WASHINGTON - Fresh from a failed effort to scuttle Citigroup Inc.'s purchase of Associates First Capital Corp., Inner City Press/Community on the Move has set its sights on another bank deal: Firstar Corp.'s agreement to buy U.S. Bancorp.
In a 15-page comment letter filed Monday by Matthew Lee, its executive director, the group asks the Federal Reserve Board to block the purchase until hearings are held on the companies' lending practices.
Inner City accuses the two companies of disproportionately denying prime-rate credit to minorities. The letter also claims that New Century Financial Corp., an Irvine, Calif., lender in which U.S. Bancorp has a 27.5% ownership stake, preys on the same population with high-rate loans.
"U.S. Bancorp is extremely active in high-interest-rate, subprime lending, but the Federal Reserve has yet to examine these parts of U.S. Bancorp's business," Mr. Lee wrote. "Given Chairman Greenspan's and other Fed governors' speeches throughout 2000 on predatory lending, expressing the Fed's concern, it is imperative that the Fed finally scrutinize U.S. Bancorp's subprime lending, including through New Century, in this proceeding."
Reza Aghamirzadeh, senior vice president and manager for community development at U.S. Bancorp, said the two companies "have demonstrated significant support and commitment" to the Community Reinvestment Act "and have created a very robust program to ensure the needs of their entire communities are met."