For more than 40 years, the Community Reinvestment Act has stood as the federal government’s primary tool to fight redlining, a racist lending practice in which banks fail to lend to people of color. Now, President Donald Trump’s chief bank regulator is proposing sweeping changes to how the law is enforced.
The proposal, from Comptroller of the Currency Joseph Otting, would allow banks to receive Community Reinvestment Act credit for investments that have little to do with black and Latino homeownership or economic development, such as financing sports stadiums and providing high-interest credit cards to low-income people. The Jan. 10 proposal already has sparked controversy, with civil rights groups arguing that it could undermine incentives for investment in low-income communities, the law’s core function.
As it conducts oversight of the plan, the House Financial Services Committee reached out to Reveal senior reporter Aaron Glantz, requesting a submission for the congressional record.
Glantz is co-author with data reporter Emmanuel Martinez of Reveal’s Kept Out investigation into modern-day redlining, which last year was named a finalist for the Pulitzer Prize. He is also the author of the 2019 book “Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream,” which tells the story of OneWest Bank, where Otting served as president and CEO prior to being appointed by Trump.
His submission to Congress, below, details Otting’s dismal community lending record at OneWest. As Glantz notes: ”From 2011 to 2015, with Mr. Otting in charge, government data show, OneWest helped just three African American and eleven Hispanic families buy homes nationwide.”
Statement for the record
U.S. House Financial Services Committee
Subcommittee on Consumer Protection and Financial Institutions
“The Community Reinvestment Act: Reviewing Who Wins and Who Loses with Comptroller Otting’s Proposal”
January 14, 2020
Senior Reporter, Reveal from The Center for Investigative Reporting
Author, Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream (Custom House, 2019)
Chairman Meeks, Ranking Member Luetkemeyer, and members of the committee, my name is Aaron Glantz, and I am a senior reporter at Reveal from The Center for Investigative Reporting, the oldest nonprofit news organization in the country focusing on investigative journalism. I have worked as a journalist for 24 years. Reveal’s weekly radio program airs on more than 500 public radio stations across the country and is listened to by millions of Americans.
Thank you for the opportunity to provide a submission for the record regarding Comptroller of the Currency Joseph Otting’s proposal to overhaul the regulations that govern the Community Reinvestment Act, a landmark 1977 law enacted to reverse the legacy of government-sanctioned redlining. Mr. Otting’s proposals that banks be allowed to receive CRA credit for financing sports stadiums and providing high-interest credit cards to low-income people have sparked controversy, with civil rights groups arguing that they could undermine incentives for investment in low-income communities of color. As a journalist at a nonprofit, nonpartisan news organization, I want to be clear that we take no position on any policy proposal. However, we welcome the opportunity to present facts uncovered through the practice of journalism.
There can be no doubt that the CRA is not currently fulfilling its intended mission.
Last April, I appeared before this body to detail the findings of Reveal’s Kept Out investigation,¹ which was a finalist for the Pulitzer Prize.² Our analysis of millions of publicly available mortgage records from 2015 and 2016 uncovered 61 metro areas where people of color were far more likely to be denied a conventional mortgage than their white counterparts, even when they made the same amount of money, tried to borrow the same amount of money, and wanted to buy in the same neighborhood. This latest wave of redlining spanned the country: in Atlanta and Detroit, in Jacksonville and St. Louis, in the Pacific Northwest and Washington, D.C.3
And yet, we found 99 percent of national banks had received a satisfactory or outstanding grade on their Community Reinvestment Act inspections in the decade after the housing bust.⁴ The law, we found, is so full of loopholes that banks can easily evade the purpose of the law to guarantee equal access to mortgage credit.
Indeed, Mr. Otting’s former bank, OneWest Bank, provides a case study in the law’s failure to produce results for communities. In August 2015, the Office of the Comptroller of the Currency (OCC) gave OneWest a “satisfactory” grade on its Community Reinvestment Act evaluation⁵ despite significant evidence that the bank had engaged in modern-day redlining.
This record is detailed in my most recent book, Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream, published by Custom House books in October 2019.⁶ It is the basis of a Reveal episode that aired the same month.⁷
Homewreckers tells the story of OneWest Bank, which Mr. Otting ran from October 2010 until August 2015, when it was sold to CIT Group for $3.4 billion.⁸ Mr. Otting then served as president of CIT Bank and co-president of CIT Group until he was fired in December 2015.⁹
Mr. Otting was one of those Homewreckers. His community lending record at OneWest is relevant to understanding his proposal to overhaul the CRA, and that record was extremely troubled.
