Alexander, Mitzi

From: Heidenreich, Suzanne Sent: Monday, February 26, 2018 8:43 AM To: Alexander, Mitzi Subject: FW: Banks of & Richmond Foster Racial Economic Exclusion: FMCRC Requests CRA Downgrade for BB&T and Citibank

Follow Up Flag: Follow up Flag Status: Flagged

‐‐‐‐‐Original Message‐‐‐‐‐ From: Al Pina [[email protected]] Received: Sunday, 25 Feb 2018, 9:12AM To: 'Al Pina' [[email protected]] Subject: Federal Reserve Banks of Atlanta & Richmond Foster Racial Economic Exclusion: FMCRC Requests CRA Downgrade for BB&T and Citibank

Florida Minority Community Reinvestment Coalition 4836 Tuscan Loon Drive Tampa FL 33619

February 26, 2018

Federal Reserve System of Atlanta Federal Reserve Bank of Richmond Ms. Mr. Mr. Thomas Barkin Governor President President 20th & C Street NW 1000 Peachtree Street NE 701 E. Byrd St Washington D.C 20551 Atlanta, GA 30309 Richmond, VA 23219

RE: Request for CRA inquiry into lack of home lending to minorities and lack of construction lending for affordable housing development to minority led and focused nonprofits by Citibank and BB&T. Placement of “Need to Improve” into bank CRA file for lack of affordable housing construction lending to minority led and focused nonprofits. Request for Racial Housing Inclusion Studies by Reserve Banks of Atlanta and Richmond to follow Leadership of Reserve Bank of San Francisco “Color of Wealth in Los Angeles” Study (Sent via certified letter and email)

Dear Ms. Brainard, Mr. Bostic and Mr. Barkin:

1 In the area of both home lending to minorities by BB&T and Citibank and providing access to capital to minority led and focused nonprofits for construction of affordable housing, these two banks (and many other banks you regulate) they should just place a sign on their bank building “White Need Only Apply”.

The Federal Reserve Bank of San Francisco study “The Color of Wealth” clearly demonstrates that there is a vast and growing racial wealth gap that is driven by the lack of both minority home ownership and home equity. Most banks that you regulate, and in particular Citibank and BB&T, have failed miserably to provide capital to both minority home buyers and minority led and focused nonprofit affordable housing developers who wish to provide increased access to affordable housing that will increase minority household wealth. But this is a direct reflection of both the Federal Reserve Bank of Richmond and the Federal Reserve Bank of Atlanta desire and commitment towards racial economic inclusion. Your Banks can brag all you want about how you push for racial economic inclusion but in the end all that matters is the data and the data clearly shows both of your regulatory bodies have failed miserably in racial economic inclusion.

There is national crisis in the lack of affordable housing in large urban cities throughout the United States. In Florida and Maryland this lack of affordable housing is now having a significant negative impact on the number of new minority home owners. Nonprofits must play a vital role in the development and construction of affordable housing. But these nonprofits are not able to become a vital supplier of affordable housing due to the lack of capital provided directly from major financial institutions. At the top of this list of banks not directly providing capital to nonprofits are BB&T and Citibank.

We at FMCRC and the organizations we work with are requesting a formal CRA inquiry into this matter and if substantiated, that their current CRA rating be adjusted with a “needs to improve” in this area of direct lending to both minority home buyers and minority led and focused nonprofit home builders.

Capitalism without capital is nothing more than an ISM. In the Latino and especially the African American community there is mostly ISM. The CRA act is squarely focused on “access to capital” and not charity or grant giving as this passage of the actual CRA act outlines:

The Community Reinvestment Act (CRA) is a federal law that requires banks to meet the credit needs of their entire communities, including low-moderate income (LMI) neighborhoods. The CRA Act begins by reciting to Congress three findings. First, financial institutions are required to serve the “convenience and needs” of the communities in which they are chartered to do business. Second, “the convenience and needs of the communities include credit services.” Third, financial institutions have “continuing and affirmative obligation(s) to help meet the credit needs of the local communities in which they are chartered.”

