A mega-merger with a hopeful twist (continued)

BUT IT’S WHAT happens in a place like Olneyville, not China, that counts in Rhode Island. This one-time industrial neighborhood, a five-minute drive from downtown Providence, is so distressed that much of the landscape features not abandoned mills, but the weedy, rock-strewn lots left when the mills burned down.

Like downtown, however, Olneyville is enjoying some glimmers of a renaissance. Some remaining mills are undergoing multi-million dollar commercial and housing conversion, and a greenway, with parks and bicycle trails, is being installed along the Woonasquatucket River that winds through the area.

Banks can make a life-or-death difference in such neighborhoods. They provide not only money and day-to-day branch banking services, they also bring the expertise and political muscle that can help bring dying areas back to life. Banks, in fact, are required to help these kinds of areas, and are rated on how they meet guidelines of the federal Community Reinvestment Act, which looks at what kind of investments and services they put into poor areas. The act came about in part because of the role banks played in helping to destabilize formerly middle class neighborhoods in Boston and other cities.

Fleet received an "outstanding" rating last year from regulators on its community reinvestment performance in Rhode Island. However, experts say a close analysis of the bank’s performance makes that judgment arguable.

The National Community Reinvestment Coalition analyzed Fleet’s lending for home loans in 2002, and found that it, indeed, was outperformed the average of Rhode Island lenders in the percentage of loans to African-American and Hispanic home-buyers. The figures show, however, that Fleet was hardly playing a robust role in the overall housing market. Fleet provided just 525 of 17,673 loans analyzed that year — three percent of the state’s bank mortgages, and nowhere near Fleet’s 24 percent share of the Rhode Island market.

Still, housing advocates like Brenda Clement, executive director of the Housing Network of Rhode Island, a 22-member coalition of nonprofit housing groups, voiced worries during a Federal Reserve System hearing in January on the loss of Fleet’s identity. "We are extremely concerned that the proposed merger will leave Rhode Island without local bank officials with decision-making power and access to resources to serve Rhode Island’s unique markets," Clement wrote.

As it happened, a textbook example of what she was talking about was unfolding in Olneyville. It had started long before the merger announcement, with a call placed by Fleet to the Olneyville Housing Corporation’s Frank Shea. The bankers said they’d been hearing good things about the group’s work, Shea says, and wanted to know if they could help.

Soon Fleet officials were deeply involved, helping with a $3.5 million, 22-unit project called Riverside Townhouses. The plan was to use one-acre of land donated by the city, which had reclaimed it after a fire destroyed the former mill building at Bosworth and Curtis streets. Olneyville Housing would retain ownership of the land. The low- and moderate-income buyers, when it came time to resell, would offer the properties to people of similar financial means, assuring a continuum of affordable housing.

Fleet joined a number of other partners in the project, agreeing to provide the construction loan to put up the buildings. What’s more, it became the official applicant for a key piece of financing, a $550,000 grant from the Federal Home Loan Bank. Once the houses were up, Fleet would process at least five, and perhaps all, of the mortgages.

One of the bankers got so enthusiastic that he joined the Olneyville Housing Corporation’s board of directors — exactly the kind of local involvement that Clement later worried about losing.

In fact, when the Bank of America takeover was complete, the Fleet man’s job was one of those eliminated. Also, as the Bank of America-Fleet deal was closing, the Riverside Townhouses project was only half-funded, and there was concern about completing the deal.

On April 29, Bank of America officials came by mini-bus to Olneyville from Boston to inspect the project, along with others in which Fleet was involved. These were new faces, and what they saw wouldn’t make a profit-minded banker’s heart flutter.

The site of the would-be townhouses was an uneven plot of dirt and rocks, set off by concrete blocks — hardly ready-to-build. Meanwhile, the amenity that was intended to make the site extraordinarily attractive — the adjacent Riverside Mills Park — was a natural wonder only if you shut your eyes listened to Shea’s description of what was supposed to happen. Envisioned as a nine-acre park next to the Woonasquatucket River, with a performance stage, water and skateboarding parks, and picnic areas, it was an extension of the industrial wasteland, and the bankers had to take Shea’s word that there was actually a river beyond a distant row of weed-like trees.

The Bank of America folks had other stops to make that day, Shea recalls. But they stayed longer than scheduled, taking in the details of the townhouse project and others in Olneyville. In the end, the new bankers continued backing the townhouses.

Just as interesting, the bankers asked what else Olneyville Housing was working on. Shea said the agency was considering more complex projects, like rehabilitating buildings with stores on the first floors and apartments overhead — more complex projects than the agency had done before. Not a problem, the Bank of America officials said, they had done lots of those in the past.

Shea says it remains to be seen what will happen. But he was impressed with Bank of America’s interest, and with the giant bank’s obvious ability to help with a project much more complicated than those handled by Olneyville Housing in the past.

Clement, of the Housing Network, is guardedly hopeful, too. "They do bring to the table a lot more products and resources than Fleet ever had," she says. "If we can be assured that we will have some of their resources coming to Rhode Island, it could be a very good thing."

Bank of America’s takeover of Fleet is part of a relentless rearrangement of the national and even the global banking system, which is still taking place.

For example, at the time of the Fleet merger on April 1, Bank of America became the second largest bank in the nation. But the subsequent purchase of Bank One Corporation by J.P. Morgan Chase & Company knocked Bank of America back to third place, with a mere $1.02 trillion in assets, compared to the new Number Two’s $1.12 trillion. (Citigroup, with $1.32 trillion, is the king of the hill.)

This concentration of wealth and power among a few banks — whose resources are greater than that of many countries — makes it easy to wonder whether too few companies will be calling the shots economically, and politically, in the years to come. But perhaps the best way to judge the effects of such mega-deals will not be with what happens with the latest big deal on Wall Street, but what becomes of big dreams in neighborhoods like Olneyville.

Brian C. Jones can be reached at brijudy@ids.net.