Paulina Gonzalez might be the most feared person in California banking. She’s executive director of San Francisco’s California Reinvestment Coalition, opposition from which has been instrumental in drawing out the time line of a proposed merger between Pasadena’s OneWest Bank and CIT Group in Livingston, N.J.
She’s doesn’t miss an opportunity to blast OneWest for what she feels is the bank’s inadequate service to the community, but has recently also adopted a good-cop role for banks she feels are doing the right thing.
Her newest gig doubles down on that approach: She’s partnered with former Los Angeles Mayor Antonio Villaraigosa and Irvine’s Banc of California Inc. to oversee a proposed $200 million fund that will make investments in lower-income communities.
Gonzalez and Villaraigosa will co-chair the fund’s community advisory panel, which will help direct capital to businesses they feel are overlooked despite being growing and creditworthy.
“We have to dispel the myth that most of these loans are high risk,” Gonzalez said.
The investment fund, which Banc of California said will include contributions from at least 12 other California lenders, is part of the bank’s Community Reinvestment Act plan, something institutions must put together when seeking a merger or acquisition. Banc of California made a CRA commitment as part of its acquisition last year of the local assets and branches of Puerto Rico’s Popular Community Bank.
Banc of California Chairman Steve Sugarman announced the creation of the fund at a Clinton Global Initiative conference in Denver earlier this month.
Sugarman credited the ex-mayor with emphasizing the importance of working with community groups – and OneWest’s experience has certainly underlined that.
“Villaraigosa really raised to our attention the need to partner to key community groups,” Sugarman said.
Gonzalez said the current plan took shape through a series of conversations she had with Sugarman earlier this year.
“In February, Steve and I began to bounce around some other ideas, one of which was the investment fund,” she said. “One of the things we remain very interested in is how and where the funds get spent to ensure they have maximum impact. The fund could be a game changer for how banks partner with community groups.”
Through her engagement with Banc of California, Gonzalez has shown a willingness to play ball when a bank makes a good faith effort. She said that hasn’t been the same for her boogeyman, OneWest. Officials there declined to comment.
CRC’s opposition helped pave the way for regulators to call for a relatively rare public hearing on the CIT-OneWest merger, and the organization is showing no sign of pulling back. On June 9, it called on federal regulators to investigate OneWest’s history of foreclosures, alleging that a disproportionate number of them have taken place in minority communities.
Gonzalez said the CRA commitment her group is asking for from OneWest as part of its planned merger is hardly onerous. She pointed out that Banc of California and downtown L.A.’s City National Bank have managed to commit to community benefit plans she felt did a lot for lower-income communities, without driving their shareholders to the poorhouse.
So Gonzalez was more than happy to use the fund announcement as another opportunity to draw a distinction between Banc of California and OneWest.
“It’s been disappointing to see where OneWest has landed,” she said. “CRA plans like the one Banc of California has put together have really allowed for innovation. When banks want to do the right thing, it’s a win-win situation.”
Working Capital
Wells Fargo Capital Finance in Santa Monica makes asset-based loans to businesses, many of which borrow against their balance sheets because they can’t qualify for cash-flow loans.
Chief Executive Henry Jordan said one recent trend he’s observed is that many of these businesses are tapping into more of their facilities.
“Lately, we’ve seen customers borrow more against their credit lines,” he said.
Jordan said some of that is due to businesses finally having higher sales expectations and investing accordingly, but there’s also another factor driving companies to max out their lines: Money is cheap today but businesses expect it to be more expensive soon.
“People think interest rates are going up,” Jordan said.
C-Suite News
West L.A. wealth management firm Aspiriant has named four new principals in its main office. They are John Allen, chief investment officer; Kelly Cruz, manager of strategic planning; Ray Edwards, director of tax services; and Alec Manoukian, information technology director. … Wells Fargo Capital Finance has named three longtime veterans of the bank to new roles. Scott Diehl will lead a group that includes supply chain finance and factoring; Steve Macko will lead the industries group, which includes technology financing; and Kurt Marsden will be in charge of corporate finance.
Staff reporter Matt Pressberg can be reached at [email protected] or (323) 549-5225, ext. 230.
