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Public Meeting Transcripts

Public Meeting Regarding NationsBank and BankAmerica

Thursday, July 9, 1998

Transcript of Panel Seventeen

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        20            MS. KITCHEN:   I'm Heather Kitchen.  I'm 

        21   managing director of American Conservatory Theater here

        22   in San Francisco.  American Conservatory Theater's 

        23   mission is to nurture the art of live theater through 

        24   dramatic dynamic productions, intensive actor training in 

        25   our conservatory, and an ongoing dialogue with our 

        26   audience and our community.  ACT is a not-for-profit 
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         1   corporation.  It has an operating budget of more than $13 

         2   million annually.  

         3            We believe that our work as artists is 

         4   fundamental to a complete and healthy community.  Bank of 

         5   America has been a partner with ACT in producing our 

         6   work, not only philanthropically but as a business 

         7   partner.  NationsBank has played a similar role with our 

         8   colleagues in Charlotte, North Carolina.  ACT supports 

         9   the merger of Bank of America and NationsBank.  

        10            In a very fiscally difficult time following the 

        11   Loma Prieta earthquake, while the rebuilding of our 

        12   theater was underway, Bank of America stepped forward and 

        13   provided American Conservatory Theater with the operating 

        14   capital to allow us to mount our first season back in the

        15   Geary Theater.  They've continued to work with us since. 

        16   They provided us with a favorable term loan for our 

        17   capital campaign, which covers our expenses until our 

        18   pledges are fully realized in the year 2002.

        19            During the past two years, our relationship with 

        20   Bank of America has continued to grow.  Since the 

        21   announcement of the impending merger, our banking 

        22   relationship has deepened.  In our most recent year-end 

        23   review last month, the bank's representative offered ACT 

        24   further improvements in the business terms of the loan.  

        25   Our relationship and that of our colleagues in Charlotte, 

        26   North Carolina will continue to prosper with the merger 
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         1   of Bank of America and NationsBank as we continue to 

         2   partner with the bank to present our cities with 

         3   outstanding live theater.  Thank you.  

         4            MS. SMITH:    Ms. Peck.  

         5            MS. PECK:   Good evening.  I'm Susan Peck, 

         6   western director of the Housing Assistance Council, which 

         7   is a national nonprofit organization that was created to 

         8   improve the housing conditions of the rural poor.  

         9            One of the things that we do nationwide is 

        10   operate a pre-development loan fund for nonprofits and 

        11   public agencies to allow them to get to the point where 

        12   they can develop housing and receive long-term 

        13   financing.  And as part of that program, we have a 13 and 

        14   a half million dollar federally-funded program for 

        15   self-help housing developments.

        16            And I just wanted to mention that Bank of

        17   America has provided us funding to help in the 

        18   implementation of that program.  The federal funding 

        19   unfortunately came with no administrative money.  And 

        20   most of that money will be turned back to the local 

        21   nonprofits once they've developed the 1,600 units of 

        22   housing, home ownership housing, and 75 percent of that 

        23   money will go back into their communities.  

        24            It's also my pleasure this evening to represent 

        25   the California Coalition for Rural Housing, which is a 

        26   statewide rural housing advocacy and education 
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         1   organization.  And I also serve on the California 

         2   advisory committee of the Rural 2000 initiative.  

         3            My brief remarks will focus exclusively on rural 

         4   matters.  I'd like to point out that rural parts of our 

         5   nation suffer a higher rate of poverty than our urban 

         6   counterparts, 17 percent versus 14 percent.  And within 

         7   rural America, there are persistent pockets of poverty.  

         8   These are primarily in the Mississippi delta area, along 

         9   the US and Mexico boarder, in Indian country, and in 

        10   Appalachia.  These are the areas that Housing Assistance 

        11   Council focus most of its attention since poverty, as you 

        12   all know, has such a considerable impact on housing 

        13   conditions.  

        14            Much of our work also targets areas where farm 

        15   workers live and work, all too many in the most 

        16   deplorable of housing conditions.  About one-third of the 

        17   nation's farm workers have incomes of less than $5,000.  

