In a victory for Chase Manhattan Corp., a New York judge has ruled that the state banking regulator acted properly in approving the merger with Chemical Banking Corp.
The decision, published Tuesday, ends half of the banking giant's legal bickering with Inner City Press-Community on the Move, a Bronx-based community group that has fought the merger. A suit in U.S. district court challenging the Federal Reserve Board's approval is still pending.
"It was our view all along that Inner City Press has no case, and we regard the court's decision as a vindication of our position," said Chase spokeswoman Charlotte Gilbert-Biro.
State Supreme Court Judge Beatrice Shainswit rejected Inner City Press' arguments that the New York Banking Department lacked a basis for its decision. She said the department reviewed the lending records of both banks, the location of their branches, and their commitments to boost low- income loan programs.
"The banking board's approval was based on specific reasons arising from its evaluation of the proposed merger," the judge wrote.
In her decision, Judge Shainswit, relying on the same reasoning, also rejected a similar suit challenging North Fork Bancorp.'s merger with Extebank.
But the ruling wasn't a slam dunk. The judge also declared that Inner City Press has the legal right to challenge decisions made by the state banking department. The two banks had challenged the group's authority to sue, arguing that mergers do not directly affect it. But the judge said community groups can sue because their job is protect their neighborhoods.
Matthew Lee, the group's executive director, pledged to use this legal right to fight other bank mergers in state court. "This doesn't kill us," Mr. Lee said. "It makes judicial review of approvals under CRA a legitimate type of case."
But North Fork's lawyer downplayed Mr. Lee's victory. "The fact that she did not deny him standing ... was not particularly relevant because she upheld the banking board's decision," said William Sweet, a partner at the Washington law firm of Skadden, Arps, Slate, Meagher & Flom.
