6 Unanswered Questions about the CIT Group and OneWest Merger

Tomorrow, CIT Group releases its earnings call for Q4.  CIT Group is also in the middle of a proposed bank merger with OneWest Bank, a merger that the California Reinvestment Coalition and 70 other organizations are opposing.  A few questions about the merger are included below.

1) There are over 70 state and national organizations currently opposing your proposed merger with OneWest Bank.  A new petition, started last Friday, already has over 10,000 signatures, urging the Federal Reserve to reject this proposed merger.  How is the bank leadership responding to this opposition?

2) Along with this proposed merger, and bank leadership claims the bank is ready to become Too Big to Fail, there has been a renewed focus on the $2.3 billion TARP bailout provided to CIT Group in 2008 that has not yet been repaid. Do you anticipate paying taxpayers any of this money back?

3) According to the LA Times, this merger provides generous compensation to bank investors and officers, in some cases for part-time work.  How do you justify paying Steve Mnuchin $4.5 million annually for part-time work?  Under the proposed merger, he would serve as Executive Vice Chairman at CIT Group while also running his hedge fund, Dune Capital.

4) OneWest Bank has come under fire recently for its practices related to foreclosures on widows and other similarly situated family members when a reverse mortgage borrower passes away.  See this story, for example: NFM sisters chained to home to protest reverse mortgage.  Are you concerned about these practices?  Does CIT Group or OneWest bank have any plans on working with HUD to update this policy so more widows aren’t thrown out of their homes?

5) Met Life is suing the federal government over its SIFI designation.  Does CIT Group have any similar plans since your proposed merger would also entail a SIFI designation?

6)  According to a new poll, the majority of Americans want Too Big To Fail banks broken up.   And yet, you’re planning on the first ever bank merger to create a Too Big To Fail bank.  Any thoughts on this poll?

Alameda County to Install ATMs so Families Don’t Have to Pay Fees

What ATM fees could have paid for instead

Remember the $19 million ATM fee report by CRC, released last year?

The Contra Costa Times reports that Alameda County will be installing ATM machines in Oakland and Hayward so that Alameda County residents can withdrawal their benefits without incurring costly ATM charges.

Andrea Luquetta, Policy Specialist at CRC, comments:

“Alameda County supervisors have shown incredible leadership with this…Other counties have taken creative steps, but this is the most creative and practical we’ve seen, and it’s the right thing to do.”

Take a look:

The special ATMs will be installed in the lobbies of Oakland agencies, such as the Eastmont Self-Sufficiency Center; the Adult and Aging Office; the Enterprise Office; and the Thomas L. Berkley Square Office. The machines also will be placed in the Eden Multiservice Center in Hayward.

Read the rest of the story here: Alameda County to install no-fee ATMs for families in need


Can Churches Provide A Meaningful Alternative To Payday Lending?

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.


BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.


Interesting Post from Consumerist on churches and credit unions teaming up to help people avoid getting caught in the payday loan debt trap.

The CIT Group and OneWest Bank Merger: What You Need To Know About This TBTF Merger

TARP bailout Checks

Have you heard about the Too Big To Fail bank merger that’s being proposed in California?  Our media guide below highlights the many, many troubling aspects of this proposed merger and why the Federal Reserve should hold public hearings on this merger.  If you’re interested in learning more, and sending an email to regulators about this merger, please visit CRC’s OneWest/CIT Group merger resource center.

UPDATE: Over 10,000 people have already signed a new petition to the Federal Reserve about this proposed merger- take a look: Stop the merger of banks that will be Too Big to Fail

What’s being said and written about this proposed merger?

“I have never heard anything like this,” said Bert Ely, an independent banking consultant. “It strikes me as unusual and kind of overkill, unless possibly there is a problem that hasn’t surfaced publicly yet that they are trying to mitigate or minimize.”  Bloomberg: OneWest Seeks Wall Street’s Help Lobbying Yellen on CIT

The windfalls that will accrue to Paulson, Soros, Mnuchin, and others will increase their personal values on Forbes’ charts of millionaires and billionaires and likely be seen in their charitable and philanthropic giving. Just realize, however, how much of that philanthropy, even when devoted to anti-poverty work as Soros and Paulson might do, is both directly and indirectly subsidized by the American taxpayer.  NonProfit Quarterly: Taxpayers Subsidize Top Philanthropists through OneWest Bank Deal

“They consistently refuse to allow consumers to repay a reverse mortgage loan, they accelerate foreclosure and auction the property illegally, and no matter what they sell the property for, OneWest, under its subsidiary Financial Freedom, will make a claim to the FHA insurance fund to get reimbursement for the balance of the loan, closure-related fees and other legal fees,” Jolley said.   Mainstreet: Protestors Oppose Too Big To Fail Bank Merger of OneWest and CIT Group in California

“This is an embarrassing amount of subsidy for the FDIC to give to the billionaire owners of this bank, especially when the bank leadership refuses to create a strong community reinvestment plan,” said Kevin Stein, the coalition’s associate director, in a statement.  Los Angeles Business JournalOneWest Expected to Receive Over $2.4 Billion From FDIC

