In the face of fierce winds blowing outside the main office of New Haven Savings Bank yesterday, New Haven Mayor John DeStefano Jr. issued a “Call to Action” against the bank’s current conversion plan in front of about a dozen spectators and television cameras on the blustery street corner.
The 165-year-old bank is currently depositor-owned, with a board of directors comprised of community leaders. The bank’s officials have proposed a conversion plan that would decentralize ownership and offer shares in the institution, converting it from a mutual to a capital-stock bank.
DeStefano said he has four goals for the NHSB: that no bank officers should profit internally, that the bank resolve poor racial lending practices, that the bank participate in more philanthropic endeavors, and that the board of directors become more representative of the community.
The mayor urged residents to rally behind him at Thursday’s Connecticut banking commissioner’s public hearing, where the issue will be addressed.
“We are going to get louder, more assured in our opposition, and no matter how strong the wind blows, we are not going away,” he said.
Phyllis Homicz and Marie Criscuolo, both NHSB depositors, said they braved the strong winds outside to see DeStefano speak because they agree with his cause.
“Everything he said was true. We were depositors for many, many years, and they want to take it away. They should have more to say to the depositors,” Homicz said.
Roland Lemar, New Haven’s public information officer, said DeStefano is trying to ensure the best possible outcome for New Haven.
“For 165 years the New Haven Savings Bank has been focused on New Haven,” Lemar said. “It supports many local charities, sponsors events on the green including the International Festival of Arts and Ideas, and has engaged in slightly progressive lending practices. The mayor is concerned that we will lose an aspect of the community that we can’t get back.”
Lemar also expressed DeStefano’s fear that if the conversion plan goes through, the city’s only remaining community bank will be taken over by external financial institutions within a matter of years, as has happened with similar banks in the past.
DeStefano said by losing the New Haven Savings Bank, the city could lose up to $400 million in assets to internal bank management and out-of-town interests, and compared it to the loss of $1 million in the Enron scandal.
“Enron — will look like cheap stuff if [the bank's managers] have their way,” he said.
Since the announcement of the proposal, DeStefano has made several attempts to stop the conversion plan from becoming a reality. He fought to have a depositor vote on the issue, but the bank applied for a waiver through the Federal Deposit Insurance Corporation, Lemar said.
The FDIC granted the waiver despite opposition by DeStefano and his supporters.
“The bank’s management didn’t even want the owners to vote,” DeStefano said. “They took advantage of a loophole — and in one hour they voted to kill 165 years of work.”
Lemar said the goal of Monday’s “Call to Action” was to get as many people as possible to go to the state’s banking commissioner’s public hearing on Thursday to show the large amount of opposition to the plan.
“In the mayor’s words, ‘I tried the nice tactful way by using my position, but now we’re going to rally, now we’re going to approach the bank directly,'” Lemar said.