A FAILED BANK BOUGHT BY STEVEN MNUCHIN
OneWest Bank was a creature of the 2008 housing bust and global financial crisis. It was founded by Steven Mnuchin, now Treasury secretary, who led a group of investors, including John Paulson, J. Christopher Flowers, Michael Dell, and George Soros. They acquired the failed Pasadena, California, thrift IndyMac from the Federal Deposit Insurance Corporation in 2009, then rebranded it as OneWest.¹⁰
Mnuchin’s group paid the government nothing for IndyMac, and the FDIC agreed to a “shared-loss” agreement, whereby the government paid OneWest when the bank lost money on foreclosures from IndyMac’s loans. Under the terms of the deal, the government not only promised to make up for most of the money OneWest lost on bad loans, but it also agreed to bear most of the bank’s other foreclosure-related costs, including attorneys fees, inspections, and appraisals. Moreover, no matter how much money the ownership group made on new loans, the bank never would have to pay back the federal subsidies.¹¹
Officials, including then-FDIC Chairwoman Sheila Bair, said the shared-loss agreement was necessary because without it, “our losses would have been even greater.”¹² Indeed, while Mr. Mnuchin’s group of investors paid the government nothing, they did agree to invest $1.6 billion in the bank.¹³ Still, critics said the bank financially incentivized foreclosures, inoculating it against losses for taking people’s homes. After closing the IndyMac deal, Mr. Mnuchin’s group then struck similar shared-loss agreements with the FDIC when it acquired two other Southern California banks, La Jolla Bank and First Federal Bank of California.¹⁴
Mr. Mnuchin hired Joseph Otting as CEO of OneWest in October 2010.¹⁵
In the ensuing years, OneWest Bank would foreclose on 137,000 families,¹⁶ including 23,000 seniors. Documents I obtained using the Freedom of Information Act show the government subsidized this foreclosure machine to the tune of more than $1 billion.¹⁷
MR. OTTING’S FORECLOSURES
OneWest’s deal with the FDIC came with one saving grace for consumers: OneWest was required to enter into “loan modification programs” to help troubled borrowers stay in their homes.
Under Mr. Otting, however, the bank regularly came under scrutiny for its foreclosure practices. In 2011, for example, the Office of the Comptroller of the Currency found that OneWest engaged in “unsafe and unsound” practices when handling mortgage loans and foreclosures, that bank employees lied in foreclosure paperwork, and that it failed to devote “adequate oversight” to its foreclosure process — all practices that consumer advocates say could lead to borrowers improperly losing their homes. In response, the bank signed a consent decree promising to do better. As president and CEO of the bank, Mr. Otting signed the 2011 document and is listed as the designated recipient of all future correspondence.¹⁸
But the problems continued. The nonprofit California Reinvestment Coalition conducts an annual survey of counselors certified by the U.S. Department of Housing and Urban Development who help consumers with loan modifications. In 2010, the counselors rated OneWest the worst offender in California for failing to offer workarounds in the state. Two years later, the annual survey found that 95 percent of housing counselors rated OneWest as “terrible” or “bad,” with only HSBC Bank receiving lower marks among the 16 banks covered by the survey.¹⁹
OneWest also caught the attention of law enforcement. On January 18, 2013, four senior attorneys on then-California Attorney General Kamala Harris’ Mortgage Fraud Strike Force produced a 25-page memo detailing “evidence suggestive of widespread misconduct” at the bank. After reviewing hundreds of documents, Ms. Harris’ deputy attorneys general found that OneWest employees had signed backdated and false documents that propelled borrowers rapidly toward foreclosure. Bank staff also performed acts in the foreclosure process “without valid legal authority” and “failed to comply with requirements related to the execution, timing, and mailing of foreclosure documents.”²⁰
Ms. Harris’ deputies recommended that the attorney general sue OneWest to hold it accountable — an important step, they said, because the bank already had foreclosed on 35,000 California homes. In addition, they explained, the bank’s shared-loss agreement with the FDIC stated clearly that Mr. Mnuchin’s group of investors could receive payments from the government only if OneWest followed proper foreclosure practices, including engaging in the loan modification program established by the FDIC. If the state of California found that OneWest violated those rules, the payments would stop, which, the deputy attorneys general argued, could save the federal government millions of dollars and keep countless borrowers in their homes.²¹
But despite a strong recommendation from her staff, Ms. Harris declined to sue OneWest Bank. “Case NOT filed despite strong recommendations,” reads a cover sheet atop the memo. As a result, no one at OneWest faced prosecution, no customers got their homes back, and the shared-loss payments from the FDIC kept coming. (Ms. Harris has said she didn’t pursue the case because she “didn’t have the legal ability,” arguing that “the rules were written in favor of the banks.”²²)
By June 2014, data from the federal Treasury Department showed OneWest had denied three-quarters of the loan modification applications it had received since 2009 — a higher rate than that of Bank of America, JPMorgan Chase, and Wells Fargo.²³
HARM TO COMMUNITIES OF COLOR
OneWest’s foreclosure machine had a devastating impact on people of color, though neither the bank nor Mr. Otting would ever be sanctioned for violating the Community Reinvestment Act.
