Packet Materials

DATE: May 15, 2020 Item No. 7

LOCAL AGENCY FORMATION COMMISSION Agenda Packet Contents List

 Staff Memorandum from Bryan Goebel, Executive Officer  “Assessing Bank Accountability, The COVID-19 Community Stress Test”            

Completed by: Alisa Somera Date: May 8, 2020

(This list reflects the explanatory documents provided.)

San Francisco Local Agency Formation Commission City Hall 1 Dr. Carlton B. Goodlett Place, Room 409 San Francisco, CA 94102-4689 Tel. 415.554.6756 Fax. 415.554.5163

COMMISSIONERS May 15, 2020 Sandra Lee Fewer, Chair Board of Supervisors TO: LAFCo Commissioners Cynthia Crews-Pollock, Vice- Chair Member of the Public FROM: Bryan Goebel, Executive Officer Matt Haney Board of Supervisors SUBJECT: Item 7 – Presentation and Discussion on the LAFCo Report Gordon Mar Assessing Bank Accountability in San Francisco during the COVID-19 Board of Supervisors Pandemic

Shanti Singh Today LAFCo research associate Cara Yi, a fellow in public affairs at Member of the Public- Alternate Coro Northern California, presents the findings of her report, Assessing Bank Accountability: The COVID-19 Community 'Stress Test'.

Bryan Goebel There are five recommendations, informed by thorough research and interviews Executive Officer over the last month, that are important steps to help keep banks in San Francisco accountable during this crisis and its aftermath, and underscore the City’s role in Inder Khalsa Legal Counsel filling gaps, especially as it relates to underserved and disadvantaged communities:

Alisa Somera 1. Issue a statement of intent to hold banks accountable for community Clerk accessibility, fair practices, and good-faith efforts in the COVID-19 crisis Cara Yi response. Coro Research Fellow 2. Engage with communities of color to document requests for relief and track the granting of COVID-19 assistance from banks. 3. Organize listening sessions with the LEP (limited English proficiency) community to understand how the time-sensitive nature of the crisis response has affected accessibility. 4. Spotlight direct service providers on the sf.gov COVID-10 resources page who offer financial literacy resources and consumer legal assistance. 5. Assess the preparedness and capacity of City networks to scale acquisition and preserve affordable housing units.

I want to thank Cara Yi for her invaluable research and work that went into producing this report.

RECOMMENDATION: Accept the report and recommendations, provide feedback and direct next steps to staff. SAN FRANCISCO LOCAL AGENCY FORMATION COMMISSION

City Hall | 1 Dr. Carlton B. Goodlett Place, Room 409, San Francisco, CA 94102-4689 T 415.544.6756 | F 415.554.5163

Assessing Bank Accountability The COVID-19 Community ‘Stress Test’

Cara Yi Coro Fellow in Public Affairs LAFCo Research Associate

May 15, 2020

Local Agency Formation Commission City and County of San Francisco ASSESSING BANK ACCOUNTABILITY: THE COVID-19 COMMUNITY ‘STRESS TEST’

1. Introduction

Under the Local Agency Formation Commission’s (“the Commission” or “LAFCo”) special studies authority, I was asked by the Executive Officer, Bryan Goebel, to provide research and policy support for a public bank. Soon after, the coronavirus (“COVID-19”) pandemic hit San Francisco and, under the guidance of the Commission’s Chair, Supervisor Sandra Lee Fewer, shifted to examine the existing banking system and its crisis response.

With new direction, I was tasked to assess bank responses to COVID-19 and identify gaps and vulnerabilities left by banks’ (in)actions. To conduct the assessment, I contacted banks, community organizations at the state and local levels, and City officials. This four-week study coincided with the rollout of government programs and mandates catching many at their busiest. A special thanks to the 21 individuals, listed below, who gave their time and shared their resources to inform the findings of this report.

Kelly Batson, United Way Bay Area Sushil Jacob, Lawyer’s Committee for Civil Rights Bianca Blomquist, Small Business Majority Sharky Laguana, SF Small Business Coalition Amy Beinhart, SF Supervisor Hillary Ronen’s Office Flor Lorenzo, Beneficial State Foundation Karl Beitel, SF Budget & Legislative Analyst Consultant Jason Matthews, Urban Financial Services Coalition Chelsea Boilard, SF Supervisor Sandra Fewer’s Office Naima McQueen, Alliance for Community Development Peter Cohen, Council of Community Housing Organizations Kỳ-Nam Miller, Metropolitan Transportation Commission Jacob Dumez, SF Office of Financial Empowerment William Ortiz-Cartagena, SF Small Business Commissioner Nick Egger-Bovet, Beneficial State Bank Xiomara Peña, Small Business Majority Lamar Hetystek, Minority Business Development Agency Daisy Quan, SF Supervisor Gordon Mar’s Office Cynthia Huie, SF Small Business Commissioner Kevin Stein, California Reinvestment Coalition Kurtis Wu, SF Public Bank Coalition

The largest barrier to more completely assessing bank responses was the lack of transparency. Due to provisions legislated in the banking system, opportunities to examine bank processes and interactions with the community on a statistically significant scale are scarce. Consequently, this report assesses banks according to how the banking system enables and mandates its actors to respond to the COVID-19 crisis. In identifying at-risk groups in the banking system, this report concludes that data-tracking and increased capacity at local community-based organizations can increase bank accountability in San Francisco.

1 ASSESSING BANK ACCOUNTABILITY: THE COVID-19 COMMUNITY ‘STRESS TEST’

2. Background

2.1 AN OVERVIEW OF BANKS & THE BANKING SYSTEM The basic functions of retail and commercial banks (hereafter, “banks”) are to receive deposits and make loans. As intermediaries operating between agents who supply financial capital via deposits and agents who demand credit via loans, banks reduce transaction costs and enable an efficient allocation of capital in the economy. 1 While individual banks are distributive intermediaries between savers and borrowers, banks acting in a system with other banks can do more. According to fractional reserve theory, banks engaged in systemic interactions in a banking system can increase aggregate capital available in the economy for lending.2 In other words, banks participating in the federal banking system can extend more credit than the capital they receive in deposits. Hence, banks in the banking system function not only as transaction-based distributive intermediaries but also as distributive intermediaries of credit opportunities.

