Community activists blasted the Federal Reserve Board for approving Chemical Banking Corp.'s acquisition of Chase Manhattan Bank without waiting for the results of a recently completed community reinvestment review.

"They violated due process," said the Rev. Charles Stith, executive director of the Organization for New Equality. "This stinks."

The Fed gave Chemical permission late Friday to buy Chase, a $10 billion deal that will create the country's largest bank. The Fed rejected scores of complaints under the Community Reinvestment Act, saying both banks meet the credit needs of their communities. The Fed did not include any conditions in its order, other than requiring the bank to fulfill an $18 billion CRA commitment announced last fall.

Several groups threatened to sue to block the deal, to appeal the Fed's approval administratively, or to protest the banks to build popular support against the acquisition.

Mr. Stith said the Fed should have waited for the Office of the Comptroller of the Currency to complete its CRA review of Chase before acting on the application. Instead, the Fed relied on a 1993 exam.

Robert Gnaizda, general counsel at the Greenlining Institute, said his group will ask the Fed to reconsider the decision.

Bank officials said they aren't worried. "We are very pleased the Federal Reserve Board approved the merger and we do not believe anything these groups will try to do will stand in the way," said Chase spokeswoman Charlotte Gilbert-Biro.

Officials at the Fed could not be reached Monday or Tuesday due to the massive snow storm that hit the East Coast.

The groups will have a difficult time in court, according to Richard Ritter, a former federal prosecutor who now consults on fair-lending and community reinvestment issues. "The Fed is simply to consider what information is available," he said.

Besides, Chemical's lead bank has racked up two consecutive "outstanding" CRA ratings while Chase's lead bank has received "satisfactory" scores.

But Matthew Lee, executive director of the Bronx-based Inner City Press/Community on the Move, is not deterred. He said Monday that he plans to seek a temporary injunction in federal court this week to block the merger.

"It should not have been approved without conditions," Mr. Lee said. "The way they processed it was overly bank-friendly."

Even if the challenges fail, community groups said they plan to keep the heat on Chase. Mr. Stith said his group will establish a national "Chase Watch" to ensure the bank lives up to its $18 billion pledge.

"We are going to look at every aspect of Chase Manhattan's business and tell the truth about its responsiveness to the community," he said.

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