Activists are asking the Supreme Court to let them appeal bank merger approvals to federal court under the Community Reinvestment Act.
The groups argue that a federal appeals court erred when it ruled in December that activists do not have standing to challenge Fed merger approvals in court because they are not harmed by these decisions.
Instead, they said in their March 12 appeal that activists must have the right to challenge mergers. According to their argument, regulators only have the power to enforce the CRA through the merger approval process. This means the only way activists may challenge CRA assessments is by appealing merger approvals to the court.
"To deny standing to organizations which fight for affected communities' right to equal credit access is to emasculate a citizen's right to benefits under the CRA," wrote Michael E. Deutsch, a lawyer at the New York-based Center for Constitutional Rights, which represents Inner City Press/Community on the Move, Black Citizens for Justice, Law and Order, and Delaware Community Reinvestment Action.
Industry lawyers, however, questioned whether the Supreme Court would hear the case. "This is a real long shot," said Warren Traiger, a principal at the New York law firm Butler, Fitzgerald & Potter.
Mr. Traiger noted that it is not enough to simply have an interest in the outcome. Instead, the Supreme Court has required groups to show that they have been injured by the regulator's decision and that there is a direct link between the injury and the conduct of the regulator.
"These groups cannot meet this test," he said. "How were they hurt?"
Paul H. Schieber, a partner at the Philadelphia law firm Blank, Rome, Comisky & McCauley, said the community groups have no case because the law was never intended to benefit activist groups.
"The law was not designed to help any organizations," he said. "The law was designed to help the Fed say no to a bank merger if the banks were not diligent in meeting community credit needs."
"This is just an effort by some groups to use CRA as a blackmail statute," he added. "That is nothing new."
But Matthew Lee, executive director of Inner City Press/Community on the Move, was more optimistic, noting that the courts have given groups permission to file Fair Housing Act suits on behalf of the community even though the activists are not personally harmed by the discrimination.
"To let the law have meaning, the people whom the law was intended help must have standing to sue," Mr. Lee said.
The case centers on the Fed's May 14 decision to let Banc One Corp. acquire First USA despite CRA protests. The justices are expected to decide by late spring whether to accept the appeal.