NLSLA and Councilman Cedillo Oppose Bank Merger, Demand Community Benefits
LOS ANGELES, CA – Federal regulators must reject the creation of the first new ‘Too Big to Fail’ bank since the financial crisis, unless One West Bank and CIT Group agree to make substantial affordable housing investments to help families and communities devastated by the banks’ unscrupulous practices.
Neighborhood Legal Services of Los Angeles County and Los Angeles City Councilman Gil Cedillo demand federal regulators halt the move or else force the banks to invest $2 billion in the creation and preservation of affordable housing.
Neighborhood Legal Services is a member of the California Reinvestment Coalition, a powerful coalition of community groups whose unwavering campaign forced the Federal Reserve to take the unusual step of holding a public hearing on the merger in Los Angeles Thursday, February 26.
Councilman Cedillo joined NLSLA and other California Reinvestment Coalition members at a press conference outside the hearing at the Los Angeles Branch of the Federal Reserve Bank.
NLSLA attorneys have for years witnessed the devastation these banks inflicted on low-income communities throughout Los Angeles County. The organization represented countless families struggling to hold onto their homes against banks like One West—which foreclosed on more than 35,000 homes during the foreclosure crisis despite promising federal regulators it would participate in loan modification programs.
“Families whose homes were taken now must reckon with procuring shelter in the midst of an affordable housing crisis,” said NLSLA Executive Director Neal Dudovitz. “Considering the billions of dollars in public subsidies these banks have turned into private profit, federal regulators must—at the very least—require them to invest in the preservation and creation of affordable housing in Los Angeles.”
During the financial crisis, CIT took $2.3 billion in TARP bailout money, but never repaid those funds because its subsequent bankruptcy wiped out its obligation to the taxpayers. One West acquired IndyMac after it was taken over by the FDIC, and the federal agency forced the public to subsidize One West’s losses on IndyMac’s assets. Under the proposed merger, none of the public subsidies would be paid back, but top executives would reap enormous compensation as part of the deal. Meanwhile, One West’s loss share agreement would be transferred to CIT, enabling the new bank to continue receiving public subsidies.