Yesterday, the FDIC seized seven more small banks and added them to the FDIC’s failed bank list which now numbers almost 140 bank seizures in 2009.
The 110th bank seized by the FDIC in 2009 is Park National Bank (PNB), which was seized on October 30, 2009, when the keys of this model community bank in Oak Park, IL, were handed over to US Bankcorp, a beneficiary of $6.6 billion in taxpayer bailout funds in 2008.
But something very different happened at PNB that is not happening anywhere else in the country: community organizers dug in to fight back. We are here to ask for Kossacks to join in our fight to wage a national campaign to stop the trend of "big bank swallows community bank." Please read below the fold and join our fight.
Specifically, we need your help to encourage House Financial Services Committee Chair, Congressman Barney Frank, to hold hearings on our disappearing community banks.
Before I dive in here, please take a moment to call Rep. Barney Frank (ask for staff member, Bill Zavarello - 202.225.5931), and ask him to schedule a January Hearing to discuss an appropriate use of remaining TARP funds to save community banks.
With lawmakers salivating over the prospects of spending $200 billion in leftover TARP money, on Wednesday, Dec. 9, President Obama outlined his plan for those funds. This article from the New Jersey Business News suggests tepid responses from business owners, so we wanted to suggest something that would have saved Park National Bank and helped Main St. First, a snip of Obama’s proposal:
Obama proposed eliminating capital gains taxes on small business investment and tax cuts to encourage small business hiring. He didn’t estimate how much revenue would be lost.
The plan drew lukewarm reviews from small business owners in New Jersey, many of whom said they may not qualify for the tax breaks proposed by the president.
Big bank (US Bankcorp) swallows First Bank of Oak Park and Park National Bank:
Park National Bank was owned by Mike Kelly, a philanthropic business owner who built a profitable, model community bank in Oak Park, IL. Kelly then reached out to serve mostly minority low-to-moderate income Chicago neighborhoods and suburbs. The FDIC took the keys from Kelly on Friday, October 30, 2009. On Monday, November 2, people demonstrated outside FDIC’s Chicago offices. Thus began the Coalition to Save Community Banking. The local paper used four articles to talk about the ordeal. The photos and headlines tell the story, but I suggest reading each article and getting to know this community. All four articles ran in the Nov. 3, 2009 Wednesday Journal of Oak Park and River Forest.
Article 1 – Austin Community Activists used signs to express their feelings in Westsiders stand up for one of their own
Article 2 - Oak Park Village President David Pope wrote a commentary titled, Mike Kelly a model for community leadership. Here’s an excerpt:
Park National has built a highly regarded and well-deserved reputation as one of the most community-minded banks in the country. That ethos stems directly from the leadership of Michael Kelly, who has proved himself over four decades to be a great banker and an even better person. Mr. Kelly has built a culture at FBOP centering on serving historically underserved communities because it is the right thing to do. In the case of Park National, doing well by doing good is a genuine way of life, rather than the sort of empty sloganeering that we too often witness emanating from today's C-suites.
Article 3 - FBOP deserved better treatment captures the takeover moment.
Regulators swooped in Friday night and branches were re-opened Saturday under the U.S. Bank flag. FDIC officials and U.S. Bank employees were on hand to calm fears, answer questions and put on a good front for customers and bank staff alike.
Article 4 – Long road to fed takeover talks about FBOP’s inability to secure TARP funds and Kelly’s efforts to secure $650M in private equity lines.
Troubles for FBOP Corp. began last fall when the U.S. government seized Fannie Mae and Freddie Mac, two federally sponsored mortgage companies. That seizure forced hundreds of banks to write down the value of their preferred shares in these companies to just about nothing. FBOP's loss was $855 million. Hope for a federal bailout was lost when, despite initial approval for funds from TARP - the U.S. Treasury's Troubled Asset Relief Program - FBOP was put off because guidelines weren't in place for small, privately held banks. Changes were made to TARP in February, but they instead rendered FBOP ineligible.
The Chicago Tribune’s John McCarron captures the essence of Kelly and what happened at PNB in this short snip:
It was typical of Mike Kelly to invest in companies with a social purpose. Before the crisis he had donated a substantial portion of Park National's profits to help build affordable housing, open charter schools and rehab foreclosed homes. Typical was a $22 million interest-free loan to build Christ the King Jesuit College Prep, now rising in the Austin neighborhood.
More important, long-term, was the way Kelly took over the struggling First Bank of Oak Park in 1981 and made loans that helped stabilize the village's racially integrating housing market. The branches Park National opened along Austin Boulevard became both anchors for, and bridges between, Austin and Oak Park.
Our proposal:
The way I see things, FBOP/PNB has proven its willingness and ability to lend to upstart businesses and homeowners at fair interest rates and still be profitable. Mike Kelly looked out for the entire community – not just himself or a group of unseen shareholders. It is simply unfair that the honest community banker is getting swallowed up by US Bankcorp that was given $6.6 billion in taxpayer bailout funds in 2008. Although Kelly sought bailout funds and tried numerous, creative avenues to keep PNB afloat, he ultimately lost the battle.
Instead of using leftover TARP money to dole out federal incentives directly to businesses, an effort should be made to stabilize community banks. And while there remains a great amount of controversy over the entire bank bailout idea, we, at the very least feel that there should be some public discussion – we want a hearing. Public, field hearings and house committee hearings are necessary to connect lawmakers to the realities we face in our communities.
What community organizers are doing and how can you help?
About 25 people representing diverse community organizations, churches, elected officials, local small businesses and concerned citizens have been meeting periodically to find ways to squeeze an ounce of justice out of the controversial TARP program.
From day one, organizers took to the streets to hold signs, gather signatures, call elected officials and get the word out through press events.
Representatives Davis and Rush joined community organizers in a press conference prior to initiating a petition drive. One organizer, Terry Finnagan said:
African-Americans in the thousands are willing to protest, agitate, and switch banks in support of a white billionaire they know and trust. Find me one titan of Wall Street who can make this claim.
The coalition has submitted over 1,000 signatures to Rep. Luis Gutierrez (D-Chicago) in seeking a field meeting with the FDIC in Chicago and hearings in Congress. The group is gaining momentum, but we really need your help! Please call Rep. Barney Frank - (ask for staff member, Bill Zavarello - 202.225.5931).