Housing advocates protest OneWest Bank's appalling record on foreclosures.
Two banks with troubled histories of foreclosures and squandered public bailouts are now asking the Federal Reserve to merge, making them “too big to fail”—and they are getting really creative in their tactics.
It is very rare for the Federal Reserve to deny bank mergers, but OneWest Bank is not taking any chances. They have set up an online petition to support the merger on the bank’s website that has netted 1,900 signatures.
The bank is even trying to pressure regulators to approve the merger with no public hearing, and the facts behind the two banks—OneWest and CIT Bank—make it clear why.
OneWest has a terrible record on foreclosures—they recently attempted to evict an 103-year-old Texas widow because she forgot to pay her homeowner’s insurance.
They are asking to merge with CIT Bank—who received $2.3 billion in taxpayer funds to help small businesses, and then filed for bankruptcy to be discharged of this obligation. If the Federal Reserve approves the merger, experts say they would become “too big to fail.”
Daily Kos was approached by consumer advocates, who asked for our assistance—so we set up our own online petition opposing the merger.
Please read below the fold for our progress so far.
I am proud to report that we are at over 11,000 signatures, and this “e-mail fight” caught the attention this week of the Los Angeles Times:
The liberal blog Daily Kos last week set up its own online letter generator to fire oppositions to the merger at regulators. In an email this week, California Reinvestment Coalition Executive Director Paulina Gonzalez told her allies that more than 10,000 Internet-generated letters of opposition had been sent, and asked for more.
Regulators and advocates alike said they'd never seen anything like it.
"This is a new one and very surprising," said John Taylor, chief executive of the National Community Reinvestment Coalition in Washington.
OneWest Bank thinks they can generate an astroturf campaign to approve the merger, but it’s clear that this has seriously backfired. The Federal Reserve never sees so much feedback on these bank mergers, and our counter-efforts have proven that the bank is outnumbered.
Moreover, as the L.A. Times reports, the backlash can make the bank’s investors nervous.
The email pressure also puts regulators "uncomfortably ... in the middle between the emerging bank and community groups," Thomas said, and "will be frowned upon by investors as being counter productive and ultimately costly in legal, consulting and other fees."
"OneWest and CIT should have done their CRA homework and realize that the Fed has never met a merger it does not like," Thomas said.
"Worse case scenario, the Fed tacks on some community or other commitments in a 'conditional approval,' but it will still be approved! So, why create all these problems and PR headaches?"
Daily Kos was very active
in the successful campaign to stop Larry Summers from chairing the Federal Reserve. As a result, Janet Yellen was confirmed.
Stay tuned for what happens to this merger.