OneUnited – is a bank of commerce not The Divisive Bank
by Imogen Reed for AboutBlackBoston.com
They may have their critics, both inside and outside the black community, but there is little doubt that OneUnited, with its headquarters in Boston, was once one of the most successful minority banks in the country, and still claims to be the largest black owned bank in the US. Priding itself on its base in the black community, Chairman and Chief Executive Officer (CEO) Kevin L Cohee boasts on the bank’s website that: “OneUnited Bank is fulfilling the hundred year old civil rights dream by garnering the savings power of our communities and channeling it back into urban communities for economic development”; and is so certain of this that it forms part of the bank’s mission statement. ‘One Community, One Bank, OneUnited’ is the familiar slogan of the bank offering everything from savings rates to mortgages to the community.
However, things have changed. Troubled times first hit in 2008, when sexual assault and drugs charges were levelled against the controversial CEO in California. Although the charges were dismissed, Cohee only escaped prosecution prosecution on the drugs charges after agreeing to undertake a ‘Drug Diversion Program.’ In the same year the CEO and his colleagues received a ‘Cease and Desist’ order from the Federal Authorities relating to misspending by them and lax lending practices that were jeopardising the continuance of the bank’s operating license. Both incidents brought Cohee’s lavish lifestyle into public focus, with a company funded Porsche and a handsome living allowance, a condominium on Ocean Drive in Miami Beach and use of a Santa Monica mansion leased by the bank for $26,500 per month. This lavish lifestyle was in sharp contrast to that the OneUnited CEO has advocated to his customers. In a recording urging them to live modestly and within their means he said “Do you really need a Mercedes Benz? You just need a car.”
insert: Boston Banner Editorial:Criticizing Success, August 2009
[ START – A legitimate source of criticism is the existence of a cease-and-desist order (C&D) sent to the bank in October by the Federal Deposit Insurance Corporation (FDIC). While the C&D requires the correction of some technical problems, much of the attention has been directed to the fact that OneUnited CEO Kevin Cohee and his wife, Teri Williams, live in a $6.4 million Santa Monica mansion. However, the reasons for that are quite valid.
Since Los Angeles is by far the bank’s largest market, the Cohees have to spend about 40 percent of their time there. They are independently affluent and their local home is a $3.5 million house in Brookline. It is unreasonable to expect them to live in less habitable accommodations in L.A.
Another reason: Los Angeles is a major target for expansion. It makes sense for the CEO to become an established figure in the community and to develop good relationships with upscale residents whom the bank expects to become valuable customers. One must wonder, however, whether the sight of such black affluence might have caused the FDIC examiner to have an adverse emotional reaction. END ]
Financial Crises have Consequences
In the same recording, Cohee explained that “Being a financially literate being is not as complicated as most people might think”, although he and OneUnited seemed to have found it very difficult, having initially requested $50million in bailout money when the financial crisis hit, eventually receiving $12 million from the Troubled Asset relieve Program (TARP), in recognition of their $50million plus exposure to potential losses with Fannie Mae and Freddie Mac when they went into conservatorship. In the process they managed to draw on the good will of Maxine Waters, Congresswoman from California, Ranking member of the House Financial Services Committee, and spouse of a former member of the OneUnited board, who because her husband still held some stock in the bank, is now facing an ethics trial because she requested a meeting between Treasury Secretary Henry M Paulson and representative from the minority banks, including OneUnited.
Falling Short of the Mark
That particular controversy lingers on, and it looks increasingly likely that there will be no such trial before November’s elections, and a Democrat victory in the House would likely see it disappear entirely. More immediately for OneUnited are their difficulties with fulfilling the lofty ambitions of its CEO. The company’s mission statement did not only comprise of Cohee’s purple prose, but goes on to say that: “This clarity of vision and mission is reflected in everything we do. We seek to unite urban communities to share ideas, technology and management resources to better meet the banking needs of inner city communities”, and that “We provide everyone with an opportunity to achieve the basic foundation for financial security by offering affordable banking services.” Yet in January Federal deposit Insurance Corp (FDIC) rated the bank as ‘needing to improve’ in relation to the Community reinvestment Act requirements on which such banks were largely founded, and described the bank as being in ‘substantial non-compliance’ with Florida CRA laws.
Bank v Church
In Boston itself, One United has been in a long running dispute with Charles Street African Methodist Episcopal Church, one which is proving to be yet another PR disaster for the bank. Having fallen behind on repayments during the recession on a $3.7 million construction loan the church had taken out to build the Roxbury Renaissance Centre as a community facility, they found themselves being sued for the deb
t by OneUnited. Fuel was added to the fire when last month the bank issued a foreclosure notice and published auction notices on the church building itself in relation to a separate $1.1 million loan, for which the church was used as collateral. Rev Gregory G Groover Snr is reported as commenting that, “This is clearly a result of their anger around the litigation. Or maybe it was simply to humiliate and embarrass us.” Representatives for the church insist that they have tried on numerous occasions to discuss refinancing of the loans, but that OneUnited has refused to engage on the matter.
It is widely believed that the bank, which still owes money under TARP, is coming down hard on its commercial customers in particular in an effort to shore up its balance sheet. However, in the process, and particularly in its fight with the Charles Street Church, it appears to be calling down a rain of fire on itself, and undermining its own base within the black community. Rev Eugene Rivers has called for “… black clergy across the United States to look into the practices of this bank and to stand in solidarity with Charles Street AME, who are in this case a victim of predatory lending by an anti-black bank,” and such calls for action are beginning to garner widespread support.
Keeping the Trust of the Community
With less than 5% of black community wealth being handled by African-American owned banks, it is important that the reputation that many have built up for financial prudence and community re-investment and involvement is not undermined by the actions of the few, and that black communities all over the US, including Boston, can continue to trust that their money will be well managed by people who have the interests of both individual customers and the whole community at heart. With that in mind perhaps it is now time that the National Bankers Association (NBA) who represent minority bank interests, take pro-active measures and insist that the Federal Authorities to step in where they are needed.
Sources: OneUnited.com, The Blackstonian, bet.com, boston.com, bostonherald.com, Washington post Aug 12th 2010, The Daily Caller Feb 17th 2012, NY Times July 19th 2011