How Much Money Does Wall Street Spend on Lobbying and Campaign Contributions?

occupy-wall-street-political-cartoon-lobbyists

Political cartoon by Mike Luckovich, Atlanta Journal Constitution

A new report from Americans for Financial Reform provides a troubling window into the amount of cash pouring into Congress from Wall Street since the 2008 crisis -it’s over $2.7 million a day, and more than $3.7 million per member of Congress!

Wall Street Money in Washington,” is a 62-page examination of political spending, draws on a special data set compiled by the Center for Responsive Politics for AFR in order to provide a more precise look at financial industry spending than is otherwise possible.

Campaign Contributions: $1.2 billion. Individuals and entities associated with financial reported making $1,201,417,199 in contributions to federal candidates for office during this election cycle. The financial sector’s contributions were almost twice that of any other specific business sector identified in the data. Of the $688,150,613 in party-coded contributions by PACs and individuals associated with finance, 55% went to Republicans and 45% went to Democrats.

Five U.S. Senators and two House members were among the biggest Congressional recipients of financial sector contributions. Sen. Marco Rubio (R-FL) topped this list with $8,687,969. The other senators were Ted Cruz (R-TX), with $5,482,011; Charles Schumer (D-NY), with $5,345,563; Rob Portman (R-OH), with $4,158,259; Pat Toomey (R-PA). Members of the House of Representatives were led by House Speaker Paul Ryan (R-WI), with $5,727,069; and House Majority Leader Kevin McCarthy (R-CA), with $3,397,980.

Lobbying: $898 million. The financial industry reported spending a total of $897,949,264 on lobbying in 2015 and 2016. This puts the sector in – close – third place, behind the Health sector, which spent $1,022,907,176, and a category of “Miscellaneous Business,” a sector that that itself probably includes some Wall Street lobbying by business groups with a broader focus than only finance.

Since 2008, the financial services industry has spent more money on contributions and lobbying than it did before the crisis, and the total in this cycle is the highest yet. 

“The entire apparatus of government operates in an environment flooded with millions of dollars in Wall Street cash on a daily basis,” said Lisa Donner, executive director of Americans for Financial Reform. “If you want to understand why finance too often hurts consumers, investors and businesses far from Wall Street, take a look at these numbers.”

You can read the whole report on the Americans for Financial Reform website. 

 

Twenty-One Unanswered Questions About the OneWest and CIT Group Merger

Why No Questions at OneWest Hearing

In February, the Federal Reserve and Office of the Comptroller of the Currency held a public hearing about the proposed merger of CIT Group and OneWest Bank. Public hearings are not held on every proposed bank merger, and some thought the hearing was held both in response to the record-breaking opposition to it, and in response to the many unique issues raised by this merger.

While advocates appreciated the regulators holding the hearing, they were also surprised that the regulators at the hearing didn’t ask the Bank CEOs, the supporters, or the opponents, any questions.

CT Financial News wrote “Yet, despite the size of the deal and the controversial issues it raises, regulators asked no questions of any of the public speakers, not even of Thain or Otting.”

It wasn’t for a lack of questions about the proposed merger.

CRC and other organizations have raised questions about the merger since October, but unfortunately the banks have declined to be transparent with the community.

While there is a long list of unanswered questions about this merger, we are including some of the more significant ones that have been raised since October when CRC initially announced our opposition to this merger.  For more information, see CRC’s Merger Resource Page where you can read the in-depth letters we have sent to the regulators.

Foreclosures

At the hearing, Joseph Otting, CEO of OneWest Bank, shared figures on the number of modifications OneWest has provided, but he didn’t share any numbers about foreclosures, improper foreclosures, or how many more people are facing foreclosure.

Mr. Otting’s testimony at the hearing:

Joseph Otting Testimony at Public Hearing

1) Is there a contradiction between the statement above and the outside indicators below about OneWest foreclosure practices?

They include:

2) How many families has OneWest Bank foreclosed on, both nationally and in California since buying the failed IndyMac Bank in 2009?

3) Has OneWest ever submitted a reimbursement claim to the FDIC for a wrongful foreclosure, such as this one?

OneWest Mortgage Fraud Case

4)  How many widowed, widower surviving spouses and other heirs, like these two sisters below, has OneWest’s reverse mortgage servicer subsidiary, Financial Freedom, foreclosed on since buying IndyMac in 2009?

Foreclosing on Heirs

5) How many homeowners, surviving spouses, and other heirs are in OneWest’s foreclosure pipeline right now?

6) Does OneWest Bank (and do regulators) believe that OneWest Bank is exempt from the California Homeowner Bill of Rights?

