On Monday, February 2, 2015, California community advocates along with Daily Kos, went to the Federal Reserve and delivered over 15,000 petitions of people who don’t want to see another Too Big To Fail bank created. The advocates also delivered a letter to the Federal Reserve and Office of the Comptroller of the Currency, signed by 51 state and national organizations, calling for hearings on the proposed Too Big to Fail bank merger of CIT Group and OneWest Bank.
The petition was signed by over 15,000 people. Some of their comments are included in the slide-show below.
Wondering why people are concerned about the merger?
Here’s a few reasons:
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.
For more information, visit CRC’s “OneWest and CIT Group Merger Resource Page.”