Tonight at 5 p.m., the Banking Department of the state of Connecticut will hear public testimony on the New Haven Saving Bank’s scheme to merge with two smaller banks and demutualize. For the sake of working people in this city and the health of the regional economy, this is a scheme the state should reject — just as the bank’s depositors would overwhelmingly have rejected the turnover of their collectively owned bank to Wall Street decision makers. Unfortunately, last month the bank successfully lobbied the FDIC for a waiver to bypass a depositor vote. This is only the latest sign of the bank’s disregard for the New Haven community — a disregard which can only become more flagrant if the bank is allowed to go public and end a 165-year tradition of mutual ownership.
While New Haven Savings Bank CEO Peyton Patterson wrote recently that the bank “remains committed to helping build and maintain the economic and social vitality of our South Central Connecticut community,” research by the Connecticut Center for a New Economy into the bank’s lending policies over the past five years demonstrates a callous lack of concern for the impact of its lending patterns on the economic security of poor and minority families and their pursuit of livelihood and homeownership.
In each of the past five years, the bank has made more mortgage loans to upper income neighborhoods than to low- and moderate-income neighborhoods combined. Each year over 81 percent of loans have gone to over 90 percent white census tracks, while under 3.5 percent have gone to census tracks which are majority minority like much of New Haven. Even compared to peer institutions, the bank has failed to deal equitably with low-income families, making only 1.2 percent of its loans to low-income census tracks. Low-income whites, however, were more likely to have their applications accepted by the bank than even upper-income blacks.
Under the Community Reinvestment Act, beneficiaries of federal deposit insurance like the New Haven Savings Bank must work to “meet the credit needs of the communities in which they operate.” The authors of CCNE’s report, however, found that the Bank “has not met the credit needs of the entire community from which it draws deposits.” The New York-based Fair Finance Watch/ Inner City Press reached a similar conclusion, based on what Coordinator Matthew Lee identified in these pages (“Savings Bank changes merit students’ attention” 10/23) as “strikingly different” market shares of mortgages to whites and minorities.
The New Haven Savings Bank’s use of its economic and institutional power in this community over the past five years demands the condemnation of all New Haveners — students among them. It also makes this the most absurd, and most dangerous, moment for the bank to go public and dismantle the mutual ownership, which represents the only control — however tenuous — the community has over the bank. Should the bank go public, it is poised to make an estimated sum of hundreds of millions, as money that is now invested in this city is transformed into generous stock options for the current board of the bank. Then a community struggle to keep the bank accountable becomes a community struggle to keep the bank in New Haven. As Lee noted, 23 out of 25 Connecticut mutual banks that went public in the past two decades were then sold away to larger banks, following a national trend. Perhaps the most egregious example was the Cambridgeport Bank, which was sold four days after the mandatory three year wait after going public, at a $10 million profit for CEO Jim Keegan, who had promised in language stronger than Peyton Patterson’s that the bank would never be sold. This may be why Patterson’s predecessor predicted that the New Haven Savings Bank “will not be here in five years.”
In its lawyer’s letter to the FDIC, the bank offered a perverse plea to circumvent a vote by the bank’s depositors because of the danger from “politically aligned” groups “regularly engaged in anti-business activities.” It warns, “Requiring a depositor vote will serve their interests by providing them with another forum to assert their political views.” What’s splashed across the pages of the letter is a thinly-veiled contempt for working people — and for any democratic process that gives them voice — all too commonly displayed by corporate institutions in this city and this nation. The bank’s appeal for help wielding off a “well organized, politicized and well financed” opposition is ironic coming from a conglomerate of the most powerful electrical, medical, media and financial companies in the region: United Illuminated, the New Haven Register and Yale-New Haven Hospital, whose leaders sit on the bank’s board.
Each of these companies has a stated policy of social responsibility and a record towards working people that has been the subject of sustained community criticism. These are interconnected problems that demand interconnected solutions. Over the past years, tremendous movements have mobilized in this city to fight for corporate practice in New Haven, and over the past months, they’ve won a series of tremendous victories, most recently the announced changes in Yale’s Homebuyer program and the hospital’s debt collection policies.
Tonight, in response to sustained communal outcry, the state is demanding of these interests what the federal government failed to: that they confront and hear from the working people who risk paying the costs of their latest project. We, as students, should be there to stand with those in our community who are fighting to maintain and reform a mutual bank against those who would render it the latest casualty of distorted priorities.
Josh Eidelson is a sophomore in Jonathan Edwards College.