The California Reinvestment Coalition, an organization that advocates for banks to do more for low-income communities, will oppose the planned purchase of Pasadena’s OneWest Bank by Livingston, N.J., finance firm CIT Group Inc.
Kevin Stein, the coalition’s associate director, said the coalition will oppose the purchase over concerns that the combined bank, which will have more than $70 billion in assets, will not lay out a plan detailing how it will benefit communities served by OneWest.
Representatives for CIT and OneWest did not immediately return calls for comment.
The group opposed another local bank deal, Irvine lender Banc of California’s acquisition of the local branches and deposits of Puerto Rico’s Banco Popular, over similar concerns. Ultimately, Banc of California released a community benefit plan supported by the coalition.
Last week, the coalition also said it was concerned that the Federal Deposit Insurance Corp. will carry over to CIT a lucrative agreement it reached with OneWest during the depths of the financial crisis, when the Pasadena lender emerged from failed IndyMac Bank. Under the deal, the FDIC helped cover the bank’s loan losses. Stein re-emphasized that issue Tuesday.
“We are concerned that the regulators will rubber stamp this deal, approving the creation of another Too Big to Fail bank and allowing OneWest to transfer its loss share agreement to CIT,” he said. “The merger should provide a clear public and community benefit, and not simply the enrichment of investors and continuing public subsidy.”
In an Oct. 3 press release, Paulina Gonzalez, the coalition’s executive director, said that while the agreement made sense at a time when the banking system was fragile, to continue it only enriches opportunistic investors without any benefit to the communities the bank serves.
Stein said other concerns include OneWest’s track record with foreclosed homes, as well as the bank’s small business loans mostly going to companies with more than $1 million in revenue.
The coalition will ask the Federal Reserve Bank of New York, one of several regulators that must sign off on CIT’s acquisition of OneWest, to block the deal. The Federal Reserve’s deadline for comments regarding the deal is Oct. 10.