The data tell a damning story. During the housing boom years, IndyMac consistently received a “satisfactory” CRA evaluation from federal banking regulators,²⁴ even though it charged high interest rates (defined by the government as more than 3 percentage points above prime) to 24 percent of its white borrowers, but to 36 percent of Hispanic and 43 percent of African American borrowers.²⁵ This meant that when the recession hit, people of color disproportionately faced higher monthly payments for the same size mortgages and were disproportionately more vulnerable to foreclosure. After the crash, OneWest was supposed to address these disparities through the federally sponsored loan modification programs. But the data indicate the bank did not.
The California Reinvestment Coalition analyzed 36,000 of OneWest Bank’s foreclosures. Although roughly 40 percent of the loans IndyMac made in California before the bust were in neighborhoods where a majority of residents were people of color, the coalition found that 70 percent of OneWest foreclosures were in these neighborhoods.²⁶
After OneWest foreclosed on those properties, neglect often diminished their value. Another organization, Fair Housing Advocates of Northern California, investigated how well OneWest maintained and marketed homes after foreclosing on them. The group’s representatives visited properties in white communities and found that they generally were well maintained and marketed with manicured lawns, securely locked doors and windows, and attractive, professional For Sale signs posted out front. By contrast, OneWest foreclosures in communities of color often had descended into blight, with trash strewn around the premises; overgrown grass, shrubbery, and weeds; and boarded-up or broken doors and windows. OneWest properties in those areas “appear abandoned, blighted, and unappealing to potential homeowners,” the group found, even where they “are located in stable neighborhoods with surrounding homes that are well maintained.”²⁷
These developments had sweeping implications for the very communities the Community Reinvestment Act was supposed to help. In America, the average homeowner boasts a net worth that is a hundred times greater than that of a renter: $200,000 for homeowners compared with $2,000 for renters, according to the U.S. Census Bureau.²⁸ Indeed, in the years since the housing bust, the racial homeownership gap has widened to levels not seen since the Jim Crow era.²⁹ As generations of wealth built by families of color were eviscerated by banks like OneWest and neighborhoods fell into blight, homes that had been in the hands of families were bought up by corporate speculators. Monthly mortgage payments that previously had built equity for working families turned into rent paid to national conglomerates.
The average white family is now worth $131,000, nearly 14 times more than the average African American one, according to the Census Bureau. The average black family has less than $10,000 to its name. Nearly one in three black households are literally worth nothing, government statistics show, because their debts are greater than or equal to their assets. That’s more than twice the rate at which whites have a “zero or negative” net worth. (Hispanics fare only slightly better than African Americans. Government data show the median Hispanic family is worth about $18,000, while about one in five Hispanic families are worth nothing.)³⁰
In Homewreckers, I tell the story of one house in Los Angeles, an 834-square-foot bungalow near the corner of Florence and Normandie Avenues.³¹ For half a century, it was owned by M.L. and Beulah Butler, an African American family that moved west from Mississippi to Southern California as part of the Great Migration that followed World War II. In Los Angeles, M.L. worked at the post office and Beulah worked as a maid. They scrimped and saved and in 1963, the same year California banned racial discrimination in lending, they bought their first house.
Beulah planted a rose garden in the front and a vegetable garden in the back. Her outgoing personality and delicious hospitality made the Butler home a social center in the neighborhood. They raised their son there. Over the decades that followed, the Butlers stayed in their home, made their monthly mortgage payments, increased their wealth, and purchased their piece of the American Dream.
In 1991, two years before the family paid off its mortgage, M. L. died. Beulah battled kidney failure, then dementia. In 2010, when Beulah was 80, her granddaughter, Jessica, 27, moved into the bungalow to take care of her full time. Jessica was the first in her family to go to college, graduating from Humboldt State University with a degree in social work. It was then that she remembers spotting mail from Financial Freedom Senior Funding, a division of IndyMac that sold “reverse mortgages.”
Soon, she figured out that in 2007, at the height of the real estate bubble, her grandmother had taken out such a mortgage against the family home, with an adjustable rate that topped out at 16.6 percent. Every month, Financial Freedom gave her a $500 check that Beulah used for expenses or for an outing to a casino. That amount, plus fees and compound interest, was added each month to the balance she owed. Every month, Financial Freedom stripped away more equity from the Butler family home.
