Banker & Tradesman previously reported that the debut of America’s Mutual Banks, a new group promoting the survival of mutual institutions, has received a tepid response from local mutual bankers. But local attorneys also took notice – and they’re more surprised at the controversial man running the show.

America’s Mutual Banks’ primary promoter and organizer is Douglas Faucette, a Washington, D.C.-based partner with Locke, Lord Bissell & Liddell. In a recent Banker & Tradesman article, he spoke forcefully about the need for mutuals to fight for their survival. With their interests overlooked by lawmakers and regulators, mutual banks are minorities in the industry whose long-term survival is threatened.

But Faucette is well-known among his peers for helping flip cash-only mutuals to stock institutions, effectively diminishing the number of banks for which his group intends to advocate. Much of his career has been spent representing banks as they convert to stock institutions, according to local attorneys and Faucette’s own online biography. In that light, his involvement with America’s Mutual Banks appears to be unusual at best.

“A very large part of his transactional practice is in converting mutual institutions to stock institutions,” said William Mayer, Boston-based partner with law firm Goodwin Procter, adding that Faucette had a national reputation for his bias toward the stock form of banking. “He has been aggressive in marketing his skills in that regard.”

Dubious Reputation

Converting mutual banks to stock institutions comes with a number of incentives. Stock banks can raise capital far more easily through investors, and when sold to larger competitors, stock bank executives frequently make a handsome profit. Critics added that some law firms have aggressively pursued these transactions – and raked in plenty of fees in the process.

Some local banking attorneys declined to speak on the record, but privately told Banker & Tradesman that Faucette’s involvement seemed suspicious, given his reputation. Although America’s Mutual Banks has a number of prominent, national mutual bankers claiming membership, it is operated out of Faucette’s office. Membership fees are also sent there.

Faucette said he hasn’t done a mutual-to-stock conversion in years, but acknowledged that he formerly did a brisk business in converting banks – which is why he has a decidedly non-mutual reputation.

“I was very successful at it, so it’s not surprising,” he told Banker & Tradesman in conversations subsequent to our initial coverage of his formation of America’s Mutual Banks. “I’m usually successful at whatever I do, when I want to do it.”

His professional career was geared toward helping banks make their own choices, Faucette said, whether it was to convert from mutuality or defend themselves against conversion. He cited one recent case, Spencer Bank Savings and Loan versus Menlo Acquisition Corp., in which he defended the New Jersey-based mutual’s right to resist conversion attempts from its depositors.

Court documents show that Faucette’s firm was on the side of the bank as it tried to fight off a forced conversion.

But Faucette’s biography on his law firm’s website strikes a different note: “Widely-known throughout the financial services industry for his regulatory/M&A and thrift demutualization practice, Mr. Faucette has been involved in the demutualization of almost every savings institution in the country with assets in excess of $1 billion.”

Despite Faucette’s background, some out-of-state mutual bankers have signed on to the new advocacy group, dismissing its founder’s prior business as immaterial.

“Certainly I’m aware of [Faucette’s] background … I’ve known Doug for a long time, he’s a very intelligent individual. … and I don’t have any particular concerns,” said Bill McGarry, CEO of Ridgewood, N.Y.-based Ridgewood Savings Bank.

Not A Proponent

Faucette’s reputation hadn’t made it around to some Massachusetts banks, who nonetheless gave his new group a lukewarm reception.

Some local bankers, including Elizabeth Jones, CEO of Everett Cooperative Bank, told Banker & Tradesman they didn’t know Faucette’s name, but said they didn’t intend to join America’s Mutual Banks, anyway. With strong groups like the American Bankers Association in place, Jones said, a new group for mutuals seemed redundant and counter-productive.

Faucette pointed out that it made very little sense for him to be creating a mutual advocacy group – one that would give mutual banks a stronger national voice – if he secretly wanted to help these mutuals become public. Trying to foster mutual-bank pride wouldn’t exactly make such a task easier.

But Sean Mahoney, a Boston-based partner with law firm K&L Gates, noted that if someone wanted to network with potential clients, creating a group comprised solely of those clients would be one way to do it.

And while Mahoney acknowledged that Faucette’s statement that he hadn’t been doing much work in converting mutuals to stock institutions recently may be accurate, he also noted that very few people had been doing such work. With the marketplace so rocky, the timing was wrong to do a stock conversion anyway, Mahoney said, and such activities have been few and far between in the past few years.

Stanley Ragalevsky, a Boston colleague of Mahoney’s and fellow partner at K&L Gates, was more blunt in his assessment of Faucette’s involvement with a mutual bank advocacy group, given Faucette’s background: “I would not count him as a proponent of mutuality.”

Mahoney did add that there was nothing wrong with a lawyer helping banks convert to stock institutions. “[Faucette] has been a strong proponent of charter choice,” he said, although Mahoney, like other Boston lawyers, said he knew Faucette primarily as a demutualization attorney.

Faucette, for his part, said other lawyers weren’t objective commentators on his career, and they often weren’t aware of the variety of work he’d done to both keep and convert mutuals.

“People are funny, what their recollections are,” he said.