CIT-OneWest Merger Gets Public Hearing

A Los Angeles community voices its concern over the $3.4 billion banking deal.
Katie Kuehner-HebertMarch 2, 2015

CIT Group’s $3.4 billion acquisition of OneWest – a bank arisen from the ashes of failed subprime mortgage lender IndyMac – was the subject of a rare public meeting on Thursday in Los Angeles.

CIT announced the deal in July, but due to immense pressure to force the combined company to improve OneWest’s low-income lending and foreclosure practices, the Federal Reserve and the Office of Comptroller of the Currency held a hearing in Los Angeles during which they heard from more than 100 people. The speakers included homeowners, members of the clergy, small-business owners, and advocates for the poor, as well as the banks’ chief executives, according to The New York Times.

Some of the speakers were particularly frustrated at OneWest’s reported practices because the company – along with CIT – received federal assistance after the financial crisis.

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“OneWest and CIT were saved by U.S. taxpayer subsidies and they have failed to return the investment to the communities they are required to serve,” Isela Gracian, a vice president at East LA Community Corporation, a neighborhood development group, reportedly said.

But OneWest’s chief executive Joseph M. Otting told the regulators that the bank had taken steps to improve its “low satisfactory” Community Reinvestment Act rating that it had received after its most recent bank examination, according to the Times.

Bank analysts said that regulators are intensely scrutinizing a number of acquisitions and mergers. They are still examining, for example, M&T Bank’s proposed acquisition of Hudson City Bancorp, more than two years after the deal was announced in August 2012.

At the same time, the financial industry is “ripe for consolidation” due to tepid loan demand, moderate economic growth, and costly regulations, the newspaper wrote.

“There are too many banks competing for too little business,” Keefe Bruyette & Woods analyst Christopher McGratty told the Times. “We feel pretty confident that more consolidation is going to happen.”