Orders issued under Bank Holding Company Act

Federal Reserve Bulletin,  Summer, 2004  by Robert DeV. Frierson

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(33.) The Board notes that JP Morgan and Bank One Corporation act as loan servicers or trustees for a large number of mortgages. The legal capacity in which either institution is involved in a foreclosure may not be readily apparent from court records. Foreclosure actions in an institution's capacity as a loan servicer or trustee would not indicate safety and soundness issues or a failure to meet the convenience and needs of the communities served by the institution. The Board notes, however, that JP Morgan has implemented a program to assist borrowers facing foreclosure by providing counseling and refinancing. On consummation of this proposal, JP Morgan would be better able to assist in mitigating borrowers' losses through local branch staff in areas currently served by Bank One Corporation.

(34.) Bank One-Ohio offers tax-refund-anticipation loans to customers through independent tax preparers. All underwriting credit decisions are made by Bank One-Ohio using credit criteria consistent with safe and sound banking practices and in compliance with applicable laws. Bank One Corporation also provides financing to its customers engaged in the business of tax-refund-anticipation lending, but is not involved in the lending practices or credit decisions of these lenders. The credit documents executed in connection with the financing, however, require these lenders to comply with applicable laws. The Board expects all bank holding companies and their affiliates to conduct tax-refund-anticipation lending free from any abusive lending practices and in compliance with all applicable law, including fair lending laws. The Federal Trade Commission ("FTC"), Department of Housing and Urban Development ("HUD"), and DOJ are responsible for enforcing compliance by nondepository institutions with laws governing the activity.

(35.) See Interagency Questions and Answers Regarding Community Reinvestment, 66 Federal Register 36,620 and 36,639 (2001). A commenter, however, suggested that JP Morgan Bank manipulates its CRA performance evaluations by significantly increasing its percent-age of loans to LMI and minority individuals in the year preceding its CRA evaluation and that its performance diminishes in the years after an evaluation. CRA evaluations measure performance during the applicable period and do not give undue weight or consideration to a bank's increased performance within that time period. If a bank's CRA performance was uneven during the evaluation period, the Board expects that its CRA performance evaluation would reflect such an inconsistent performance.

(36.) After the Bank One Evaluation, Bank One Corporation merged 16 of its subsidiary banks into Bank One and Bank One-Ohio ("Merged Lead Banks"). Each of the banks that was merged into the Merged Lead Banks received a "satisfactory" or "outstanding" rating at its most recent CRA performance evaluation by the appropriate federal financial supervisory agency.