Dozens of community groups oppose WaFd-Luther Burbank deal

More than 50 organizations, including many housing activist groups in California, are opposing Washington Federal's pending acquisition of Luther Burbank, citing a litany of concerns about the deal.

The groups, led by the California Reinvestment Coalition, are asking the Federal Deposit Insurance Corp. to withhold its approval unless substantial conditions are imposed, though it did not specify the conditions.

They are also urging the FDIC to hold public hearings on the proposed merger. The FDIC is the primary federal regulator of both banks and is one of several agencies that must approve the agreement before it can be finalized.

The $654 million deal, announced in November, would create a combined institution with around $29 billion of assets and 210 locations in nine states, mostly in the Western U.S.

"The proposed merger threatens to result in lost jobs for California workers, fails to demonstrate it will meet the convenience and needs of impacted communities, fails to demonstrate a public benefit, and raises questions and concerns about managerial resources, systemic risk, and respect for regulatory oversight," the groups wrote in a letter to the FDIC.

Signatories of the Feb. 3 letter include the Greenlining Institute, the Woodstock Institute and the union-backed Committee for Better Banks. Also signing the letter were the Sacramento Housing Alliance, the San Joaquin Valley Housing Cooperative, the Housing Rights Committee of San Francisco and the Fair Housing Council of the San Fernando Valley.

Santa Rosa, California-based Luther Burbank has 10 branches in California and one in Washington state. For Seattle-based Washington Federal, which is known as WaFd Bank, the deal would mark its entrance into the nation's most populous state.

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A WaFd spokesperson provided a written statement on behalf of both banks.

"We respect the process of soliciting input from impacted stakeholders and look forward to discussions with the groups to understand their perspectives," the statement read. "Ultimately our objective will be to work together to find a path forward whereby the combined organization can and will do more good in our communities than has previously been accomplished."

The specific issues raised in the community groups' letter to the FDIC include: concerns that Luther Burbank's multifamily lending business provides financing to landlords who seek to displace tenants in favor of wealthier occupants; concerns about WaFd loans to oil and gas companies; and concerns about Luther Burbank's record in mortgage lending to minority borrowers.