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Editorial: Burke's Law
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Business New Haven
1/5/2004
By: BNH
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Many if not most observers of the New Haven Savings Bank conversion battle assume that a rubber stamp approval by state Banking Commissioner John P. Burke is a foregone conclusion.
Despite the fact that Burke had scheduled a final hearing for January 5 in New Haven to allow the public to comment on the bank's proposed conversion from a depositor-owned mutual savings bank to a public stock corporation, all evidence suggests that the commissioner has aligned himself not with NHSB depositors and does not favor an open and equitable process to assure that their interests are protected.
In advertisements advancing its position, NHSB's new managers assert that bank depositors - that is, owners - have only two real "rights": the right to purchase stock, as well as certain "liquidation rights." The ad's authors neglected one important right - the decision regarding the future of the bank.
NHSB management, supporters of the conversion and even banking commission officials have steadfastly maintained that conversion from a mutual to a stock bank is a commonplace event, and there is no reason to portray the NHSB conversion as anything different.
The strong opposition by a large number of depositors and a broad range of elected officials belies that view entirely. No other Connecticut conversion in our memory has seen such fierce opposition.
Some conversion supporters have portrayed this opposition as part of an anti-business atmosphere being generated by disaffected community groups, unions and opportunistic politicians. Speaking as a voice of the business community, we vigorously disagree. To the contrary, we have heard from numerous business people skeptical of the motives of the bank's directors and deeply disappointed in the style and approach to this important decision.
From the outset we have called upon the bank's board to create a transparent process and open a dialogue with depositors and community stakeholders. NHSB directors' failure to do so has generated a damaging rift within the greater New Haven community.
The decision to withhold the individual votes of corporators is one more example of this failure.
Burke has thwarted efforts to force the release of the vote tally by individual NHSB corporators to approve the conversion. Those opposed to the conversion have sought to hold individual bank corporators accountable for their votes. To them, Burke has offered scant solace.
Commissioner Burke and the bank's directors must understand by now that throughout the greater New Haven community skepticism about the independence of the corporators chosen by the board abounds. That skepticism has tainted the integrity of their vote. While the actions of the bank's board may not be transparent the conflicts of interest of many of the corporators they chose are plain for all to see.
If history writes that the legacy of the Rowland administration is, in essence, "Looking Out for No. 1," Burke has an opportunity to distance himself from the din of me-too-ism emanating from Hartford by aligning himself with the plainly expressed will of the greater New Haven community and insisting that NHSB depositors have their say. After all, is not the job of the NHSB board of directors under current bank by-laws to represent the interests of depositors, not to flout their wishes.
If NHSB directors take that responsibility seriously, they will have nothing to fear from a depositor vote. And unless Jack Burke wishes to be remembered as the fox that was placed in charge of guarding the henhouse, he will use his authority to ensure a solution that creates the greatest good for the greatest number.
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