The group accuses Wachovia, SouthTrust and SunTrust of conspiring on community projects. The banks say the charges are "bogus."
By JEFF HARRINGTON
Published April 22, 2004
A group of Florida activists is seeking a federal investigation into Wachovia, SouthTrust and SunTrust, alleging the three banks coordinated community lending decisions statewide in violation of antitrust laws. One bank spokesman called the charges "bogus" and "surreal."
The Florida Minority Community Reinvestment Coalition, formed in Tampa last year as an umbrella for 32 statewide organizations, formally asked for an investigation in a letter dated April 19 and sent simultaneously to the Federal Reserve, U.S. Treasury Department and U.S. Attorney General's office.
"What we have here is basically an oligopoly," said Al Pina, acting chairman of the coalition, which promotes investment in poor and minority communities. "There was an amazing amount of cooperation (among banks)."
However, the banks and at least one independent community lending expert dismissed antitrust accusations, saying there is nothing wrong with banks talking about policy issues and discussing how to split the risk of development projects.
"I'm surprised that concern is expressed over any collaboration effort by banks to promote credit and additional banking services because that's what we want," said Ken Thomas, a Miami banking consultant and expert on community lending issues.
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Under the federal Community Reinvestment Act of 1977, banks are required to help meet the credit needs of communities in which they do business. Banks, however, have wide leeway in deciding how to invest billions of dollars in loans, grants, contracts and other services.
According to Pina, representatives of Wachovia, SunTrust and SouthTrust met and talked on the phone to discuss which community projects should be funded and which shouldn't. They also allegedly outlined a strategy to deflect the influence of the community reinvestment coalition.
In particular, Pina said, the banks objected to the coalition's push for a review of CRA lending throughout Florida to use as a benchmark for directing future investments.
In his letter, Pina alleges the meetings were in direct violation of the 114-year-old Sherman Antitrust Act.
"I'm just offended," Pina said. "This is (the) old Southern mentality of punishing some and rewarding others. It's got to end."
Barry Koling, spokesman for SunTrust in Atlanta, decried the coalition's letter as "bogus charges" that will be tossed out by the Federal Reserve.
"Clearly banks are on the same boards . . . and community partnerships. We run into each other all the time," he said. "When it comes to lending, we're competitors. Any suggestion there is any sort of coordination of lending strikes me as surreal."
Moreover, Koling questioned whether Pina was targeting banks that had rejected requests to give money to either the coalition or Access Florida, an organization Pina previously ran.
"Do these allegations have any connection to our declining to fund Access Florida? I don't know," Koling said.
Pina said Access Florida had approached only SouthTrust seeking funding, not Wachovia or SunTrust, and the coalition has not approached any of the three.
"It's ridiculous if they're going to try to tag us with sour grapes," he said. "The investigation will be able to (uncover) what is and what wasn't."
Wachovia spokesman Kevin Bezner did not address accusations directly but said the Charlotte bank often works with other financial institutions, nonprofits and federal agencies to provide access to capital in needy neighborhoods. As the second-largest bank in Florida behind Bank of America, Wachovia last year made $825-million worth of affordable mortgage loans, $2.1-billion in small-business loans and $241-million in commercial development loans and investments statewide.
SouthTrust spokesman David Oliver declined to comment on the accusations, saying the Birmingham bank's community development office has not received the letter. However, Oliver pointed out that SouthTrust received a satisfactory rating in its last CRA exam. In Florida, the bank received a high satisfactory rating for lending, a high satisfactory rating for service and an outstanding rating for investment.
According to Pina, the trigger for the alleged bank meetings came in October. That was when the coalition first began pushing for a CRA review. Pina said some banks saw a review as a threat and talked among themselves about quashing it.
Pina alleged that several other banks were involved in talks but he deemed Wachovia, SouthTrust and SunTrust the "three main culprits," singling out Wachovia as prime coordinator.
Pina said he witnessed some of the interaction among banks and has privately talked to several bank employees who verified the meetings. He did not include specific dates, names or circumstances in his letter.
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Pina's background includes working with the Greenlining Institute, a California group that has persuaded financial institutions to pledge billions of dollars to help minorities and low-income residents in that state.
He contends Florida's poor and minority residents were short-changed when huge out-of-state banks such as NationsBank (now Bank of America) and First Union (now Wachovia) bought smaller Florida institutions, turning Florida into a banking colony.
Since shifting to Florida and organizing the coalition last year, he has quickly tried to make up for lost time.
Last fall, Pina brought minority activist groups together in a statewide summit. And in February, he helped rally more than 150 minority and low-income activists to Orlando for a rare public hearing into bank lending. The hearing was a platform for the coalition to push for Bank of America to pledge billions of dollars to Florida in community development loans, grants and other projects as part of its merger with FleetBoston Financial.