After 20 years running City Hall, John DeStefano plans to move into an office a mile west on Whalley Avenue—to help run a community development bank he brought into existence.
DeStefano (pictured above) plans to become executive vice-president of START Community Bank on Jan. 1, the day he stops serving as mayor of New Haven.
He made the announcement formally before 60 well-wishers at a Tuesday afternoon press conference at the bank’s 299 Whalley Ave. headquarters.
“I couldn’t imagine leaving New Haven. Everyone I care about and love and know is in New Haven,” he told them. He said he wanted to “make a difference” in his next job: “Being on the 14th floor of some corporate place was not going to do it.”
DeStefano will shift from overseeing a workforce of around 5,000 people and combined budgets of over $700 million to helping to manage a bank with 22 employees and $44 million in assets.
In a newly created position, DeStefano will report to bank President William Placke, the man he brought to New Haven to run START. DeStefano will be charged with growing the bank and making it profitable; and “furthering [its] community development activity.”
State regulators, who must approve executive hires at start-up banks, recently OK’d DeStefano’s position. He said in an interview Monday that he decided to go public now—seven-plus months in advance—in the name of public “transparency.”
For the “next act” of his career, DeStefano said, “I wanted to stay local. I wanted to do something [in which] my participation would be meaningful. I wanted to do something I was connected to in the past.
“START for me was a good fit to do all these things. It came out of my experiences. It’s hyperlocal. They’re going to be a successful bank no matter what; perhaps it more fully and more quickly gets there” with his help.
The mayor said he also hopes to do some teaching on the side starting in 2014, to keep his hand in policy and to remain in contact with idealistic young people.
DeStefano said he will conduct no business with START bank during his remaining City Hall tenure so as to avoid conflicts of interest; he also promised to avoid doing any business with City Hall during his first year at START in 2014.
Meanwhile, START President Placke said the bank in turn will not seek any new city government business during the rest of 2013 above the approximately $1.5 million in deposits already there. “I’d just feel very awkward” about soliciting, Placke said. “So we’re just going to be content with what we have and see how things develop.” Placke called START’s hiring of DeStefano “one of the most exciting developments in my banking career.”
START opened in December 2010. It grew out of a contentious battle years earlier over the sale of the old New Haven Savings Bank, the city’s last major mutual (depositor-owned) community bank, to then-NewAlliance bank (now First Niagara). DeStefano helped lead a protest movement against that sale; the ensuing negotiations with state regulators led to NewAlliance agreeing to set aside tens of millions of dollars to form a not-for-profit institution committed to lending money to businesses and families in the city. That institution, First City Fund Corporation, formed in 2004. It in turn formed START as a for-profit subsidiary.
START follows in the mold of other “community development” banks in the country modeled after Chicago’s Shorebank, City First in D.C. and North Milwaukee State Bank . The banks tend to exist to spur development in poorer neighborhoods by lending to home-purchasers and small-business owners who otherwise might have a harder time finding credit. In New Haven, START has also worked on “financial literacy” for young people and alternatives to predatory “payday lenders.” (Click here, here and here to read about some of its activities.) DeStefano served as a founding director of First City and continues to sit on both First City’s and START’s boards of directors.
Placke and DeStefano declined to divulge DeStefano’s bank salary.
Charlie Terrell’s Inspiration
In describing his interest in community banking, DeStefano displayed a 51-year-old momento and invoked the memory of a legendary New Haven business leader.
The momento is a passbook for a savings account his parents opened on his behalf with $25 at the old New Haven Savings Bank in 1962 when he was 6 years old. DeStefano remembered depositing a few bucks at a time in that account beginning in 1966, when his parents started giving him an allowance. The bank would send a representative to St. Bernadette School on a regular basis; the nuns would send kids down the hall to meet him to deposit money in their accounts and develop an appreciation for saving for the future.
