is key to CRA, on performance evaluations and crucially on bank merger and expansion applications. Inner City Press, which often submits FOIA requests to the OCC (which is, frankly, slow), the Federal Reserve, FDIC and even non-USA regulators many of whom are faster than the OCC, emphasizes that comment periods should never close while information that is not specifically exempt from disclosure under FOIA is being withheld. Inner City Press has pending with the OCC, but not yet responded to, FOIA requests related to this proceeding / process, that should be responded to in full, including any necessary appeal, during this proceeding.

If the OCC proceeds to significantly diminish the importance of assessment areas on CRA exams, the progress in increasing lending to low- and moderate-income neighborhoods will be halted. NCRC estimates that low- and moderate-income neighborhoods could lose up to $105 billion in home and small business lending nationally over a five year time period. We join in the comments of NCRC, of which we are members... We urge the OCC to go back to the drawing board and develop reform proposals with the Federal Reserve Board and the FDIC.

And, for the reasons above and yet to be submitted, we contend Comptroller Otting should be recused from this process. Thank you for your attention to this."

While Reuters blandly noted that he is "a former banker," the bank he headed, OneWest, was accused of predatory lending and when its acquisition by the CIT Group was challenged by Fair Finance Watch, CRC and others Otting arranged for seemingly counterfeit or compelled comments supporting the merger. In this light, Question 11 of his "Advanced Notice of Proposal Rulemaking" or ANPR is noteworthy: "11. How can community involvement be included in an evaluation process that uses a
metric-based framework?" How, indeed. Here's what Otting wrote as a banker, already long public, in support of his merger:

"From: Otting, Joseph M [at]
Sent: Wednesday, January 07, 2015 5:00 PM
Cc: Haas, Alesia Jeanne; Tran, Cindy; Kim, Glenn
Subject: Support For OneWest Bank
Dear Friends,
We were excited to announce on July 21, 2014, that IMB HoldCo LLC, the parent company of OneWest Bank entered into a merger agreement with CIT Group Inc. As part of the applications for regulatory approval of the transaction, our regulators are interested in the perspectives of the public. We are writing you to seek your support of the Bank and pending merger. This merger, if approved, would create the largest bank headquartered in Southern California with a full suite of banking products and services, which will allow us to better serve our customers. We would retain and grow jobs and are committed to continuing and expanding our efforts to serve the economic and development needs of our community. I would like to ask you to take a moment to click on the link below and submit a letter of support adding any of your own words or thoughts.
Please submit your letter by clicking here, or by visiting our website at (if the link isn't clickable or part of the link is cut off, please copy and paste the entire URL into your browser's address bar and press Enter)
Thank you for your support.  Best wishes for a successful 2015 and please call on me if I can ever be of assistance.
Joseph M. Otting
President and CEO
OneWest Bank N.A.
888 East Walnut Street
Pasadena, CA 91101"

   There is and will be fight-back, under NCRC's TreasureCRA campaign. Watch this site - including on actual enforcement of CRA.


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