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The Intercept: The fake public comments supporting a bank merger are coming from inside the house

The Intercept, September 29: The fake comments supporting a bank merger are coming from inside the house 

Comments submitted to a top banking regulator supporting a 2015 merger between OneWest Bank and CIT Bank were attributed to people who never sent them, according to documents obtained under the Freedom of Information Act and reviewed by The Intercept.

The fake comments appear to be tied directly to Joseph Otting, the head of the regulatory agency himself.

OneWest Bank may have played a role in the fabrication. The text of the fake supportive comments is identical to a sample letter placed on the OneWest website in 2015 encouraging customers to support the merger. Otting, then CEO of OneWest, sent emails to his contacts on Wall Street at the time, pointing to the sample letter on the website and soliciting support.

Otting now heads the OCC, where he has kicked off a project to “modernize” the Community Reinvestment Act, which assesses banks for lending into low- and moderate-income areas. The CRA really only has one enforcement mechanism: Regulators examine it when banks attempt to merge.

Critics argue that Otting’s main goal is to undermine the CRA because of his experience in the OneWest merger. “This bank did a particularly poor job in lending to the community,” claimed Kevin Stein of the California Reinvestment Coalition, one of the organizations that fought the merger. “They were upset there was an effort to hold them to account. The response is to try and loosen the rules across the board, and diminish the role the community has in the process.”

As is customary, federal regulators — both the OCC and the Federal Reserve had jurisdiction — opened a public comment process for the merger. Community activist groups like the California Reinvestment Coalition immediately called for a public hearing, citing OneWest’s dubious foreclosure practices and insufficient commitment to lending in poor communities.

According to the Federal Reserve, 2,177 individuals and organizations submitted supportive comments, “of which approximately 2,093 commenters submitted substantially identical form letters” — aka OneWest’s sample letter. Opposition groups filed petitions with 21,000 signatures calling on regulators to block the merger. In an email, OCC spokesperson Bryan Hubbard stated that “identical ‘form letters’ are considered one comment letter as form letters are frequently used.” But the OCC’s order on the merger states: “The OCC received over 2,300 comment letters both in support of and in opposition to the Application. Approximately 1,700 of the letters resulted from an email campaign initiated by CITG and OWB seeking support for the merger.”

Upon further research, the CRC found that, in a batch of 593 “supporters” of the merger, all of them had Yahoo email addresses, when Yahoo only controlled 3 percent of the email market. Yahoo famously suffered a data breach in 2014 of at least 500 million user accounts, including passwords, which could have facilitated placing emails in user’s names without their knowledge. Plus, a large number of the emails were sent in the middle of the night on Valentine’s Day in 2015, and roughly one-third of the email addresses associated with supporters bounced back, including seemingly fake ones like “gooeypooey69@yahoo.com.”

Stein believes that OneWest had to have been behind the fake comments.

That makes Otting’s potential role in inducing fake public comments a critical factor. “You have a bank regulator run by a banker who openly defrauded the bank merger process a few years earlier,” said Matthew Lee of Inner City Press. “What these documents show raise troubling questions about the effort to change the CRA.”

Otting is scheduled to appear at a Senate Banking Committee hearing on October 2, where his CRA push could be a topic of discussion.

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