“I loved that house,” Jessica Butler told me. “I grew up in that house. I remember my grandma making ice cream in the back. Until the last year (of her life), we cooked together. When she passed away, I thought it would pass to my father. But that’s not what happened.”
Jessica’s father — Beulah’s son, Marcus — said he never knew his mother had taken out the loan. “I would have told her not to,” he said. “We had worked so hard to pay that home off.”
In the end, the Butler family lost the house. After Beulah passed away at age 82 in 2012, OneWest Bank filed an official notice — addressed to the dead woman — at the L.A. County Courthouse. Its message was simple: Beulah Butler had defaulted on the reverse mortgage scheduled to come due after she passed away, a mortgage now controlled by OneWest. The bank was calling in all the money she owed. The total came to $326,103.19 — an amount, OneWest cautioned, that “will increase until the account becomes current.”
When they received the notice, Beulah’s survivors didn’t fight back. They didn’t know, for example, about a federal rule that required OneWest Bank to offer them the house at 95 percent of its appraised value, which, thanks to the housing bust, was a much lower amount than the big bill the bank had sent. Like most families caught in this kind of financial difficulty, they were ashamed of the financial mistakes they’d made, so they just gave up. Jessica Butler packed up her grandmother’s belongings and rented a one-bedroom apartment in the Crenshaw district, near where her father also rented. Marcus Butler had worked for decades loading luggage onto airplanes at LAX. It had paid well enough, but he’d never managed to save. Court records show Marcus declared bankruptcy three times to erase debt from high-interest credit cards.
The property sat empty for nearly a year. Squatters moved in. Marcus would drive by and call the police on the intruders. “He was just heartbroken,” Jessica told me.
OneWest put the house up for bid on April 17, 2013. The purchase price was $180,000, or about half what the bank had demanded from the Butlers. That difference didn’t matter to OneWest: Because the loan was insured by the government, Mr. Otting’s bank could simply bill the taxpayers for the $146,000 difference between the sale price and the $326,103 reverse mortgage bill.
When the bidding was finished, the buyer of the Butler family’s bungalow was not another young family trying to make its start, like M.L. and Beulah had in the 1960s. It was a shell company called ColFin AI-CA5 LLC, part of a growing real estate empire being built by Tom Barrack, the founder of Colony Capital, which eventually would own more than 30,000 homes.³²
In the two South Central Los Angeles ZIP codes that surround the Butler family home, my investigation found that OneWest Bank ultimately foreclosed on 262 families.³³ During a similar period, federal lending data show, it refinanced just 15 mortgages there. Two corporate landlords, powered by the private equity conglomerates Blackstone and Colony, then bought 219 houses in the neighborhood.³⁴
The image of a foreclosure king wasn’t the one Mr. Otting wanted to project. In a 2018 interview with the Las Vegas Review-Journal, Mr. Otting echoed the language of service, explaining that he saw his job running OneWest as an opportunity to help the Los Angeles area. “We wanted to make a hometown bank,” he said. “Bankers are dream makers. We all have a responsibility to help our communities.”³⁵
But the bank’s definition of community was severely limited. As it foreclosed on homeowners in suburban minority neighborhoods in desert cities such as Lancaster and Palmdale and urban centers such as South Central L.A., its network of bank branches hugged the coast, from Huntington Beach to Santa Monica, where most residents are white; then they branched east, in an arc through the Hollywood Hills, as if to avoid heavily black and Hispanic neighborhoods downtown, before reaching the company’s corporate headquarters in Pasadena, another majority-white community.³⁶ Since the bank was long on mortgages because it had assumed the ledger from IndyMac’s profligate lending during the boom, OneWest Bank generally was conservative in its mortgage lending. In practice, this meant the new borrowers were overwhelmingly white.
From 2011 to 2015, with Mr. Otting in charge, government data show, OneWest helped just three African American and eleven Hispanic families buy homes nationwide. During those years, the bank did not help a single family purchase a home in South Los Angeles.³⁷
A LENDER TO THE RICH
It’s not that OneWest lacked capital — or shied away from making risky loans. The bank, under Mr. Otting’s leadership, simply invested its capital in other ways, making a series of large, controversial, sometimes very risky loans.
