Corus Bank in Chicago is defending itself against claims that it preys on the elderly and the poor.

The $2.2 billion-asset bank rakes in roughly $1.3 million a year in fee income from 60,000 Social Security recipients. These are not customers, but the government wires their monthly checks to Corus, which cuts checks that recipients pick up at the payday lenders of their choice.

Corus also makes most of its small-business loans to three categories of companies: a national network of 1,000 payday lenders, currency exchanges, and check-cashing operations.

As a result, activists are asking federal regulators to downgrade the bank's Community Reinvestment Act rating to "needs to improve."

But Corus executive vice president Dave Johnson said the bank and the companies it finances are plugging a gap left by other lenders.

"The number of people who use this [seniors] program … seems to indicate that there must be some need for it," Mr. Johnson said. "One could argue that to take away a program like this could have a disastrous impact on the people who rely on it."

Corus' borrowers, he said, are legitimate businesses that provide a much-needed service in their communities.

But a watchdog group, the Chicago CRA Coalition, says Corus shirks its responsibilities.

"We want the OCC to send a signal to this bank that it's not doing its part for the community and is not being a responsible financial institution," said Dan Immergluck, a senior vice president of the Woodstock Institute. The Chicago nonprofit, which monitors area banks and encourages economic development, is a member of the Chicago CRA Coalition.

This is the first time the coalition has singled out any bank. It lodged its complaint now, it said, because the timing is right: The OCC is giving Corus a CRA exam - the bank's first since 1998 - and the exam is expected to be wrapped up in mid-April.

Mr. Johnson said that in his five years with the Chicago bank he has received no complaints about its CRA compliance.

Corus has increased its community reinvestment and lending since its last CRA exam, he said. For example, he said, last summer it committed $20 million to make home loans to low-income residents in a pilot program run by the City of Chicago.

"We're really disappointed by the coalition's evaluation," Mr. Johnson said. "We disagree with what they said and their interpretation of what we're doing. We think we merit a 'satisfactory' rating, and we're confident we will receive one."

Almost all banks do.

At yearend, 91.6% of OCC-regulated banks had a "satisfactory" rating, and 6.9% were considered "outstanding," said Malloy Harris, an OCC national bank examiner and a CRA team leader. Only 1.5% were rated "needs to improve," and none got "substantial noncompliance."

In recent years the Association of Community Organizations for Reform Now has successfully argued that regulators should downgrade CRA ratings for two banks.

In May 1998, Acorn persuaded regulators to lower the "outstanding" rating of St. Louis-based Mercantile Bank to "satisfactory." Six months later the group's efforts led to a two-notch drop, from "satisfactory" to "substantial noncompliance," for $1.1 billion-asset Marquette National Bank in Chicago; when Marquette appealed, regulators raised its rating to "needs to improve."

Mr. Harris said examiners seldom receive public comment, even though the regulatory body welcomes it and takes it seriously.

During evaluations, he said, regulators rate banks on the amount of housing and small-business loans they make in low- and moderate-income areas, along with other investments. They are also given credit for innovation in meeting community needs.

The Chicago CRA Coalition contends that Corus fails on all counts.

Beyond complaining about Corus' charging high fees to seniors and financing payday loan companies, the coalition asked the OCC to censure the bank for buying $87 million of mortgage loans from Cityscape Financial Corp. Lawsuits accuse the Elmsford, N.Y., lender of preying on the poor with inflated fees and interest rates.

But Mr. Johnson rejected that criticism also.

"The portfolio we purchased from Cityscape had a low percentage of loans that we'd consider high-rate, high-fee loans," he said. "In each case we had a loan like that, we asked the customer to sign a disclosure statement … stating that they knew the terms and conditions of the loan.

"We got a signed disclosure statement from these people. They know what kind of loan they have. You can't define that as an unscrupulous business practice."

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