It’s not a Fortune 500 company or major Wall Street player. But Westamerica Bank has something its big competitors don’t: The distinction of being the one bank that fought back against the Greenlining Institute.
Northern California-based Westamerica Bank endured the standard protest and negative press blitz in 2002 after it filed a merger application with the Federal Reserve Bank.
But instead of meeting with Greenlining officials and coming up with a plan to invest in low-income communities, the bank called a lawyer.
Attorney Jonathan Joseph fired off a letter to Greenlining, demanding an apology and threatening a libel lawsuit for a press release that vilified the lender and its Chief Executive Officer David Payne as having Scrooge-like behavior.
Greenlining’s “concocted statistics and fabricated claims” are “inaccurate, derogatory, misleading and unfounded” and meant to “incite the public and mislead federal regulators,” Joseph wrote, according to a 2002 story in the American Banker, a trade publication.
The offending press release blared in a headline with all capitals: “WEST AMERICA BANK’S CEO MAKES MILLIONS WHILE COMMUNITIES GET NOTHING!” It went on to say that Payne made $6.9 million a year plus $19 million in stock options while each of its 94 branches averaged only about $1,000 in grants to the poor.
The release accused Westamerica of “utter neglect for the community.”
In his letter, Joseph responded by saying “the bank is not a charity, a foundation or any other type of non-profit organization. There is no legal or ethical link between executive compensation paid and community investment activities,” according to American Banker.
Joseph demanded that Greenlining publish a retraction and apologize to the community.
Greenlining responded by posting a six-page memo on its Web site defending its position. The last page was a letter to Payne titled, “Public Apology,” that directed the banker to the previous pages.
Greenlining also complained to the Federal Reserve Bank and asked for a public hearing. However, this time there was no long, drawn-out regulatory process. Rather, the Fed granted the application in about six months — lightning speed for a bureaucratic agency bogged down by red tape.
The Fed even praised Westamerica for its lending practices under the Community Reinvestment Act, which was enacted to prevent redlining.
In the Fed’s 2002 report approving the merger, board secretary Robert Frierson discounted the issue of Payne’s salary, saying it wasn’t an issue. The report went on to say that an unidentified “commenter” — the commenter was not identified, but Greenlining had previously promised to challenge this merger — wanted the board to impose future “commitments” on Westamerica or take action against them, presumably if the agreements weren’t upheld.
The board refused. A commenter also asked for a delay in acting on the proposal, which was also denied. And in refusing to hold a hearing, Frierson wondered why it was necessary if the Fed had already received the complaints in writing.
“The commenter’s request fails to demonstrate why its written comments do not present its views adequately,” Frierson wrote. “The commenter’s request also fails to identify disputed issues of fact that are material to the board’s decision and that would be clarified by a public meeting or hearing.”
But Greenlining also complained to regulators that Payne threatened them with a libel suit as a way to suppress their right to comment on the merger.
“The commenters asked the board to take steps to prevent banks from interfering with the free speech rights of community groups commenting on applications,” Frierson wrote.
The regulators clearly didn’t want to be involved in that either, referring Greenlining to the court system if it felt victimized.
In 2005, an unnamed commenter again tried to derail another Westamerica acquisition, criticizing its lending practices to low-income residents. However, in its report granting the merger, the Fed disagreed, arguing that the bank’s record was “excellent.”
And, in similar language to the 2002 application, the “commenter” wanted the Fed to enforce certain future commitments against Westamerica. It refused, saying that was beyond the scope of the law.
And it was apparent that this “commenter” was still waiting for a meeting with Westamerica.
“One commenter has requested the board to arrange an informal meeting between the commenter and Westamerica,” the report said. “The Board’s Rules of Procedure … does not require any person to attend an informal meeting. Westamerica declined to meet with the commenter through this process.”
The bank has continued to flourish, and two years ago US Banker magazine named it the best mid-sized bank in the nation.
About the authors:
Tori Richards is a veteran broadcast and print investigative journalist with CalWatchdog, a project of the Pacific Research Institute. Mark Tapscott is editorial page editor of The Washington Examiner.