“I work with hundreds of consumers who share a common experience with OneWest Bank — a deliberate failure to comply with consumer protection laws and regulations or provide any level of customer support,” said Sandy Jolley, a reverse mortgage suitability and abuse consultant and a certified HUD reverse mortgage counselor.  Pasadena Star-News: Protesters gather to oppose OneWest merger with CIT Group

Under that deal, the FDIC agreed to share the losses from bad IndyMac loans, paying more than $2.4 billion over time. So far, the regulator has paid more than $1 billion in loss-sharing payments to OneWest, the coalition said, and the terms allow continued payments to a buyer like CIT.  Los Angeles Times: Advocacy group protests CIT Group deal for OneWest Bank

“Reverse mortgages are a bet by the mortgage company that they’re going to make money …and someone’s going to die early,” Smith told the I-Team, adding, “In this case, Myrtle Lewis won the bet, and the mortgage company wants to welch.”  CBS DFW: 103-Year-Old North Texas Woman Fights To Keep Her House

For every homeowner who has their story covered, there are countless others whose stories won’t be told, especially in the reverse mortgage context wherein a grieving spouse may not think to call their local media as their bank tries to take their home from them. That’s where bank regulators should play an important role in ferreting out bad behavior and holding them accountable.  HousingWire CRC Op-Ed: This is why reverse mortgage servicers need a foreclosure moratoria

If approved by bank regulators, this would be the first time a Systemically Important Financial Institution (SIFI) was created through a merger. The SIFI designation is given to banks that are so large that their collapse could trigger problems throughout the entire financial system. California Progress Report CRC Op-Ed: Can We Have Bank and Regulator Hearings in California Too?

The $2.3 billion that CIT Group received from the U.S. Treasury’s Troubled Asset Relief Program, which remains unpaid due to CIT’s subsequent bankruptcy filing, serves as an all-too-relevant reminder to regulators about the dangers in subsidizing banks without proper oversight. Before regulators give the green light to this merger, public hearings need to be held that thoroughly consider the risks posed by the creation of a SIFI bank that is still dependent on a subsidy from the FDIC.  American Banker BankThink Blog CRC Op-Ed: Is the FDIC Subsidizing a ‘Too Big to Fail’ Merger?

Would you be shocked to learn that regulators may well approve creation of a new “too big to fail” bank from the ashes of one of the very institutions that crashed our economy? HuffingtonPost Greenining Institute Op-Ed: A New ‘Too Big to Fail’ Bank for the 1 Percent

CRC Opposition to CIT Bank and One West Bank (OWB) Merger (Radio Show)

“We have worked with a homeowner who was ‘dual tracked’ by OneWest,” wrote James F. Zahradka II, the foundation’s supervising attorney. “The client had submitted an application for a loan modification and submitted all of the required documents. Nevertheless, OneWest continued to pursue foreclosure to the point of selling the home at a trustee sale. OneWest only rescinded the sale after we complained to OCC on the borrower’s behalf.”  Pasadena Star-News Groups oppose CIT’s planned acquisition of OneWest Bank

Activists’ Protests On the Money (subscription to LABJ required)

At a hearing on Bank of America Corp.’s 2008 takeover of troubled lender Countrywide, Stein warned that the merger would “not only impact working families and neighborhoods, but also the strength of the national economy.” The Fed approved the merger; BofA has since suffered about $60 billion in losses, most of it from Countrywide loans and securities.  Los Angeles Times: Groups urge U.S. to reject CIT takeover of OneWest Bank

The bankruptcy wiped out preferred stock from the TARP deal, and CIT never repaid the government. But it emerged from bankruptcy with a new CEO, John Thain, the notorious former head of Merrill Lynch who was ousted during the crisis for, among other things, a million-dollar re-decoration of his office, complete with a $35,000 commode.  The Fiscal Times: Are Regulators About to Let Another Bank Get Too Big to Fail?

Ironically, many of the banks deemed “too big to fail” ended up failing low-income communities and communities of color throughout the United States as they made shoddy mortgages, robo-signed documents, and later foreclosed on millions. Some of these same communities are now asking if this merger between OneWest Bank and CIT Group would result in any public benefit and are asking how further harms by a “too big to fail” bank will be prevented. Los Angeles Daily News Op Ed by CRC and Greenlining Institute: Shouldn’t communities be considered ‘too big to fail’? Guest commentary

The 10 Most Popular Stories in Consumer Finance in 2014 on CRC’s blog

What were the most popular posts on the CRC blog in 2014?

