Consumer group seeks to block Chase purchase of J.P. Morgan
By Reuters, 11/06/00
NEW YORK -- A consumer advocacy group said on Monday it filed papers with U.S. regulators opposing Chase Manhattan Corp.'s plan to buy commercial and investment bank J.P. Morgan & Co. Inc. , because of Chase's allegedly biased lending practices.
New York-based Inner City Press/Community on the Move said Chase's normal lenders routinely deny loans to minorities like blacks and Hispanics, while another arm of the bank, Chase Funding, targets these communities with high-interest rate products.
Chase, the No. 3 U.S. bank holding company, was not immediately available to comment.
The advocacy group, which frequently files to oppose bank mergers, also said Chase was allegedly involved with questionable lenders who lend to less credit-worthy borrowers through its Chase Securities arm, which securitizes pools of such loans.
"Chase has rolled-up three New York banks, and now turns away from normal interest rate business in the communities it was chartered to serve, in favor of standardless subprime, global and investment banking business," Matthew Lee, InnerCity Press's executive director and general counsel, said. "There should be hearings, and the applications should be denied."
Inner City Press also asked regulators to hold hearings on the merger.
Chase said in September it would buy J.P. Morgan for about $35 billion in stock, in a bid to join the handful of powerful global players now dominating the securities industry.
The combined bank will have about $660 billion in assets and businesses advising companies on mergers and new stock offerings, as well as one of the largest consumer and commercial banking operations in the United States.
Inner City Press alleged that at the decade's close, Chase got into high-interest-rate lending in low-income communities, making $3 billion in subprime loans in 1999.
Critics have said subprime lending, or loans to less credit-worthy borrowers, can be predatory because the loans are aimed at poor people but then put them in a financial bind.