OneWest lent to companies that were fracking for oil and natural gas in the Bakken Formation in North Dakota, the Cherokee Basin in Oklahoma, and the Central Kansas Uplift.³⁸ OneWest also helped finance Corinthian Colleges, the company that owned the for-profit colleges Heald, Everest, and WyoTech. All three closed their doors in 2015 amid state and federal fraud charges.³⁹
In fact, compared to its competitors, OneWest made a greater proportion of its loans to companies that took big risks. “The loans,” the Los Angeles Times reported in 2017, “were used to acquire companies through leveraged buyouts — deals in which private equity firms buy a company using some of their own capital plus a loan taken out on the company itself — and to fund dividend recapitalizations, a practice in which firms borrow against the value of a business and use the proceeds to pay a dividend to their investors.”⁴⁰
In 2013, for example, OneWest joined a consortium of financial institutions, including Bank of America and JPMorgan Chase, in extending a line of credit to Colony Capital, helping to fund Mr. Barrack’s home-buying spree.⁴¹ This line of credit created a financial revolving door, as Colony used the loan in part to buy up OneWest’s foreclosures. By the end of 2014, OneWest’s commitment to Colony alone had grown to $45 million — more than all the money it made available to African American and Hispanic homebuyers over five years.⁴²
HEADING OUT, CASHING IN
In 2014, Mr. Mnuchin and Mr. Otting moved to sell OneWest Bank, approaching officials at the Federal Reserve about a sale to CIT Group.
Advocacy groups, including the California Reinvestment Coalition (CRC) and Greenlining Institute, opposed the sale, arguing before it was approved that OneWest and CIT should be required to make specific promises to increase their investments in low-income communities and communities of color.
Such agreements are common. Earlier that year, for example, CRC had negotiated a deal with another Southern California lender, Banc of California, clearing the way for its acquisition of Popular Community Bank’s 20 Southern California branches. In that deal, which was brokered by former Los Angeles Mayor Antonio Villaraigosa, Banc of California agreed to invest the equivalent of 20 percent of its deposits in poor and working-class neighborhoods. Among other reforms, the bank promised to set aside a minimum amount of money for affordable-housing development and small-business lending, as well as to create a low-cost checking account and lower its ATM fees. It also pledged to provide an annual accounting of its goals to CRC and a host of other nonprofit organizations over the next five years. CRC and its allies came to Banc of California with requests that “were realistic,” Robert Braun, a partner at the law firm Jeffer Mangels Butler & Mitchell, told the Los Angeles Business Journal. “They asked for things that the banks can give.”⁴³
But when CRC approached Mr. Otting about a similar agreement as part of its acquisition by CIT, it did not go well.
In Homewreckers, I tell the story of one meeting between Mr. Otting and a delegation of community leaders facilitated by CRC:
Shortly after the merger announcement, Paulina Gonzalez led a delegation of more than a dozen community groups to OneWest’s Pasadena offices. They took the elevator up and were escorted into a conference room for a meeting with the company’s top brass. Gone was the glad-handing Otting. Faced with a group of advocates with demands, he was aloof “and kind of detached,” Gonzalez recalled. He laughed off the terms that her group proposed, the same ones that Banc of California had agreed to: 20 percent of deposits invested in low-income and working-class borrowers, small business lending, and a public accounting of what it had done for the community. “We also had some stuff in there around affordable housing,” Gonzalez said, namely that they wanted OneWest to invest $30 million in a trust fund for nonprofit developers. “He was like, ‘There’s no way. We’re not going to do it.’” The bank that was extending $45 million in credit to Tom Barrack’s company had no interest in lending to community nonprofits.
“You have foreclosed on all these people. Part of California’s housing crisis is the foreclosure crisis,” Gonzalez countered. She turned to Otting. “How much do you make in a year?”
“Well, how much do you make in a year?” he countered.
“Joseph, that’s public information,” she replied. “You can look it up in our 990s” — the tax forms that nonprofits must make available to the public.
I looked up her income. It was $124,000.⁴⁴ OneWest was a private company, so Otting’s compensation was not public in 2014, but documents filed with the SEC show that CIT was promising him $12.5 million in company stock, along with an annual pay package of up to $4.5 million — meaning he stood to make $26 million over the next three years.⁴⁵
“You know, you’re sitting here. You’re a millionaire,” Gonzalez told him. “You know we’re talking about people whose have been foreclosed upon. They lost everything, you know. And you’re not engaging in that conversation.”
Otting, Gonzalez decided, was “the type of person who did what he needed to get what he wanted, which was to get the merger.” The community groups left empty-handed.⁴⁶
After months of community pressure, the Federal Reserve and Office of the Comptroller of the Currency agreed to hold a hearing on the merger.⁴⁷ But a day of public testimony didn’t alter the outcome. Mr. Otting got everything he wanted. Five months later, on July 15, 2015, the Federal Reserve and OCC approved the merger,⁴⁸ without forcing OneWest to make any specific financial commitments to the community.
CIT paid Mr. Mnuchin’s ownership group $3.4 billion.⁴⁹ Mr. Otting was among the corporate leaders who personally profited.
