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Friday, Sep 22, 2023

Great Western



Staff Reporter

Local community advocates have been approaching H.F. Ahmanson & Co. about its hostile takeover bid for Great Western Financial Corp. and what the $6.07 billion deal could mean for minorities and low-income families.

Ahmanson spokeswoman Samantha Davies confirmed that the company has received a slew of phone calls since the thrift announced its takeover bid.

If history is any precedent, Ahmanson, parent firm of Home Savings of America, could end up making major commitments to community groups in order to ensure that its hoped-for acquisition proceeds smoothly.

Bank of America was persuaded to commit to making $12 billion in so-called Community Reinvestment Act loans over a 10-year period to ensure its acquisition of Security Pacific Bank in 1992. CRA loans typically go to businesses and homeowners in underserved and low-income areas.

Similarly, Wells Fargo Bank committed $45 billion to CRA lending and another $300 million to philanthropic causes to help ensure its acquisition of First Interstate Bank last year.

“Folks are going to be all over (Ahmanson) like a cheap suit, demanding that all communities be served and no one gets hurt in the acquisition,” said John Bryant, chief executive of Operation Hope, a non-profit investment bank that specializes in lending to underserved communities.

Like many of his counterparts at other non-profit groups, Bryant was on the phone with Ahmanson Chief Executive Charles Rinehart within days of the Feb. 18 merger announcement.

Likewise, the Greenlining Institute was in touch with both Rinehart and Great Western Chief Executive John Maher shortly after the announcement, according to policy director Bob Gnaizda.

Great Western officials were not immediately available for comment last week.

The Greenlining Institute whose members include the Latin Business Association, Asian Business Association, Black Business Association and First African Methodist Episcopalian Church bills itself as a think tank that advocates for services to minority and underserved urban areas.

The institute played a key role in getting both Wells and BofA to make CRA loan commitments prior to their respective mergers, Gnaizda said. The group is becoming a thorn in the side of Glendale Federal Bank, which is in the process of acquiring Transworld Bank of Encino.

Greenlining lodged a protest to federal regulators against the merger six weeks ago, complaining that Glenfed needed to improve its lending record to minorities and low-income families before the merger could be approved.

“We believe that when an institution changes the dynamics in a regulated industry, they have certain responsibilities to the community,” said Gnaizda. “We’ll look for commitments (similar to ones made by Wells and BofA) or better.”

California Reinvestment Committee of San Francisco is another activist group that’s been in touch with Rinehart and Maher since the proposed acquisition announcement, said Alan Fischer, executive director of the committee. Like the Greenlining Institute, the California Reinvestment Committee promotes CRA lending by California financial institutions.

In the case of Ahmanson and Great Western, the committee is concerned about branch closures and decreased competition in the minority and low-income lending arena, said Fischer.

“We’ve contacted both sides to express our concerns and hope to meet with the banks and talk about the issues. We’ve also been passing on our concerns to the regulators,” he said.

Smaller community activist groups also are pressing their cases.

A group called Seniors Against Investment Fraud issued a warning to Ahmanson, pointing out that it could become the target of a consumer boycott if it acquires Great Western. The organization is angry at Great Western over previous charges most of them already settled that the thrift allegedly misled older people into using their savings to buy shares in Great Western mutual funds.

“It’s a propitious time to do this,” said Norma Resnick, chairwoman of the seniors’ group. “Anyone who wants to achieve a goal has to work with the situation and take action at the proper time.”

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