Archive Number 3:  June - July, 1999

   Click here for Current CRA Reporter

       Click here to Search This Site

July 26, 1999

Legislative update:   As H.R. 10 and S. 900 move toward conference, developments are ensuring the legislation will become bogged down. Sen. Gramm (R-TX) on July 23 announced that he is placing the entire membership of the Senate Banking Committee onto the conference committee. This appears to be Gramm’s way of trying to get around the fact that most senior Committee members, including Republicans, are opposed to Gramm’s version of the legislation. So throw the whole Committee into conference. The House will reciprocate, and the conference is sure to be unwieldy. Over Gramm’s opposition, Jim Leach will be the chairman of the conference committee. All of this led Gramm, late last week, to tell lobbyists, and Senate Banking Committee members in a closed door meeting, that the conference will take months, and be “long and arduous.” Bridge News, July 22. Perhaps in an attempt to send more positive signals to campaign funders, Gramm also told lobbyists that Hillary Clinton’s “probable [Senate] run in New York ‘will make it very difficult’ for the President ‘to kill this bill,’ since ‘top New York financial firms back the banking overhaul.’” Wall Street Journal, July 23. Oh, the sweet stench of politics...

* * *

July 12, 1999

      The most indicative CRA story of last week was Senator Gramm’s July 7 letter to Office of Thrift Supervision Director Ellen Seidman, blasting her for a speech she gave at a CRA conference on June 17, suggesting that nationwide, non-brick and mortar institutions be evaluated on the basis of their service to low- and moderate-income constituencies, and not simply neighborhoods in their headquarters city.

     Gramm’s letter stated, “Your proposed alternatives... seem to suffer from a serious problem: a lack of statutory authority.” As with most of Gramm’s attacks, this one suffers a problem: inaccuracy, over-simplification, and contempt for the First Amendment.

     The CRA statute, 12 United States Code, Sections 2901 - 2906, is extremely short, and does not define the “communities” which banks have a duty to serve. In fact, 12 U.S.C. Sec. 2902(4) provides support and a precedent for the alternatives discussed by the OTS. It states: “A financial institution whose business predominately consists of serving the needs of military personnel who are not located within a defined geographic area may define its ‘entire community’ to include its entire deposit customer base without regard to geographic proximity.” This was placed in the law to placate institutions that serve military employees nation- and worldwide, so that they wouldn’t receive low CRA ratings for not serving the areas around here they happened to put their headquarters.

     Now, there are more and more applications for new institutions which would collect deposits and/or lend nationwide; these applicants are trying to limit their CRA duties to only the cities in which they put their headquarters. The mutual fund company T. Rowe Price, for example, applied in 1998 for a thrift charter to sell certificates of deposit nationwide, and argued that it should be exempt from CRA entirely. ICP opposed this, and the OTS ruled that T. Rowe’s thrift would be subject to CRA.  But T. Rowe is now developing a CRA plan to serve only Baltimore, despite its plans to collect deposits nationwide. There is a similar application in at the Office of Thrift Supervision, for Canadian Imperial Bank of Commence to set up a large non-brick and mortar bank, and limit its CRA duty to Orlando, Florida.

     So Senator Gramm is incorrect about the “lack of statutory authority.” Gramm’s true motives are revealed later in his letter. Ms. Seidman in her speech encouraged more institutions to consider developing CRA Strategic Plan -- an encouragement that all of the other regulators, including Gramm’s favorite, the Fed, have made. Gramm writes that he opposes the strategic plan option, because it “will tend to empower and meet the political and financial needs of the noisiest CRA political pressure groups, but only accidentally have any impact on our nation’s low and moderate income neighborhoods or the unempowered people that the law was intended to benefit.”

      Gramm appears to be referring to a provision in the current CRA regulation which provides for banks to publish notice and solicit public comments as they develop a CRA strategic plan. Any input, Gramm seems to feel, is illegitimate “empowerment.” Ironically, the Strategic Plan option allows banks to set their own standards of sufficient CRA performance, and to sidetrack the public’s input away from the bank’s merger applications. Since input on time-sensitive merger applications is unquestionably more “empowering” (to use Gramm’s term) than input on a time-insensitive CRA Strategic Plan or CRA performance evaluation, one would expect Gramm to support the strategic plan option. But Gramm is either ill-informed, or simply gets itchy when he hasn’t been able to publicly attack CRA for a couple of days.

