15,000 Americans Tell Federal Reserve “No Thanks!” on TBTF Bank Merger of CIT Group and OneWest Bank
PROPOSED BANK MERGER SETS NEW RECORD FOR NUMBER OF AMERICANS OPPOSING IT
Yesterday, California community advocates, along with the Daily Kos, delivered over 15,000 petitions to the Federal Reserve, setting a new record for the number of individuals opposing a bank merger. The petition signers are urging the Fed to not approve of a proposed merger of CIT Group and OneWest Bank, which would create the newest Too Big To Fail bank.
Advocates also gave the Federal Reserve a letter signed by 51 national and state organizations, urging the Fed to hold public hearings on the proposed merger, citing concerns about regulatory capture, unpaid bank bailouts, the FDIC paying OneWest for foreclosure costs, and systemic risks created by the merger. Organizations calling for public hearings include: The National Housing Resource Center, National People’s Action (NPA), PolicyLink, Public Citizen, Courage Campaign, The Other 98%, US PIRG, National Consumer Law Center, and The California Alliance for Retired Americans.
"Over 15,000 Americans who signed the Daily Kos petition are angry that banks like CIT Group received billions while ordinary Americans lost their homes. We're calling on the Federal Reserve to not approve of this merger, to not repeat the same mistakes again, and to not create another Too Big To Fail bank" commented Paul Hogarth, campaign director at Daily Kos.
“During the past two years, CIT Group spent over $6,000 a day lobbying for less regulation. The irony of a bank that needed a $2.3 billion loan from taxpayers, but then couldn’t pay back that loan, and who is now spending millions lobbying for less regulation, is not lost on our communities. How can the Fed ignore over 15,000 people opposing this merger? No more regulatory capture. No more rubber-stamped mergers. And no more communities and taxpayers picking up the tab for bank misbehavior!” added Paulina Gonzalez, executive director at CRC.
The proposed merger would result in a bank with nearly $70 billion in assets and is the first time a bank merger would result in the creation of a Systemically Important Financial Institution, more commonly referred to as a Too Big To Fail bank.
"This merger is the poster-child for income inequality and bank bailouts gone bad. How can regulators justify to the American Public approving of this merger when there has been such much harm caused to communities, so much public subsidy provided to the two banks, and yet, no clear public benefit from the merger?” asked Kevin Stein, associate director of the California Reinvestment Coalition.
“My husband obtained a reverse mortgage that was serviced by OneWest Bank. When he passed away, OneWest sent appraisers to our home before we even had his funeral. Since then, I’ve tried to work with them to keep the home, but it’s been a lot of back and forth with scheduled sale dates, then postponements, then new scheduled sale dates. My house was scheduled to be sold yesterday, but then last Friday the bank postponed the sale for another month. As you can imagine, it’s a roller coaster of emotions for me” said Jan Cooper, a 74-year-old Anaheim resident who lives on Social Security.
“Our mother had a reverse mortgage serviced by OneWest. Even before she passed away, we contacted OneWest, but they refused to work with us as we tried to pay off the reverse mortgage in order to keep our family home. As a result, they took her house in November. How many other families have to go through this nightmare before the regulators act? The Federal Reserve needs to do its homework on this merger and talk to other families like ours who have been harmed by OneWest” commented Michelle Ayers and her sister, Mary Dambacher, who live in North Fort Meyers, Florida.
The national sign-on letter outlines some of the more troubling issues with the merger, including:
Regulatory capture: The Propublica/This American Life story about regulator capture heightened concerns about the Federal Reserve coddling the banks it is charged with regulating. Advocates believe this merger is the first test-case for the Federal Reserve to demonstrate that it prioritizes communities and taxpayers over banks and Wall Street.
Communities paying for bank mistakes: In addition to the $13 billion price tag for IndyMac’s failure, advocates are also concerned about the cost shouldered by local California governments for an estimated 35,000 OneWest foreclosures, the $2.3 billion in TARP funds that CIT Group accepted and never paid back, and CIT Group’s plan to reduce its taxes after the merger by using its Net Operating Loss from its 2009 bankruptcy.
Outsized executive compensation: Despite a proposed Community Benefit and Reinvestment plan that would rank the new bank near the bottom of its peers, the proposed merger includes generous compensation for bank officers and investors. The new bank’s CEO would receive $12.5 million in restricted stock in addition to his $4.5 million annual salary. The Executive Vice Chairman could collect his $4.5 million annual salary for part-time work, as he would also be allowed to continue running his hedge fund.
Additional Context:
Pictures of the petition delivery to the Federal Reserve are available here.
To see a quick Prezi that explains the troubled history of the two banks, and community concerns about the proposed merger, visit: OneWest and CIT Group Merger
To see additional information about the concerning aspects of this merger, visit the CIT Group/OneWest merger information page.
To see more information about Mary Dambacher and Michelle Ayers (sisters), visit here: Sisters Lose Home After OneWest Forecloses On Reverse Mortgage
To read more about Jan Cooper’s story, see this American Banker article: HECM Non-Borrowing Spouses Renew Class Certification Attempts (Nov. 17, 2014)
Sean Coffey
scoffey@calreinvest.org
phone: (415) 864-3980
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