The business leader is the late Charles Terrell. With a patient and conservative lending approach but a commitment to local customers, resisting the high-flying speculative development deals of the go-go 1980s, he built sleepy New Haven Savings into a large bank—courted by out-of-state corporate suitors who had to wait until Terrell’s death to get their hands on it and take it public. Terrell leveraged the bank’s success to support community causes after other local banks were gobbled by far-flung corporations with broader geographical philanthropic commitments. He set up a bank-affiliated charitable foundation. As a foster parent and philanthropist, Terrell was a respected civic figure.
After Terrell died in 2001 and New Alliance swooped in to buy New Haven Savings in 2003, DeStefano described the bank’s role in a letter:
“New Haven Savings Bank ... performs many vital functions that no other local financial entity can. It takes the deposits of our local residents and turns them into local homeownership, job creation, and entrepreneurship. It is also a committed stakeholder in the city in its philanthropy and sponsorship of community events, but also in many intangible ways. Those intangibles—like giving a low-income worker’s mortgage application an extra look—are a distinct result of the bank’s ground in this city and region. ...
“Years ago, the streets of downtown New Haven were lined with locally-owned banks whose leaders and mission were committed to the city. First National Bank, Community Savings Bank, Tradesman’s Bank, Mechanic’s Bank, Connecticut Bank and Trust, Founder’s Bank, Connecticut National Bank, First Federal, Bank of New Haven, and so forth. Because their economic self-interest was interwoven with New Haven’s fortunes, they provided the civic stewardship to strengthen the city, and they went the extra step in ensuring that local capital created local growth. All of these banks have either gone out of business or have been acquired by larger entities, making New Haven Savings Bank’s mission even more important.”
DeStefano called Charlie Terrell one of his “heroes.” He said he hopes to help START gradually achieve profitability and grow so it can eventually play a similar role to the old New Haven Savings.
START bank lost around $2 million in its second year, not unusual for a new financial institution. It aims to grow to $60 million in assets by the end of 2013, $85 million by the end of 2014, $107 million by the end of 2015. The goal is to reach profitability in 2016.
“I hope to help accelerate that—and get there safely,” DeStefano said. A community bank’s mission isn’t to engage in extending risky credit, he said. Rather, it’s to “get answers quickly and have a personal relationship” with New Haveners.
1. This makes so much sense, since DeStefano has left New Haven in such stellar financial shape.
2. “Placke and DeStefano declined to divulge DeStefano’s bank salary.” - Of course they did. Transparency my foot.
posted by: Noteworthy on May 21, 2013 12:15pm
Remember DeStefano’s famous presser on the steps of the New Haven Savings Bank - “There’s a robbery going on here…” He sure got it right.
This is the ultimate cash in. Beat up the old bank. Get the money for free, money that is available because of the stock sale (robbery) you just opposed. Control the money and the board. Sit on the board yourself. Hire the president. Tell the president to hire you. Hide the salary. Do for the bank what you did for the city - more headcounts and more deficits and enjoy the biggest paydays (taxpayer pension and START) of your professional life.
Meanwhile, START President Placke says he’ll refrain from soliciting for more money. With that high standard in place, he called the hiring of DeStefano, “one of the most exciting developments in my banking career.”
posted by: Threefifths on May 21, 2013 1:03pm
This is why I was told by someone three things you do not trust.Banks Politicians and Prechers.All lead to the money trail.Keep voting them in.
posted by: Babz Rawls Ivy on May 21, 2013 2:41pm
I am glad the Mayor has found something that will keep him connected to New Haven. All that talent and energy will be put to good use. I believe Start Bank will benefit greatly from this new addition.