For the minority community, home ownership and home equity are vital to increasing household wealth that in turn bridges both social and economic inequality in our country. There must be more emphasis on home ownership capital and not rental capital. Investors target multi-family development due to the return on investment that is layered with tax credits. The banks finance these investments due to both profit and their ability to obtain significant CRA credit. In that rentals are also necessary, there must be a balance of For Sale affordable housing and rentals. Your CRA examiners have dramatically tipped the balance in favor of multifamily development that is now contributing to the ever growing racial wealth gap that is driven by home equity.

The key to reversing this economic scale from rentals to home ownership is to develop and expand the number of minority led and focused nonprofit affordable housing developers. But without direct capital from banks to nonprofits this will not happen. We at FMCRC have proven in a very short time that with access to capital, and the right business model, a nonprofit can become a major player in affordable housing development. In a short period we have become Florida’s largest nonprofit affordable housing builder that does not use government 2 funding. Banks such as Regions, PNC, TD, Capital One and Fifth Third banks all have stepped up with programs that offer direct lending to minority led and focused nonprofits to build affordable housing. But when we attempted to access similar construction capital lines of credit at Citibank and BB&T we met nothing but resistance. This lack of access is very concerning to FMCRC and it should be to your regulatory agencies.

The lack of racial relevant focused programs and studies by both of your Federal Reserve Banks has led to an environment in both of your service areas where white led (leadership and board) organizations dominate and monopolize housing programs and community economic development in minority communities. This in turn has led to a growing racial economic segregation mentality and environment. Just recently when we at FMCRC led a charge for Baltimore African American organizations to be allowed to lead housing and community economic development programs that impact their communities, I was met with calls by white nonprofit leaders, regulators and bankers that I was a “racist’. Your Federal Reserve Banks have allowed this “sense of white entitlement” to foster and grow. We at FMCRC demand that both of your Federal Reserve Banks follow the lead of the Federal Reserve Bank of San Francisco and conduct a “Color of Wealth” study for both of your markets.

FMCRC is an economic civil rights organization and not a home builder. There are thousands of minority led and focused nonprofit affordable home builders (or those who wish to build) in our country that can overnight have a major impact on the availability of affordable housing to minority home buyers but will never be able to do so without access to capital directly from banks. It is our hope that your organizations can re-think your approach to this growing issue and formulate a CRA policy that will encourage, if not mandate, that financial institutions must have direct affordable housing construction capital available to nonprofits. There is thousands of minority led and focused nonprofits that are willing and able to begin building tomorrow but can only do so with access to capital from banks.

We at FMCRC thank you for your consideration on this request. If there are any questions, please contact myself directly at (813) 598-6361.

Sincerely,

"There are those who say thus is the way of the world....I say NO thus we make it" "It is easy to sing when one sits upon a perch of privilege as compared to those who are drowning in a sea of neglect" Al Pina Chair/CEO FMCRC & Assets & Hope Interim Chair, National Minority Affordable Home Builders Coalition & Summit Committee Member, Baltimore African American Home Builders Cooperative Cell 813-598-6361 www.assetsandhope.org www.minorityhomebuilders.org www.fmcrc.org FAITH-HONOR-STRENGTH

3 Heidenreich, Suzanne

From: Jeffries-Jones, Sharon Sent: Monday, April 02, 2018 12:06 PM To: Heidenreich, Suzanne Subject: FW: Federal Reserve Banks of Atlanta & Richmond Foster Racial Economic Exclusion: FMCRC Requests CRA Downgrade for BB&T and Citibank

FYI.

From: Jeffries-Jones, Sharon Sent: Monday, February 26, 2018 5:02 PM To: 'Al Pina' Cc: Schoonover, Heidi; Pascal, Craig; Freeman, Louis Subject: RE: Federal Reserve Banks of Atlanta & Richmond Foster Racial Economic Exclusion: FMCRC Requests CRA Downgrade for BB&T and Citibank

Al,

It is unfortunate that we are at this juncture. However, BB&T is in receipt of your request to the Federal Reserve Bank and they will proceed with gathering the necessary documentation for their review. Those results will outline BB&T’s performance in home loans to minorities, as well as, to dminority le and focused nonprofits in Florida and Maryland.

