Feb. 7, 2023

Climate change financing, displacement mortgages, CFPB attacks and racial lending disparities are key reasons groups urge FDIC to ‘deny this merger application’  


SAN FRANCISCO – The California Reinvestment Coalition (CRC) announced today that it has—alongside more than 50 national, state and local community, civil rights, tenants’ rights and climate justice nonprofit organizations—sent a letter to the Federal Deposit Insurance Corporation (FDIC) formally opposing the acquisition of Luther Burbank Savings by Washington Federal Bank (WaFd).

The 13-page letter, which includes endorsements from the California Public Banking Alliance, CASA of Oregon, Committee for Better Banks,  Friends of Public Banking Santa Rosa,  the Oil & Gas Action Network and the Western Center on Law and Poverty, asks the regulatory agency to extend the comment period and to hold public hearings. The letter notes that Luther Burbank and WaFd have failed to demonstrate that they have met community credit needs, the merger will provide a clear public benefit or that they will meet the convenience and needs of affected communities. 

“We urge the FDIC to deny this merger application. In the alternative, we believe the FDIC must impose substantial conditions to ensure that fair housing, community reinvestment, displacement, climate, and managerial concerns are addressed,” the letter reads. 

“In 2022, after years of blatant rubber-stamping of mergers and acquisitions, federal banking regulators held two public hearings for merging banks with footprints in California,” said CRC CEO Paulina Gonzalez-Brito. “We hope the FDIC will continue this streak of gathering input from the public on bank merger applications, and either reject this merger or impose substantial conditions. Not doing so would mean the FDIC is turning its backs on vulnerable communities.”

CRC has raised concerns relating to racial and ethnic disparities in Luther Burbank’s mortgage lending and its record of lending to problematic landlords who displace and harass tenants. Additionally, WaFd’s record of funding oil and gas companies as well as its recent attacks on the Consumer Financial Protection Bureau by way of WaFd President and CEO Brent Beardall, who sits on the board of the American Bankers Association, which filed a lawsuit against the CFPB last fall for its attempts to root out discrimination in financial services, poses an outsized threat to consumers and vulnerable communities.  

“The CFPB is under attack at this very moment. It was created to protect consumers against unfair practices like discrimination. The fact that the president and CEO of Washington Federal Bank sits on the board of a trade group suing the CFPB due to its efforts to fight discrimination and arguing the CFPB is unconstitutional, immediately suggests that consumers, particularly the most vulnerable consumers, are not at the heart of their business model,” said Elyse Hicks, Consumer Policy Counsel at Americans for Financial Reform.

Speaking to the impacts of Luther Burbank’s problematic lending patterns, Chanchanit Martorell, Executive Director of the Thai Community Development Center, noted the difficulties Asian Pacific Islander (API) immigrant community face when attempting to access capital as well as the inability to create wealth due to barriers in lending. “Financial institutions like Luther Burbank need to do a better job making their loan products accessible in neighborhoods of color, including to API immigrants, whether they be for business start-up/expansion and/or first-time home buying as the contributions of API and all immigrants to the local economy are significant and should not be underestimated,” Martorell said. 

Ilonka Zlatar, President of 350 Sacramento and founding member of the Sacramento Environmental Justice Coalition, called on banks like WaFd to redirect funding away from the oil and gas industries. According to a 2020 earnings report, WaFd identified $294 million in outstanding commercial and industrial loans to Oil and Gas.

“The burning of fossil fuels is destabilizing the global climate, as scientists have known since the 1970s. The people who are most affected by the consequences of climate change and pollution are those who have contributed the least to this problem, and who have the fewest resources to adapt and rebuild when natural disasters like megafloods, wildfires, hurricanes and droughts strike,” Zlatar said. “It is irresponsible for banks to continue to sink funding into stranded assets that we know this planet and its people cannot afford. We need banks to redirect this funding to the future, a regenerative and anti-oppressive economy, not the extractive and exploitative economy of the past.”