I wish the out going Mayor all the best.
posted by: Hemp_Shirt_Rocker on May 21, 2013 2:51pm
Hahaha!!! A perfect lateral promotion… He’s always been “too big to fail”!! Maybe next a side-gig as consultant for the NHBOE!!
posted by: Bill Saunders on May 21, 2013 3:04pm
Destefano holding the purse strings and O’Henry steering the boat—Yikes!
posted by: lkulmann on May 21, 2013 3:51pm
I wonder if they would consider funding a state-of-the-art Laundromat. Maybe Laundry Haven or Safe START laundry Haven…the front door could have a welcome sign boasting ‘Cay’mon In’ we are here to accommodate:)
posted by: JustAnotherTaxPayer on May 21, 2013 5:25pm
It is actually good for New Haven. The Mayor will be nearby to assist whoever succeeds him, and if the city decides it needs another Mayor who can manage the city better than anyone else had done in the past for 22 years he would be available for a comeback. Thanks John for bringing the town back from the mess it was in in 1990. I wish you could have handled the gun violence deaths a better, but that all stems from having cops that want to get involved, and can overcome the micro managing that the city attorneys did in respect to how they wanted the PD to perform. Something to think about is that crime doesn’t go completely away when policies and deployment are revved up to stop it, it moves. It moves to East Haven, North Haven, Hamden, West Haven, etc. So maybe, just maybe all those towns should be thankful a full out saturation of the neighborhoods where the violence occurs never did happen. Those towns are not ready to address multiple gang murders each year.
posted by: MrLogical on May 21, 2013 8:33pm
There is no word in the English language spelled (or pronounced…) “momento.’
The word you are looking for is ‘mEmento.”
If you were speaking Spanish, “momento” would have meaning - both literally and figuratively as to indicate a ‘moment’ of time, not a remembrance.
Does the NHI have a copy editor, or proof reader?
posted by: MrLogical on May 21, 2013 8:51pm
“...and develop an appreciation for saving for the future.”
Regrettably, with rare exception, that’s not a virtue that is understood or nurtured anymore - either at home or in schools.
Thanks to the “spend it even if ya ain’t got it” fiscal philosophy of Mr. DeStefano’s Democrat party, generations of kids growing up in Democrat households (in particular) have acquired a spendthrift attitude about money and fiscal responsibility - both personally and as citizens of the republic.
That “let the government do it” mentality (i.e., shifting the burden to other taxpayers who pay taxes) is one of many things that Democrats have done and are doing to ruin America’s proud history as a nation that once valued and rewarded thrift and personal accountability, and Mr. DeStefano’s policies as mayor played an important part in that ruination.
Perhaps in his new role he can redeem himself by extolling the virtues qualities of personal and fiscal responsibility to new generations and their parents.
I’m not holding my breath.
posted by: Honest in New Haven on May 21, 2013 9:17pm
Is anyone at all surprised by this? Bill Placke’s days are numbered—start the countdown.
posted by: Bill Saunders on May 21, 2013 10:27pm
So, how much was the signing bonus???
File this one under “Keeping up with the Peyton Pattersons.”
posted by: robn on May 22, 2013 7:58am
I’m actually surprised. I thought Mayor D was headed for a university president seat like Quinnipiac.
posted by: newhaven55 on May 22, 2013 8:35am
Isn’t Attorney Young Smith also employed by the Milford law firm that is awarded so much legal work by the City, Board of Education and the Housing Authority? One hand washes another, continuing as it has for years
posted by: charletonh on May 22, 2013 11:00am
Very interesting !
Is it true that Start Bank posted losses in the past two years ? ($2.9 million) in 2010 ($2.5 million) in 2011
As their capital dwindles, when are they projected to turn a profit?
Is it true that First City Fund Corp (the non-profit) that seeded the new Start Bank) was formed with the $27 million settlement from the NewAlliance deal for two stated reasons? 1) to seed a community bank with $10 million 2) to serve as a community foundation to provide grants to local non-profits Note: What was the capitalization of the bank? $10 million or more? Where is the remainder of the $27 million?
Wasn’t the City’s Residency Card Initiative funded by FCFC ?
What other initiatives did FCFC fund?
How are grant decisions made at FCFC?