      By now, Gramm has publicly attacked three of the four federal bank regulatory agencies about CRA. He attacked the OCC for having “polled” national banks to see which one’s would speak in favor of CRA -- and has tied up Jerry Hawke’s confirmation on this issue. Shelby (and Gramm) attacked the FDIC for co-sponsoring NCRC’s annual conference in March. And now Gramm has attacked the OTS’ director, for daring to muse about CRA reforms, at a non-governmental CRA conference in Rhode Island. The Federal Reserve, apparently, has not offended Gramm’s CRA sensibilities. But in the same time frame, Fed staffers have spoken, as Seidman did, in favor of the CRA Strategic Plan option, and the Fed has let a private, quasi-CRA group (Social Compact) use its building to hold a fundraiser.

      Gramm does not attack the Fed, because Chairman Greenspan’s compliant letters supporting S. 900 over H.R. 10 serve Gramm’s purposes. The Fed is currently doing less than ever about CRA, because Gramm’s S. 900 would expand the Fed’s turf far more than H.R. 10 would. Meanwhile, Gramm’s letter to Ellen Seidman uses the word “political” -- like it was a dirty word.


July 2, 1999

    For the 4th of July, we run a stream-of-consciousness “Reporter’s Notebook,” State of the Union on the cusp of the millennium:

House Passage of H.R. 10, “Financial Modernization,” July 1, 1999

       With lobbyists’ money in the water, things got uglier -- or, more blatant -- than usual on July 1 when the House considered financial modernization legislation. Despite their relatively thin majority, the Republicans control the process, through the Rules Committee. One of the few pro-community reinvestment provisions passed by the Banking Committee, a proposal by Rep. Lee (D-CA) to prohibit the affiliation of banks and insurance companies which have been found to have violated anti-discrimination consent decrees, was stripped from the bill before the full House vote. The Rules Committee refused to allow it to be considered as an amendment from the floor.

     Meanwhile, three Representatives from North Carolina were allowed to propose an amendment specifically benefiting the Jefferson Pilot Insurance Company of Greensboro, N.C., to allow it to continue to acquire radio stations, even if a bank buys it. The Representatives, including Democrat Mel Watt, wrapped themselves in the flag of “A.C.C. basketball,” which Jefferson Pilot’s radio stations broadcast.

     Trying to gain passage of a proposal which would allow mutual insurance companies which don’t like the laws of their home state to simply “redomesticate” to another states and sell shares in the company, without returning anything to policy holders, the Republicans lumped this together with an amendment prohibiting insurers from discriminating against victims of domestic violence. Rep. Bliley (R-VA), the sponsor of this Jekyll and Hyde bill, even got Democratic Congresswoman of Colorado, Diane DeGette, to speak in favor of it. New York Democrat Ed Towns muttered a few words in support as well. Brooklyn Democrat Nydia Velasquez sponsored a bill benefiting foreign banks.

     The two pro-CRA amendments -- Rep. Gutierrez’s (D-IL) proposal to extend CRA to all lending affiliates of banks, and Rep. Barrett’s (D-WI) proposal to require property insurers to report their underwriting by census tract -- were not even allowed on the floor. Rep. Dingell (D-MI), who opposed (or at least did nothing to help) these amendments in the Commerce Committee, on which he is ranking member, nevertheless took to the floor saying he supported Rep. Lee’s “anti-redlining” bill, and decrying H.R. 10 as “abominable legislation,” which will lead to a bail out worse that the $500 billion savings-and-loan bail out. “How different they speak, when the (C-SPAN) cameras are on,” an observer mused...

     The main showdown was on privacy, and, in short, Oxley (R-OH) beat Markey (D-MA). Markey tried a motion to recommit, to add his proposal as well as Rep. Lee’s (D-CA) so-called anti-redlining amendment, and Rep. Waxman’s (D-CA) health record privacy amendment to the bill. This motion failed by 232 to 198. And then the bill was passed, 343 to 86, nearing midnight on July 1. Congress went into recess.