        18   With incomes like these throughout rural America, it's 

        19   clear that no bank alone, nor a merged bank, can 

        20   adequately address the housing needs of the poor without 

        21   not only combining their resources but being very 

        22   flexible in the way that they provide those resources and 

        23   also with partnering, to the extent that they can, with 

        24   subsidies from federal, state, and local government.  

        25            I'd like to quickly tell you of one relationship 

        26   between the Bank of America Community Development Bank, 
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         1   the Bank of America Foundation, the United States 

         2   Department of Agriculture, the Ford Foundation, and 

         3   Housing Assistance Council that exemplifies the 

         4   commitment of Bank of America to rural housing 

         5   improvement.  This -- and particularly rural housing 

         6   improvement that involves a particularly difficult

         7   population to serve.  These are largely very low-income 

         8   Hispanic families who are purchasing lots that lack basic 

         9   infrastructure and they're doing so through land 

        10   contracts.

        11            This collaborative effort to enable local groups 

        12   surveying communities known as colonies to assess their 

        13   own needs and to help develop strategies for improvement, 

        14   including innovative bank products, must in our opinion

        15   be continued should this merger be approved.  This 

        16   particular collaborative is promoting local capacity 

        17   building and a flexible approach to lending within the 

        18   banking community.  

        19            The groups that I represent have many 

        20   expectations for this intended merger, including a 

        21   commitment specifically targeted to very low and 

        22   low-income rural households, people of color, and special 

        23   populations such as Native Americans and farm workers.  

        24   Part of this targeting should emphasize the role of 

        25   self-help housing development, where families build their 

        26   own housing, and loan products for seasonal workers.  
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         1            The commitment should also have a priority for 

         2   nonprofit housing developers who are critical to the 

         3   improvement of rural housing.  There should be an 

         4   elimination of any minimum loan sizes for rental 

         5   housing.  You would be seeking the preservation and 

         6   expansion of the Bank of America Community Development 

         7   Bank that is such a major player in rural housing 

         8   improvement, also the preservation of the Bank of America 

         9   Foundation's rural priorities that were recommended by 

        10   the Rural 2000 initiative, and preservation and expansion 

        11   of the Rural 2000 initiative with the addition of 

        12   regional advisory groups for NationsBank's geographic 

        13   areas.

        14            We'd also like careful consideration of any 

        15   further bank closings in rural communities.  There are 

        16   over 500 rural counties in this nation that have no bank 

        17   branch at all, and in many rural counties, though you 

        18   have a bank branch, they're not doing any real estate 

        19   lending.

        20            Thank you for this opportunity to participate.  

        21            MS. SMITH:    Thank you.  Ms. Washington.  

        22            MS. WASHINGTON:   My name is Sheila Washington, 

        23   president of the California Business Incubation Network.  

        24   We were founded about seven years ago to raise a level of 

        25   awareness of the incubation period for creating and 

        26   growing and launching new businesses that incubate new 
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         1   ideas into the marketplace.  

         2            We thank the Federal Reserve for holding this 

         3   forum.  And secondly, we'd like to say we support the 

         4   merger/acquisition -- I put a slash acquisition because 

         5   I'm never sure what's the correct terminology -- of Bank 

         6   of America and NationsBank.  

         7            Next I'd like to take this opportunity to thank 

         8   the Bank of America for its role in incubating businesses 

         9   and economic development initiatives in the state of 

        10   California.  They were the first in line to support 

        11   facility-based business incubators in the state.  This 

        12   was back when no one else was talking about it.  Now 

        13   everybody is talking about it.

        14            They have always been at the table involving 

        15   business and economic development initiatives.  We'd like 

        16   to offer our kudos to the management and staff of the 

        17   bank's community development department, and we would 

        18   also like to support the retention of the Community 

        19   Development Bank, especially the retention of the 

        20   Community Development Bank as a separate entity and the 

        21   Community Foundation here in California.  

        22            I cannot imagine a California without the name 

        23   Bank of America.  However, moving on, we welcome the 

        24   entrance of NationsBank, and we're looking forward to the 

        25   resources they will bring to continue and build upon the 

        26   work that the Bank of America has initiated.  
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         1            Now, we'd like to focus the future as far as 

         2   economic development is concerned on a couple of things.  