Meantime, the company struggled. CIT’s accountants found OneWest’s books were a mess and discovered a shortfall of more than $230 million.⁵⁰ That summer and fall, the U.S. Department of Housing and Urban Development’s Office of Inspector General served the bank with subpoenas regarding its reverse mortgage unit — the same unit that had stripped the Butlers of their Los Angeles home.⁵¹ CIT terminated Mr. Otting that December, but he made out fine. The Wall Street Journal reported that he made $24.9 million that year, including $12 million in severance.
ONEWEST BANK TODAY
In July 2019, the Department of Housing and Urban Development approved a massive redlining settlement with CIT Group and CIT Bank, resolving allegations of racially discriminatory lending that had taken place at OneWest from 2014 to 2017, including two years when Mr. Otting was in charge.⁵²
Under the terms of the deal, the bank pledged to originate $100 million in home loans to borrowers in neighborhoods where a majority of residents are people of color and to open a full-service branch in a low-income minority neighborhood. It also committed to investing $5 million in a loan subsidy fund to increase credit opportunities for residents in minority neighborhoods, dedicating $1.3 million to community outreach, and providing $1 million in grants to community groups for financial counseling and homelessness programs.⁵³
Four months later, in November 2019, CIT entered into a $7.75 billion community lending agreement⁵⁴ with a coalition of civil rights groups as part of its acquisition of Mutual of Omaha Bank. In announcing the deal, CIT’s Chairwoman and Chief Executive Officer, Ellen R. Alemany, said that by working with community groups, the bank would “ensure that our efforts to make a meaningful difference and help build thriving neighborhoods would be successful.”⁵⁵
The agreement included specific targets for home lending, small-business lending, charitable giving in low-income areas, and a public accounting of progress to those goals. It was exactly the types of commitments Mr. Otting had refused to make when he had led OneWest.
By then, of course, Mr. Otting had moved on. On November 27, 2017, Mr. Mnuchin, now Treasury secretary, swore in Mr. Otting as comptroller of the currency, in charge of regulating every national bank. One of his first priorities, Mr. Otting repeatedly said, was changing the way the Community Reinvestment Act was enforced.⁵⁶
1. Congress of the United States, House Financial Service Committee, “Prepared Remarks of Aaron Glantz,” April 9, 2019, https://financialservices.house.gov/uploadedfiles/hhrg-116-ba15-wstate-glantza-20190409.pdf
2. Pulitzer Prizes, “The 2019 Finalist in Explanatory Reporting: Aaron Glantz and Emmanuel Martinez of Reveal from The Center for Investigative Reporting,” https://www.pulitzer.org/finalists/aaron-glantz-and-emmanuel-martinez-reveal-center-investigative-reporting-emeryville-calif
3. Glantz, Aaron and Martinez, Emmanuel, “For people of color, banks are shutting the door to homeownership,” Reveal, Feb. 15, 2018, https://revealnews.org/article/for-people-of-color-banks-are-shutting-the-door-to-homeownership/; and Glantz, Aaron and Martinez, Emmanuel, “How Reveal identified lending disparities in federal mortgage data” Feb. 15, 2018: https://s3-us-west-2.amazonaws.com/revealnews.org/uploads/lending_disparities_whitepaper_180214.pdf
6. Glantz, Aaron. Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream Custom House, New York, 2019.
7. Aaron Glantz and Katharine Mieszkowski, reporters; Al Letson, host, “Homewreckers,” Reveal (podcast), October 19, 2019: https://revealnews.org/episodes/homewreckers/
8. Federal Reserve System online, “Order Approving the Acquisition of a Bank Holding Company,” FRB order no. 2015–20, July 19, 2015, https://www.federalreserve.gov/newsevents/pressreleases/files/orders20150721a1.pdf.
9. Tanaya Macheel, “CIT Fires Otting, 13 More Executives in Post-OneWest Shuffling,” American Banker, December 10, 2015: https://www.americanbanker.com/news/cit-fires-otting-13-more-executives-in-post-onewest-shuffling
10. OneWest Bank Group, “Investor Group Completes Acquisition of IndyMac Assets,” press release, March 19, 2009, available at BusinessWire, https://www.businesswire.com/news/home/20090319006355/en/Investor-Group-Completes-Acquisition-IndyMac-Assets
11. “Shared-Loss Agreement,” Federal Deposit Insurance Corporation, https://www.fdic.gov/about/freedom/indymacsharedlossagrmt.pdf; “Reverse Mortgage Shared-Loss Agreement,” Federal Deposit Insurance Corporation, https://www.fdic.gov/bank/individual/failed/indymac-reversemtg-sharedlossagreement.pdf.
