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Public Meeting Transcripts

Public Meeting Regarding NationsBank and BankAmerica

Friday, July 10, 1998

Transcript

       1   
           
       2   
           
       3   
           
       4                        PUBLIC MEETING
           
       5           NATIONSBANK/BANKAMERICA PROPOSED MERGER
           
       6                          ---oOo---
           
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      10   
           
      11                  SAN FRANCISCO, CALIFORNIA
           
      12                    FRIDAY, JULY 10, 1998
           
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                                                             415

       1   JULY 10, 1998                               8:37 A.M.  
           
       2                    P R O C E E D I N G S
           
       3                          ---oOo---
           
       4              MS. SMITH:  Good morning.  Let me start by
           
       5   welcoming you to the second day of this important public
           
       6   meeting on the application of NationsBank Corporation to
           
       7   acquire BankAmerica Corporation. 
           
       8              I'm Dolores Smith the Director of Division of
           
       9   Consumer and Community Affairs of the Federal Reserve
           
      10   Board in Washington D.C.  I'm the presiding officer for
           
      11   this public meeting.  
           
      12              Our other panelists are:  To my left, bob
           
      13   Freirson, who is Associate Secretary of the Board, and
           
      14   to my right, Ken Binning, who is Director for
           
      15   Applications and Financial Analysis, Division of Banking
           
      16   Supervision from the Federal Reserve Bank of San
           
      17   Francisco; and to his right Trish Nunnley, Assistant
           
      18   Counsel from the Federal Reserve Bank of Richmond. 
           
      19              We are here today because NationsBank
           
      20   Corporation of Charlotte, North Carolina, has applied
           
      21   for approval to acquire BankAmerica Corporation in San
           
      22   Francisco, California. 
           
      23              When the Federal Reserve system considers one
           
      24   of these applications, we look at a number of factors
           
      25   under the Bank Holding Company Act, these include
           
      26   financial issues, managerial issues, competitive issues
           



                                                             416

       1   and the convenience and needs of the communities
           
       2   affected.  In doing so, we particularly look at the
           
       3   record of performance of the parties under the Community
           
       4   Reinvestment Act.  
           
       5              The Community Reinvestment Act requires the
           
       6   board to take into account an institution's record of
           
       7   meeting the credit needs of its entire community.  
           
       8              The NationsBank application also involves the
           
       9   proposed acquisition or retention of non-banking
           
      10   companies engaged in activities permissible for bank
           
      11   holding companies. 
           
      12              The board must determine whether the proposed
           
      13   non-banking activities can reasonably be expected to
           
      14   produce benefits to the public that outweigh possible
           
      15   adverse effects such as undue concentration of
           
      16   resources, decreased or unfair competition, conflicts of
           
      17   interest or unsound banking practices. 
           
      18              The purpose of the public meeting is to
           
      19   receive information regarding these factors.  We will be
           
      20   seeking to elicit this information and to clarify
           
      21   factual issues related to the application. 
           
      22              We are very pleased that so many have been
           
      23   willing to come and testify at this public meeting.  We
           
      24   will have altogether about 200 groups and individuals
           
      25   represented during the two-day session. 
           
      26              I'll make a few remarks about the procedures. 
           



                                                             417

       1   This is what is called an informal public meeting. 
           
       2   Members of the panel may ask those who are testifying
           
       3   about their testimony.  This is not a formal
           
       4   administrative hearing, so we are not bound by the rules
           
       5   regarding evidence, cross-examination and some of the
           
       6   formal trappings of that kind of proceeding. 
           
       7              As you can see from the agenda, we do need to
           
       8   stick to the schedule very carefully so that everyone
           
       9   who has asked to offer oral testimony will have a chance
           
      10   to say what they would like to say. 
           
      11              We are going to ask the witnesses today to be
           
      12   mindful of the needs of others and to help us stay on
           
      13   schedule. 
           
      14              The panels will be expected to stay within
           
      15   their allotted times.  We have a signal system with
           
      16   regard to timing.  We have two timekeepers, Ariel
           
      17   Andress and Jessica Abehr.  They will give a signal when
           
      18   the witness has two minutes left to speak and another
           
      19   signal when the time is up. 
           
      20              Occasionally the timekeeper may be unable to
           
      21   get someone's attention when the time has expired.  At
           
      22   that point -- I forgot.  There are actually two signals. 
           
      23   There is one given when there is one minute remaining,
           
      24   so she will hold up a card.  And then, when the time has
           
      25   expired, she will hold up another card initially, but
           
      26   when she is unable to give someone's attention, shell
           



                                                             418

       1   give a gentle, musical nudge (indicating).  Something
           
       2   like that. 
           
       3              There also have been some individuals who are
           
       4   unable to sign up in advance, and, to the extent
           
       5   possible, we are going to give them a chance to speak as
           
       6   well.  That will take place at the end of the meeting
           
       7   this afternoon when we will make the mike available to
           
       8   anyone who would want to make a presentation, time
           
       9   permitting. 
           
      10              Witnesses may submit a written supplement to
           
      11   their oral testimony by next Friday, July 17th, and then
           
      12   the record will be closed. 
           
      13              Any written supplements should be directed to
           
      14   Jennifer J. Johnson, Secretary of the Board, Board of
           
      15   Governors of the Federal Reserve system Washington D.C.,
           
      16   20551. 
           
      17              This is information that has been provided to
           
      18   the witnesses already, and, if someone needs to have it
           
      19   in writing, it can be obtained from the registration
           
      20   desk. 
           
      21              These written supplements must be received by
           
      22   5:00 p.m. Eastern Daylight Time next Friday.  They can
           
      23   be faxed to area code 202 452-3462.  
           
      24              The July 17 date applies only to these
           
      25   supplements to oral testimony.  The general public
           
      26   comment period closed yesterday. 
           



                                                             419

       1              Also, for witnesses, if you haven't turned in
           
       2   copies of your written testimony, or, if you have any
           
       3   other written statements to put into the record, please
           
       4   leave them with the Federal Reserve staff at the
           
       5   registration table.  It's important that we get this
           
       6   information for the record. 
           
       7              A transcript of the meeting will be available
           
       8   by July 14th through the Federal Reserve Bank of San
           
       9   Francisco and the board. 
           
      10              In addition, the official transcript will be
           
      11   available by close of business on July 15th on the
           
      12   board's public web site, which is www.bog.frb.fed.u.s. 
           
      13   Technology willing, it might be ready on July the 14th. 
           
      14   With that, we will begin with our first panel. 
           
      15              This morning we have -- if I can find it --
           
      16   the Honorable Rosemary Corbin, Mayor of the City of
           
      17   Richmond, who is representing the West County Mayors and
           
      18   Supervisors Association, and then we also will have
           
      19   Michelle Fadelli, standing in for the Honorable Mary
           
      20   King, Supervisor for Alameda County. 
           
      21              I think we were scheduled to start with
           
      22   Ms. Fadelli. 
           
      23              MS. FADELLI:  Good morning.  My name is
           
      24   Michelle Fadelli, and I'm the Manager of Communications
           
      25   and Governmental Affairs for the Association of Bay Area
           
      26   Governments, and I'm speaking today on behalf of
           



                                                             420

       1   Supervisor Mary King from Alameda County who regrets she
           
       2   was not able to join you this morning. 
           
       3              Mary and I both would be representing the
           
       4   Association of Bay Area Governments, which is an
           
       5   affiliation of the nine counties and 97 cities in the
           
       6   San Francisco Bay Area.  I'll be just reading from a
           
       7   letter that we submitted on June 16th, which is a
           
       8   summary of comments that we heard at a much smaller
           
       9   regional hearing that we held last month. 
           
      10              Number one, job losses.  We are concerned
           
      11   about the large number of jobs being eliminated and
           
      12   particularly concerned about the number that will be
           
      13   eliminated, not just in San Francisco but throughout the
           
      14   Bay Area.  We ask that employees receive reasonable
           
      15   notice of any layoffs and that the new bank make a
           
      16   commitment to job training and placement. 
           
      17              Number two, community development.  We are
           
      18   concerned about the recent community development
           
      19   commitment that fails to provide specifics about
           
      20   distribution throughout various states, regions and
           
      21   communities; in addition, reference to small business
           
      22   fails to provide specific commitments to minorities and
           
      23   low-income and populations.  
           
      24              We are concerned about the preservation of B
           
      25   of A's Community Development Bank and ask that the new
           
      26   bank not compete with nonprofit housing developers in
           



                                                             421

       1   the Bay Area. 
           
       2              Number three, consumer protection.  We are
           
       3   concerned about branch closures, fee increases, ATM
           
       4   availability and ATM fees and honoring commitments to
           
       5   current customers.  
           
       6              If the new bank plans to save over a billion
           
       7   dollars by 1999, we can only suspect that  it is the
           
       8   customers will feel the impact.  The merger announcement
           
       9   boasted that the new bank will have $570 billion in
           
      10   assets.  We ask how with this giant maintain hits
           
      11   connection to the hometown customers.  
           
      12              Number four, fairness to minority and
           
      13   low-income populations.  It is stated that the
           
      14   NationsBank has a reputation for generic lending, and
           
      15   California is not a generic state.  As an aside, our
           
      16   association has forecast significant changes in regional
           
      17   demographics.  The Asian population will grow from 16
           
      18   percent of the population in 1990 to 20 percent in the
           
      19   year 2020. 
           
      20              The Hispanic population will grow from 14
           
      21   percent to 24 percent by 2020 and the Caucasian
           
      22   population will no longer be a majority at 47 percent. 
           
      23   We are concerned that NationsBank is not prepared to
           
      24   deal with the diversity in California and especially the
           
      25   Bay Area. 
           
      26              We are concerned with reports that
           



                                                             422

       1   NationsBank has a very poor record of lending to
           
       2   minorities and low-income populations, lending only a
           
       3   reported 6.3 percent to low-income households and even
           
       4   lower percentages to minorities.  
           
       5              The new bank must not be dragged down by the
           
       6   poor standards established by NationsBank.  Similar
           
       7   performance with minority and low-income lending will
           
       8   not pass muster in the Bay Area. 
           
       9              We are concerned about the closure of San
           
      10   Francisco BofA headquarters and the transfer of
           
      11   decision-making to Charlotte.  North Carolina is a long
           
      12   way from California in miles and light years away, we
           
      13   believe, in attitude.  
           
      14              Our concerns are not relieved by word that
           
      15   global operations will be based in San Francisco.  Such
           
      16   operations will be looking west to the Pacific Rim and
           
      17   will not be concerned about jobs and customer relations
           
      18   in the rest of the Bay Area. 
           
      19              More generally, we are concerned about the
           
      20   reduction of competition in this merger as well as other
           
      21   proposed mergers in banking.  With fewer banks, who will
           
      22   be compelled to offer free checking, free ATMs, and true
           
      23   customer service?  
           
      24              Mergers don't tend to favor consumers and
           
      25   don't tend to favor small businesses.  BofA customers
           
      26   are our constituents and we voice our concerns on their
           



                                                             423

       1   behalf. 
           
       2              And this letter was signed by Mary King, the
           
       3   ABAG, and Alameda County Supervisor. 
           
       4              MS. SMITH:  Thank you.  Ms. Corbin. 
           
       5              MS. CORBIN:  Yes, thank you.  I am here
           
       6   representing West Contra Costa County.  I am Rosemary
           
       7   Corbin, the Mayor of Richmond.  I want to thank you for
           
       8   allowing me to testify this morning. 
           
       9              Located on the east shore of San Francisco
           
      10   and San Pablo Bays, West Contra Costa is comprised of
           
      11   the cities of El Cerrito, Hercules, Pinole, Richmond and
           
      12   San Pablo and the unincorporated areas of El Sobrante
           
      13   Kensington, Rodeo and Crockett.  West County has
           
      14   approximately a population of 200,000.  The City of
           
      15   Richmond, with a population of 93,000, is the largest,
           
      16   oldest and most urbanized city in the area. 
           
      17              West County is a diverse community with
           
      18   minority population of over 52 percent.  While it
           
      19   contains approximately 22 percent of the county
           
      20   population, over 40 percent of the county's AFDC
           
      21   recipients reside in West County and has many of the
           
      22   largest low and moderate income neighborhoods in the
           
      23   county.  
           
      24              However, it has some of the oldest
           
      25   communities where the banks that are now moving to the
           
      26   suburbs got their start.  
           



                                                             424

       1              West County is a community where a majority
           
       2   of its population live and work in the area or in
           
       3   communities very close by.  The West County Mayors and
           
       4   the city staffs meet on a regular basis and act
           
       5   collaboratively on issues such as transportation, waste
           
       6   disposal, public safety and economic issues such as the
           
       7   subject of this hearing. 
           
       8              Our West County chambers of commerce, cities
           
       9   and institutional institutions and nonprofit
           
      10   organizations collaborate through a variety of
           
      11   organizations. 
           
      12              Finally, we are an effective lending
           
      13   territory as described by the Federal Reserve Bank of
           
      14   San Francisco and believe that the Bank of America and
           
      15   NationsBank, should this merger go forward, have an
           
      16   obligation to develop a plan with West County business
           
      17   government and community leaders for addressing the
           
      18   community reinvestment needs in our area. 
           
      19              Bank of America has nine branches in West
           
      20   County and, with over $425 million in business and
           
      21   household deposits, is the second largest bank in our
           
      22   community. 
           
      23              In terms of banking services, while BofA has
           
      24   not closed any branches in West County, it has downsized
           
      25   and relocated, which had been freestanding bank
           
      26   branches, to cramped in-store branches, particularly in
           



                                                             425

       1   low-income areas such as Richmond's Iron Triangle
           
       2   neighborhood. 
           
       3              While we applaud BofA's innovative
           
       4   initiatives in reinvestment lending, they appear to have
           
       5   had little visible impact in West County.  One bright
           
       6   spot was a $625,000 loan and assistance with welfare-
           
       7   to-work-planning to Rubicon programs, a job and housing
           
       8   development nonprofit agency serving special needs
           
       9   populations. 
           
      10              Should this merger go through, we want to see
           
      11   the continuation and strengthening of the BofA's
           
      12   Community Development Bank, and we are requesting that
           
      13   BofA begin a process of assisting West County for
           
      14   developing a plan for meeting our community reinvestment
           
      15   needs. 
           
      16              I often describe West County as being in a
           
      17   money shadow.  You probably know what a rain shadow is. 
           
      18   Well, when money floats down from the federal
           
      19   government, we tend to be behind this rain shadow where
           
      20   the money goes to Oakland and San Francisco, and we
           
      21   think that community, as defined under the Community
           
      22   Reinvestment Act, should include the whole community. 
           
      23              West County's specific needs in terms of
           
      24   community economic development are:  
           
      25              Financing for commercial rehabilitation and
           
      26   facade improvements in conjunction with redevelopment
           



                                                             426

       1   and other public financing in the older retail and
           
       2   commercial areas of Richmond, El Cerrito, Pinole, San
           
       3   Pablo, Rodeo and Crockett; 
           
       4              better access to financing for young small
           
       5   businesses, particularly minority and women-owned
           
       6   businesses through collaboration with business
           
       7   development organizations such as the West County
           
       8   Business Development Center and the local chambers of
           
       9   commerce; 
           
      10              financing for various major development
           
      11   projects in West County, including the Richmond Transit
           
      12   Village, Ford Assembly Building rehabilitation, Point
           
      13   Molate reuse and the business incubator for bioscience
           
      14   business; 
           
      15              In terms of housing, we need new affordable
           
      16   development such as Richmond Transit Village, a 52-unit
           
      17   senior housing project, Cortez and Woods school sites
           
      18   and Pinole commercial properties owned by a subsidiary
           
      19   of BofA which the city would like to develop for senior
           
      20   housing; 
           
      21              In-fill new construction and rehabilitation
           
      22   throughout older developed neighborhoods throughout West
           
      23   County.  
           
      24              Vacant closed branches for a are a problem
           
      25   for all of us.  The bank needs to work with cities and
           
      26   economic organizations to develop commercially viable
           



                                                             427

       1   reuse programs for branch facilities at closes such as
           
       2   the Richmond Ninth street branch.  
           
       3              And, finally, we have a relatively high
           
       4   unemployment rate.  The bank needs to mitigate the loss
           
       5   of jobs from this merger and commit to the hiring and
           
       6   promotion of women and minorities. 
           
       7              In summary, West Contra Costa is concerned
           
       8   about how you define community and how you can ensure
           
       9   that all of the bank's community will be served.  We do
           
      10   not believe that the proposed CRA plan contains enough
           
      11   specific goals or the monitoring necessary to enforce
           
      12   them. 
           
      13              We need area-specific community reinvestment
           
      14   plans with community input.  Also, the potential loss of
           
      15   CRA leaders within the Bank of America causes us to
           
      16   worry about commitment. 
           
      17              We applaud BofA's history of innovation
           
      18   regarding community reinvestment and its ability to work
           
      19   with all segments of the community, including nonprofit
           
      20   organizations.  
           
      21              We are looking to the Federal Reserve Bank to
           
      22   ensure the continuance of a commitment to the innovation
           
      23   from the merged bank and that commitment will extend to
           
      24   all parts of the community. 
           
      25              Thank you. 
           
      26              MS. SMITH:  Any questions of Ms. Corbin? 
           



                                                             428

       1              MR. FRIERSON:  Mayor Corbin, could I ask you
           
       2   a question, please?  
           
       3              MS. CORBIN:  Yes.  
           
       4              MR. FRIERSON:  You mentioned that one of the
           
       5   things you were advocating was the continuation of the
           
       6   strengthening of the Bank of America Community
           
       7   Redevelopment Bank, and we've heard quite a lot about
           
       8   that organization yesterday, and I expect we'll hear
           
       9   more today. 
           
      10              Could you elaborate a little bit on your
           
      11   relationship with the bank and it's projects or any
           
      12   types of developments they have done in the City of
           
      13   Richmond?  
           
      14              MS. CORBIN:  That's what I referred to in
           
      15   terms of the money shadow we are in.  The Bank of
           
      16   America has funded the Rubicon program, which we are
           
      17   very grateful for, but we think that in defining
           
      18   community, too often Oakland is seen as taking care of
           
      19   the whole -- the Oakland area is seen as taking care of
           
      20   the whole of the East Bay, and we're saying that
           
      21   community has to include West Contra Costa County as
           
      22   well.  
           
      23              I used to live in San Francisco, and I was a
           
      24   librarian at San Francisco Public and used to get in
           
      25   arguments about the fact that Richmond is not in Alameda
           
      26   County and it's not a suburb of Oakland.  
           



                                                             429

       1              I think too often people don't understand
           
       2   what we are.  They should come.  I'll give him a tour
           
       3   and they can see that it's a lot -- the East Bay is a
           
       4   large area and we're probably -- this is probably just
           
       5   one example of others throughout the Bay Area where, if
           
       6   you sit in an office in San Francisco or, God help us,
           
       7   in North Carolina, and you think that because you are
           
       8   doing something in Oakland you are doing it for the
           
       9   whole East Bay, you are wrong, and we're very concerned
           
      10   about that because we have suffered from that.  
           
      11              I don't want to take anything away from
           
      12   Oakland.  I just want to be sure we get our fair share. 
           
      13              Any other questions? 
           
      14              MS. SMITH:  Thank you. 
           
      15              MS. CORBIN:  Thank you. 
           
      16              MS. SMITH:  Thank you very much. 
           
      17              We are ready for Panel 18. 
           
      18              (Pause in proceedings.) 
           
      19              MS. SMITH:  We'll start with Mr. Hewett. 
           
      20              MR. HEWETT:  Thank you.  My name is Conrad W.
           
      21   Hewett.  For over the last three years I served as the
           
      22   State Superintendent of Banks and Commissioner of
           
      23   Financial Institutions for the State of California.  My
           
      24   term ended this past June 30th.  
           
      25              My prior to my position for the State of
           
      26   California, I was a managing partner at Ernst & Young. 
           



                                                             430

       1   For over 33 years I specialized in financial
           
       2   institutions.  Consequently, I have been involved in
           
       3   many mergers and acquisitions of financial institutions. 
           
       4              During my past three years in my capacity as
           
       5   State Superintendent of Banks and Commissioner, I have
           
       6   approved a number of bank mergers and acquisitions.  The
           
       7   largest acquisition was Wells Fargo Bank acquiring first
           
       8   Interstate Bank. 
           
       9              The California laws concerning the sale,
           
      10   merger and conversion of depository corporation are very
           
      11   similar to the federal agency laws such as the Federal
           
      12   Reserve Bank.  
           
      13              As a regulator, I had several standards to
           
      14   consider under California banking law before I could
           
      15   approve or deny such a transaction.  Some of the
           
      16   elements of the law included:  
           
      17              One, the transaction would not result in a
           
      18   monopoly; 
           
      19              two, competition would be not lessened or be
           
      20   anti-competitive; 
           
      21              three, the convenience and needs of the
           
      22   community will be served; 
           
      23              fourth, the shareholders equity will be
           
      24   adequate, and the financial condition of the combined
           
      25   banks will be satisfactory; 
           
      26              fifth, directors and executive officers will
           



                                                             431

       1   be satisfactory; 
           
       2              and, last, the surviving entity will afford
           
       3   reasonable promise of successful operation and operate
           
       4   in a safe and sound manner. 
           
       5              In my opinion, this proposed merger meets all
           
       6   the standards to be considered under the Bank Holding
           
       7   Company Act.  
           
       8              I note that the proposed transaction does not
           
       9   result in the largest bank in the United States.  Also,
           
      10   this merger will operate in only 25 of our 50 states.  
           
      11              I publicly stated over three years ago that
           
      12   there would be a large consolidation in the banking
           
      13   industry.  I had many reasons for this statement and I
           
      14   believe that this trend will continue. 
           
      15              There is too much capacity in the banking
           
      16   industry, too many banks and too much competition from
           
      17   outside the banking industry, thus, the need to
           
      18   consolidate. 
           
      19              Even our largest United States banks face
           
      20   tremendous competition from companies such as Merrill
           
      21   Lynch, GE Capital, General Motor Acceptance
           
      22   Corporations, all of the mutual funds, such as Fidelity
           
      23   and T. Rowe Price and the many consumer finance
           
      24   companies such as Household Finance and now the
           
      25   internet.  Many of these companies are not subject to
           
      26   the same state and federal regulatory laws such as the
           



                                                             432

       1   bank's presently are.  
           
       2              Other reasons I see for this merger are: 
           
       3              First, the high cost of investment in
           
       4   technology helps drive these mergers and consolidations. 
           
       5   The non-bank competitors have invested heavily in
           
       6   technology and banks must invest as heavily, if not
           
       7   more, in order to compete and to survive.  This
           
       8   investment requires a very large capital base, and one
           
       9   way to create this base is through consolidation;
           
      10              secondly, our largest U.S. banks are still
           
      11   small compared to the other banks in the world which
           
      12   comprise mainly of the Japanese, German and French
           
      13   banks. 
           
