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 Journal: OneWest 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
“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
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