Unanswered Questions About the Merger

Since this merger was announced in July 2014, community advocates have been asking questions of the two banks and of their regulators, and we’ve rarely gotten answers or complete answers.  In February, the Federal Reserve asked some questions of the banks, unfortunately the bank attorneys dodged the questions asked by their regulators, cherry-picked the data they chose to report on, and used semantics to make their checkered histories sound better.

Here are the outstanding questions that taxpayers, California communities, former IndyMac mortgage clients, and reinvestment advocates would like the regulators and banks to answer:

1) Exactly how many families (throughout the US) has OneWest Bank foreclosed on after taking over IndyMac in 2009?  How many more families are in OneWest’s foreclosure pipeline?

2) Are the Federal Reserve, OCC, FDIC, HUD, and CFPB all 100% confident that OneWest Bank processed all of its foreclosures legally and submitted only legitimate, legal reimbursement claims to the FDIC for costs related to foreclosures? We ask because there’s A LOT of evidence to suggest otherwise:

3) Speaking of foreclosures, how many widowed homeowners like Karen Hunziker have been foreclosed on or are facing foreclosure by Financial Freedom, a subsidiary of OneWest Bank because their deceased spouse was the only person listed on the reverse mortgage? (mortgage brokers often encouraged this arrangement, with promises that the younger spouse- often a woman- could be added to the loan later or could stay in the house until she died)

4) Is there a good reason why OneWest Bank’s lending record to Asian American homeowners is less than half the industry average?  Has OneWest taken any steps to correct this problem?  Are regulators concerned about the fair housing implications of OneWest’s lending record?

5) Does the Federal Reserve agree with OneWest Bank’s argument that the bank is exempt from following the California Homeowner Bill of Rights?  Has it informed Attorney General Kamala Harris, who submitted an amicus brief against the banks claiming that the Homeowner Bill of Rights doesn’t apply to them?

6) The attorneys for the two banks tried to keep OneWest Bank’s Community Reinvestment Act plan confidential and not available to the public.  Now that the public has seen it, we see that the plan acknowledges affordable housing as a major crisis in California (leading one to believe that the bank would do something about it), and also called for a more generous reinvestment plan for California communities vs. the updated plan the banks put out exactly one day before the Fed held a public hearing on the merger.  Can the CEOs of the banks explain the discrepancy in the plans and why the banks changed course?  Moreover, according to CRC analysis, OneWest wasn’t able to meet the goals it laid out for itself in its earlier plan.  Should communities and regulators be concerned?

7) According to our rough calculations, the CRA plan proposed by OneWest and CIT Group calls for a level of CRA activity equivalent to about 4% of the bank’s deposits.  This stands in sharp contrast to other peer banks and even to smaller banks like Banc of California, who made a commitment to 20%.  Can OneWest and CIT Group explain why their plan is so little in comparison to their peers?  Do they agree that there is some irony in two banks who wouldn’t be alive but for FDIC and taxpayer subsidies declining to make a robust reinvestment commitment?

8) While the banks have assured California communities that the banks are ready to merge and cross the Systemically Important Financial Institution threshold of $50 billion, would the banks be able to do this without the $2.4 billion (total) that the FDIC expects to pay to OneWest under a controversial shared loss agreement?  Or, do the banks need that ongoing subsidy?

9) Do the leaders of the bank see any irony in assuring regulators not to worry, because there will be extra supervision of their bank because it will cross the $50 billion threshold, but then at the same time, spending over $6,000 a day lobbying to get that threshold raised?

10) In 2009, CIT Group tried to publicly pressure (unsuccessfully) the FDIC into giving it more subsidies after it had already received $2.3 billion in TARP from US taxpayers.  Are the CEOs of these two companies willing to sign a pledge that they won’t ask for anymore bailouts?

11) If this bank merger is approved, CIT Group plans to lower its tax bill using its 2009 bankruptcy (you know, the one where it magically erased its $2.3 billion loan from taxpayers). Do the CEOs understand why this might frustrate your average taxpayer?




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