Hearings Scheduled on Two Proposed Megamergers
The Board of Governors of the Federal Reserve Board is scheduled on Tuesday to consider two proposed megamergers now that its staff has analyzed comments related to Community Reinvestment Act compliance.
The Fed said Friday that it has scheduled consideration of Chemical Banking Corp's planned marriage with Manufacturers Hanover Corp. and NCNB Corp.'s with C&S/Sovran Corp.
The timing is critical if the banks are to meet their yearend deadlines to join together. That is because the Justice Department needs 30 days to consider a bank merger after the Fed has given its go-ahead.
A delay could complicate the financial reporting of the four bank companies next year.
90 Comments Filed
The Federal Reserve Bank of Richmond received some 90 comments about the minority lending records of NCNB and C&S Sovran, which plan to re-emerge under the name of NationsBank. Fred Bagwell, a vice president at the the Richmond bank, said he had not tallied how many comments were for or against the transaction.
Officials at the Federal Reserve Bank of New York could not be reached for comment on the Chemical-Hanover merger plan.
NCNB has moved aggressively since the merger was announced to meet anticipated demands from community groups. In early August, just weeks after completing negotiations with C&S/Sovran, the banks unveiled a 10-year, $10 billion lending program, which is the largest CRA commitment ever made.
Pacts with Community Groups
NCNB followed by announcing an agreement with the Association of Community Organizations for Reform Now, or Acorn, one of the nation's most potent community activist groups. The bank pledged to support Acorn's programs for counseling low-income loan applicants. It also appears to have reached an informal agreement with the National Association for the Advancement of Colored People to hire more minority employees.
What NCNB has not done, however, is to reach agreements with an alphabet-soup mix of local activist groups located throughout NationsBank's eight-state territory. This has riled some of the groups, such as the Charlotte Organizing Project, which unsuccessfully challenged NCNB's purchases of thrift branches in 1990.
Challenge from Activists
"In my opinion, it's because we're watching them too closely and we're right here on their doorstep," said Chop lead organizer Jane Burts.
Chop is one of several North Carolina-based groups that joined an umbrella group, the Community Reinvestment Alliance of North Carolina, in filing a formal challenge to the merger.
An Atlanta group that protested the merger, the Atlanta Community Reinvestment Alliance, complained in its challenge that NCNB and C&S/Sovran "have steadfastly and repeatedly" informed local advocacy groups that they would not enter into specific agreements.
Ellison Clary, an NCNB spokesman, denied that the company is consciously avoiding the local groups. "We work with hundreds of groups," he said.
Robert Mannion, an attorney who specializes in CRA litigation at Arnold & Porter in Washington, said banks have little incentive to reach agreements with local activist groups. "If they did, it would mean that every acquisition, no matter where it was, would surface some group demanding an agreement."