Coalition to Save Community Banking

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The Coalition to Save Community Banking is a group of several dozen metro Chicago organizations and individuals, including Chicago Democratic Socialists of America member Peg Strobel, that came together after the Federal Deposit Insurance Corporation (FDIC) seized the assets of a local community bank, Park National Bank (PNB) with two branches in Oak Park, Illinois, on October 30, 2009. PNB and eight sister banks (including several in California) were all owned by First Bank of Oak Park, Inc. (FBOP), which the FDIC then sold to US Bancorp, also known as US Bank. This seizure happened in the afternoon; that same morning, the Treasury Department awarded FBOP/PNB Initiatives (an affiliate of PNB) $50 million in federal "New Market Tax Credit" allocations to continue PNB's long-standing investment in under-resourced and minority communities. [1]

This compelling local story raises serious nation-wide issues concerning the takeover of community banks that invest in struggling communities by large banks that do not have a similar track record and probably don't share the mission.

Background

Mike Kelly, a white man and now former owner of PNB/FBOP, "has been a beloved figure in Chicago-area communities of color for decades because of his long-standing commitments and investments in these communities. He regularly reinvested about 30% of the profits from his privately held bank into struggling neighborhoods, funding schools and nonprofits and helping individuals and institutions buy and keep homes and businesses."

The coalition gained the support of several Congressional Representatives, various local and state office holders, and grassroots activists.

On Wednesday, April 14, 2010, CSCB held a demonstration in downtown Chicago in front of FDIC offices and US Bank. Contact for this was Peg Strobel. [2]

Goals

  • Include reforms in pending legislation to preserve and support community-based banks with a demonstrated community reinvestment commitment, re-capitalize them, and help them to aid the recovery of Main Street from the Great Recession. Provisions like those proposed in Senate Bill S 1822 ­ the "BANK ON OUR COMMUNITIES" ACT (sponsored by Sen. Jeff Merkley, D-OR, and Sen. Barbara Boxer, D-CA) should be part of real reform of the banking industry.
  • Convince the Inspectors General of FDIC and OCC to investigate whether the actions against Park National Bank/FBOP violated the agencies' own rules, and if so, reverse the decision to seize and sell our community bank.
  • Ensure that FBOP's Founder Mike Kelly may continue to hold a license to operate a bank. (His bank failed because of the financial crisis, not mismanagement. PNB/FBOP needed to recapitalize due to losses from investing in Freddie Mac and Fannie Mae at a time when they were good investments.)
  • Secure a strong Community Benefits Agreement with the new owner, US Bancorp.
  • Explore what actions might be taken by Illinois state officials to protect community banks.
  • Continue to enlarge and diversify the Coalition. [3]

Accomplishments

  • Rep. Luis Gutierrez (chair of the House Subcommittee on Financial Institutions and Consumer Credit) held a Congressional hearing January 21 on the issue of FPOB/PNB and community banks. We sent more than 60 people to Washington.
  • We gained the support of Rep. Danny Davis; Rep. Bobby Rush; State Sen. Don Harmon; David Pope, President of the Village Board, Oak Park; and State Rep. LaShawn Ford.
  • Sponsored by Sen. Don Harmon, Senate Joint Resolution 81 has passed the Illinois Senate and moves to the Illinois House, where it is cosponsored by Karen Yarbrough, Angelo Saviano, Deborah L. Graham, LaShawn Ford, and Marlow H. Colvin. The resolution "urges the United States House of Representatives Financial Services Committee and the United States Senate Committee on Banking, Housing, and Urban Affairs to continue hearings to investigate the FDIC's seizure of Park National Bank."
  • December 16, 2009, the Chicago City Council joined with our coalition in demanding a Congressional hearing to investigate the seizure and sale of First Bank of Oak Park/Park National Bank and the repercussions for other community banks reinvesting in our communities. As reported by the Chicago Sun-Times, Chicago aldermen condemned as "absurd, bordering on criminal" the federal government's decision to seize Park National Bank."
  • Within a month of the seizure, community groups that comprise the Coalition delivered petitions with over 1,000 signatures to the D.C. office of Rep. Luis Gutierrez.[4]

References