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Occupy Wall Street's anger at banks stops at Amalgamated

The bank, owned by the Workers United labor union, has emerged as the movement's unofficial financial institution. But it too has had its share of controversial investments.

November 18, 2011|By Nathaniel Popper, Los Angeles Times
  • Amalgamated Bank is where the Occupy Wall Street movement has about $326,000 in donations deposited, or about two thirds of the total raised by the New York arm of the movement, according to its finance committee.
Amalgamated Bank is where the Occupy Wall Street movement has about $326,000… (Carolyn Cole, Los Angeles…)

Reporting from New York — The Occupy Wall Street movement has led many banks to hire extra security. Manhattan's Amalgamated Bank has rolled out the red carpet.

The bank, owned by the Workers United labor union, has emerged as the unofficial financial institution of the anti-Wall Street movement.

Even people who hate banks, it seems, need a bank.

"It was quite obvious we were not going to open a Bank of America account," said Wylie Stecklow, who serves on Occupy Wall Street's finance committee. "But we had to deal with banks if we were going to process funds."

Amalgamated is where the Occupy Wall Street movement has about $326,000 in donations deposited, or about two thirds of the total raised by the New York arm of the movement, according to its finance committee. When things have heated up, as they did when protesters were temporarily evicted early this week, the bank has provided support, including storage space and conference rooms, and has kept tellers around after hours when protesters needed money.

But even banks trying to change the world get drawn into the less attractive corners of Wall Street. Amalgamated made some controversial investments in California subprime mortgages and recently gave a 40% ownership stake to some of the same private equity titans that Occupy Wall Street has been protesting against.

"First and foremost the bank has to be a bank, and has to be and should be a successful bank," said the bank's chairman, Noel Beasley, who is also the head of the Workers United union.

Ed Grebow, the bank's CEO, is a former private equity manager himself, coming to the bank from J.C. Flowers & Co., a global private equity firm run by billionaire investment banker Chris Flowers.

More recently, though, Grebow has been out on the streets of New York protesting during marches aimed at denouncing the banking industry.

"I'm trying to show personally that you can be a bank, but also be supportive of progressive values," said Grebow, who occupies a corner office in midtown Manhattan that is sparsely decorated with old union trinkets.

The tension between upholding progressive ideals and operating in a world mesmerized by money has been a growing issue for Occupy Wall Street. It has come up in the movement's incongruous effort to trademark its name, and in debates about accepting donations from business leaders.

In California, the Oakland encampment confronted the contradictions when it begrudgingly deposited $20,000 in a mega bank — Wells Fargo — while it waited for a credit union account to open.

But these tensions are brought into particular focus at Amalgamated. Founded by the Amalgamated Clothing Workers of America in 1923, the bank has a long history of trying to bridge the chasm between capitalism and labor.

In the early days, the bank existed to provide services to immigrant workers whom other banks avoided. Amalgamated has continued to cater to those customers, with things such as free checking accounts and branches in working-class neighborhoods that are underserved by other banks.

The bank has grown to 27 retail branches focused mostly in New York, with other locations in Pasadena, Las Vegas and Washington.

But along the way, the bank has also added some of the more complex financial products that have gotten other banks into trouble — including a commercial loan division and a relatively new unit focused on making private equity investments.

Grebow says with each of the bank's operations there is a careful effort to only support projects that its union partners would agree with.

"We talk a lot about what we need to do to be a bank that has good business practices," he said.

When the protesters on Occupy Wall Street's finance committee journeyed to meet Grebow at the bank's midtown headquarters, they liked what they saw.

"He's a very regular dude," said Pete Dutro, who is one of the members of the committee that is handling the movement's money. "He definitely had the air of authority that comes with a bank CEO. He came across as one of us."

But even Grebow acknowledges that it has not always been a smooth ride.

The thirst for profit led the labor-backed bank, like many conventional institutions, to invest in the doomed subprime mortgage market. It bought $212 million worth of high-risk mortgage loans issued by Calabasas-based Countrywide Financial, which imploded and nearly failed during the financial crisis before being bought by Bank of America.

That not only proved to be a toxic investment, but it also put Amalgamated in a tricky situation in which it owns mortgages that are being foreclosed on by Bank of America.

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