February 24, 1993

Self-Proclaimed 'Banking Terrorist' Organizes Around Lending Fraud

By Rob Wells

It wasn't a typical gathering inside the Federal Reserve Board's room in Washington, but then Bruce Marks isn't the typical banking operative.

Around the Fed's long, polished wooden board room table, a center for key financial decisions in the country, sat the self-proclaimed "banking terrorist" and 40 black homeowners.

Tension rose in the room as Federal Reserve Governor Susan Phillips and Fed staff refused to say exactly when they would decide on Marks' request: Conduct field hearings on mortgage lending abuses and prevent Fleet Financial Group Inc., a major banking company caught up in the case, from expanding.

"We want to know if you're going to deal with this issue in a straightforward, legitimate way or not," Marks told the regulators.

The homeowners, wearing bright yellow T-shirts that read "Save Your Home from the Fleet of Loan Sharks," begin murmuring about a sit-in, a la civil rights style.

"Should we order dinner and stay here tonight?" one man asks pointedly.

Eventually, the Fed staff agreed to hold another meeting with the group in three weeks. Grinning, Marks - a white man with a wiry build, thinning, curly light brown hair and a somewhat mischevious demeanor - left the room with the homeowners, jubilant.

The scene illustrated the growing visibility of Marks, 37, executive director of Union Neighborhood Assistance Corp. of Boston, an arm of Local 26 of the Hotel and Restaurant Workers union.

He's credited for publicizing the abusive lending practices of mortgage companies that target lower income homeowners in minority neighborhoods with high-interest loans, and the major banks that purchase them.

Inspired by Marks' work, the Senate Banking Committee devoted a hearing to the issue earlier this month.

Yet bankers who have been the object of his attacks call him a demagogue who resorts to extortion to get his way.

"I think I would characterize his approach as very confrontational, in an extreme manner, that on balance will yield fewer results than a more tempered approach," said Richard Driscoll, president of the Massachusetts Bankers Association. "I think Bruce sees victims wherever he sees a bank."

Fleet Financial, based in Providence, R.I., threatened to file criminal legal action against Marks in December for making "irresponsible allegations." Marks claims that Fleet, the nation's 14th largest banking company, faces $ 1.2 billion in liabilities and could be rendered insolvent if it lost just one of the five lawsuits it faces in Georgia.

Fleet also has accused Marks of extortion for threatening to launch a national media campaign against the bank if Fleet wouldn't give his group $ 20 million for community development.

Direct, confrontational negotiating tactics championed by Marks and his supporters are more commonly associated with radical environmental groups, militant unions and AIDS activists.

Marks said he sees fertile ground blending these organizing techniques with his business world experience, which includes an MBA from New York University and a two-year stint reviewing merger applications for the New York Federal Reserve Bank.

"I was very clear that I wanted to do community advocacy, but I wanted to know the enemy," said Marks, who grew up in Scarsdale, an affluent suburb of New York City. "I had an expertise that didn't fit into what community-based organizations were all about."

"There is a tremendous amount of information out there that could not survive the light of day. Our job is to bring those issues to the light of day and to organize around them."

Marks' constituency are the poor and working class, many of whom are black and minority, who have had a difficult time obtaining normal bank loans and other services due to discrimination and lack of conventional banking services in their communities.

The Boston hotel workers union decided to push into affordable housing issues in the late 1980s because "we could not improve the membership's standard of living without housing," Marks said. The early meetings were well attended by the rank and file.

"We knew we were on to something," Marks said.

He views the experience in Boston and in Georgia, where hundreds of black homeowners claim they've been cheated in second mortgage scams, as models for national organizing for community development. In these cases, he says, finance companies pressure poor homeowners into taking out high-interest second mortgages on their properties, which frequently lead to default.

Bankers accuse Marks of grossly exaggerating the extent of mortgage lending irregularities. Marks certainly makes some unusual claims.

"This is bigger than BCCI," Marks once said, a reference to the collapse of Bank of Credit and Commerce International, perhaps the most intricate bank fraud in history.

At another point, Marks said organizing around the second mortgage scandal will be "more than the environmental movement of the '80s." He predicted banks stand to lose millions in huge consumer fraud lawsuits, comparing the scope of the losses to the banks debacles in Third World loans in the 1970s and commercial real estate in the 1980s. Bankers reject that notion.

Others say they admire Marks' energy and creativity in delving into complex banking issues.

"Bruce Marks is out there in the trenches, doing the hard research needed to gain fair access to credit for those who have been left behind by major lending institutions," said Rep. Joe Kennedy, D-Mass.

Deepak Bhargava, legislative director for Association of Community Groups for Reform Now or Acorn, described Marks' research as "extremely first-rate, innovative."

"He's really tapped into something that obviously is a really widespread problem out there and no one has put together the pieces on it," Bhargava said. "What he has done is really impressive."

James Mahoney, a Boston Federal Reserve Bank spokesman, said Marks "is very clever in identifying issues. And he is extremely energetic in bringing those issues to light, particularly through the media."

"He gives a voice to some of the people who wouldn't normally have a voice in these proceedings," said Mahoney.

Marks' campaign so far has had limited tangible results on Wall Street, where Fleet is considered a top-notch banking company with some of the best management in the business. Investors earlier this month snapped up $ 350 million in a new offering of common stock.

Some analysts find Marks' research, particularly on Fleet's solvency, to lack substance.

"What he is doing is going in with a point of view and trying to find what it takes to prove that," said Nancy Bush, regional bank analyst for Brown Brothers Harriman & Co. "I don't call that research. I call that advocacy."

Marks isn't particularly concerned about whether he's liked on Wall Street and says some analysts might come around to his view, particularly if regulators begin denying merger applications on community lending grounds. Besides, Marks - who backpacked through Africa for a year and went bungee jumping in New Zealand for his honeymoon - is ready for unusual challenges.

As part of that challenge to improve housing for the poor, Marks and his group also are designing affordable mortgage loans in conjunction with local banks as part of a broader advocacy for the poor and working class in the financial markets.

"There's never been the sophisticated counterpoint that represents the community," he said.

This article is reprinted here for non-commercial, educational, fair use purposes only.