Greenlining's Blog

Wachovia: Fourth Largest Bank Is Ignoring California

Wachovia Bank is presently the nation’s fourth largest bank. It is seeking to acquire our nation’s largest savings and loan, World Savings, recently acquired a major California auto lender, and is planning to build 200 more branches in California.

Greenlining Institute and its members have met twice with the CEO of Wachovia, Ken Thompson, who appears to have effectively addressed CRA issues in North Carolina. Wachovia, however, has said no to Greenlining’s request that it be a leader in California, as it is in North Carolina, in small business lending, in closing the minority homeownership gap and addressing the needs of the unbanked and underbanked.

As a result of Wachovia’s intransigence, Greenlining filed a protest on August 10 with the Federal Reserve. We are seeking Federal Reserve hearings in Oakland and Los Angeles.

Greenlining’s August 10 protest was preceded by an August 4 community hearing in Oakland co-sponsored by Congresswoman Barbara Lee and Congressman Barney Frank. One hundred and forty community leaders attended and 92% of the 49 speakers presented concerns about whether Wachovia was up to the task of effectively serving California’s 20 million minorities and 1.4 million minority-owned businesses.

Wachovia’s primary argument is that it has made a $150 billion ten-year commitment to California. However, Greenlining’s Federal Reserve protest indicates that up to $130 billion of this amount (85%) may consist of potentially risky adjustable rate mortgages to low-income families and high interest credit cards.

Greenlining’s Federal Reserve protest also demonstrates that Union Bank, Wells Fargo and Bank of America have made far larger commitments even after adjustments for size and have far greater achievements. For example, Bank of America nationally has made 45 times more SBA loans to African Americans than Wachovia has:

• 67 times more SBA loans to Latinos than Wachovia has; and
• 75 times more SBA loans to Asian Americans than has Wachovia.
• Behind Union Bank in Philanthropy

Wells Fargo contributed $39 million in philanthropy to underserved communities in California while Wachovia has committed to only $10 million. Further, the far smaller Union Bank made $12.4 million in philanthropy in California last year.

Responsible Competition
Greenlining Institute strongly supports more competition in California. Our members, therefore, want Wachovia to make CRA commitments that are comparable to those it has made in Charlotte and in North Carolina. This is particularly important, since Wachovia’s CEO has stated to Greenlining members that he expects Wachovia to be No. 1 in market size in California within ten years (Bank of America’s CEO committed on March 9 at a meeting with Greenlining members to being the national leader in closing the minority homeownership gap and addressing small business problems confronting minority-owned businesses). All of California expects the same from Wachovia. It will never be No. 1 without true leadership commitments.

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