From the East Bay Express article: Saving the Homeowner Bill of Rights

Danny Barak, an attorney in Foondos’ law office, is currently appealing the decision before the Ninth Circuit Court of Appeals in hopes of reversing the lower court’s decision, and clarifying once and for all that federal savings banks like OneWest can’t claim preemption over California’s foreclosure protection laws. “I think that a Ninth Circuit ruling that the Homeowner Bill of Rights is not preempted by HOLA would end this problem once and for all,” said a hopeful Barak.

Attorneys representing OneWest Bank and representatives of the bank’s public relations firm, Sard Verbinnen & Company, did not respond to requests for comment for this report.

7) Homeowners are wondering-  Are there any contradictions between the statements like Mr. Thain’s (below) vs. the actions of the investors who bought this bank, knowing they would be foreclosing on tens of thousands of people and getting reimbursed by the FDIC for these foreclosure costs (to the tune of $2.4 billion)?

At the hearing, Mr. Thain, CEO of CIT Group, commented to the WSJ:

“I think the stories you’ve just heard [on the panels] are terrible.” He then referenced one example of people being thrown out of their house but blamed a federal rule he said needed to be changed.

8) If Mr. Thain is concerned about these foreclosures, is he willing to work with OneWest Bank, and/or with the regulators to reduce the number of preventable foreclosures and to ensure that surviving spouses aren’t being foreclosed and evicted from their homes?

Community Reinvestment

A day before the hearing, the two banks announced that they were switching plans for where CIT Bank, which collects deposits from around the US, would reinvest those deposits.  Instead of reinvesting the deposits in the communities where the money is collected, or even the top ten or twenty metropolitan areas where the deposits are collected, the banks announced that all of CIT Bank’s deposits would be reinvested in its LA Assessment area.  Here’s what one CRC member had to say about CRC and its members taking a principled stand that CIT Bank should reinvest its deposits in the communities from which it receives them:

“While we’d love the $$$ for southern California, I’m reminded of how Dorothy Richardson and her neighbors in Pittsburgh first staged a series of “sit-ins” at local banks because of the redlining in their neighborhood. Every neighborhood matters. Every family matters. Out of the strength of her convictions, Dorothy succeeded and the Neighborhood Reinvestment Corporation and NeighborWorks Network were formed. We must stand for what is right on behalf of all of our neighbors to ensure justice for everyone. Seems fitting during Black History Month.”

9) Why are CIT and OneWest only planning on reinvesting in LA, whereas the Community Reinvestment Act calls on banks to reinvest their deposits in the communities where they receive them?

10) If CIT Bank knows where the deposits are coming from, why doesn’t CIT Bank reinvest deposits in those communities?

11) Why did the bank CEOs change course on where the deposits would be invested?  Originally they were going to continue to only reinvest the deposits in Salt Lake City, UT.

12) Why did OneWest try to keep its CRA Strategic Plan confidential?

13) Since OneWest didn’t meet the reinvestment goals it set for itself in its CRA Strategic plan, what steps (if any) will OneWest take to improve?

Systemic Risk

Community advocates, who saw the damage caused by IndyMac Bank’s reckless lending and $13 billion failure, and who witnessed the $2.3 billion bailout provided to CIT Group, are still trying to understand:

 14) How is a larger, $70 billion bank is less risky than two smaller banks?

15) How is CIT Group less interconnected today than it was in 2008, when it received its bailout from taxpayers?  (ostensibly for small business owners, though as CNN pointed out, CIT Group actually made about 1,000 fewer small business loans)

CIT Group Small Biz Lending after TARP Bailout (CNN)

16)  How can taxpayers and regulators be assured that this new bank wouldn’t try to pressure taxpayers or regulators into another bailout, as CIT Group did in 2009 (for a 2nd bailout), before filing bankruptcy?

CIT Group Tries to Pressure FDIC

17)  If CIT Group isn’t concerned about systemic risk, why has it spent more than $6,500 a day during the past two years, lobbying on things like systemic risk?  From Opensecrets.org 

CIT Group Lobbying

Meeting Community Credit Needs

18)  Why does OneWest Bank only have two branches in low income communities?

OneWest Bank Branches

19)  Outside of  mobile banking, do the bank CEOs have plans to serve low-income consumers, especially given new research by the FDIC, which found:

 “Although mobile banking would appear to be an appealing substitute for bank office visits, and is a fast-growing option, it remains one of the least common ways for consumers to access their accounts.”  

20)  Is there a reason OneWest bank’s lending record to Asian borrowers is lower than the industry as a whole?

21)  Why is most of OneWest’s small business lending to businesses with greater than $1 million in gross revenue?

Los Angeles Community Leaders Speak Out Against OneWest Bank Merger

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.

Testimony on Need for CIT Group and OneWest Bank to Develop Stronger CRA Plan

The testimony of Stephon Taylor, Director of Programs with California Resources and Training (CARAT), 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.