Given the various roles banks play to safeguard deposits, allocate credit, and operate the payments system, banks are regulated by a network of agencies. Major bank regulators include the Board of Governors of the Federal Reserve System (“Federal Reserve”), the Federal Deposit Insurance Corporation (“FDIC”), the Office of the Comptroller of the Currency (“OCC”), the Consumer Financial Protection Bureau (“CFPB”), and state agencies. Regulators supervise banks for safety and soundness, disclosure, standard setting, competition, and price and rate regulations.3 A bank’s primary regulator depends on the banks’ charter type or legal status. Therefore, when banks choose to apply for a state or national charter, banks effectively de jure choose favorable regulations under either state regulators (for state- chartered banks) or the OCC (for federal-chartered banks), among other factors.4 However, de facto, federal preemption laws (where federal statute is applied to state-chartered banks)

1 “What Is the Economic Function of a Bank?,” Federal Reserve Bank of San Francisco, July 2001, https://www.frbsf.org/education/publications/doctor-econ/2001/july/bank-economic-function/. 2 Richard A. Werner, “Can Banks Individually Create Money out of Nothing? — The Theories and the Empirical Evidence,” International Review of Financial Analysis 36 (December 2014): 1–19, https://doi.org/10.1016/j.irfa.2014.07.015. 3 Marc Labonte, “Who Regulates Whom? An Overview of the U.S. Financial Regulatory Framework” (Washington, D.C.: Congressional Research Service, March 10, 2020). 4 Jay B. Sykes, “Banking Law: An Overview of Federal Preemption in the Dual Banking System,” 5 (Washington, D.C.: Congressional Research Service, January 23, 2018).

2 ASSESSING BANK ACCOUNTABILITY: THE COVID-19 COMMUNITY ‘STRESS TEST’ and state parity provisions5 (where state-chartered banks can petition to receive powers granted to federal-chartered banks) narrow the regulatory jurisdictions of state regulators.

Though chartering authority is tied to regulatory power, national banks are not wholly immune from state law, and vice versa. According to the Supreme Court, national banks “are subject to the laws of the State, and are governed in their daily course of business far more by the laws of the State than of the nation,” because contracts, acquisition and transfer of property, and the right to collect debt and the liability to be sued for debts “are all based on State law.”6 To summarize, state laws apply to federal-chartered banks so long as they are limited to “establish[ing] the legal infrastructure around the conduct of [bank activities].”7 Regulations on “the manner, content or extent of the activities authorized for national banks,” including administrative oversight, are reserved for the OCC.8 State-chartered banks are likewise subject to federal laws, especially as they pertain to federal tax, consumer protection, and anti-discrimination laws. 9 The designation of consumer protection and anti- discrimination laws as areas of federal jurisdiction suggests that more stringent state laws are preempted, or displaced by federal law. Yet, the Supreme Court ruled in Cuomo v. The Clearing House Association, L.L.C. that federal-chartered banks are not preempted from the enforcement of state consumer protection and anti-discrimination laws in judicial proceedings.10 Though states do not hold visitorial, or administrative, powers over federal- chartered banks, in judicial action against a national bank, states can cause examinations of non-public national bank information.

5 The California Financial Code provides state-chartered banks a parity provision. “Advantages of State Charter,” California Department of Business Oversight, September 27, 2019, https://dbo.ca.gov/advantages- of-state-charter/. 6 Nat’l Bank v. Commonwealth, 76 U.S. (9 Wall.) 353, 362 (1869). 7 See Gutierrez v. Wells Fargo Bank, N.A. Sykes, “Banking Law: An Overview of Federal Preemption in the Dual Banking System,” 6. 8 “National Banks and the Dual Banking System” (Office of the Comptroller of the Currency, September 15, 2003), All Districts, https://www.occ.treas.gov/publications-and-resources/publications/banker- education/files/national-banks-and-the-dual-banking-system.html. 9 Ibid. 10 Sykes, “Banking Law: An Overview of Federal Preemption in the Dual Banking System,” 13-14. “Cuomo v. The Clearing House Association, L.L.C.: National Banks Are Subject to State Lawsuits to Enforce Non- Preempted State Laws” (Washington, D.C.: Congressional Research Service, January 11, 2011). John F. Cooney and Brock R. Landry, “The Scope of State Power: Supreme Court Rules That National Banks Are Subject to Enforcement of State Laws” (Community Banker, September 2009), https://www.venable.com/- /media/files/publications/2009/09/the-scope-of-state-power-supreme-court-rules-that/files/the-scope-of-state- power/fileattachment/community_banker.pdf.

3 ASSESSING BANK ACCOUNTABILITY: THE COVID-19 COMMUNITY ‘STRESS TEST’

The scope for cities and localities to affect WHAT POLICIES CAN THE CITY PURSUE? bank activities in the banking system is Cities can pursue educational, proprietary, even narrower. Just as federal laws can and limited regulatory policies to address preempt state laws, state laws can problems with bank accountability. preempt local ordinances. The California Educational policies include public Supreme Court interprets Article XI counseling and know-your-rights trainings, section 7 of the State Constitution as and proprietary actions include city policies to upholding local jurisdiction so long as discontinue or not conduct business with local legislation does not duplicate, certain parties. Regulatory policies include contradict or enter an area fully occupied, advocating for state or federal legislative expressly or implicitly, by state law.11 For changes. Each course of action implicates instance, in 2005, the Court overruled the different legal concerns outside the scope of City of Oakland’s ordinance regulating this report. predatory lending in home mortgages stating that the “Legislature has fully occupied the field of regulation of predatory practices in home loans.”12

2.2 AT RISK GROUPS IN THE BANKING SYSTEM Given banks’ critical roles in society and for economic development, banks are expected by law to “serve the convenience and needs of their local communities.”13 However, until the Community Reinvestment Act of 1977 (“CRA”), banks in the broader system had no incentive or accountability to “adequately seek out and help meet the credit needs of viable lending prospects in all sections of their communities.”14 In fact, prior to 1977, banks had engaged in redlining. Whether because of racial discrimination or fear of credit weakness, banks had designated areas of the community, mostly low- and moderate-income (“LMI”), as “places where they would not lend” thereby excluding certain groups from accessing the banking

11 “History of Municipal Home Rule” (League of California Cities, July 7, 2016), https://www.cacities.org/Resources-Documents/Resources-Section/Charter-Cities/History-of-Municipal-Home- Rule-2. John A. Russo, “The Legality of Proposed City Anti-Predatory Lending Policies,” Oakland Office of the City Attorney, Legal Opinion, October 10, 2000, https://www.oaklandcityattorney.org/PDFS/Opinions/AntiPredLending.pdf. 12 “California Supreme Court Strikes Down Oakland’s Predatory Lending Ordinance” (Sheppard, Mullin, Richter & Hampton LLP, February 1, 2005), https://www.sheppardmullin.com/media/publication/94_pub354.pdf. 13 12 USC Sec. 2901, Title XII. 14 Robert B. Avery, Paul S. Calem, and Glenn B. Canner, “The Effects of the Community Reinvestment Act on Local Communities” (Sustainable Community Development: What Works, What Doesn’t and Why, Board of Governors of the Federal Reserve System, 2003), 1.