      14              as you know, the U.S. is rapidly becoming a
           
      15   globally player and world trader.  Our banks must be
           
      16   large enough to provide the financing and capital
           
      17   necessary for our businesses to compete worldwide; 
           
      18              third, because there is very little overlap
           
      19   in this merger concerning the consumer, the consumer
           
      20   need and convenience should be satisfied.  Branch
           
      21   banking has changed dramatically in the past five years
           
      22   because of ATM usage, banking by phone, computer banking
           
      23   and banking by mail.  The consumer has dictated this
           
      24   shift in the delivery system of banks.  The consumer has
           
      25   a wide choice in availability of financial institutions
           
      26   from which to choose.  As I said earlier, the
           



                                                             433

       1   competition is fierce.  This transaction should enhance
           
       2   the service and products available to the customers of
           
       3   the new bank.  This is truly an interstate bank merger
           
       4   as contemplated by the federal Riegle-Neal Interstate
           
       5   Banking and Branching and Efficiency Act of 1994, which
           
       6   congress passed, and the law became effective September
           
       7   29th, 1994.  As I see, as a result, the consumer will be
           
       8   the benefactor of one of the first truly interstate
           
       9   banks in our country.     
           
      10              Concerning the other facts of this merger,
           
      11   both companies are financially strong as indicated by
           
      12   their financial statements, capital ratios, operating
           
      13   ratios and market capitalization. 
           
      14              If this transaction is approved by the
           
      15   Federal Reserve Board, in my opinion it should be, then
           
      16   a nationwide franchise will be delivered which has the
           
      17   potential to deliver financial service to millions upon
           
      18   millions of families and businesses. 
           
      19              Thank you. 
           
      20              MS. SMITH:  Thank you.  Mr. Collette. 
           
      21              MR. COLLETTE:  Is it on? 
           
      22              MS. SMITH:  Yes, if you just bring it a
           
      23   little closer.  
           
      24              MR. COLLETTE:  Thank you.  I appreciate the
           
      25   opportunity of expressing -- addressing this very
           
      26   important topic before the Federal Reserve.  
           



                                                             434

       1              My name is Craig Collette.  I am a member of
           
       2   the Board of Directors of the California Independent
           
       3   Bankers and president of a small bank in Southern
           
       4   California called Marathon National Bank, it's a $75
           
       5   million institution.  
           
       6              As an independent banker with 33 years of
           
       7   experience, I would like to give you my views on the
           
       8   impact of this gigantic merger between NationsBank and
           
       9   Bank of America.  I am speaking this morning also on
           
      10   behalf the California Independent Bankers, which
           
      11   represents some 200 banks throughout our state. 
           
      12              Let me first address you, though, as a
           
      13   concerned citizen of the State of California.  When
           
      14   legislation was debated in Sacramento three years ago,
           
      15   this legislation enabled this kind of merger, and the
           
      16   California Independent Bankers raised an important
           
      17   issue:  What will the tax impact be when we permit out-
           
      18   of-state institutions to own California banks and their
           
      19   headquarters are moved out of state?  Little attention
           
      20   was given to this critical question.  As a concerned
           
      21   taxpayer in the state, I would like to raise this issue
           
      22   again. 
           
      23              I would recommend that those that are
           
      24   reviewing this application for merger derive estimates
           
      25   and projections of what this merger will mean to
           
      26   California taxpayers when the headquarters of the
           



                                                             435

       1   combined institutions shift to Charlotte, North
           
       2   Carolina. 
           
       3              Matter of fact, all of California's three
           
       4   largest financial institutions are now or about to be
           
       5   moved out of state or the headquarters moved out of
           
       6   state from these entities.  
           
       7              Now, as an independent bank president, I have
           
       8   additional views.  The United States, with the passage
           
       9   of the Riegle-Neal bill, is moving from a diversified
           
      10   financial system to one characterized by a lopsided
           
      11   barbell with just a very few large banks at one end and
           
      12   a large number of independent banks at the other.  
           
      13              To quote Hugh McColl, Chief Executive of
           
      14   NationsBank, U.S. banking will be quote "...a
           
      15   barbell-shaped industry with a dozen or a half dozen
           
      16   very large players at one end and four or five thousand
           
      17   boutiques on the other," unquote.  On this issue we
           
      18   agree, but what are the implications of such a
           
      19   structure?  I feel strongly that increased financial
           
      20   concentration means less competition.  
           
      21              NationsBank and Bank of America's merger at
           
      22   60 billion is the largest between two American banks. 
           
      23   The bank created by this merger will have 8.2 percent of
           
      24   the Nations deposits.  Dangerously close to the ten
           
      25   percent limit set by the Riegle-Neal bill. 
           
      26              Unfortunately, this trend towards
           



                                                             436

       1   mega-mergers will probably continue given the overvalued
           
       2   asset base our own stock market has created.  The trend
           
       3   toward mega-mergers, this includes this merger, is not
           
       4   healthy for Main Street, where I come from, is very
           
       5   risky for Wall Street and it is bad for the Federal
           
       6   Reserve and other regulators who will have the
           
       7   responsibility to examine and possibly to even bail out
           
       8   these mega-giants when they are mismanaged, over
           
       9   speculate or reach too far in risky ventures.  These
           
      10   banks are the new super-sized, too-big-to-fail
           
      11   varieties.  
           
      12              The evidence shows that increased the
           
      13   concentration in the banking industry has not benefited
           
      14   bank customers.  The economies of scale that supposedly
           
      15   justify large bank mergers either do not materialize or
           
      16   are not passed on to the customers.  In addition, large
           
      17   interbank mergers reduce competition in ATM network
           
      18   markets as well as credit card markets. 
           
      19              Consider five points:  
           
      20              First, larger banks charge higher fees. 
           
      21   According to Bank Rate Monitor, none of the top 50 banks
           
      22   in the U.S. offer the least expensive checking accounts. 
           
      23   In fact, those offering the most expensive checking
           
      24   accounts are banks involved in the latest mega mergers,
           
      25   Citibank and NationsBank.  The best deals are offered by
           
      26   smaller regional and community banks.  In a 1997 study
           



                                                             437

       1   found a widening gap between large and small bank fees; 
           
       2              the Federal Reserve study found the average
           
       3   fees charged by multi-state banks are significantly
           
       4   higher than those charged by single state banks, even
           
       5   accounting for location and other factors that might
           
       6   explain the differences; 
           
       7              two, banks mergers have an adverse effect on
           
       8   consumer pricing.  A Boston Federal Bank study of 499
           
       9   bank mergers found the combined banks lowered interest
           
      10   rates paid on deposits regardless of the amount of
           
      11   competition in the market; 
           
      12              three, economies of scale.  It is
           
      13   interesting, the evidence suggests that the optimal size
           
      14   of a bank in terms of economies of scale, profitability
           
      15   and efficiency is between $100 and $1 billion, quite a
           
      16   bit smaller than the 300 to 600 billion loss that will
           
      17   be created from the latest mergers.  A Harvard study
           
      18   showed that instances of improved operating results
           
      19   after a merger were due primarily to higher repricing,
           
      20   not economies of scale, suggesting the use of increased
           
      21   market power to raise prices.  Given sufficient market
           
      22   power, large banks can price smaller competitors out of
           
      23   the market with below market rate loans or above market
           
      24   rate deposits; 
           
      25              four, large interbank mergers also have
           
      26   negative effects on competitive ATM network markets;
           



                                                             438

       1              and, five, large bank mergers are creating an
           
       2   oligopoly of credit card issuers led by Citibank, Bank
           
       3   One and NationsBank.  
           
       4              It is also indicated by the Rand Research
           
       5   organization that when the pending mergers are
           
       6   consummated the top ten credit card issuers will control
           
       7   72 percent of the credit card market. 
           
       8              In conclusion, as an independent bank
           
       9   president, I am fully aware that in the beginning
           
      10   community banks will prosper from the fallout of
           
      11   customers from big bank mergers.  After these giants
           
      12   consolidate, however, there will be no longer a fair and
           
      13   equitable competitive environment in independent banks
           
      14   in the areas that I have pointed out in my testimony. 
           
      15   Bank customers and small businesses will suffer as a
           
      16   result.  
           
      17              Thank you very much. 
           
      18              MS. SMITH:  Thank you.  Kurmel.  
           
      19              MR. KURMEL:  My name is Larry Kurmel.  I am
           
      20   Executive Director of the California Bankers
           
      21   Association.  I'll just make a few points.  I've offered
           
      22   some testimony on some things that you can have for the
           
      23   records,  
           
      24              Much has been made over the increased
           
      25   dominance of the banking marketplace resulting from BofA
           
      26   and NationsBank merger.  Our view to the contrary is the
           



                                                             439

       1   merger will do no more harm to the banking industry in
           
       2   California, in fact, it will create market
           
       3   opportunities.  I base that on statements with
           
       4   interviews with community bankers throughout this state
           
       5   and the western United States.  Obviously Craig Collette
           
       6   was not among them. 
           
       7              But there is a very different view, as
           
       8   evidence, there were ten new bank charters in California
           
       9   in the last year.  In Nevada, which concluded in 1997
           
      10   with 21 community bank charters, now has 31 community
           
      11   bank charters.  I understand that's soon to be 32 or 33. 
           
      12              Frankly, there is more threat to the
           
      13   community banking business by unrestrained tax-exempt
           
      14   from credit unions than it will from the combined merger
           
      15   of BankAmerica and NationsBank, which has very little
           
      16   overlap in their marketplace, as you are all aware. 
           
      17              BankAmerica has long been a leader within the
           
      18   ranks of the industry in California.  And the California
           
      19   Banks Association, in particular, a past Chairman or
           
      20   president of our organization is Don Mulane, the current
           
      21   President of the California Bankers Association is Vice
           
      22   Chairman of the Bank of America, Kathy Burke. 
           
      23              The question we had is the commitment of
           
      24   NationsBank to the continued leadership role
           
      25   demonstrated by BankAmerica in California.  And Hugh
           
      26   McColl was a keynote speaker at our convention in May to
           



                                                             440

       1   personally provide that assurance and provide the
           
       2   assurance of his commitment to assuring healthy
           
       3   competition between large banks and community banks in
           
       4   the State of California. 
           
       5              Much has been made about combining and what
           
       6   happens with people and that sort of thing.  I should
           
       7   note the combined employee base of the two organizations
           
       8   is about 200,000 people.  That's larger than the City of
           
       9   Fresno.  Out of that they anticipate somewhere around
           
      10   2,000 to 2,500 jobs will actually be lost.  In relative
           
      11   terms, according to any business study I've seen, that's
           
      12   a relatively insignificant amount. 
           
      13              Let me talk a little bit, there is a lot of
           
      14   speculation about what do the commitments of these banks
           
      15   mean.  Let me focus for a moment, if I may, just on the
           
      16   $250 billion commitment.  I don't know about you, but
           
      17   that's a big number to me. 
           
      18              I started my career as a housing expert in
           
      19   the Department of Housing and Community Development in
           
      20   the State of California.  I was a deputy secretary to
           
      21   the Business Transportation Housing Agency in
           
      22   California. 
           
      23              MS. SMITH:  Would you move your mike a little
           
      24   to the left?  
           
      25              MR. KURMEL:  Sure.  Better?  
           
      26              MS. SMITH:  Yes. 
           



                                                             441

       1              MR. KURMEL:  I am reluctant to move to the
           
       2   left too much, but I appreciate it.  
           
       3              I was a deputy secretary to the Business
           
       4   Housing Transportation Agency under then Governor Jerry
           
       5   Brown and was part of the creation of the California
           
       6   Housing Finance Agency. 
           
       7              Bank of America was one of the instrumental
           
       8   entitles in providing a consortium of banks to provide
           
       9   low and very low multi-family housing financing in the
           
      10   State of California.  The consortium today, which
           
      11   includes, I believe, over 60 banks, mostly community
           
      12   banks, has opportunities for investment in CRA
           
      13   activities they would not have had on their own. 
           
      14              CCRC in California, in its ten years of
           
      15   existence, has done more multi-family, low and very
           
      16   low-income housing financing than has the California
           
      17   Housing Finance Agency in its 20 years of operation.  
           
      18   So, when it comes to commitment, you have to look at the
           
      19   record, it seems to me.  
           
      20              I testified in this very room about the
           
      21   Security Pacific and BankAmerica merger.  At that time a
           
      22   ten-year commitment was made by the bank of the
           
      23   surviving organization to CRA lending.  They met that
           
      24   requirement, met that threshold within three years and
           
      25   went on to fully exceed that.  Last year they started --
           
      26   established I believe it was $140 billion target and
           



                                                             442

       1   they were moving briskly towards fulfilling that public
           
       2   obligation they had created for themselves, I might add. 
           
       3              I would add one note of caution.  In my
           
       4   experience in housing and economic development, I am
           
       5   very cautious of throwing too much money at a problem. 
           
       6   For one reason, you don't want to throw out or denigrate
           
       7   the experience or exercise of experience of other
           
       8   players in that market.  
           
       9              For example, Mayor Corbin might note, that
           
      10   the largest community bank in Richmond is the Mechanics
           
      11   Bank of Richmond, an organization that had been there
           
      12   for over 90 years who had a substantial commitment to
           
      13   financing and improvement in that community.  
           
      14              You don't want BankAmerica/NationsBank
           
      15   commitment to go in there and blow through the ability
           
      16   of Mechanics Bank to participate in the restructuring
           
      17   and rebuilding of its communities. 
           
      18              So, in my view, you have to be real careful
           
      19   about being too specific with this large batch of
           
      20   dollars for fear of disrupting those processes that are
           
      21   already in place.  But, if you are looking at the track
           
      22   record of both NationsBank and BankAmerica as exercised
           
      23   through people like Don Mulane who have chaired the
           
      24   Community Bank of Bank of America, they have met every
           
      25   public goal they have established for themselves and
           
      26   exceeded that performance.  The same has been true in
           



                                                             443

       1   NationsBank in those market areas where it has been
           
       2   performing.  
           
       3              So I would just urge some caution playing
           
       4   with $350 billion dollars.  You don't want to end up
           
       5   tantamount to offering a drunk a bottle of Tokay.  Thank
           
       6   you. 
           
       7              MS. SMITH:  Thank you.  Mr. Koppe. 
           
       8              MR. KOPPE:  Thank you, and good morning.  My
           
       9   name is Bruce Koppe.  I am Executive Director of the
           
      10   Washington Bankers Association, located in Seattle,
           
      11   Washington. 
           
      12              The Washington Bankers Association represents
           
      13   substantially all of the commercial banks in our state,
           
      14   almost all of which fit the generally accepted
           
      15   definition of community bank.  
           
      16              Prior to assuming my present position, I
           
      17   spent over ten years as General Counsel to Rainier
           
      18   National Bank in Seattle, later Security Pacific Bank
           
      19   Washington.  Where my duties included responsibility for
           
      20   community affairs and social policy. 
           
      21              My time in Washington includes the period
           
      22   covering Bank of America's acquisition of Sea First Bank
           
      23   in which Bank of America had a significant interest and
           
      24   the relatively recent conversion of Sea First into
           
      25   branches of Bank of America.  
           
      26              During all of these periods and events, I
           



                                                             444

       1   have had significant contact with the Sea First/Bank of
           
       2   America Corporation in collaborative community affairs
           
       3   projects, as a representative of both donor and donee
           
       4   groups, as a competitor and in promotion of collective
           
       5   efforts on behalf of the banking industry in our state
           
       6   working with and through the bankers association. 
           
       7              My purpose today is to support the merger
           
       8   application and record of Bank of America, particularly
           
       9   its Sea First operation in the State of Washington. 
           
      10              Sea First has been and continues to be a
           
      11   leader in the community especially in community
           
      12   reinvestment.  
           
      13              I don't intend to recite specific
           
      14   accomplishments because those are known to the Federal
           
      15   Reserve through the Sea First/Bank of America CRA exams
           
      16   which for several years have resulted in ratings of
           
      17   outstanding.  Rather, I want to emphasize what I believe
           
      18   are important indicators of future conduct.  
           
      19              Much of the controversy surrounding mergers
           
      20   of institutions involves an attempt to determine what
           
      21   the future holds for the communities to be served.  The
           
      22   best indicators of that are how the institutions have
           
      23   behaved in the past.  And, in order to help determine
           
      24   that, my presentation focuses on four specific points. 
           
      25              First, when bank of America acquired Sea
           
      26   First Bank in the early 1980s, there was a great deal of
           



                                                             445

       1   apprehension in Washington State the control of the
           
       2   entity would shift to San Francisco and that Sea First
           
       3   community involvement would suffer.  That did not happen
           
       4   much to the credit of both parent and subsidiary. 
           
       5              More recently, when Sea First's operations
           
       6   were converted to branches of Bank of America, albeit
           
       7   operating under the Sea First name, the same
           
       8   apprehensions were expressed.  In fact, the apprehension
           
       9   began when the BofA Sea First organization began
           
      10   functionalizing its operation sometime prior to
           
      11   conversion to branches.  
           
      12              Again, those apprehensions have proved
           
      13   groundless.  In each case we have seen no diminution in
           
      14   the Sea First commitment to all aspects of community
           
      15   affairs and community service. 
           
      16              Moreover, I understand that the head of the
           
      17   Bank of America presence in the State of Washington,
           
      18   Mr. John Renlove has been given broad authority and
           
      19   autonomy over community activities.  Certainly that's
           
      20   been borne out by the company's performance to date, a
           
      21   continuation of its broad and significant involvement in
           
      22   all aspects of community development, philanthropy and
           
      23   service to its customers. 
           
      24              As Sea First/Bank of America has gone through
           
      25   each of these transitions its past performance has
           
      26   accurately predicted its future performance. 
           



                                                             446

       1              Second, banking customers are extremely
           
       2   sensitive to mergers and acquisitions even among our
           
       3   smaller community banks, but particularly with respect
           
       4   to the large bank mergers.  This has been demonstrated
           
       5   most notably in the key bank acquisition of Puget Sound
           
       6   Bank and Wells Fargo's acquisition of First Interstate
           
       7   Bank in our state.  Each acquisition has seen some
           
       8   outpouring of customers to local community banks known
           
       9   for excellence of personal service.  
           
      10              Sea First has a great reputation for customer
           
      11   service as well as an aware management team.  They know
           
      12   as well as anyone that to dilute their community
           
      13   activities and service at this time or any time in the
           
      14   future would be the height of folly.  As stated earlier,
           
      15   their record through similar events has demonstrated not
           
      16   only their awareness of that fact but their continued
           
      17   commitment to their customers and their communities
           
      18   generally. 
           
      19              Third, I think it's important to know at
           
      20   least in our state that our community banks do not see
           
      21   the merger of BofA and NationsBank as a threat.  If
           
      22   anything, it's an opportunity to gain customers.  I'm
           
      23   not saying anything that BofA isn't keenly aware of and
           
      24   I don't think Sea First/BofA will let that challenge go
           
      25   unanswered. 
           
      26              Finally, I've worked with Sea First on
           



                                                             447

       1   community outreach including fairly extensive activity
           
       2   over the past year, much of which was very innovative. 
           
       3   The organization has willingly committed its time and
           
       4   resources and continues to do so.  I can attest
           
       5   personally to their commitment. 
           
       6              In summary, the Sea First/Bank of America
           
       7   record of community support and customer service in the
           
       8   State of Washington has been first rate and has not been
           
       9   diminished through corporate change.  
           
      10              We believe their past performance totally
           
      11   supports the presentation application.  We also believe
           
      12   that their past performance through periods of
           
      13   significant corporate change is a reliable predictor of
           
      14   what will happen in the future.  In our view,
           
      15   speculation and conclusions to the contrary are not only
           
      16   totally unwarranted, but very unfair. 
           
      17              Thank you. 
           
      18              MS. SMITH:  Thank you, questions. 
           
      19              MR. FRIERSON:  I have two questions.  First
           
      20   for Mr. Hewett, as a former state banking supervisor and
           
      21   decision-maker, I would be interested in your views on
           
      22   the comments that we have heard at this public meeting
           
      23   and in the comment period that a bank with a
           
      24   headquarters on the east coast would be less successful
           
      25   in understanding the credit needs of California
           
      26   communities. 
           



                                                             448

       1              MR. HEWETT:  That's a good question.  I do
           
       2   believe that California is such a tremendous economic
           
       3   market, not only in the United States but in this world,
           
       4   that if there is any void of consumer availability to do
           
       5   banking of any kind, that the bank from the east coast
           
       6   or from the southeast will come into this state and
           
       7   establish a headquarters if that means that will help
           
       8   that particular institution financially in the future
           
       9   and so forth. 
           
      10              I don't see any -- in today's age of
           
      11   technology, wherever it's headquartered, could be
           
      12   headquartered in Hawaii and still operate in California
           
      13   and still provide services to the consumer and still be
           
      14   competitive.  I don't see that as a real significant
           
      15   issue in terms of where the headquarters -- the
           
      16   headquarters are usually only made up of a few, in this
           
      17   case probably only a few hundred people.  It's not the
           
      18   headquarters, it's the service that's provided to the
           
      19   customer by the representative of that bank, wherever
           
      20   that community may be.  
           
      21              MR. FRIERSON:  And a question for
           
      22   Mr. Collette.  Does your bank operate an ATM network? 
           
      23              MR. COLLETTE:  We don't have our own ATMs. 
           
      24   We utilize networks provided by larger institutions. 
           
      25              MR. FRIERSON.  Could you give us your bank's
           
      26   experience with the competitive impact of the
           



                                                             449

       1   consolidation of ATM networks, specifically how it
           
       2   affects your clients:  
           
       3              MR. COLLETTE:  Yes.  On a pricing basis, we
           
       4   have had experience where we have been -- where our
           
       5   customers have been charged for the use of another
           
       6   institution's ATM, even though we were a member of the
           
       7   network.  And that did do some harm to the customer base
           
       8   of our institution. 
           
       9              MR. FRIERSON:  Thank you.  I don't have any
           
      10   more questions.  
           
      11              MS. SMITH:  There are no other questions,
           
      12   then we thank you very much for coming this morning. 
           
      13              (Pause in proceedings.) 
           
