Security Pacific Deal Fought by Consumer Groups

A coalition of California community groups has asked the Federal Reserve to reject Security Pacific National Bank’s attempt to acquire 20% of Mitsui Manufacturers Bank.

The move is the latest effort by consumer activists to thwart bank mergers that they contend fail to provide adequate benefits for minority and low-income consumers.

In a five-page letter sent Monday to a Federal Reserve vice president, the so-called California Reinvestment Committee contended that Security Pacific’s credit record fails to meet standards under the 1977 federal Community Reinvestment Act, which requires regulators to examine whether merging financial institutions provide loans and credit to neighborhood residents.

“In all of 1988, Security Pacific made only three loans to home buyers in predominantly black South Central Los Angeles,” Gail Hillebrand, an attorney for Consumers Union, one of six community groups opposing the acquisition, said in a release.

But Dick Warner, a spokesman for Security Pacific, said the bank’s Community Reinvestment Act record was reviewed last fall by regulatory agencies in connection with its merger with Southwest Bank and “was said to be satisfactory.”

Warner said the total of only three home loans to South Central residents in 1988 was accurate but “do not reflect the current state of affairs.” He had no current numbers, however.

Hillebrand said Security Pacific should follow the lead of Bank of America and Wells Fargo, which have set $50 million and $25 million, respectively, as goals for affordable-home lending for minorities and the poor.