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Protests by community groups and now a public hearing threaten to delay the completion of CIT's acquisition of OneWest Bank. The deal will probably get approved, and it might not get delayed too long, but all those "probablys" and "mights" are what make the proponents of more big M&A queasy.
February 6 -
A government tool for unloading failed bank assets and minimizing FDIC losses may be used as a vehicle to publicly subsidize private gains in the proposed merger between CIT Group and OneWest Bank.
November 20 -
The $44 billion-asset specialty lender viewed its pending purchase of OneWest Bank as its way to get significantly over the $50 billion threshold for systemically important financial institutions. But CIT CEO John Thain is all for a proposal that would raise the SIFI bar higher.
October 28
Few bankers want to hear consumers and community groups rehash grievances from the financial crisis.
But two bankers John Thain, the chief executive of CIT Group, and James Otting, the CEO of OneWest Bank are expected to get an earful at
Dozens of community groups, minority coalitions and churches are expected to protest CIT's
The hearing is expected to last at least eight hours, with 20 panels, a three-page long roster of speakers and an "open microphone" at the end.
"We want them to be transparent about how they will serve the community in a way that reflects the size of the organization they are to become," said
The community groups have plenty of ammunition against the CIT-OneWest merger and may direct some of their ire against regulators. The two banks have received nearly $5 billion in corporate subsidies, Stein said.
CIT, a $48 billion-asset specialty finance company based in Livingston, N.J., received $2.3 billion in taxpayer support from the Treasury Department's Troubled Asset Relief Program. But that infusion was wiped out in 2009 when CIT filed for bankruptcy.
The $23 billion-asset OneWest, based in Pasadena, Calif., received lucrative loss-sharing deals from the Federal Deposit Insurance Corp. that are expected to
The combined bank would have $70 billion in assets and 73 branches. Nearly all of those branches belong to OneWest; only two of them are located in low-income areas, Stein said.
Much of the criticism at the hearing is expected to be directed at OneWest, created in 2009 from the failed subprime lender IndyMac, which was responsible for 35,000 foreclosures in California alone. Some seniors also are expected to complain at the hearing about OneWest's reverse mortgage business resulting in foreclosures for some nonborrowing spouses.
Public hearings are held for most large bank mergers primarily as a way for community groups to let off steam. But no bank merger has ever been stopped by community protests, though some have been delayed by a few months, said Robert Gnaizda, the retired co-founder and policy director of the Greenlining Institute, in Berkeley.
Some community groups are supporting the merger primarily because the two banks have agreed to invest $5 billion over four years in small business loans and residential mortgage lending, according to a draft proposal. The merged company would develop an annual plan to meet the needs of five assessment areas in Southern California, stretching from Oxnard to San Diego, with the goal of receiving an "outstanding" Community Reinvestment Act rating.
Speaking last month at an
