Chase, Chemical Banks Plan Community Loan Program
Chase Manhattan Corp. and Chemical Banking Corp. on Wednesday said they will launch an $18.1-billion, five-year nationwide community-investment program following their merger early next year. But some community groups quickly said the program has serious problems.
In a joint announcement, the two banks, whose merger would create the largest bank in the country, said the program would be the largest in U.S. banking.
Of the total, $4.2 billion would go to New York state, with $3.2 billion earmarked for New York City.
The program is seen as a means of stemming opposition to the merger by community groups. Under the 1977 Community Reinvestment Act, federal regulators may block mergers by banks that do not have good records of lending money where they do business.
Currently, Chase and Chemical together invest $1 billion a year in low-income projects.
The community groups have described their actions as the only way to get banks’ attention and to boost lending to minority and low-income neighborhoods.
The Chase-Chemical program includes $3.4 billion in loans and investments to assist small businesses and community-based nonprofit organizations.
Another $13.5 billion would be used for affordable mortgages nationwide to be provided by subsidiary banks and the new Chase Residential Mortgage Co., as well as an expansion of credit and mortgage counseling programs.
Further, the banks said they are pledging $1.2 billion in loans and investments for affordable housing and commercial and economic development in low- and moderate-income communities in New York, New Jersey, Connecticut and Texas.
The program also includes $70 million in philanthropic initiatives and contributions to community-based nonprofit groups nationwide.