The testimony of Renee M. G. Chavez, Operations Manager of Montebello Housing Development Corporation (MHDC), 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 help. It outlines why 21,000 people are opposing this merger along with 100 California and national organizations. Pictures of the rally against the merger are available here.
Testimony of Renee Chavez
Thank you for taking the time to take our responses. I hope that you are serious and committed to doing what is right and that we are all not wasting our time today.
My name is Renee M. G. Chavez, I am the Operations Manager of Montebello Housing Development Corporation (MHDC) a 501 (c)(3) non-profit community based housing agency with offices in Montebello, CA that serves low to moderate income families in Los Angeles and San Bernardino Counties via education and counseling. MHDC was established in 1992 to meet the affordable housing needs of Los Angeles County residents. MHDC’s mission to educate and assist in the delivery of safe, sanitary, quality and affordable housing to individuals and families of modest financial means has been the driving force of the organization. We believe in creating financial wealth through home ownership.
All who have responded today and you are aware that Indy Mac was one of the subprime lenders whose bad lending practices preyed on our communities of color and seniors.
During the foreclosure crisis families lost homes and their wealth because of the lack of assistance to modify underwater homeowners. Because of the loss of assets and wealth, communities of color are now struggling to rebuild. The dream of homeownership was stolen from many families.
The OneWest investors received not only a bargain basement price to purchase Indymac, they also obtained a favorable loss share agreement with the FDIC that provided for the FDIC to cover a significant amount of the losses on loans made by Indymac.
In other words, OneWest investors paid little for a bank that came with limited risks to the investors while forever impacting communities.
15% of OneWest’s branches are located in low and moderate-income census tracts, as compared to a statewide average of 30% of bank branches being located in LMI tracts. 35,000 Californians have lost their homes due to foreclosures by OneWest and its subsidiary, Financial Freedom
All in this room and you know that CIT Group received $2.3 billion from the US taxpayers, via TARP Troubled Asset Recovery Program. A little while later, CIT Group filed bankruptcy, and eliminated its obligation to repay the government.
How many homeowners might have been able to keep their homes if that money had gone to modifications instead?
Remember those who are still suffering. In 2014 in LA County there were 21,538 families that faced foreclosure. In January there were 1631 notice of defaults. Remember, these people paid the taxes that bailed out CIT.
We hope that the Federal Reserve and the Office of the Comptroller of the Currency is serious about their consideration of another Too Big to Fail Bank. Our communities have already paid too high a price while both banks were separate entities. Stop this insult to the taxpayers, that include those people who lost their homes, by rejecting the merger.
Too Big to Fail is too big to approve.
However, since this merger will probably go through it is imperative that protections for our communities be put in place prior to the approval. These protections should include, at a minimum:
- Prior to approval, CIT Group and OneWest Banks should be required to make strong public community reinvestment commitment based on the new size of their bank with benchmarks clearly established. These CRA commitments need to made public with input with a cross section of those agencies testifying today. MHDC, with these other agencies, are interested in safeguarding our communities. The CIT Group and OneWest Banks are interested in their investors. Together, there would be a compromise on CRA requirements that could be fair.
- As both banks have demonstrated that they cannot be trusted to work in good faith, when merged should they be in violation they should be fined $2.3 billion. Those funds could be used to assist communities in low and moderate-income census tracts that continue to be severely underserved.
- Should the banks be allowed to merge, they should not receive any loss share agreement with the FDIC.
- If merged, the banks should not be able to participate in any bailout should their business practices, that include obscene salaries to only a few, prove them unfit to continue. The bank should be allowed to fail. As you know, businesses fail every day.
Thank again for taking time to hear our comments. I look forward to your response and participating in future discussions to put accountability back into the banking industry.