1) Most popular: City of Los Angeles Lawsuit Against Chase, Wells Fargo, Citigroup, and Bank of America

The City of Los Angeles filed a lawsuit against JPMorgan Chase for targeting minorities for predatory mortgages and the subsequent economic damage when these loans went into default.  The City Attorney, Mike Feuer, has already sued Wells Fargo, Citigroup Inc, and Bank of America for the same issues.  See this Law 360 article on a new lawsuit filed in December 2014:  LA Sues JPMorgan, BofA, Citi Over Discriminatory Lending

2. New Resource for Widowed Homeowners Facing Foreclosure

The “widows and orphans” problem refers to the fact that many widows, orphans, and others who inherit or have an ownership interest in property have faced foreclosure upon the death of a loved one because they were not listed on the loan, and the servicer would not work with them so that they could keep the family home.  See the recent announcement from the CFPB that they will providing additional updates to these rules here: CFPB Proposes Expanded Foreclosure Protections

3. Editorials Against Payday Lenders

How do over 50 newspapers feel about the payday lending industry?  Take a look and learn why advocates are excited about the Consumer Financial Protection Bureau’s upcoming rule-making for an industry who had a number of scandals in 2014.

4. The Payday Lender Hall of Shame

This is the worst of the worst when it comes to payday loan stories- here’s just a small sample, be sure to read the full post, and while you’re at it, sign our petition to CFPB Director Richard Cordray.

  • 1,000 text messages sent to a man after his suicide from debt collectors?
  • $83 million in campaign contributions made by the payday loan industry to prevent strong consumer protections from being enacted into laws
  • Training manuals that tell payday loan staff how to keep customers caught in the debt cycle

5. Banc of California Acquisition of 20 Banco Popular Branches Opposed 

After CRC members and allies opposed this acquisition, Banc of California agreed to create a public, 5 year community benefit and reinvestment plan.

6. Community members gather in Oakland to Celebrate California Reinvestment!

While CRC members and allies are serious about economic justice, they also know how to have fun.

7. Community leaders protest sale of 20 local Banco Popular Branches in Los Angeles

CRC members and allies held a press conference in front of a Banco Popular branch in LA as part of our initial opposition to Banc of California purchasing 20 Banco Popular branches.

8. John Oliver and Sarah Silverman on Payday Loans  

This post is self-explanatory, but if you watch the video, know that this industry is so bad there’s some adult language used by Mr. Oliver and Ms. Silverman.

Our favorite line? 

After a payday lender says “If you can’t pay the loan, don’t worry, we’ll be there to work with you.”

Oliver responds “No S*** you’ll be there, your business model depends on it!

(He’s referring of course to the debt trap that is sprung for the majority of people who take out a payday loan and find themselves unable to repay it two weeks later).

9. Bank Payday Loans No Longer Offered By Wells Fargo or US Bank

CRC was particularly happy to see this announcement after our opposition to banks providing these “direct deposit advance” loans that were very similar to payday loans.  Of course, we’d still like to see the banks get completely out of the business of payday lending, and stop providing financing to these modern day loan sharks.  For more on the financing that main street banks provide to payday lenders, see the report “Connecting the Dots” from our ally, Reinvestment Partners, based in North Carolina.

10. 80 Organizations Call on Federal Government to Address Private Equity and Investor Landlords

Have you heard about Wall Street’s latest profit scheme?  After millions of homeowners lost their homes to foreclosure, private equity is now moving into the housing market, buying roughly $200 billion worth of single-family homes, with the intent of securitizing the rental income…sounds familiar, doesn’t it?  Just look out if you’re a first-time homebuyer (hard to compete with all cash offers), a tenant (you might get booted to make way for higher paying renters), or a community, whose makeup could be changed thanks to the new landlords.

And, our three honorable mentions (we should point out that the OneWest post is only a few weeks old, so it was at a distinct disadvantage!)

A.  Community Leaders Hold Press Conference at OneWest Bank Headquarters 

In December, CRC received a response to our FOIA request to the FDIC, asking how much money the FDIC has paid out and expects to pay out in the future, under controversial shared loss agreements with the bank.  We released the figures (OneWest is on track to receive a whopping $2.4 billion by 2019!) at a press conference with our members and allies in front of the bank’s headquarters, where we called on the Federal Reserve to hold public hearings about this proposed, Too Big To Fail bank merger.  CRC also called on the bank to implement a foreclosure moratorium for surviving spouses whose mortgage is serviced by a OneWest subsidiary, Freedom Financial.  Read Kevin Stein’s HousingWire post to learn about three elderly homeowners who were facing foreclosure by OneWest Bank, and why we’re urging the bank to implement a moratorium until HUD develops rules to address situations where surviving family members are facing foreclosure due to a reverse mortgage.

B. Why we need Operation Choke Point to stop Illegal Online Payday Lenders

Payday lenders need access to your checking account in order to process the loans.  Learn more about Four Oaks Bank, and how 14 consumers were harmed by the bank playing an enabling role in processing illegal predatory loans.

C. Tenants Rights After a Foreclosure Upheld by California Court of Appeal

The story of a bank becoming the owner of a home after a foreclosure trustee sale is common in California.  Unfortunately, so is the experience of these two tenants who had continued paying their rent and should not have been evicted.  After a trustee sale, some real estate agents will try and get the current tenants out of the property as quickly as possible, offering cash for keys, making illegal threats, or even calling the police.  Tenants may or may not know their rights, and the real estate agents may take advantage of this and try and force them out quickly.