      14              MS. SMITH:  We'll go ahead and start with
           
      15   Ms. Supinski substituting for Mr. Lee. 
           
      16              MS. SUPINSKI:  Yes, thank you.  
           
      17              Good morning, Ms. Smith and members of the
           
      18   panel.  This is the testimony of Matthew Lee, Executive
           
      19   Director of Inner City Press Community on the Move and
           
      20   of the Inner City Public Interest Law Center, together
           
      21   known as ICP, which the California Reinvestment
           
      22   Committee has been kind enough to present.         
           
      23              ICP on May 6th filed a 54-page protest to
           
      24   this application along with the Black Citizen for
           
      25   Justice Law and Order of Dallas, Texas and the New
           
      26   Mexico Alliance, two of its whose members, Gilbert
           



                                                             450

       1   Sanchez and Robert Wells, you heard from yesterday. 
           
       2              We are opposed to this proposed merger
           
       3   primarily due to NationsBank's continued predatory and
           
       4   discriminatory practices through its finance companies,
           
       5   NationsCredit and EquiCredit, and due to the
           
       6   anti-competitive and branch-closing effects the proposed
           
       7   merger would have in New Mexico and in Dallas, Texas. 
           
       8              NationsBank's ill-defined community
           
       9   reinvestment pledge does nothing to address these
           
      10   issues.  In fact, as explained in a moment,
           
      11   NationsBank's failure to live up to its commitment with
           
      12   regard to NationsCredit, calls into question whether the
           
      13   board could rely on NationsBank's press release pledge. 
           
      14              In 1996, when NationsBank announced its
           
      15   proposal to acquire Boatmen's Bank shares, including its
           
      16   subsidiary Sunwest, the larger bank in New Mexico, ICP
           
      17   and the New Mexico Alliance filed comments with the
           
      18   Federal Reserve Board.  We critiqued the lending of
           
      19   NationsBank and its higher than normal interest rate
           
      20   finance company, NationsCredit, and documented that
           
      21   NationsBank was referring applicants who were
           
      22   disproportionately African Americans and Hispanics from
           
      23   its banks to NationsCredit which offers higher than
           
      24   normal interest rate credit, but that NationsCredit had
           
      25   no policy or program to refer up to NationsBank
           
      26   applicants who were entitled to normal interest rate
           



                                                             451

       1   credit. 
           
       2              We showed that NationsBank has been closing
           
       3   branches in low-income communities of color and has been
           
       4   opening NationsCredit offices in these communities.  
           
       5              The board has refused to conduct an
           
       6   examination of NationsCredit but did ask NationsBank how
           
       7   many lawsuits were pending against NationsCredit. 
           
       8   NationsBank submitted a skeletal list of 119 lawsuits
           
       9   then pending against NationsCredit.  We showed that the
           
      10   list was incomplete, but, even if it were not, it would
           
      11   seem that volume of litigation would trigger some
           
      12   examination by the Federal Reserve. 
           
      13              During that protest, NationsBank CRA officer
           
      14   was quoted in U.S. News and World Report to the effect
           
      15   that NationsCredit would institute a practice referring
           
      16   applicants who were entitled to normal interest rate
           
      17   loans up to NationsBank banks from NationsCredit and
           
      18   that this would be done by February of 1997. 
           
      19              NationsBank refused thereafter to provide
           
      20   information about NationsCredit or this promise to
           
      21   change.  In January of this year, we were informed by
           
      22   the Office of the Comptroller of the Currency that
           
      23   NationsCredit still has not instituted any referral-up
           
      24   program.  NationsBank has since confirmed this,
           
      25   proffering as its excuse that there has been a lot of
           
      26   turnover at NationsCredit.  
           



                                                             452

       1              Most recently, the Federal Reserve itself
           
       2   asked NationsBank to describe all current and planned
           
       3   referral programs between its banks, mortgage company
           
       4   and finance companies.  NationsBank's response has been
           
       5   that everything is in flux. 
           
       6              Simply put, NationsBank's 350 billion
           
       7   community reinvestment commitment is not credible since
           
       8   NationsBank has not lived up to its previous
           
       9   commitments.  It is also important to note that
           
      10   NationsBank has refused to make any more specific
           
      11   geographic commitments even at the state, much less the
           
      12   county, level.  But the key point to us is that
           
      13   NationsBank promises of future improvements do not in
           
      14   fact take place.  
           
      15              After NationsBank bought Boatmen's and
           
      16   Sunwest, NationsBank quickly closed eight branches in
           
      17   New Mexico, even though there was not overlap between
           
      18   NationsBank and Sunwest.  
           
      19              The Federal Reserve has said in its
           
      20   NationsBank/Boatmen's conditional approval order that it
           
      21   would monitor NationsBank's branch closing, but this has
           
      22   had little to no effect. 
           
      23              More recently, after gaining approval to
           
      24   acquire Barnett Banks of Florida, NationsBank has moved
           
      25   to close over 200 branches in Florida. 
           
      26              In this proposal NationsBank and Bank of
           



                                                             453

       1   America overlap in Mexico -- in New Mexico and in
           
       2   Dallas.  NationsBank has refused to disclose how many or
           
       3   which branches it would close.  It has also put forth a 
           
       4   laughable low divestiture proposal that would allow them
           
       5   to predominate and raise prices in Dallas and a number
           
       6   of New Mexico markets.  
           
       7              NationsBank has apparently paid numerous
           
       8   group to come and testify in its support at this public
           
       9   meeting, but the facts, as they say, are the facts. 
           
      10              NationsBank said it would institute a
           
      11   referral-up program from NationsCredit to its banks by
           
      12   February of 1997, and NationsBank did not do so.  This
           
      13   proposed merger would be anti-competitive in Dallas and
           
      14   numerous New Mexico markets and NationsBank's
           
      15   divestiture proposal is sorely insufficient. 
           
      16              NationsBank has refused to disclose what the
           
      17   actual effects of the merger would be, including branch
           
      18   closings. 
           
      19              There are other adverse issues including the
           
      20   foreseeable loss of various Bank of America programs
           
      21   ably raised by the California Reinvestment Committee and
           
      22   others.  For all reasons stated, this proposed merger
           
      23   should be denied. 
           
      24              Thank you for your attention and we will be
           
      25   submitting further written comments.  Thank you. 
           
      26              MS. SMITH:  Thank you very much. 
           



                                                             454

       1   Ms. Kurudisha. 
           
       2              MS. KURUDISHA:  Thank you for the opportunity
           
       3   to testify.  
           
       4              I am Program Director of the West Contra
           
       5   Costa Business Development Center.  I'm also owner of a
           
       6   small business called Associates for Community Change
           
       7   and Development.  In the two capacities, I have worked
           
       8   with the West Contra Costa Community for the last nine
           
       9   years.  
           
      10              The president, the current president of the
           
      11   board of the West Contra Costa Business Development
           
      12   Center is Mr. Robert Leet, who is Executive Vice
           
      13   President of the Mechanics Bank and the chief lending
           
      14   officer of that bank. 
           
      15              The West Contra Costa Business Development
           
      16   Center is a result of years of effort by the West Contra
           
      17   Costa community to work with the banking community to
           
      18   develop an approach to economic development and
           
      19   community development in the West Contra Costa
           
      20   community. 
           
      21              We have worked with all of the regulatory
           
      22   agencies and as many as 22 banks in our effort to put
           
      23   together a community reinvestment plan for our
           
      24   community.  The years of effort have resulted in the
           
      25   development of the West Contra Costa Business
           
      26   Development Center as an intermediary for community
           



                                                             455

       1   development and economic development in the West Contra
           
       2   Costa community. 
           
       3              When we look at our efforts to work with Bank
           
       4   of America, we applaud their participation in the
           
       5   community meetings that have been held on banking in
           
       6   West Contra Costa.  We also applaud their contribution
           
       7   to the West Contra Costa Business Development Center
           
       8   which has been $25,000.  
           
       9              We, however, point out that, while this has
           
      10   supported our effort, it has not matched the request for
           
      11   a five-year commitment on the part of the bank to the
           
      12   community development effort of the West Contra Costa
           
      13   Business Development Center. 
           
      14              We would like an opportunity to develop, as
           
      15   an intermediary for our community and give the small
           
      16   cities that we represent an opportunity to develop an
           
      17   urban core process and strategy that allows us to
           
      18   resolve some of the problems that are centered in the
           
      19   low-income and moderate-income communities that we
           
      20   represent. 
           
      21              The community bank, which is Mechanics Bank,
           
      22   strongly endorses and calls for additional banking
           
      23   meetings to be held in West Contra Costa where large
           
      24   banks, like BofA, make real contributions to community
           
      25   reinvestment. 
           
      26              When the bank sees in the inner core, urban
           



                                                             456

       1   inner core of our community, lines that extend out the
           
       2   door of minorities who come in to do checking and other
           
       3   banking services, and downsize their branch so that
           
       4   those lines now extend out into the rain, we do not
           
       5   believe that they are responding to the interests of the
           
       6   community.  
           
       7              When they downsize their branch so that
           
       8   merchants in the inner core cannot have change to
           
       9   continue business, we do not view that as contributing
           
      10   to economic development or listening to the needs of the
           
      11   community. 
           
      12              We have had Bank of America at the table with
           
      13   us over the last eight years and we applaud the things
           
      14   that they have done in the large urban areas of
           
      15   California.  However, most of America is not large urban
           
      16   areas.  It is small cities that often, like West Contra
           
      17   Costa, have urban problems to resolve that are growing. 
           
      18              We would like an opportunity to take
           
      19   advantage of the open land that remains in our area to
           
      20   develop small businesses that include indigenous
           
      21   population.  We call on the Federal Reserve Board to
           
      22   develop a fair and open process for community planning
           
      23   that includes the interest of small cities and economic
           
      24   development and small business development. 
           
      25              MS. SMITH:  Thank you very much. 
           
      26   Mr. Thompson. 
           



                                                             457

       1              MR. THOMPSON:  Yes.  Thank you very much.  
           
       2              My name is David Thompson.  I am the City of
           
       3   Richmond Redevelopment Director.  
           
       4              Our Mayor, Rosemary Corbin gave most of the
           
       5   testimony that I would like to give this morning, so I'm
           
       6   not going to burden you with repeating that.  A number
           
       7   of the comments that Ms. Kurudisha has provided are also
           
       8   my thoughts.  
           
       9              I would, though, like to comment on some of
           
      10   the issues that I see as the Redevelopment Director with
           
      11   regard to relationship with banking institutions
           
      12   generally and with the Bank of America and the possible
           
      13   merger with NationsBank and the acquisition by
           
      14   NationsBank in terms of its impact in our community. 
           
      15              The most effective relationships that we have
           
      16   had have been ones where we have been able to develop a
           
      17   personal relationship working with banking officers and
           
      18   where there is a corporate commitment to doing that and
           
      19   to making things happen in communities.  Our concern is
           
      20   that through this merger the decision-makers are going
           
      21   to be remote and that the products are going to be more
           
      22   generic and are going to be more difficult to work with. 
           
      23              In many cases in our community it is going to
           
      24   take a combination of financing to make projects work
           
      25   including our redevelopment agency and other public
           
      26   funding.  Our needs are for revitalizing our older
           



                                                             458

       1   commercial neighborhoods. 
           
       2              We know that in many cases the bank by itself
           
       3   cannot do that.  We have to have a vehicle for sitting
           
       4   down with somebody and saying, "This is the program that
           
       5   we need for this community and we're prepared to do this
           
       6   much, can you do the other?"  
           
       7              Let me say that the example that Mayor Corbin
           
       8   noted with regard to Rubicon programs was in fact a
           
       9   situation like that that happened with the bank.  Out of
           
      10   the Community Development Bank, it was a very aggressive
           
      11   senior loan officer who came to the city and said,
           
      12   "We're interested in doing business in your city," and
           
      13   we put together a deal with Rubicon programs that
           
      14   involved our city and involved the Bank of America.  
           
      15              Our concern, quite frankly, is that with this
           
      16   merger we are not going to be able to have that kind of
           
      17   relationship.  So, whether it goes through or doesn't go
           
      18   through, we want to preserve a relationship here in
           
      19   California, particularly in Northern California, so that
           
      20   we can continue that kind of relationship. 
           
      21              Earlier the question of the independent banks
           
      22   and the case, this case, the Mechanics Bank, which
           
      23   started in 1906 in Richmond, and it's role in the
           
      24   relationship.  I point out over the last -- well, from
           
      25   1994 to 1996, they had a significant growth in their
           
      26   deposit base from the household business sector, while,
           



                                                             459

       1   in fact, in West Contra Costa County the Bank of
           
       2   America's deposit base declined.  
           
       3              I am concerned about that because, while the
           
       4   community bank has ability to do certain kind of
           
       5   lending, and, quite frankly, they're reasonably
           
       6   effective on the small business side of things, when it
           
       7   comes to the larger transactions, such as the Ford
           
       8   Building, which will be a $70 million project in the
           
       9   City of Richmond, a 500,000 square foot Ford assembly
           
      10   building, that Mechanics Bank is not going to be able to
           
      11   be a serious player in that kind of a project.  We've
           
      12   talked with them about it.  
           
      13              There are other real estate transactions like
           
      14   that where it is going to be more appropriate for a
           
      15   larger bank. 
           
      16              Our concern is, again, as this goes forward,
           
      17   that we preserve the ability to be able to have a
           
      18   relationship and to enter into a real process of
           
      19   discussing West Contra Costa County's community
           
      20   development reinvestment needs. 
           
      21              Again, I want to thank you for the
           
      22   opportunity to present here.  This is unusual and we
           
      23   appreciate it. 
           
      24              MS. SMITH:  Thank you very much.  Mr. Henry. 
           
      25              MR. HENRY:  Good morning.  Excuse me, I've
           
      26   got a small cold, on my way down here, by the way. 
           



                                                             460

       1              Thank you once again for allowing me to come
           
       2   before you to state the problem that we have with Bank
           
       3   of America in our area.  It's called OMI.  Ocean
           
       4   View/Merced/Ingelside District.  It's in the southern
           
       5   part of the city where most of everybody that goes
           
       6   through there goes right through our area; however, if
           
       7   you go down the main street over there, which is called
           
       8   Ocean Avenue, you'll find that it also runs, Ocean
           
       9   Avenue, runs all the way out to the ocean. 
           
      10              But, when you look at the businesses that's
           
      11   in that corridor, you'll find that for years, years,
           
      12   many, many years, that there was only one bank on that
           
      13   corridor and that was Bank of America.  Everything that
           
      14   Bank of America got out of that neighborhood came from
           
      15   that corridor. 
           
      16              Now, what I'm alluding to right here right
           
      17   now is Bank of America up and pulled out.  We contacted
           
      18   them on many occasions to try to get them to keep that
           
      19   branch open.  Why?  For the simple reason, this area is
           
      20   an area where most of low-income families are retired. 
           
      21   We have many, many seniors that has medical problems,
           
      22   and they closed the bank.  They don't have access to a
           
      23   bank in that area within a half a mile.  That would be
           
      24   the closest.  
           
      25              Now, in this area also, transportation is
           
      26   fairly good, I wouldn't say excellent, but the seniors
           



                                                             461

       1   can't use the bank to get to the AMT [sic] machines. 
           
       2   That's what they left there, they left the AMT machines,
           
       3   and they expect those people to go there and use those
           
       4   machines.  I tell you, that's not a very good idea,
           
       5   because those machines and that bank that they left
           
       6   there was ripped off.  The machines was ripped off.  So
           
       7   it's not safe for seniors to be in that area at that
           
       8   machine. 
           
       9              Now, I would also like to say I disagree with
           
      10   this merger simply because the first of next year all
           
      11   government checks will automatically be electronically
           
      12   transmitted.  Now, what does that mean to a senior
           
      13   citizen that has to use an AMT machine?  Can't speak to
           
      14   anyone, most of them are afraid to use the machines.  I
           
      15   don't like to use them myself and I'm much younger than
           
      16   they are. 
           
      17              I'll give you a little example of what
           
      18   happened to me.  I used AMT machine, put in the amount
           
      19   of money that I wanted to withdraw, it went through the
           
      20   transaction, I'm looking for my money to come out, lo
           
      21   and behold, no money.  So, it was the weekend.  So what
           
      22   happened?  I had no one to talk to, had no place to go. 
           
      23              So, finally, Monday morning came around, I
           
      24   went to the bank and I told them what happened.  Well,
           
      25   these things happen.  There is no one there to talk to. 
           
      26   We need a bank in our area, we need tellers, so that the
           



                                                             462

       1   senior citizens can talk to and get service through. 
           
       2              I would only ask that this merger not be
           
       3   accepted.  Thank you. 
           
       4              MS. SMITH:  Thank you very much. 
           
       5   Ms. Blosser. 
           
       6              MS. BLOSSER:  Yes.  I'm Regina Blosser, and
           
       7   I'm from the Ocean View Merced Heights Neighbors in
           
       8   Action.  Ceasar and I are both members of this public
           
       9   safety and neighborhood improvement organization in the
           
      10   Ocean View District of San Francisco.  
           
      11              The Federal Reserve sent me a copy of the
           
      12   Bank of America closure policy adopted by the Social
           
      13   Policy Committee of BofA on September 14th, 1993.  I
           
      14   wish to read it to you in as much time as I am allowed
           
      15   item by item and then tell you how we believe that the
           
      16   BofA did not follow its own closure policy when it
           
      17   closed our bank on Ocean Avenue. 
           
      18              Item, bit by bit, every sentence, "Bank of
           
      19   America is committed to providing access to banking
           
      20   services to all members."  Well, obviously it's not
           
      21   committed to providing access to banking to us, because
           
      22   it closed our branch. 
           
      23              Number two, "Furthermore, the bank will
           
      24   reasonably strive to minimize any negative impact on the
           
      25   community."  BofA didn't strive to minimize any negative
           
      26   impact on our community, in fact, when we make phone
           



                                                             463

       1   calls to community development department that wrote
           
       2   this little document, they are never returned.  We call,
           
       3   they don't call back.  We leave an answer on the
           
       4   answering machine. 
           
       5              Number three, "Review and concurrence by
           
       6   corporate community development must be an integral part
           
       7   of the California retail banking branch closure decision
           
       8   process."  Well, we would like to see this review
           
       9   because we have not received any justification for
           
      10   closing our branch through any sort of document.  We
           
      11   would like to see the review of this policy when it had
           
      12   to do with closing our bank. 
           
      13              Number four -- again, we wish to see a review
           
      14   of these closure recommendations. 
           
      15              Number four states, "Once a bank has been
           
      16   identified for potential closure, a representative from
           
      17   Corporate Community Development will review corporate
           
      18   recommendations to be sure any negative impacts on the
           
      19   community and its serving area are identified and
           
      20   included in subsequent considerations."  Well, we
           
      21   certainly wrote them a lot of letters stating the
           
      22   negative impact we knew would be created in our
           
      23   commercial district.  
           
      24              Merchants can't make change anymore, they
           
      25   depend on this.  They have to have a secure place to put
           
      26   their deposits.  They no longer have this because the
           



                                                             464

       1   branch closed.  Business has gone down.  They have to
           
       2   spend their time going to another bank by car.  They
           
       3   cannot simply walk down the street to use banking
           
       4   services that merchants need.  
           
       5              These things you would think would have to do
           
       6   with potential negative impacts.  The decision was
           
       7   already made to close our bank before any of these
           
       8   impacts were considered.  On and on and on.  
           
       9              I'll submit the rest to you on a point-by-
           
      10   point basis.  This is their own branch closure policy. 
           
      11   I don't know how beholden they are to follow this
           
      12   policy.  I'll tell you item by item they did not follow
           
      13   it.  You can ask anyone of our residents in the OMI if
           
      14   they realize or know they followed this closure policy. 
           
      15   This is their own document. 
           
      16              This is a map.  I put a half-mile circle
           
      17   around every branch in San Francisco that I could find
           
      18   listed in the phone book.  You can see it's all covered
           
      19   in green.  This obviously is downtown where a lot of
           
      20   branches are needed to serve people.  This is industrial
           
      21   district.  This is residential -- this little blank spot
           
      22   here is residential area where there are no commercial
           
      23   corridors to locate a bank.  It's hilly country with
           
      24   sparsely located houses.  All of this is green in the
           
      25   city.  This red is our neighborhood.  Do you see any
           
      26   green half-mile radius circles going to our
           



                                                             465

       1   neighborhood?  
           
       2              Now, we've been told that it's only a
           
       3   three-minute drive to the next branch.  But every other
           
       4   neighborhood in this city is not required to make -- and
           
       5   it's not a three-minute drive, let me tell you.  It's
           
       6   more like 15 or 20 minutes after you've found a parking
           
       7   spot or you've been transferred to another bus to get
           
       8   there.  It is certainly not a three-minute ride to the
           
       9   next branch. 
           
      10              Anyway, you see my point.  I had to show you
           
      11   this in color.  This area is the only area that does not
           
      12   have a green half-mile distance to the next nearest
           
      13   branch.  A lot of these overlap, lot of branches are
           
      14   less than a half-mile in other neighborhoods, Bank of
           
      15   America branches. 
           
      16              The yellow are what we call banker's rows. 
           
      17   There is a banker's row here, they passed resolution at
           
      18   the planning department stating they wanted no more
           
      19   banks on their commercial district because all they had
           
      20   were banks and no practical places like grocery markets
           
      21   or shoe stores, nothing but banks.  And we can't even
           
      22   find one bank.  And we have tried, we have tried to find
           
      23   Sterling.  
           
      24              The Mayor's Office of Economic Development
           
      25   asked Sterling Bank to come to our neighborhood.  When
           
      26   they met with Bank of America representatives to take
           



                                                             466

       1   over the old bank building and to use as a Sterling
           
       2   Bank, Bank of America refused to remove its ATMs.  So
           
       3   Sterling did not want to locate there. 
           
       4              We have tried looking for, you know,
           
       5   consumers unions, credit unions, that might expand their
           
       6   field of membership.  But you might know that the
           
       7   American Bankers Association brought a lawsuit against
           
       8   credit unions and presently credit unions cannot expand
           
       9   its fields of membership to neighborhoods like ours that
           
      10   need some kind of service, banking service.  
           
      11              Presently there is a bill in the house, and
           
      12   perhaps it will be passed, and we will be able to find a
           
      13   credit union, but right now we're stymied.  We want a
           
      14   bank and we can't get one. 
           
      15              Numerous non-profits have come to you to
           
      16   state their satisfaction with these bank's financing of
           
      17   their programs.  This is fine, but the only thing our
           
      18   neighbors and merchants want is a bank.  We feel no
           
      19   desire for charitable giving.  
           
      20              That's what we want, we want to take care of
           
      21   ourselves and we want to be independent, self-sufficient
           
      22   and prosperous, and we need a bank.  That has been
           
      23   denied us, and our attempts to get a bank have been
           
      24   sabotaged by the Bank of America by not allowing ATMs
           
      25   for a new bank, by the Bankers Association by not
           
      26   allowing us to pursue a credit union as an alternative. 
           



                                                             467

       1              We think that we really must talk about this
           
       2   merger and how they comply with the Community
           
       3   Reinvestment Act. 
           
       4              MS. SMITH:  Thank you very much.  Please do
           
       5   submit your complete statement and your map that you
           
       6   have outlined in color as well. 
           
