Earlier today, CRC released an important reminder for people whose mortgage was originated by IndyMac Bank, and later serviced by OneWest Bank, or for customers who have a reverse mortgage that is serviced by Financial Freedom.
“We want the general public, but especially people with direct experiences with OneWest or Financial Freedom to know that they have an opportunity to share their experiences with the two bank regulators who are reviewing the proposed merger of OneWest with CIT Group,” explained Kevin Stein, associate director of the California Reinvestment Coalition (CRC). CRC, along with 100 other organizations, and over 15,000 people who signed a Daily Kos petition, are opposing the merger, citing a long list of concerns.
The Federal Reserve and Office of the Comptroller of the Currency are hosting a public hearing next week, on Thursday, February 26, from 8:00AM to 5:00PM in Los Angeles at the Federal Reserve building (located at 90 South Grand Ave, Los Angeles, CA 90015), and the general public is invited to attend.
Stein explains: “If you’re unable to attend the hearing, we suggest sending your comments about this proposed merger to the Federal Reserve and the Office of the Comptroller of the Currency. The deadline for comments is February 26, 2015. We have directions on how to send your comments to the Federal Reserve on our website:http://www.calreinvest.org.
Organizations opposing this merger have cited a long list of concerns, including:
1) Corporate subsidies: According to CNN (Nov 1, 2009) , CIT Group received $2.3 billion in TARP funds it never repaid, and the FDIC estimates it will pay OneWest Bank a total of $2.4 billion for costs related to soured loans, under a controversial “shared loss agreement” the FDIC has with the billionaire owners of OneWest Bank. The banks also plan to use CIT Group’s 2009 bankruptcy to further reduce their taxes if the merger is approved.
2) OneWest Bank’s troubling foreclosure record: Legal settlements, surveys of housing counselors, and rankings from J.D. Power and Associates all suggest that customers seeking help with their mortgage from OneWest Bank have encountered numerous obstacles, run-arounds, red-tape, and delays that may have pushed people into foreclosure instead of keeping their homes.
3) Outsized compensation for bank officers: According to the LA Times(Oct 14, 2014) if this merger is approved, the CEO of the bank is expected to receive an annual salary of $4.5 million, plus restricted stock options worth $12.5 million. The Chairman of the board is also expected to receive an annual salary of $4.5 million, but this is for part-time work, since he would also be allowed to continue running his hedge fund.
4) Weak Community Reinvestment Plan: Under the Community Reinvestment Act (CRA), banks are required to reinvest in the communities where they do business. Unfortunately, the CRA record for both banks is mediocre, and the bank’s future reinvestment plans (if the merger were approved) also would rank the bank near the bottom of its peer banks in California.
To read more about this merger, CRC encourages people to visit our CIT Group and OneWest Bank Merger Resource Center, where they can see in-depth analysis of the merger, why it matters to communities, and how to get involved.