wfn.org | Churches Present Shareholder Resolution

[PCUSA.NEWS@pcusa.org]

23-April-1997 
97172 
 
             Churches Present Shareholder Resolution on 
           Equal Credit  Opportunity to Norwest Corporation 
 
                      by Jerry L. Van Marter 
 
MINNEAPOLIS--Four church organizations have called for Norwest Corporation 
to adopt a fair lending policy with a goal of achieving at least the 
financial services industry average of lending to racial and economically 
disadvantaged groups.  The call came in the form of a shareholder 
resolution presented at Norwest's annual meeting here April 22. 
 
    The four church organizations that filed the shareholder action were 
the Presbyterian Church (U.S.A.), the Episcopal Church, the Mercy 
Consolidated Asset Management Program and the Congregation of the Holy 
Cross Southern Province.  The four are all Norwest shareholders, owning 
more than 125,000 shares between them. 
 
    The resolution noted that Norwest's lending record to African 
Americans, Hispanics and low- income borrowers trailed the industry average 
in 1995 by 17 percent, 5 percent and 5 percent, respectively.  If 
Prudential Home Mortgage, which Norwest acquired in 1995, had been 
included, the discrepancy would have increased to 24 percent, 14 percent 
and 18 percent. 
 
    In his speech to shareholders introducing the resolution, the Rev. 
William Somplatsky-Jarman of the Presbyterian Church (U.S.A.) also called 
attention to the deterioration of Norwest's lending record between 1994 and 
1995.  He said the call for an official Norwest lending policy is intended 
"to provide an initial level of insurance against violations of the Equal 
Credit Opportunity Act." 
 
    Noting that Norwest is the largest mortgage originator and servicer in 
the country, Somplatsky-Jarman said, "Norwest and its record should lead 
the industry -- they can do better." 
 
    John Lind of CANICCOR, a San Francisco-based banking research group 
that works closely with church investors, said, "Norwest has tried to 
justify its lending record with arguments which miss the mark."   
 
    CANICCOR research has found that Norwest touts the Community 
Reinvestment Act (CRA) performance of its banking subsidies, but its 
mortgage company is not subject to CRA obligations outside its bank areas. 
And it is outside of these areas where the mortgage company makes most of 
its loans.  Beyond that, CRA only indirectly addresses lending to racial 
minorities. 
 
    The research also details how Norwest's lending record stacks up 
unfavorably in comparison with its competition.  "Norwest believes it 
cannot be compared with anyone else because of differences between banks 
and mortgage companies or differences in market strategies or locations," 
Somplatsky-Jarman observed.  "However, our research accounts for these 
variables.  When you separate out Norwest Mortgage from Prudential or from 
the banking subsidiaries, their record is still substandard." 
 
    Church stockholders have focused on the role of mortgage companies in 
recent years because they make more than half of all home mortgage loans 
and could, church investors insist, play a critical role in the economic 
revitalization of communities.  "Increased lending to people traditionally 
excluded from access to credit will improve our housing situation," said 
Harry Van Buren of the Episcopal Church. 

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