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Fed Disappeared CRA Linkbancorp Condition on Approval Now NJ Branches out of CRA

By Matthew Russell Lee, Patreon Maxwell Book

SOUTH BRONX, May 10 – The Federal Reserve Board in considering the proposed merger on the rebound between New York-based Link Bank and Partners Bancorp omitted at the eleventh hour - or apparently the thirteenth hour - language about a Community Reinvestment Act condition imposed by the FDIC.

  Now the Fed and its Governors have been asked Why - and when.

Inner City Press and Fair Finance Watch have long exposed redlining - and in this vein, on May 6 they filed a Community Reinvestment Act challenge with the FDIC and Federal Reserve.

  In October, the FDIC required from LINKBANK a plan to improve its lending to African Americans, which Inner City Press has published on its DocumentCloud here.

But Link kept spinning, issuing a press release about these partial approvals without mentioning the condition, and concluding it "remains subject to the approval of the Board of Governors of the Federal Reserve System and other customary closing conditions. LINK anticipates closing the Merger in the fourth quarter of 2023." We asked, How do they know?

 Well, they know that the Fed has boiler plate ready, ready to say it is concerned with HMDA disparities without acting on them, ready to say they conferred with the FDIC without acknowledging the condition the FDIC required.

The "Corrected" Fed approval emailed to Inner City Press on November 16 did not acknowledge the CRA condition. But the approval order first posted - and voted on?- did. We on November 16 filed:

Dear Chair Powell, Secretary Misback and others in the FRS:   This is a formal request for reconsideration under 12 CFR Part 262.3(k) of the Board's "corrected" -- dropping the  reference to FDIC's CRA Condition - Approval of the above-captioned applications by LINKBANCORP, Inc..  

  The Board's website currently says, of this order, that "Note: The initial version of this order was incorrect and inadvertently posted. A corrected version was posted on November 15, 2023."   

 Meanwhile, Deputy Associate Secretary Fennell's letter to me dated November 16 states that "today the Board of Governors of the Federal Reserve System has approved the proposal." If the approval was "today" / November 16, how was it corrected on November 15? The copy emailed to us on November 16 is entitled "Corrected."

   It's worse, much worse. The original (real? approved?) version of the order stated  "The FDIC’s approval of the merger of Bank with the Bank of Delmarva and Virginia Partners Bank includes a condition requiring the resultant institution to develop an action plan, including a marketing plan and additional outreach, to be submitted to the FDIC for approval, for monitoring and improving the extent of home mortgage applications from, and originations to, African American applicants in the resultant institution’s assessment areas. This condition will help ensure that the resultant institution continues to help in meeting the credit needs of the African American population in the resultant institution’s assessment areas."  

  It is true that the FDIC imposed a CRA condition, after receiving comments from Fair Finance Watch / Inner City Press. The FDIC sent the order with condition to us and we posted it online.

   So why - and when - did the Federal Reserve, which claims to have conferred with the FDIC as primary supervisor, abruptly take out of its already-posted approval order the language about the CRA condition? Was it after the Board's approval? Who decided that the CRA condition language should be removed? Why? To make it unenforceable?  

 The "corrected" approval order, with the CRA language removed, is said to be:  "Voting for this action: Chair Powell, Vice Chair Jefferson, Vice Chair for Supervision Barr, Governors Bowman, Waller, Cook, and Kugler." When did each vote? Were they made aware of, and is each Governor responsible for, the removal of the CRA condition language?  

  These are clearly facts that we could not present during the official comment period, or even prior to approval (or at least, "correction").    And they militate for reconsideration, for airing to each Governor and an explanation, given the Governors' claims and statements about their commitment to CRA.

On  November 21 past 5 pm, a Federal Reserve staff attorney left Inner City Press a voicemail reading a script that the Fed General Counsel - without showing even this to the Board members - determined there was nothing new in the request. But Inner City Press didn't know about the removal of the condition language until after the Fed said it approved it - it could NOT have been shown before. UNreal. And the new(ish) Governnors? What do they think or do?

We still don't know. But now LINKBANCORP is selling branches that it acquired to a credit union, American Heritage Credit Union, and thereby taking more than $100 million of deposits out from the Community Reinvestment Act. We'll stay on this

Fair Finance Watch has been reviewing LinkBank including its 2021 HMDA data not taken into account in any CRA exam and finds it troubling.

 In Pennsylvania in 2021, Link Bank made 49 HMDA-reported loans to whites - and only TWO to African Americans, worse that its peers.  When one expands the review to include loans beyond Pennsylvania, Link Bank's loans in 2021 to whites increase to 53, but to African Americans remains the same insufficient TWO.  

   Linkbank has grown more disparate since - but first, the issue of the Federal Reserve removing its own language about the FDIC's CRA condition must be addressed on this request for reconsideration, and the approval stayed.

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