Under a banner that read “Join the Journey,” about 100 people – from each side of Austin Boulevard – met at Judson Baptist Church in Oak Park on Thursday night. They came from Oak Park and from Austin to find ways to speak out about the FDIC takeover of a local institution that was a near-bottomless funding source for both communities.
“Some banks are considered too big to fail, but Park National was too good to fail, too useful to fail. This is not just a financial crisis. It is also a moral crisis,” said Rev. Marshall Hatch of New Mount Pilgrim Missionary Baptist Church in East Garfield Park. Since Monday, Nov. 2, the first business day after the takeover of Park National and its eight sister banks in FBOP Corp., Hatch and other West Side community leaders have been protesting that Washington didn’t fully note the company’s longstanding community investment.
On the morning that banking regulators took over FBOP’s subsidiaries, Treasury Secretary Timothy Geithner was in Chicago to award the Oak Park-based company $50 million in tax credits for neighborhood development.
“When Mike Kelly gets the shaft, something is wrong,” said Hatch, referring to the sole owner of FBOP, a quietly philanthropic River Forest resident who wrote checks for schools and health clinics in Austin. “We know insanity when we see it. It’s time to stand up and fight back.”
Thursday night, Hatch led a panel that included Oak Park Village President David Pope; Nancy Brown of Bethel New Life; community activist Jackie Leavy of Grass Root; and Jacqueline Reed of the Westside Health Authority. Among those present were Ald. Emma Mitts (37th Ward); Rob Breymeier of the Oak Park Regional Housing Center; Bob Vondrasek of the South Austin Coalition Community Council; and Rev. Ira Acree, Hatch’s colleague in the The LEADER’s Network (Leaders for Empowerment, Advocacy and Disaster Relief), a West Side coalition of ministers.
U.S. Rep. Danny Davis (D-7th) was expected, but did not show up.
FBOP Corp., once a model of strength in the banking industry, got in trouble last fall when the U.S. government seized Fannie Mae and Freddie Mac, two federally-sponsored mortgage companies in which FBOP had heavily invested. The loss was $855 million. Initial approval for a federal bailout was lost when a change in guidelines of the U.S. Treasury’s Troubled Asset Relief Program, or TARP, rendered such small, privately-held bank companies as FBOP ineligible. The feds had set an Oct. 30, deadline for new capital to be raised.
Despite a bottom-of-the-ninth swing by FBOP to present a private and local deal for the required capital – a vice president had said they needed a week to close on the paperwork – the FDIC picked a Minneapolis-based chain, U.S. Bank, as the buyer. On the night of the takeover, the government press release concluded:
“The FDIC estimates that the cost of the nine banks to the deposit insurance fund will be a combined $2.5 billion. U.S. Bank’s acquisition of all the deposits was the ‘least costly’ resolution for the FDIC’s deposit insurance fund.”
Pope, who has a master’s degree from Northwestern’s Kellogg School of Management and who spent time in the Peace Corps, told the group that this action profoundly offended him. “Two and a half billion dollars,” Pope said, “comes out to $25,000 for every man, woman and child in Austin. If you’re aware of the facts in this case and you’re not absolutely outraged, then you’re not alive.”
Oak Parker Jackie Leavy, a longtime West Side community organizer with the defunct Neighborhood Capital Budget Group, announced the start of the Coalition to Save Community Banking. Its goals: 1) Congressional hearings on this bank failure and on the plight of all community banks and 2) negotiations with U.S. Bank about support of Oak Park and the West Side.
“We have to illuminate what went wrong so we know how to prevent it,” she said. “Without community banks, the Community Reinvestment Act doesn’t mean squat.”
Breymeier noted that, unlike Park National, U.S. Bank arranges more mortgages with white customers than it does for borrowers of color. “U.S. Bank just bought a bank with a real commitment to the community,” Breymeier said. “They need to honor that commitment. They need to reinvest in our communities.”