New Haven Mayor John DeStefano Jr. will meet with State Banking Commissioner John Burke today to discuss New Haven Savings Bank’s plans to convert from a mutual to a capital-stock bank.
The proposed changes have sparked an outcry from DeStefano and several New Haven community leaders, who have argued that the converted NHSB — whose shares could be publicly traded — would no longer serve in the best interests of area residents. But the bank scored a victory on Monday when the Federal Deposit Insurance Corporation rejected the entreaties of the mayor and the New Haven Board of Aldermen and approved NHSB’s request to waive a depositor vote on the proposed conversion.
With the bank now free to pursue conversion without a depositor vote, both the bank and the mayor said they are turning their focus to the Connecticut Department of Banking, which must approve the conversion plan. While DeStefano plans to voice his concerns to Burke today, the department will also hold a public hearing over the conversion plan in Hamden on Dec. 4.
Applications necessary for NHSB’s conversion and merger with Tolland Bank and Savings Bank of Manchester are still pending with the FDIC, the Connecticut Department of Banking and the Federal Reserve Bank of Boston. While NHSB argues that the changes would make it more competitive, opponents believe the conversion would make it easier for NHSB to be bought out by larger competitors.
DeStefano said the waiver request was only a “first step” in the process of conversion. He said he thought the FDIC’s prolonged consideration of the city’s concerns demonstrated the merits of its argument against changes in the bank’s structure.
“While the outcome was disappointing, it was predictable because the FDIC has never rejected a waiver request in the past,” DeStefano said. “Even though the waiver was granted, it allowed people to focus on what the New Haven Savings Bank was trying to do.”
DeStefano said he asked to meet with Burke to make sure the State Department of Banking understood the city’s concerns over the bank. Jim Heckman, the director of government and public relations for the Connecticut Department of Banking, said the commissioner and his staff were still reviewing the bank’s application for conversion.
But New Haven Savings Bank Senior Vice President Paul McCraven said despite public concern over the bank’s lending practices and its conversion, NHSB has been a “strong leader” in economic development and an “essential part of the community” by serving on boards and supporting organizations throughout New Haven.
“The fact that the FDIC has approved the waiver proves we are doing things in the proper manner,” McCraven said. “We are looking forward to the public hearing. We’ll appreciate the opportunity to get our side of the story out.”
Matthew Lee, executive director of the community advocacy group Fair Finance Watch in New York, said he was not surprised by the FDIC’s approval to waive the depositor vote. But Lee said he thought the choice was not concurrent with the community’s best interests, as customers will not be given input in the decision.
“It’s another sleazy step down the road,” he said. “It’s almost like a credit union saying, ‘Screw the members.'”
Lee said it is important between now and the Dec. 4 hearing that community members send comments or complaints to the Federal Reserve Bank of Boston in order to force the bank to improve its practices.
“It’s the regulator’s job to make sure NHSB does a better job, so we’re appealing to the regulator,” Lee said.
NHSB announced the plan of conversion in July, and its corporators approved the plan for conversion on Sept. 8.