4 ASSESSING BANK ACCOUNTABILITY: THE COVID-19 COMMUNITY ‘STRESS TEST’ system and its credit opportunities.15 In the CRA, Congress affirmed banks’ obligations to help meet the credit needs of the local community – specifically, of LMI groups – and mandated federal bank regulators to assess and rate banks on their CRA compliance. In the 43 years since, lending in LMI neighborhoods has increased.16 Yet, when considered with the rise of gentrification, LMI groups continue to be excluded from the banking system. The Urban Institute found that in 2016, 60 percent of CRA-credited loans in LMI neighborhoods were made to middle- and high-income borrowers and, in terms of dollar volume, only 28 percent of CRA-credited dollars went to LMI borrowers in LMI communities.17

Other groups at risk of being underserved or disadvantaged in the banking system include communities of color, those with limited English proficiency (“LEP”), and the undocumented. While the CRA indirectly addresses racial disparities, studies find that lower levels of lending to communities of color are not fully explained by income and wealth.18 For instance, in Figure 1, which includes an income factor, communities of color consistently experience higher rates of credit denial.

FIGURE 1. Incidence of Credit Denial by Applicant's Family Income and Race/Ethnicity, 2018

70% 60% 50% 40% 30% 20% 10% 0%

Share of Credit Applicants Denied Applicants Credit of Share Less than $40,000 $40,000-$100,000 Greater than $100,000 Applicant's Family Income

White Black Hispanic Overall, Regardless of Race/Ethnicity

Source: Board of Governors of the Federal Reserve System, Report on the Economic Well-Being of U.S. Households in 2018

15 Eugene A. Ludwig, James Kamihachi, and Toh Laura, “The Community Reinvestment Act: Past Successes and Future Opportunities,” Revisiting the CRA: Perspectives on the Future of the Community Reinvestment Act, 84 (San Francisco, CA: Federal Reserve Bank of San Francisco, February 2009), https://www.frbsf.org/community-development/files/cra_past_successes_future_opportunities1.pdf. 16 Ibid, 90. 17 Laurie Goodman, John Walsh, and Jun Zhu, “Most CRA-Qualifying Loans in Low- and Moderate-Income Areas Go to Middle- and Upper-Income Borrowers,” Urban Institute, March 4, 2019, https://www.urban.org/urban-wire/most-cra-qualifying-loans-low-and-moderate-income-areas-go-middle-and- upper-income-borrowers. 18 Ludwig, Kamihachi, and Laura, “The Community Reinvestment Act: Past Successes and Future Opportunities,” 86.

5 ASSESSING BANK ACCOUNTABILITY: THE COVID-19 COMMUNITY ‘STRESS TEST’

For LEP and undocumented communities, banks are not legally liable to protect the consumer in ways that put these groups at risk. The language barriers for LEP consumers create a series of obstacles in accessing banking services. Not only are there limitations in which technical terms have equivalent translations, but also inconsistent translations create more confusion than clarity.19 Financial literacy and familiarity with the U.S. financial system pose another barrier. Where consumers who understand the full lifecycle of a transaction are able to adequately weigh repercussions and risks, consumers without the full view are disadvantaged in decision-making. Yet, banks are not obliged to ensure consumers understand the full scope and potential repercussions of a transaction.20 While information asymmetry disadvantages all consumers, the rate of incidence among LEP groups is higher. For undocumented communities where immigration status can be used against them in legal proceedings, undocumented persons can be dissuaded to right wrongs even when the law would protect their interests. For instance, lenders who impose onerous or unsatisfactory terms on consumers and later provide contract changes to those who complain, take unfair advantage of consumers who lack the resources or power to complain. 21 However, banks are not required to always protect consumers via “opt-out” arrangements.

There are significant overlaps between the various risk groups – socioeconomic status, race and ethnicity, language proficiency, and legal status. Considering the weaknesses in the current system with the demographics of the San Francisco community, the need to hold banks accountable to “serve the convenience and needs of [our] local communit[y]”22 draws an even greater imperative.

19 “Spotlight On Serving Limited English Proficient Consumers: Language Access in the Consumer Financial Marketplace” (Consumer Financial Protection Bureau, November 2017), https://files.consumerfinance.gov/f/documents/cfpb_spotlight-serving-lep-consumers_112017.pdf. 20 Ruth Plato-Shinar, “The Language Barrier in Banking Documents – The Bank’s Special Liability to Guide the Perplexed” (Israel: Netanya Academic College, August 13, 2014), https://doi.org/10.2139/ssrn.2479929. 21 Nathalie Martin, “Giving Credit Where Credit Is Due: What We Can Learn from the Banking and Credit Habits of Undocumented Immigrants,” Michigan State Law Review, no. 989 (2015), 1001-2, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2587436. 22 12 USC Sec. 2901, Title XII.

6 ASSESSING BANK ACCOUNTABILITY: THE COVID-19 COMMUNITY ‘STRESS TEST’

3. Assessing Bank Responses to COVID-19

On March 9th, the banking system – via its state and federal regulators – acknowledged the adverse impacts of COVID-19 on affected communities and the potential disruption it posed to banks.23 While bank responses to the crisis unfolded throughout the month, on March 27th, under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), banks were legislated to act as government intermediaries on two fronts: 1. Directly, as the government’s distributive intermediary for the federal government’s Payment Protection Program (“PPP”) for small businesses and small business employees; and, 2. Indirectly, as the government’s intermediary for consumer relief for the general public via the bank’s customer base. This section attempts to document how the CARES Act has enabled banks to respond to the COVID-19 crisis and how banks in San Francisco have taken action. Though this assessment is taken in the midst of COVID-19 response efforts, timely insights can be provided for the City to hold banks and the broader banking system accountable in their crisis response.

