CalFed Deal to Be Discussed
Unable to persuade the Federal Reserve Board to hold a public hearing on Citigroup Inc.’s proposed takeover of California Federal Bank, community groups have scheduled their own hearing next week at a state office building in downtown Los Angeles.
Questions about whether Citigroup’s sub-prime lending businesses have been fair in their treatment of people with bad credit or little credit history probably will top the list of concerns aired at the hearing, said hearing organizer Robert Gnaizda.
The groups also will raise issues involving Citigroup’s huge credit card business, as well as its commitment to making residential and small-business loans to minorities, said Gnaizda, policy director for the Greenlining Institute, a San Francisco organization that lobbies for improved financial services in lower-income and minority neighborhoods.
The hearing will be held Aug. 21 from 10 a.m. to 3 p.m. at the Ronald Reagan State Building, 300 S. Spring St. Use of an auditorium in the building was arranged by state Assembly Speaker Herb Wesson (D-Culver City) and Assemblyman Marco Firebaugh (D-Los Angeles), who heads the Latino Caucus in the Assembly. Former California Supreme Court Justice Cruz Reynoso will preside.
Both the Federal Reserve and the Office of Thrift Supervision, which regulates savings and loans such as CalFed, must approve the proposed takeover.
The Greenlining Institute had pressured both agencies to schedule public hearings on the case, but the Office of Thrift Supervision held its hearing behind closed doors and the Fed, while asking Citigroup dozens of written questions about its sub-prime lending practices, has never suggested it will hold any hearings.
“So that’s why we’re holding our own,” Gnaizda said. He said Greenlining hopes to show the depth of concern felt by California community groups and will provide transcripts of the proceedings not only to the Fed but also to Treasury Secretary Paul O’Neill, who oversees the Office of Thrift Supervision, and to legislative banking committees and minority caucuses.
Wesson spokeswoman Patricia Soto said the speaker wanted to encourage public discussion of the takeover and Citigroup’s practices. While not an official state proceeding, the hearing “is something he thought was important for the community,” Soto said.
Citigroup, the nation’s largest financial services company, announced May 22 that it had agreed to buy CalFed’s parent, San Francisco-based Golden State Bancorp, for $5.8 billion in cash and stock. The deal would give the New York bank 335 additional branches in California and 17 in Nevada.
In evaluating the transaction, banking regulators are required among other things to consider whether fair-lending and equal-credit laws are being satisfied.
Citigroup said last month that it would commit $120 billion in loans and investments over 10 years to minority and lower-income customers in California and Nevada. But the plan met with skepticism from the Greenlining Institute and other groups, which said they wanted an even bigger commitment with more specific pledges of how the money would be distributed.
The community groups raised their concerns at the closed-door hearing called by the Office of Thrift Supervision last month.
The Greenlining Institute invited Robert T. Parry, president of the Federal Reserve Bank of San Francisco, to attend next week’s hearing. A spokesman said Parry wouldn’t attend and noted that the Fed’s central board in Washington is considering the merger.
Greenlining also invited Citigroup Chief Executive Sandy Weill to open the hearing with a presentation on the benefits of the merger. Citigroup spokesman Steve Silverman said the company hasn’t decided whether it will send a representative, noting that executives of the company already “have had numerous meetings with Greenlining. While we ultimately did not reach agreement with them, we went ahead and unilaterally made a tremendous commitment to the people of California and Nevada.”
