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Press Release |
Contact: Angelyque Campbell, |
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AUSTIN, TX -- A statewide organization that monitors the mortgage lending practices of banks and other institutions urged federal regulators today to halt the proposed merger of NationsBank and Bank of America while unresolved questions about the banks’ investment practices in low income and minority communities are addressed.
In a letter delivered Wednesday to the Federal Reserve Bank of Richmond (Va.), a Texas Community Reinvestment Coalition (TCRC) official said regulators should carefully consider the effect mergers have on Texas communities, particularly low income and minority communities. NationsBank and Bank of America are two of the state’s largest financial institutions.
"NationsBank’s and Bank of America’s level of performance in some minority and low- to moderate-income communities raises doubts about the merged bank’s ability to meet this ambitious pledge, particularly in Texas," said Angelyque Campbell, the coalition’s coordinator.
Bank of America, based in San Francisco, has failed to implement in Texas the innovative lending and investment products it has introduced in California in accordance with a federal law – the Community Reinvestment Act (CRA) – which monitors the bank’s mortgage lending practices. Instead, data filed in 1996 by banks with the federal government shows Bank of America disproportionately targets Texas low income and minority communities with manufactured housing loans while failing to adequately provide conventional home loans.
Recently, Bank of America sold its manufactured housing unit. However, it has yet to offer "an alternative affordable housing plan which meets their community reinvestment obligation of lending to minority and low and moderate income communities."
"The Board should delay this merger until Bank of America’s CRA performance evaluation is re-examined due to the sale of its manufactured housing unit," Campbell said.
NationsBank of Texas, NA is the state’s largest bank, with $60 billion in assets and 20 percent of all insured deposits last year. Bank of America, with $5.3 billion in assets and $4.4 billion in deposits in 1997, held more than 2 percent of the state’s deposits.
Despite its size, NationsBank is a relatively small player in the Texas single family home mortgage market, with between 1 to 3 percent of home loans in some areas. "We believe that NationsBank should be making more single-family home purchase loans throughout the state as part of its commitment to reinvest in the communities," the letter stated.
According to data filed with federal regulators by NationsBank under the Home Mortgage Disclosure Act (HMDA) for 1996:
Race $ Amount Loaned Percentageof Amt. Loaned State Population1990 Census White
$391,176,000
86%
75% (12,774,762)
Hispanic
$ 45,582,000
10%
23% ( 3,890,820)
Black
$ 17,986,000
4%
12% ( 2,021,632)
Total
$454,744,000
100%
16,986,510
Campbell urged the Federal Reserve to delay the merger until NationsBank’s current CRA performance evaluation is completed and made public. She added that the coalition’s difficulty in obtaining relevant information from NationsBank about their lending record raises questions about the bank’s commitment to working with community groups.
"Our recent and past experience leads us to question NationsBank’s sincerity in addressing longstanding problems in many Texas communities," Campbell said. "We request that NationsBank commit to start regular, semi-annual meetings with TCRC … in a manner which promotes good faith dialogue and mutual respect."
Said Campbell: "If the merged bank is to lead the financial industry in community lending and investment as it should, and as it asserts it will, the current lending patterns of the merging banks in Texas warrant close scrutiny."
TCRC receives administrative support from the Southwest Regional Office of Consumers Union. Consumers Union, publisher of Consumer Reports, is a nonprofit organization established in 1936 to provide consumers with information and advice on goods, services, health, and personal finance. Consumers Union accepts no outside advertising nor is beholden to any commercial interest.