February 26, 2015

Thank you for the opportunity to speak today.  I will keep my comments brief.

I am Stephon Taylor, Director of Programs with California Resources and Training (CARAT), a 19 year old economic development non-profit in California.  CARAT’s primary focus over the last 19 years has been research and development, and program design and implementation as it relates to Technical Assistance (TA) services for small businesses in underserved communities in California. CARAT provides technology solutions training to over 3,000 small businesses. The majority of the small businesses that we serve have less than $1 million in annual revenues and fewer than 10 employees.

California has a vast underserved population of small businesses needing access to capital as well as management and technical assistance (TA) support services to assist them in starting and sustaining their business operations.  They need affordable capital and appropriate financing vehicles.

The economic downturn in the country hit California as well and many of the existing businesses are still in need of restructuring and stabilization assistance. Additionally many people out of work turned to self employment as an option and need (TA) assistance to grow and expand their businesses.

My concerns around the proposed merger OneWest/CIT merger are as follows:

  1. Lack of banking access in LMI communities. Only two of the banks’ 73 branches are in low income census tracts, and one of those branches is slated to close post-merger. Our work with our small business constituency has shown that physical branch locations are a necessity. Mobile banking, while a great supplemental tool, is not a substitution for physical branches.
  2. The banks’ track record of performance related to community development. In the past, both OneWest and CIT have made minimal contributions to support technical assistance and economic development. Without a definitive and robust CRA plan to address those areas, I don’t see how the merger meets the “conveniences and needs” of the affected communities.
  3. The banks’ track record of performance related to small business lending. The majority of OneWest’s small business lending has been to businesses with over $1M in revenue, and they have not committed to serving smaller businesses. Their publicly stated goals to increase their lending to businesses with revenue under $1M have also fallen short of the mark.

In conclusion, my concern is that OneWest/CIT needs to bring products and services into California that fit the market needs of our small business owners, which aren’t adequately served by their current product mix.  My second concern is that there is a miniscule commitment, if any, to supporting, in a philanthropic way, economic development and business TA services that are needed.

California is always in need of more great corporate citizens. CARAT would welcome the opportunity to work with OneWest/CIT to meet the needs of the underserved small businesses within the state.

However, there is an immediate need for OneWest/CIT to develop a more robust, comprehensive and public CRA plan that details the commitments they will make to their California constituency.

I would urge that a philanthropic and community benefit commitment is made by OneWest/CIT to California that truly supports the needs of California Small Businesses.

LA City Council Member Gil Cedillo Speaks Against Proposed OneWest Bank Merger

Last Thursday, the Federal Reserve and Office of the Comptroller of the Currency held a public hearing about the proposed merger of OneWest Bank with CIT Group.  During a lunch-time rally, LA City leaders, including Council Member Gil Cedillo, spoke about the need for the banks to create a much stronger Community Reinvestment plan, that reflects the bank’s nearly $70 billion in assets.

The current plan offered by OneWest Bank and CIT Group is a fraction of what both its peer banks and even smaller banks have committed to. 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.

Below is the video of Council Member Cedillo speaking about the merger.

Testimony Against OneWest and CIT Group Merger by Isela Gracian at ELACC

The testimony of Isela Gracian, Vice President of Operations for East LA Community Corporation (ELACC) 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.

TESTIMONY OF ISELA GRACIAN, VP OF OPERATIONS AT EAST LA COMMUNITY CORPORATION

Good morning and thank you for hosting this hearing. My name is Isela Gracian and I am the Vice President of Operations for East LA Community Corporation (ELACC). ELACC is an economic and social justice organization serving the Eastside of Los Angeles for 20 years. We serve over 5,000 working class Latino families annually through our different programs and services. ELACC provides quality affordable housing to over 2,000 individuals in our affordable housing developments. Through our work we have leveraged over $124 million in investment for affordable housing and community assets to the Eastside of Los Angeles.

For decades the neighborhoods and residents we serve have lacked the needed investment to keep up with housing needs. In February of last year, the California Housing Partnership Corporation released a study highlighting how the housing market is failing to meet the need of low-income families in California.

In the Los Angeles County alone we have a deficit of nearly 400,000 homes for extremely low income renters; these are the most vulnerable residents in our neighborhoods. The families able to secure an affordable housing rental unit go from being rent burden with spending an average of 70% of their monthly income for rent to paying 30% of their income for rent. Affordable housing provides stability to families while enhancing the assets of neighborhoods.

While we believe that the large banks have failed to do their fair share of investment for affordable housing development, at least some have made efforts to improve access to capital and be partners is closing the affordable housing gap for low-income families. In these efforts one player has been absent, that player is OneWest. In their portfolio of products, OneWest does not have a multifamily loan product and CIT already has plans to phase out their Low Income Housing Tax Credit (LIHTC).