         3   One, we would like to have a priority given to 

         4   development of sustainable -- to the development of a 

         5   sustainable infrastructure for small business development 

         6   to meet the diversity of community needs.  

         7            And, two, we would like to put on the top 

         8   priority list linking of lending and technical 

         9   assistance, meaning pre-loan and post-loan assistance.

        10            And, three, we would like to emphasize or ask 

        11   that community economic development investment fund to 

        12   support these efforts be one of the agenda items.  

        13            Now, we appreciate and like the big monies of 

        14   $350 billion and what have you, but we can tell you that 

        15   in order for that to reach the level of business 

        16   development that we see necessary, you need to also 

        17   combine the technical assistance arm of lending.  And 

        18   we've done a lot of work on initiating some of these kind 

        19   of structures.  Nonprofit organization has been at the 

        20   forefront of helping, as you've heard many times today, 

        21   making this possible.  

        22            Now, where we are right now is to raise the 

        23   level of how we do that.  The delivery system as it has 

        24   so far evolved needs to be structured now and raised in 

        25   its importance relative to the commitment of -- for 

        26   lending and economic development.  
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         1            We would encourage the Federal Reserve Agency to 

         2   continue its efforts along these lines.  You have done 

         3   yourself -- the agency has participated in some workshops 

         4   and some initial gathering of evidence relative to 

         5   technical assistance.  So I'd also like to raise that 

         6   level of awareness, that we would like to see that 

         7   continued and accelerated, actually, so that we can 

         8   continue -- so that we can have sustainable businesses.  

         9            As we move forward, it is time that there be a 

        10   focus on the system of nonprofit organizations.  They 

        11   have been primary vehicles these past ten years, and it's 

        12   time that they get their chance just like the housing -- 

        13   the housing segment did ten years ago.  If you'll 

        14   remember, ten years ago housing was just starting out to 

        15   build its own infrastructure for affordable housing.  Now 

        16   we have some system of nonprofit developers within the 

        17   housing community.  Now, that's the same kind of thing 

        18   that the business side needs today to be accelerated.  

        19            CBIN is a statewide organization for the 

        20   incubation of ideas, that is, the creation and launching 

        21   and growing of business enterprises.  Again, we thank you 

        22   for this opportunity, and we're looking forward to 

        23   working with the combined banks to achieve sustainable 

        24   economic development in California.  Thank you.  

        25            MS. SMITH:    Thank you.  Mr. Kaimowitz.  

        26            MR. KAIMOWITZ:   My name is Gabe Kaimowitz.  I'm 
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         1   Florida representative for an organization formed in 1995 

         2   known as Attorneys Against American Apartheid.  The 

         3   concept is taken from a book by Professor Douglas Massey 

         4   of the University of Pennsylvania and Nancy Denton, now 

         5   in Albany in New York.

         6            The intent of the group was in 1995 to monitor 

         7   how federal funding, how local funding, and how private 

         8   funding are used to re-segregate parts of the United 

         9   States, and that inevitably resulted in scrutiny of 

        10   mergers such as that of Bank of America and NationsBank.  

        11            Let me state at the outset that I know virtually 

        12   nothing about Bank of America.  I feel -- and I should 

        13   add this -- that I'm here much as somebody at a wedding 

        14   who is asked, "Speak now if you're ever going to speak if 

        15   you have an objection."  

        16            I do think the merger is going forward.  I think 

        17   it should perhaps go forward.  But based on precedent 

        18   that I will cite specifically, I think, for Mr. Frierson 

        19   and in response to his question to Mr. Devine earlier.  

        20   Based on precedence, I urge the Federal Board to look at 

        21   this merger as closely as it ever has looked before.

        22            You've heard much testimony here today, and I 

        23   would say I learned a lot today.  And one of the things I 

        24   learned supports the basic thesis that I'm here to 

        25   deliver, which is that NationsBank has moved on from its 

        26   origins in North Carolina and especially, from my 
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         1   knowledge, in Florida and in Central Florida, deserting 

         2   areas where it has previously made promises and 

         3   commitments and moved on to bigger promises and bigger

         4   commitments.  What has it left in its wake?  