3.1 BANKS IN SAN FRANCISCO San Francisco has 46 banks insured by the FIGURE 2. Banks in San Francisco by Charter Type federal government (“FDIC-insured”) – 28 Outer Ring: Share of Deposits state-chartered and 18 federal-chartered banks.24 While the majority of banks in San Francisco are state-chartered (Figure 2 Inner Ring), federal-chartered banks Inner Ring: Number receive far more of San Francisco residents’ of Banks dollars in deposits (Figure 2 Outer Ring). With regards to institutional size, San Francisco has more small- to medium-sized banks with total assets of $10 billion and below (Figure 3). However, where deposits State-chartered banks Federal-chartered banks Source: FDIC, Summary of Deposits in 2019

23 “Joint Press Release: Agencies Encourage Financial Institutions to Meet Financial Needs of Customers and Members Affected by Coronavirus,” Board of Governors of the Federal Reserve System, March 9, 2020, https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200309a.htm. 24 “Summary of Deposits,” FDIC: Bank Data & Statistics, June 30, 2019, https://www.fdic.gov/bank/statistical/.

7 ASSESSING BANK ACCOUNTABILITY: THE COVID-19 COMMUNITY ‘STRESS TEST’

FIGURE 3. Banks in San Francisco by Asset Size

16 100%

14 90% 80% 12 70% 10 60% 8 50%

6 40% 30% 4 20% 2

Number of Banks in San Francisco San in Banks of Number 10% 0 0% Less than $1B $1B-$10B $10B-$50B $50B-$100B Over $100B Holdings Deposit Francisco San of Share Asset Size

Number of state-chartered banks Number of federal-chartered banks

Overall deposit share (regardless of charter)

Source: FDIC, Summary of Deposits in 2019 are considered, more of San Francisco residents’ dollars are held by large banks with over $100 billion in assets. In contrast, the twelve community banks in San Francisco – banks legally recognized as keeping core deposits local and making many of their loans to local businesses25 – capture less than a one percent share of deposits (see Appendix A for more details on the characteristics of San Francisco’s community banks).

3.2 ASSESSING BANK RESPONSE FOR SMALL BUSINESSES & THEIR EMPLOYEES The CARES Act designated FDIC-insured banks as lenders approved to participate in the Payment Protection Program (“PPP”), a program granting federally covered, forgivable loans to small businesses.26 Under section 1102(a)(2)(F)(ii), banks, as lenders approved to make loans, were legislated the “delegated authority by the [federal government] to make and approve covered [PPP] loans.” This delegation of authority included processing, approving, and queuing loan applications for PPP funds distributed on a first-come, first-served basis. The first-come, first-served system of distribution tested banks on their demonstrated priorities. Under the framework of the program, the government paid PPP processing fees to

25 “FDIC Community Banking Study,” FDIC: Community Banking Initiative, June 23, 2014, https://www.fdic.gov/regulations/resources/cbi/study.html. 26 Small businesses include nonprofits, veterans organizations, and Tribal businesses eligible under section 31(b)(2)(C) of the legislation. PPP-eligible borrowers also include individuals operating under a sole proprietorship, independent contractors, and eligible self-employed individuals.

8 ASSESSING BANK ACCOUNTABILITY: THE COVID-19 COMMUNITY ‘STRESS TEST’ banks, thereby incentivizing banks to process as many applications as possible.27 Regulations in the banking system, however, caused banks to limit application processes to existing customers.28 The risk and expense involved in accommodating a new customer, especially a temporary one, was considered “onerous and time-consuming.”29 While the PPP attempted to align the industry’s profit incentive with the program’s intent to reach those in need, what resulted was a general prioritization of bank customers over the public with, in some cases, additional eligibility requirements. For instance, early in the PPP implementation, Bank of America required applicants to either have a small business lending or small business checking relationship with the bank or a checking account exclusively with the bank. 30 JPMorgan Chase and U.S. Bank likewise required applicants to be current customers, and Citibank processed applications by curating its own internal list of eligible applicants.31

Bank of America, JPMorgan Chase, and U.S. Bank are among the 39 banks in San Francisco with delegated authority to process, approve, and queue PPP applications. In total, banks participating as PPP lenders hold 99.5% of San Francisco deposits suggesting that most residents with preexisting banking relationships are covered by their bank provider. Bank customers representing the remaining 0.5% of the City’s total deposits can apply for the PPP at four state-chartered banks. However, this analysis does not adequately capture community needs in San Francisco. Unbanked and even underbanked individuals (if they do not have the type of banking relationship required by the institution for applicant eligibility) in the banking system are disadvantaged. Moreover, a third of the City’s community banks – banks more likely to serve LMI groups and make loans to local businesses – are not PPP lenders. One of the four community banks not participating, though an eligible lender, is not processing PPP

27 According to the PPP loan term and payment structure, banks were incentivized to favor smaller dollar applications of $350,000 or less. See “Small Business Loan Program Risks May Impede US Bank Participation,” Fitch Ratings, April 15, 2020, /banks/small-business-loan-program-risks-may-impede-us-bank-participation-15- 04-2020. As of April 22nd, PPP transaction fees have amounted to a total of more than $10 billion for banks. See “Small Business Rescue Earned Banks $10 Billion In Fees,” NPR, April 22, 2020, https://www.npr.org/2020/04/22/840678984/small-business-rescue-earned-banks-10-billion-in-fees. 28 “Nichols Calls for Adjustments to KYC Rules to Facilitate PPP Loans,” ABA Banking Journal, April 13, 2020, https://bankingjournal.aba.com/2020/04/nichols-calls-for-adjustments-to-kyc-rules-to-facilitate-ppp-loans/. 29 Know-your-customer and anti-money laundering compliance certification require banks to verify information about the borrower. The bank industry estimates that “the initial steps of processing a new borrower’s application can add as much as two hours of work. And then verifying that the customer’s information is legitimate can take a month or longer.” See “Banks Blame AML Rules for Emergency Loan Logjam,” American Banker, April 8, 2020, https://www.americanbanker.com/articles/banks-blame-aml-rules-for-emergency-loan- logjam. 30 Prachi Bhardwaj, “Small Business Loans and the Coronavirus Stimulus: Here’s How the Major Banks Are Handling PPP Applications,” Money, April 10, 2020, https://money.com/sba-loans-stimulus-ppp-application- requirements/. 31 Ibid.

9 ASSESSING BANK ACCOUNTABILITY: THE COVID-19 COMMUNITY ‘STRESS TEST’ applications to the disadvantage of its customers. The absence of more community-based intermediaries in San Francisco’s PPP distribution channels is cause for concern.

