Filipinos demonstrate support
AT A public hearing on CIT Group’s $3.4 billion takeover of OneWest Bank, supporters said the merger would benefit minority groups and poor neighborhoods, while critics said such an occurrence would create a new “too big to fail” bank.
“We have set forth aggressive goals for community investment and development activities in Southern California, including targeting $5 billion of community-related activities over the next four years,” said CIT Group Chairman and CEO John Thain.
The Federal Reserve and Office of the Comptroller of the Currency (OCC), which regulates national banks, held the hearing held Thursday, Feb. 26, at the Federal Reserve Bank of San Francisco in Los Angeles. If regulators approve CIT’s purchase, it would be the first merger since the financial crisis to create a bank with assets worth more than $50 billion, a threshold imposed by the US Dodd-Frank law that requires Federal Reserve supervision and more stringent capital rules.
Among communities strongly backing the merger include Filipinos. Faith Bautista, president and CEO of the National Asian American Coalition (NAAC), said her organization, Island Pacific Supermarket, and 130 Filipino organizations in Los Angeles are in favor of the “marriage” between the companies.
“Why? Bakit? Because OneWest is the bank that will take Filipinos to the next level. They’re very committed in microlending, they’re very committed [to] small business, they’re very committed in increasing home ownership,” she said during a brief conference held by the National Diversity Coalition (NDC) on the day of the hearing.
OneWest and the NAAC have partnered to offer financial education services to Filipinos through kiosks. The bank is also looking into installing ATMs at Island Pacific Supermarket locations.
“The more we work together, the more we hold hands together, the more we will increase and give opportunities to the unbanked, underbanked and immigrants,” Bautista said.
Jeff Lim, president of Island Pacific Supermarket, said OneWest has helped Filipinos in the Philippines, as it is one of the banks that financed the supermarket’s importation of products such as dried fish.
“These dried fish are caught, they’re dried by fishermen in the Philippines They’re not Americans—but they’re still citizens of this world… and it’s banks like OneWest that we should support, banks that… finance minorities like us to get more products like dried fish that create jobs in the Philippines,” Lim said. “As we are able to create new distribution channels for fisherman in our country, it’s just basic economics that their standard of living will improve as more and more of us are competing for products that they catch.”
In addition the anticipated benefits to minority communities, other NDC speakers expressed optimism about the merger under the leadership of OneWest Bank President and CEO Joseph Otting, who assumed his position in the company in 2010.
Otting has spent months reaching out to organizations, including the NAAC, NDC and Los Angeles Latino Chamber of Commerce to win their endorsements.
“Joseph, here, I feel is the right leader at the right time at the right place in history, and he’s going to prove it to everybody … and I look forward to the opportunity to join him in that effort,” said Aubrey Stone, president and CEO of the California Black Chamber of Commerce.
Other groups and individuals, however, voiced opposition to the merger.
With such support from the Filipino community, Orson Aguilar, executive director of Greenlining Institute, a multi-ethnic advocacy and leadership development nonprofit organization, said “they should at least have a Filipino on board.”
Distressed homeowners and reverse mortgage holders at the hearing also cited personal experiences dealing with mortgage problems.
Teena Colebrook, a member on a panel against the merger, told the audience that notices to rescind her mortgage were ignored in 2011 and 2012 and that she has not yet received accounting of alleged debt she owes.
“It should be jail time, not sale time,” she said.
OneWest Bank, created in 2009, came from the remains of IndyMac Bank, a mortgage lender that failed in 2008, costing the federal deposit insurance fund $13.1 billion.
Rebecca Isaac, a panel speaker who started the website IndyMac Complaints, said the bank has not resolved wrongs from years ago and allegedly still owes her money because of alleged violations.
Helen Kelly, a former Minnesota prosecutor, raised her voice while testifying about difficulties she encountered with OneWest when she wanted to alter the terms of her mortgage. She also compared bankers to an “Ebola virus” that had spread to contaminate homeowners.
Otting addressed public commenters who highlighted OneWest’s foreclosure record during his statement at the beginning of the hearing, saying that prior to the sale of the bank’s third-party servicing business, which was sold almost two years ago, 92 percent of mortgages it serviced were for third parties.
“This means that we did not own the loans and, in fact, we were legally bound by contracts and servicing agreements that governed how we would service loans,” he said.
In California alone, Otting said OneWest has completed more than 58,000 loan modifications and other foreclosure alternatives. He further cited an April 2014 report published by the OCC, which reported that the bank’s error rate, after testing about 27,000 loans, ranged between 0 to 0.21 percent.
“As I said, we always regret any errors that were made and, in connection with the OCC’s Independent Foreclosure Review, we have distributed remediation payments to all of the affected borrowers in accordance with OCC guidelines,” Otting said.
Despite a mostly serious meeting, lighter moments came about, including ones that drew laughs from the audience.
“I serve a God who’s too big to fail,” said one pastor who testified in support of the merger.
Lim, the president of Island Pacific Supermarkets, drew applause and cheers from the audience when he said that the Filipino community, which is sometimes referred to as the “invisible minority,” was not invisible on Thursday.
A group of opponents led by the California Reinvestment Coalition, which advocates for low-income communities and those of color for fair and equal access to financial services, rallied outside the Federal Reserve Bank building. Along with other groups, the coalition recently delivered a petition to regulators containing more than 15,000 signatures calling for a hearing.
“Today we are calling on the Federal Reserve to protect our communities from another too-big-to-fail bank merger,” said Paulina Gonzalez, executive director of the coalition. “They’ve made vague promises and a vague community re-investment plan, and we say it’s not good enough.”
Gonzalez said the $5-billion pledge, $3.8 billion of which are promised loans to low-income borrowers, did not satisfy Community Reinvestment Act public-benefit requirements. She also said there are almost no OneWest branches in low-income communities, pointing out only two locations in such areas.
“I would like OneWest Bank… going forward [to] do more to ensure that in serving the Latino community and communities of color,” Cynthia Amador, president and CEO of Azul Management Systems Institute, Inc., during the hearing.
Los Angeles Councilmember Gil Cedillo spoke against CIT’s acquisition of OneWest due to what he said was a lack of defined plans.
“Mergers are good things for banks, and they can be good things for the community, but only if we have clear and specific drawn-out plans of them fulfilling their obligations to the community,” he said.
Cedillo said another way communities in need could be served is through collaborating with the City of Los Angeles to build new housing, protect existing houses, and put foreclosed homes back on the market to get people back into them.
Despite all the opposition, many individuals attended the hearing in support of the proposed acquisition.
With the merger still pending approval, Otting said he looks forward to completing it as soon as possible, while opponents from the CRC have called on the Federal Reserve to deny it until there are branches in low-income communities.
Public hearings, which were more common during a wave of bank consolidation wave in the 1990s, are unusual these days, with the last in Southern California focused on Bank of America Corp.’s purchase of subprime mortgage specialist Countrywide Financial Corp. in 2008.
Despite the hearing, analysts expect the merger to be approved later this year.
(With reports from Los Angeles Times American Business and The Wall Street Journal)
(LA Weekend February 28 – March 3, 2015 Sec. D pg.1)