The testimony of Michael Chan, president of Asian Inc, about the proposed OneWest and CIT Group merger is featured in its entirety below. If you were unable to attend the hearing, CRC live-blogged it here and you may also find our CIT Group/OneWest Merger resource page helpful as well. Pictures are available here.
Federal Reserve Hearing for CIT Group Acquisition of OneWest
Thursday, February 26,2015
Federal Reserve Bank, 950 South Grand Avenue,
Los Angeles, California 90015
Thank you for giving me this opportunity to provide my statement. My name is Michael Chan and I am the President of ASIAN, Inc., a nonprofit tax exempt corporation that seeks to empower our disadvantaged Asian American Pacific Islander and other racial minority communities by removing obstacles to their socio-economic advancement in California.
Over our last 43 years, we have developed over 1,000 affordable housing units. We assisted over 15,000 Low to Moderate (LMI) persons with Limited English Proficiencies secure homebuyer education, foreclosure counseling, and financial literacy training in Northern California. We also operate 3 Minority Business Development Agency Business Centers in San Francisco, San Jose and Fresno, where we have assisted hundreds of minority businesses secure hundreds of millions of dollars in contracts and capital. We have compiled a significant track record that illustrates our deep understanding of the broad community reinvestment issues that are being discussed here today.
Based on our humble experiences, ASIAN, Inc. is compelled to currently oppose the CIT Bank merger due to what we see are significant flaws and limitations in the CIT Bank CRA Benefits Plan which in our opinion can and should be remedied by CIT Bank.
We understand this this is a unique merger of a retail bank, OneWest Bank, based in Southern California, and an internet bank, CIT Bank, which can accept deposits from anywhere. This poses some unique CRA challenges, particularly regarding the basic fundamental CRA tenet that deposits collected from a community need to be reasonably reinvested back into that community.
With significant deposits being made over the Internet to CIT Bank in conjunction with deposits received at OneWest Bank branches in Southern California, it is good to know that CIT Bank will recognize Internet deposits in Southern California for reasonable reinvestment in Southern California. This is a good start.
This also says that CIT can track where Internet deposits are coming from not only in Southern California but anywhere else in and outside of California. Given that there is a consensus within the community development leadership that where deposits are taken is where those deposits need to be reasonably reinvested.
The proof is on CIT Bank to show that their CRA Benefits Plan can address the reinvestment of deposits received outside of Southern California back into reinvestments that impact disadvantaged LMI communities from where these deposits came from. The reinvestment needs are just as severe in Fresno, Stockton, Sacramento, Oakland, San Francisco, East Palo Alto, San Jose and other California localities as they are in Southern California.
Otherwise endorsement of the CIT CRA Benefits Plan as-is with its presumed flaws would send the wrongful message that de facto redlining via the Internet cannot be prevented.
This would be a tragic precedent for CRA rankings for internet banks. Their CRA Plan needs to be revised to address this systemic imbalance between the location of deposits and where community reinvestments are made. This is where the CRA regulations are maybe a step behind internet banking and need to protect the intent and integrity of the CRA Act.
We all want to avoid redlining as an unintended consequence. This is why it is so very important to require CIT Bank to develop a more transparent, realistic and comprehensive CRA Benefits Plan that will benefit all of California’s disadvantaged, culturally diverse, and Limited English proficient LMI communities that have deposits with CIT Bank.