Community groups are balking at Household International's $8.6 billion deal to buy Beneficial Corp., saying the merger would hurt the low- and moderate-income people both companies target.

In addition, the two groups contend, Household disproportionately targets African-Americans and Hispanics for high-rate loans and has an inadequate community reinvestment program.

Inner City Press/Community on the Move and the Delaware Community Reinvestment Action Council are asking the Office of Thrift Supervision and the New York State Banking Department to step in.

Both groups are requesting an informal meeting with the OTS and an examination of Household's lending practices and plans for community reinvestment.

The opposition comes as regulators, legislators, and the subprime industry itself are taking a closer look at how finance companies should be patrolled and what responsibility these lenders have toward borrowers.

"There has to be a stronger responsibility, particularly under the Community Reinvestment Act, for subprime lenders," said Rashmi Rangan, executive director of the Delaware group. Subprime lenders, which serve markets that banks traditionally avoid, are often not subject to bank regulations.

The Department of Housing and Urban Development, the Federal Trade Commission, and the Department of Justice have been stepping up efforts to police these lenders.

Household's thrift subsidiary, Household Bank, is a "classic study in community disinvestment and reverse redlining," said Ms. Rangan, in a letter to the OTS.

A Household spokeswoman said the company is "continuously monitored" by the OTS.

In addition, Household's recent application to convert Beneficial's bank charter to a thrift charter is "simply outrageous," said Matthew E. Lee, executive director of Inner City Press, in a letter to the thrift regulator. "Current applicants to the OTS for thrift charters ... are almost without exception making detailed arguments about new benefits they would bring to communities."

Household, on the other hand, "made almost no showing whatsoever," he said.

Mr. Lee said his group would like the terms of a thrift charter approved in November for Travelers Group to serve as a precedent for all subprime lenders seeking such charters.

In part because of pressure from such community groups as Inner City Press, Travelers promised to monitor sales practices of finance units that are not subsidiaries of the thrift, give compliance training to these employees, and ensure management carefully monitors terms of riskier loans.

"Nowhere in the public portion of Household's application are any such consumer-protection issues mentioned," Mr. Lee said.

The OTS has not yet decided whether a meeting with the community activists is warranted, said spokesman Paul Lockwood. Thrift subsidiaries owned by subprime lenders are bound by the same CRA requirements as everyone else, he added.

Most of the loans that the community groups are challenging are made through Household Financial Corp., a nonthrift subsidiary of Household International.

The OTS generally does not regulate corporate sister entities of a thrift but does have the requisite jurisdiction under some circumstances, Mr. Lockwood said.

Separately, Household and Beneficial issued letters to the employees at Beneficial's Peapack, N.J., office notifying them of a "plant closing or mass layoff" that will occur July 18. The letters, which are required by the Worker Adjustment and Retraining Notification Act, were dated last Friday.

In April, Household said the Peapack office would remain open, and a spokeswoman said Wednesday that "the facility would still remain there" but "some of the positions would go away" after the deal closes. She said the company could not specify the number of employees at the office or how many would be laid off.

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