Wamu Loan Plan Trumps Rival -- $75 Billion Inner-City Proposal Eclipses Ahmanson Bid

LOS ANGELES - In the largest inner-city loan program ever proposed by a U.S. banking institution, Washington Mutual said today it will lend $75 billion to mostly lower-income and minority borrowers over 10 years if it successfully acquires Great Western Financial.

Washington Mutual said the majority of those mortgages, consumer and small-business loans would be made in California.

The proposal eclipses a $70 billion community reinvestment commitment made three weeks ago by Home Savings of America.

Seattle-based Washington Mutual is engaged in a duel with the corporate owner of Home Savings to acquire Chatsworth, Calif.-based Great Western.

But the Greenlining Institute, the California Reinvestment Committee and other community-based organizations said they could not endorse Washington Mutual's proposal, saying it lacks the specifics of Home Savings' commitment.

"We commend the ($75 billion) number itself, but we have to evaluate it with care and criticism," said Bob Gnaizda, general counsel at the Greenlining Institute, which praised Home Savings' commitment.

Kerry Killinger, Washington Mutual chairman and chief executive, declined to make comparisons with Home Savings' pledge. "Our program was built on what we are comfortable with and what we can deliver," he said in an interview yesterday.

"We, of course, think investors will view it favorably," Killinger said.

Washington Mutual, which has a friendly merger agreement with Great Western, was expected to counter Home Savings' pledge because it did not want to risk losing ground on social issues that could affect the pitched battle to be the dominant U.S. thrift. Home Savings is the country's biggest thrift, followed closely by Washington Mutual and Great Western.

Meanwhile, H.F. Ahmanson & Co., the Irwindale, Calif.-based parent of Home Savings, said yesterday it had received enough support from Great Western shareholders to force Great Western to hold its annual meeting by May 6.

Great Western's board had indefinitely postponed that meeting, originally scheduled for April 22, as part of its effort to fend off Ahmanson's offer, valued at $6.3 billion as of yesterday's market close. Washington Mutual's offer is worth $6.16 billion.

At Great Western's annual meeting, Ahmanson is hoping to seat three of its nominees on Great Western's board, who then would press the remaining eight directors to support or at least review Ahmanson's proposal.