Suit aims to block
Bank of America merger
to enforce Hawaiian loans

An attorney representing native Hawaiians has filed a federal lawsuit seeking to block the Federal Reserve Board of Governors from approving the Bank of America-FleetBoston merger until BofA complies with two Fed orders mandating that BofA provide $150 million in mortgage lending on Hawaiian Home Lands.

The suit, filed yesterday by Eric Seitz in District Court in Honolulu, requests injunctive relief on behalf of plaintiffs Momo Haili, Kahilihiwa Kipapa and Elizabeth Ann Hooipo Kalaenaauao Pa Martin. Federal Reserve Governor Alan Greenspan is the first defendant listed on the complaint.

The Federal Reserve incorporated the commitments into its merger approvals in 1994 and 1998 for two previous BofA acquisitions.

BofA, which entered the Hawaii market in 1992 by purchasing HonFed Bank, acquired Hawaii-based Liberty Bank in 1994 and NationsBank in 1998. BofA's Hawaii branches were acquired by American Savings Bank, a subsidiary of Hawaiian Electric Industries Inc., in late 1997 for $96 million.

"Bank of America's gross delinquency on this commitment has cost Hawaiian families tens of millions of dollars when the lost opportunity to accumulate home equity and the other benefits of home ownership are added up," said Puuhonua "Bumpy" Kanahele, a native Hawaiian leader who has been advocating for enforcement of the Federal Reserve's orders since 1998.

Additionally, BofA also has a $30 million lending commitment ordered by the Fed regarding affordable housing on Kauai that was supposed to be completed by 1996. A news release accompanying the suit said it appears that commitment has yet to be acted upon. The Kauai commitment was not part of the suit.

Ian Chan Hodges, a spokesman for the Hawaii Fair Lending Coalition, said his group wants to let BofA know that its lending commitments are legally binding.

"This is not a Britney Spears wedding," he said.

BofA officials could not be reached for comment yesterday.


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