Enlisting community advocates in its war for Great Western Financial Corp., Home Savings of America announced Thursday it would invest $70 billion in its markets during the next 10 years.

"This is the best, by far, Community Reinvestment Act commitment ever made," said Bob Gnaizda, Greenlining Coalition general counsel. "Our members are rooting for Home Savings because it's very unlikely a comparable commitment could ever be secured from Washington Mutual."

H.F. Ahmanson & Co., Home Savings' parent, made a hostile bid for Great Western Feb. 17. Early this month, the Chatsworth, Calif., thrift accepted a friendly offer from Washington Mutual Inc. of Seattle. Ahmanson, Irwindale, Calif., enriched its offer Monday by 15%, to $6.6 billion.

Home Savings' community reinvestment plan, hammered out with the coalition and the California Reinvestment Committee, would recruit the help of more than 200 community, civil rights, minority business, and religious groups.

In past megamergers, support from community activist groups has been crucial. Their role is even more important in a hostile situation because CRA protests can hold up a bidder's application, allowing a competitor to gain an all-important time advantage.

"In a hostile deal timing is everything, and this makes community groups much more important than in a typical deal," said Charles Grice, executive director of the Community Reinvestment Institute, a Los Angeles-based, nonprofit research group.

In its battle with First Bank System Inc. for First Interstate Bancorp last year, Wells Fargo & Co. announced an unprecedented $45 billion pledge of CRA lending in local communities.

In return, Greenlining Coalition members promoted Wells over First Bank; 120 witnesses sponsored by Greenlining testified in support of Wells at Federal Reserve hearings on the competing bids.

"Wells did it as a PR gambit, and First Bank was not big enough or sophisticated enough to come back with their own pledge," said Matthew Lee, executive director of Inner City Press/Community on the Move, a New York- based activist group that has held up several large bank mergers on CRA grounds.

"I would be surprised if Wamu doesn't make such an announcement," he added.

In fact, Washington Mutual officials said Thursday that they, too, would unveil a "comprehensive" community reinvestment plan in the next several weeks but refused to release any details.

The pledge made by Home Savings includes $45 billion of home loans and $12 billion of consumer loans by 2008 to minority group members and people living in low- to moderate-income census tracts. Another $3 billion is to finance multifamily housing, 35% of which would be in low- to moderate- income census tracts. Home Savings also agreed to lend $10 billion to small businesses, with roughly 75% of that in loans or lines of credit of less than $50,000.

Finally, Home Savings is to donate at least $150 million during the next 10 years to charitable organizations, including 10% of its proceeds from pending goodwill litigation.

"I would be astounded if Washington Mutual, with its arrogance about the community, matches this commitment on any level," said Alan Fisher, executive director of the California Reinvestment Committee.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.