Paulina Gonzalez, executive director of the California Reinvestment Coalition, released this statement today:
“Mr. Otting’s nomination is another example of this president’s preference for filling key regulatory posts with Wall Street executives and former bankers with problematic track records. We can’t think of a worse choice for this important position. Less than three weeks ago, Mr. Otting’s former bank agreed to pay $89 million as part of a settlement with the US Department of Justice for alleged reverse mortgage fraud. The Dept. of Justice said the alleged fraud happened between March 2011 and August 2016, and Mr. Otting was CEO for most of the time (Oct 2010 until he was terminated in Dec 2015) this fraud is alleged to have occurred.
As CEO of OneWest Bank, Mr. Otting worked against the interests of Main Street homeowners, small business owners, seniors, and communities of color. His track record at the bank led to a redlining complaint that our nonprofit filed against the bank, an ongoing investigation by the New York Attorney General into problems at the bank’s reverse mortgage subsidiary; investor disclosures about material weaknesses at the company; one of the most problematic foreclosure records of all the banks in California; and a consent order with the Federal Reserve that’s still in effect.
The Comptroller of the Currency is one of the most important jobs in the nation for ensuring that large banks (including Mr. Otting’s former employer) are well-capitalized, well-regulated, and don’t engage in illegal or harmful practices against their customers. We imagine the Senate Banking Committee will have a great deal of questions about the many challenges Mr. Otting had in following the rules while running one bank in Southern California, and whether he’s truly qualified to serve as a regulator for over 1,400 banks.”
Joseph Otting and OneWest Bank: A Record of Cut Corners and Financial Heartaches
A Laggard at Small Business Lending: The Los Angeles Times labeled OneWest Bank a “laggard” after analyzing its small businesses lending record, citing its preference for private equity deals, and also noted the bank’s higher than average amount of insider loans.
Foreclosing in California, but not Lending: On the consumer side, the bank was about nine times as likely to foreclose on a homeowner living in a community of color as compared to originating a mortgage to a homeowner in a community of color.
Protecting Seniors Will Kill Jobs? Mr. Otting also served as chair of the California Chamber of Commerce. While he was chair, the Chamber labeled a state bill to protect widows and widowers from needless foreclosure a “jobs killer.” This designation prevented the bill from advancing in the California legislature that year and more California seniors likely lost their homes unnecessarily as a result.
Petition to Federal Reserve Chair Yellen: In trying to secure approval for OneWest’s merger with CIT Group, Mr. Otting infamously created an online petition urging Federal Reserve Chair Yellen to not hold a hearing on the proposed merger. Mr. Otting then asked his friends on Wall Street to sign it. In Mr. Otting’s judgment, his friends on Wall Street, thousands of miles away, were somehow better situated to provide input on a California bank merger than the community members who were actually going to be impacted by the merger. Advocates also raised questions about suspicious timing and email addresses for a number of the alleged “supporters” for the online petition by Otting.