Presently, public data has not been released by the Small Business Administration (“SBA”) or the Department of the Treasury that could enable an equity assessment of PPP loan recipients in San Francisco. Nonetheless, several observations can be made about bank responses from aggregate numbers nationwide: • The first round of PPP loans hit the $349 billion allocation limit on April 16th. Based on SBA data from this first round of allocation, we find that almost half of total PPP funds went to applicants receiving more than $1 million in loans (Figure 4). In the second round, the share going to loans over $1 million was reduced by half and nearly 75 percent of the $310 billion went to applicants with less than $1 million in loans (Figure 5).

FIGURE 4. PPP Distributions in Round 1

25% 1,229,893 20%

15%

10%

5% 224,061

140,197 Approved Loans of Number 0% 41,238 21,566 4,412 Less than $150K $150K-$350K $350K-$1M $1M-$2M $2M-$5M More than $5M Share of Total PPP Loans ($349 billion) ($349 PPPLoans Total of Share PPP Loan Size Per Borrower

Share of the total loan amounts approved Number of loans approved

FIGURE 5. PPP Distributions in Round 2

40%

1,993,002 30%

20%

10%

138,968 Approved Loans of Number 0% 58,758 13,481 6,110 1,472 Less than $150K $150K-$350K $350K-$1M $1M-$2M $2M-$5M More than $5M Share of Total PPP Loans ($310 billion) ($310 PPPLoans Total of Share PPP Loan Size Per Borrower

Share of the total loan amounts approved Number of loans approved

Source: SBA, Paycheck Protection Program (PPP) Report on April 16, 2020 (Figure 4) and May 1, 2020 (Figure 5)

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• According to crowd-sourced data (27,308 responses), the approval rate for loans smaller than $1 million is 11.2 percent, for loans between $1 million and $5 million is 20.7 percent, and for loans greater than $5 million is 23.4 percent.32 • Over 77 percent of survey respondents nationally accessed the PPP loan through a preexisting lending relationship with their PPP lender.33

3.3 ASSESSING BANK RESPONSE FOR BANK CUSTOMERS Under Title IV, the CARES Act legislated temporary changes to the banking system to stabilize and assist those affected by COVID-19. For instance, the CARES Act temporarily suspended increases to banks’ reserve requirements enabling bank lending abilities,34 and the legislation addressed credit protection, forbearance, and moratoriums among other relief measures. In doing so, Congress increased regulatory flexibilities in the banking system such that bank regulators would be mandated, under section 4013(c), to defer to bank decisions in loan modifications related to COVID-19. State and federal regulators issued a joint statement clarifying how the banking system would support crisis response efforts. In a joint letter to bank CEOs, regulators (in the quote, referred to as “the agencies”) stated— “The agencies encourage [banks] to consider prudent arrangements that can ease cash flow on affected borrowers, improve their capacity to service debt, increase the potential for financially stressed residential borrowers to keep their homes, and facilitate the [bank’s] ability to collect on its loans….[and] when working with borrowers, lenders and servicers should adhere to consumer protection requirements, including fair lending laws, to provide the opportunity for all borrowers to benefit from these arrangements.”35 In a separate letter, the FDIC urged bank CEOs to act in the long-term interests of communities and the financial system with the following recommended actions36— • Waive certain fees, such as: o Automated teller machine (ATM) fees for customers and non-customers,

32 “Total Loans Received,” COVID Loan Tracker, 2020, https://www.covidloantracker.com/data. 33 “Preexisting Relationships,” COVID Loan Tracker, 2020, https://www.covidloantracker.com/data. 34 Keith Burns, “Guidance on the CARES Act and Banking,” Nexsen Pruet, April 2, 2020, https://www.nexsenpruet.com/insights/need-a-loan-modification-ask---guidance-on-the-cares-act-and- banking. 35 “Joint Statement on the Interaction of the CECL Revised Transition Interim Final Rule with Section 4014 of the Coronavirus Aid, Relief, and Economic Security Act,” FIL-32-2020, March 31, 2020, https://www.fdic.gov/news/news/financial/2020/fil20032.html. 36 “Working with Customers Affected by the Coronavirus,” FIL-17-2020, March 13, 2020, https://www.fdic.gov/news/news/financial/2020/fil20017.html.

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o Overdraft fees, o Late payment fees on credit cards and other loans, and o Early withdrawal penalties on time deposits; • Increase ATM daily cash withdrawal limits; • Ease restrictions on cashing out-of-state and non-customer checks; • Increase credit card limits for creditworthy borrowers; • Offer payment accommodations, such as allowing borrowers to defer or skip some payments or extending the payment due date, which would avoid delinquencies and negative credit bureau reporting; and • Work with consumers who are temporarily unable to work due to temporary business closures, slowdowns, or sickness. Assessing San Francisco’s 46 FDIC-insured banks against their regulator’s recommendations, we find that more than half of banks in the City publicly commit to implementing, where appropriate, one or more of the recommended actions (see Appendix B for more details). Mortgage-related provisions, where specified, vary from foreclosure moratoriums, forbearances, waivers for late fees, and assurances against negative credit reporting. Twenty- six banks committed on their websites to providing some sort of mortgage loan assistance to customers upon consultation. In most cases, relief is available on an opt-in basis, or upon request. This opt-in approach assumes awareness and capacity on the part of the consumer to request relief and meet eligibility. However, there is little transparency to assess if such assumptions are credible. Is available relief accessible? Without public data and transparency in banks’ customer processes, this question remains unanswered.

12 ASSESSING BANK ACCOUNTABILITY: THE COVID-19 COMMUNITY ‘STRESS TEST’

4. Recommendations & Conclusion

COVID-19 has presented itself a stress test on our systems’ resources, capacities, and processes. For the banking system, this crisis has increased bank resources and underscored bank capacities to act as distributive intermediaries yet has highlighted the opacity of bank processes (see to sections 3.2-3.3). In this moment where access to relief and resources are lifelines for communities, understanding who and how communities gets access to build resiliency draws a greater imperative.

