Merrill Lynch Pledges Minority Aid
Merrill Lynch & Co. announced Wednesday that it will invest at least $77 million in minority communities in Los Angeles and Orange counties as part of a 10-year economic development partnership with local community groups.
The partnership, billed as the first of its kind in the securities industry, will include $40 million in zero-down-payment mortgage loans to low-income home buyers, $20 million in small business loans and $5 million in equity investments in small businesses during the initial three-year pilot project.
The community investment program was negotiated by the Greenlining Institute and the Orange County Alliance for Community & Economic Development, two multiethnic coalitions devoted to garnering economic opportunities for minorities. The San Francisco-based Greenlining Institute has negotiated several other larger agreements with banks, utilities and insurance companies to boost investment in economically depressed urban areas.
Although the dollar amount is smaller than for some of those other agreements--notably the $45 billion promised by Wells Fargo Bank over 10 years--it represents a first step for Merrill Lynch, said Paul W. Critchlow, Merrill Lynch senior vice president of marketing and communications.
“We feel this makes very good business sense for us,” Critchlow said.
Minority communities represent “a huge untapped market,” he said. “We think there’s a lot of wealth for Merrill Lynch to tap into and to help create.”
The community investment program, announced at news conferences in downtown Los Angeles and Santa Ana, grew out of discussions with the Greenlining Institute and the Orange County Alliance in the wake of Orange County’s December 1994 bankruptcy filing.
Orange County sued Merrill Lynch for $2 billion, accusing the brokerage firm of triggering the unprecedented bankruptcy by illegally extending billions of dollars in credit that was then invested in exotic securities. Merrill Lynch has maintained it acted properly.
Details of the community investment program are still be worked out, Critchlow said, but will include, in addition to the mortgages and small business loans and investments: more than $3 million in investments to create low-income housing units in Los Angeles and Orange County; $4 million in investments in education, job training, literacy, entrepreneurship and other programs “that advance individuals into the economic mainstream”; and the promise to hire 30 financial consultants with experience in “historically underserved communities.”
