Groups Seek to Enlist U.S. Regulators as Allies : Minorities, Irate Over Branch Closings, Take on Banks

Spurred by the planned closing of a Wells Fargo Bank branch in an inner-city San Francisco neighborhood, several California business and civil rights organizations have appealed to federal regulators to develop a national plan to aid minority communities they say have been abandoned by major banks.

In a six-page letter sent Monday to the heads of the Federal Reserve Board, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, the groups complained that although the federal government has spent billions of dollars to bail out failing banks, “federal agencies have no policies or programs to save minority communities from the improvidence of giant white-owned banks.”

“We see a disproportionate number of bank closings in poor and minority communities,” said Robert Gnaizda, a lawyer with Public Advocates, the San Francisco-based public interest law firm that helped draft the complaint.

The letter, which also asks the federal agencies to assist in finding another bank to take over the Wells Fargo branch, was signed by the presidents of the San Francisco Black Chamber of Commerce, California Council of Urban Leagues, Black Business Assn. of Los Angeles and the Bayview Merchants’ Assn. in San Francisco.

“There is a growing concern that minority branches are being set up for failure,” Gnaizda said. “The Wells Fargo branch is operated as if it were a welfare office.”

Spokesmen for all three federal agencies said they had not yet received a copy of the letter and noted that no federal agency has the authority to prevent a bank from closing a branch. However, a spokeswoman for the Office of the Comptroller of the Currency noted that her agency does take past complaints about bank service into consideration when considering bank applications to open a new branch.

Betty Lattie, a vice president of Wells Fargo in San Francisco, said the Bayview Wells Fargo branch was not being singled out and that service there was no worse than at other Wells Fargo offices.

“That bank has simply not met our profitability standards,” said Lattie, who noted that Wells Fargo has closed about 138 of its 621 branches, including several in affluent communities, since acquiring Crocker National Bank in 1985. “Frankly, I don’t know if there is a study that will show you that there are more bank closings in minority communities.”

Nevertheless, the complaint is the latest evidence of minority discontent with allegedly poor bank service and with bank closings in inner-city communities in the wake of deregulation, federal officials and banking industry spokesmen said.

Since deregulation began in 1980 and eliminated the ceilings placed on the interest that banks could pay on checking accounts and bank certificates of deposit, competition has dramatically increased, cutting into bank profits and prompting widespread cost cutting and fee raising, including increased checking account fees, greater use of automated teller machines and branch consolidations.

“Banks, after opening up a lot of branches, found themselves having to compete by offering higher money market rates,” said Leonara S. Cross, director of communication at the Office of the Comptroller of the Currency in Washington.

“Now they are looking for ways to cut costs,” she added. “So they close branches that are less profitable. We’ve put out a banking circular encouraging banks to talk with community groups before they take those kinds of actions. But legally there is nothing we can (force) the banks to do.”

“We are aware of the issue,” added Joe Belew, president of the Consumer Bankers Assn., a suburban Washington trade group that represents large retail banks such as Wells Fargo. “It’s happening all over the country . . . and it’s due to competitive pressures.”