In response to mounting pressures for transparency in the banking system’s COVID-19 response, the Federal Reserve announced on April 23rd that it would begin to disclose “extensive” information on the relief and aid granted to banks and other actors. 37 The information disclosed would include the amounts borrowed and interest rates charged to named institutions, including banks. While efforts by the Federal Reserve increases the system’s transparency to understand how banks are enabled to respond to COVID-19, it does little to bring accountability in banks’ interactions with the community. The OCC, the primary administrative regulator of federal-chartered banks, issued a statement shortly after the Federal Reserve’s announcement reminding banks and the public of its exclusive oversight and authority to mandate disclosures at federal-chartered banks.38 While the corollary for state-chartered banks may be different, state parity provisions make increased transparency efforts by state regulating counterparts unlikely. 39 Yet, the need to hold processes accountable in determining aid allocations is of increased urgency. That relief and resources provided in this moment have reverberating effects on community development and resiliency in the crisis aftermath underscores the deeper imperative for the City to call for increased transparency in bank-community interactions.

37 “Federal Reserve Board Outlines the Extensive and Timely Public Information It Will Make Available Regarding Its Programs to Support the Flow of Credit to Households and Businesses and Thereby Foster Economic Recovery,” Board of Governors of the Federal Reserve System, April 23, 2020, https://www.federalreserve.gov/newsevents/pressreleases/monetary20200423a.htm. 38 Cody Gaffney, “Reminder from the OCC: National Banks Not Subject to Visitorial Powers of State Authorities,” Covington & Burling LLP, April 27, 2020, https://www.covfinancialservices.com/2020/04/reminder-from-the-occ-national-banks-not-subject-to-visitorial- powers-of-state-authorities/. 39 In discussing parity between state and national banks, the California Department of Business Oversight assures state-chartered banks that “state banks can have the same advantages and the same competitive edge that a national bank would have” (“Advantages of State Charter” 2019).

13 ASSESSING BANK ACCOUNTABILITY: THE COVID-19 COMMUNITY ‘STRESS TEST’

Since the implementation of the PPP in April, banks have faced a series of class action lawsuits alleging discriminatory policies (Profiles, Inc., et al., v. Bank of America Corp., et al.), 40 negligence and unfair practices (Sha-Poppin Gourmet Popcorn L.L.C., v. JPMorgan Chase Bank, N.A., et al.),41 and fraudulent concealment (BSJA, Inc., et al. v. Wells Fargo & Co., et al.)42 among other cases.43 Judicial proceedings have drawn public attention to the consumer level. However, as the U.S. District Court for the District of Maryland ruled in Profiles, Inc., et al., v. Bank of America Corp., et al., legislators are “better positioned… [to] ameliorating the effects of the COVID-19 crisis.”44

4.1 RECOMMENDATIONS Considering the limited scope for municipalities to directly address problems with bank accountability (see section 2.1), this report recommends the City of San Francisco urge regulators45 to improve transparency in bank processes by appealing to the CFPB with data documenting the San Francisco community’s interactions with banks. To position the City to pursue regulatory policy changes, San Francisco should consider the following recommendations— Recommendation #1: Issue a statement of intent to hold banks accountable for community accessibility, fair practices, and good-faith efforts in the COVID-19 crisis response. A resolution or public statement can encourage public conversations that identify common customer experiences with banks and guide community-based organizations to make concerted efforts to act as intermediaries between banks and at-risk groups.

40 “Rifkin Weiner Livingston LLC Sues Bank of America for Class Action for Prioritizing Its Lending Clients and Denying Access to the PPP Program to Its Depository Clients and Other Small Businesses,” PR Newswire, April 3, 2020, https://www.prnewswire.com/news-releases/rifkin-weiner-livingston-llc-sues-bank-of-america-for- class-action-for-prioritizing-its-lending-clients-and-denying-access-to-the-ppp-program-to-its-depository- clients-and-other-small-businesses-301035474.html. 41 Leah Hope, “PPP Loans: Westchester Small Business Owner Leads Class Action Lawsuit against Chase Bank,” ABC7 Chicago, April 24, 2020, https://abc7chicago.com/6127972/. 42 “Suits Allege Banks Played Favorites With Loans,” PYMNTS, April 20, 2020, https://www.pymnts.com/legal/2020/class-action-lawsuits-banks-ppp-loans/. 43 “Stalwart Law Group Files Class Actions against Nation’s Biggest Banks for Alleged PPP Loan Deception,” Business Wire, April 20, 2020, https://www.businesswire.com/news/home/20200420005266/en/Stalwart-Law- Group-Files-Class-Actions-Nation%E2%80%99s. 44 “Bank of America Class Action,” Rifkin Weiner Livingston LLC, April 13, 2020, https://www.rwllaw.com/bank- of-america-class-action-2/. 45 The OCC is the primary regulator for federal-chartered banks and the California Department of Business Oversight is the primary regulatory for California state-chartered banks.

14 ASSESSING BANK ACCOUNTABILITY: THE COVID-19 COMMUNITY ‘STRESS TEST’

Recommendation #2: Engage with communities of color to document requests for relief and track the granting of COVID-19 assistance from banks. Under the CARES Act, banks “can initiate action”46 to aid their customers by waiving supplemental fees, easing restrictions of cashing checks, expanding credit products for borrowers, increasing credit card limits, and offering payment accommodations. In most cases, relief is available upon consultation and approved on a case-by-case basis. Recognizing that racial disparities in banking outcomes is not fully explained by income and wealth, data-tracking among customers of color can document other factors at play in bank-customer interactions. To collect meaningful and representative data, LAFCo should conduct a study with direct service providers (those providing legal counsel, consultation, workshops and trainings) to communities of color. Sample questions for the assessment can include: What is the COVID-19 assistance requested? If denied assistance, what reason did the banks provide? Recommendation #3: Organize listening sessions with the LEP community to understand how the time-sensitive nature of the crisis response has affected accessibility. Relief availability during COVID-19 has largely been time sensitive, i.e. the PPP available on a first-come, first-served basis. In this rapidly developing environment where communication with LEP groups requires additional steps, like translation and distribution via alternative media channels, the City should assess how reaching LEP communities are prioritized in communication planning. The listening session can provide a forum for the public to provide feedback on how public communication across language barriers can be improved in crisis and non-crisis periods. Recommendation #4: Spotlight direct service providers on the sf.gov COVID-19 resources page who offer financial literacy resources and consumer legal assistance. Direct service providers are the community’s intermediaries to banks. The City can demonstrate its commitment to hold banks accountable for fair and good-faith practices by educating the consumer and bank customer. Spotlighting community- based organizations can allow providers to redirect resources from marketing to direct services work. Recommendation #5: Assess the preparedness and capacity of City networks to scale acquisition and preserve affordable housing units. In the housing market disruption of 2008-09, the City’s network was unable to scale and compete against private firms and real estate speculators. While the Community Opportunity to Purchase Act (COPA) gives qualified nonprofits in San Francisco the right-of-first-offer and right-of-first-

46 “Federal Government Response to COVID-19: Financial Institution Regulations and Available Measures,” The National Law Review, March 27, 2020, https://www.natlawreview.com/article/federal-government- response-to-covid-19-financial-institution-regulations-and.

