Consumer group opposes Bank of America/MBNA merger
By Jonathan Stempel
NEW YORK (Reuters) – A U.S. consumer group which has taken
some credit for thwarting Citigroup Inc.’s
ambitions on Monday said it opposes Bank of America Corp.’s
prices and reduce consumer privacy.
Inner City Press is asking the Federal Reserve for public
hearings on the $35 billion acquisition.
In March, the Fed cited comments by the group, which is
based in New York’s borough of the Bronx and has faulted
various practices at several lenders, when it ordered Citigroup
to delay big takeovers until it had tightened internal controls
and addressed regulatory problems.
The acquisition of MBNA is expected to close in the fourth
quarter. It would leave Citigroup, Bank of America and J.P.
Morgan Chase & Co.
the U.S. credit card market. These are also the three largest
U.S. banks, each with more than $1 trillion in assets.
“We’re going in with full guns blazing,” said Matthew Lee,
executive director for Inner City Press, in an interview. “This
troika of trillion-dollar banks would basically be able to set
prices at will, leaving consumers with less choice, which we
consider contrary to the public interest.”
Lee, a lawyer, said “Rates are already high in the credit
card industry, even with rates the Fed sets itself being low.”
Terry Francisco, a spokesman for Charlotte, North
Carolina-based Bank of America, said: “We are confident that
the proposed acquisition of MBNA will deliver measurable
benefits to our customers, communities and shareholders.”
Inner City Press said the merger would let Bank of America
share MBNA customer data with more than 1,000 affiliates.
It noted that the bank in February reported the
disappearance of computer tapes with data on some 1.2 million
U.S. government employees.
The group also said the acquisition might let the bank
control more than 10 percent of U.S. deposits, the maximum
allowed. Bank of America Chief Executive Kenneth Lewis has said
he doesn’t expect to breach that limit.
In addition, Inner City Press charges that the bank denies
mortgage applications to blacks and Hispanics nearly twice as
often as to whites and has been more likely than its peers to
offer Hispanics higher-cost loans.
In its March order approving Citigroup’s purchase of Texas’
First American Bank SSB, the Fed cited claims of an unnamed
“commenter” — which was Inner City Press — accusing the bank
of abusive lending practices, opening accounts for officials
associated with terrorism and financing projects that cause
environmental or social harm. Citigroup was given a chance to
Lee said the Citigroup restrictions show “the Fed will act
even on deals that don’t raise issues of competition.”
Inner City Press previously campaigned unsuccessfully to
block HSBC Holdings Plc’s
acquisition of Household International Inc.