The debate over the New Haven Savings Bank’s proposed conversion into a joint-stock corporation continued Thursday night with a heated public hearing in which bank officials and local politicians squared off over the controversial plan.
At a standing-room-only meeting in Hamden that featured picket lines and a raucous crowd, NHSB President and CEO Peyton Patterson and several state and local officials opposing the conversion — including Connecticut Attorney General Richard Blumenthal LAW ’73 and New Haven Mayor John DeStefano Jr. — presented their cases. With over 120 people signed up to speak, State Banking Commissioner John Burke, who had taken the unusual move of convening a public hearing last month, announced after three-and-a-half hours of testimony that he would call another meeting within the next two weeks.
In a presentation at the beginning of the hearing, Patterson said the bank — which is the largest recipient of deposits in the New Haven area — needed a new strategy to compete with larger banks like Wachovia.
“We want to be a player in the Connecticut marketplace to maintain our competitive advantage,” Patterson said.
In July, NHSB announced it would seek to both “demutualize” into a publicly traded stock-holding corporation and acquire the parent companies of the Savings Bank of Manchester and Tolland Savings Bank. Since the announcement, however, DeStefano and several other local political and community leaders have argued the conversion will hurt depositors and eventually lead to a takeover by an out-of-town bank.
Last month, the Federal Deposit Insurance Corporation approved a waiver that allows the bank to undergo a conversion without a vote of its depositors. Like other mutual savings banks, NHSB is owned collectively by its depositors.
During his testimony, DeStefano questioned whether a conversion provided any economic benefits, while sharply criticizing the process through which the bank has attempted to convert its ownership structure. DeStefano, who said he had “never seen anything as disappointing” as the bank’s actions in his 10 years as mayor, pledged that the community was determined to see a fair process.
“I guarantee you — this is not going to go away,” DeStefano said.
Over the last week, the city has paid for radio advertisements and phone calls to New Haven residents asking them to speak out in opposition to the conversion proposals. In response, the bank has argued that its plans represent efforts to grow that are both typical and necessary in the industry.
Throughout the meeting, emotions ran high in a crowd that was largely in opposition to the conversion plan. At the request of the bank, police conducted searches with metal detectors at the door — an effort that infuriated conversion opponents who said it was another indicator of bank leaders’ unwillingness to engage in an open process with the local residents.
But Patterson and several others said NHSB has taken an active role in the local community over its 165-year history. Defending the bank against charges it does not lend sufficiently to low-income and minority borrowers, Patterson said the bank would devote $27.5 million to “low- and moderate- income loans and investments” in addition to donating $30 million to its charitable foundation.
“We clearly want to demonstrate, as we have for many, many years, a much higher level of community support,” Patterson said.
But Blumenthal, who called efforts to challenge the bank’s conversion a “historic” precedent, said he believed the pledges were not enough.
“In this instance, the community commitments need to be larger,” Blumenthal said. “But equally important, they need to be enforceable.”
Opponents of the bank’s conversion — who included all but two of the more than 20 elected officials who testified — advocated different approaches varying from a two-year moratorium on conversion to a depositor vote on a plan.