Worries about predatory lending, branch closings and the marginalization of low-income neighborhoods topped the list of concerns voiced Thursday at the first of two hearings designed to give the public a chance to comment on J.P. Morgan Chase & Co.’s plans to buy Bank One Corp. of Chicago in a deal valued at about $58 billion.
The second hearing is scheduled for April 23 at the Federal Reserve Bank of Chicago.
In a daylong hearing held at the Federal Reserve Bank of New York in lower Manhattan, community and legal services groups conceded they had little chance to block the deal, which would create the country’s second-largest bank.
Nonetheless, Sarah Ludwig of the Manhattan-based Neighborhood Economic Development Advocacy Project said activists hoped to pressure the Fed to extract pledges from the two banks as part of their final merger agreement.
“The Federal Reserve should not approve the merger without imposing a series of specific and monitorable conditions on Chase to ensure that the merger bank meets the convenience and needs of all communities,” Ludwig said.
Announced in January, the deal would create a financial institution with $1.1 trillion in assets, surpassed nationally only by Citigroup Inc.
Eager to assuage the deal’s critics, William Harrison, J.P. Morgan Chase’s chairman and chief executive, used the hearing to announce the combined bank’s pledge to invest $675 billion over the next 10 years to finance mortgages for homeowners in minority and lower-income communities.
Last year, J.P. Morgan Chase committed to invest $500 billion for low-income mortgage lending over the same period.
As part of the pledge, the combined bank would invest another $125 billion in small-business loans, affordable housing and commercial development in low-income and moderate-income communities.
“Making banking services widely available and continuing to help develop affordable housing and revitalizing neighborhoods are integral to our business goals and corporate values,” he said.
Many of those critical of the merger acknowledged that Chase had a long record of lending to homeowners and small businesses in low-income neighborhoods of New York City.
Yet Rev. Jesse Jackson, whose Rainbow/PUSH Coalition has yet to take a position on the merger, said he was concerned that the Federal Reserve and Congress had failed to enforce the Community Reinvestment Act of 1977. The act requires banks to serve low- and moderate-income neighborhoods.
Jackson said it is common for banks such as J.P. Morgan Chase to purchase mortgages arranged by so-called predatory lenders, directly aiding those institutions that take advantage of prospective homeowners whose credit is judged to be too risky for mainstream banks.
“It is not right to lend money for affordable housing on one hand, and then finance the egregious pawn shops and predatory lenders on the other,” Jackson said. “That whole process must be cleaned up.”
Matthew Lee, executive director of Inner City Press, a community group based in the south Bronx, said a review of recent government filings showed that J.P. Morgan Chase consistently made loans to a “shadow world of fringe finance and predatory lending” businesses.
Among them, Lee said, were pawnshops and gun dealers in at least 11 states.
Payday lenders typically charge borrowers allegedly exorbitant interest rates, requiring only that an applicant has a job and agrees to write a post-dated check to the lender.
Bank One spokesman Thomas Kelly countered that J.P. Morgan Chase operated more branches in the Bronx than any New York City bank.
“J.P. Morgan has ethical standards for doing business, and we try our very best to ensure that our borrowers comply with all local and national laws,” he said.