12. Aaron Glantz and Katharine Mieszkowski, reporters; Al Letson, host, “Homewreckers,” Reveal (podcast), October 19, 2019: https://revealnews.org/episodes/homewreckers/
13. Dealbook, “F.D.I.C. Closes Sale of IndyMac,” New York Times, March 20, 2009, https://dealbook.nytimes.com/2009/03/20/fdic-closes-sale-of-indymac-to-onewest/?mtrref=www.google.com&gwh=05BC3B52FAE7E1E507512B5BE804010C&gwt=pay&assetType=PAYWALL
14. Thomas Kupper, “La Jolla Bank Fails; OneWest Takes Over,” San Diego Union Tribune online, February 19, 2010, https://www.sandiegouniontribune.com/sdut-la-jolla-bank-seized-by-federal-regulators-2010feb19-htmlstory.html.
15. OneWest Bank, “OneWest Bank Names Joseph Otting President, Chief Executive Officer and a Member of the Board,” press release, October 27, 2010, available on BusinessWire.com, https://www.businesswire.com/news/home/20101027006123/en/OneWest-Bank-Names-Joseph-Otting-President-Chief
17. Financial statements for: IndyMac Federal Bank FSB, July 11, 2008-December 31, 2017; LaJolla Bank, FSB, February 19, 2010–December 31, 2017; https://www.documentcloud.org/documents/5783901-IndyMac-LJB-Loss-Share.html.
18. “Consent Order,” regarding OneWest Bank, Office of Thrift Supervision, docket no. 18129, order no. WN-11–011, April 13, 2011, https://www.occ.gov/static/ots/misc-docs/consent-orders-97665.pdf.
19. “Chasm Between Words and Deeds VIII: Lack of Bank Accountability Plagues California,” California Reinvestment Coalition, April 2012, available at https://www.documentcloud.org/documents/5978998-Chasm-Between-Words-and-Deeds-VIII-Lack-of-Bank.html.
20. Nicholas G. Campins et al. to Frances T. Grunder et al., memorandum, “Executive Summary: Request for Authorization to File Action Against OneWest Bank,” January 18, 2013, California Department of Justice, available at https://www.documentcloud.org/documents/3250383-OneWest-Package-Memo.html.
22. Joe Garofoli and Tal Kopan, “Kamala Harris’ Mortgage Meltdown Record Under Scrutiny as Campaign Heats Up,” San Francisco Chronicle online, April 1, 2019, https://www.sfchronicle.com/politics/article/Kamala-Harris-mortgage-meltdown-record-under-13730708.php.
23. U.S. Department of the Treasury, “HAMP Application Activity by Servicer, As of June 2014,” accessed at FRASER, Federal Reserve Bank of St. Louis, https://fraser.stlouisfed.org/title/5156/item/519646.
24. FFEIC Interagency ratings search for CRA performance for IndyMac Bank, F.S.B.: https://www.ffiec.gov/craratings/
25. Analysis of Home Mortgage Disclosure Act data by author.
26. Analysis of HMDA data by author; analysis of foreclosures by California Reinvestment Coalition.
27. California Reinvestment Coalition, “CIT Group Accused of Redlining and Violating Fair Housing Act,” press release, November 18, 2016, http://calreinvest.org/press-release/cit-group-accused-of-redlining-and-violating-fair-housing-act
28. “Table 1. Median Value of Assets for Households, by Type of Asset Owned and Selected Characteristics: 2014,” downloaded from the U.S. Census Bureau website, last revised September 17, 2018, http://www.census.gov/data/tables/2014/demo/wealth/wealth-asset-ownership.html.
29. Glantz, Aaron and Martinez, Emmanuel, “For people of color, banks are shutting the door to homeownership,” Reveal, Feb. 15, 2018 https://revealnews.org/article/for-people-of-color-banks-are-shutting-the-door-to-homeownership/
31. The story of the Butler family is told at greater length in Glantz, Homewreckers, 183-209.
32. Colony Starwood Homes, “Colony Starwood Homes Announces Closing of $7.7 Billion Merger of Starwood Waypoint Residential Trust with Colony American Homes,” press release, January 5, 2016, available at BusinessWire.com, https://www.businesswire.com/news/home/20160105006880/en/Colony-Starwood-Homes-Announces-Closing-7.7-Billion
33. Author’s analysis of Los Angeles County property data.
34. Author’s analysis of Los Angeles County property data.
35. Wade Tyler Millward, “Man Who Oversees Country’s Biggest Banks Lives in Las Vegas,” Las Vegas Review-Journal online, May 5, 2018, https://www.reviewjournal.com//business/man-who-oversees-countrys-biggest-banks-lives-in-las-vegas.
