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For week ended November 28, 1999 Posted 24 Feb 2001

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Fed may hold hearing on Zions merger

Summarized by Kent Larsen

Fed may hold hearing on Zions merger
Deseret News 25Nov99 B4
By Max B. Knudson: Deseret News business editor

WASHINGTON, DC -- The Federal Reserve Board says that it will "carefully consider" holding a public hearing on the proposed merger of Zions Bancorp and First Security Corp. before approving the $5.9 billion merger. The proposed merger of the two Utah-based banks, both of which have strong Mormon histories, has been attacked by community groups who claim that the merger will decrease competition and decrease access to credit.

"It's better than the outright 'No!' from them that we expected," said Tim Funk, representing the Utah HUD Tenants Association. The group is one of a coalition of community groups in Utah, Nevada, California and New Mexico that have twice asked the Fed to hold public hearings on the merger. The coalition, which calls itself the "Western Citizens for Access to Credit," wants assurances that the bank resulting from the merger will be responsive to community reinvestment needs. Specifically, the group is concerned about mortgage lending and small business loans to minorities and low- to moderate-income households.

After petitioning the San Francisco branch of the Fed on October 4th, the group sent another letter November 10th and received a letter from Robert deV. Frierson, associate secretary of the Board of Governors of the Fed, saying "Your request that the board hold a public hearing has been made part of the record on the application filed by First Security and will be carefully considered by the board in reviewing the proposal." While the letter sounds like a bureaucratic brush-off, the coalition is encouraged just to get an acknowledgement.

The coalition's efforts are different from the efforts of a group of Utah county citizens who have filed a lawsuit against the proposed merger, saying that it violates anti-trust laws. The coalition is worried that the merger will mean that 40 to 50 bank branches will close, decreasing the access of small businesses and rural and lower-income people to the bank. They also worry that the merger will mean layoffs, "Rumor has it that First Security is already planning for massive layoffs, like over 250 of its 650 or so employees in its information systems group," said Funk. "This is one of our major concerns, as stated in our correspondence with Zions and First Security, and we have received assurances that nothing was happening yet."

Copyright 1998, 1999, 2000, 2001 Kent Larsen · Privacy Information