ACORN to challenge Allfirst-M&T deal

Community activists call local bank's loan practices inadequate

October 01, 2002|By Bill Atkinson | Bill Atkinson,SUN STAFF

A community activist group said yesterday that it plans to challenge M&T Bank Corp.'s proposed acquisition of Allfirst Financial Inc.

The group, known as the Association of Community Organizations for Reform Now (ACORN), said Allfirst's lending record to African-Americans and low-income individuals is inadequate. ACORN plans to hold a news conference today.

"We have met with Allfirst on numerous occasions to ask them to expand their community lending," said Mitch Klein, ACORN's head organizer in Baltimore. "Their response has been to make it harder for people to get a loan. They have an obligation to be providing for the credit needs of the entire community."

Last week, Buffalo, N.Y.-based M&T agreed to buy Allfirst of Baltimore from Allied Irish Banks PLC in a deal worth $3.1 billion. The deal is expected to be completed early next year, making M&T the country's 18th-largest banking company with $49 billion in assets and more than 700 branches in six Northeastern states and Washington.

The transaction comes seven months after Allfirst lost $691.2 million in a currency trading scandal that it has blamed on John M. Rusnak, a former trader at the bank.

Spokesman C. Michael Zabel said M&T has received the highest ratings by state and federal regulators who monitor lending to minorities and low-income groups.

"We look forward to performing to that same level in our new markets," Zabel said.

Allfirst received a "satisfactory" rating from regulators in its last Community Reinvestment Act examination last year. The highest rating is "outstanding."

"We feel our community reinvestment record speaks for itself," said Philip H. Hosmer, an Allfirst spokesman. "We are pleased to have achieved a high satisfactory rating in all three performance tests with our regulators."

Klein acknowledged that challenges to acquisitions often don't work, but they can cause delays, he said. ACORN plans to send statistics and anecdotal evidence to the Federal Reserve Board, which must approve the acquisition, hoping the agency will grant a hearing on the deal, he said. ACORN plans to seek a meeting with M&T before contacting the Fed.

"This is a bank that deserves a hearing on how it treats the community," Klein said.

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