BB&T is interested in continuing our discussion to address the training center development which will support minority led affordable housing. I am writing you today in order to request a time so we can schedule a conference call/visit to further discuss the community needs you have identified.

Sincerely Sharon

Sharon Jeffries-Jones BB&T EVP, Director of CRA/Community Development

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1

June 12, 2018

E. Louis Freeman, Senior Vice President BB&T Community Development 255 S. Orange Avenue, 10th Floor Orlando, Florida 32801

RE: Hotbox Art Residency Program - Thank you BB&T!

Dear Louis,

As the President of REVA Development Corporation and on behalf of its Board Directors, and Northwest Historic District thank you for the gift of $10,000. We welcome your partnership on our efforts to make a difference in the Northwest Neighborhood, West Palm Beach, Florida.

Your generous contribution will assist the Hotbox Art Residency Program lead the effort for rehab and preserve historic structures in the community. Further, the partnership will serve as a catalyst for initiating a cultural art presence and economic vitality in this underinvested community. With this timely contribution, BB&T demonstrates not only financial backing, but the moral support needed to continue our efforts to advocate for increased community investments.

There is no way to fully express our gratitude, however, we will continue to stand by the work we do, and we take comfort in knowing BB&T stands with us. If you have any questions regarding fulfillment of your grant or about our work, do not hesitate to call me direct at 954-829-7788.

Again, please accept my sincere appreciation for your commitment to the goals and mission of REVA Development Corporation and the communities we serve.

Regards,

Don D. Patterson President/CEO cc: REVA Board of Directors

808 East Las Olas Boulevard, Suite 101 I Fort Lauderdale, Florida 33301

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From: Kenneth H. Thomas, Ph.D

To: FDIC Chair Jelena McV/illiams via [email protected] Federal Reserve Board Chair via david.w.skidmore @ federalreserve. qov House Financial Services Committee Chair Maxine Waters via [email protected] Fed merger comments @ comments.applications. @rich.frb.org FDIC merger comments @ B ankerMergerApplication @ fdic. &ov

Date: March 18,2019

Re: First Convenience and Needs Comment Recommending Approval of Proposed BB&T/SunTrust Merger Conditioned Upon the Federal Reserve Being the Primary Federal Regulator

Please consider this my first formal Convenience and Needs comment recommending approval of the proposed BB&T/SunTrust merger conditioned upon the Federal Reserve being the primary federal regulator of the resultant bank. Both of these banks have offices near me, although I do not have any personal or business relationships with either bank.

I have commented on most major bank merger in the U.S. since the 1990s, and., rather than protests or challenges, every one of them have been comments recommending approval conditioned upon a convenience and needs issue consistent with good public policy.

That is once again the case with this current merger where I am recommending conditional approval. The primary case supporting this conditional argument is found in the February 13,2019 American Banker BankThink article titled "Fed, not FDIC, should regulate a merged BB&T-SunTrust."

While the two merging banks have billed this as a "merger of equals," it is anything but that for their primary federal bank regulators, namely the FDIC for BB&T and the Fed for SunTrust.

American banks, unlike banks or regulated companies elsewhere, have the lirxury of choosing their own primary federal regulator. Importantly, they can switch them if desired to find the "friendliest" regulator, often referred to as "competition in laxity."

As in every law or regulation, however, there must be exceptions to allowing a bank this luxury to choose their own federal regulator when the public interest is potentially adversely impacted as would be the case here in terms of the convenience and needs of the communities to be served by the resultant bank.

1 Why the FDIC Won the "Competition in Laxity" Decision by the Resultant BB&T/SunTrust Bank

Having followed both banks for decades, I was not at all surprised to see that the resultant bank chose the FDIC as their primary federal regulator, and I believe it was for the following reasons

l. BB&T, the decision maker in this deal, with greater assets, market value and 57Vo ownership of the new bank, is comfortable with their existing FDIC primary federal regulator.

