A recent op-ed in American Banker includes a remarkable complaint, alleging that “certain stakeholders have not contributed positively to the public discussion.” The author, Deputy Comptroller Barry Wides, doesn’t name names, but I believe that this public scolding is directed at my organization, the California Reinvestment Coalition.
CRC has raised serious questions about the advance notice of proposed rulemaking issued by the Office of the Comptroller of the Currency last August. We continue to discuss our concerns with our members, allied organizations, and elected officials who believe that financial regulation should seek to combat inequality and protect civil rights. And we believe that this op-ed reflects a political agenda driven by administration appointees. More troubling than mere sensitivity to criticism, this agenda scorns input from groups that hold banks accountable to their communities.
We believe it’s part of an ongoing campaign that reflects the worst tendencies of the rest of the Trump administration: silencing the public in order to break norms with impunity.
Why raise our hands to be named as the targets of anonymous criticism? Because the OCC has directly reprimanded CRC for speaking out. In a bizarre move, the OCC sent an official letter to our organization less than three months ago that defends the ANPR’s outreach and calls our public input “false and negatively prejudging.” (This was not prejudging — we read the whole thing and then judged.) It asks “that you refrain from mischaracterizing the OCC’s CRA ANPR” in public communications.
It’s one thing for kindergarten teachers to ask for nice comments only. It’s quite another for a public agency in a democratic government. Using official communications to criticize solicited public input is a chilling move.
This fear of the public is not unique to the ANPR process. Reports suggest that the OCC has unilaterally decided to smooth the way for mergers by no longer considering critical public comments during the merger process itself, instead relegating them to a separate CRA examination track. A similar plan to wall off the public has been reported for mergers that involve other regulatory agencies; yet another would make FOIA responses harder to get.
Why, then would the OCC want to chill this particular input? If we’re wrong about their intentions, what would they have to hide? If the ANPR doesn’t foreshadow a threat to the important role the CRA plays in protecting working-class communities of color and mom-and-pop businesses who have been unfairly denied access to financial products, then the agency has nothing to worry about.
Sadly, there’s more evidence that we’re right. And it comes straight from the top.
Comptroller Joseph Otting’s career in the private sector was the perfect audition to be appointed to eviscerate the CRA. When Otting was CEO of OneWest Bank, a CRC analysis found it to be one of the poorest CRA-performing banks in California, making inadequate reinvestments in low- and moderate-income communities and people, failing to meet local credit needs for affordable homeownership and rental housing, failing to make small business loans to small businesses and catering to wealthy clients.
Given that track record, we worry that the “outdated regulatory framework” described in these pages refers to policies that direct investment to working people, or that might inhibit companies like OneWest from foreclosing on tens of thousands of Californians, including seniors, widows and their families.
We also worry that the comptroller’s public comments reveal this agenda. As the Wall Street Journal reported, he has publicized plans to “make it harder for community groups to ‘pole vault in and hold [bankers] hostage,'” which is to say, prevent communities that have been the victims of redlining from holding banks accountable.
More recently, a CRC FOIA request confirmed that the OneWest/CIT merger was supported by fabricated letters generated from a template provided by OneWest and issued at the direction of Mr. Otting to his friends and family. Rather than investigate this violation of the law, the OCC has approached public comment in a similar spirit, encouraging compliments and lashing out at critics.
Many of these concerns were raised by Rep. Katie Porter, D-Calif., in an April 1 letter to the comptroller inquiring whether the CRA risks conflicts of interest and regulatory capture in its approach to CRA. We hope the agency will respond to a member of Congress more openly than it has received our own comments.
Avoiding sunshine and accountability may be the only way the OCC can defend a process that, in a radical break with the norms of rulemaking, has cast aside the traditional balanced process that includes the Federal Reserve and the FDIC and proceeded unilaterally.
What could be more in line with the way this administration has treated ordinary Americans? The picture is clear: They don’t want to hear criticism from the public, and they don’t want them to see what they’re doing.
It’s almost like they’re building a wall.