Maui County wants Bank of America to live up to a decades-old promise it made to Native Hawaiians when it committed $150 million in loans to help them build and buy homes on lands set aside for them by Congress after the overthrow of the monarchy.

Last summer, the Maui County Council hired former Hawaii Attorney General Margery Bronster to pursue a lawsuit against Bank of America for what many consider to be its failed obligation to the islands’ indigenous people. The council approved paying Bronster’s firm more than $200,000.

But since then, the county and its attorneys have been struggling with how best to take on the nation’s second largest bank, which has more than $2.3 trillion in assets and has orchestrated its own years-long campaign to quiet the controversy.  Nearly a year later, no lawsuit has been filed and Maui County has for the most part been keeping discussions about the case in executive session.

Bank of America has said through lawyers and lobbyists that it kept its promise to the islands’ Native Hawaiians, although not as originally envisioned. As proof, the bank points to a letter it received from the state Department of Hawaiian Home Lands in 2007 that states it fulfilled the $150 million commitment.

Flag flies at Kaiona Beach Park with the majestic Koolau Mountains near Waimanalo.
A small group of Native Hawaiians have been fighting with Bank of America over a $150 million lending commitment it made more than 25 years ago. Cory Lum/Civil Beat/2020

Maui County faces a number of challenges in pursuing the issue, including whether it even has legal standing.

Officials who have weighed in on the dispute — including Hawaii Gov. David Ige and U.S. Sen. Brian Schatz — say they don’t see many options when it comes to forcing Bank of America to make good on its original promise. Ige, in particular, says the state has no grounds to pursue a legal claim because it could not find an enforceable contract or settlement agreement with the bank.

Bank of America spokesman Bill Halldin said in a statement to Civil Beat that Maui County is off base with its potential lawsuit.

“While we respect the issues faced by the native Hawaiian community, this is a meritless claim relating to a pledge made in 1994,” Halldin said. “The Bank fulfilled its pledge and the state confirmed that in 2007.”

The Maui County Council, for most part, has discussed its legal strategies in closed door meetings.

Vice Chair Keani Rawlins-Fernandez said the lawsuit, in general, will focus on the bank’s failure to meet its stated lending goal to Native Hawaiian homesteaders and the effect it has had on the county’s property tax revenues. The county is also exploring whether it has a case to pursue the bank over fraudulent foreclosures.

“This commitment was born of racism,” Rawlins-Fernandez said. “I am Kanaka Oiwi, Native Hawaiian, and by breaking its promise Bank of America has hurt our lahui by depriving us of the opportunity to build generational wealth.”

She said she worries that if Maui County doesn’t proceed with a lawsuit, Bank of America will continue to avoid responsibility.

“They have the money, they have the high-powered attorneys and time is always on their side,” Rawlins-Fernandez said. “Our council is the most bold when it comes to standing up for the people and the communities, but I’m hoping that the other councils will join the lawsuit because their counties were also deprived of the same taxes and their constituents deprived of the same opportunities.”

‘We Were Considered Unbankable’

The dispute between Maui County and Bank of America has its origins in the early 1990s when the corporation still had a presence in the islands.

In 1994, Bank of America wanted to expand its market share in Hawaii by purchasing Honolulu-based Liberty Bank.

The bank needed approval from the Federal Reserve for the acquisition, but a Maui nonprofit, Na Poe Kokua and an affiliated organization, the Hawaii Fair Lending Coalition, filed a complaint, alleging the banks had participated in discriminatory lending practices that prevented certain Filipinos and Native Hawaiians from obtaining home mortgages.

To help win the Fed’s blessing, Bank of America announced it would provide $150 million in residential mortgage loans to Native Hawaiian borrowers seeking to buy homes on 200,000 acres of land held in trust for them by the state Department of Hawaiian Home Lands.

“They lied. They never did it.” — U.S. Sen. Brian Schatz

The bank pledged to give an additional $100,000 in grants to help Filipinos in Hawaii find affordable housing and dedicated another $30 million in construction loans for the island of Kauai, which was still recovering from the devastation caused by Hurricane Iniki in 1992.

