OneUnited’s “cardinal sin”
OneUnited Bank has a complicated relationship with bills. Specifically: It isn’t fond of paying its own. The Boston-based bank was saved in 2008 with a $12 million cash infusion from the US Treasury. Since that time, OneUnited has missed 11 quarterly payments to the Treasury, racking up $1.7 million in unpaid dividends. That’s what makes a headline in today’s Herald a real screamer: The bank that won’t pay its own bills is putting the screws to a Dorchester church, threatening to foreclose if the church doesn’t come up with $1.1 million by next month.
OneUnited is chasing the Charles Street African Methodist Episcopal Church for a $1.1 million balloon payment on a five-year old loan the church used to construct a community center. The church’s lawyer tells the Herald that the church has not missed any monthly payments on the loan. Typically, commercial loans are extended or refinanced when their balloon payments come due. It’s also not unheard of for banks that want to close out loans to schedule foreclosure auctions to create leverage over commercial borrowers.
But the prospect of OneUnited — which was bailed out in 2008 specifically because of its ties to minority communities in Boston, Florida, and California — playing hardball with a historic black church has observers calling foul. The Ten Point Coalition’s Rev. Jeffrey Brown tells the Herald today, “I think it’s absolutely outrageous for a bank — especially a bank that’s supposed to be a minority bank — to move on an institution like the Charles Street. If there’s anything that’s a cardinal sin, this would be it.”
The optics of the loan standoff certainly don’t look good for OneUnited, given the bank’s liberal attitude toward repaying its own debts. OneUnited was operating under a cease and desist order — one of the steps on the road to a bank closure — when it received its lifeline from the Treasury. The bank now owes the Treasury a dividend payment on its $12 million bailout every quarter. To date, it has paid just under $94,000, while racking up $1.7 million in unpaid dividends. As a chronic non-payer of bailout dividends, the Treasury has assigned a government observer to sit in on the bank’s board meetings. OneUnited posted a $2.8 million profit last year. The bank has also been battered with rounds of bad press relating to its tepid mortgage business. It was recently hit with a fine from the FDIC, and it has come under scrutiny for its compliance with the Community Reinvestment Act. In short, it’s not the type of institution that should pick a fight over financial management, if such a fight can be avoided.
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