       7              Do you have questions? 
           
       8              MR. FRIERSON:  Mr. Thompson, could I ask you,
           
       9   do you work with both in-state and out-of-state banks as
           
      10   a redevelopment director. 
           
      11              MR. THOMPSON:  We work primarily with
           
      12   in-state banks.  
           
      13              MR. FRIERSON:  Could you just elaborate a
           
      14   little bit, contrast your experiences working with
           
      15   in-state versus out of state banks? 
           
      16              MS. SMITH:  Would you move the mike closer to
           
      17   you? 
           
      18              MR. THOMPSON:  Sure.  We haven't had much
           
      19   experience to out-of-state banks.  They don't market to
           
      20   us.  Where we do run into -- where we do work with them
           
      21   is a result generally of a developer bringing the
           
      22   out-of-state financing in toW.  Sometimes it is banks,
           
      23   sometimes it's insurance companies and other financial
           
      24   institutions.  But, for the most part, we rely on
           
      25   working with the institutions that are here that are
           
      26   headquartered here and with whom we can develop
           



                                                             468

       1   relationships and with whom our non-profits develop
           
       2   working relationships.  
           
       3              I have to tell you a brief story.  I was
           
       4   working with Bridge Housing on a housing development
           
       5   project, and we were negotiating and I said, "Well,
           
       6   what's in your commitment letter?"  And they said, "What
           
       7   commitment letter?  We just call them up and tell them
           
       8   what we need."  Now, it would be nice for all of us to
           
       9   have that kind of relationship and Bridge is a very
           
      10   large and experienced housing development group. 
           
      11              But what it said was that the corporate
           
      12   relationship that existed between Bridge Housing and
           
      13   that financial institution, it's the other big one in
           
      14   town, was such that they were able to do things to make
           
      15   projects move and get done that you wouldn't be able to
           
      16   do if you didn't have those kinds of senior executive
           
      17   kinds of relationships that are both formal and
           
      18   informal. 
           
      19              MS. SMITH:  Thank you very much for coming
           
      20   this morning and do submit your complete statements for
           
      21   the record.  You have until next Friday to do so, but
           
      22   the sooner you can do it the better.  Thank you.  
           
      23              (Recess taken.)
           
      24   
           
      25   
           
      26   
           





                                                                   469


         1            MS. SMITH:  I think we're ready for Panel 20.

         2   And my notes say that I should start with -- is it

         3   Mr. Serpan?

         4            MR. SERPAN:  Yes.  You want me to start?

         5            MS. SMITH:  Please.

         6            MR. SERPAN:  My name is Rhea Serpan and I'm the

         7   President and CEO of the San Francisco Chamber of

         8   Commerce.  And I appreciate this opportunity to speak on

         9   behalf of the Chamber regarding the merger of BankAmerica

        10   and NationsBank.

        11            Since its founding in 1904 in the city here,

        12   BankAmerica has been integral to the development of the

        13   business community in San Francisco.  The Bank has been a

        14   long-standing member of the San Francisco Chamber of

        15   Commerce.  In fact, A.P. Giannini was on its board and

        16   that involvement continues to this day.  BankAmerica has

        17   generously supported the Chamber's many activities,

        18   including providing resources to our business development

        19   programs and contributing both expertise and funding.  For

        20   instance, BankAmerica has contributed $250,000 over three

        21   years to SF Works, the welfare-to-work initiative created

        22   by the Chamber and the Committee on Jobs and United Way

        23   here in the city.

        24            BankAmerica has been a generous contributor to

        25   economic development projects, including a multi-year

        26   commitment to investment in the San Francisco Partnership,
 .

                                                                   470


         1   a public-private partnership launched by the Chamber to

         2   attract and retain business and jobs in San Francisco.

         3   And BankAmerica has been a strong supporter and

         4   contributor to the Bay Area Sports Hall of Fame Youth

         5   Fund, Business Arts Council, Business Volenteers for the

         6   Arts and Leadership San Francisco, all chamber programs.

         7            And throughout its history, BankAmerica has been

         8   involved and a responsible corporate participant in the

         9   San Francisco community.  BankAmerica recognizes that

        10   small businesses are the job creation engine here in our

        11   city and drive the economy and has made a substantial

        12   investment in San Francisco area firms, and currently the

        13   bank has small business loan commitments in the Bay Area

        14   that total $708 million.  And since 1990, the Bank has

        15   loaned 235 and a half million dollars to support the

        16   construction of 4,500 affordable housing units in the

        17   region.  And the bank has contributed 14 million in the

        18   past three years to arts, education and health and human

        19   services, including a $5 million commitment to the United

        20   Way.

        21            The Chamber fully expects BankAmerica to continue

        22   to play an important leadership role in our community.  We

        23   believe that as their business grows, and it will, that

        24   their corporate involvement will also expand.

        25            BankAmerica's merger with NationsBank along with

        26   the announced merger of Wells Fargo and Northwest Bank
 .

                                                                   471


         1   will reaffirm San Francisco as a national and global

         2   banking center.  BankAmerica is expected to take advantage

         3   of and fully participate in our region's growth and to

         4   benefit from the strategic advantages of doing business in

         5   San Francisco.  San Francisco is the center of a strong

         6   and growing Bay Area economy, and is the gateway to the

         7   Asian marketplace and the place where Silicon Valley does

         8   its banking.

         9            While there will undoubtedly be some job

        10   dislocation, new job opportunities are going to be created

        11   as a result of this merger.  And, of course, it's too

        12   early to tell and estimate with any accuracy exactly what

        13   the net effect might be on jobs, but I'm convinced that

        14   the combined strengths of the two institutions as they

        15   come together creates the potential for job growth that

        16   may not have otherwise been possible.  It is significant,

        17   I think, that the banks' combined corporate and investment

        18   banking headquarters are going to be here in

        19   San Francisco, that's an important part of the banking

        20   institution.

        21            The Chamber is proud of the strengths of our

        22   community and we're confident in the continued growth of

        23   our economy and we strongly believe that BankAmerica will

        24   continue to be a major contributor to both.  Thank you.

        25            MS. SMITH:  Thank you very much.  We'll go to

        26   Ms. Ferniza.
 .

                                                                   472


         1            MS. FERNIZA:  Thank you.  Good morning, my name

         2   is Sandra Ferniza and I'm President and CEO of the Arizona

         3   Hispanic Chamber of Commerce located in Phoenix, Arizona.

         4            The Chamber of Commerce is pleased to have the

         5   opportunity to testify on behalf of the proposed Bank of

         6   America and NationsBank merger.  In an era of decreasing

         7   public assistance to individuals of low and moderate

         8   income and small, women or minority-owned businesses,

         9   banks, with the encouragment of the Community Reinvestment

        10   Act and the conscious of its board members, are a major

        11   source of hope to those who dream of home or small

        12   business ownership.

        13            Institutions such as Bank of America have been a

        14   source, both directly and indirectly, of credit and

        15   capital to those who lack access to conventional financial

        16   services through innovative projects and community

        17   partnerships.  The current industry trend of bank

        18   consolidation poses serious questions for those of us who

        19   work with financial institutions in an effort to encourage

        20   investment, leveraging, financing and creation or

        21   preservation of jobs in less affluent communities.

        22   However, our experience with Bank of America has led us to

        23   include that the proposed merger will result in a

        24   continuation and/or expansion of the bank's commitment to

        25   serving poor and diverse communities.

        26            Bank of America has been an active member and
 .

                                                                   473


         1   strong corporate partner of the Arizona Hispanic Chamber

         2   of Commerce since 1980.  In addition, it was a founding

         3   member of Los Amigos de AHCC, a corporate advisory group

         4   that provides both financial and business value to the

         5   chamber and its small business members.  Bank of America's

         6   recognition and understanding and commitment to the

         7   growing Hispanic market is borne out in two key areas for

         8   our chamber.  One, in a publication known as DATOS, Focus

         9   on Arizona's Hispanic Market, of which the bank is a

        10   premier sponsor, and has reached an audience of

        11   non-believers about the potential Hispanic market, we are

        12   extremely grateful for that opportunity.  And, two,

        13   through our Minority Businesses Development Center which

        14   the bank has provided both financial and technical

        15   assistance to the mission of the greater Phoenix Minority

        16   Business Development Center which the chamber operates.

        17   Also, a member of the bank staff serves on our board of

        18   directors and its bank officers and staff regularly

        19   participate in chamber business seminars, host networking

        20   mixers to highlight procurement opportunities and serve as

        21   speakers and instructors in our business education series

        22   known as NxLevel and Su Plan de Negocio.  So they've put

        23   their money where their mouth is, not only in terms of

        24   dollars, but in terms of active participation with the

        25   chamber and its memberships.

        26            Bank of America has also demonstrated a
 .

                                                                   474


         1   commitment to diversity in the board room at all levels of

         2   management and in a unique bilingual customer service that

         3   has thrived in our valley called CuentaTel.  Through

         4   partnerships with organizations like others and ours, it

         5   supports training to consumers, business owners and others

         6   who play a promising and important role in developing the

         7   social and economic fabric of America.

         8            Most importantly to the chamber, the merger

         9   presents new opportunities for the local business

        10   community.  A nationwide network that has greater access

        11   to global financial markets is consistent with the growing

        12   presence of mutual customers seeking to retain and expand

        13   their business success and it is particularly important in

        14   Arizona as a border state.  It also presents greater ease

        15   of service for individual consumers whose mobility is a

        16   vital part of an expanding commodity and economy.

        17            The chamber expects the activities previously

        18   mentioned to continue after the merger of the two

        19   institutions.  I want to reiterate that, based on

        20   experience, we feel confident that the bank will not only

        21   continue its outstanding community service but also seek

        22   new ways to efficiently and effectively serve the needs of

        23   a diverse customer base, both large and small.  That

        24   commitment we feel has been assured through the pledge of

        25   the $350 billion to serve communities most in need.

        26            In addition, let me add that personally my
 .

                                                                   475


         1   husband and I have been Bank of America customers since it

         2   assumed responsibility for the former Western Savings &

         3   Loan Association and its Security Pacific institutions.

         4   That transaction convinced me that it's possible to

         5   survive and thrive from a change at Bank of America while

         6   maintaining a high level of customer service.  We are all

         7   of us resistant to change but we must look for the new

         8   opportunities that change brings us.  Thank you for your

         9   attention.

        10            MS. SMITH:  Thank you very much.  Mr. Tierney.

        11            MR. TIERNEY:  Presiding Officer Smith and panel

        12   members, thank you for this opportunity to provide

        13   testimony at this hearing.  My name is James Tierney and I

        14   have asked for this time to describe my very positive

        15   working experience with Bank of America staff in Portland,

        16   Oregon.  I'm the Deputy Director of Community Action Team

        17   in charge of community development.  We're a community

        18   based nonprofit anti-poverty agency serving three rural

        19   counties in northwest Oregon.  Like many community action

        20   agencies around the country, we provide a number of

        21   coordinated anti-poverty programs such as Head Start,

        22   child and family development programs, Low Income Energy

        23   Assistance and homeless assistance.  In the area of

        24   community development, we also assist our communities with

        25   the development and rehabilitation of affordable housing,

        26   affordable homeownership programs, single-family
 .

                                                                   476


         1   rehabilitation and community facilities development.

         2            My understanding of the Community Reinvestment

         3   Act is that a lender is expected to actively seek ways to

         4   meet the credit needs of its community.  As a community

         5   organizer working in a rural area, I find the communities

         6   to find themselves usually at populations no larger than

         7   10,000 persons.  In our three county service area, two of

         8   our communities are served by one bank based in the three

         9   county area.  All other commercial banking is done with

        10   banks which serve all or most of the state, usually many

        11   states.  Given the realities of the commercial banking

        12   industry in the 1990s, each of our communities must look

        13   outside the community for some or all of its banking

        14   needs.

        15            While working in our communities have been

        16   approached by local bankers representing several banks,

        17   with one exception, these bank officials have understood

        18   very little about community development.  Rather than

        19   offering useful partnerships, they have sought information

        20   and offered referral services.  Bank of America has been

        21   different.  In our community development work, no bank,

        22   local or otherwise, has supported our community

        23   development efforts like Bank of America.

        24            In the last eight years, I've arranged three

        25   loans with the help of Bank of America staff.  I've also

        26   arranged one with a statewide nonprofit bank consortium
 .

                                                                   477


         1   and one with a government agency.  The difference in

         2   support service is marked.  For me, the irony of these

         3   experiences is breathtaking.  I feel that I have had to

         4   fight tooth and nail with the nonprofit government agency

         5   to simply get good loans underwritten.  In these cases I

         6   felt that my lending partner was seeking to underwtie the

         7   transaction in a way that reduced my agency's development

         8   and operating cushions to such low levels that it would

         9   deny us sufficient capacity to continue our work.

        10            Working with the Portland Bank of America staff

        11   is an entirely different experience.  They appear to be

        12   actively planning for our future.  The bank staff has

        13   encouraged us to take on new roles increasing our

        14   efficiency and effectiveness.  During our campaign to

        15   organize and develop the capacity of other nonprofits

        16   working in our three county service area, we received bank

        17   support in the form of time, expertise and money.  The

        18   bank staff has taken a personal interest in the

        19   development and capacity of my agency and me personally.

        20   This has taken the form of scholarships, supportive

        21   information and advice.

        22            I cannot speak about any of the Bank of America

        23   CRA work except that which I've seen in Portland nor do I

        24   have any experience with NationsBank.  However, I can say

        25   the Bank of America and its Portland's staff has made a

        26   huge difference in our ability for us to do our work.
 .

                                                                   478


         1   Thank you.

         2            MS. SMITH:  Thank you.  I don't know how to

         3   pronounce your name.

         4            MS. HAUGER:  It's Hauger.

         5            MS. SMITH:  Ms. Hauger.

         6            MS. HAUGER:  Thank you.  Thank you for the

         7   opportunity to allow me testify for the Community Housing

         8   Resources of Arizona located in Phoenix on behalf of our

         9   experience with Bank of America, Arizona.  I'm Executive

        10   Director of Community Housing Resources of Arizona.  We're

        11   a small HUD approved housing counseling agency established

        12   in 1987 to promote fair housing and equal housing

        13   opportunity for residents of Phoenix.

        14            In 1990, we expanded our services to include

        15   pre-purchase counseling and affordable homeownership

        16   programs.  In the eight years since then, over 2100 low

        17   and moderate income families have completed our one-on-one

        18   counseling program and become homeowners.  And over 600

        19   have received downpayment closing cost grants.  On

        20   average, 27 families per month become homeowners taking

        21   part in our services.

        22            In order to make the dream of homeownership a

        23   reality for lower income and minority households,

        24   Community Housing Resources relies heavily on the support

        25   of financial institutions.  Over the last six years, Bank

        26   of America Arizona has been instrumental in our success by
 .

                                                                   479


         1   providing significant funding and management support.  We

         2   sincerely hope that the mutually beneficial partnership

         3   with the bank will continue after the merger is completed.

         4   Bank of America has recognized the value of pre-purchase

         5   counseling in preparing lower income households for

         6   homeownership by contracting with our agency to provide

         7   pre-purchase counseling for low income first-time home

         8   buyers.

         9            BofA has provided first mortgages for our

        10   clients, have given us generous grants to support our

        11   counseling program.  These grants not only have provided

        12   operating funds for us but they've also provided the very

        13   necessary matching funds needed to secure government

        14   grants for downpayment assistance programs and

        15   homeownership counseling.

        16            In addition to this generous financial support,

        17   BofA Arizona employees James Rayburn, Juan Salgado and

        18   Darryl Tenenbaum has unselfishly helped and guided our

        19   small agency by providing hundreds of hours of management

        20   service.  They have also served on our board of directors

        21   and provided technical assistance which has ensured that

        22   we have been able to meet our goals and missions.

        23            In addition, as a director since 1990, James

        24   Rayburn has saved our organization thousands of dollars by

        25   providing countless hours of pro bono legal advice.

        26            Community Housing Resources strives to provide
 .

                                                                   480


         1   homeownership opportunities for underserved populations,

         2   including persons with disabilities and ethnic minority

         3   households.  Over 60 percent of the clients that we serve

         4   are Hispanic and more than one-third of all of our

         5   one-on-one counseling sessions are conducted in Spanish.

         6            Our main concern with the proposed merger is that

         7   our low-income and minority clients will be underserved by

         8   the creation of such a large bank.  We are, however,

         9   encouraged by recent articles describing Nationsbank's

        10   increased efforts to serve the growing Hispanic community

        11   and we trust that those efforts will extend to all

        12   traditionally underserved communities in Arizona.

        13            We support the merger with the expectation that

        14   the current level of support for our organization,

        15   including the employee involvement from the bank, will

        16   continue and that the new bank will provide increased

        17   homeownership opportunities for the low-income and

        18   minority communities we serve.  Thank you.

        19            MS. SMITH:  Thank you very much.  I have a

        20   question for you on the homeownership counseling.  Does

        21   your organization participate in the application process

        22   or is that handled by bank personnel?

        23            MS. HAUGER:  That is handled by bank personnel.

        24            MS. SMITH:  So how does your operation work,

        25   then, on the counseling side?

        26            MS. HAUGER:  What we do is act as though we are a
 .

                                                                   481


         1   lender as far as looking at all the information on the

         2   income, debt, credit and cash resources of our clients.

         3   We look at that, we advise them on their ability to

         4   qualify for a mortgage, whether we think that they can

         5   meet minimum lender requirements.  We give them

         6   information on a number of types of loans that are

         7   available showing them what it would cost them, what they

         8   can afford getting that type of loan.  And also, you know,

         9   what the benefits might be from one type of loan to

        10   another.  Based on that, then our clients make their

        11   decision on the type of loan they would like.  And we

        12   prepare all the information for them to take to the

        13   lender.

        14            MS. SMITH:  And you direct them to several

        15   lenders or --

        16            MS. HAUGER:  Yes.  So they, basically, make the

        17   choice on what type of product they want and what lender

        18   they would like to go to.

        19            MS. SMITH:  Thank you.  Question?  Any other

        20   questions?  Well, thank you very much for coming this

        21   morning.  And it looks as if we're ready for the next

        22   panel.

        23            Okay, I think we're ready to start.  And we'll

        24   start with Mr. Herald.

        25            MR. HAROLD:  Mr. Harold is still out here.

        26            MS. SMITH:  Oh.  Is there a chair for him?
 .

                                                                   482


         1            MR. HAROLD:  I suppose you would like me to begin

         2   now.  Thank you.

         3            MS. SMITH:  Yes, if you would pull the mike

         4   toward you.

         5            MR. HERALD:  My name is Michael Herald and I'm

         6   the Executive Director of Housing California.  We are a

         7   statewide coalition of affordable housing advocates,

         8   particularly nonprofit housing institutions, homeless

         9   advocates and those who advocate for the poor and for

        10   adequate public benefits.

        11            We are, as I said, a statewide organization.  We

        12   operate out of Sacramento, we represent the nonprofit

        13   trade associations, housing trade associations, that are

        14   around the state.  Our organization does a number of

        15   things that are important to the field of nonprofit

        16   housing.

        17            First of all, we advocate in the state

        18   legislature for additional subsidy dollars for affordable

        19   housing.  This year, we were successful in increasing the

        20   state low-income housing tax credit by $15 million pushing

        21   that figure up to $50 million.  We have an additional $35

        22   million in the state budget for affordable housing

        23   programs, the first new funding for housing this decade.

        24   And we've also been the principal sponsors and advocates

        25   for making sure the national guard armories are kept open

        26   in the winter months for homeless persons.
 .

                                                                   483


         1            We also sponsor the lowest largest low-income

         2   housing conference that we're aware of in the country, it

         3   draws over a thousand people annually to Sacramento to

         4   hear over -- to attend over 48 workshops during a lobbying

         5   visit to the state capitol.  We have several major keynote

         6   speakers who always come in.  We provide over 200

         7   scholarships to low-income persons and people of color so

         8   that they can come from far distances and attend our

         9   conference.  We pay all their costs.  In 1996, we

        10   conducted a voter registration drive that registered over

        11   32,000 low-income and homeless persons on sites all over

        12   the state.

        13            Lastly, we have been one of the principal

        14   advocates in the state over the last five years for

        15   increasing community investment by corporate -- by

        16   corporations.  Specifically, we have been very active in

        17   organizing and encouraging more community investment by

        18   insurance companies and we helped to create the California

        19   Organized Investment Network which is a pilot project

        20   operating out of the State Department of Insurance which

        21   has already generated over $40 million in new investment

        22   in California, and we are working closely with them to

        23   establish an intermediary called Impact Capital which will

        24   actually generate even more, up to $400 million over the

        25   next several years for affordable housing and community

        26   economic development.
 .

                                                                   484


         1            The members of our organization are very

         2   concerned about the merger of Bank of America and

         3   NationsBank.  While we don't come here today to

         4   specifically oppose the merger, we do want to share with

         5   you our concerns.

         6            The bank has been -- the CRA bank in California

         7   has been an absolutely crucial player to the development

         8   of nonprofit organizations in California.  They have

         9   funded and promoted and provide investment dollars for a

        10   number of activities.  I'll just touch on a few just to

        11   give you an example of some of the things they have worked

        12   on and have helped with.

        13            The Nonprofit Housing Association of Northern

        14   California located here in San Francisco has been the

        15   recipient of several grants, one of which was a major

        16   project to help which the bank assisted in funding which

        17   has been a very big project on NIMBE, the Not In My

        18   Backyard Experts, assisting community groups and nonprofit

        19   housing developers to overcome barriers and opposition the

        20   neighbors have and they've developed a lot of really

        21   profound materials that are being used all over the state.

        22            The bank has also been very helpful in promoting

        23   diversity in the nonprofit housing community.  They have

        24   funded grants to both the Nonprofit Housing Association

        25   and the California Coalition for Rural Housing, that I'm

        26   aware of, that have promoted diversity in the nonprofit
 .

                                                                   485


         1   housing community.  Each year they provide funding and

         2   those organizations place people of color at nonprofit

         3   organizations and really encourage their development in

         4   the nonprofit world.

         5            Other organizations like the Southern California

         6   Association of Nonprofit Housing have also benefited in

         7   similar ways.  The bank has been very supportive of them

         8   over the years.  They have been a very big player in

         9   marshaling more resources, subsidies, if you will, to

        10   build more affordable housing in Los Angeles.  The same is

        11   true with the Federation for Nonprofit Housing in

        12   San Diego, the bank has been there and has been a partner

        13   in this work with them.

        14            The California Coalition for Economic

        15   Development, likewise, they've been our partners in

        16   working to increase investment by insureds and they have

        17   also been benefited by the bank and have been constantly

        18   supported and helped through working on the issues that

        19   folks in the economic development world are concerned

        20   about.

