June 28, 1999
 
 
 

                   Fleet, BankBoston Plan $14.6 Billion
                   For Low-Income, Small-Business Loans

                   By JOHN HECHINGER
                   Staff Reporter of THE WALL STREET JOURNAL

                   Fleet Financial Group Inc. and BankBoston Corp. proposed setting aside
                   $14.6 billion for low-income and small-business loans in the five years
                   after their mergerless than the two banks had been lending before the
                   merger.

                   The disclosure, made in a draft proposal to local activists, had been
                   designed to win community support for Fleet's plan to buy BankBoston for
                   $16 billion. The banks' community-lending role is expected to be a major
                   focus of Federal Reserve Board merger hearings July 7.

                   But many community groups reacted angrily to the plan, saying the
                   combined banks are expected to be more profitable, so they shouldn't cut
                   back their low-income lending. "That doesn't sound like progress," said
                   Thomas Callahan, executive director of the Massachusetts Affordable
                   Housing Alliance. "That's a nonstarter."

                   Although few analysts expect the Fed review to block the merger, the
                   hearings could prompt the bank to increase future loan commitments to
                   low-income borrowers.

                   The banks said they came up with $14.6 billion figure by averaging loan
                   volume over the last few years and projecting it forward over the next five
                   -- adjusted for planned branch and asset divestitures. Representatives of
                   both banks contend that the buyers of those branches would keep up
                   low-income lending under the federal Community Reinvestment Act, so
                   that the same amount of credit -- or more -- would go to low-income and
                   small-business borrowers.

                   Also, a Fleet spokesman said, the bank had been meeting with 125
                   community groups in the past six to eight weeks to come up with the draft
                   plan -- with a final version to be announced in the next few weeks. "Those
                   numbers represent a proposal," he said. "It's still under development."

                   In the draft proposal, the banks said they planned to make $7.5 billion in
                   loans for small businesses; $4 billion for affordable home mortgages; $2
                   billion for community-development lending; $1 billion in consumer lending;
                   $100 million for equity investments in small, minority and women-owned
                   businesses and other community initiatives; and $15 million in technical
                   assistance and support to programs such as volunteer activities.

                   According to recent analyses by a University of Massachusetts professor
                   and Inner City Press/Community on the Move, a New York activist group
                   that focuses on the Community Reinvestment Act, bank acquisitions by
                   Fleet have been followed by disproportionately large declines in mortgage
                   lending to low-income and minority borrowers. Fleet disputes the studies'
                   conclusions.