A California group that advocates for low-income borrowers is calling on regulators to hold hearings on the biggest U.S. bank sale of 2014. The target of that deal, OneWest Bank, is pushing back in an unusual way.
OneWest Chief Executive Officer Joseph Otting sent an e-mail to his contacts on Wall Street this week asking for help to discourage bank overseers from holding public hearings on its $3.4 billion takeover by CIT Group Inc.
Otting’s e-mail includes a link to a petition addressed to Federal Reserve Chair Janet Yellen and others stating that “there is no need for a public hearing.” The contents of the e-mail were described by executives at investment banks who received the message and spoke on the condition that they not be named so as not antagonize a potential client.
“I have never heard anything like this,” said Bert Ely, an independent banking consultant. “It strikes me as unusual and kind of overkill, unless possibly there is a problem that hasn’t surfaced publicly yet that they are trying to mitigate or minimize.”
OneWest is the former IndyMac Bancorp, which failed in 2008 and was acquired by a group of investors including George Soros and John Paulson the next year.
“It’s general business practice to solicit comments from key constituencies, including customers, community organizations and trade associations, to highlight the support a proposed merger/transaction has within the community,” David Isaacs, a spokesman for OneWest, said in an e-mailed statement. Representatives of CIT and the Fed declined to comment.
IndyMac’s 2009 sale by the Federal Deposit Insurance Corp. was the target of protests by foreclosed homeowners outside the residence of Steven Mnuchin, its chairman. Mnuchin, a former Goldman Sachs Group Inc. partner, brought together Soros, Paulson and others including Michael Dell to acquire IndyMac for about $1.5 billion.
Those backers agreed last July to sell Pasadena, California-based OneWest to CIT, the New York business lender run by John Thain, and that’s revived the protests.
A copy of Otting’s e-mail was forwarded to Bloomberg News by Kevin Stein, associate director of the California Reinvestment Coalition, or CRC, which advocates for low-income borrowers and is a primary opponent of the deal.
His group, which organized a protest at OneWest’s headquarters in December, has argued in letters to state and federal regulators that the deal will create another “too-big-to fail” bank. The transaction would enrich OneWest management with little benefit to the community, CRC said.
Below a message titled “Show your support for OneWest Bank,” visitors to the OneWest website are encouraged to add their name and address to a form letter to Yellen.
“This merger will retain and create new jobs in California,” the letter reads. “I believe the management team and OneWest have demonstrated its commitment to our community and to serving the needs of not only their clients but the community at large and due to this, I do not believe there is a need for a public hearing.”
Regulators have made it harder for big banks to merge since taxpayers bailed out the largest U.S. lenders during the financial crisis. M&T Bank Corp.’s $3.7 billion deal for Hudson City Bancorp. Inc. has been stalled since 2012. The Fed delayed Capital One Financial Corp.’s $9 billion acquisition of ING Groep NV’s online bank for public hearings.
The CIT deal is slated to close in the first half of 2015, pending approval from the Fed and Office of the Comptroller of the Currency.
CIT would have $67 billion in assets and 73 branches after buying OneWest, according to an investor presentation in July. At that size, CIT would become the 36th largest bank holding company by assets, according to regulatory data.