Paulina Gonzalez’s testimony 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.
When discussing the proposed CIT and OneWest merger, the LA Times quoted a banking consultant who said: “The Federal Reserve has never met a merger it didn’t like.” Here we are, with this merger poised to create a “Too Big to Fail” bank before you for your consideration, in which the public benefit is questionable, and the public subsidy unprecedented to the tune of $5 billion, including $2.3 billion in never to be repaid TARP funds (tax payer dollars).
The public subsidy dwarfs the measly CRA plan offered by the bank, and dwarfs the public benefit of this merger.
We are looking to the Federal Reserve and OCC and asking, will you merely rubber stamp this merger after today’s hearing?
Or will you require, as the Bank Holding Act and Dodd Frank requires you to do, a REAL and TRUE Public Benefit that outweighs the risk of a new Too Big to Fail bank?
OneWest has been around for 5 years in Southern California, yet it was only after the merger with CIT was announced last year that the bank has shown any interest in community outreach.
OneWest’s dismal 5 year record in serving the credit, investment, and lending needs of the low and moderate income communities of Southern California, and CIT’s failure to meet the goals of its own CRA Strategic Plan tell us more than we need to know about where LMI communities rank in the bank’s list of priorities.
Some might say, but the bank is promising to do more. To that I say, ramped up CRA activity, grantmaking and vague promises to do more at the time of a merger DOES NOT add up to meet the regulatory requirement for public benefit. Past experience has shown us that when the media spotlight dims and the regulators turn their attention to the next bank and the next merger, banks tend to fall bank to their old habits. And despite their promises made under the pressures of a merger, we are all too familiar with OneWest’s old habits.
So today we are asking, where has OneWest been for the last five years? What you will hear loud and clear today, from Southern California practitioners who oppose this merger, that the bank has been largely absent from LMI communities.
What all the recent promises and ramped up activity amount to is an effort by the bank, in the face of unprecedented opposition, to garner support at the time of a contentious merger application.
Lastly, CIT Group and OneWest’s current CRA Plan, as proposed, does not meet the public benefit test the Federal Reserve is bound to measure this application by. Its plan to reinvest $5 billion over 4 years amounts to a mere 5% of its deposits, putting it at the bottom half of all California banks in overall CRA activity. In comparison, during a request acquisition Banc of California committed to 20% of its deposits for overall CRA activity. Mechanics Bank, a bank that like OneWest originates very few mortgages, recently signed a CRA Plan with CRC that committed to 15% of its deposits to overall CRA activity.
OneWest is at least 10x the size of these two banks, and stands before you and all of us trying to convince us that it meets the public benefit test having only committed 1/3 to 1/4 of what these much smaller banks have committed.
Not only does this merger not meet the public benefit test, but I’m not even sure it meets the laugh test.
We ask you today to prove to a wary public that long gone are the days of regulatory rubber stamps.
The CIT Group OneWest proposed merger doesn’t pass the public benefit test, and therefore should not be approved.