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BankUnited: Step up or Stay Out
January 9, 2013
What kind of banks do we want in our city? Do we want a bank that has a history of discriminatory lending practices and does not lend to lower-income borrowers? Probably not. Yet that is exactly what could happen if Florida-based BankUnited comes to NYC.
The original BankUnited, FSB failed during the financial crisis and was closed by the FDIC in 2009. The new BankUnited, NA is now run by two former Capital One executives who have profited greatly by this sale, due in no small part to a loss share agreement with the FDIC that has covered over $6 billion in losses to date. These executives are originally from New York and eager to return; when their non-compete agreement with Capital One expires at the end of January, they have aggressive plans to do so.
BankUnited already acquired the New York-based Herald National Bank in early 2012 and is seeking approval to officially operate their three New York City branches under the BankUnited name. They are also applying to expand their branch network in New York City, with none in low- or moderate-income neighborhoods. When banks want to merge or expand, they must apply to their regulators. Part of the approval process includes an assessment of their CRA record. In the case of BankUnited, based on their public record,we believe those applications should be denied.
Prior to the failure, BankUnited, FSB barely got a “Satisfactory” on its latest CRA exam, with Low Satisfactory in lending. The new BankUnited is currently undergoing its first CRA exam, which is not yet released, but federal Home Mortgage Disclosure Act data demonstrates exactly the type of behaviors we do not want in our city. The bank is very active in Broward and Miami-Dade counties in Florida where nearly 40% of households are low- and moderate-income. Yet, BankUnited originated less than 10% of its loans to LMI borrowers. Even worse, they made no loans to African American borrowers in 2011 and just 4 in 2010 in those counties.
ANHD’s does not believe that banks with a documented history of troubling lending practices should be given regulatory permission to do business in our city. BankUnited’s merger and expansion applications should be denied until they demonstrate a real commitment to meeting the credit needs of low-income and working class New Yorkers of all races and ethnicities.