The efforts of city and state officials have yet to stall plans for New Haven’s largest local bank to be bought by one based in New York.
First Niagara, a Buffalo-based bank, has offered to buy New Haven-based NewAlliance Bank for $1.5 billion. NewAlliance shareholders almost unanimously voted to approve the sale of the bank on Dec. 20, according to a press release, despite a concerted campaign by critics such as Mayor John DeStefano Jr., who fear the loss of a local institution.
With the support of newly elected Senator Richard Blumenthal LAW ‘73 and U.S. Rep. Rosa DeLauro, city officials are promising to continue lobbying for a regulatory intervention.
“We hope to create as many opportunities as we can to press the case that this [sale] does not serve the economy of Connecticut,” DeStefano said.
DeStefano has written to the Federal Reserve Bank of New York, the state banking commission, and the comptroller of the currency, arguing to each agency that by law, approval of bank mergers must take the “convenience and needs of the community” into account. The merger, he wrote, could have disastrous consequences for New Haven community because it would “reduce the credit available to low- and moderate-income individuals, small businesses and homebuyers, and cause significant job losses.”
Ward 1 Alderman Michael Jones ’11 said he was concerned that First Niagara would not have the relationships with the New Haven community that NewAlliance has and would not serve it adequately.
“At the end of the day, people are more than just dollars and cents on balance sheets,” Jones said.
Still, executives at both NewAlliance and First Niagara maintained that the merger will not be detrimental to New Haven residents.
“This combination delivers significant value to our stockholders, creates an even stronger financial institution, enhances our high quality service and product offerings for customers and increases the support of our communities in New England over the long term,” NewAlliance CEO Peyton Patterson said in a press release.
In a statement responding to the mayor’s concerns, First Niagara vice president Leslie Garrity said the bank has already appointed about 10 NewAlliance executives to key positions in the combined bank, which will maintain NewAlliance’s positive footprint in the New Haven community.
But Ward 29 Aldermen President of the Board of Aldermen Carl Goldfield said the sale of NewAlliance is emblematic of broader problems in the nation’s financial system, which he says is becoming too consolidated.
“Too few people can dictate the terms of our financial system,” Goldfield said. “I’m not a flaming liberal–I believe it’s okay for people to make money–but there is a danger to this level of concentrated wealth.”
Goldfield added that he was opposed to the conversion in 2003 that turned New Haven Savings Bank into NewAlliance. DeStefano led an unsuccessful campaign then to prevent the bank from regionalizing and becoming a publicly traded company.
Outside the NewAlliance headquarters on Church Street on the afternoon of Dec. 8, Blumenthal joined DeStefano despite freezing gusts to call for public hearings before the Federal Reserve Bank of New York approves the merger. While the city’s lobbying efforts are ongoing, DeStefano said he does not expect a decision by regulators in the very near future.
“This is a process,” he said.
If regulators do not prevent the merger, the 195 Church St. headquarters of NewAlliance Bank will become First Niagara’s New England regional headquarters.