June 28, 1999
Fleet, BankBoston Plan $14.6 Billion
For Low-Income, Small-Business Loans
By JOHN HECHINGER
Staff Reporter of THE WALL STREET JOURNAL
Fleet Financial Group Inc. and BankBoston Corp. proposed setting aside
$14.6 billion for low-income and small-business loans in the five years
after their mergerless than the two banks had been lending before the
The disclosure, made in a draft proposal to local activists, had been
designed to win community support for Fleet's plan to buy BankBoston for
$16 billion. The banks' community-lending role is expected to be a major
focus of Federal Reserve Board merger hearings July 7.
But many community groups reacted angrily to the plan, saying the
combined banks are expected to be more profitable, so they shouldn't cut
back their low-income lending. "That doesn't sound like progress," said
Thomas Callahan, executive director of the Massachusetts Affordable
Housing Alliance. "That's a nonstarter."
Although few analysts expect the Fed review to block the merger, the
hearings could prompt the bank to increase future loan commitments to
The banks said they came up with $14.6 billion figure by averaging loan
volume over the last few years and projecting it forward over the next five
-- adjusted for planned branch and asset divestitures. Representatives of
both banks contend that the buyers of those branches would keep up
low-income lending under the federal Community Reinvestment Act, so
that the same amount of credit -- or more -- would go to low-income and
Also, a Fleet spokesman said, the bank had been meeting with 125
community groups in the past six to eight weeks to come up with the draft
plan -- with a final version to be announced in the next few weeks. "Those
numbers represent a proposal," he said. "It's still under development."
In the draft proposal, the banks said they planned to make $7.5 billion
loans for small businesses; $4 billion for affordable home mortgages; $2
billion for community-development lending; $1 billion in consumer lending;
$100 million for equity investments in small, minority and women-owned
businesses and other community initiatives; and $15 million in technical
assistance and support to programs such as volunteer activities.
According to recent analyses by a University of Massachusetts professor
and Inner City Press/Community on the Move, a New York activist group
that focuses on the Community Reinvestment Act, bank acquisitions by
Fleet have been followed by disproportionately large declines in mortgage
lending to low-income and minority borrowers. Fleet disputes the studies'