Activists rip OCC on 1st Union-Chase deal.

A New York-based community group is asking the Office of the Comptroller of the Currency to overturn part of an October decision giving First Union Corp. permission to acquire Chase Manhattan Corp.'s private banking deposits and loans.

The group, Inner City Press/Community on the Move, charged in a Dec. 4 letter that the banks improperly amended their application in order to include sale of the private banking business, which includes more than $100 million of deposits and $25 million of loans to residents of Central and South America.

"The OCC should have required them to do a new public notice or to reapply," said Matthew Lee, executive director of Inner City Press/Community on the Move. "They didn't do that."

Rather, the agency approved the amended application Oct. 14, giving First Union permission to buy eight Chase branches and the private banking business.

Mr. Lee said his group, which is waging a massive community reinvestment campaign against Chase, had no way to know that Chase wanted to sell the private banking business.

"That strikes us as profoundly unfair and not legal," Mr. Lee said. "I can't see how we cannot win on this."

OCC spokesman Dean DeBuck defended the agency, saying banks can amend applications without a new comment period as long as they do not "materially" change them.

Also, the public could comment on the transfer because Chase had to apply to move the private banking deposits from various affiliates to its Florida operation, Mr. DeBuck said.

Chase spokeswoman Charlotte Gilbert said the bank and the comptroller acted properly.

"It didn't change the nature of the transaction, so another public comment period wasn't required," Ms. Gilbert said.

The Comptroller's explanation didn't sit well with Mr. Lee, who said a person had no way to know that the Chase application involved First Union.

"It is not an application to transfer the deposits to First Union," Mr. Lee said. "There was never an application for that. There was never a public comment period for that. It is between Chase Manhattan and Chase Florida."

Also, he said $100 million can never be immaterial.

Some banking attorneys, however, sided with the Comptroller. "There are two issues," said H. Rodgin Cohen, an attorney at Sullivan & Cromwell who represents First Union. "One - in the abstract - is it so material to the transaction that notification needs to be published? Second, is it material to the protestant? I'm not sure you would satisfy either test."

Former comptroller Robert L. Clark agreed. "If the sale of the branches has already been properly noticed, there really isn't a need to give people the chance to protest," said Mr. Clark, a lawyer at Houston's Bracewell & Patterson.

Another banking attorney, who does some work for Chase, said $100 million of deposits is not material to an $890 million transaction between multibillion-dollar institutions.

A First Union spokeswoman said the bank would wait for the Comptroller to approve the internal Chase transfer before contacting any private banking customer.

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