Aside from its impact on the people who work at Chase Manhattan Corp., the merger with Chemical Bank has had major consequences that are still being played out in the communities they serve.

At the outset, the new Chase made an $18.1 billion, five-year pledge of financing for affordable housing and community development.

By March 1997-a year after the merger was completed-the bank said it had made $4.8 billion of community investments nationwide, including $1.2 billion for affordable housing; $13.5 billion of low-income mortgages; $70 million in grants to nonprofit organizations; and $3.4 billion in small- business loans and investments.

But neither the commitment nor the progress impressed community activists. A court challenge remains pending.

"We haven't retracted our request that (the merger) be undone, although it seems that would be pretty difficult at this time," said Matthew Lee, executive director of Inner City Press/Community on the Move. A decision in the group's challenge of the Federal Reserve's approval of the merger is expected soon from the U.S. Court of Appeals for the Second Circuit.

Mr. Lee's group, which is based in the Bronx, N.Y., and has "a whole corner of our office dedicated to Chase," contends the pre- and postmerger banks have lagged on compliance with the Community Reinvestment Act. As evidence, they cite branch closings and lending records in poor neighborhoods.

"No bank is perfect," Mr. Lee said. "But it's now the largest bank in the country, and we think their record is still bad."

Chase counters that it was the largest private financier of affordable housing in New York City in 1996 and that it committed itself to open branches in East Harlem and the South Bronx.

The Delaware Community Reinvestment Action Council is also supporting the Inner City Press effort. Rashmi Rangan, executive director, after quoting an extensive list of complaints about Chase's activities in Delaware, said: "I'd say 99.9% of banks fall short, or else we would not see the blight that we see around here. We would not see access to credit and capital denied."

Community activists are known for taking potshots at giant corporations, but criticism also comes from more established quarters.

"The more we merge and consolidate and concentrate, the further we get from the people, and it doesn't matter whether that's in New York City or the smallest town in Kansas or Minnesota," said Norbert A. McCrady, head of a consulting firm called McCrady/Midwest and former executive vice president of the Independent Bankers of Minnesota.

Mr. McCrady, who is based in Eden Prairie, Minn., contends that Chase has more interest and experience in corporate than retail banking. "They've talked about their consumer banking, and it sounds good, but the fact is that neither Chase nor Chemical has really been a consumer bank," he said.

Warren Traiger, a New York-based lawyer who specializes in CRA issues, sees it differently.

"Banks have always taken some blame for urban blight and deterioration, but I don't think it's well-placed in the case of Chase," he said. "The new Chase is under a magnifying glass in terms of community performance, and they can't get away with anything."

The $18.1 billion pledge was "substantial," Mr. Traiger said. "I haven't heard anyone accuse them of not living up to it. It's out there in black and white-it's a yardstick."

Whenever branches close, neighborhoods are unhappy, Mr. Traiger pointed out. But he added: "I don't think you'll see any neighborhoods as such abandoned by the bank. That's got to be the acid test here."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.