With some of the nation's largest banks preparing to pour billions of dollars into low-income neighborhoods, smaller institutions fear they'll be undercut in their own community reinvestment efforts.

The big banks are acting to gain federal and state regulatory approval for mergers, and to avoid conflicts with community activists. Major institutions, including Boston-based Fleet Financial Group, Chase Manhattan Corp., and First Chicago NBD Corp., have agreed to lend billions at below- market rates for low-income housing and small businesses.

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