A New York consumer group is challenging before federal bank regulators the pending $1.5 billion merger of New Haven’s NewAlliance Bancshares and a Buffalo, N.Y., lender, claiming both banks fall short in lending to minorities and low- and moderate-income borrowers.
Inner City Press/ Fair Finance Watch said it formally filed a challenge on Tuesday – the deadline for filing initial comments with federal bank regulators about the merger of NewAlliance into First Niagara Financial Group.
The Bronx-based group claims neither bank is in compliance with federal Community Reinvestment Act (CRA) requirements.
According to the group, NewAlliance lags behind its peer banks in issuing home mortgages to African- and Hispanic-Americans and to low- and moderate-income borrowers in its key Connecticut markets of Hartford, Bridgeport and New Haven, as well as Springfield and Worcester, Mass.
The group leveled a similar charge against First Niagara in that bank’s major markets in upstate New York and Pittsburgh, Pa.
The group also is critical of the “golden parachute” that NewAlliance CEO Peyton R. Patterson will  receive upon retirement if the deal is completed as scheduled next spring.
Matthew Lee, executive director of Inner City Press / Fair Finance Watch, said he believes First Niagara has grown too quickly in recent years, while becoming “less and less friendly,” to low and moderate income people and minorities.
“So [First Niagara] just seems like a particularly inappropriate acquirer of NewAlliance,” Lee said.
In a written statement First Niagara said, “This single protest of the transaction was lodged by an individual who has for years opposed various bank mergers around the country and is based in New York City, outside of the communities First Niagara and NewAlliance serve. He similarly, and unsuccessfully, opposed First Niagara’s transaction with Harleysville National Bank. Again, we believe his latest protest is without merit. First Niagara continues to believe its NewAlliance merger remains on schedule for closing in April 2011, subject to shareholder and regulatory approval.
NewAlliance officials did not respond to HBJ Today’s requests for comment.
Earlier this year, regulators approved First Niagara’s purchase of Harleysville Bank in the Philadelphia over CRA objections from Inner City Press/Fair Finance Watch.