2. BB&T is by far the largest bank regulated by the FDIC, but this is not the case with SunTrust and the Fed. Using the Comptroller's reference to regulated banks as the Office of the Comptroller of the Currencv's (OCC) "customers." it is harder to say NO to your far and away largest customer, whether you are a regulator, bank or any business. Of the 30 banks with assets over $100 billion, the $216 billion BB&T is one of only two state-chartered Fed nonmember banks whose primary federal regulator is the FDIC, the other one being the $104 billion Discover Bank. Of the remaining 28 banks, 19, including the very largest, have the OCC as their primary federal regulator and nine, including SunTrust, have the Fed.

3. The FDIC demonstrated that it was friendlier than the Fed when it (and North Carolina's state regulator) terminated BB&T's joint anti-mone)¡ laundering order dated December 20. 2016, on June 29,2018 but the Fed still has not terminated that order.

4. Most importantly, based on my detailed CRA research, the FDIC has displayed a continued pattern and practice of favoritism toward BB&T on the industry's most subjective regulation, namely CRA. The two most blatant cases of regulatory favoritism involved BB&T's 2009 acquisition of the failed Colonial Bank in Alabama and BB&T's most recent CRA exam.

FDIC Favoritism With BB&T's Colonial Bank Acquisition

BB&T's biggest and most important deal prior to SunTrust was the purchase of the failed Colonial Bank in Alabama from the FDIC. That was the deal that gave BB&T its critical foothold in the Southeast, especially the nation's most rapidly growing big state, my home state of Florida. The FDIC did not make public in a timely fashion material data about BB&T's fair lending and CRA performance, which could have scuttled the deal.

BB&T was downgraded from an outstanding rating in 2004 to satisfactory in 2008 because of a serious fair lending violation, namely a "pattern or practice of discrimination on the basis of race" in violation of the Equal Credit Opportunity Act and the Fair Housing Act.

For some unknown reason, which I can only ascribe to favoritism, the FDIC conveniently withheld public notification of the downgrade and finding of serious racial discrimination until September 2010, well after the FDIC accepted BB&T's winning bid for Colonial Bank in August 2009.

In contrast to this unprecedented 31-month delay, nearl]¡ three vears, the FDIC released BB&T's two previous CRA exams in 2004 and 2001 |ust eight months after they were completed, and the two previous exams were released withinþur and jive months. The FDIC has never explained why their release of that BB&T's 2008 exam with serious racial discrimination issues took roughly FOUR to EIGHT times longer than the previous ones?

2 Had the FDIC disclosed this material information in a timely manner consistent with previous exams of that bank and other banks, the predictable outcry from community groups, Congress and the general public could have scuttled BB&T's bid on the failed Alabama bank or inhibited the FDIC's ability to accept that bid.

In that case, Colonial would have gone to the runner-up, TD Bank. which had put forth a fairlv close bid. There is no doubt in my mind that BB&T would not be the bank it is today or the bank that it will be after this proposed merger without the Colonial Bank purchase. I documented this argument to the regulators in a2012 when BB&T bought BankAtlantic, one of Florida's largest thrifts, but it was readily dismissed.

FDIC FavoritismWith BB&T's Most Recent CRA Exam

In an unusual case ofdéjà vu all over again, BB&T's most recent CRA Performance Evaluation (PE) released on May Day 2OI8 resulted in an outstanding rating, despite the fact that they were once again found to have engaged in a "substantive violation of Regulation B, which implements the Equal Credit Opportunity Act."

The problem this time was not a friendly delay in the FDIC's release of the rating but rather an outright inflated rating. Having read thousands of CRA PEs since 1990, when I coined the term "CRA Grade Inflation" in my first book on CRA, I concluded that the FDIC inflated BB&T's current CRA rating from a satisfactory to an outstanding one for the following reasons:

1. The above- cited fair lending violation in the exam should have resulted in a one-rating downgrade as was the case in BB&T's 2008 exam and most other FDIC exams, consistent with FDIC examination procedures. However, in an apparent accommodation to its largest "customer," the FDIC stated fhat""a downgrade of the CRA rating to less than Outstanding was not warranted" based on the Bank's "CRA performance, extent and impact of the finding, and immediate corrective actions taken." I believe this was an unprecedented act of favoritism.

2. BB&T received a "high satisfactory" rating on the 5O7o weighted Lending Test and outstanding ratings on the 25Vo weighted Investment and Service Tests. Many banks receiving such a "50-50" ratings mix from the FDIC receive an overall satisfactory rather than outstanding rating, because of the importance of the Lending Test, especially when there is a serious fair lending violation.

