50 Organizations Oppose Too Big To Fail Bank Merger in California

COMMUNITIES URGE REGULATORS TO HOLD HEARINGS IN LOS ANGELES

Los Angeles- October 23, 2014—Fifty organizations submitted letters to the Office of the Comptroller of the Currency yesterday, opposing a Too Big To Fail Bank Merger of CIT Group and OneWest Bank. The organizations are calling for public hearings about the merger to be held in Los Angeles and for regulators to extend the public comment period to allow more analysis of the impact of the “Too Big To Fail” merger on communities. (Link to letter)

Member organizations from the California Reinvestment Coalition are concerned that the merger would create a Too Big To Fail Bank with nearly $70 billion in assets and as a result, outsized risks to communities that were already harmed by IndyMac’s toxic mortgages and over 35,000 foreclosures conducted by OneWest Bank.

Kevin Stein, associate director at the California Reinvestment Coalition, explains: “Given the troubled history of both banks, 50 organizations are opposing this merger and urging the Federal Reserve and the Office of the Comptroller of the Currency to make sure communities aren’t harmed again. The merger as its currently proposed is a non-starter for CRC members and allies- we have never seen a bank merger like this with so much public subsidy and so little public benefit. A good first step would be for the bank leaders to sit down with community leaders, solicit their input about community needs, and use that dialogue to create a robust, public,Community Benefit and Reinvestment Plan to outline this bank’s commitment to California communities.”

“While its peer banks have 30% of their branches in our communities, only 15% of OneWest bank branches are located in low and moderate income census tracts” said Michael Banner, Chief Executive Officer, of Los Angeles LDC. “If OneWest is serious about this merger moving forward, we would suggest it take a reality check and look at what its peers have accomplished as benchmarks for the many areas where it can improve.”

Hyepin Im, president and CEO of Korean Churches for Community Development comments: “Our communities are particularly concerned about the low level of mortgage lending by OneWest as compared to its peers.According to 2013 HMDA data, for the industry as a whole, 16% of mortgage loans in California went to Asian borrowers. In comparison, only seven percent of OneWest’s mortgages went to Asian borrowers. Regulators should take a close look at OneWest’s record in light of this proposed merger.”

Organizations sent letters to the Office of the Comptroller of the Currency (link to OCC letter) and the Federal Reserve Bank of New York (link to FRBNY letter) raising a long list of concerns about the merger, including:

1) Transparency issues with learning much money the FDIC has paid out to OneWest investors under three shared-loss agreements. (See FOIA request here)

2) The extent to which OneWest Bank complied with its obligations to modify mortgages when possible as part of the shared-loss agreement.

3) Whether or not it’s appropriate for the FDIC to allow the shared-loss agreements to transfer to the new bank,and whether or not it is appropriate for the FDIC to continue providing this subsidy in 2014.

4) OneWest’s bottom-of-the-pack record for community reinvestment and whether the new bank would seek to improve on this record.

5) The amount of corporate subsidies provided to the two banks, including CIT Group’s “gift” of $2.3 billion in unpaid TARP funds, and the irony in the banks depending on public subsidy, but proposing a miserly Community Reinvestment Plan.

6) Possible manipulation of the Community Reinvestment Act: CIT Bank accepts deposits from around the US via the Internet, but focuses its community reinvestment at its Utah Headquarters, leavings advocates to question how the bank is meeting its CRA responsibilities (CRC’s FOIA request to OCC)

As part of a five-day public awareness campaign about the merger, CRC raised a long list of unanswered questions in five issues areas for bank regulators about the merger last week:
Day 1: Bank Merger Would Benefit Investors, But What About Communities?
Day 2: Advocates Question If FDIC Loss-Share Agreements Should Continue As Part of Bank Merger
Day 3: Community Groups Question OneWest’s Foreclosure Record
Day 4: How Much Government Welfare Can One Bank Accept?
Day 5: Communities Deserve a Strong Community Benefit and Reinvestment Plan