15 ASSESSING BANK ACCOUNTABILITY: THE COVID-19 COMMUNITY ‘STRESS TEST’

refusal in certain sales, it is uncertain if nonprofits will also be able to quickly scale to meet the need should the COVID-19 crisis cause another severe housing market disruption.47

4.2 CONCLUSION Banks should be accountable to the community, especially during this crisis period, because of what systems have tasked banks to do. As distributive intermediaries of credit opportunity and COVID-19 relief, banks have been nudged to take action in the long-term interests of communities and the financial system. 48 When banks were previously designated as the federal government’s intermediary in 2009 for a voluntary home loan modification program – the Home Affordable Modification Program – the response effort was assessed to be too lenient.49 There were “no requirements and no consequences for not doing well.”50 Yet, today, we face a similar situation with banks designated, on a voluntary basis, to distribute relief and work in good-faith without consequences for not meeting the mark. Learning from past crisis periods and response efforts, San Francisco should act in its capacity to hold banks accountable; and the effort to hold banks accountable is as much an investment in community empowerment as it is an advocacy effort to legislate change.

47 Joshua Sabatini, “New Law Pushes Property Owners to Sell to Nonprofits Not Speculators,” The San Francisco Examiner, April 16, 2019, https://www.sfexaminer.com/the-city/new-law-pushes-property-owners-to- sell-to-nonprofits-not-speculators/. 48 “Working with Customers Affected by the Coronavirus,” March 13, 2020. 49 Carolyn Said, “BofA, Wells Step up Mortgage Efforts,” SFGate, September 10, 2009, https://www.sfgate.com/business/article/BofA-Wells-step-up-mortgage-efforts-3287559.php. 50 Ibid.

16 Appendix A.

TABLE 1. Descriptions of Banks in San Francisco as of June 30, 2019 PPP LENDER SHARE OF SF DEPOSIT SHARE OF THE BANK’S FDIC-INSURED BANK CHARTER TYPE ASSET SIZE ELIGIBLE? HOLDINGS DEPOSITS FROM SF

Bank of San Francisco* Yes State < $1B 0.1% 100%

Bank of the Orient* Yes State < $1B 0.2% 61.3%

Beacon Business Bank, National Association* Yes Federal < $1B 0% 58.2%

California Pacific Bank* Yes State < $1B 0% 78.4%

CIBC National Trust Company Yes Federal < $1B 0% 0%

First Federal Savings and Loan Association of San No Federal < $1B 0% 37.4% Rafael*

GBC International Bank* Yes State < $1B 0% 16.2%

Metropolitan Bank* Yes State < $1B 0% 19.9%

Mission National Bank* No Federal < $1B 0.1% 84.3%

Amalgamated Bank No State $1B - $10B 0% 1.1%

Bank of Guam Yes State $1B - $10B 0% 2.6%

Bank of Marin* Yes State $1B - $10B 0% 2.9%

BNY Mellon Trust Company, National Association No Federal $1B - $10B 0% 0%

Boston Private Bank & Trust Company Yes State $1B - $10B 0.1% 4.4%

CTBC Bank Corporation (USA) Yes State $1B - $10B 0% 0.8%

First Bank Yes State $1B - $10B 0.1% 2.8%

17 PPP LENDER SHARE OF SF DEPOSIT SHARE OF THE BANK’S FDIC-INSURED BANK CHARTER TYPE ASSET SIZE ELIGIBLE? HOLDINGS DEPOSITS FROM SF

Fremont Bank* Yes State $1B - $10B 0% 2.9%

Hanmi Bank Yes State $1B - $10B 0% 1.5%

Heritage Bank of Commerce* Yes State $1B - $10B 0.1% 41.4%

Industrial and Commercial Bank of China USA, No Federal $1B - $10B 0.2% 20.2% National Association

Mechanics Bank Yes State $1B - $10B 0% 2.0%

Preferred Bank Yes State $1B - $10B 0.1% 7.0%

Sterling Bank and Trust, FSB Yes Federal $1B - $10B 0.6% 48.6%

Tri Counties Bank Yes State $1B - $10B 0.2% 1.1%

United Business Bank Yes State $1B - $10B 0.4% 0.2%

Bank of America California, National Association Yes Federal $10B - $50B 4.8% 100%

BNY Mellon, National Association No Federal $10B - $50B 0% 0%

Cathay Bank Yes State $10B - $50B 0.1% 1.5%

East West Bank Yes State $10B - $50B 0.9% 5.7%

Signature Bank* Yes State $10B - $50B 0.1% 0.7%

Umpqua Bank Yes State $10B - $50B 0% 5.0%

Western Alliance Bank Yes State $10B - $50B 0.1% 0.9%

Bank of the West Yes State $50B - $100B 1.3% 4.3%

City National Bank Yes Federal $50B - $100B 0.7% 3.6%

18 PPP LENDER SHARE OF SF DEPOSIT SHARE OF THE BANK’S FDIC-INSURED BANK CHARTER TYPE ASSET SIZE ELIGIBLE? HOLDINGS DEPOSITS FROM SF

Comerica Bank Yes State $50B - $100B 0.8% 3.2%

Zions Bancorporation, National Association No Federal $50B - $100B 0.2% 0.8%

Bank of America, National Association Yes Federal > $100B 42.7% 7.1%

Citibank, National Association Yes Federal > $100B 3.7% 1.5%

First Republic Bank Yes State > $100B 12.8% 34.7%

HSBC Bank USA, National Association Yes Federal > $100B 1.3% 2.4%

JPMorgan Chase Bank, National Association Yes Federal > $100B 5.0% 0.9%

MUFG Union Bank, National Association Yes Federal > $100B 2.6% 6.2%

The Northern Trust Company Yes State > $100B 0.2% 1.1%

U.S. Bank National Association Yes Federal > $100B 0.3% 3.0%

Wells Fargo Bank, National Association Yes Federal > $100B 19.9% 3.5%

* indicates FDIC-defined community bank status Source: FDIC, Summary of Deposits in 2019

