3 Groups Seek to Block NationsBank, BofA Union

NationsBank Corp.’s proposed $63-billion merger with San Francisco-based BankAmerica Corp. was challenged by three community groups on grounds that NationsBank’s lending practices exclude minorities and that the combined bank will hurt consumers by overwhelming competitors in the Southwest.

New York-based Inner City Press/Community on the Move, New Mexico Alliance and Dallas-based Black Citizens for Justice, Law and Order have asked the Federal Reserve Board to block the merger and to schedule public hearings. The groups said NationsBank has a record of disproportionately denying loans to minorities while targeting these communities through consumer finance units that charge higher rates for loans.

The New Mexico and Texas groups also cited concerns about job cuts and branch closures in their states, where the two banks have the most overlap of businesses.

NationsBank’s community investment group president, Cathy Bessat, said the groups repeat statements made in two previous protests when NationsBank acquired Boatmen’s Bancshares and Barnett Banks. Both were approved by the Fed.

Last month, NationsBank and BankAmerica agreed to a merger that would create the second-largest U.S. bank with $570 billion in assets, 29 million customers in 22 states and offices in 38 other countries. The groups say questions of fair lending by the entire company and the impact on some markets must be addressed first.

NationsBank Texas, for example, denied 47% of loan applications from blacks, while turning down 20% of white applicants, Inner City Press said, citing NationsBank’s most recent lending documents filed under the Home Mortgage Disclosure Act. In Tennessee, the bank denied 49% of blacks and 19% of whites.

The disparity in approval rates is wider than the industry average, the group said.