     Next stop is the Conference Committee, where Sen. Gramm (R-TX) will be pushing to retain the anti-Community Reinvestment Act provisions included in the bill he passed, on a party line vote, in May. (On July 1, the Senate also confirmed Larry Summers as the new Secretary of the Treasury; as reported below, Senator Gramm recently told the San Antonio Express that he has an “agreement” with Summers on how to look into CRA... Developing....). Centrist Democrats said they’ll try to get the various amendments that were stripped from or not allowed to be debated during the vote on H.R. 10 re-attached to the bill in conference. If the July 1 Alice-in-Wonderland House proceedings are any guide, don’t hold your breath. This is your democracy at work, at the cusp of the millennium...

June 29, 1999

     The financial modernization bill is scheduled to be debated on the House floor on July 1. The various pro-Community Reinvestment Act amendments -- to expand CRA to banks’ lending affiliates and to require bank-affiliated property insurers to report when they underwrite, by census tract -- are apparently being blocked by the Rules Committee, as is an amendment to protect consumers’ privacy. “It’s too early to speculate about amendment right now,” Rules Committee spokesman Richard Mills said on June 28.

    The spokesman for Rep. Tom Barrett (D-WI) says Barrett is still asking the Rule Committee to allow his amendments to be considered on July 1, without success. Rep. Markey (D-MA), urging consideration of his privacy amendment, has implied he’ll oppose the “rule for debate” if his amendment is not considered.

    Meanwhile on June 28, a class action was filed in California Superior Court in Los Angeles against BankAmerica, Wells Fargo and other banks, alleging that these banks sold customers’ names, addresses, Social Security numbers, account usage and other information without disclosing it to consumers for the past four years.

June 28, 1999

    While outside of Washington, Fleet floats a trial balloon for a CRA pledge that it less than its and BankBoston’s current lending (click here to view), and HSBC applies for a major in-market merger without making a pledge of any kind, despite its weak record (click here for summary, or see The Independent (London), June 27), on Capitol Hill the contraction of the scope of the CRA moves closer to becoming reality.

     In the House last week, arcane logjams were broken, setting the stage for a full House vote on financial modernization legislation on July 1st.  The House Rules Committee will decide what amendments can be offered. In the mix are:

--an amendment sponsored by Rep. Gutierrez (D-IL) and others to extend CRA to the banking and lending activities of all holding company affiliates;

--an amendment sponsored by Rep. Barrett (D-WI) and others to require bank-affiliated insurance companies to report their underwriting data by census tract;

--and various anti-CRA amendments mirroring Senator Gramm’s already-passed S. 900: CRA exemption for rural banks with assets under $100 million; a safe harbor from comments for all banks with “Satisfactory” CRA ratings (that is, 98% of banks); and a so-called “sunshine” amendment that would only be applied to groups that actually oppose banks’ merger applications (see below).

     Whatever the House passes would have to be conformed with the Senate’s anti-CRA legislation; the question would then become whether President Clinton would exercise his veto power or not. The House version’s “expansion” of CRA is extremely modest, but seems to be the most that the Administration would fight for. Treasury Secretary nominee Summers may clarify this on June 28, or, maybe not.

June 21, 1999

    CRA is jumping, from the halls of Congress (where the House is set to vote on financial modernization legislation before July 4) to the beaches of Rhode Island (where a corporate CRA conference was held June 16-18, at one of the ground-zeros of Fleet’s proposed acquisition of BankBoston).

   We’ll start with the beach -- it’s more interesting, and in a way more telling. Substantively, on June 17, OTS Director Ellen Seidman delivered a speech suggesting that CRA assessment areas not be limited to where banks have their (headquarters) offices, particularly in light of the new Internet and nationwide-lending banks. It’s a cry in the (surf-’n-turf) wilderness, given what the Office of the Comptroller of the Currency appears ready to approve for Canadian Imperial Bank of Commerce (Internet and supermarket bank limited its assessment area to Orlando, Florida) and Bank of Scotland (telephone and Internet bank with yet-to-be-named new partner, limiting its assessment area to Stamford, Connecticut).