By most accounts, the bank never completely followed through. In 1997, Bank of America shut down its retail operations in Hawaii and by 1998 had only lent $3 million to Hawaiian homesteaders. The bank didn’t abandon the islands altogether, however.

That same year Bank of America needed the Fed’s approval to merge with NationsBank to become the largest commercial banking presence in the U.S.

The bank once again vowed to fulfill its $150 million lending commitment and bank executives even flew to the islands to meet with Na Poe Kokua and other Natives Hawaiian beneficiaries at Iolani Palace to prove they were serious.

Kehaulani Filimoeatu, who is one of the founders of Na Poe Kokua, was at those gatherings. For a time, she said, she was hopeful Bank of America would keep its promise.

“For Hawaiians in Hawaii we were considered unbankable and high risk,” Filimoeatu said.

Kehaulani Filimoeatu is one of the co-founders of Na Poe Kokua, a nonprofit that helped spur Bank of America to pledge $150 million in Native Hawaiian home loans. Courtesy: Bryan Berkowitz

Native Hawaiians have struggled for generations to gain equal footing — both politically and economically — with those who colonized the islands, she said. Not having access to credit only exacerbated the inequalities, especially when Native Hawaiians experience higher rates of poverty than most other ethnic groups in the state.

She said Bank of America’s commitment presented an opportunity to slow the cycle by putting money in the hands of Native Hawaiians who wanted to own homes.

In 2003, officials at DHHL began negotiating a separate agreement with Bank of America that allowed it to pay down the balance of its $150 million obligation through other means, including by lending to developers.

Four years later, DHHL’s deputy director, Ben Henderson, sent a letter to Bank of America saying it had fulfilled its commitment based on his review of a two-page spreadsheet bank officials had provided to the agency that listed the various lines of credit, construction loans and grants it had doled out over the years.

“The statement of BoA contributions toward fulfillment of its commitment appear to be in order,” Henderson said.

For Bank of America, the letter was a key to proving it had met its obligations, but to some Native Hawaiians it signaled “back-room dealing” by Gov. Linda Lingle and her Republican administration, as prominent activist Bumpy Kanehele wrote in an op-ed in the Honolulu Star-Bulletin.

Kehaulani Filimoe’atu, second from left, met with Catherine Bessant, third from the right, in Hawaii in 1998 when Bank of America reaffirmed it would follow through on its $150 million commitment to Native Hawaiians. 

In 2012, the Hawaiian Homes Commission, which oversees DHHL, said Henderson had “signed off” on releasing Bank of America without the commission’s approval.

A spokesman for DHHL now says that, outside of the letters, the agency has no record of any written agreements or memorandums of understanding with Bank of America detailing how the commitment would be fulfilled or any documents backing up the numbers provided in the spreadsheet.

“Would anybody be satisfied with something like that?” said Brandon Makaawaawa, who is the current president of Na Poe Kokua. “That’s $150 million with no receipts. If you filed your taxes today you’d have more documents.”

Makaawaawa and others, including Rawlins-Fernandez, have questioned whether DHHL even had the authority to negotiate with Bank of America considering the commitment was made to the Fed and not to the state agency.

Halldin said Bank of America would not provide any more documents other than what was in the spreadsheet.

Years Of Arguments

In 2018, Ige sent a letter to Catherine Bessant, one of Bank of America’s top executives, and someone American Banker magazine had described as “The Most Powerful Woman in Banking.”

Ige told Bessant that Bank of America was “delinquent” in fulfilling its promise to Native Hawaiians and that it was time to come back to the islands to negotiate a “fair and final settlement.” Almost immediately, there was a statewide push to hold Bank of America accountable.

The Maui County Council was the first to pass a resolution supporting Ige’s efforts. Over the next year or so, Honolulu, Kauai and Hawaii county councils followed suit along with the Hawaii Senate.

Even Hawaii’s senior U.S. Sen. Brian Schatz  weighed in when asked about the controversy by Filimoeatu during a town hall on Maui.

“They lied,” he said. “They never did it.”

Bank of America, meanwhile, launched its own campaign to counter the narrative that it had walked away from its commitment to Native Hawaiians.

