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December 9, 2004
Community activists, Sovereign
sign $3.6b investment plan
Sovereign Bank New England executives signed an
agreement last week with activists of color promising to direct
$3.6 billion in benefits, mainly home and small business loans,
to low- and moderate-income people in Massachusetts between now
Bank executives negotiated the deal over the past year with the
Community Advisory Committee formed by state Sen. Dianne Wilkerson
in 1998 to negotiate such deals with major banks.
“It is a refreshing change in what historically has been
a tension-filled environment when community groups go to banks
to talk about commitment,” said Wilkerson before the signing
ceremony at Sovereign Bank’s main Boston office. “In
this climate of shrinking corporate presence and rapid consolidation
and mergers of financial institutions, Sovereign Bank stands tall,
committed to serving its most needy and often underserved customer
The deal extended the bank’s 2000 commitments to lend to
small businesses and low- and moderate-income homebuyers, purchase
goods and services from minority-owned businesses and contribute
money to business development and job training in lower-income
Activists who negotiated the deal say it will help continue to
build trust between the bank and people of color who are often
wary of banks due to historical discrimination.
Before the civil rights movement, banks often would not give loans
to African American-owned businesses. Would-be homebuyers, meanwhile,
were denied bank loans.
Today, observers say the discrimination continues. They point
to predatory lenders, who market loans with high and hidden fees
disproportionately in neighborhoods of color.
“There’s no question that these kinds of agreements
are almost essential, because we have experienced, unfortunately,
handshakes in the past from banks and other corporations and they
are only handshakes,” said NAACP Boston Branch President
Lenny Alkins. “The deliverance of what they say they will
do has fallen short.”
Sovereign Bank was on track to meet its monetary promises under
the 2000 agreement negotiated between the bank and the Community
Advisory Committee and due to expire next year, say committee
members and Sovereign officials.
“We met or exceeded every one of our commitments in that
agreement,” said Sovereign Bank Executive Vice President
Ronald Walker. “We are committed to economically develop
these communities and being a part of them.”
A Sovereign Bank representative could not say, however, how much
of the bank’s loan value went to communities of color in
The new agreement calls for Sovereign Bank to invest $1.2 billion
in small business loans and $940 million in mortgage lending to
low- and moderate-income people in Massachusetts. It also calls
for the bank to contribute $222 million in community development
financing for affordable housing projects and commercial real
estate sponsored by for profit and nonprofit organizations.
Bank executives promised to invest $30 million in equity in community
development corporations, community development financial institutions,
equity loan pools and other entities serving small businesses.
Bank executives agreed to provide $25 million in loans via the
federally funded empowerment zones in Boston, Worcester and Springfield.
The money will pay for job training and business development for
residents of the low-income neighborhoods in the zones —
a major boost for the often cash-strapped organizations that run
the empowerment zone programs.
“It’s about time,” said George Greenidge, board
president at Boston Connects, Inc., which runs Boston’s
Empowerment Zone. “For years, we’ve been talking about
how to get greater leverage with corporations.”
The agreement also calls for Sovereign Bank to funnel 20 percent
of its expenditures on contracts for goods and services in Massachusetts
to businesses owned by people of color, and 15 percent to businesses
owned by women. The deal calls for bank executives to strive for
20 percent of their employees to be people of color.
It has become increasingly difficult for activists to bring banks
to the table to negotiate community benefits as larger banks acquire
Boston- or New England-based institutions, making the Community
Advisory Committee’s success and Sovereign Bank’s
willingness to negotiate more remarkable.
San Francisco-based Bank of America merged recently with Fleet
Bank, the institution which had previously acquired Bank Boston.
But Bank of America made fewer specific commitments to Massachusetts
community development initiatives than had Fleet, promising instead
to step up its national giving.
“When you talk about community reinvestment, that is dangerous
because they feel the lion’s share of the investment should
go where their headquarters is, not their subsidiaries,”
The Community Advisory Committee, which has negotiated community
development agreements with other major banks including Citizens
Group, Bank of America and Fleet Bank, has proved critical in
pressuring banks to invest in working class communities in the
So has the Community Reinvestment Act, a state law that requires
banks to invest in lower-income communities.
Wilkerson is joined on the committee by representatives of Sovereign
Bank, the New England Area Conference of the NAACP, the Boston
Branch of the NAACP, Fair Housing Center of Greater Boston, Massachusetts
Association of Community Development Corporations, Citizens’
Housing and Planning Association, Urban League of Eastern Massachusetts,
Veterans’ Benefits Clearinghouse and the offices of Boston
City Councilor Chuck Turner and U.S. Sen. John Kerry.
Committee members plan to reach out to under-served communities
to encourage community members to take advantage of the loans
and other investment opportunities promised under the agreement.
“We will make sure community agencies are aware of
this agreement,” said Alkins.
The bank’s development officers in local branches, meanwhile,
will reach out to businesses to inform them of the opportunities.
Sovereign operates branches in Mattapan Square, Fields Corner,
Upham’s Corner, Columbia, the Washington Park Mall, Egleston
Square and other locations throughout Boston and Massachusetts.
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