After hitting California's big banks for months with ads that they're ignoring their communities, Glendale Federal Bank now finds itself under a similar attack.
More than 20 California community groups have charged the $15 billion- asset thrift with inadequate lending to minorities and refusing to meet to address minority concerns. The groups include a local chapter of the National Association for the Advancement of Colored People, and a variety of minority business groups and church organizations.
Stephen J. Trafton, chief executive of the Glendale, Calif.-based thrift, has vigorously denied the accusations, stating, among other things, that the groups' lending data on the thrift came from a period when it was still recovering from near insolvency.
The groups are using the thrift's proposed acquisition of a $375 million-asset bank, announced in November, to air their concerns before the Office of Thrift Supervision.
The two sides presented oral arguments to the OTS on Thursday. Once Glenfed's merger application is deemed complete, the agency will make a ruling within 30 days.
The protests have turned the tables on the company, which has made a name for itself in recent months by attracting thousands of new customers through similar attacks on the state's big banks.
In a series of humorous, hard-hitting radio advertisements, the thrift has portrayed primarily Wells Fargo & Co. and BankAmerica Corp. as ignoring the needs of individual customers in the interests of efficiency.
"When you live in a glass house, you shouldn't throw stones," said Alan Fisher, executive director of the California Reinvestment Committee, one of the protest groups. "They have been aggressively attacking big banks for not being open to community needs, and here community leaders come to them, and they decide that they know better than the community."
For its part, Mr. Trafton stated in the thrift's official response to the OTS last month that he put together a team of about 25 company officials who met with about 350 business, government, and civic leaders from two low-income communities in the Los Angeles area.
"I know of no other bank that even attempts these kinds of grassroots community-oriented discussions," Mr. Trafton said in a statement.
But the protesting groups, at least several of which were refused a meeting with Mr. Trafton, said it was too little, too late, and done only because of the OTS hearing Thursday.
Robert Gnaizda, general counsel of the Greenlining Institute, said Glendale's chief executive has refused to meet with his group because he is more interested in selling the company.
"They are setting themselves up to be bought, instead of being committed to the interests of society," Mr. Gnaizda said. "Trafton doesn't want to meet with us because he doesn't have a long-term plan."
The Greenlining Institute is asking for the following:
That the U.S. Department of Justice look into the thrift's small- business lending record.
That the thrift allocate more of its advertising budget to minority businesses.
That it allocate 25% of an estimated $1.8 billion potential windfall from its goodwill litigation to meet community needs.
The Greenlining Institute asserted that Glenfed made less than one home loan per branch to moderate-income minorities. The thrift called the group's data "highly selective," noting that in 1995, when part of the information was collected, the company was not only still in a recovery mode, but also was shifting its asset mix away from traditional thrift business.
