Local Groups Protest Chase-Chemical Merger
A coalition of Southern California community, church and business groups Tuesday filed a protest with the Federal Reserve Board against the pending merger of New York giants Chemical Banking Corp. and Chase Manhattan Corp., accusing Chase of ignoring minority and lower-income customers in its home and small-business lending.
The groups said the Fed’s action in the $10-billion Chemical-Chase deal will set standards for future combinations, including the even-bigger proposed transaction involving First Interstate Bancorp.
In a news conference Tuesday morning outside the Los Angeles branch of the Federal Reserve Bank of San Francisco, representatives of a dozen organizations called Chase “the worst minority home lender in Los Angeles.”
Organizers of the news conference said that in 1993, only 2.4% of Chase’s 1,557 home loans in the Los Angeles area were to African American or Latino borrowers.
A Chase spokeswoman said the bank tripled its mortgage originations to minority borrowers last year. The main reason for the growth was Chase’s decision to start offering smaller loans instead of just focusing on the “jumbo"--over $203,150--market, she said.
The protesters asked the Fed, which oversees bank holding companies, to push Chase to commit a total of $90 billion over a five-year period to community lending. That would be five times the amount Chase previously pledged.
Robert L. Gnaizda of the San Francisco-based Greenlining Coalition said the Fed’s ruling in the Chase-Chemical case could affect the local battle in which First Interstate has agreed to merge with First Bank System Inc. of Minneapolis but is also the target of a hostile takeover attempt by Wells Fargo & Co. of San Francisco.
If the Fed takes layoffs and branch closings into account in Chase-Chemical, as community groups are urging, it could also consider those factors in the First Interstate deal, Gnaizda said.