        21            And I guess the way we would capture this whole

        22   thing is that the CRA bank has been critical, it's helped

        23   us to create partnerships.  We talked for many years about

        24   how we could create public-private partnerships.  In the

        25   last decade, the CRA bank has been the master of doing

        26   that.  They have been in every one of our conferences,
 .

                                                                   486


         1   they are virtually ubiquitous, you cannot turn around

         2   without seeing a BofA CRA person at the conferences

         3   working with nonprofit organizations.  They have deep and

         4   strong relationships built on real business relationships.

         5            Lately, we have even seen them increasingly hire

         6   out of the nonprofit world and hire to the bank.  And so

         7   there's such a cross-fertilization now going on between

         8   what the CRA bank does and what our nonprofit

         9   organizations in California do, that in some respects, I

        10   mean, when I go and meet people in the CRA bank, I knew

        11   them for years when they were with nonprofit

        12   organizations.  We all speak the same language.

        13            Just to sum up, three things that we're asking

        14   the Federal Reserve to do.  One is we're very concerned

        15   that NationsBank will not have the same relationship with

        16   our California nonprofits that we've experienced and

        17   enjoyed to date.  Particularly worried that there's not a

        18   long-term commitment and a firm commitment to funding

        19   multi-family housing.  And we really want the Federal

        20   Reserve to closely examine and make sure that NationsBank

        21   continues the work that the CRA bank has done and build on

        22   the trust that we have.

        23            Second, we are discouraged and concerned that

        24   there's not a greater level of charitable giving going to

        25   nonprofit organization that sponsor activities.  Likewise,

        26   we are concerned that there's not enough charitable giving
 .

                                                                   487


         1   going to the state and regional organizations which are

         2   sponsoring the activities that I described above.

         3            And then, lastly, I just wanted to say that

         4   California's needs, housing needs, are profound.  We have

         5   seen a series of recent studies that have come out

         6   recently that are describing -- that we have the worst

         7   rental market in the county.  Nine of the twelve worst

         8   homeownership markets.  And we would strongly encourage

         9   the bank to deepen their commitment beyond the $70 billion

        10   that they've committed to California.  NationsBank coming

        11   in and promoting the same thing, even though the size of

        12   the bank has doubled, is not appropriate.  Thank you.

        13            MS. SMITH:  Thank you very much.  Ms. Raucher.

        14            MS. RAUCHER:  Thank you very much.  My name is

        15   Deborah Raucher, and I'm with East Bay Housing

        16   Organizations.

        17            East Bay Housing Organizations is a coalition of

        18   affordable housing advocates in Alameda County.  Our

        19   membership of over 130 individuals and organizations

        20   represents nonprofit developers who create affordable

        21   housing and others in the affordable housing fields.

        22            My organization provides advocacy and education

        23   around the issue of affordable housing, including a

        24   campaign to educate people about the benefits of

        25   affordable housing.

        26            It is no secret that in the Bay Area housing
 .

                                                                   488


         1   costs are skyrocketing and affordable housing is becoming

         2   more and more difficult to find.  At developments in

         3   Alameda County, families must wait years in order to get

         4   access to affordable housing.  And as the federal

         5   government shrinks from its role in providing affordable

         6   housing, many seniors, families and people with

         7   disabilities are at risk of losing their housing,

         8   exacerbating the already existing crisis.

         9            In the East Bay, as in many other regions,

        10   nonprofit community-based developers have been at the

        11   forefront of addressing this need.  Nonprofit developers

        12   have created and maintained thousands of affordable units

        13   in Alameda County.  During the past five years, over 2500

        14   new affordable rental units have been created throughout

        15   the county.

        16            These developments are a vital asset to our

        17   community and house our senior citizens, people with

        18   disabilities, low-income working families, including our

        19   teachers, day-care workers, retail workers and, of course,

        20   our children.  Such developments are crucial, as well, to

        21   neighborhood revitalization efforts and stabilizing

        22   neighborhoods.

        23            For example, in East Oakland we've seen

        24   affordable housing developments revitalize neighborhoods

        25   and provide needed services, such as child care, health

        26   services and employment training.
 .

                                                                   489


         1            Time and time again, I've heard stories of

         2   families who are able to improve their employment

         3   situation, save money for the purchase of a home, see

         4   their children's performance in school improving as a

         5   result of having access to safe, decent and affordable

         6   housing.

         7            A tremendous need, however, still exists and more

         8   affordable housing is vitally important.  And this cannot

         9   happen without the participation of financial

        10   institutions.

        11            Bank of America, as one of the largest financial

        12   institutions in the region, has been an absolutely vital

        13   component in this equation in our communities and the loss

        14   of the resources provided by Bank of America for these

        15   purposes would be devastating to the creation of more

        16   affordable housing.

        17            The reason that I'm here today is that I'm very

        18   concerned about the lack of specificity and targeting in

        19   NationsBank's recently announced commitment to CRA, as

        20   well as their lack of a written commitment.  And I would

        21   like to urge you to consider requiring NationsBank to make

        22   a more specific and written commitment to their CRA

        23   requirements as a condition of the merger.

        24            Some of the examples of things which Bank of

        25   America has provided in this community has been their

        26   Community Development Bank where people have developed an
 .

                                                                   490


         1   expertise about the needs of California's communities.

         2   I'm concerned that a bank coming from outside the region

         3   won't have the same expertise about the issue of

         4   affordable housing and the specific needs of California

         5   communities.

         6            In addition, the Community Development Bank has

         7   been a vehicle for many developers in our county to access

         8   money through the Affordable Housing Program operated by

         9   the Federal Home Loan Bank.  There's been no commitment by

        10   NationsBank to continue this program.

        11            Other important programs that Bank of America

        12   operates that are at risk for being lost is the At Risk

        13   HUD Preservation Housing Projects.  Expiring HUD projects

        14   present an extremely serious threat to our communities'

        15   affordable housing stock and a loss of this resource could

        16   have broad negative impacts on our communities.

        17            In addition, there's been no commitment by

        18   NationsBank to prioritize nonprofit housing developers.

        19   In Alameda County, nonprofit developers have a level of

        20   expertise and commitment to providing affordable housing,

        21   and we would hope that NationsBank would make a commitment

        22   to utilize this resource.

        23            Another concern that I have is the potential for

        24   NationsBank to bring their own Community Development

        25   Corporation into our communities which will conflict with

        26   our already highly successful nonprofit development
 .

                                                                   491


         1   community and which will not be able to understand and

         2   address the needs of our communities as our local CDCs are

         3   able to do.

         4            Another major concern that I have is the risk of

         5   losing Bank of America's corporate giving program.

         6   Nonprofits in my community are doing vital and important

         7   work to help low-income communities, and a lot of these

         8   organizations, my own included, are dependent on

         9   charitable contributions.

        10            My own organization receives funding from Bank of

        11   America Corporate Charitable Giving Program for our

        12   operations to educate the general public about the need

        13   for affordable housing and the benefits for which

        14   affordable housing provides to communities.  And as

        15   resources for our work become more and more scarce, the

        16   loss of this would be devastating to nonprofit

        17   organizations in Alameda County.

        18            California's communities are unique and there

        19   needs to be a specific commitment which addresses the

        20   particular needs of our communities.  I urge you to

        21   consider not allowing this merger unless specific

        22   commitments are made by NationsBank.  Not only in the area

        23   of affordable housing finance and corporate contributions

        24   but in targeted home purchase lending, small business

        25   lending, community economic development, and consumer

        26   issues which affect low-income and minority communities.
 .

                                                                   492


         1   Thank you very much.

         2            MS. SMITH:  Thank you.  Ms. Haws.

         3            MS. HAWS:  Good morning.  This testimony is

         4   submitted on behalf of Sally Gallegos, Executive Director

         5   for United Indian Nations which is a job training and

         6   placement program that serves Native Americans, young

         7   adults 18 and over in the East Bay.

         8            United Indian Nations also has a community

         9   development corporation which is a nonprofit developer of

        10   housing and employment opportunities that are true to

        11   Native American cultures and values to promote the

        12   economic and social well-being for Native Americans in the

        13   San Francisco Bay Area.

        14            United Indian Nations has created an urban Indian

        15   initiative to acquire and develop property on closing

        16   military bases and other surplus federal lands that

        17   directly connects low-income communities to housing,

        18   employment and revenue generating opportunities.

        19            This initiative is a model development mechanism

        20   that can be replicated by urban and rural and Native

        21   American organizations to mitigate negative impacts on our

        22   community from historical federal policies.

        23            The Bureau of Indian Affairs Relocation Program

        24   initiated in the early 1950s and continued until the early

        25   '70s created dramatic changes in the number and character

        26   of American Indian populations in urban centers.  As a
 .

                                                                   493


         1   direct result of these federal programs, more than 85,000

         2   American Indians moved from reservations to urban areas

         3   and many others followed to join their extended families

         4   or find better employment or educational opportunities.

         5            According to the 1990 U.S. Census, which

         6   undercounts Indian people overall, more than 65 percent of

         7   American Indians now live in urban areas.  In addition,

         8   the urban Indian populations have historically been

         9   excluded from federal, state and foundation funding

        10   targeted for Native American projects located on or linked

        11   to -- excuse me, linked to the provision of service or

        12   products to reservations rural communities or tribal

        13   governments.

        14            The San Francisco Bay Area Native American

        15   community is one of the largest and fastest growing in

        16   Indian populations in the country today.  The 1990 census

        17   reported more than 40,000 Indians in the Bay Area,

        18   although we realize this number is closer to 60,000.

        19   Although it's one of the smallest ethnic minority groups

        20   in the area, it's the third largest concentration of urban

        21   Indians in the United States.  The demographic and

        22   socioeconomic stresses of the Bay Area Indian community

        23   reflects the history that brought Indians to this area.

        24   These conditions are exasperated and the following

        25   socioeconomic and psychological problems face our

        26   community.
 .

                                                                   494


         1            It is the fastest growing urban Indian population

         2   in the country today.  The population has increased more

         3   than 600 percent since 1960.  Following from this, the Bay

         4   Area has a disproportionate number of young people,

         5   approximately 40 percent of our population are under the

         6   age of 25.  Considering that suicide is the second leading

         7   cause of death for Indian adolescents, the need to

         8   meaningfully engage this growing population in moving

         9   towards family self-sufficiency is our highest priority.

        10   In order to engage these individuals, we have to raise

        11   educational levels.

        12            Bay Area Indians have considerably lower

        13   educational attainments than the general population.  In

        14   1990, nearly one in four American Indians had not earned

        15   their high school diploma.  Unemployment rates for

        16   American Indians are higher than those of other Bay Area

        17   residents.  In 1990, nine percent of the community was

        18   unemployed, as opposed to five percent for the general

        19   population.  Employed Bay Area American Indians, about

        20   20,000 in 1990, tended to occupy blue-collar positions and

        21   very few were managers.  Overall, the Bay Area American

        22   Indian population has a dramatically low average income.

        23   The per capita income in 1990 was $14,000, compared with

        24   19,600 for the area as a whole.  The proportion of

        25   American Indian families living in poverty is 11 percent,

        26   was nearly twice as high for all Bay Area families at six
 .

                                                                   495


         1   percent.  Additionally, more than one-third of Indian

         2   households headed by women were living in poverty, 35

         3   percent, compared to less than 20 percent for the total

         4   population.

         5            A low proportion of Bay Area American Indian

         6   families own property and the denial rates for American

         7   Indian mortgage lending has risen steadily.  Only 40

         8   percent of American Indian households owned homes in 1990,

         9   compared to 57 percent of all Bay Area households.

        10            United Indian Nations Community Development

        11   Corporation currently has three exciting projects in the

        12   Bay Area.  Transitional housing at the Alameda Naval Air

        13   Station.  We have an American Indian Museum and Cultural

        14   Center which is a regional educational museum at the Oak

        15   Knoll Naval Hospital.  And the United Oakland Eco Parks, a

        16   community driven redevelopment project for 220 acres at

        17   the Oakland Army Base.

        18            We are not here to oppose the merger between Bank

        19   of America and NationsBank.  But in order for United

        20   Indian Nations to continue to revitalize our community and

        21   our neighbors in the East Bay, we need to have continued

        22   access to Bank of America's level and range of

        23   contributions for nonprofit infrastructure and continued

        24   support for projects that target very low-income urban

        25   communities.

        26            The Bank of America has been a positive CRA force
 .

                                                                   496


         1   in California institutionalizing community reinvestment as

         2   a business through the Community Development Bank.

         3   Considerable expertise about community reinvestment as a

         4   business and about the needs of the California community

         5   has come to be housed at the Community Development Bank.

         6   Bank of America's Rural Initiative 2000 has targeted

         7   funding to reservations and rural American Indian projects

         8   bringing significant new benefits to those underserved

         9   communities.

        10            A merger with NationsBank should augment the

        11   current benefits to low-income communities in California

        12   and bring additional funding and range of services for

        13   urban initiatives without reducing the current grassroots

        14   service provided by Bank of America.  Thank you.

        15            MS. SMITH:  Thank you.  Ms. Hill.

        16            MS. HILL:  Good morning.  I'm Reverend Terry

        17   McCray-Hill and I'm the pastor of a parish community that

        18   has felt the pressures of the closure of a branch of Bank

        19   of America that has been in their community for over 75

        20   years.

        21            The significance of my testimony today is neither

        22   pro nor con but is merely a statement from one through a

        23   continuum of ministry in that community has heard the

        24   complaints of people from low to middle income within a

        25   distressed neighborhood that are anguished by the lack of

        26   an insured depository institution providing full-scale
 .

                                                                   497


         1   financial transactions after 75 years of continued

         2   services.

         3            Just for a brief synopsis of what our community

         4   looks like, you've probably heard testimony regarding this

         5   neighborhood over your course of proceedings, but it is

         6   the OMI, which stands for Oceanview Merced Heights in

         7   Ingleside.  This community is a potpourri of over 20,000

         8   low and middle class residents and has traditionally been

         9   underserved due, in part, to being included in the

        10   community immediately adjacent to them which is

        11   comparatively wealthy in proportion.

        12            Based on the 1990 census, our data indicates that

        13   OMI residents are 41 percent African American, 26 percent

        14   Asian-Pacific Islanders, 16 percent Caucasian, 11 percent

        15   Latino, and 6 percent others.  If we look at that in terms

        16   of the children and youth in that community, one out of

        17   every four persons is a child under the age of 18.

        18            Many of the residents and merchants located

        19   within this community were severely inconvenienced by the

        20   closure of the Ocean Avenue/Faxon branch of BofA.

        21   Discussions ranging from the disadvantages of a

        22   full-service financial institution in the life of the

        23   community, even to those discussions concerning life after

        24   closure, have persisted since the announcement of a

        25   possible closure in 1997.

        26            My purpose for being here today is merely to say
 .

                                                                   498


         1   that, though distressed, this community has found unity

         2   and hope within its diverse ethnic and socioeconomic

         3   mixture and would benefit greatly from programs sponsored

         4   by BofA that provide stress, economic, development and

         5   other ways of mitigating any perceived differences in risk

         6   and return between low income, minority and distressed

         7   neighborhoods and other neighborhoods as referenced in the

         8   Community Reinvestment Act of 1997.

         9            What can we do and what shall we look forward to

        10   Bank of America continuing to provide?  We look forward to

        11   programs that stress investment for low income, that

        12   stress how to save so that we now see capital gains, as

        13   opposed to just merely looking for a financial institution

        14   as a place for the cash and return of checks.

        15            We hope that the token and pledge made by Bank of

        16   America will be carried out invisible in this community

        17   should the merger occur between NationsBank Corporation.

        18            I thank you for your time and I look forward to

        19   seeing the fruits of your labor in collaboration with

        20   community, not only across California and this nation but,

        21   in particularly, in OMI.  Thank you.

        22            MS. SMITH:  Thank you very much.  Mr. Bivens.

        23            MR. BIVENS:  Good morning.  Presiding officer and

        24   members of the panel, my name is Bob Bivens and I am a

        25   member of the National Board of Directors and President of

        26   the Stockton, California branch of the National
 .

                                                                   499


         1   Association for the Advancement of Colored People.

         2   Generally known as the NAACP.

         3            I appreciate the opportunity to come before this

         4   body today to give testimony expressing concern and

         5   opposition for the public record regarding the proposed

         6   acquisition of Bank of America Corporation by NationsBank

         7   Corporation.  And to quote our chairman of the Board of

         8   Directors, the Honorable Julian Bond, bank mergers need to

         9   be opposed when banks do not address the specific needs of

        10   minorities and the poor.

        11            The NAACP was founded in 1909 and we are the

        12   oldest civil rights organization in America with over 200

        13   units in California and over 1700 units across this nation

        14   and in several countries abroad.  The NAACP has a long

        15   history of fighting for civil rights, economic and

        16   community development and self-sufficiency for African

        17   Americans and other ethnic minority groups and all

        18   disenfranchised people in America.

        19            While we remain focused on our founding

        20   principles, we have in recent years taken a more

        21   aggressive and proactive approach to achieving economic

        22   and community empowerment.

        23            Some of our concerns are the $350 billion

        24   announcement, while is an impressive sum of money,

        25   nonetheless, it lacks the specificity and targeted lending

        26   service and investment components needed in a full
 .

                                                                   500


         1   community reinvestment commitment.  More specifically, it

         2   does not address the critical needs of the California

         3   communities.

         4            The banks have refused to make specific and

         5   meaningful written commitment to California.  They have

         6   verbally told me and the national board -- as a national

         7   board member representing the NAACP for the State of

         8   California and the Stockton branch and members of the CRC

         9   in meetings that they are allocating approximately $70

        10   billion to California, the same 70 billion already

        11   allocated to this state under the 1997 Bank of America

        12   $140 billion lending goal.  In other words, the banks have

        13   not committed one additional penny to California and that

        14   will be the state that's most impacted by this merger,

        15   that will lose the headquarters of the largest bank and

        16   will see the state's -- Bank's successful community

        17   reinvestment program dismantled.

        18            No written commitment to provide specific

        19   products and services targeted at the unique needs and

        20   priorities of California's diverse regions and people.

        21            There is no written commitment to establish a

        22   floor goal, or targeting, for lending in this area and

        23   specifically the Central Valley of California for small

        24   businesses nor any commitment to target loans or lines of

        25   credit of 50,000 or less to small minority-owned

        26   businesses.
 .

                                                                   501


         1            There is no written commitment to prioritize

         2   nonprofit housing developments which will keep housing

         3   developments at the greatest level of affordability for

         4   the longest period of time.

         5            NationsBank has a CDC which develops its own

         6   housing developments.  The California branches of the

         7   NAACP are concerned that, were it to function in a similar

         8   manner here in California, it would conflict directly with

         9   the state's thriving infrastructure of nonprofit housing

        10   developments.  In negotiating meetings with the banks, the

        11   California State Conference of the NAACP and CRC members

        12   have requested that NationsBank only do investment and

        13   lending but no development in California.  NationsBank has

        14   categorically refused to make such a commitment.  Although

        15   the NAACP has an ongoing relationship with NationsBank

        16   with our Community Development Resource Centers, this has

        17   no bearing on California and Bank of America has not been

        18   agreeable to establish a similar type program.

        19            There's no written commitment to continue Bank of

        20   America's program of appointing a liaison on community and

        21   fair housing issues.

        22            There's no written commitment to develop a

        23   program to provide venture capital to minority-owned

        24   businesses, especially those located in the distressed and

        25   rural areas of California.

        26            There's no evidence to adopt a commitment to any
 .

                                                                   502


         1   written goals or purchasing a certain percentage of goods

         2   and services consumed in California's minority-owned

         3   vendors in California.

         4            I'm going to skip over a lot of this, I'll be

         5   submitting it to the record.  Regarding the proposed

         6   acquisition of Bank of America Corporation, the NAACP

         7   California State Conference of Branches and myself as an

         8   elected member of the board of directors from California

         9   stand ready as resources to ensure that certain goals are

        10   met and matters are not overlooked if a merger of the two

        11   institutions goes forward.

        12            We are extremely concerned about the consumer

        13   protection, competition and economic expansion.

        14   Successful and effective mergers are to lower costs,

        15   improve product quality or enhance efficiencies.  The

        16   proposed new bank's commitment of 350 billion in community

        17   development lending and investment over the next ten years

        18   is an indication of an expected enhanced delivery of

        19   services resulting from a merger.

        20            350 billion represents the largest community

        21   development commitment ever announced by a financial

        22   institution.  This is an opportunity for organizations

        23   like the NAACP to challenge this bank and an opportunity

        24   for the new bank to live up to the bank's chartered role

        25   as an economic leader in the communities.  Again, thank

        26   you for the opportunity to appear before you today.
 .

                                                                   503


         1            MS. SMITH:  Thank you very much.  Mr. Prince.

         2            MR. PRINCE:  Chairperson Smith, members of the

         3   board, thank you for the opportunity to testify today.

         4            My name is Chuck Prince, I'm the Executive

         5   Director of the Southeast Idaho Council of Governments.

         6   I'm not from California -- actually, I was raised in

         7   California but I'm one of the few members of the panel

         8   today that are here that isn't from a California

         9   organization.  I'm here today representing the National

        10   Association of Development Organizations, NADO.

        11            I'm here to express NADO's conditional support

        12   for the proposed merger.  NADO is a national association

        13   of regional development organizations serving rural and

        14   small metropolitan communities throughout America.  The

        15   association, a public interest group founded in 1967,

        16   provides its members with training, information and

        17   representation and has been a leader in promoting the

        18   interests of America's frequently forgotten small towns

        19   and rural regions.

        20            Regional development organizations are

        21   multi-county service delivery providers that pool

        22   otherwise thin local resources across a region and are

        23   catalysts for cooperation between citizens and the public

        24   and private sectors.  Most of America's rural towns --

        25   rural areas and small towns which are home to over 77

        26   million people are sreved by regional development
 .

                                                                   504


         1   organizations.  One of the most important functions of

         2   these organizations is capitalizing and managing revolving

         3   loan funds that serve the credit needs of small high risk

         4   businesses unable to obtain loans on their own for private

         5   commercial lenders.  Often, these revolving loan funds are

         6   the only available non-commercial source of credit, so

         7   they play an important role in local economic development.

         8            This brings me to the focus of our concerns and

         9   our conditioned support for the proposed merger.  The most

        10   compelling reason we feel this merger should be approved

        11   is the $350 billion ten year commitment to community

        12   development lending made by NationsBank/Bank of America on

        13   May 20, 1998.  Simply put, this commitment is

        14   extraordinary and will have a long-reaching impact both in

        15   the community served by the merged bank and in

        16   establishing a benchmark for future bank mergers.

        17   However, even with the $350 billion commitment, we feel

        18   the merger should be approved with very specific

        19   conditions.

        20            First, that the Bank of America Community

        21   Development Bank be retained and expanded in both mission

        22   and function.  The Community Development Bank is unique.

