Community advocates Thursday accused the Federal Reserve Board of ignoring protests in approving Wells Fargo & Co.'s acquisition of First Interstate Bancorp this week.
"The Federal Reserve is an embarrassing rubber stamp regarding mergers," said Robert Gnaizda, general counsel to the San Francisco-based Greenlining Institute.
Mr. Gnaizda, speaking Thursday at a conference sponsored by the National Community Reinvestment Coalition, said the Fed should have ordered the bank to revise its plans for closing 345 branches and eliminating 5,000 jobs.
Kenneth Thomas, a Miami-based writer about the Community Reinvestment Act, said the Fed should serve as an independent referee in disputes between bankers and activists. Instead, the Fed proved to be a "cheerleader" for Wells Fargo, he said.
The Fed, in approving the Wells Fargo deal March 6, disregarded more than 600 community protests.
According to Mr. Thomas, the only independent voice left in the merger process is the Justice Department, which ordered Wells Fargo to more than double the amount of deposits it had planned to divest to resolve antitrust problems.
But bankers defended the Fed.
"The Federal Reserve does have a role in making sure the laws are enforced, but it also must look at the economics of a banking system with too much capacity,' said the head of the American Bankers Association's government relations council, R. Scott Jones. He is also chairman of Goodhue County National Bank, Red Wing, Inn.
Malcolm Bush, president of the Chicago-based Woodstock Institute, said the debate missed the point. Mergers, regardless of CRA commitments, move decision-making out of neighborhoods. "Local knowledge cannot be applied from a computer in the basement 2,000 miles away," he said.