Judge rejects challenge
to BofA merger
A federal judge has dismissed a lawsuit brought by Native Hawaiians against the Federal Reserve Board seeking to halt Bank of America's merger with FleetBoston, saying he lacked jurisdiction.
U.S. District Judge David Alan Ezra had said during a hearing last Wednesday that he likely would dismiss the case. But he criticized Bank of America for failing to meet its commitments to Native Hawaiians, and said the Federal Reserve should consider their concerns.
In his formal ruling on Monday, Ezra noted that the Federal Reserve is considering testimony for and against the proposed merger.
"Any order issued by this court stopping that deliberative process would be premature because plaintiffs have no definitive basis that they will be injured by any particular action taken by the board," the judge wrote.
Ezra also said the three plaintiffs lacked standing to bring the lawsuit. He said he was not convinced that their inability to obtain mortgages could be fairly traced to any obligations on behalf of Bank of America.
"The board is charged with considering approval of a proposed merger," he said. "It is far too tenuous to link the alleged harm suffered by the plaintiffs to any wrongdoing by the board."
Eric Seitz, attorney for the three part-Hawaiian plaintiffs, said he was disappointed but not surprised by Ezra's ruling because it conforms with the comments the judge made at the hearing.
Seitz said he will meet with his clients as soon as possible to consider whether to appeal.
"But I hope the Federal Reserve will take seriously the judge's comments and do something on their own to address the concerns of native Hawaiians," Seitz said.
Ezra said that while Bank of America has on several occasions reaffirmed its commitment to providing the necessary financing for Native Hawaiian mortgages, it has continuously failed to fulfill that commitment.
"While this court lacks jurisdiction to order the board to take action with regards to Bank of America's commitments, it can only urge that the board assess Bank of America's prior commitments in considering whether or not to approve its (merger) application," Ezra said in his ruling.
The lawsuit claimed that Bank of America has not complied with commitments made on two occasions to provide tens of millions of dollars for loans and low income housing in Hawaii.
Katherine H. Wheatley, assistant general counsel for the Federal Reserve, had argued during the hearing that the board lacks enforcement authority. "We can't go to Bank of America and impose penalties," she said.