A coalition of California community groups sees a windfall coming from the demise of the First Interstate Bancorp.-First Bank Systems Inc. merger.
The Greenlining Institute asked First Bank on Thursday to use most of a $200 million breakup fee to endow a community reinvestment foundation. First Bank is in line for the fee because First Interstate broke a contract to merge. Instead, First Interstate decided to combine with Wells Fargo & Co.
"We think it is unfair for First Bank to make a $200 million profit for providing no service to anyone," said Robert Gnaizda, the group's general counsel. "It should go back to the community because they are taking it from the communities served by First Interstate and Wells Fargo."
The foundation would operate in any state the three banks have branches in. It would finance community groups, development projects, and affordable housing. Mr. Gnaizda said his group will ask regulators to give First Bank extra Community Reinvestment Act credit if it creates the foundation.
In the letter, the Greenlining Institute asked to hear back from First Bank within 48 hours. A First Bank spokeswoman did not return calls for comment.