36. Author’s analysis of bank branch location data maintained by the FDIC.
37. Author’s analysis of HMDA data.
38. Examples include: Yuma Energy, “Form 10-K: Annual Report, 2015,” filed with U.S. Securities and Exchange Commission, May 23, 2016, http://www.sec.gov/Archives/edgar/data/81318/000135448816007616/yuma_10ka.htm; PostRock Energy, “PostRock Finalizes New Credit Facility,” press release, December 20, 2012, available at https://www.sec.gov/Archives/edgar/data/1473061/000119312512513087/d458065dex992.htm; Sanchez Production Partners, “Form 10-K: Annual Report, 2014,” filed with U.S. Securities and Exchange Commission, March 5, 2015, https://www.sec.gov/Archives/edgar/data/1362705/000136270515000010/spp-20141231x10k.htm.
39. Corinthian Colleges, “Consent Agreement and Amendment No. 5 to Credit Agreement,” filed with the US Securities and Exchange Commission, December 9, 2014, https://www.sec.gov/Archives/edgar/data/1066134/000143774914022119/ex10-1.htm Corinthian Colleges et al., “Fourth Amended and Restated Credit Agreement,” filed with US Securities and Exchange Commission, May 17, 2012, https://www.sec.gov/Archives/edgar/data/1066134/000110465912038883/a12-12544_1ex10d1.htm.
40. James Rufus Koren, “Steven Mnuchin’s OneWest Favored Private Equity Firms, Did Little Small-Business Lending,” Los Angeles Times online, January 19, 2017, https://www.latimes.com/business/la-fi-mnuchin-onewest-lending-20170117-story.html.
41. Colony Financial, “Lending Agreement,” filed with U.S. Securities and Exchange Commission, August 6, 2013, https://www.sec.gov/Archives/edgar/data/1467076/000119312513327010/d582135dex101.htm.
42. Colony Financial, “Second Amendment,” filed with the U.S. Securities and Exchange Commission December 12, 2014, https://www.sec.gov/Archives/edgar/data/1467076/000119312514443308/d838677dex101.htm; author’s analysis of HMDA data.
43. Matt Pressberg, “Activists’ Protest on the Money: Coalition Scores Concessions in Lender Unions,” Los Angeles Business Journal, October 20, 2014.
44. California Reinvestment Coalition Form 990, Internal Revenue Service, 2014.
45. CIT Group, “Form 8-K: Current Report,” filed with U.S. Securities and Exchange Commission, July 25, 2014, https:///www.sec.gov/Archives/edgar/data/1171825/000089109214005596/e59749_8k.htm
46. Glantz, Homewreckers, 225-226.
47. Marshall Heyman, “Public Hearing Planned on Proposed Sale of OneWest Bank to CIT Group,” Los Angeles Times online, February 6, 2015, https://www.latimes.com/business/la-fi-onewest-hearing-20150207-story.html.
48. Federal Reserve System online, “Order Approving the Acquisition of a Bank Holding Company,” FRB order no. 2015–20, July 19, 2015, https://www.federalreserve.gov/newsevents/pressreleases/files/orders20150721a1.pdf.
50. Zachary Mider and Saleha Mohsin, “The Mess Steven Mnuchin Left Behind,” Bloomberg Businessweek, December 16, 2016, available at Blendle, https://blendle.com/i/bloomberg-businessweek/the-mess-steve-mnuchin-left-behind/bnl-bloombergbw-20161219-112801?sharer=eyJ2ZXJzaW9uIjoiMSIsInVpZCI6InBoaWxpcGJhc2hlIiwiaXRlbV9pZCI6ImJubC1ibG9vbWJlcmdidy0 yMDE2MTIxOS0xMTI4MDEifQ%3D%3D.
51. CIT Group, “Form 10-K: Annual Report, 2015,” filed with U.S. Securities and Exchange Commission, March 4, 2016, https://www.sec.gov/Archives/edgar/data/1171825/000089109216013044/e68394_10k.htm.
52. U.S. Department of Housing and Urban Development, “Conciliation Agreement Between California Reinvestment Coalition (Complainant) and CIT Group, CIT Bank N.A. dba OneWest (Respondent,” July 26, 2019, https://www.hud.gov/sites/dfiles/FHEO/documents/19CITCRCsigned.pdf
54. Andy Peters, “CIT Pledges $7.75 Billion in investment as part of Mutual of Omaha Deal,” American Banker, November 1, 2019. https://www.americanbanker.com/news/cit-makes-775b-reinvestment-pledge-as-part-of-mutual-of-omaha-deal
56. Joseph Otting, “A Community Reinvestment Act that works for everyone,” American Banker, December 12, 2019 https://www.americanbanker.com/opinion/a-community-reinvestment-act-that-works-for-everyone