   And a surf-’n-turf wilderness this conference was, complete with Narragansett Bay sailing and cocktail parties, and a “traditional New England clambake” (according to the program). At the risk of being divisive, the program, soliciting attendees at $600 per person, contains smiling mugshots of eleven CRA “experts” -- all of them of what in the Bronx is called “the Caucasian persuasion.” For real estate advertisements like this, the New York Times has been sued (and settled).

    Sen. Gramm has to date focused his attacks on community-based activists, few of whom are sailing and eating shell fish in the name of CRA. It appears that Gramm is really trying to undermine activism and public participation in the merger process, not any alleged waste or abuse. Ironically, Gramm himself quotes Donald Hogue, president of Tennessee’s Bank of Halls, that “you cannot believe the number of solicitations we have received from consultants and salespeople offering to help with compliance -- for a fee, of course!”

    Gramm, however, wasn’t sailing on the Narragansett. Rather, as his office announced in a press release, he will be ringing the bell of the New York Stock Exchange on June 21, and then briefing reporters on his version of financial modernization, which would remove CRA protections from communities. On June 22, Gramm’s Senate Banking Committee will hold a hearing on the nomination of Larry Summers as Treasury Secretary. Gramm has said he has an “agreement” with Summers about how to proceed on CRA hearings. San Antonio Express, June 5, 1999, and see below.  Accordingly, CRA questions may fly, if they fly at all, from both sides of the aisle...

   Final “beach” note: one of the floating mugshots in the program for the corporate CRA conference is that of First Union’s CRA officer, the banker who has been the most explicit about the quid-pro-quo expected from First Union’s community “partners.”  “If a group wants to sit and protest all the way through to the bitter end, we don’t view that as a partnership,” she’s said. When First Union flew officials of groups it’s funded in Florida up to the CoreStates merger public meeting in Philadelphia in 1998, the Federal Reserve ignored requests that pro-bank witnesses be required to disclose these arrangements. This request for “sunshine” -- which Gramm says he wants -- was rejected by the Fed. And Gramm’s proposed sunshine amendment would not address this problem -- again, it is only directed as undermining advocacy against bank mergers.

   Also ignored by Gramm: National City Bank’s CRA Officer James Matthews’ April 9, 1999, letter supporting CRA. But Gramm has attacked First Union’s letter on CRA, which First Union went out of its way to say was “required” by its Philadelphia / CoreStates agreement. Which agreement First Union CRA staffer Rosie Saez recently admitted First Union has fallen $240 million short on, in just the first year... Too much clam baking? Or is it First Union’s new status as take-over target, rather than acquirer?

June 14, 1999

    While Congress considers allowing banks to freely buy insurance companies, and vice versa, the House Commerce Committee on June 10 voted down a proposal to require property insurers to report where they underwrite policies (just as banks currently report mortgage lending data).

     The proposal, sponsored by Rep. Tom Barrett (D-Wis.), was voted down 17-28. All Republicans on the Committee voted against it, joined by Democrats Dingell (D-MI) and Ralph Hall (D-TX). The suddenly-convenient rationale for the no votes? That it would “amount to a huge government-mandated invasion of privacy.” Milwaukee Journal Sentinel, June 11.

    But banks have been reporting their mortgage lending by census tract since 1975, with no invasions of privacy: names and street addresses are not given, just enough data to gauge the fairness of the financial institution.

    The Commerce Committee also voted down a weakened proposal, that the Commerce Department conduct a study into the prevalence of insurance discrimination. Whose privacy would this “no” vote protect? The state insurance regulators’? Dingell and Hall again voted against the proposal, with Republican Heather Wilson of New Mexico crossing party lines to vote for it.

    The Republicans’ and “soft” Democrats’ votes against these data-collection proposals appear more grounded in solicitude to the industry than in concerns about privacy. The American Banker of June 10, profiling freshman New York Senator Chuck Schumer, reports: “His support for the CRA is not boundless, however. Sen. Schumer called community activists’ plans to intensify CRA requirements ‘pie in the sky.’ He also opposes applying CRA to insurance and securities firms.”

    Ironically, during the week of the vote, indications of the problem of redlining in property insurance continued to mount. On June 9, Liberty Mutual Insurance Co. announced that it was settling discrimination complaints filed with the Department of Housing and Urban Development in 1997. Among other things, Liberty Mutual has agreed to finally begin providing replacement-cost insurance coverage to homes built before 1950. Robert Muleski, a Liberty Mutual senior vice president, said, “We don’t view it as a settlement,”. Then... what is it?