3. BB&T received an inflated outstanding rating on the Investment Test, since qualified investments during the Review Period amounted to only 0.7Vo of total assets, which is below fhe l7o outstanding benchmark in The CRA Handbook and below the comparable percentage of many other banks receiving Outstanding ratings from the FDIC.

4. BB&T received an inflated outstanding rating on the Service Test, since their cited 5,728 Community Development Services is about 2,000 services below the outstanding benchmark based on mv detailed CRA research summarized in my recent CRA reform comment.

Jô Had the FDIC made the proper downgrade, BB&T would still be a satisfactory rated bank,like9l%o of all banks, and this would most likely not be an obstacle to the SunTrust merger. However, we expect our biggest banks, especially those engaged in major M&A deals, to have outstanding ratings and certainly not have any substantive Reg B violations.

BB&T is Too Big To Regulate for the FDIC

I previouslv argued that BB&T was Too Big To Regulate (TBTR) for the FDIC based on regulatory favoritism on the Colonial Bank deal. This was similar to a much earlier argument I made that the now defunct V/ashington Mutual (WAMU) was TBTR for the now defunct Office of Thrift Supervision, and that is when I first coined the TBTR phrase.

Please note that TBTR is different from the "Too Big To Manage" complaint lodged against Wells Fargo in the recent House Financial Services Committee hearing involving that bank, since "manage" implies management's efforts in running a bank versus a regulator's efforts to oversee a bank to insure it is acting in the public interest.

If BB&T was TBTR when I made that argument in20l5, their roughly doubling of size and the FDIC's continued regulatory favoritism as documented above makes this argument even stronger.

The FDIC is primarily a regulator of small banks, whereas the OCC and the Fed have much more experience in overseeing very large banks. Under the supervision of the Fed, BB&T would just be another large bank brick in the Fed's regulatory wall rather than the dominant one under the FDIC

Summary: Merger Approval Must Be Conditioned on the Federal Reserve Being the Primary Federal Regulator for the Resultant Bank

Good public policy dictates that the resultant bank from the BB&T and SunTrust merger must have the Fed as their primary federal bank regulator.

The continued lobbying and other efforts by the applicant banks, their lawyers and consultants, and even by a conflicted FDIC itself to allow it to be the resultant bank's primary federal regulator must be ignored to protect the public interest.

Our banking system is unique in the world for many reasons, including this luxury for our banks to choose among multiple federal regulators. I am not suggesting we remove this perk, but I do believe when there is such repeated and documented regulatory favoritism by one federal bank regulator toward one bank, their biggest by far as is the case here, that we must make an exception in the public interest.

Therefore, I recommend this merger be approved but only under the condition that the Federal Reserve be the primary federal regulator of the resultant bank. Otherwise, this proposed merger will NOT be meeting the required Convenience and Needs factor for approval and will certainly NOT be in the public interest.

4

October 24, 2018

BB&T Mr. David Grow 835 W Hamilton St Suite 100 Allentown, PA 18101

Dear Mr. Grow, On behalf of the Hedwig House Board of Directors, Members, and Staff, we extend our sincerest thanks to BB&T for the CRA Grant of $3,000.00. Your generous donation will allow for the growth of our PREP Program, thereby benefitting the individuals we serve at Hedwig House. Hedwig House offers support to persons whose accomplishments and quality of life have been challenged by mental illness. Our services are designed to assist individuals as they pursue their goals which encompass a variety of areas such as living, vocational, educational, and social. It is because of the generosity of individuals, corporations and foundations, like yours, that we are able to continue to provide these important services. We are most grateful for your grant which will make a positive impact on the programs we are able to provide for those in need in our community.

Sincerely,

Madeline Edgcumbe Development Manager

Hedwig House, Inc. is a non-profit organization under section 501©(3). Our Taxpayer Identification number is 23-2010639. The official registration and financial information of Hedwig House, Inc. in Montgomery County may be obtained from the Pennsylvania Department of State by calling 1-800-732-0999. No goods or services were provided in exchange for this contribution.