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Merrill Lynch Plans Investments in O.C., L.A. Minority Areas

Economy: Firm commits $77 million to development over 10 years in partnership with community groups. County bankruptcy was catalyst.

September 12, 1996|NANCY RIVERA BROOKS | TIMES STAFF WRITER

SANTA ANA — Citing the Orange County bankruptcy as the catalyst, Merrill Lynch & Co. announced Wednesday that it will invest at least $77 million in minority communities in Orange and Los Angeles counties as part of a 10-year economic development partnership with local community groups.

The partnership, billed as the first of its kind in the securities industry, will include $40 million in zero-down-payment mortgage loans to low-income home buyers, $20 million in small business loans and $5 million in equity investments in small businesses during the initial three-year pilot project.

The community investment program was negotiated by the Greenlining Institute and the Orange County Alliance for Community & Economic Development, two multiethnic coalitions devoted to garnering economic opportunities for minorities.

The community investment program, announced at news conferences in downtown Los Angeles and Santa Ana, grew out of discussions with the Greenlining Institute and the Orange County Alliance in the wake of Orange County's December 1994 bankruptcy filing.

Orange County has sued Merrill Lynch for $2 billion, accusing the brokerage firm of triggering the unprecedented bankruptcy by illegally extending billions of dollars in credit that was then invested in exotic securities. Merrill Lynch has maintained that it acted properly.

Leaders of the Orange County Alliance, which includes a number of Asian, Latino and African American business and social service organizations, commended the program.

"This program will be a tremendous catalyst for economic development in Orange County and Los Angeles," alliance members said in a joint statement.

San Francisco-based Greenlining Institute has negotiated several other, larger agreements with banks, utilities and insurance companies to boost investment in the inner city.

Although the dollar amount was smaller than some of those other agreements--notably $45 billion promised by Wells Fargo Bank over 10 years--it represents a first step for Merrill Lynch, said Paul W. Critchlow, Merrill Lynch senior vice president of marketing and communications.

"We feel this makes very good business sense for us," Critchlow said.

Minority communities represent "a huge untapped market," he said. "We think there's a lot of wealth for Merrill Lynch to tap into and to help create."

Details of the community investment program are still to be worked out, Critchlow said, but will also include: more than $3 million in investments to create low-income housing units in Los Angeles and Orange County; $4 million in investments in education, job training, literacy, entrepreneurship and other programs "that advance individuals into the economic mainstream," and the promise to hire 30 financial consultants with experience in "historically underserved communities."

"This opens new doors to economic development for the underserved communities who really need it," said John Gamboa, executive director of the Greenlining Institute. "It creates opportunities in a way that provides our communities with self-esteem and dignity."

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