Activists Plan To Fight Link Of N.Y. Banks
A powerful community group is getting ready to challenge the proposed merger of Chemical Banking Corp. and Manufacturers Hanover Corp.
The Association of Community Organizations for Reform Now, knows as Acorn, plans to ask the Federal Reserve Board to block the deal under either the Community Reinvestment Act or federal antitrust law or both, an adviser to the group said in an interview.
The group plans to determine its course by early next week.
Group Compiles Data
"We anticipate being able to do a CRA challenge and an antitrust challenge as well," said Nikos Valance, the adviser. Mr. Valance is working with the Financial Democracy Campaign, which includes Acorn and other community organizations.
Mr. Valance said it was too early to discuss the specifics of the planned challenges. "We are in the process of gathering data," he said.
Meanwhile, a New York State legislator has called on regulators to block the proposed merger unless both banks guarantee that their branches in low-income neighborhoods will remain open.
CRA challenges are also expected to drop up in the proposed merger of NCNB Corp. and C&S/Sovran Corp. NCNB Corp. chairman Hugh L. McColl Jr. said he "expects some challenges" but doubted they would delay the transaction.
State Legislator's Conditions
State Sen. Franz S. Leichter, a Manhattan Democrat, held a press conference Tuesday to make public a letter he had sent to Derrick Cephas, New York's superintendent of banks, concerning the Chemical-Hanover pact.
Sen. Leichter, a longtime critic of New York's banks, stated that the merger should be approved only if the two banks agree to identify their branches in underserved communities; guarantee that, if an identified branch is closed, its surrounding community will still have access to banking services; and guarantee no reduction in money available to small businesses and to housing projects for people with low and moderate incomes.
"He expresses some serious concerns, and we intend to look into them," Mr. Cephas said.
Mr. Leichter has also written the Federal Reserve Board and the U.S. Justice Department. These letters include data from a study the senator released in 1989 showing that branch closings were accelerating in New York City, with black and Hispanic neighborhoods suffering the most.
Massive Presence in N.Y.
If combined, Chemical and Hanover would have 436 branches in the New York City metropolitan area. About 70 branches overlap, and some of those are slated to be closed.
Upon announcing their merger agreement last week, Chemical and Hanover said the combined bank would have more branches in low- and middle-income neighborhoods than any other in New York.
In March, the Federal Reserve Bank of New York gave Hanover its highest possible rating for Community Reinvestment Act compliance.
Chemical has not undergone a federal CRA exam since the law was amended to require those ratings be made public. The bank has, however, gotten the highest possible CRA rating from the New York State banking department.