OneWest and CIT were saved by US taxpayer subsidies and they have failed to return the investment to the communities they are required to serve.

With so many families on the brink of homelessness because they are severely rent burdened we need every large bank reinvesting in the community.

Therefore, I urge the Federal Reserve to require that CIT and OneWest develop a comprehensive and public CRA plan with commitments proportionate to the size of the new bank and that it is informed by broad community input.

Thank you.

Kevin Stein Testimony at OneWest and CIT Group Proposer Merger Hearing in Los Angeles

The testimony of Kevin Stein, associate director of the California Reinvestment Coalition, 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.

Kevin Stein Testimony

Thank you to the Federal Reserve and the OCC for holding this hearing and for the opportunity to testify.  My name is Kevin Stein, I work at the California Reinvestment Coalition  (CRC). I have been at CRC for 15 years, and I have seen many mergers, but this is the most problematic and outrageous merger I have seen

The last time we were here for a merger was in 2008 when Bank of America purchased Countrywide. We opposed that merger and argued that Bank of America would be left processing numerous foreclosures and harming families without any meaningful commitment to the community.

The regulators approved that merger with no significant conditions. Nothing changed. Bank of America kept foreclosing on Countrywide loans, and inadequate reinvestment failed to mitigate harms.  Six years from now, people will look back on this hearing and this merger to see if the regulators got it right this time.

Here, there is much private gain, much public subsidy, but no public benefit.

Based on the limited data provided by OneWest, our analysis finds they are towards the bottom of the pack, and below their peers, in meeting community credit needs and reinvesting in neighborhoods.

The Bank’s CRA performance has been poor, and its promises not much better.

As one example, according to the Bank’s own CRA strategic plan, which the bank sought to keep confidential, affordable housing is identified as a critical need.

But what has the Bank done to address this need? It has devoted little of its already small pool of contributions for affordable housing, its home lending record is weak and disparate, it does not offer a multi-family loan product, and it may participate only in a limited way in the Low Income Housing Tax Credits program

With such strong nonprofit capacity in its assessment area, the bank’s performance is shameful, and represents a wasted opportunity to address critical housing needs.  The Bank appears not to have met all of the goals it set for itself in its secret, Strategic Plan. Without a clear, public and strong CRA Plan, how can communities hold the bank accountable, and why would we expect things to be any different this time?

Foreclosures are also deeply concerning.  It would be bad enough if OneWest Bank (OWB) merely did a poor job meeting community credit needs.

But in fact, OWB helped create community credit needs through mass foreclosures that inflicted great harm on families and communities. We estimate that OWB has processed over 35,000 foreclosures in California alone. In addition, the Bank has foreclosed on 2,000 reverse mortgage borrowing seniors, their widows and heirs in our state, and continues to do so, as you will hear more about later today.

In fact, the main way in which OneWest engages with LMI communities is through foreclosure.

OWB has been a “terrible” servicer. In our surveys of housing counselors over the years, OWB was frequently cited as among the worst:

  • In 2010, OWB was the deemed the worst at offering loan mods
  • In 2011, OWB got the most votes for being a “terrible” servicer
  • In 2012, OWB got the 2nd most votes for worst servicer
  • In addition, there are over 1,000 CFPB consumer complaints against OWB, including 150 complaints about its reverse mortgage servicing, about 12% of all reverse mortgage complaints

In his testimony, Joseph Otting talks as if OneWest foreclosures are a passive endeavor, that OneWest fell into a number of loans that are subject to rules he wishes were different. But this exactly what OneWest signed up for. They bought a foreclosure machine, negotiating a sweetheart loss share agreement with the FDIC. And they have profited handsomely from this foreclosure machine

We are urging the regulators that:

  • OneWest’s foreclosure practices need to be reviewed and improved.
  • OneWest should not be allowed to foreclose on borrowers without 3rd party review,
  • OneWest should stop arguing it need not comply with our state’s Homeowner Bill of Rights
  • OneWest and Financial Freedom should cease all foreclosures on surviving spouses until the law on this issue is settled
  • No decision on this merger should be reached until an audit is done on OneWest’s servicing practices. In fact, we know that the FDIC is conducting a loss share audit of OneWest in May. There should be no decision on this merger until after the results of that audit have been made public.
  • Further, the Fed and the OCC should not approve this merger without substantial conditions imposed requiring the bank to first develop a clear, strong Plan to meet the affordable housing and economic development needs of its communities, with clear benchmarks established, and significant resources devoted to achieve that purpose

The Bank has shown its unwillingness to do this on its own. Without this, the merger provides immense private gain, outrageous amounts of public subsidy, greater systemic risk, but no public benefit, and the merger should be denied.

Thank you