State Street Boston Corp. was the target of protests this week by local activist groups angry about the bank holding company's lending policies and its opposition to a state tax proposal.
The $26 billion-asset bank holding company took heat from Union Neighborhood Assistance Corp. and Tax Equity Alliance for Massachussets.
UNAC, famous for highlighting Fleet Financial Group's involvement with controversial second mortgage lenders, says State Street Boston Corp. is evading state and federal Community Reinvestment Act regulations by misrepresenting itself as primarily a wholesale bank.
Although the bank holding company says it makes very few residential mortgage loans, UNAC research director Marty Leary said, "Our agency gets two or three people a week in here who are being foreclosed on by State Street."
Compliance Claimed
But State Street spokesman George Russell Jr. maintained that the bank was in complete compliance with CRA rules. "Our business is focused on servicing financial assets worldwide. We don't offer consumer mortgages," he said.
A spokesman at the Federal Reserve Bank of Boston confirmed that the bank has a satisfactory CRA rating.
Mr. Russell said UNAC's confusion may have been due to the fact that, occasionally, a bank customer who has been relocated by an employer and needs to quickly purchase a home will ask State Street for a mortgage.
He said State Street issued nine mortgages to customers in the last three years, totaling $10 million, a small percentage of the bank's assets.
But Mr. Leary said research at the registry of deeds reveals State Street issued more mortgages than Mr. Russell claimed. "We're finding more and more. The reality is they have 10 to 20 just in this county and we haven't looked at Connecticut yet," Mr. Leary said.
Mr. Leary also said that State Street has foreclosed on properties owned by "working class families." These families received loans that Dime Savings Bank of New York securitized in 1989, of which State Street became master custodian.
But Mr. Russell adamantly denied that State Street had foreclosed on any of the Dime properties. He said State Street acted as a trustee and representative of the investors in the Dime Savings securitization.
Thus, the bank could not foreclose on any of the properties. "We did not originate any of those loans, and we don't service any of those loans," he said.
Income Tax Controversy
TEAM, the other group joining the UNAC protest in front of the bank's headquarters and several of its branches, was there to criticize State Street's opposition to a plan for a graduated state income tax. The proposal is expected to be included as a referendum on the election ballot in November.
State Street is spending corporate money to sway voters against a proposal to replace Massachusetts' flat income tax with a graduated one that would cut taxes for families earning less than $100,000 and increase taxes for the wealthy, said TEAM executive director Jim Braude.
While State Street admits it has lobbied legislators on the tax issue, the bank will not reveal how much it is spending on the campaign until September, when it is legally required to do so.
Its spokesman, Mr. Russell, said the bank has gotten involved in the issue because it believes a graduated income tax will serve as "a disincentive" to new business moving to the state.
