Goldman Sachs Seeks $16B from GE With Fine Print Ads, Fed Favors

By Matthew R. Lee

NEW YORK, September 2 -- The lack of seriousness in US bank regulation grows from the relatively smaller to the largest banks, with Goldman Sachs the most recent example. Goldman is trying to speed through Federal Reserve approval to buy $16 billion in insured deposits from GE Capital, and the Fed so far seem bent on helping.

 As Inner City Press exposed last month, Royal Bank of Canada jumped the gun and began doing business with City National Bank without any Federal Reserve approval (see Los Angeles Times, here.)

 Now, even as New York regulators says their comment period on Goldman Sachs' GE Capital proposal extends at least through September 28, Goldman has published fine print notices in the New York Post and a newspaper in Utah saying the Federal Reserve will stop listening on September 19.

  Really? After the Fed made Goldman Sachs a bank holding company with no public comment period at all, so Goldman could get a bail-out? After the Fed's coziness with Goldman Sachs was again demonstrated, by the audio taped by then-Fed examiner Carmen Segarra?
 
  When Goldman Sachs became a bank holding company literally overnight in 2008, Inner City Press / Fair Finance Watch and others including NCRC asked the Fed how this was done with no public comment period at all.

  The answer, it seems, is to be found in the audio leaked by Carmen Segarra of the Federal Reserve, showing further Fed favors for Goldman Sachs.

 With this history, and Goldman's history in predatory lending with Litton Servicing and as an underwriter, see Occupy Wall Street video here, and UN / migration connection here, it seems clear that the Fed must hold public hearings on Goldman Sachs' GE Capital application, when it is filed.

  But with the Federal Reserve, you can never be too sure, or too careful.

  When Community Bank System of upstate New York filed with the Fed nine answers to questions asked after Inner City Press' challenge, it tried to withhold fully eight of the nine responses. More here.

  Inner City Press immediately filed a Freedom of Information Act request for the whole submission - and even the Federal Reserve saw through Community Bank System's absurdly -- and tellingly -- overbroad withholding, releasing all but one part of one of the eight withheld responses. But since then, all the Fed has done is seek a mere antitrust control commitment.

  Here's is the Federal Reserve's letter to Inner City Press granting most of its FOIA request:

Freedom of Information Act Ruling Rejecting Community Bank System Withholding 8 of 9 Responses on Oneida Ap... by Matthew Russell Lee

here is the now unredacted version of Community Bank System's submission.

Unredacted Version of Community Bank System's Responses on Oneida, After ICP's FOIA Request by Matthew Russell Lee

We'll have more on this.

Background: The largest bank merger recently proposed, that of Royal Bank of Canada and affluent-focused Los Angeles-based City National Bank, has since April been the subject of a Community Reinvestment Act challenge by Fair Finance Watch.

  The LA Times has reported on the "letter from the Fed [which] asks the banks to respond to questions raised in written comments by [FFW]. Spokesmen for the banks declined to comment.... Fair Finance Watch, a New York advocacy group for minorities, questioned a deal between the banks in a June 11 comment letter to the Fed."

  Inner City Press first put that Fed letter online, here; then Canada's National / Financial Post reported without credit it had "obtained" it.

  By contrast, in the pending proposal of Community Bank System - Oneida, the Syracuse Post-Standard disclosed that "Inner City Press forwarded the letter to news outlets. Some of the Fed's questions focus on whether Community could improperly control matters at Oneida in advance of the acquisition. Community is working on Fed's questions, said Hal Wentworth, Community's senior vice president for retail banking."

  One common theme is that non-control (and therefore antitrust) laws are being violated. One difference is that Community Bank System does comment to the media -- if only to blame the messenger -- while larger RBC and CNB do not. Arrogance?

 On Community Bank System's blaming the messenger, FFW has commented to the Fed that it will "will comment again when Community Bank System I has provided a copy of its response to the FRS' questions of July 13. Beyond the CRA and impermissible “control” questions raised therein, we wish at this time to raise the issues that, in a public response to ICP's comments, Community Bank System's SVP for retail banking said the following, in a prepared statement no less:

'In a statement today, Hal Wentworth, Community's senior vice president for retail banking, said that Inner City Press is not a local group and pointed out that letter was the only one filed on the Oneida deal. "This activist does not do business with either Oneida or Community Bank."'

If it would be inappropriate for Community Bank System to comment on or disclose information about its customers, in this context the same applies to the above-quoted, which, separately, is reminiscent of human rights abusing countries emphasizing where the rights groups who study and report on them are based."

   Now Community Bank System is trying to withhold eight of its nine responses; Inner City Press is challenging this under the Freedom of Information Act, comparing Community Bank System's outrageous withholding at the Fed with other banks, and with Community Bank System's to the OCC, more here.

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