ARCHIVES OF LEAD STORIES
January 1, 2004
Activists criticize bank’s
community investing plan
Jeremy Schwab
The recent merger of the Bank of America, the largest retail bank
in the country, with Fleet Bank sent ripples of worry through
the community development community.
Advocates for low-income communities say that Bank of America’s
broad national strategy for investing in lower-income communities
will not be as effective as Fleet’s state-by-state approach.
“Our main concern is the Bank of America will not do state-by-state
plans, and these programs are very specific in Massachusetts —
a soft second mortgage program, the MassHousing Partnership, Boston’s
Empowerment Zone,” said Massachusetts Association of Community
Development Corporations Deputy Director Maureen Flynn. “Without
making commitments to those specific programs, we don’t
know how a national plan could possibly utilize the programs we
have in place to deliver services and products to low- and moderate-income
communities.”
The Bank of America promised in 1999 to commit $350 billion to
lending and investing in low- and moderate-income communities
nationwide.
“We are ahead of that promise,” said Bank of America
spokeswoman Elouise Hale. “We are the number one small business
assistance lender in the country and the sole financier for more
than one hundred thousand units of affordable housing. We have
an outstanding rating for Community Reinvestment Act compliance.
Our [national] approach is very understandable given we are a
national and global entity, not a regional entity like Fleet.”
Hale admitted that the Bank of America has not increased its monetary
commitment to low- and moderate-income investing despite acquiring
Fleet and moving into seven more states.
Bank of America Chairman and CEO Ken Lewis said in an October
press conference that he would honor Fleet’s commitments
to investing in low-income communities. But Hale said the bank
has not yet decided which commitments to honor.
“Those decisions have not been made at this point,”
she said. “We will continue to work with CDCs to determine
local funding priorities.”
Fleet’s New England commitments include $25 million per
year to small business lending, soft second mortgages to 2000
families by 2005 and $25 million per year in charitable giving,
$11 million of it in Massachusetts.
Fleet’s giving and loans lag behind the promises. Fleet
invested $22 million last year in small businesses and has provided
845 soft second mortgages since 2000.
Fleet went beyond the call of duty, however, in giving grants
as well as loans for rental housing development. All banks that
merge with smaller banks in Massachusetts must contribute rental
housing money to the MassHousing Partnership.
“We’ve called [the Bank of America] to convert some
of that loan obligation into grant obligation,” said MACDC
deputy director Flynn.
Juan Cofield, president of the New England Area Conference of
the NAACP, warned the Fleet-Bank of America merger might have
a negative impact on communities of color.
“We are concerned that there could be a dimunition of banking
services to communities of color,” said Cofield. “We
are concerned that the decision-making process will be outside
of this area.”
The merger must first be approved by the federal government and
is not expected to be complete until this summer.
“We’re comfortable that we are going to meet the regulations,”
said Hale.
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