        23   Its vision statement which reads, in part, to support

        24   community growth and prosperity by being the catalyst for

        25   or by forming public/private partnerships for funding, has

        26   led directly to a work program which loaned over $560
 .

                                                                   505


         1   billion -- excuse me, $560 million for affordable housing

         2   in 1997.  The Community Development Bank's great success

         3   is attributable to its outreach to nonprofit housing

         4   development network as a pool of partners and borrowers.

         5   And recognizing that the affordable housing lending

         6   process requires specialized skills, many of the Community

         7   Development Bank's 300 staff were recruited from this

         8   nonprofit network.  The NationsBank/Bank of America

         9   Corporation $350 billion commitment includes $115 billion

        10   for affordable housing.  The only logical steward and

        11   conduit for these funds is the Bank of America Community

        12   Development Bank.

        13            Two, using the Bank of America Community

        14   Development Bank's affordable housing development

        15   activities as a template, the merged bank should create an

        16   entity dedicated solely to community economic development.

        17   Just as the Community Development Bank has reached out to

        18   the nonprofit housing development corporations for

        19   affordable housing partnerships, this new entity should

        20   reach out to the community economic developing network,

        21   including regional development organizations, for business

        22   and job creation ventures.  Only by making an

        23   organizational and structural commitment to the community

        24   economic development will the merged banks' actual lending

        25   and investments come close to matching the promises of its

        26   May 20th, 1998 press release.
 .

                                                                   506


         1            Three, we commend the NationsBank/Bank of America

         2   $10 billion commitment to rural America.  We ask that the

         3   purposes of this rural pool be sufficiently broad to

         4   include financing for community facility and

         5   infrastructure improvements.  Many small cities, special

         6   districts and counties often find it difficult to finance

         7   city halls, jails, water and sewer systems, community

         8   centers and streets.  Participation of the new BankAmerica

         9   in meeting these credits needs would be a valued

        10   contribution in efforts to better rural America.

        11            Four, the merged bank has also pledged $180

        12   billion for small business lending and $25 billion for

        13   economic development.  To say that these are substantial

        14   amounts of needed capital is a gross understatement.

        15   However, we're greatly concerned that the lion's share of

        16   these funds will be used for government insured loans.

        17   While these loans are an important tool in job creation

        18   efforts, they truly represent little risk to the bank and

        19   only serve a very narrow spectrum of the needs of the

        20   small business credit continuum.

        21            In order for these funds to have greatest impact,

        22   we believe a large portion of these funds should be

        23   targeted towards direct loans to higher risk borrowers

        24   including business start-ups, investments in and grants to

        25   revolving loan funds of regional development

        26   organizations, creation of an accessible secondary market
 .

                                                                   507


         1   for loans made by development organizations through the

         2   revolving loan funds, creation of a set-aside for small

         3   business lending and investment in rural and small

         4   metropolitan communities for ventures of any size.

         5            A recent NationsBank/Bank of America publication

         6   calls for only making loans to ventures creating more than

         7   25 jobs in rural or lower and moderate income communities.

         8   This limitation is artificial and simply doesn't reflect

         9   the job creation activities in rural America where three

        10   and four employee ventures are the rule and 25 employee

        11   ventures the major exception.

        12            And four, the development of venture capital

        13   pools at regional development organizations and other

        14   regional multi-state intermediaries.

        15            Only by adding these higher risk activities in

        16   with the safety of government insured loans will the

        17   merged bank begin to approach meeting the credit needs of

        18   small world businesses.

        19            In conclusion, Chairperson Smith, NADO

        20   conditionally supports this merger.  As stated at the

        21   outset, a $350 billion commitment to community development

        22   lending and investment is unprecedented.  However,

        23   translating funding commitment to real impact requires a

        24   focused plan of action.

        25            This plan should contain, one, retention of the

        26   Bank of America Community Development Bank.  Two, creation
 .

                                                                   508


         1   of an equivalent to the Community Development Bank

         2   focusing on community economic development.  Three, a

         3   vision of the community development needs of rural

         4   America's broad enough to include infrastructure finance.

         5   And four, an approach to small business and economic

         6   development lending that features a rural set-aside and a

         7   mix of both government insured and non-traditional higher

         8   risk loans and investments.

         9            Thank you for the opportunity to testify today.

        10            MS. SMITH:  Thank you very much.  Questions?

        11            MR. FRIERSON:  I'd like to thank all the

        12   panelists for coming here and giving us this very

        13   important information, and to remind you that if you do

        14   have written statements you can submit them for the record

        15   at the table outside , and we'll make sure they're

        16   included as part of the record, it will be reviewed in

        17   this application.  Thank you very much.

        18            MS. SMITH:  We'll first have David Noguera

        19   speaking for Mayor Elihu Harris, Mayor of Oakland.

        20            MR. NOGUERA:  Thank you.  On behalf of the Mayor

        21   of Oakland.  As the mayor of a city where the vast

        22   majority of the population consists of families of color

        23   and is in the shadow of the largest financial institution

        24   in California, I would like to express some of my concerns

        25   regarding the merger with an institution that will become

        26   an absentee landlord for all of Oakland.
 .

                                                                   509


         1            Community reinvestment and economic redevelopment

         2   must be more than a national pledge.  To be meaningful,

         3   there must be specifics for each affected community,

         4   particularly communities that have historically been

         5   underserved or redlined such as Oakland.

         6            In California today, many financial institutions

         7   have made specific pledges and set specific goals for

         8   minorities and women for lending, for contracts and for

         9   charitable contributions.  I am concerned that NationsBank

        10   is unwilling to do so.

        11            Historically, our city and minority communities,

        12   in particular, have been the object of general promises

        13   that have failed to produce results.  I'm also concerned

        14   that the prestigious local community groups as well as

        15   national minority organizations that know the work of

        16   NationsBank, such as the National Black Chamber of

        17   Commerce, the National Black Business Council and the

        18   Asian Business Association and the Latin Business

        19   Association, have all criticized this proposed measure due

        20   to lack of specificity for underserved communities.  I am

        21   also concerned that, while other institutions have

        22   committed to diversity goals that reflect our state's

        23   extraordinary diversity, NationsBank has stated that it

        24   will not set any goals or release any data on their

        25   achievements.

        26            Until the chairman of BofA and NationsBank put in
 .

                                                                   510


         1   writing the type of specifics that their competitors have

         2   produced regarding minorities and underserved communities,

         3   I believe that it would be best to either deny the merger

         4   or, in the alternative, impose such a condition of

         5   approval of the merger.  Thank you.

         6            MS. SMITH:  Thank you very much.  Mr. Mosher.

         7            MR. MOSHER:  Thank you.  Good morning, my name is

         8   Mark Mosher, I'm Executive Director of the Committee on

         9   Jobs, a coalition of 33 of San Francisco's largest private

        10   sector employers.

        11            Our organization focuses on public policy issues

        12   affecting the city's economic vitality and quality of

        13   life.  During its eight-year history, Jobs has organized

        14   corporate community involvement in a few key areas,

        15   including major youth hiring and welfare-to-work

        16   initiatives.  It is in this context that I would like to

        17   address the proposed merger and what we believe to be Bank

        18   of America's post-merger commitment to San Francisco.

        19            In every initiative Committee on Jobs has

        20   undertaken, whether it is our effort to replace cuts in

        21   the federal Summer Youth Employment Training Program or

        22   the organization of hundreds of business volunteers

        23   through Christmas in April, Bank of America has taken a

        24   leadership role.  The bank has demonstrated to us that

        25   this leadership role will not decline in the wake of a

        26   merger.
 .

                                                                   511


         1            When the local business community came together

         2   to address the challenge of welfare-to-work, Bank of

         3   America led the way.  Last year, the bank contributed

         4   $250,000 to found San Francisco Works, an effort to help

         5   transition 2,000 public assistance recipients into

         6   self-sufficiency over the next three years.  Bank of

         7   America's involvement in this effort transcends checkbook

         8   philanthropy.  Bank Chairman Dave Coulter has personally

         9   involved himself in the organization, participating in

        10   board meetings, loaning his staff to counsel San Francisco

        11   Works in current training methods and committing

        12   employment opportunities to program graduates.  The bank

        13   has communicated to us that its commitment in each of

        14   these areas will not decline after the merger.

        15            I value Bank of America's role in San Francisco,

        16   and I was surprised and disappointed when I heard the

        17   headquarters would be moved to Charlotte.  The move is

        18   definitely a blow to the city's prestige.  However, in

        19   practical terms, David Coulter and half of the merged

        20   bank's executive management team will remain in

        21   San Francisco, several key operations will remain

        22   headquartered in San Francisco, and the deep spirit of

        23   community involvement and fostered by the bank's current

        24   leadership will continue.

        25            We urge approval of the merger.  Thank you.

        26            MS. SMITH:  Ms. Duncan.
 .

                                                                   512


         1            MS. DUNCAN:  Yes, I am Emily Duncan, the

         2   Executive Director of the Snohomish County Private

         3   Industry Council.  Snohomish County is located in

         4   Washington State and it is just north of King County where

         5   Seattle is.

         6            We are a private industry council and we are the

         7   managing partner for the Job Training Partnership Act

         8   which we administer in Snohomish County.  This law is

         9   enacted to provide training funds for low-income youth and

        10   adults and dislocated workers, but it's not the Job

        11   Training Partnership Act that I want to talk about today,

        12   it's Down Home Washington.  Because that's the other half

        13   of us.

        14            Down Home Washington started ten and a half years

        15   ago as what has now come to be known as Microenterprise

        16   Program.  In those days, we didn't know the name.  What we

        17   wanted to do was provide entrepreneurial training for

        18   low-income women, half of whom were welfare recipients.

        19   And we did do this.  What is remarkable about this

        20   particular experiment is that, although we had the

        21   operating funds through our own Job Training Partnership

        22   Act moneys, we didn't have a loan fund.  And in those

        23   days, no one, to speak of, had heard of Microenterprise

        24   and I don't even know if the word had been invented yet.

        25            But Sea-First, which is Bank of America in

        26   Washington State, stepped up to the plate and they
 .

                                                                   513


         1   provided the first dollars for that initial loan fund.  It

         2   wasn't a lot of money but it was incredibly important

         3   because they were out front and in the leadership position

         4   and it ended up leveraging many, many times, more than 15

         5   times the amount of money that they contributed.  So they

         6   have been very responsive.  And they are concerned about

         7   the -- their position in the community and they try to

         8   fill the gaps where those exist and where they understand

         9   them.

        10            One of the most incredible things about this

        11   first program is that (unintelligible) came to all three

        12   of the graduations over a three year period.  She didn't

        13   have to do that but I know that she enjoyed it as much as

        14   I did.

        15            We are very proud to be one of the grantees of

        16   Sea-First/Bank of America in Washington State.  Sea-First

        17   also recognized the need for funding in rural areas and,

        18   in fact, Bank of America now has a major rural area

        19   initiative.

        20            We support this merger.  We do believe in the

        21   commitment of the $350 billion over the period of time.

        22   We do believe that greater resources will be made

        23   available through it.  We also know that NationsBank is

        24   very supportive of the kinds of things that

        25   Microenterprise is involved in.  And without the support

        26   of organizations like Sea-First, we would not be in the
 .

                                                                   514


         1   position we are today where we have about $4 million

         2   available in loan funds that cover 16 counties in the

         3   State of Washington.  From an initial operating budget of

         4   $29,000, we now have an operating budget of $375,000, and

         5   that growth has been fueled by support from Sea-First/Bank

         6   of America.

         7            We do have a concern and that concern is in

         8   Washington State, there are no banks headquartered in

         9   Washington State of any size any longer.  And our concern

        10   is that we will be almost invisible, and so along with

        11   other groups from the Rural 2,000 Committee, we support a

        12   fair allocation of resources by region and also by rural

        13   and urban and other designations.  Thank you very much.

        14            MS. SMITH:  Thank you.  Ms. Singla.

        15            MS. SINGLA:   Good morning, and thank you for the

        16   opportunity to testify regarding the proposed merger

        17   between NationsBank and Bank of America.  My name is

        18   Indira Singla and I'm the President and CEO of Automation

        19   M.H, Incorporated of Dallas, Texas.

        20            We are a small woman-owned computer systems

        21   integration company based in Dallas.  I was also a

        22   delegate from North Texas to the White House conference on

        23   small business in 1995.  As a small business owner, I take

        24   deep interest in the affairs that affect all small

        25   businesses, including minority and women-owned businesses.

        26            Our relationship with NationsBank is a three-fold
 .

                                                                   515


         1   relationship.  First, as a business client, our banking

         2   relationship with NationsBank goes back to over ten years.

         3   This relationship is based on the commitment that

         4   NationsBank has for small business development.  I have

         5   found them very sensitive to the needs of small business

         6   community.  NationsBank has supported us in times of need

         7   through loans, lines of credit, and other services

         8   numerous times.  Over the years, we have come to depend

         9   upon NationsBank and their employees for exceptional

        10   quality service and commitment to assist small businesses.

        11            The second relationship we have with NationsBank

        12   is a vendor relationship.  NationsBank has been our

        13   customer for over three years.  During this period, we

        14   have supplied them with mid-range units, hardware,

        15   software, integration consulting and network services.  We

        16   have worked with their Asset Management Interest

        17   Department, Capital Markets Department and the Strategic

        18   Technologies Group.  Most recently, we provided service

        19   for their E-mail capabilities between NationsBank and Bank

        20   of America.

        21            Over the years, NationsBank -- as a small

        22   business owner knows, that all of this will not be

        23   possible if NationsBank did not have a commitment to give

        24   an opportunity to small business like ours to participate

        25   in such opportunities.  They have demonstrated this

        26   commitment by participating in many, many small business
 .

                                                                   516


         1   development activities in Dallas.

         2            Thirdly, as NationsBank, as it applies to the

         3   community relationship, as a citizen of Dallas, I have

         4   observed NationsBank to play a leading role being the

         5   community investment expert in the financial services

         6   industry through the delivery of special programs for low-

         7   and moderate-income individuals and communities.

         8   NationsBank is an active participate in the South Dallas

         9   Economic Development Program.  I see this merger bringing

        10   more opportunities to thousands of small businesses across

        11   the nation just like Automation Image.  So I support this

        12   merger.  Thank you.

        13            MS. SMITH:  Thank you very much for your

        14   testimony.  Next, we have Mr. Esquibel.

        15            MR. ESQUIBEL:  Good morning.  My name is Eduardo

        16   Esquibel, I am the Executive Director of United Housing

        17   and Educational Development Corporation.  United Housing

        18   is a nonprofit 501C3 organization formed in 1990 in the

        19   State of Arizona that provides affordable housing in the

        20   rural areas of Pima and Pinal Counties.  United Housing is

        21   currently under contract with the United States Department

        22   of Agriculture, Rural Housing Services, to operate and

        23   provide technical assistance under the 523 self-help

        24   program.  This program targets families in need of safe,

        25   decent and affordable homes.  Families qualify for a

        26   housing loan from Rural Development called a 502 direct
 .

                                                                   517


         1   loan program based on their income and need.  The families

         2   income cannot exceed 80 percent of the area's median

         3   income.  Subsidy is awarded to families based on family

         4   size and income.

         5            These families are considered low and very low

         6   based on income standards.  United Housing is pleased to

         7   be a partner with Bank of America's Community Development

         8   Bank.  Bank of America has already established an

         9   effective partnership which has enabled local self-help

        10   housing organizations like ours to expand the opportunity

        11   for self-help families to achieve homeownership.

        12            Bank of America in 1997 established its Rural

        13   2,000 Initiative which is addressing rural concerns of

        14   reaching out to markets that either no service is

        15   available and/or is underserved.  Bank of America's Rural

        16   2,000 Initiative will make available funds to provide

        17   mortgage loans by partnering with the Department of

        18   Agriculture as well as with Fannie Mae to start the 502

        19   direct blended loan program which is being piloted through

        20   the Rural 2,000 Initiative.  The 502 direct loan program

        21   current funding level is $1 billion this fiscal year.  The

        22   rural initiative is assisting nonprofit organizations with

        23   lines of credit for construction loans and infrastructure

        24   loans that will provide critical resources to facilitate

        25   development of building sites for low-income families who

        26   are willing to commit the time and energy to build their
 .

                                                                   518


         1   homes for themselves and their neighborhoods.

         2            United Housing has demonstrated success in the

         3   development of self-help housing.  In fact, since 1990,

         4   United Housing has assisted 102 families in the successful

         5   construction of their homes through the mutual self-help

         6   program.  The State of Arizona is currently ranked No. 2

         7   in the United States for providing self-help homeownership

         8   under the Department of Agriculture's national self-help

         9   program.  United Housing was nationally recognized in 1996

        10   by the Fannie Mae Foundation as a recipient of the Maxwell

        11   Award of Excellence for the production of low-income

        12   housing.  At the same time there are many families who are

        13   waiting for the opportunity to join with their neighbors

        14   to build better homes for themselves and their children.

        15   One of the continuing obstacles we face is the difficulty

        16   of acquiring affordable building sites.  Bank of America

        17   funds through the Community Development Bank has assisted

        18   United Housing in the development of suitable building

        19   sites.

        20            The opportunity of this merger can provide

        21   greater resources to nonprofits like ourselves in

        22   partnering with the federal resource dollars that have

        23   been available in the past to operate programs such as the

        24   self-help program.  The Bank of America/NationsBank $350

        25   billion commitment to provide funding resources, as I have

        26   discussed earlier, will have an impact on rural area
 .

                                                                   519


         1   markets that have been underserved and misunderstood for

         2   years.

         3            Bank of America has a proven track record in

         4   effectively managing the Community Development Bank by

         5   providing funds which has created homeownership

         6   opportunities for hard working low-income families within

         7   our service area and throughout rural America.  United

         8   Housing supports the merger between Bank of America and

         9   NationsBank.

        10            Thank you for the opportunity to speak on behalf

        11   of the families that we served and United Housing.  Thank

        12   you.

        13            MS. SMITH:  Thank you very much.  Mr. Price

        14            MR. PRICE:  Thank you very much.  Good morning.

        15   My name is Al Price, I'm from Beaumont, Texas, I'm a

        16   retired captain for American Airlines, and for the past 21

        17   and a half years, I've been a member of the Texas House of

        18   Representatives.  Today I represent the Southeast Texas

        19   Community Development Corporation, Incorporated, SETCDC

        20   which I serve as president.

        21            SETCDC is certified as a CHDO by the Texas

        22   Department of Housing and Community Affairs to serve rural

        23   Texas and certified as a CHDO by the Cities of Beaumont,

        24   Port Arthur and Orange.

        25            In the past five years, SETCDC has completed new

        26   construction and rehab in excess of $2.2 million.  We
 .

                                                                   520


         1   anticipate construction of 250 new homes and the rehab of

         2   over 100 in the next three years.  As we expect to also

         3   expand into rural Texas.

         4            Some eight years ago, when we were reviewing the

         5   lending practices of banks in our community, I met Ms.

         6   Cathy Bessant of NationsBank, she came to Beaumont to work

         7   with us to talk about achieving the aims of the Community

         8   Reinvestment Act.  She was very cooperative and I'm very

         9   pleased to know that she will be involved in this great

        10   effort.

        11            Our organization has developed a business

        12   relationship with NationsBank which includes the

        13   arrangement of permanent financing of loans for our

        14   homeowners.  In this manner, we've been successful in

        15   addressing the housing and banking needs of a clientele

        16   that is traditionally below the regular commercial banking

        17   floor.  Through our Homebuyer Education Program, we work

        18   with persons who are currently renters.  We inform them,

        19   encourage them, cajole them, if necessary, spurring them

        20   to dare achieve the dream of homeownership.

        21            Virtually every one of our clients utter in

        22   disbelief at closing, "I never thought I'd ever own my own

        23   home."  These are new homeowners.  These are first-time

        24   home buyers, these are new mortgages in our community,

        25   this is new money being generated, this is private

        26   enterprise doing what it can do best and much better than
 .

                                                                   521


         1   the government.  This is removing people from the public

         2   dole.  This is putting housing and economic development in

         3   the private sector without dependency on public funds.

         4            Upon learning of the proposal of NationsBank to

         5   make $350 billion available to address the needs of

         6   low-income and rural areas, I contacted NationsBank to

         7   discuss ways that we and they could partner with local

         8   officials and community leaders to plan and execute

         9   locally conceived programs that would benefit the

        10   community while concurrently achieving the goals of

        11   NationsBank and SETCDC.  This $350 billion infusion

        12   represents a pool of resources that will allow communities

        13   to do housing and economic development on a scale that

        14   will be both trendsetting and transforming.  And if done

        15   correctly, it will allow a level of efficiency that can

        16   significantly stretch those dollars.

        17            I've submitted a proposal to NationsBank to

        18   establish a pilot program in a small county in southeast

        19   Texas.  This proposal, which could be quickly implemented,

        20   calls for our convening the county commissioners plus the

        21   mayors and council members of each city with a population

        22   of 10,000 family -- population in that county, along with

        23   the officials of HUD, the State of Texas, local nonprofit

        24   groups and the private sector for the purpose of assisting

        25   local communities in the creation of a plan for housing

        26   and economic development.
 .

                                                                   522


         1            Such a procedure could be replicated anywhere and

         2   at will.  Through SETCDC and other nonprofits, NationsBank

         3   will then be able to extend its financial tentacles into

         4   hamlets that are presently inaccessible, thereby

         5   transforming old communities.

         6            Homeownership is the cornerstone of safe,

         7   desirable neighborhoods and, therefore, is essential to

         8   any plan to revitalize communities.  People who own their

         9   own homes care about their streets, their property values

        10   and their schools.  They generate business, they pay

        11   taxes, and more often than not, they vote.  By providing

        12   safe, sanitary desirable homes to low- to moderate-income

        13   families, CHDO will work to fend off the renters'

        14   mentality with this emphasis on dependency, consumership

        15   and apathy and replace this renters' mentality with a

        16   homeowners' mentality with this emphasis on independence,

        17   productivity and involvement.

        18            Ladies and gentlemen, because I'm so pleased to

        19   see this expression of corporate responsibility and

        20   goodwill and because I view this as a definitive measure

        21   to put affordable housing and community development firmly

        22   into the private sector and away from dependency on

        23   government handouts.  I'm very pleased to support this

        24   merger.  Thank you.

        25            MS. SMITH:  Thank you very much.  Ken, you have a

        26   question?
 .

                                                                   523


         1            MR. BINNING:  I would like to ask Mr. Mosher a

         2   question, please.  We heard a number of speakers express

         3   concern that support and understanding for California

         4   needs would fall off when the headquarters is moved to

         5   North Carolina.  And I believe you stated that you and

         6   your organization have been convinced by BofA that that

         7   won't happen and I was just curious if you could elaborate

         8   a little on what types of information or assurances from

         9   them have given you that confidence?