Several of the signees noted Luther Burbank’s record of lending to landlords who routinely harm tenants, including K3 Holdings, a landlord sued by 16 of its tenants for fair housing and other violations, as well as Swami International, Monark, Mittal, and affiliated property owners. Between September 2017 and March 2020, Swami, Monark and affiliates racked up 460 code violations, according to data obtained from the Los Angeles County Department of Public Health.

When banks finance bad landlords that harass and evict tenants, they are harming our communities,” said Maria Patino Gutierrez, Director of Policy and Research at Strategic Actions for a Just Economy (SAJE). We hear from tenant families every day that landlords like K3 Properties and Swami International subject tenants to verbal and physical abuse and uninhabitable conditions in order to force them out or squeeze them for exorbitant rents and unnecessary charges. We need for this cycle of banks profiting off of community and tenant harm to stop.”

WaFd, headquartered in Seattle, has  $21 billion in assets and $16 billion in deposits across 200 branches in Washington, Oregon, Nevada, Idaho and Texas. The bank does not have any branches in California currently. In January, it submitted an application to acquire Luther Burbank, a Santa Rosa, California-based bank with 10 branches, $8 billion in assets and $6 billion in deposits. 

Endorsers of the letter include the following organizations:

  • California Reinvestment Coalition 
  • Americans for Financial Reform Education Fund 
  • Anti-Eviction Mapping Project 
  • Bank On Our Future 
  • Berkeley Student Cooperative 
  • CA Community Land Trust Network 
  • Cal State Fresno Office of Community and Economic Development 
  • California Capital Financial Development Corporation 
  • California Coalition for Rural Housing
  • California Housing Partnership 
  • California Public Banking Alliance 
  • California Rural Legal Assistance, Inc.
  • CASA of Oregon 
  • CCEDA 
  • Committee for Better Banks 
  • Community Economics 
  • Community Housing Development Corporation 
  • Congregations Organized for Prophetic Engagement (COPE) 
  • Consumers for Auto Reliability and Safety 
  • Council of Community Housing Organizations
  • East Bay Housing Organizations
  • East Los Angeles Community Corporation 
  • Empire Justice Center
  • Extinction Rebellion San Francisco Bay Area
  • Fair Housing Advocates of Northern California 
  • Fair Housing Council of the San Fernando Valley
  • Faith and Community Empowerment 
  • Friends of Public Banking Santa Rosa 
  • Housing and Economic Rights Advocates (HERA) 
  • Housing Rights Center 
  • Housing Rights Committee of San Francisco 
  • Inclusive Action for the City 
  • K3 Tenant Council 
  • Little Tokyo Service Center (LTSC) Community Development Corporation 
  • Multicultural Real Estate Alliance For Urban Change 
  • Oil & Gas Action Network 
  • PCR Business Finance 
  • Public Counsel 
  • Public Good Law Center
  • Public Interest Law Project 
  • Rainforest Action Network 
  • Revolving Door Project 
  • Sacramento Housing Alliance 
  • SAJE (Strategic Actions for a Just Economy) 
  • San Francisco Public Bank Coalition 
  • San Joaquin Valley Housing Collaborative 
  • Southern California Black Chamber of Commerce 
  • Tenderloin Neighborhood Development Corporation (TNDC) 
  • Thai Community Development Center 
  • The Central Valley Urban Institute 
  • The Greenlining Institute 
  • The Sacramento Environmental Justice Coalition 
  • Western Center on Law and Poverty 
  • Woodstock Institute

Read CRC’s letter to the FDIC


About the California Reinvestment Coalition

The California Reinvestment Coalition(CRC) works to build an inclusive and fair economy that meets the needs of low-income communities and communities of color by disrupting systems of oppression. CRC is the largest statewide community reinvestment coalition in the country, with over 300 member organizations across California that provide services to thousands of Californians. CRC members include affordable housing developers, community development financial institutions, housing counseling agencies, small business technical assistance providers, legal services agencies, and community-based organizations.



Media Contact:
Brian M. Maxey
bmaxey@calreinvest.org, 510-813-7552