Wachovia 'Plowing Forward'

The Record ( — Thursday, October 9, 2008


Citigroup and Wells Fargo took a timeout in their legal battle over control of Wachovia, but it was business as usual for the Wachovia bankers hawking small-business loans and other financial services in downtown Elizabeth.

"There is a lot of noise and a lot of uncertainty, but we are plowing forward," said Stephanie Wall, senior vice president for community relations at Wachovia Corp.

The luncheon for small-business owners at the Winfield Scott Ballroom was the first of three planned over the next several months to reach out to potential borrowers and help meet Wachovia's substantial community reinvestment goals. The next seminar will be in Jersey City in December.

Phyllis Salowe-Kaye, head of consumer watchdog New Jersey Citizen Action, said the possible takeover or split up of Wachovia raises questions about the fate of the bank's five-year, $8 billion community investment agreement between Wachovia and two non-profits — New Jersey Citizen Action and the Housing and Community Development Network of New Jersey.

The deal that went into effect last year includes pledges to make $2 billion in affordable mortgage loans and $5 billion in loans for small businesses throughout the state, among other investments. The commitment was made to help smooth the way for Wachovia's acquisition of Oakland, Calif.-based Golden West Financial Corp., a deal that is blamed for much of Wachovia's financial woes.

"My position is that whoever takes [Wachovia] over, if they buy the bank, they buy the contract," said Salowe-Kaye.

Citigroup Inc. and Wells Fargo & Co. could not immediately be reached for comment and Wall declined to remark on the future of community investment agreement. "We remain focused on serving the needs of the community," she said.

The bank made $1.7 billion in small-business loans in the state last year and so far this year it has made $1.1 billion, putting the bank well ahead of its billion-dollar-per-year small business lending target, said company spokeswoman Fran Durst.

Business owners who attended the event said they were concerned about the direction the economy is going but not about the fate of Wachovia.

"It will just be folded into the other's operation," said Mark Abramson of South Plainfield, who was contemplating applying for a loan to start a stamp-collecting business. He favors Wells Fargo because "My mortgage is with Wells," he said.

"Wachovia is one of the largest banks," said Johayne Garcia, owner of Nu Style, a hair salon in Elizabeth. "I'm pretty confident they will turn out OK."

Garcia was preparing to apply for a $30,000 loan to launch her own line of shampoos and conditioners. But she's worried whether she will be able to show enough income from the salon. "When things get hard, people do their hair themselves," she said.

"Wachovia will be bought by somebody who has money, and the people will still be there" said Gordon F. Haas, executive director of Greater Elizabeth Chamber of Commerce, who described the troubled bank as "an excellent community partner."

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