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Wash. Mutual fires back
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April 10, 1997: 1:34 p.m. ET
Thrift pledges community loans of $75 billion in bid for Great Western
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NEW YORK (CNNfn) -- Washington Mutual Inc. launched the latest salvo Thursday in its attempt to merge with Great Western Financial Corp.
The thrift announced it is making a pledge to lend $75 billion over 10 years to lower-income and minority borrowers if its proposed merger goes through. The majority of those loans would probably be in California, where Great Western is based.
Home Savings of America, a thrift owned by H.F. Ahmanson & Co., made a similar offer of $70 million three weeks ago. Home Savings has also made overtures to Great Western but has so far been rejected.
Despite the increased offer of minority and lower-income lending, Washington Mutual's proposal has so far not received the blessing of many community-based organizations which approved of Home Savings' commitment.
"Washington Mutual's offer contains few specific guarantees for low-income and minority borrowers (for lending in the future,)" said Remi Mullins, banking implementation coordinator for the Greenlining Institute.
The proposal by Home Savings, Mullins said, "sets specific goals for lending and minority contracting and how they would like the company to reflect California's diverse community." She also explained it set targets for minority manager and board member representation.
Mullins said that in the past Washington Mutual has operated in a spirit of benign neglect toward minority and lower-income lending.
Officials of both Washington Mutual and Great Western were on hand for the announcement, which was made in the Watts neighborhood of Los Angeles.
Washington Mutual claimed it has a well-documented record of housing and shelter-related loans and investments in the communities where it operates.
"We (will) continue to make community reinvestment an integral part of our ongoing business plan," said Kerry Killinger, chairman of Washington Mutual."
Community social issues can sometimes influence investors and is often of assistance in securing regulatory approval. The Community Reinvestment Act issues ratings of companies with regard to their fair borrowing practices but many community groups say the designation is meaningless.
Ahmanson made a $6 billion hostile takeover bid for Great Western in March but turned off many investors with its cost-cutting approaches. Washington Mutual entered as a "white knight" with a $6.6 billion offer.
Shareholders are expected to take up the issue at their annual shareholder's meeting. Great Western has attempted to postpone the meeting in an attempt to fend off Ahmanson, which says it has enough shareholder support to force the meeting.
--Randy Schultz
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