BankAmerica Proves Nimble In Deflecting Loan Criticism

SAN FRANCISCO -- While BankAmerica Corp. and activists dispute the company's community lending record, one thing is not under debate: Even critics concede that the bank has managed the public relations aspects of the issue with great skill.

That's especially important as regulators consider BankAmerica's proposed merger with Los Angeles-based Security Pacific Corp. If mishandled, community reinvestment concerns can delay or even block regulatory approval of a merger.

BankAmerica's approach to the issue may become a textbook example of how to defuse potential CRA problems. The company laid the groundwork for approval by making a serious commitment to community lending several years ago.

Open Lines of Communication

It also has kept its doors open to activists. Since announcing the Security Pacific deal, the San Francisco bank has made timely concessions to community groups and provided a steady flow of upbeat information on the subject.

BankAmerica's handling of data on home loans to minorities, which the Federal Reserve released last month, is a case in point. Though the company's California bank had a better record than most competitors, it still turned down black and Latino mortgage applicants at a rate roughly 50% higher than for whites in 1990.

Before releasing the potentially explosive data, as required by the 1989 Home Mortgage Disclosure Act, BankAmerica called meetings with community groups in San Francisco, Los Angeles, and San Diego to give them an advance look. It then issued a press release on the results, despite requests by some activists to hold off until the data could be analyzed.

Out in Front of Critics

BankAmerica's statement stressed its community lending record, but conceded that it needed to improve. It then outlined specific steps its California bank is taking, including special underwriting procedures aimed at easing loan approval for minority applicants.

BankAmerica "confronted the problem directly and took a positive approach," said Kenneth H. Thomas, a Miami-based CRA consultant. "And they didn't use [the bank's] |outstanding' rating as a shield."

The approach reflected a carefully crafted plan for handling CRA protests, developed over the last five years and refined in the wake of the Security Pacific merger announcement.

"Our strategy has been to be out in front on CRA, preempting any demands on us," said executive vice president Donald A. Mullane, the bank's point man on CRA issues. He emphasized that the public relations strategy would be doomed to failure if it were not backed by a real commitment to improve.

BankAmerica chief executive Richard M. Rosenberg has made CRA a personal priority, holding a series of meetings with community groups in recent months, Mr. Mullane noted.

The Greenlining Coalition has been one of BankAmerica's toughest critics. Selwyn Whitehead, the group's executive director, classifies the bank's CRA blitz as "a spin-doctor approach." However, she concedes that the bank is "moving in the right direction."

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