WASHINGTON -- Most bankers see the Bronx as a crimeridden slum, full of abandoned buildings and burdenecf with most of society's evils.

But when Inner City Press/Community on the Move thinks of the Bronx, it sees an area of great potential that's in desperate need of credit.

Right now, the community group's picture of the Bronx is winning out.

The organization has successfully employed Community. Reinvestment Act challenges to force New York area banks to make available that desperately needed credit.

So far the group has fought First Fidelity Bancorp., Natwest U.S.A., Bank of New York Corp., and Republic New York Corp., getting three of them to expand banking services to the borough.

So what is this group that's bringing the industry's Goliaths to their knees7

Matthew Lee, the group's executive director, said he created the organization in 1987 as a grass-roots, self-help newspaper for homeless people who wanted to homestead empty buildings.

"The idea was, there's lots of abandoned buildings, why not rehabilitate them so people could live there?" Mr. Lee said.

He said New York law makes it difficult to evict anyone who has lived in an abandoned building for 30 days.

The group's homesleading efforts gave rise to a movement and led his organization to transform itself into a tenant's rights' association to better serve the people it helped homestead.

In its new form, the group began in 1990 to look at housing issues more generally, including the importance of lending.

"For us, it just started to grow organically," he said.

"We began to look at why buildings were abandoned and why they weren't fixed up. We determined relining was part of it."

Mr. Lee said that as his and other groups began refurbishing buildings, the population of the Bronx began growing.

So, while banks a decade ago could cite declining population statistics as a reason for closing branches, they cannot anymore.

"We have gotten much more serious with banks," he said. "It may have made sense at one time to close branches. But not anymore."

Mr. Lee, who has no legal training, said he began researching the Community Reinvestment Act and soon learned that he could wield the law as a powerful sword in his battle to bring banking services to the Bronx.

The group's first target - Bank of New York.

Mr. Lee said the group began researching the company in late 1992 and discovered that its CRA boundaries included only Queens and the part of Manhattan below 92 Street.

They excluded the Bronx, Brooklyn, and the rest of Manhattan, he said.

"We brought that up to them and in the case of the Bronx, they said why should they if they don't have branches there," Mr. Lee recalled.

But, he said the anecdotal evidence showed the bank did business in the Bronx. In fact, it was the top mortgage lender in the North Bronx. he said.

Bank of New York officials could not be reached for comment.

Mr. Lee said he told the bank that it was lending only to the cream of the crop in the borough, an activity he said violates the CRA.

Bank of New York didn't want to deal, he said. So, his group fried a protest with the Federal Reserve and New York State regulators.

At that point, Bank of New York relented. It agreed to expand its delineation to include the Bronx, Brooklyn, and upper Manhattan.

Mr. Lee said his only regret is that the Fed didn't order the bank to act.

Instead, it noted in the ruling that the bank agreed to act on its own, making moot the need to consider the CRA complaints.

"We sometimes try to raise this as a precedent and they say no, look at the order;' he said. "That's why we would have liked it to be in the order."

The group next filed comments on July 23 against Natwest.

That bank settled Aug. 23 when it agreed to open a full-service branch in the heart of the borough and to include for CRA purposes much of the south Bronx.

The bank also will create a microloan fund to help homesteaders repair vacant buildings.

Donald P. Schwartz, Natwest U.S.A.'s senior vice president, said he was impressed with Mr. Lee and his organization.

He said the community group was willing to negotiate the best arrangement for the borough.

In Natwest's case. that involved opening a full-service branch in the Bronx in addition to funding other lending programs.

"At the end of the day, I think we both won." Mr. Schwartz said.

He said the experience taught him that banks should work with community groups rather than fight them.

A week after filing the Natwest comments, the group filed against First Fidelity.

The New Jersey-based bank, which operates throughout New York, agreed in mid-August to designate several Bronx communities in its CRA map even though it operates only one branch.in the borough.

First Fidelity also agreed to establish a loan pool of $5 million a year for three years and to create a special $100,000 microloan fund for small businesses.

First Fidelity officials were not available for comment.

Community on the Move's fourth challenge is still pending. It filed comments on Aug. 15 against Republic, charging that because it operates a branch in the Bronx, it must include part ol the borough in its CRA plan.

Officials at Republic's public relations office declined to comment.

But, Mr. Lee said the bank tells him that it doesn't have to designate the Bronx because it operates its branch solely to serve the Bronx Terminal Market, a fruit and vegetable market.

The group, whose complaint is blocking Republic's efforts to close a branch, may file complaints to prevent the company from acquiring a group of Brazilian banks if it doesn't agree to include the Bronx in its CRA plan, Mr. Lee said.

Mr. Lee said groups like his are the key to making the CRA work.

"It puts the regulators on the spot because they are here handing out 'satisfactory' ratings an here comes community groups with documentation," Mr. Lee said,

CRA experts agree that the law cannot work without organizations such as Inner City Press/Community on the Move.

"They are the key," said Woody Widrow, vice president of the National Community Reinvestment Coalition.

"In terms of understanding the community's needs, you got to go the community groups. They are an essential element."

Matthew Roberts, special counsel for community and consumer law at the Comptroller's offme, said the CRA reform proposals now pending before the agencies reflect the importance of local organizations.

He said the changes seek to provide these groups with more information so they can operate more efficiently.

Kenneth H. Thomas, whose written extensively on CRA, said Congress always intended community groups to push local reinvestment.

In fact, he said, the reliance on local organizations is a weakness in the law because communities without strong groups - such as Miami - do not have effective community reinvestment.

"Banks in Miami are very fortunate compared to banks in New York." Mr. Thomas said.

Regulators do not expect Mr. Lee's group to rest now. Gregory P. Wyka, assistant regional directot in the Federal Deposit Insurance Corp.'s New York office, said the group has challenged every move by banks in the New York metro area.

"This group has been and will be very vocal," Mr. Wyka said "You're going to be hearing a lot from these people."

On that, Mr. Lee agrees. He said the group may target Chase Manhattan Corp. next.

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