Thrift May Make Community Loan Pledge

Washington Mutual Inc., the Seattle-based thrift that recently purchased longtime Southern California financial institutions Home Savings and Great Western, is expected to announce today a commitment to invest $120 billion in lower-income communities during the next 10 years.

The anticipated announcement comes on the heels of a $350-billion community loan plan unveiled Wednesday by merger partners NationsBank Corp. and BankAmerica Corp.

“This commitment is the result of ongoing dialogue with community leaders,” said Kerry Killinger, chairman and chief executive of Washington Mutual, now the nation’s biggest thrift, with more than 350 branches in California.

The $120 billion expands on a $75-billion lending pledge that Washington Mutual made in April 1997. More than $60 billion of the pledge will be earmarked for California, where the company has most of its branches, Killinger said.

“This is the best commitment in the nation so far,” said John Gamboa, executive director of Greenlining Institute, a nonprofit community rights group in San Francisco. “It’s on the cutting edge. It’s creating new avenues of investment and setting new, specific standards. This one has the meat the BankAmerica plan is missing.”

Community activists this week sharply criticized the B of A pledge for its lack of specifics, although it included a much larger dollar amount than Washington Mutual’s plan.

The Washington Mutual pledge includes $81.6 billion earmarked for affordable housing loans to minority borrowers, to borrowers in low- to moderate-income areas and to borrowers earning less than 80% of median income.

It also includes $25 billion in loans to small businesses, with an emphasis on loans of $50,000 or less. About $12.5 billion will be set aside for low-income apartment and mobile-home developments and $1.3 billion for community development.

The loans will begin next year, once Washington Mutual’s merger with H.F. Ahmanson, the Irwindale-based parent of Home Savings, is completed.