        10            MR. MOSHER:  I have to admit that my experience

        11   is very parochial in that my organization's jurisdiction

        12   is that of San Francisco.  I happen to know the chairman

        13   of Bank of America through my organization and through a

        14   lot of the community initiatives that we sponsor.  And, if

        15   anything, in the wake of the merger announcement, I think

        16   we've seen really expanded commitment to some of the

        17   programs that we've started, such as San Francisco Works,

        18   the welfare-to-work initiative, and we've seen that in the

        19   form of really a commitment that has gone from at the

        20   outset a financial commitment to the program, what has

        21   turned into, in some cases, senior executives of the bank

        22   coming out and expressing an interest in helping local

        23   nonprofit organizations do a better job of training people

        24   coming off of public assistance to what I would

        25   characterize as really up-to-the-minute specifications for

        26   jobs that are available in the banking industry.
 .

                                                                   524


         1            So what we've seen is -- I mean, first of all, a

         2   commitment to see this program through to whatever

         3   conclusion, you know, its board of directors decides it

         4   wants to reach.  But also the bank giving more than

         5   dollars sending senior executives to, in effect, go out

         6   and serve as consultants to some nonprofits that are doing

         7   job training in an effort to try and get public assistance

         8   recipients trained for jobs in this particular bank.  And

         9   the commitment that has been made is that they not only

        10   want to make a financial commitment and a commitment of

        11   expertise, that they want to integrate former public

        12   assistance recipients into the bank post-merger.

        13            MR. MENDELL:  Thank you.

        14            MS. SMITH:  Mr. Price, you used the term that

        15   sounded like CHDO and you may have explained what it was

        16   earlier but I missed it.

        17            MR. PRICE:  I'm sorry, that's an acronym for

        18   Community Housing Development Organization.

        19            MS. SMITH:  So CHDO.

        20            MR. PRICE:  CHDO.  Some bureaucrat thought that

        21   up.

        22            MS. SMITH:  Do you have any questions?  Well,

        23   thank you very much, we appreciate your coming this

        24   morning to talk to us.  And if you have any additional

        25   comments that you want to submit for the record, you have

        26   until next Friday but not later than 5:00 o'clock eastern
 .

                                                                   525


         1   daylight time.

         2                         (Short break.)

         3

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        10

        11

        12

        13

        14

        15

        16

        17

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        26
 .                                                                     526


         1            MS. SMITH:    Good afternoon.  I'm reminding the 

         2   witnesses about our timing system.  We have a timer who 

         3   will give you a one-minute message when you have one 

         4   minute remaining.  She'll hold it up.  And then one 

         5   minute later -- we hope that you will see it.  Sometimes 

         6   you may not because you'll be looking at your text.  One 

         7   minute later, she will hold up the time expired message.  

         8   And then, if you still haven't looked up, then we have 

         9   the gong.  So that's the system that we'll be using.  Are 

        10   we all set?  

        11            This is Panel 23, and we're going to start with 

        12   Dr. Welbon.  

        13            DR. WELBON:   Good evening, Chairman Smith and 

        14   to the members of the board.  We are here representing 

        15   the Pastors and Ministers Congress of San Francisco and 

        16   adjacent cities and also the Northern California 

        17   affiliate of the National Congress of National Black 

        18   Churches, which represent over 25 million churches -- I 

        19   mean, 25 million members over the nation.  

        20            We are here in objection to the merger and the 

        21   resolution to the proposed merger by NationsBank 

        22   Corporation of Charlotte to acquire Bank of America 

        23   Corporation of San Francisco.  

        24            The Pastors and Ministers Congress of San 

        25   Francisco and adjacent cities, in conjunction with the 

        26   South Bay branch of the NAACP and the Northern California 
.
                                                                     527


         1   affiliate of the Congress of National Black Churches, 

         2   which represent over 500 churches in the Bay Area and 

         3   active community-based organization, have formed a 

         4   coalition against a merger and hereby file their concerns 

         5   on behalf of the neighborhoods about the merger's impact 

         6   on the banking services to lower income and minority 

         7   neighborhoods.  

         8            The federal law, the Community Reinvestment Act 

         9   of 1977, requires banks to make loans in all 

        10   neighborhoods in which they have branches.  And we're 

        11   concerned about how Bank of America is closing most of 

        12   their bank branches in predominant African-American 

        13   neighborhoods in the area.

        14            In addition, I'd like to put a little quote 

        15   there, too.  If you now go to most of Bank of America -- 

        16   especially they've closed down most of them in the 

        17   predominant African-American neighborhoods in San 

        18   Francisco however.  But if you go into any Bank of 

        19   America, black males is an endangered species.  They 

        20   don't exist on the windows as tellers.  

        21            I would hope that you would consider a 

        22   comprehensive recruiting program that can enable young 

        23   black males to participate and be workers in the bank.  

        24   That's one point.  

        25            The next point is that -- our concerns is 

        26   that -- we are concerned about the poor community lending 
.
                                                                     528


         1   records to minorities, especially African-Americans in 

         2   low-income areas.  Federal regulators should look at 

         3   their records very closely.  I'm talking about the bank 

         4   before the merger.

         5            We feel that these giant institutions should 

         6   expand their loan commitments nationwide in community 

         7   development loans and other investments, such as 

         8   assisting worthwhile community service projects.  We feel 

         9   that the bank should expand their small business loans, 

        10   affordable housing loans, loans to minority contractors, 

        11   especially African-American contractors, and economic 

        12   development loans and consumer loans.  

        13            It is our concern if these two banking 

        14   institutions are allowed to merge without these detailed 

        15   guidelines in place as part of this merger, it is our 

        16   views that these institutions may neglect or abandon this 

        17   community investment in California, especially in 

        18   African-American neighborhoods.  

        19            More important, we are very concerned about 

        20   these banking institutions' lending policies to 

        21   African-Americans, high-end policies of 

        22   African-Americans, especially African-American males as I 

        23   state.  

        24            Now let me just take you just a few steps 

        25   further.  We have signed an agreement from the National 

        26   Congress of National Black Churches with the Justice 
.
                                                                     529


         1   Department.  If you want to see crime go down in our 

         2   neighborhoods, you can be a player at the table to help 

         3   us.  We have developed a very comprehensive innovative 

         4   program that we have submitted to the Justice 

         5   Department.  They have accepted our -- a one-year pilot 

         6   program.  And I submit the comprehensive program proposal 

         7   to NationsBank, to the Federal Reserve Board, to review 

         8   that proposal.

         9            We're working in the school systems.  We're 

        10   taking our churches to work and to the communities, the 

        11   school, with the police department, social service 

        12   agencies, et cetera, to put together a comprehensive plan 

        13   and to help young people stay out of trouble.

        14            And another thing that we're trying to do as 

        15   well, we are trying to put together a proposal to stop 

        16   jails from filling up.  Educate our young peoples, build 

        17   this nation, build a strong nation.  And this is what 

        18   this should be all about.  And this is why we're at this 

        19   time opposing the merger until such time that some of 

        20   these things are looked at very carefully and some of 

        21   these things are put in place so that we can really look 

        22   at the bank and you can look at America as it grows into 

        23   the 21st century, all colors, all peoples participating 

        24   and working.

        25            We want that kind of vision and we can -- you 

        26   can help us make it.  And that's why we're here at this 
.
                                                                     530


         1   time opposing this merger.  Because you can be a great 

         2   player in helping us make this become a reality.  Thank 

         3   you very much.  

         4            MS. SMITH:    Thank you, Dr. Welbon.  

         5   Mr. Burgis.  

         6            MR. BURGIS:   Yes.  My name is John Burgis, and 

         7   I serve as senior vice president of financial services 

         8   and chief financial officer for Catholic Healthcare 

         9   West.

        10            Today I represent the concerns and hopes of 

        11   Catholic Healthcare West and a number of institutional 

        12   investors, including the general board of pensions of the 

        13   United Methodist Church, the Presbyterian Church U.S.A., 

        14   Christian Brothers Investment Services, the congregation 

        15   of the Sisters of Charity of the Incarnate Word, and 

        16   Sisters of Charity Health System.  These institutions 

        17   alone hold over 650,000 shares of NationsBank stock and 

        18   over 400,000 shares of Bank of America stock.  

        19            Catholic Healthcare West uses Bank of America 

        20   for its cash transactions and credit needs.  Both the 

        21   Sisters of Charity and the Sisters of Charity Health Care 

        22   System use NationsBank for their cash transactions.

        23            Let me begin with some background on Catholic 

        24   Healthcare West's relationships with Bank of America.  

        25   Catholic Healthcare West is a 3.5 billion dollar health 

        26   services delivery system with facilities and affiliated 
.
                                                                     531


         1   physician groups in California, Arizona, and Nevada.  As 

         2   a religiously-sponsored organization, CHW seeks business 

         3   partners that demonstrate corporate social 

         4   responsibility.

         5            In 1991, CHW began a significant lending and 

         6   depository relationship with Bank of America, due in 

         7   large part to the bank's commitment to expanded community

         8   reinvestment.  During the ensuing years, we have noted 

         9   and admired Bank of America's efforts to differentiate 

        10   itself as a leader in corporate social responsibility.

        11            Particular accomplishments include focused 

        12   attention to developing and promoting access to 

        13   affordable financial services and products, driven by a 

        14   formal goal to achieve outstanding ratings in every CRA 

        15   examination; substantial financial commitment to Bank of 

        16   America Community Development Bank; dedicated and expert 

        17   leadership devoted to community reinvestment and 

        18   development; inclusion of environmental and social 

        19   considerations and criteria for lending to developing 

        20   economies; development of a strong environmental program, 

        21   including endorsement of the serious principals for 

        22   corporate and environmental responsibility and 

        23   accountability; sustained commitment to diversity in the 

        24   workplace demonstrated by effective equal employment 

        25   opportunity and promotion programs, minority purchasing 

        26   programs, and expanded family benefits programs.
.
                                                                     532


         1             Relative to the proposed merger of Bank of 

         2   America and NationsBank, we urge the new corporation to 

         3   embrace a comparable, if not enhanced, stance towards 

         4   corporate responsibility.  In our view, the merger 

         5   presents a singular opportunity to develop an exemplary 

         6   enterprise that succeeds in the marketplace by becoming 

         7   the national leader in meeting community needs.

         8            In particular, we are concerned that the new 

         9   corporation commit formally and publicly to meeting the 

        10   credit needs of every community where it does business, 

        11   with special attention to low/moderate income clients and 

        12   persons of color.  To that end, we have asked Dr. Lind of 

        13   CANICCOR to prepare reports assessing both NationsBank 

        14   and Bank of America's performance in addressing the 

        15   credit needs of these historically under-served 

        16   populations.  

        17            Based on Dr. Lind's assessment, we ask the new 

        18   corporation to commit to both mortgage lending and small 

        19   business goals.  In mortgage lending, especially on 

        20   purchased mortgages and home improvement loans, we ask 

        21   that the new holding corporation seek to achieve, first, 

        22   performance levels above the industry level in the 

        23   assessment areas of the banking subsidiaries and lending 

        24   to black, Hispanic, and low-income borrowers and in 

        25   lending in low/moderate income tracts and, secondly, 

        26   performance levels at parity with the industry in all 
.
                                                                     533


         1   other geographic areas in which the mortgage lending 

         2   subsidiaries operate in lending to black and Hispanic 

         3   borrowers.  

         4            With regard to business lending, we request that 

         5   the corporation achieve above the industry levels in 

         6   small business loans, especially first loans of 100,000 

         7   and under in low/moderate income tracts and, secondly, 

         8   loans to small businesses in low/moderate income tracts.  

         9            We believe that these goals would not impair the 

        10   financial viability of the corporation but would increase 

        11   the corporation's market.  Such goals would provide a 

        12   firm basis for a further development of these communities 

        13   and help ensure the corporation against violations of the 

        14   Equal Credit Opportunity Act.  

        15            In recent negotiations with a number of 

        16   corporations, we have been gratified by their readiness 

        17   to adopt similar goals and are confident that the merged 

        18   corporation will demonstrate a comparable willingness to 

        19   implement such goals.

        20            We were pleased with the announcement of a 

        21   community lending commitment of 350 billion over the next 

        22   ten years for the merged corporation.  It is, indeed, the 

        23   largest commitment announced to any merger so far.

        24            We welcome the new corporation's willingness to 

        25   detailed annual reporting of performance at national, 

        26   regional, and local levels.  We view such reporting as a 
.
                                                                     534


         1   means to maintain public accountability and as a platform 

         2   for dialogue.

         3            However, we believe that the goals which I 

         4   outlined above serve a different function from these 

         5   commitments.  Commitments are what can be counted on, 

         6   while goals detail the benchmarks toward which the 

         7   corporation aims, thus goals are usually higher than 

         8   commitments and are more specific.  We are particularly 

         9   concerned that goals be developed to apply to local 

        10   markets and market sectors.

        11            As Dr. Lind points out -- well, I will stop 

        12   there and simply conclude by saying that, in closing, let 

        13   me reiterate my advocacy that the new corporation embrace 

        14   a vigorous stance toward corporate social responsibility 

        15   and seize the opportunity to develop an exemplary 

        16   enterprise that succeeds in the marketplace by becoming 

        17   the national leader in meeting community needs.

        18            MS. SMITH:   Thank you very much.  And next we 

        19   will hear from Dr. Lind.  

        20            DR. LIND:   Thank you.  I'm John Lind, executive 

        21   director of CANICCOR, an agency of a nonprofit 

        22   corporation.  CANICCOR serves as a consultant to 

        23   institutional investors on the social responsibility of 

        24   financial institutions.  It provides services in two 

        25   fashions.

        26            First, CANICCOR provides information to funds 
.
                                                                     535


         1   that have social screens.  These include Kinder,

         2   Lynderberg & Domini, Calvert, and U.S. Trust.  Secondly, 

         3   CANICCOR provides analysis for and coordination between 

         4   institutional investors which take an active role with 

         5   the corporations in which they invest.  It is out of this 

         6   second role that I speak with you today.  

         7            As you have heard from John Burgis of Catholic 

         8   Healthcare West, church-related shareholders have sought 

         9   agreements with a number of major lenders to have goals 

        10   of lending at or above the industry level to each 

        11   under-served group and area in which the corporation 

        12   operates.  The industry level is defined as all reporters 

        13   under the Home Mortgage Disclosure Act.

        14            Concerns focus primarily on home purchase loans, 

        15   home improvement loans, and small business loans.  These 

        16   are products geared towards first-time home buyers, 

        17   households improving their living conditions, and small 

        18   businesses seeking to expand or sustain their 

        19   operations.  

        20            With regard to home purchase loans for owner 

        21   occupancy, neither NationsBank nor Bank of America have 

        22   been near the industry levels in their home areas, let 

        23   alone in distant areas.

        24            Bank of America's performances were outstanding 

        25   in 1992 with their development of Neighborhood Advantage 

        26   loans, and these performances were particularly good with 
.
                                                                     536


         1   low/moderate income minority borrowers.  But in the 

         2   intervening years, the industry overtook Bank of America 

         3   and its performance levels dropped continuously.  

         4   However, this decline was retarded by the manufactured 

         5   housing lending unit.  Unfortunately, this unit was sold 

         6   during the spring of this year, and I have had to 

         7   eliminate its lending from my analysis to estimate Bank 

         8   of America's present performance level.  

         9            To its credit, Bank of America is beginning to 

        10   design some new products, but it will take time to get 

        11   these products into the marketplace.  

        12            NationsBank has performed poorly in its home 

        13   areas of North Carolina and surrounding states.  It has 

        14   aggressive -- it has an aggressive acquisition program 

        15   and recently acquired Boatmen's and Barnett banks, both

        16   of which perform much better than NationsBank.  It 

        17   remains to be seen whether NationsBank will have learned 

        18   from its acquisition or whether NationsBank's policies 

        19   will prevail and cause the lending performances to 

        20   decline.  

        21            Let me give you a few numbers to illustrate the 

        22   problem.  In 1996, NationsBank originated 14,092 loans to 

        23   black borrowers, the most difficult to serve group, in 

        24   its home territory of North Carolina, South Carolina, and 

        25   Virginia, 657 loans below the industry level of all Home 

        26   Mortgage Disclosure Act reporters.  If NationsBank were 
.
                                                                     537


         1   to achieve the industry parity, lending to black 

         2   borrowers in these states should have increased by 45 

         3   percent.  

         4            In 1996, Bank of America issued 396 loans to 

         5   black borrowers in California, 186 loans below the 

         6   industry average.  To have achieved industry parity in 

         7   its lending to this sector, lending to black borrowers 

         8   should have increased by 47 percent.  

         9            Overall, in 1996, the two corporations performed 

        10   at 24 to 27 percent below the industry in lending to 

        11   black borrowers, 12 to 15 percent below the industry in 

        12   lending to Hispanic borrowers, 14 percent below in 

        13   lending to low/moderate income borrowers, and seven to 22 

        14   percent below in lending in low/moderate income tracts.  

        15   I refer you to my filing for details on home improvement 

        16   lending and small business lending.  

        17            Let me summarize by saying that we have had a 

        18   recent phone conversation with NationsBank and believe 

        19   that the goals we propose are not foreign to the 

        20   corporation.  However, even if these goals were adopted, 

        21   the merged corporation faces considerable challenge in 

        22   developing the necessary structures to attain these goals 

        23   in the near future.  

        24            NationsBank -- one, NationsBank and Bank of 

        25   America have very different corporate cultures which need 

        26   to cooperate and coordinate.  Two, their market areas are 
.
                                                                     538


         1   very different, high housing price California versus 

         2   moderate-priced midwest and south.  So they will need a 

         3   diversity of loan products, and those products will have 

         4   little overlap.  And, three, both corporations are coming 

         5   from relatively poor performance levels in their distinct 

         6   market areas.  

         7            These challenges underscore the importance of 

         8   detailed reporting by loan type and market area on the 

         9   part of the merged corporation and the necessity of 

        10   providing a forum for discussion of the performance 

        11   results.  

        12            We do not expect miracles overnight, but we hope 

        13   to see progress according to a planned process.  Thank 

        14   you.  

        15            MS. SMITH:    Thank you very much.  Ms. Hizel.  

        16            MS. HIZEL:   Good afternoon.  I have the 

        17   pleasure of representing Youth Enterprises System 

        18   Incorporated, which, along with its parent organization, 

        19   Youth Development Incorporated, is one of the largest 

        20   nonprofit community development corporations in New 

        21   Mexico.  We develop affordable housing, as well as 

        22   counsel under-served communities primarily comprised of 

        23   residents with very low, low, and moderate incomes, the 

        24   majority of which are minority groups such as Hispanic, 

        25   Native American, and African-American.  

        26            Youth Enterprises System Incorporated is not 
.
                                                                     539


         1   opposed to the merger but asks that the Federal Reserve 

         2   Bank consider these concerns and address any foreseen 

         3   problems to ensure a successful merger.

         4            Currently both NationsBank and Bank of America 

         5   are active lending institutions in the state of New 

         6   Mexico, and though NationsBank is a newcomer, some of its 

         7   employees are long-time banking partners from Boatmen's 

         8   and Sun West.

         9            The impact of the recent Sun West acquisition 

        10   was fairly smooth because the preliminary transactions in 

        11   which we were actively involved did not appear to slow or 

        12   diminish.  The residual effect has been, however, less 

        13   than favorable in that our current transactions are 

        14   tediously slow and inconsistent.  The cause seems to be 

        15   due to the fact that some of the new loan officers are 

        16   unfamiliar with our market and transaction types are not

        17   properly prepared or informed of our needs.  We hope the 

        18   merger will not displace any bank officers who are 

        19   familiar with our market and who are intimately familiar

        20   with our client and agency obligation.  The needs of our 

        21   communities are unique to New Mexico, as are the needs of 

        22   communities in say San Francisco or Houston.

        23            NationsBank was generous in its debut in New 

        24   Mexico, and Bank of America has also contributed to our 

        25   communities via organizations, businesses, and other 

        26   institutions.  We would suggest increased and more 
.
                                                                     540


         1   focused bank contributions targeting affordable housing 

         2   and economic revitalization of older neighborhoods via 

         3   mini/macro-loan programs, nonprofit neighborhood credit 

         4   unions, and other new initiatives as necessary given the 

         5   current economic climate in our community.

         6            One of our major concerns is that the two bank 

         7   personalities will distort one another and cause chaos in 

         8   the delivery of contributions and bank products.  If the 

         9   cost of the merger is passed through to the 

        10   organizations, then the communities we serve by reducing 

        11   contributions and/or minimizing discounted and wavered 

        12   products, then the people we serve will suffer the 

        13   burden.  

        14            Many bank employees from both banks are 

        15   uncertain of their future.  Combine this with the Norwest 

        16   buy-out of Bank of New Mexico and Wells Fargo buy-out of 

        17   Norwest and the entire banking community is on its ear in

        18   New Mexico.  Our organization and others like us are not 

        19   able to function at full capacity because of the turmoil, 

        20   because of the lack of fluid transactions, new staff 

        21   coming, old staff going, and contributions at a 

        22   standstill.

        23            Last year we conducted over $11 million of 

        24   business not inclusive of our day-to-day banking business 

        25   in excess of 12 million a year.  This calendar year we 

        26   have not been able to close a single transaction with 
.
                                                                     541


         1   NationsBank despite the fact that we have nine sites 

         2   under contract and were scheduled to close one bond 

         3   transaction on June 30th, 1998.  We had commitments from 

         4   the bonding agency and the rehab granting agency since 

         5   March and April of '98 respectfully and began discussions 

         6   on this 4.2 million deal in March of '98.  The deadline 

         7   has now been given as August 15th.

         8            We have memorandums of understanding with other 

         9   major mortgage lenders in our market but have not been 

        10   able to get one with NationsBank due to the lack of 

        11   response, nor Bank of America.  Again, I believe it is 

        12   due to the fact that policy changes are occurring, 

        13   staffing changes are occurring, and employees are 

        14   entering our marketplace with ideas that may have worked 

        15   in San Francisco but will never work in New Mexico.

        16            Our mortgage and commercial product is important 

        17   to our constituency and to us, and if this merger slows 

        18   the delivery of our product, of that product, then our

        19   production and growth potential is also diminished.  The 

        20   bank contributions are important to us and, without them, 

        21   we cannot conduct feasibility analysis and other 

        22   pre-development duties necessary to commit ourselves to

        23   long-term loans and other bank products.  Therefore, it 

        24   is critical that local officers conduct business as usual 

        25   to ensure the bottom line of the bank and the services of 

        26   the agencies are fulfilled.
.
                                                                     542


         1            Deals work only if the bank is willing to 

         2   provide below-market interest rate, fee waivers, and 

         3   discount portfolio products to our constituency.