    Also last week, Nationwide Insurance has avoided paying a $10 million fine for underwriting discrimination in Texas by agreeing to open twenty new offices in communities of color in Texas: eight in Houston, four in El Paso, three in Dallas, two in Austin and one each in Fort Worth, McAllen and Hidalgo County. Nationwide also committed to increase sales in 100 zip codes where the minority population is over 60 percent, and to bring its auto and homeowners insurance sales in those neighborhoods up to the same level as its statewide market share within five years. A Fort Worth state representative expressed disappointment: “In essence, what we’re seeing is that a company can break the law and then get coached into compliance by the people who should punish it.... The fact that there is no fine sends a bad signal to other players in this industry.” As does the Commerce Committee’s June 11 vote. The amendment, it appears, will be offered again on the House floor, when, after the Rules Committee, it comes up for a vote, reportedly before the July 4 recess.

     Meanwhile, the mergers proceed apace. AmSouth says it will acquire First American of Nashville; Firstar has just filed its application with the Federal Reserve to acquire Mercantile of St. Louis. This comment period runs to July 12. Firstar merged with Star Bancorp last year, just after Star had made a $5 billion CRA commitment. The commitment was not raised in that merger, and, to date, has not been raised in connection with the Mercantile proposal. Firstar’s only announcement is that it will begin an “adopt-a-block” program in a few cities. Firstar Home Mortgage Corp. in 1997, for conventional home purchase loans in the Chicago MSA, denied 20% of application from African Americans, versus only 3.1% of applications from whites, for a denial rate disparity of 6.45. The enigmatic “Firstar Credit Card Bank NA” also made home purchase loans in Chicago, denying African Americans 2.75 times more frequently that whites. Hmm...

     AmSouth, in its home state of Alabama, is no day at the beach. Down by the beach, in the Mobile MSA, AmSouth in 1997, for conventional home purchase loans, denied 50% of application from African Americans, versus only 14.5% of applications from whites, for a denial rate disparity of 3.45. In the Montgomery, Alabama MSA in 1997, AmSouth denied the applications of African Americans 3.68 times more frequently that the applications of whites. In the Nashville, Tennessee MSA, AmSouth in 1997 denied the applications of African Americans 4.18 times more frequently that the applications of whites -- and that’s the city where First American, which AmSouth is trying to buy, is headquartered. Developing, both in D.C. and out in the communities. Stay tuned. And, as always, for or with more information about the issues above, contact us.

* * *

June 9, 1999

Headline: Gramm Protests Fleet Bank Merger (!)

    While Senator Gramm (R-TX) campaigns against the Community Reinvestment Act in Congress, his office continues to ask the Federal Reserve to “address” Gramm’s constituents’ concerns about abusive practices by banks that have pending merger applications at the Fed.

    The Fed has provided Inner City Press with a copy of a submission by Sen. Gramm’s office, dated May 4, stating “[a] constituent has sent the enclosed communication. A response which addresses his/her concerns would be appreciated. Please send your response to the following address: Office of Senator Phil Gramm.” Attached to Gramm's office's memo to the Fed is a two-page letter from a Dallas resident, stating:

                                                           March 29, 1999

Dear Senator Gramm:

    Fleet Financial Group is currently undergoing a merger with Bank of Boston. Congress and the regulators should take a good look at this merger, as I believe it will cause a major and negative impact to consumers. My personal experience with this rogue financial institution exemplifies this belief:

    Fleet acquired my credit card from another company... Fleet did not disclose the change in fees, as required by law. After the acquisition, I received a small cash advance from an automatic teller machine. The following month, I notices an exorbitant cash advance fee of approximately $30... I immediately requested that my account be closed... A process of letter writing and a series of attempted phone calls resulted in Fleet ignoring all of my communications. Fleet also began assessing late fees on my now closed account relating to the $30 advance. In December 1998, Fleet charged off an amount of $293 on my account and reported my account as charged off to the three major credit reporting agencies. This charge off has severely damaged my credit... At the present time, I am still waiting to hear from Fleet.

