Bradley Voices Concern at Proposed Bank Merger

Injecting City Hall into the debate over the proposed acquisition of Security Pacific Corp. by BankAmerica Corp., Los Angeles Mayor Tom Bradley Thursday raised concerns about the possible loss of jobs and increase in commercial office vacancies as well as “the distinct possibility” that several bank branches might be closed in low-income neighborhoods.

In a letter to BankAmerica Chairman Richard Rosenberg, Bradley indicated he was particularly worried about “the impact of the proposed merger upon the economic development of the city’s less advantaged areas.” Bradley asked to meet with Rosenberg to discuss his concerns before the Federal Reserve Board acts upon the merger.

Bradley added that he was “especially concerned about Bank of America’s high rate of denial of mortgages to minority residents. The figures demonstrate that last year the bank rejected home loan applications from minorities at a far higher rate than from Anglos.”

“Within the city of Los Angeles,” the mayor wrote, “Bank of America’s denial rate for minorities was over twice the citywide average.”

The mayor does not have the power to block the acquisition, but he could add weight to any case made against the merger if he registered his concerns with the Federal Reserve Board during the monthlong review process that occurs after a formal merger application is filed. Ron Supinski, manager of media relations for the Federal Reserve Bank in San Francisco, said he expects the application to be filed early next month.

Michael Bodaken, the mayor’s housing and community reinvestment coordinator, said he has discussed the issues raised by the mayor with bank officials and said Bradley decided to write the letter after bank officials indicated their preference for holding any discussions after the merger had been approved.

In response to Bradley’s letter, bank officials said Thursday they would meet with the mayor before final action on the merger. “We recognize the concerns of Mayor Bradley and will schedule a meeting with him as soon as possible,” said a spokesman for BankAmerica’s Rosenberg.

Bodaken said he could not offer a complete count of the number of jobs and bank branches in possible jeopardy in the city’s poorer neighborhoods. He said BankAmerica and Security Pacific operate six branches each in South-Central Los Angeles. In his letter, the mayor noted “the distinct possibility that the merger will cost hundreds, if not thousands, of Los Angeles residents their jobs.”

Bodaken also said the merger could lead to 2 million square feet of vacated office space currently occupied by the two banks in Los Angeles.

Bodaken insisted that the mayor had no intention of “picking a fight with BankAmerica” and was not inclined to oppose the merger.

“We just want to find a way to retain these jobs and branches,” he said.

BankAmerica acknowledged this month that its rate of rejection of home loan applications for minorities was far higher than for Anglos last year. It released a statement disclosing that the bank denied 1.6 minority loan applications for every application from an Anglo that it denied.

At the same time, the firm announced it would offer easier lending terms for those applying for loans in low-income areas. A bank spokesman Thursday reiterated the bank’s pledge to increase its loan commitment to low-income borrowers, saying the merged bank would set a 10-year low-income lending goal of $12 million, a 33% increase over the existing goals of both banks.

In his letter to the bank’s chairman, Bradley acknowledged the bank’s plans, saying “I commend you on the effort.”