Activist praises B of A in Nevada, worries about new law

Phil Levine

Thursday, Feb. 17, 2000 | 10:51 a.m.

A housing advocate says Bank of America's Nevada operation remains a good corporate citizen dedicated to continuing its lending to low-income residents and in poorer neighborhoods.

But Gail Burks, executive director of the Nevada Fair Housing Center Inc., is concerned over the potential impact new bank laws may have on banks' neighborhood investments.

"B of A (Nevada) continues to honor its CRA (Community Reinvestment Act) commitments, and has been diligent in doing what they said they would," said Burks. "They've been a good corporate citizen, and we (Nevada) were fortunate to not lose our key (CRA) people after the merger."

In contrast to the post-merger shake-up felt at B of A's community lending operations in California -- in 1998, San Francisco-based Bank of America merged with Charlotte, N.C.-based NationsBank -- Burks said it remains business as usual at B of A Nevada.

Originally introduced in 1977 during the Carter Administration, the CRA requires banks to reinvest in communities where they conduct business. After last November's passage of the Bank Modernization Act, negotiations began in Washington to draft new CRA rules.

Those negotiations are ongoing, with the deadline for public input set for March 27.

The uncertainty surrounding the outcome of CRA negotiations casts a shadow over the generally bright portrait of B of A's CRA investments in Nevada, Burks said.

"Even though we were pleased that the CRA was maintained as part of the new Bank Modernization Act, there are ways to erode the act without repealing it," said Burks.

"I also think that most people don't realize that the changes made by the new bank law now affect mainstream America, not just low-income people."

The Bank Modernization Act makes it simpler for banks, securities firms and insurance companies to partner or merge. Critics of the law, including Nevada Sen. Richard Bryan, are concerned over the potential loss of privacy as banks share information with their new affiliates.

George Smith, president of Bank of America Nevada, said his bank remains committed to the principles of CRA.

"The fact is that with the CRA, you can make money by doing the right thing," he said. "I also believe that the merger (with NationsBank) was a plus for our customers, as they brought with them products and services that complemented what we already had."

Burks believes that, like politics, all banking is local, and credits Smith with B of A Nevada's commitment to CRA investments.

"We've been fortunate that, unlike California, we didn't lose local B of A people such as George," she said.

B of A Nevada Vice President Jocelyn Cousins, who oversees the bank's CRA activities, says Southern Nevada's explosive population growth means there's more demand than ever for products aimed at low-to-moderate income households.

"The growth in this area, particularly in the number of people employed in the gaming sector, means the need for those types of products continues to grow," said Cousins.

She cites B of A Nevada's growth in both mortgage loans and low-income housing financing as proof of both the bank's CRA commitment, and increased market demand.

"In 1999, we loaned $45 million in CRA financing for low-to-moderate-income multifamily (apartment) construction," said Cousins. "That's up from $33.8 million a year earlier.

"We also provided $101 million in CRA home loans last year, up sharply from $78.6 million in 1998."

Last fall, Bank of America was chosen as the preferred Nevada lender for the Community Express Program, designed to help small businesses in need of capital.

Still, Burks remains concerned about the potential impact of new CRA rules and increased merger activity.

"We recently lost a good corporate citizen with the merger of Pioneer Citizens Bank," she said of the bank that merged with Zions Bancorporation, owner of Nevada State Bank.