     Senator Gramm, I am a constituent of yours and I appreciate the great job you do on behalf of all Texans... Do not allow the merger to take place without first ensuring that the average people will not suffer exorbitant and undisclosed fees...

    Sen. Gramm has proposed, and pushed through the Senate on a party-line vote on May 6, an amendment to S. 900 which would preclude the consideration of virtually all public comments against merger applications by banks with “Satisfactory” Community Reinvestment Act ratings (which Fleet has).

    That is, under Gramm’s proposed law, which he has continued to defend, most recently to the editorial board of the Austin American Statesman (June 7, 1999), Gramm’s constituent’s comment could not be considered by the Fed. But Gramm submits the comment to the Fed, and asks the Fed to “address the concerns,” and to reply to his office.

    Gramm could have (but didn’t) write back to his constituent, saying: “While you attempt to link your complaint about Fleet to its pending merger application, I have proposed a law which would preclude the Fed from considering such comments. Therefore I....”.

   But it might appear that Gramm sees, at least in terms of constituent service, the benefit of a public comment period on banks’ expansion applications, as an opportune time to get “concerns... addressed” (see Gramm’s office’s memo, above).  Inner City Press is inquiring into whether and how this particular concern has been addressed, or whether Gramm’s office itself has taken any steps, beyond forwarding the letter to the Fed, to get Fleet to address the issue.

   It is worth noting that the Community Reinvestment Act agreement that Gramm put portions of up on an easel on the Senate floor on May 6, claiming it involved extortion -- was an agreement by Fleet Financial Group. Gramm also that day decried an agreement in which First Union had agreed to write letters supporting CRA -- but quickly added, “by First Union, a great bank.” Gramm didn’t say that about Fleet, and has even less reason to do so now, given his constituent’s letter, which Gramm forwarded to the Fed, asking it to “address the concerns,” and to reply to him. Developing...

    Another paradox: Rep. Marge Roukema (R-NJ), chairwoman of House Banking’s financial institutions subcommittee, had scheduled a hearing on CRA for June 16 -- but then quickly changed the topic of the hearing to the way banks’ loan loss reserves are treated by the accounting regulator, FASB. Rep. Roukema has said she wanted to “get to the bottom” of the CRA issue, but then, as noted by the American Banker of June 7, dropped it for a hotter issue. Note: Rep. Roukema might want to check out, for example, Fleet’s declining lending in New Jersey (see WSJ of 6/8 at B11, or click here for a summary) before holding her CRA hearing, when or if it is ever rescheduled...

    Finally, the full House Commerce Committee is scheduled to mark up the financial modernization bill. Expected are some amendments which would require bank-affiliated property insurers to disclose their underwriting by census tract, and possibly McCollum’s Gramm-mirrored “sunshine” amendment.  The June 7 report immediately below reviews the effect that amendment would have, and how the largest banks would try to get around it, leaving it only apply to (and discouraging) advocacy and “concern-resolution” in connection with merger applications (like Gramm and his constituent, above). This will be updated by June 14, at latest. Stay tuned...

June 1, 1999

The Roll Back of the Community Reinvestment Act

     While Congress debates financial modernization legislation, the Senate version of which would roll back the Community Reinvestment Act, and the House version of which would expand CRA only slightly, a rising percentage of consumers’ assets are flowing to non-banks like Charles Schwab Corp., businesses are saying they will borrow from mutual funds instead of banks, and banks themselves are moving to jettison their brick-and-mortar branches. The CRA should be modernized and expanded along with these changes, but Senate Banking Chairman Phil Gramm (R-TX), and a group of “soft” Democrats, stand in the way. On the ground, the facts change.  Some recent examples:

     On May 26, the Bloomberg news wire reported that Charles Schwab Corp. says that its checking account customers can now get free use of automatic teller machines worldwide. The Schwab Access account, which requires a $5,000 initial deposit and is limited to customers with more that $100,000 in assets, will rebate all ATM surcharges. Bloomberg quotes a stock analyst that “this is certainly a threat to traditional depository institutions... This is certainly an effort that’s right on target to gain more wallet share from their most profitable customers.” Schwab is not subject, under current (outdated) law, to the CRA.