19 Appendix B.

TABLE 2. Bank Responses to COVID-19 PPP FOR ONLINE PARTICIPATING MORTGAGE-RELATED ASSISTANCEiv FDIC-INSURED BANK NON- TRANSPARENCY RELIEF APPLICATION TYPEiii PPP LENDER?i CUSTOMERS? RATINGii 1v 2vi 3vii 4viii

Bank of San Francisco* Yes Yes Poor None mentioned - - - -

Bank of the Orient* No - Poor None mentioned Yes - - -

Direct consultation; Beacon Business Bank, National Association* Yes No Fair - - - - Universal supplemental fee waivers

California Pacific Bank* Yes No Poor None mentioned - - - -

CIBC National Trust Company No - Fair None mentioned - - - -

First Federal Savings and Loan Association of San No - Poor None mentioned - - - - Rafael*

GBC International Bank* Yes Yes** Poor None mentioned - - - -

Metropolitan Bank* No - Poor None mentioned - - - -

Mission National Bank* No - Poor None mentioned - - - -

Amalgamated Bank No - Good Universal supplemental fee waivers Yes Yes Yes Yes

Universal consumer loan, credit Bank of Guam Yes No Good Direct consultation card payment deferral

Bank of Marin* Yes No Good Universal supplemental fee waivers - - - -

BNY Mellon Trust Company, National Association No - Poor - - - - -

Boston Private Bank & Trust Company Yes No Good Direct consultation Yes Yes Yes Yes

CTBC Bank Corporation (USA) Yes No Poor None mentioned - - - -

First Bank Yes No Good Request consumer loan assistance Yes Yes Yes -

20 PPP FOR ONLINE PARTICIPATING MORTGAGE-RELATED ASSISTANCE FDIC-INSURED BANK NON- TRANSPARENCY RELIEF APPLICATION TYPE PPP LENDER? CUSTOMERS? RATING 1 2 3 4

Fremont Bank* Yes No Good Direct consultation Direct consultation

Hanmi Bank Yes Yes Fair Universal supplemental fee waivers - - - -

Heritage Bank of Commerce* Yes No Poor None mentioned - - - -

Industrial and Commercial Bank of China USA, No - Poor None mentioned - - - - National Association

Mechanics Bank Yes No Poor None mentioned - - - -

Preferred Bank Yes No Poor None mentioned - - - -

Sterling Bank and Trust, FSB Yes No Fair Direct consultation Yes Yes Yes Yes

Request consumer loan assistance, Tri Counties Bank Yes No Good Yes Yes Yes - fee waivers

United Business Bank Yes Yes Poor None mentioned - - - -

Request payment deferrals, fee Bank of America California, National Association Yes No Good Yes Yes Yes Yes waivers

BNY Mellon, National Association No - Poor None mentioned - - - -

Direct consultation; Cathay Bank Yes Yes Good Yes Yes Yes - Universal supplemental fee waivers None mentioned aside from East West Bank Yes No Fair Direct consultation mortgage-related assistance Request credit card payment deferral; Universal supplemental Signature Bank* Yes No Good Direct consultation Yes fee waivers, suspension of withdrawal limits

Umpqua Bank Yes No Good Direct consultation Yes Yes Yes -

Western Alliance Bank Yes No Poor None mentioned - - - -

Bank of the West Yes No Good Direct consultation Yes Yes Yes Yes

21 PPP FOR ONLINE PARTICIPATING MORTGAGE-RELATED ASSISTANCE FDIC-INSURED BANK NON- TRANSPARENCY RELIEF APPLICATION TYPE PPP LENDER? CUSTOMERS? RATING 1 2 3 4

City National Bank Yes No Poor None mentioned - - - -

Request payment deferrals, fee Comerica Bank Yes No Good Direct consultation waivers

Zions Bancorporation, National Association No No Poor None mentioned - - - -

Request payment deferrals, fee Bank of America, National Association Yes No Good Yes Yes Yes Yes waivers Request payment deferrals, fee Citibank, National Association Yes No Good Yes Yes Yes Yes waivers

First Republic Bank Yes No Fair Direct consultation Direct consultation

Request payment deferrals, fee HSBC Bank USA, National Association Yes No Good Yes Yes Yes - waivers

JPMorgan Chase Bank, National Association Yes No Good Request payment deferral Direct consultation

Request payment deferrals, fee MUFG Union Bank, National Association Yes No Good Direct consultation waivers

The Northern Trust Company Yes No Poor None mentioned - - - -

Request credit card payment deferral; Universal supplemental U.S. Bank National Association Yes Yes Good Yes Yes Yes - fee waivers, suspension of withdrawal limits

Wells Fargo Bank, National Association Yes No Good Request payment deferrals Yes Yes Yes Yes

* indicates FDIC-defined community bank status

** indicates that though the PPP is processed for non-customers, existing bank customers are explicitly stated to receive priority in processing

i Lenders participating in the PPP as of April 23, 2020.

22 ii Transparency is defined here as public accessibility to information and is measured by the degree to which banks are forthright with their capacity to respond to COVID-19 disruptions and related challenges. Where COVID-19 resources are easily accessible online, i.e. COVID-19 landing page, and described with detail, i.e. other than a phone number or email to reach a bank representative, the bank is assessed as ‘Good’. Descriptions on the webpage are desirable for information-sharing purposes given the limited capacity and time inefficiencies of one-on-one consultations. Where COVID-19 resources are accessible online, i.e. COVID-19 landing page, the bank is assessed as ‘Fair’. Where the bank does not provide COVID-19 resources online, the bank is assessed as ‘Poor’. iii Relief application refers to the flexibilities a bank offers customers. ‘Direct consultation’ indicates that the bank has stated the potential availabilities of flexibilities available via direct consultation and provided on a case-by-case basis. ‘Request’ means that the bank specifies the type of assistance available. Though determined on a case-by-case basis, the application for the specified relief is open to all customers. ‘Universal’ flexibilities describe blanket options the bank offers and extends to all customers automatically. iv Mortgage-related assistance is offered to bank customers on a direct consultation basis. While some banks specify the types of assistance available (options 1 through 4), others simply ask the consumer to directly consult the bank. Where the bank specifies the types of assistance available, the bank is marked with a ‘yes’ to provide the option specified. ‘Direct consultation’ indicates that the bank communicates a potential for mortgage-related assistance without specifications. v Assistance option 1 is forbearance. vi Assistance option 2 is a waiver for late fees. vii Assistance option 3 is assurance against negative credit reporting. viii Assistance option 4 is a foreclosure moratorium.

23