It has all the makings of a classic David-and-Goliath showdown.
In a cluttered four-room office above a St. Paul storefront, a ragtag army of community activists plots a publicity campaign that it hopes will pressure one of the nation's largest banks to negotiate an "affordable banking" package for low- and moderate-income customers.
But the Goliath in the fight, $78 billion asset Norwest Corp., insists it is not a bad buy.
Norwest officials have met twice this year with their tiny nemesis, the Association of Community Organizations for Reform Now, known as Acorn. But the bank says it is meeting the needs of lower-income residents - and won't give in to pressure tactics.
"We don't need to play those games, because we're doing a good job," said Patricia Hanson, Norwest Bank Minnesota's president for community development.
A chorus of regulators and local competitors back up the claim. But Alton Bennett, a member of the Minnesota and national Acorn boards, remains unbowed.
"We're not going away," he says.
The showdown between Acorn and Norwest is similar to dog fights between banks and community groups across the country. Usually, activists wait for the approval process that goes along with a big merger to make their demands, hoping the bank will acquiesce rather than lose an important deal.
The ongoing tension between banks and professionalized political action groups has become business as usual. Whichever way the Twin Cities battle ends, it is certain to afford lessons for banks and their community-based antagonists.
In this go-round, Acorn officials argue that the exceedingly profitable bank should share more of its wealth. Norwest earnings rose 22% in the first nine months of the years, to $845.8 million; full-year earnings may top $1.1 billion.
Acorn concedes that Norwest's fees and practices are similar to those of most other banks. The group acknowledges it's singling out the bank because it is the biggest based in the state.
"We're trying to get structural change, but you can't achieve that by targeting the industry," said Michael Slater, head organizer for Minnesota Acorn. "You have to pick one (company).
"Norwest is the biggest. If we can do a deal with them, we can expand it across the industry."
This year, Minnesota Acorn has issued reports critical of the company's fee structure and consumer lending program, charging that, "Norwest has substantially contributed to the existence of two separate and very unequal systems, one for the rich and one for the poor."
The group has held press conferences in the Norwest Tower lobby, packed dozens of chanting protesters into the bank's fourth-floor executive suite, and picketed Norwest branches in the Twin Cities.
It has also mailed letters to Norwest board members and to the homes of top executives, and formally opposed the company's bid to acquire San Antonio-based Union Texas Bancorp. In a letter to regulators, it charged that Norwest "ignores the needs of minority and low to moderate-income communities."
Norwest officials said they are somewhat flustered by the group's attacks - and the local press coverage they've received.
"We're perplexed," Ms. Hanson said. "They're trying to find something that will bring us to our knees ... (but) these are industry issues, and we're not the market leader."
Critics of Acorn, including some Norwest competitors, charge that the group is more concerned with its own role in the process than results.
"Why are they focusing on Norwest? Because Norwest has not made a deal with them," said one rival Twin Cities banker who has worked with Acorn officials before. "Acorn wants (Norwest) to play by its rules."
Regulators and local civic groups give Norwest passing marks on its outreach efforts.
In September, the Minneapolis Community Development Agency reported that Norwest was far and away the leader in so-called "city-assisted lending," providing $23.6 million of the $37 million provided by area banks in 1995.
Norwest has attained "outstanding" CRA ratings in each of its past two exams, and bank officials express confidence the results will be the same this year.
"You don't get that CRA rating very easily," said Robert Evans, vice chairman of Minneapolis-based TCF Financial Corp. Norwest "is doing a good job, and they're still getting nailed" by Acorn.
Acorn officials, however, say they are unimpressed by such data. Mr. Slater said that banks must work with his group "because there's no other organization in the country that represents low-income families like we do."
Now Acorn is turning up the heat, in an effort to force Norwest to the bargaining table.
Late last month it released a report, "Norwest: Minnesota's Merchant of Misery," alleging that the company's lenders routinely refer low-income borrowers to its consumer lending subsidiary, Community Credit Co., which charges substantially higher interest rates than the bank.
The allegations duplicate those of the recently published book "Merchants of Misery," edited by Michael Hudson, a reporter with the Roanoke Times in Virginia. The book charges that NationsBank Corp., Banc One Corp., and National City Corp. also make excessive profits by steering less-affluent clients to their consumer finance subsidiaries.
Those borrowers don't default at any higher rate than bank borrowers, the Acorn report states. But Community Credit, which Norwest acquired in 1994, "requires" borrowers to take out high-priced credit insurance.
Ms. Hanson said that Norwest doesn't require credit insurance and views Community Credit "as another way of meeting customer needs," because it "has more leeway."
Norwest Financial, the subsidiary which includes Community Credit and several other specialized lending operations, reported a return on assets of 3.13% in the second quarter of the year, compared with 1.50% for Norwest as a whole.
Those charges came fast on the heels of a July report that alleged that Norwest made $67 million, or one-third of its 1994 service fee income, from bounced-check fees. It said that returned checks cost Norwest only $2.68, but that the company charges $21.
Norwest officials disputed the figures, although they offered no numbers of their own. In an interview, they claimed not to know how much overdrafts cost the bank to process or what profits Norwest made from overdraft fees.
Acorn officials say that such fees hit lower-income people hardest, and that as a result 25% of households in the nation - and 44% of nonwhite families - don't have a checking account.
"These fees amount to modern-day redlining," said Mr. Bennett. "It's tough for people to enter the economic mainstream without a banking account."
In the late-1980s, Acorn persuaded TCF to modify its underwriting standards and to create a pool of funds to cover portions of mortgages that can't be sold on secondary markets.
What may be more important to Acorn officials is that the deal served as a template for similar deals with other banks in the Twin Cities, including First Bank System Inc. and Firstar Corp.
Norwest did not sign on to Acorn's mortgage program, but is involved with several other groups to provide low-cost mortgages to inner-city neighborhoods, Ms. Hanson said. She also acknowledged that Acorn played a role in helping to shape one of those programs.
Acorn hopes to duplicate the success of its TCF mortgage strategy with bank fees, by getting Norwest to better publicize its fees and to offer low-cost overdraft protection, lower minimum deposits, and credit counseling to low-income customers.
But Ms. Hanson said that Norwest already offers community credit counseling and a checking account with no minimum balance requirement, and that it exceeds disclosure requirements for fees.
"If you look at pricing in the Twin Cities market, we're not the market leader in most (fee) categories," she said.
She added that Norwest prices overdrafts to discourage customers from writing bad checks, and won't change the policy, or offer overdraft protection - a credit product - to unqualified borrowers.
Acorn "thinks overdrafts have to be affordable. We think they shouldn't happen," Ms. Hanson said. "It's a crime to write a bad check."
Mr. Engen is a freelance writer based in Minneapolis.
