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March 1, 2011 re Libya, Sri Lanka, UN Corruption

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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.

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Fed Governor Was Lobbied by Chinese Gov't on Bank Deal, FOIA Documents Show, Insiders' Game Faced with Challenge

By Matthew R. Lee, Exclusive

NEW YORK, August 2 -- When the US Federal Reserve Board decided to allow a company owned by the People's Republic of China to buy an American bank without requiring any application by the Chinese government, it had been lobbied at the level of Fed Governor Warsh, by a lawyer who was previously the General Counsel of the Federal Reserve Bank of New York, documents show.

  Earlier this year Inner City Press filed a challenge and Freedom of Information Act request with the Fed about the proposed acquisition of US-based Bank of East Asia by the China Investment Corporation, and Central Huijin Investment Limited and Industrial and Commercial Bank of China (ICBC), owned by the Chinese government.

  While the US Bank Holding Company Act says that US government entities do not need to seek Fed approval to buy banks, there is no exemption for foreign governments. But the Fed has read in such an exemption.

  More than three months after its FOIA request, Inner City Press has received a set of heavily redacted documents from the Fed, some of which are now being put online, here.

The documents reflect multiple inquiries by ICBC's lawyer Ernest Patrikis, previously the General Counsel of the Federal Reserve Bank of New York, now at the law firm of White & Case.

  In August 2010, the Fed's Ann Misback wrote to Kathleen O'Day and four others, "Ernie called with two questions, one on China and one on India. What would be the Fed's reaction if one of the largest Chinese banks entered an agreement to purchase a small U.S. bank (likely serving an ethnic Chinese community) [REDACTION] I told him I would get back to him on this question."

  While the Fed blacked out "Ernie's" question about India, the e-mail still shows how lawyers for the Chinese government and banks can essentially seek pre-approval from the Federal Reserve, before any public comment period is announced.

  Even after protests, the Fed continued "ex parte" communications with "Ernie." But these communications and pre-approvals went to the top level of the Federal Reserve.

  On November 12, 2011 Patrikis e-mailed the Fed's Ann Misback about a meeting the chairman of government-owned ICBC had with then Fed Governor Kevin Warsh, on October 20, saying that ICBC's chairman had complained to Governor Warsh "about the inability to buy a bank in the U.S.. The governor said the bank could file an application now."

  The applications, when they came in 2011, did not include any application by the Chinese government, ICBC's owner.

  That the Fed is not only outside the law but also unwise in inventing an exemption from the Bank Holding Company At for foreign government has been made more clear by issues surrounding the assets of the Gaddafi regime's Libyan government. Exemptions lead to instability, apparenlty the Fed's main concern. (FOIA and the Community Reinvestment Act do not appear to be concerns of the Fed.)

  While the Fed gives exemptions to the Chinese government, other branches of the US government are now investigating Dutch-based ING for violating sanctions in Iran, Cuba and Sudan. ING is trying to sell its US bank ING Direct to consumer-challenged Capital One. Can the Fed be expected to fairly review the application?

  Likewise, global bank HSBC is trying to ditch 180 upstate New York branches to Buffalo-based First Niagara, which now says it would divest (sell or close) fully 100 of the branches. Perhaps the Fed doesn't really care for stability, either, at least not the stability of moderate income US communities.

  The documents reflect an insider's game at the Fed that is not only distasteful but we believe illegal. A Freedom of Information Act appeal has been filed with all the withheld information, and more steps will follow: watch this site.

  Here is a complaint from inside Wells Fargo Financial that Inner City Press published in 2008.  And here the New York Times.

March 1, 2011 re Libya, Sri Lanka, UN Corruption

Click here for Inner City Press' March 27 UN debate

Click here for Inner City Press March 12 UN (and AIG bailout) debate

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These reports are usually also available through Google News and on Lexis-Nexis.

Click here for a Reuters AlertNet piece by this correspondent about Uganda's Lord's Resistance Army. Click here for an earlier Reuters AlertNet piece about the Somali National Reconciliation Congress, and the UN's $200,000 contribution from an undefined trust fund.  Video Analysis here

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