         5            I and NationsBank and, for reasons that I will 

         6   explain shortly, First Union arrived in Florida at the 

         7   same time in 1985.  Apparently you've learned today that 

         8   something called the Black Business Investment Fund 

         9   created by the state arrived about the same time.  That 

        10   confluence was not unexpected.  Most of it is attributed 

        11   to one single attorney, and it's important that he be 

        12   understood as an attorney, who's the general counsel of 

        13   the Florida Banking Association.  He's also an attorney 

        14   and partner in one of the most prominent and the fastest 

        15   growing law firms in the United States, according to the 

        16   National Law Journal in November of 1997.

        17            I want to discuss it in two phases.  One, that 

        18   in 1985 to 1991, NCND and CNS entered the Florida market 

        19   and were immediately challenged, as you've heard today, 

        20   by numerous groups.  And lo and behold the challenges 

        21   were immediately solved.  And many of the groups today 

        22   will go home -- as well I think happened with ACORN.  We 

        23   had a meeting.  They gave us something.  They promised us 

        24   something.  That was enough.  My God, they sat down at

        25   the table with us, bankers.  What that resulted was a 

        26   shallow group of promises that resulted in no commitment 
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         1   of any sort.

         2            I then proceeded to challenge First Union.  The 

         3   cite is -- because it's the same model I intend to use at 

         4   this point -- 940F 2nd at 610 -- yeah, at 610 -- 11th 

         5   Circuit, 1991.

         6            The premise, then, which is amplified at this 

         7   point is that locally many of these banks can't and won't 

         8   do the commitments because of a history of racial 

         9   segregation that exists in certain areas of this country 

        10   tied to land and land use.  Nowhere is that more evident 

        11   than in the state of Florida and particularly in Central 

        12   Florida.  

        13            I would have prevailed against First Union.  I 

        14   did prevail in persuading both the board and the office 

        15   and the controller of currency that First Union had been 

        16   tremendously remiss in its promises.

        17            I've already submitted my written documentation, 

        18   and I won't go into it at great length.  It consists of 

        19   the history of NationsBank in Central Florida, 

        20   particularly in Orlando, and its tie-in to the political 

        21   structure from 1985 to the present and a supplement that 

        22   I put together relatively rapidly.  

        23            I just want to end on a point that I think will 

        24   personify it.  The story keeps moving on rapidly.  And 

        25   that is that when you're dealing in a place like Orlando, 

        26   Florida, you have a situation where the merger was given 
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         1   one paragraph because the $350 billion is taken with a 

         2   grain of salt after the history in Orlando.

         3            NationsBank, however, has chosen -- and this ad 

         4   I think says it all, along with the story.  On July 8th, 

         5   notice -- I'm sorry, that's the first -- no, I'm sorry.  

         6   I raised the wrong one.  In there notice the headline  

         7   and the story that accompanies, "Blacks May Absorb More 

         8   Nicotine."  There's your money to the end power.

         9            What you've got is the bank advertising heavily, 

        10   often with an elderly white couple in the center in the 

        11   main dailies in the area tied to this particular merger.  

        12   What you have in three black weeklies, weeklies targeted 

        13   to African-Americans, are very small ads that concentrate 

        14   on the African-American audience.  

        15            You were asked this morning to consider, and I 

        16   ask you again to consider the racial aspect of this 

        17   merger and how much it is influenced by a southern bank 

        18   moving in a direction with values that it has inculcated 

        19   certainly since 1985.  Thank you for your time.  

        20            MS. SMITH:    Thank you very much.

        21            With that, we will adjourn the meeting.  But I 

        22   want to observe it has been a very long day.  However, we 

        23   have received important testimony from all of the panels.  

        24   And we know the considerable effort that it took for some 

        25   organizations to come and be represented here today, and 

        26   we thank all of them, whether from California or from the 
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         1   east coast.  And we are adjourned, then, until tomorrow 

         2   morning at 8:30 a.m. 
 
Last update: December 3, 2010