After six months of Pestering Bank of America to make concessions in the communities served by LaSalle Bank, community groups finally scored a partial victory. The Charlotte goliath finally agreed to spend $95 billion for community development in low- and moderate-income and minority communities in Illinois and Michigan.
Moreover, BofA will invest $7 billion annually in Illinois and $2.5 billion a year in Michigan over a 10-year span and will sustain LaSalle’s $17 million sum in annual charitable giving.
BofA also will move its commercial real-estate headquarters from Atlanta to Chicago, returning jobs and tax revenue to the city and bringing back senior decision-making activities.
BofA’s acquisition of LaSalle, worth $21 billion, was approved by the Federal Reserve on September 14 at the holding-company level; it still requires sign-off from the Office of the Comptroller of the Currency on the national level, which is expected in January.
The OCC, say sources, usually follows the lead of the Fed and rarely asks for additional concessions from banks.
The sale went through even though LaSalle’s parent company, ABN Amro, was purchased on October 5 by a consortium of banks led by Royal Bank of Scotland for $101 billion after a months-long tug-of-war with Barclays for the Dutch giant.
BofA, which did not have much of a presence in the Midwest before the merger, adds 400-plus banking centers and 1,500 ATMs in Illinois, Michigan and Indiana. In September, BofA announced it would cut 2,500 jobs in Illinois and 1,500 in Michigan by 2010, according to Scott Silvestri, a spokesman for BofA.
A consortium of nonprofits that make up Save Chicago Jobs and Community Investment has been raising concerns about job and tax-revenue losses since the sale was announced on April 23.
An August 17 Anderson Economic Group study had warned that the merger would force Chicago to take a $780 million hit to its economy and would drain 10,500 jobs from the area.
Perhaps the group most ardently opposed to the merger is the Woodstock Institute. President Malcolm Bush’s requests for a public hearing to air the issues was turned down this summer; his request that the Federal Reserve Board reconsider its approval of the deal was rejected on October 1.
While Bush says he is pleased that the pressure of the groups and Sens. Richard Durbin and Barack Obama have helped to convince BofA to make concessions, he says more should be done and that “the group continues to “look at the opportunities for raising some of [the] issues that remain.”
For example, he hopes to encourage the bank to improve its market-share ratios of home-mortgage loans to minority borrowers. He also wants BofA to “follow Citigroup’s lead and come up with a fair credit-card product.” Citi, he says, offers “just” credit-card contracts.
Amy Brundage, a spokeswoman for Sen. Obama, says BofA’s steps were “a promising start,” but more can be done. “[The senator believes] that this should be a beginning and not the end of their efforts to build a permanent presence in Chicago and the community,” she says.
Organizers knew they had a chance to win community development concessions from BofA given the bank’s track record. In 2003, when the big Charlotte institution gobbled up FleetBoston Financial Corp., local officials successfully pressured the $1.5 trillion-asset giant into guaranteeing that the initial job loss would be restored in two years and that it would invest $750 billion in philanthropic efforts over a decade.