Why has there been no public accountability for FCFC, since its formation (and the award of the $27 million) was the direct result of many constituencies within the city, ie local ministers, labor, aldermen?
The community doesn’t know enough about these and other related questions to know if this is a good thing or a really bad thing!
posted by: charletonh on May 22, 2013 11:55am
And finally, the bank referenced as one of the models for Start Bank ( Chicago’s Shore Bank) is currently in really big financial trouble! Check it out!
posted by: Xavier on May 22, 2013 2:47pm
Threefifths “This is why I was told by someone three things you do not trust.Banks Politicians and Preachers.All lead to the money trail.Keep voting them in.”
Really? Got some sort of cut and paste story to support your opinion? Probably.
First, while so many cities just rolled over a let our neighborhood banks get eaten up and disconnected from their community, JD took a stand and did something. The fruit of that audacity is START Community Bank.
Second, it is easy to kick the daylights out of someone when they are down or leaving office. Give credit where credit is due. JD for all his faults, has given 30 years to help New Haven and done so with all the energy and creativity he could muster. JD is a leader, that refused to let the cynical, naysayers undermine the notion of a better New Haven. JD did what he could do and it is time to move on. He made New Haven better because he made us react to him, negatively or positively, to involve ourselves in our neighborhoods and city.
Third, it is time for the 3/5’s of New Haven to claim their 2/5 and involve themselves with others who are trying to improve their lives the lives of their neighbors. Something that is not exclusively done behind a keyboard with sarky comments. One can engage to help the city without others, with our churches, with our elected officials, and with those like banks and universities, who see the benefit in investing in New Haven.
posted by: Honest in New Haven on May 22, 2013 3:38pm
to New Haven 55: You hit the nail on the head. There is no accountability on that board since JD controls them all. There isn’t an independent voice among them. I can see it now, JD called Placke and told him to schedule the announcement! As for conflict of interest, it starts with the Board chair whose firm does get city business. This is JD’s way things get done in New Haven!
posted by: Threefifths on May 22, 2013 7:39pm
posted by: Xavier on May 22, 2013 3:47pm Threefifths “This is why I was told by someone three things you do not trust.Banks Politicians and Preachers.All lead to the money trail.Keep voting them in.”
Really? Got some sort of cut and paste story to support your opinion? Probably.
I do not have to cut and oaste.You should just ask the american people who have been screwed by all three.
First, while so many cities just rolled over a let our neighborhood banks get eaten up and disconnected from their community, JD took a stand and did something. The fruit of that audacity is START Community Bank
And this is why more and more people are turning to credit unions.
Second, it is easy to kick the daylights out of someone when they are down or leaving office. Give credit where credit is due. JD for all his faults, has given 30 years to help New Haven and done so with all the energy and creativity he could muster.
30 years to help New Haven.Again ask the people of New Haven,In fact just today I was driving in westville and went down alden ave and saw at least ten house for sale.I pull up and ask one of the owners why I you are selling and she said Crime and high Taxes.How many times has taxes gone up with J D.
Third, it is time for the 3/5’s of New Haven to claim their 2/5 and involve themselves with others who are trying to improve their lives the lives of their neighbors. Something that is not exclusively done behind a keyboard with sarky comments.
Who said I am just behind a key board.If you are reading my sarky comments,Then you two must be behind the key board.Who are these others who are trying to improve their lives the lives of their neighbors.Were are they at.
P.S. My bad Which one are you.Banker Politician or Precher.
posted by: Threefifths on May 22, 2013 7:57pm
@: Xavier Start Community Bank John DeStefano Press Conference.
Check these pictures out.Let me know what you see.I see Politicians and Prechers.
@ charletonh: I just reviewed three of First City Corporation’s 990s. To say they are interesting is an understatement. To answer one of your questions, “Grants and similar amounts” paid were $-0- on all three. If I were the IRS, I would audit the hell out of them.