WASHINGTON - The Federal Reserve Board has raised a procedural red flag that could further complicate FleetBoston Financial Corp.'s plan to join forces with North Fork Bancorp to acquire Dime Bancorp.

North Fork, which is headquartered in Melville, N.Y., has been aggressively pursuing a $1.9 billion hostile bid for the New York City thrift in recent months. In March, North Fork teamed up with FleetBoston, which agreed to provide financial backing for North Fork's offer in return for the chance to buy up North Fork shares as well as branches and deposits in the New York region if North Fork succeeds in buying Dime. The plan also had the effect of blocking a potential bid by Fleet to acquire Dime.

But Fed General Counsel J. Virgil Mattingly wrote in a letter dated Monday to Fleet's lawyers that the company is required to file notice with the Fed before proceeding because it is indirectly acquiring a thrift. Under the law, a bank holding company may not buy more than 5% of a "nonbanking company" such as a thrift without a review by the Fed.

"No bank holding company may acquire or retain ownership or control of the shares of a company engaged in activities ... such as a savings association's without providing the Board written notice of the proposed transaction," Mr. Mattingly wrote.

Though Fleet has argued that it is not subject to the notice requirement because it is buying part of North Fork as part of the deal - not Dime directly - Mr. Mattingly said North Fork's plan to purchase Dime still trigger the requirement.

The letter said that as soon as Fleet files the required form the Fed will publish notice of the proposed acquisition in the Federal Register and open it to public comment for 15 days.

This could expose Fleet to protests by consumer advocates who have been particularly critical of its lending in low- and moderate-income communities during recent years.

"People will comment on the Fleet notice," predicted Matthew Lee, executive director of Inner City Press/Community on the Move, who has criticized Fleet's community reinvestment record.

Though spokesmen for Dime and North Fork declined to comment, and Fleet officials did not return phone calls, a key source familiar with the situation predicted that Fed review could delay the deal by at least a month.

Since Fleet entered the picture, Dime has been pushing the Fed to require Fleet to file the notice. In response to these letters, Fleet has written letters defending its position and claiming a Fed filing is unnecessary.

The Fed lawyer's decision is an embarrassment for Fleet, the source said, adding: "Is it fatal in and of itself? Probably not."

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