bank rates

CIT Purchase Of OneWest Generates Controversy at Los Angeles Hearing

I supported CIT Group’s proposed acquisition of OneWest Bank at a hearing in Los Angeles last week because I think it will be good for savers – or at least some savers.

But the deal took heavy flak at a public meeting held by two government regulators that must approve the deal, the Federal Reserve Board and the Office of the Comptroller of the Currency.

Opposition was expressed by an array of community action and consumer advocacy groups, as well as individual OneWest customers.

Their objections included assertions that:

  • The merger of online-based CIT Bank with Southern California branch-based OneWest, would create a new “too big to fail” institution (about $67 billion in assets) without any significant public benefit.
  • The track records and future commitments of the two banks in the areas of community-based lending under the Community Reinvestment Act are inadequate.
  • The merger fails to address and remedy certain heavy-handed foreclosure and reverse mortgage practices at OneWest.

A number of equally committed (and equally vociferous) groups and individuals expressed support for the merger.

These included an assortment of civic, faith-based and minority-based organizations throughout Southern California, including advocates for minority-owned small businesses.

I testified briefly on behalf of a group sorely underrepresented in bank executive suites and regulatory hearing rooms: SAVERS.

I told the regulatory panel that, as an investor who chases CD deals on the Internet, I probably wouldn’t benefit from the merger.

In all honesty, I usually can get higher returns on certificates of deposi at online-oriented banks, such as the current CIT, than at banks that focus on brick-and-mortar branch deposit-taking, as, I believe, will the combined CIT-OneWest.

Nevertheless, I expressed support for the merger on the grounds that it would likely benefit the bulk of savers in Southern California who don’t have the time or energy to chase rates like I do.

It should be particularly positive for senior savers who prefer to bank at a physical branch and are uncomfortable using Internet-only banks.

I emphasized that my support assumed the combined bank would adopt what I consider the innovative and saver-friendly culture of CIT, demonstrated by its current suite of online savings products and special rate promotions for existing customers.

Frankly, my testimony was less a statement to regulators than a plea to the CEOs of the two banks (who sat in the audience) to embrace, post-merger, CIT’s positive approach to savers.

I hope that, should the deal ultimately pass regulatory muster, my plea will be heeded.

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Comments (2)
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2 Existing Comments
  1. James Barnes said:
    on March 1st at 09:00 pm

    Thanks very much for doing this!

  2. Advocate said:
    on March 6th at 05:02 pm

    Hi Charles, strange- no mention of the $2.3 billion in TARP that CIT Group took from taxpayers and never paid back? Or the $2.4 billion that OneWest is expected to pocket from foreclosing on IndyMac loans?