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When federal regulators seized Park National Bank and its parent company last October and turned operations over to US Bank, it caused an outcry through Chicago’s West Side and into Oak Park.
And the fight is not over.
On Saturday, March 13 at 10 a.m., the Coalition to Save Community Banking will meet at the Light of Liberty Church of God and Christ at 2 W. Washington Blvd. in Oak Park. The group will then march to Park National’s former headquarters at the corner of Austin Boulevard and Madison Street where it will stage a protest over the loss of the community bank that had invested heavily on the West Side. The coalition plans to assemble 300 to 500 people for the march.
“We’re gearing up a campaign around a Community Benefits Agreement that targets US Bank to continue the kind of community lending that Park National had,” coalition member and South Austin Coalition organizer Elce Redmond said.
The agreement “is a set of criteria [centered] around local hiring, around lending, around supporting community organizations,” said Redmond. “It’s about a seven- or eight-page document that we’ve had. And we’ve been trying to have negotiations with US Bank on this document.”
E-mails and calls to US Bank have not been returned. A receptionist told a reporter on Feb. 24 that no one could comment as things were still “floating.”
Mike Kelly, chairman of Park National and its parent company, First Bank of Oak Park, was known for lending to customers in Chicago’s impoverished West Side neighborhoods in Austin and West Garfield Park. After the 2007 closing of Austin High School, Park National extended a $22 million, no-interest loan to build Christ the King Jesuit College Preparatory School; students began attending class in the new building Jan. 4.
“This bank epitomized what community banking was; they loaned money to small businesses, community organizations, nonprofits,” said Redmond.
Attorney Kelli Dudley, a professor and program assistant in the Predatory Lending Program at John Marshall Law School, said Park National was well known in the community for giving “zero-percent loans to community organizations and schools, giving money to community organizations through grants” and did “things like cleaning up houses that had been subject to foreclosure and making them nice and livable and resalable and yet absorbing a little bit of that cost each time.”
Redmond also said he heard Kelly, a longtime River Forest resident, was considering filing suit against the Federal Deposit Insurance Corp. over how it handled the takeover.
“I don’t know what his specific intentions are,” said Dudley, who educates Austin residents on predatory lending and avoiding foreclosures. “There might just be some legal technical issues that would make it hard to sue the FDIC, but it does seem like that the community bank and the people affiliated with it and the people who relied on it should have some kind of legal recourse, because here a big decision takes place under cover of the night and they’re not given any opportunity to have any input into it.”
Kelly recently took legal action against JP Morgan Chase, which sued the FBOP last June over a loan Chase called in and which may have contributed to the worsening financial state and eventual government seizure of Kelly’s company.
“They [Chase] sued him and he filed a motion with that lawsuit,” said Dudley. “JP Morgan Chase, it is alleged, unfairly accelerated and called in a loan, and it was a huge amount percentage-wise of their [Park National’s] portfolio, which caused them to look temporarily weak.”
The protest planned for March will come less than two months after dozens of Park National supporters traveled to Washington, D.C., to attend a congressional hearing on last year’s seizure and selling of Park National and its other banks. Kelly testified as members of the Coalition to Save Community Banking looked on.
Redmond, who made the round-trip bus trip with other coalition members, said several congressional members at the Jan. 21 hearing “put the FDIC on the hot seat.”
“The FDIC sort of admitted, ‘Well, it didn’t really need to happen,’” Redmond said, “But how do you reverse it? That becomes the big issue.”
There is also the issue of big bank versus small bank in the government’s eyes, as Dudley said: “There is a difference in the standards that are applied in evaluating whether the FDIC should come in and close down a Park National versus whether they should come in and close down one of the six largest banks in the country, and it’s just frankly not fair at all,” said Dudley.
Camille Lilly, the volunteer executive director for the Austin Chamber of Commerce, said the loss of First National still ripples through the community.
“They [Park National] were community banking,” she said. “We had the leadership, we had the commitment – we had all of that at Park National for the community to develop themselves, and when we remove that opportunity, the community struggles with developing themselves.”
Park National’s community philanthropy made it unique in the banking world, Dudley said. “Rather than making all of their decisions based on what will flow the most money to shareholders and what will flow the most money into the corporation, they made some decisions that were based on doing good in the community.”
Lilly and others worry about whether US Bank will perform some of these same community bank functions. “From what I’ve heard and read, it is not their philosophy to be community banking sensitive. That is not what they built their model on, so it’s a void in our community because we once had it.”
For more information about Saturday’s march, contact the South Austin Coalition at (773) 287-4570.