In 2019, it hired Ivan Lui-Kwan, a prominent Native Hawaiian attorney, to lobby state and county officials. Ethics filings show the bank paid Lui-Kwan nearly $75,000, a significant amount of which was dedicated to swaying the governor.

In addition to lobbying, Bank of America also filed a lawsuit against Maui County in 2020, just hours after the council approved its resolution to pursue legal claims against the corporation. But U.S. District Court Judge J. Michael Seabright threw out the case, saying the challenge was premature because Maui County hadn’t even filed its lawsuit yet.

“Rather than entangle ourselves in something that is so complex and so far in the past we’re choosing to move forward.” — DHHL Director William Aila

Ige refused multiple requests to be interviewed for this story but in a pair of written statements his office explained the governor no longer believes the state has legal standing to force a settlement with Bank of America.

“The governor’s position was formed after consultation with the Department of the Attorney General, which reviewed information from the various loan and project documents still available given the passage of time,” the office said. “Because more than 20 years have passed, there is no expectation that new information will become available. But if new information does become known, the State will review it to see if it changes our assessment.”

The statement added that other entities that might have claims against Bank of America “should address them with the Federal Reserve and BOA.”

William Aila, director of DHHL, said he believes Bank of America fulfilled its commitment, based on Henderson’s letter.

“Ben Henderson is a very honorable man,” Aila said. “I know that he wouldn’t have issued that letter if he didn’t think it was the correct thing to do. I know that he wouldn’t have done it if he wasn’t authorized to do so.”

DHHL William Aila during Senate Hawaiian Affairs Committee meeting.
William Aila, director of DHHL, says he thinks it’s time to move past the dispute with Bank of America and find new opportunities for loans to Native Hawaiians. Cory Lum/Civil Beat/2020

In the meantime, Aila said he would prefer to seek out new opportunities for lenders to provide construction and home loans to Native Hawaiian beneficiaries. If Bank of America decided to do that on its own, he said, it would be “admirable.”

“Rather than entangle ourselves in something that is so complex and so far in the past we’re choosing to move forward,” Aila said. “My position is, Bank of America, if you want to come to Hawaii and start lending again we will work with you.”

Bank of America has argued that it was not that easy to get into the market for Native Hawaiians home loans.

The bank said it faced “stiff competition” from other lenders, including Bank of Hawaii and First Hawaiian Bank.

There was also a shortage of properties available to borrowers due to DHHL’s struggles to develop homesteads fast enough to keep up with demand. In 1998, the bank said, there were more than 16,000 Native Hawaiian beneficiaries waiting for residential properties. By 2018, the wait list had grown to more than 23,000.

Regulatory Reform May Be The Answer

There’s not a lot of recourse available when a bank backs away from a community-based lending commitment, according to Linda Jun, senior policy counsel for Americans for Financial Reform.

Often the promises are made during the merger and acquisitions process, she said, but there’s not much oversight afterward. At that point, it’s up to the community to speak out.

“The Bank fulfilled its pledge and the state confirmed that in 2007.” — Bank of America spokesman Bill Halldin

“The reality is that this is not an official part of the process, and the regulators that could do more, haven’t,” Jun said. “So really the accountability is from the public.”

Nick Weiner, of the Committee for Better Banks, says he finds it confounding that Bank of America has been so obstinate in its opposition to reopening discussions over the $150 million commitment in a climate in which racial justice and equity are at the forefront of public discussion.

Bank of America clearly has the money, he said, pointing to recent announcements that it’s raising the minimum wage of its employees to $25 an hour and investing more than $1 billion in racial equality and economic opportunity, particularly in Black, Hispanic and Asian communities.

“They’ve been stonewalling for decades,” Weiner said. “I don’t know why they don’t come back and reach some compromise to fulfill the commitment.”

Congressional action might be necessary, Schatz said. His office has yet to find a clear mechanism to reopen negotiations with Bank of America, much less punish it for abandoning its original commitment.

“This is an area that’s ripe for reform,” Schatz said. “Bank mergers should not be rubber stamped. If regulators give banks credit for commitments that they make to their communities then the regulators should have the authority to enforce the commitments. It’s pretty clear to me that they don’t.”

Civil Beat’s coverage of Maui County is supported in part by a grant from the Nuestro Futuro Foundation.

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