     On May 27, Allied Waste Industries said it will borrow less from banks and more from mutual funds and others to pay for its purchase of Browning Ferris Industries. The company will borrow $2.75 billion from mutual funds and insurance companies (neither of which are subject to the CRA).

    Meanwhile, Bank One’s CEO John McCoy recent said his institution may not buy any more banks, but only grow through the Internet. Bank merger applications are, for now, the only enforcement mechanism of the CRA. Also, the regulators have allowed many banks to limited their CRA assessment areas to the neighborhoods around their branches. McCoy said: “With what’s happening on the Internet, I’m not sure we will ever have to buy another bank... There may come a time where we don’t need to provide brick and mortar.”  First Union, now viewed as a take-over target, has set an internal goal of shifting 25 percent of its customers to e-banking or telephone banking by 2001. “Expenses on its ‘brick-and-mortar’ operations could be cut by 10 percent as it trims its network of 2,400 branches,” [First Union CEO] Crutchfield said.

   In issues ICP is advocating on, the Office of the Comptroller of the Currency is considering allowing Canadian Imperial Bank of Commerce to set up a $4 billion, continent-wide Internet bank, and to limit its CRA responsibility to Orlando, Florida.   The OCC is also considering giving televangelist Pat Robertson and the Bank of Scotland a charter for a nationwide bank, which would limit its CRA duty to Stamford, Connecticut.  

   The Office of Thrift Supervision is considering giving Lehman Brothers an expedited unitary thrift charter for buying the undercapitalized, one-branch Delaware Savings Bank for a mere $1.9 million.  

    The Federal Reserve has allowed Royal Bank of Scotland to limit its Internet bank’s CRA duties to Atlanta, Georgia, encouraged the acquisition of Bankers Trust by Deutsche Bank, and stands ready to approve the anticompetitive combination of Fleet and BankBoston. Fed Chairman Greenspan has more recently assuaged Phil Gramm with public memoranda criticizing the House’s bill for expanding CRA. That, at least, is how Phil Gramm characterized the Greenspan’s memo -- and the Fed said nothing to dispute this. The Fed wants its turf expanded, and seems happy to jump into Phil Gramm’s politicized mud pit toward this end.

    Meanwhile communities are being left behind...

    The Fed scored a win in a House Commerce subcommittee on May 27, when the pending bill was amended to expand the Fed’s jurisdiction, and no pro-CRA amendments were allowed, even by minority leader Dingell (D-MI). The bill will be on the House floor by the Fourth of July, then into a conference committee where Phil Gramm’s Senate bill has three anti-CRA provisions. How many bank branches will have been closed by then, and how many more mergers approved? While many of the problems discussed a above would continue even if President Clinton vetoes the bill, low income communities would be much worse off if Clinton backslides on his veto threat and signs the legislation. And who’ll be the next president? John McCain (R-AZ), who recently proposed a bill stripping the FCC of its power to review most telecommunications mergers?

    When community groups try to oppose these trends, Senator Gramm and others call the groups extortionists. Apparently, the last remaining problem in Dow-10,000 America is too much public participation, too informed and activist a citizenry. To which we plead -- guilty. Stay tuned...

       Click here to Search This Site

How to Contact Us     Site Map    Search This Site    Inner City Press' Community Reinvestment Reporter   Global Inner Cities   Citigroup Watch  Inner City Reporter Bank Beat   Inner City Poetry   Community Reinvestment   Environmental Justice Insurance Redlining In the Bronx FCC/Telecommunications About Inner City Press Inner City Arts&Culture Inner City Housing ICP's Freedom of Information Guide Links/Resources Frequently Asked Questions   The Inner City Reporter's Federal Reserve Beat Privacy Policy     For the Media Inner City Public Interest Law CenterWhat's New on Site

Copyright 1999 - 2003 Inner City Press/Community on the Move, Inc..   All rights reserved.  As should be clear, but in an excess of caution: under no circumstances does the information in this column (or web site) represent a recommendation to buy or sell securities.  For further information, or to request reprint or other permission, contact: Permissions Coordinator, Legal Administration, Inner City Press, P.O. Box 580188, Mount Carmel Station, Bronx, NY 10458.  Phone: (718) 716-3540.  Fax: (718) 716-3161.  E-mail: CRA [at]