As the banking industry consolidates, it is facing increasingly vocal community opposition to mergers.

But in protests under the Community Reinvestment Act, national and local reinvestment activists are canceling each other out.

The splits were evident in two recent deals: Wells Fargo & Co.'s acquisition of First Interstate Bancorp. and Chase Manhattan Corp.'s merger with Chemical Banking Corp.

The high-profile, policy-oriented national groups are trying to extract the largest reinvestment commitments possible from merging banks. They have no faith in the Federal Reserve Board, acting as if Fed approval of mergers were a forgone conclusion.

The community-based groups, however, do not want to give up their local bank branches. These organizations usually have a narrower focus; they often run lending programs connected with the local banks.

In the Wells Fargo-First Interstate deal, one group of activists led by the Greenlining Institute negotiated a 10-year, $45 billion reinvestment commitment, nearly half of which will go to small-business programs.

The deal clearly will bring financing to low-income neighborhoods, but it also deflated what had been roaring opposition to the merger.

On the other side was the California Reinvestment Coalition, an advocacy group consisting of 100 small, community organizations.

It tried in vain the continue the public-relations campaign against Wells Fargo. But the battle already was lost.

The support of a major community organization ensured Wells Fargo would pass muster at the Fed, even though it is closing hundreds of branches and firing thousands of employees.

A similar split developed when Chemical bid for Chase Manhattan Corp., although with different results.

The more prominent, national groups again fought for large reinvestment commitments. But Chemical countered the demands by agreeing to continue funding for the scores of local community programs it already was supporting. These smaller groups then agreed to testify on the bank's behalf, blunting the effect of national protests.

Banking consultants and lawyers said the industry should try to widen this breach by taking either the Wells Fargo or the Chemical Bank approach.

Jo Ann S. Barefoot, president of Barefoot, Marrinan & Associates, a compliance consulting firm in Columbus, Ohio, said many banks are choosing to work with the highest profile groups. This allows them to ignore the less prominent activists. "That will go a long way to reducing the risk of a Community Reinvestment Act protest in a merger approval," she said.

But Howard Adler, a partner at the Washington law firm Gibson, Dunn & Crutcher, said it doesn't matter which group you court - all that counts is getting some community organizations on your side.

"If a number of community groups are going to take pot shots at you, it is good policy to let regulators know there are two sides of the story," he said.

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