Banking on change
Springfield NAACP President Rudy Davenport will travel to Chicago later this month to testify against the $58 billion merger of Bank One Corp. and J.P. Morgan Chase & Co.
Davenport plans to urge the Federal Reserve Board to force the banking giants into an agreement to curb discriminatory lending practices in low-income and minority communities.
"The Board has a responsibility to the entire community," he says, "not only to the financial sector, but to the social-justice sector as well."
Davenport will testify as part of a formal complaint against the merger filed by Central Illinois Organizing Project, a grass-roots organization based in Bloomington.
But CIOP, which was instrumental in last year's passage of an anti-predatory lending bill into state law, gave a pass to another major bank merger now underway that could have local implications.
Memphis, Tenn.-based Union Planters Holding Corp., which has branches in 48 Illinois cities including two locations in Springfield, is in the process of being acquired by Birmingham, Ala. -based Regions Financial Corp.
Other watchdog groups in the country oppose this merger, citing dismal track records for community investment by both institutions.
For example, New York-based consumer advocacy group Inner City Press reports that UP and Regions each fund payday and title loan companies.
Such companies, known as predatory lenders, prey on low-income communities by offering loans with exorbitant interest rates.
Inner City Press also contends UP and Regions each engage in the illegal practice of redlining by limiting low-interest loans to minorities, and then subsidizing predatory lenders who charge high fees.
While Regions has yet to open in Illinois, statistics for Montgomery, Ala., show it discriminated against minorities by administering conventional home purchase loans to whites at a rate of eight-to-one.
Meanwhile, in Springfield, CIOP cites statistics from 1998 to 2001 that show UP approved just 5 percent of its conventional home-purchase loans for people of low- and moderate-incomes.
UP spokesman Victor Rocha refused to address these discrepancies, saying only, "Regions will respond according to the federal regulatory approval process."
CIOP Executive Director Don Carlson says the decision not to file a complaint against the Regions-UP merger was based on a meeting he had late last month with a Regions senior vice-president.
"Basically, he gave us his word that Regions would be a better partner to our communities," says Carlson.
"We work by faith and not by sight alone."