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

As ING Quietly Asked Fed to Waive Application to Own 9.8% of Capital One, Syria & Sudan Business Shielded, FOIA Shows

By Matthew R. Lee

SOUTH BRONX, August 8 -- When Capital One applied to acquire ING Direct, the US Internet banking subsidiary of Amsterdam-based ING, community groups like our filed protests, based on Capital One's anti-consumer practices.

  But less was said about ING, in part because its US business had been directed at a more affluent clientele, and because it was not viewed as the applicant.

   But after Inner City Press filed a Freedom of Information Act request with the Federal Reserve Board on July 22, a partial response from the Fed Reserve shows that ING has quietly sought a ruling from Fed General Counsel Scott Alvarez that ING should not have submit any application subject to public comment to own up to 9.9% of Capital One.

  This would exclude public comment and consideration of ING doing business with the likes of Sudan and Syria, Cuba, Iran and others on the US state sponsors of terrorism list.

  ING has admitted being under investigation for, and negotiating with the US Department of Justice about, such violations, and there have been expressions of Congressional concern to ING Group Executive Board Chairman Jan H.M. Hommen and US Treasury Secretary Timothy Geithner which the Fed could ignore by granting ING's stealth request.

  The documents obtained under FOIA show that ING, represented by the Wall Street law firm of Sullivan & Cromwell, on July 15 wrote to the Fed's Alvarez asking for "written confirmation that [ING] will not be deemed to directly or indirectly 'control' Capital One for purposes of the Bank Holding Company Act upon the consummation of the Bank Sale."

  Earlier in ING's 13 page request, on which the Fed has until now not solicited or accepted any public comment, ING says that the shares with which Capital One would pay it for ING Direct would "represent between 9.7% and 9.9% of the outstanding shares of Capital One's Common Stock on the closing date."

  Under the Bank Holding Company Act, any holding over 4.9% can be considered control. One would think, given the issues raised, that the Fed would solicit comment and hold the requested public hearings on ING's request to own nearly 10% of Capital One. But it has only come about because of the Fed's partial FOIA response.

  Inner City Press / Fair Finance Watch immediately submitted a comment to the Fed and its chairman Ben Bernanke formally demanding the ING submit an application to own over 4.9% of Capital One, and that public comment be accepted on these issues.

Fed board, Bernanke in center, ING's Sudan & Syria business not shown

  Inner City Press / Fair Finance Watch also joined in requests by NCRC and others for public meetings and an extension of the comment periods until at least October 22.

  In a FOIA appeal already filed, Inner City Press has demanded all withheld records about ING's stealth request, as well as the withhold portions of Capital One's application, which range from exhibits about money laundering to ING's mortgage portfolio.

  Amazingly, the Fed mis-read Inner City Press' FOIA request as only asking from Fed communications with ING and Capital One about the proposed acquisitions, when in fact Inner City Press requested all records reflecting Fed communications concerning either of the two companies.

  The Fed has provided such records, including internal Fed emails about the Industrial & Commercial Bank of China and Governor Warsh's meeting with its chairman, in previous responses to Inner City Press.

  The Fed has also withheld records about an "ex parte" meeting as far back at May 26 between Capital One's Kevin Murray (SVP of Regulatory Relations), John Finneran and Gary Perlin with a range of Fed officials.

  It seems the Fed, ING and Capital One may really have something to hide in this transaction, including seeking to exclude from public comment and consideration ING illegally doing business in and with Syria, Iran, Cuba and Sudan. Watch this site.