News

Govt. clears BofA, Fleet merger

March 9, 2004

WASHINGTON - The Federal Reserve has cleared the way for Bank of America and FleetBoston Financial Corp. to combine and form a banking powerhouse with nearly $1 trillion in assets and branches from coast to coast.

According to an Associated Press report, the Fed's board of governors, including Chairman Alan Greenspan, voted 6-0 on March 8 to approve the merger, finding that Bank of America's acquisition of Fleet would not threaten competition or unduly concentrate banking resources.

The new institution, with about 5,700 branches, would have assets estimated at $966 billion, trailing only Citigroup and another planned bank megamerger between Chicago-based Bank One and J.P. Morgan Chase.

The Fed's approval removed the last major regulatory hurdle for the deal, with its estimated cost of $47 billion, as it had already received a go-ahead from the Justice Department and the Federal Trade Commission.

If approved by shareholders of both banks, the merger could be completed early next month. Both banks have scheduled special shareholders meetings for March 17, according to the AP.

At public hearings held by the Fed in January in Boston and San Francisco, witnesses voiced concerns about predatory lending, possible closing of rural bank branches and the trend toward big banks getting bigger.

In February, a federal judge in Honolulu saying he lacked jurisdiction dismissed a lawsuit against the central bank brought by Hawaiians seeking to halt the merger. But U.S. District Judge David Alan Ezra also criticized Bank of America for what he said was its failure to meet its commitments to Hawaiians.

Ian Chan Hodges, a spokesman for the Hawaii Fair Lending Coalition, said that his group planned to appeal the Fed's decision in the 9th U.S. Circuit Court of Appeals, which has jurisdiction over Hawaii.

The Fed noted in its order issued on March 8 that Bank of America recently affirmed its intention to complete its goal for mortgage lending to Hawaiians.

In its merger review, the Fed also determined that the new bank to be called Bank of America Corp. would fulfill obligations under the Community Reinvestment Act, which requires banks to make loans in low-income and minority areas as a condition for opening new branches.

To reassure consumers, Bank of America has said it would commit to investing $750 billion in community lending and investment over the next decade, including $100 billion in the mid-Atlantic and New England markets served by FleetBoston.

According to the AP, Bank of America said that some job losses may be expected because of the "elimination of redundant administrative positions" but that employees who deal directly with customers will be largely unaffected.