WASHINGTON — The American Bankers Association and the National Community Reinvestment Coalition are engaged in an unusual exchange of accusations of intimidation and misrepresentation that puts regulators in the middle of the clash, according to letters obtained by American Banker.
The ABA wrote in a recent letter to the Federal Reserve that it fears the NCRC could retaliate against the ABA's members for their support of its lawsuits against the Consumer Financial Protection Bureau.
The NCRC disputed the claims that the ABA levied against them in a follow-up letter to the Fed, saying that the industry group "didn't ascertain basic facts prior to writing the heads of the bank regulatory agencies, who we believe have better things to do." The fair-lending advocates called the ABA's concerns that it would retaliate against its member banks an "astounding and seemingly malicious leap of logic."
The Fed declined to comment on the letters.
The clash centers around a pair of lawsuits brought by the ABA against the CFPB. The first
ABA President and CEO Rob Nichols sent a letter to Fed Chairman Jerome Powell on Oct. 13 saying the NCRC had written to some of its member banks, asking whether those banks support the ABA's litigation against the CFPB, or, as the NCRC put it in its letter dated to an unspecified day in September, "support our efforts to uplift our underserved communities."
"The actions of the ABA serve to perpetuate the worst public image of the banking industry: An industry that puts profits over people, and will take every step to prevent a more just economy," the NCRC's original letter continued. "We must know, does your institution support our efforts to uplift our underserved communities? Or, do you support the ABA?"
The NCRC said in an Oct. 18 response to ABA's Oct. 13 letter to Powell that it didn't send its original letter to ABA member banks, but rather shared a "courtesy draft" of a letter with some members of banks' NCRC's advisory boards "in confidence," which was later "leaked" to the ABA. The ABA told American Banker that it disputes that interpretation.
"Our members interpreted the signed NCRC letter they received for what it was: a promise of reprisal if they did not distance themselves from ABA," an ABA spokesman said in a statement Thursday. "We believe the communication and its misrepresentations of our advocacy crossed a line, so we shared it with the relevant regulators. If NCRC is now backtracking from their letter and tactics, that would be a welcome development."
The ABA said in its Oct. 13 letter that the NCRC's letter to its members amounts to intimidation and could further complicate the already-difficult bank merger process. Groups like the NCRC can object to the community development plans that many banks develop when they're seeking regulatory approval for a merger. That approval process is
"NCRC's tactics could chill banks' willingness to challenge a regulator when the bank believes in good faith that the regulator is acting outside the bounds Congress set," the ABA letter said. "More to the point, however, we are concerned about the fairness and integrity of the merger and branch opening application process."
The ABA said that it worries NCRC could use the role that community advocates play in "ensuring that community needs are fully considered as part of the application process" against the ABA's member banks.
"The tone and tenor of NCRC's letter suggests that NCRC and affiliated organizations may protest bank applications without adequate grounds, to retaliate against banks because of our advocacy on their behalf," the ABA said.
Banking trade groups and public advocacy groups frequently find themselves on opposite sides of important regulatory issues, but the exchange of letters with regulators regarding each group's advocacy tactics is uncommon. Banking trade groups have also traditionally not engaged in litigation against banking regulators, though the Fed's proposed Basel III endgame capital proposals
The NCRC, in its Oct. 18 letter, said that the group cannot retaliate against the ABA's member banks in potential future merger and branch-location applications because only regulators have the authority to approve or block mergers, and that the NCRC never threatened to do so.
"Since Mr. Nichols has raised the very serious allegation that somehow our actions will interfere with the fairness and integrity of the merger or branch opening processes, let me point out the obvious fact that we have no ability to impact the fairness and integrity of those processes, as we are not decision-makers in them," the NCRC said.
"[Nichols'] letter, then, is really an allegation that you will conduct yourself in some way that lacks integrity. It's an odd and careless charge, levied at you in response to something unrelated that we did," the NCRC said. "It's unfortunate that this is the level of sophistication we have come to witness from the ABA: To argue that unrelated facts and misinformation somehow support some other position they're attempting to press to their advantage, all the while throwing around unsubstantiated claims."
