A Bronx community group is trying to block U.S. Trust Corp.'s plan for absorbing a trust bank it bought.
Inner City Press/Community on the Move contends that the banking powerhouse has a poor commitment to serving low-income neighborhoods.
The group has filed a complaint with the Federal Deposit Insurance Corp., challenging U.S. Trust's plan for the former trust bank subsidiary of New York-based money manager J&W Seligman Co.
Last month, U.S. Trust announced it had completed the acquisition of the trust subsidiary and other accounts from Seligman.
Though the purchase itself did not require regulatory approval, the acquisition recently received approval from the New York State Banking Department.
However, for U.S. Trust to fold the businesses into its own - and mix noninsured and federally insured deposits - the banking company has to receive approval from the FDIC.
It is this step that Inner City Press is attempting to block, claiming that U.S. Trust's commitment to low-income neighborhoods is "too low."
"They have taken a very indirect white-shoe approach," said Matthew Lee, the leader of the community group. "Somehow they manage to remain invisible."
U.S. Trust, however, dismisses the complaint as "completely groundless."
"We expect we will get Federal Deposit Insurance Corp. approval," said a U.S. Trust spokeswoman. "The complaint doesn't have any real impact on our bank, because the deal is closed."
But the official with the FDIC said his agency has not yet approved U.S. Trust's application to merge.
Gregory P. Wyka, an assistant regional director with the FDIC in New York confirmed that his agency is currently reviewing Inner City's comments and declined to discuss the timing of a decision by the agency.
Mr. Wyka also said that protests like Inner City Press's are "not unusual."
Inner City Press wants to force U.S. Trust to improve its community reinvesting record, especially in the South Bronx.
"The law requires them to do something (for the community), and they're presently not doing it," Mr. Lee said.
Although Mr. Lee acknowledged there is no "quota" for a wholesale bank's community reinvestment commitment, he said that U.S. Trust's share in New York City is about $7 million, of which $3.2 million is a letter of credit to a housing development in the Riverdale section of the Bronx, an area he calls affluent.
"We think that's too low," Mr. Lee said. "U.S. Trust takes the easiest way out."