         4            The new merger is going to add to the existing 

         5   chaos, and though we are thankful we're not in your 

         6   shoes, it is important that this merger not diminish our 

         7   relationship but that it strengthens our relationship and 

         8   endeavors to build new and innovative ones to ensure our 

         9   common goals are met.

        10            We fear contributions will diminish, 

        11   below-market interest rates will go away, and New Mexico 

        12   employees will be replaced by employees unfamiliar with 

        13   New Mexico communities.

        14            The method of the merger is critical to all of 

        15   us, and we would like to stay abreast of all the changes 

        16   and expectations as they occur and provide as much 

        17   assistance as we can during the period to hope that our 

        18   existing products do not fail or falter.  Thank you.  

        19            MS. SMITH:    Thank you very much.  

        20            MR. FRIERSON:    I have a question for 

        21   Dr. Lind.  Could you go into a little more detail about 

        22   the methodology of the study that you used and address 

        23   whether the data allowed you to control for income as 

        24   well as race?  

        25            DR. LIND:   Well, my general methodology is to 

        26   take the home mortgage data and take the full HMDA report 
.
                                                                     543


         1   for each MSA and basically scale down that portfolio to 

         2   the size of the lender in that MSA and then compare the 

         3   two.

         4            And so if the lender -- if the scaled portfolio 

         5   which is of the same size as the lenders had, you know, 

         6   65 loans to black borrowers but the lender had only 35 

         7   loans, then I say that the lender is below the industry 

         8   by 35 loans.  And then I can add those up as I go up to 

         9   higher levels of geography and corporate levels.

        10            And obviously I used the HMDA data in terms of 

        11   the income that's provided by the HUD income levels for 

        12   that -- for the given year that are provided by the FFIEC 

        13   in looking at the income distribution of the borrowers.  

        14            This is equivalent to the old market fraction 

        15   rate that was proposed by the OCC back -- by the FFIEC 

        16   back in December of 1993.  

        17            MR. FRIERSON:    Market share test?  

        18            DR. LIND:   It's basically the market share 

        19   test, but I've -- actually, Stephen Cross at OCC agreed 

        20   with me that we're talking the same language.  It's just 

        21   that it's convenient for me to phrase it this way because 

        22   I can add it up from -- to higher levels, whereas the 

        23   market share test is really good at the -- just at the 

        24   MSA level.  

        25            MS. SMITH:    But the income that you use is the 

        26   demographic information from the Bureau of the Census?  
.
                                                                     544


         1            DR. LIND:   That's right.  

         2            MS. SMITH:    So that it tells you the income 

         3   level of given census tracts?  

         4            DR. LIND:   That's right.  I buy the FFIEC 

         5   census tape each year.  

         6            MS. SMITH:    I have a question for Dr. Welbon.  

         7   You mentioned a pilot -- a one-year pilot program and 

         8   having submitted a proposal.  I wasn't clear.  You 

         9   mentioned the Department of Justice and you mentioned the 

        10   Federal Reserve.  

        11            DR. WELBON:   That is correct.  

        12            MS. SMITH:    And what exactly is the proposal 

        13   for?  

        14            DR. WELBON:   We submitted in a very 

        15   comprehensive proposal that we submitted to the Federal 

        16   Reserve Bank and NationsBank as dealing with the school 

        17   systems.  We have an initial 1.5 million dollar grant on 

        18   the national level from the Congress of National Black 

        19   Churches, which I serve as the Northern California 

        20   chair.  And we are initiating a comprehensive innovative 

        21   program dealing with young peoples into the school 

        22   systems, also to make sure that they stay on the right 

        23   side of the track, and also that we haven't a lot of 

        24   violence in our school system at this particular time.  

        25   And we're trying to do something to bring that level 

        26   down.
.
                                                                     545


         1            And we feel that -- and we feel that what is 

         2   happening in our school systems, there must be some sort 

         3   of proper -- reason why it's happening, especially kids 

         4   shooting one another and shooting our school teachers, et 

         5   cetera.  And we need to try to focus on what can be done 

         6   to solve that sort of problem.  And that's the type of 

         7   program that we have initiated with the Justice 

         8   Department and we're working with our school.

         9            We put a summits on in San Francisco, also in 

        10   Oakland.  And in the Northern California we're having 

        11   summits meeting with the teachers of the school, the 

        12   Justice Department, the social service department.  All 

        13   of those entities are working to establish a network and 

        14   a joint partnership to order for us put -- to help this 

        15   comprehensive program at work.

        16            I would rather see us take that $35,000 so we 

        17   incarcerate prisons, put young people in prison, and put 

        18   it into -- invest it into our young people.  Because we 

        19   have to look at we're investing into our future, our 

        20   young people.  America is on the -- it can be the most 

        21   beautiful country in the world, but we have to look at 

        22   the positive side and the negative side and work with 

        23   both sides to put together this innovative -- and with 

        24   your help, we can do that.

        25            MS. SMITH:   But the proposal is for joining in 

        26   a partnership?  Is it for --
.
                                                                     546


         1            DR. WELBON:   The proposal has been submitted to 

         2   First Nationwide if you need to take a look at it, Bank 

         3   of America -- 

         4            MS. SMITH:    Well, I was interested in -- you 

         5   mentioned the Federal Reserve and I didn't know exactly 

         6   what role.  

         7            DR. WELBON:   Well, we submitted a copy to the 

         8   Federal Reserve.  

         9            MS. SMITH:    For our information?  

        10            DR. WELBON:   For your information.  

        11            MS. SMITH:    Okay.  I understand.

        12            Any other questions?  If not, we thank you very 

        13   much for your testimony this afternoon.  Be sure if you 

        14   have any supplemental comments to submit them by a week 

        15   from today close of business.  Well, 5:00 Eastern 

        16   Daylight Time.  And with that, I guess we're ready for 

        17   the next panel.  

        18            MR. PAPAN:   It's a good thing I had to make 

        19   one stop before I got here.

        20            In any event, I'd like to thank the Reserve 

        21   Board for the opportunity of coming to testify with 

        22   regard to this merger.  I, for one, feel that Bank of 

        23   America is California, and I would feel strongly that 

        24   what the Bank of America has done in California, it 

        25   should be part of the merger when it's completed.  

        26            To make it a little more specific, the Community 
.
                                                                     547


         1   Development Bank has been a very important part of Bank 

         2   of America's activities in California.  I'd like to see 

         3   that this merger enhances that same kind of activity 

         4   after the merger as has occurred prior to the merger.  

         5   And I think Bank of America could possibly do a lot to 

         6   implement what they have done in California.

         7            The resources that presently are at their 

         8   disposal, which I have been made to understand is -- the 

         9   merger will mean a 3.5 billion dollar bank.  And if we 

        10   could have somewhere around eight percent in the 

        11   activities of the Developmental Community Bank and 

        12   also Bank of America is known for its work, benevolent 

        13   work, on the Bank of America Foundation, Bank of 

        14   America's Rural 2000.  Are the three programs that I just 

        15   cited.  I think a concerted effort should be made to 

        16   continue those on a larger scale after the merger.  

        17            I have some concerns about the fact that we are 

        18   seeing the seat of a California -- of Bank of America 

        19   moving to somewhere else when it is so much a part of our 

        20   banking scene here in California.  Hopefully they are 

        21   sensitive to the possible idea that there be disruptions 

        22   with regards to employment.  I really believe that a lot 

        23   of attention should be paid as to how they're going to 

        24   implement their merger and how it's going to impact the 

        25   people that are presently working here in California.  

        26            I personally feel that the resources that the 
.
                                                                     548


         1   Bank of America has generated here in California support 

         2   the idea that banks, in general, are nothing more than a 

         3   clearinghouse for public money.  And the sensitivity to 

         4   that principal or the sensitivity to the idea that banks 

         5   are a clearinghouse for public money should be 

         6   implemented in the sense that California should not be

         7   hurt by this merger.

         8            If there are additional resources to come into 

         9   California as a result of the merger, I would most 

        10   appreciate the sensitivity that goes with being the most 

        11   popular state in the union and a lot of their activities, 

        12   although their seat of their operations will be somewhere 

        13   else, that they pay close attention to the fact that we 

        14   are a lot of people here, and we need a lot of 

        15   attention.

        16            We are, as you all know, the most agricultural 

        17   state in the union so that Bank of America's Rural 2000 

        18   is something that the new merger should not change and it 

        19   should enhance it if -- to a greater degree.  Those 

        20   resources that this merger will bring I feel can help 

        21   California a great deal.

        22            I think our management here has been something 

        23   that I, for one, being chairman of banking, having met 

        24   Mr. Coulter and seeing how sensitive he has been to the 

        25   needs of our people and to the enrichment of banking in 

        26   California by his chairmanship is something that I think 
.
                                                                     549


         1   is -- it's my understanding that you're going to 

         2   alternate the CEO or they're going to alternate the CEO 

         3   position.  And I want to make certain, for one, that if 

         4   Federal Reserve is going to oversee it that they -- what 

         5   they made public should be implemented.  

         6            MS. SMITH:    Okay.  Thank you very much, 

         7   Assemblyman Papan, for coming by this afternoon.  I know 

         8   you have a very busy schedule.  

         9            MR. PAPAN:   Well, I was hoping you could give 

        10   us some money for the budget.  But in any event, we have 

        11   our share of the surplus, so I don't think we need money 

        12   per se.  I do thank you for the opportunity of addressing 

        13   the panel.  

        14            MS. SMITH:    Thank you very much for coming 

        15   by.  

        16            MR. PAPAN:   Thank you.  

        17            MS. SMITH:    And with that, we'll go to 

        18   Mr. Baker.  

        19            MR. BAKER:   Thank you.  My name is Joseph 

        20   Baker, and I'm from the School-to-Career offices of the 

        21   San Francisco Unified School District.  The San Francisco 

        22   School-to-Career Partnership is an effort by the San 

        23   Francisco Unified School District, the San Francisco 

        24   Chamber of Commerce, and City College of San Francisco to 

        25   combine the knowledge and experience of education, 

        26   business, and government leaders to better prepare public 
.
                                                                     550


         1   high school students for their futures as college 

         2   students, members of the American work force, and 

         3   beyond.  

         4            Key aspects of the School-to-Career Partnership 

         5   include raising educational standards; identifying the 

         6   skills needed for success in further education and in the 

         7   workplace and ensuring high aspiration among all 

         8   students; integrating school and work; linking students' 

         9   classroom learning with experiences in the workplace and 

        10   in the community; ensuring students are exposed to a full 

        11   range of career opportunities, which include internships, 

        12   job shadowing experiences, internships for teachers, and

        13   site tours; evaluating progress and success; setting 

        14   goals and creating measurement tools to track and assess 

        15   the School-to-Career Partnership system; and finally 

        16   system building, connecting and expanding upon existing 

        17   school, community, government, and corporate programs 

        18   which serve to educate and prepare San Francisco youth 

        19   for career successes.  

        20            The Academy of Business and Finance is a San 

        21   Francisco School District career pathway which is a 

        22   component of the San Francisco School-to-Career 

        23   Partnership.  The Academy of Business and Finance 

        24   currently offers over 1,200 students at seven public high 

        25   schools with the opportunity to explore careers in 

        26   business and the financial services industry while 
.
                                                                     551


         1   developing the skills necessary for success in any 

         2   career.

         3            Students take rigorous academic courses, 

         4   participate in tours of businesses, work on improving 

         5   academic skills with a business mentor, work as an 

         6   intern, and take college courses in their senior year.

         7            The key to the success of the Academy of 

         8   Business and Finance program is a quality community 

         9   partnership.  An active advisory board consisting of 

        10   business executives, college partners, community 

        11   representatives, high school teachers, students, and

        12   others support and guide the program.  Training for 

        13   teachers, mentors, internships, financial support, and 

        14   assessment of the programs are all provided by this 

        15   partnership.

        16            The Academy of Business and Finance is a member 

        17   program of the National Academy Foundation based in New 

        18   York which has developed a national network of over 500 

        19   model School-to-Career programs.  

        20            This program is today at the forefront of the 

        21   school-to-work movement.  It is a focus of and model for 

        22   educational reform efforts in this community.  In San 

        23   Francisco, of the 18,962 high school students, 42 percent 

        24   are identified as educationally disadvantaged, 27 percent 

        25   receive free or reduced lunch, 24 percent are limited or 

        26   non-English speaking, and over 80 percent are identified 
.
                                                                     552


         1   as members of minority populations.  While the students 

         2   participating in the Academy of Business and Finance 

         3   program reflect the same diversity, over 94 percent 

         4   continue on to college.  

         5            Bank of America and their support for the 

         6   School-to-Career programs in San Francisco.  Bank of 

         7   America and Bank of America Foundation have served as key 

         8   factors in the support of School-to-Career programs 

         9   nationally and in San Francisco.  On a national level, 

        10   Bank of America's participation on the national employer 

        11   leadership council and in the development of national 

        12   skill standards in banking has set a standard of 

        13   corporate leadership in developing tools to assist 

        14   educators.  Bank of America supported the development of 

        15   model School-to-Career programs in many communities to 

        16   promote educational reform and economic development.  

        17            In San Francisco, Bank of America has a long 

        18   history of supporting public education.  Bank of America 

        19   currently sponsors paid internships for high school 

        20   students, scholarships, grants to support program 

        21   development, and other services that directly impact 

        22   education and improves the lives of young people involved 

        23   in San Francisco and School-to-Career programs.

        24            Bank of America provides business advisory board 

        25   leadership for the Academy of Business and Finance.  

        26   Employees throughout the bank have served as mentors and 
.
                                                                     553


         1   donated vast amounts of time to help students with such 

         2   things as resume writing and interviewing skills.  Other 

         3   employees have volunteered as speakers, provided tours, 

         4   or worked with teachers to improve curriculum.  

         5            Through our participation in the National 

         6   Academy Foundation, we have become aware that NationsBank 

         7   also supports School-to-Career in many communities, which 

         8   include Dallas, Tampa, St. Louis, Kansas City just to 

         9   name a few.  

        10            I must note that Bank of America also was the 

        11   first to seize upon a recent ruling by the OCC and 

        12   supported by the Federal Reserve Bank in which student 

        13   internships were identified as giving a bank Community 

        14   Reinvestment Act credit, and the bank seized upon this 

        15   opportunity to increase their support to the San 

        16   Francisco schools.  

        17            In conclusion, Bank of America's support for the 

        18   San Francisco School-to-Career program and the Academy of 

        19   Business and Finance has had a great and positive impact 

        20   on thousands of high school students.  The 

        21   School-to-Career office of the San Francisco Unified 

        22   School District sincerely believes the merger between 

        23   NationsBank and Bank of America will greatly increase the 

        24   School-to-Career Partnership's ability to provide quality 

        25   educational opportunities to San Francisco's young people 

        26   and will create a more diverse work force for the 
.
                                                                     554


         1   financial services industry in the 21st century.

         2            It is for these reasons that the 

         3   School-to-Career office of the San Francisco Unified 

         4   School District wholeheartedly supports a merger between 

         5   NationsBank and Bank of America.  We thank the Federal 

         6   Reserve Board for the opportunity to express this 

         7   support.  

         8            MS. SMITH:    Thank you.  Ms. McKee.

         9            MS. McKEE:   Thank you for this opportunity to 

        10   testify.  I am Michele McKee, planner with Community 

        11   Services Agency Development Corporation, CSADC, in Reno,

        12   Nevada.  CSADC is a private, nonprofit human services 

        13   corporation which has been operating in the state of 

        14   Nevada for 33 years.

        15            During the past seven years, CSADC has focused a 

        16   major portion of its energy in developing affordable 

        17   housing opportunities for low-income and working poor 

        18   populations in Nevada.  Our housing efforts actually 

        19   originated with a 10,000-dollar pre-development grant 

        20   received from Bank of America in 1991.  Since that time, 

        21   CSADC has constructed 11 projects consisting of 801 units 

        22   of affordable housing and is currently developing an 

        23   additional 200 units within the state.

        24            While our primary focus is on increasing the 

        25   availability of affordable housing, our secondary focus 

        26   has been to maintain and improve the quality of life in 
.
                                                                     555


         1   communities and neighborhoods in Nevada.  Our high 

         2   quality construction projects are located in desirable 

         3   areas of town and blend with existing architecture and 

         4   amenities, making them indistinguishable from market rate

         5   apartment complexes in the same neighborhoods.  The 

         6   Builders Association of Northern Nevada recognized one of 

         7   our most recent developments with their High Standards 

         8   Award for 1997.

         9            While CSADC has developed formal relationships 

        10   with a number of Nevada financial institutions, the 

        11   relationship formed with Bank of America has been, by 

        12   far, the most successful.  The Bank of America Community 

        13   Development Bank provided construction financing on nine 

        14   of our 11 projects for a total of $26.8 million and 

        15   provided permanent financing on one project for a total

        16   of 1.2 million.  CSADC utilizes the Bank of America 

        17   Community Development Bank financing primarily because of 

        18   its favorable loan terms and the responsiveness of its 

        19   knowledgeable and committed staff.

        20            Another CSADC project supported by Bank of 

        21   America has been our first-time home buyer program.  In 

        22   the last four years, CSADC has provided down payment and 

        23   closing cost assistance to 203 low-income families in 

        24   Reno purchasing their first home through this program.  

        25   Bank of America Mortgage has been the most active lending 

        26   participant in the program, generating 60 of the 203 
.
                                                                     556


         1   loans or 30 percent of all loans combined.  Again, this 

         2   is due largely to the high level of support and knowledge 

         3   of our program demonstrated by Bank of America staff, as 

         4   well as the favorable lending criteria which Bank of 

         5   America has developed for its affordable loan programs.  

         6            Bank of America staff were actively involved in 

         7   the development of our pre-purchase counseling program 

         8   and donated approximately eight hours per month of staff 

         9   time to assist CSADC in the actual provision of the 

        10   counseling.  The Bank of America Foundation has also 

        11   provided administrative support in the amount of $5,000 

        12   on an annual basis for this program.

        13            One of the most recent important initiatives on 

        14   which CSADC and Bank of America are working is the Bank 

        15   of America Rural 2000 initiative.  Three of CSADC's 

        16   affordable housing projects mentioned before were 

        17   developed in rural Nevada, utilizing Bank of America 

        18   Community Development Bank financing.  

        19            As you may be aware, due to the small population 

        20   and cyclical mining economic base of rural Nevada, 

        21   financing is hard to come by for any type of housing 

        22   development.  In fact, even now approximately 40 percent 

        23   of all housing in rural Nevada consists of mobile homes.

        24            The Bank of America Rural 2000 initiative is 

        25   designed to expand on the current financing products 

        26   available in rural areas to include community facilities 
.
                                                                     557


         1   such as child care centers, capacity building support for 

         2   nonprofit organizations, development of a community 

         3   development loan fund servicing rural areas, and support 

         4   of uses of technology designed to meet rural needs.  In 

         5   order to develop these initiatives, Bank of America Rural 

         6   2000 included on its advisory board community leaders 

         7   from all service areas, including CSADC's executive 

         8   director, Mr. Cloyd Phillips.

         9            Bank of America's dedication to rural areas of 

        10   Nevada is to be commended.  CSADC supports the Bank of 

        11   America and NationsBank merger.  Our main concern, in 

        12   fact, the reason for being here today, is to ensure that 

        13   the positive programs, products, and services which Bank 

        14   of America has in place in Nevada are not lost in the 

        15   process.

        16            As a relatively small state in terms of 

        17   population, we in Nevada have often found ourselves 

        18   excluded from initiatives presented by both private and 

        19   public funding sources on a national basis.  We would 

        20   encourage that the Bank of America Community Development 

        21   Bank, Bank of America Foundation, and staffing support of 

        22   local initiatives, and the Bank of America Rural 2000 

        23   initiative be maintained or expanded through this 

        24   merger.  Thank you.  

        25            MS. SMITH:    Thank you very much.  

        26   Mr. Holderman.  
.
                                                                     558


         1            MR. HOLDERMAN:   Good afternoon, Chairwoman 

         2   Smith, board members.  My name is Reed Holderman.  I'm 

         3   the western regional director for the Trust Republic 

         4   Land.  The Trust Republic Land is a private, nonprofit 

         5   land conservation organization that works nationwide to 

         6   conserve land for people.  We were founded in 1972.  We 

         7   specialize in conservation real estate.  Over the last 26 

         8   years, we have helped protect one million acres 

         9   nationwide for people to enjoy as public open space.  

        10            We have had an excellent working relationship 

        11   with Bank of America, and they have established a strong 

        12   record and responsible approach to a host of critical 

        13   environmental problems in this state.  With the 

        14   establishment of a dedicated Department of Environmental  

        15   Affairs, this financial institution has taken on a wide 

        16   variety of internal and external conservation 

        17   initiatives.

        18            They include, one, their financial and 

        19   institutional support for "Beyond Sprawl, New Pattern of 

        20   Growth to Fit the New California," a publication which 

        21   demonstrates that responsible planning and development 

        22   and the in-filling of our urban core areas is a 

        23   mainstream business concern if California is to continue 

        24   to be a healthy state.  

        25            Two, their founding support and funding for 

        26   Californians for the land.  This collaborative group of 
.
                                                                     559


         1   three major California foundations, the Hewlett Packard 

         2   and James Irvine Foundation and Bank of America, has led 

         3   to the creation of the California Center for Land 

         4   Recycling and the Great Valley Center.  CCLR, or the 

         5   California Center for Land Recycling, assists in the 

         6   cleanup and the reuse of contaminated urban properties 

         7   for public benefit.  The Great Valley Center is concerned 

         8   with Central Valley's growth and environment and works to 

         9   create sustainable communities.  

        10            And, three, the bank's leadership in the 

        11   California environmental dialogue, a group of business 

        12   and environmental leaders that work to reach agreements 

        13   on difficult business and environmental issues such as 

        14   habitat conservation and air quality.  In fact, yesterday 

        15   in Sacramento, CED held a press conference in which they 

        16   publicly announced their support for an 880 million 

        17   dollar proposed bond acting that -- buying parks and open 

        18   space in California.  

        19            In addition, Bank of America has worked directly 

        20   for the environment.  We have done business deals with 

        21   them through the bank that have benefited both California 

        22   and the bank shareholders.  One of our projects was to 

        23   protect the 14,000-acre Rutherford Ranch in San Diego 

        24   County.  

        25            Finally, I just want to say that if this merger 

        26   is approved, it is our hope that Bank of America's 
.
                                                                     560


         1   environmental leadership in California will be felt 

         2   nationwide.  Thank you.  

         3            MS. SMITH:    Thank you very much.  

         4   Mr. Watkins.  

         5            MR. WATKINS:   Thank you.  I feel a little bit 

         6   like a fish out of water.  I'm a second-level 

         7   subcontractor.  And all these distinguished speakers and 

         8   causes, I'm impressed.  But I was asked -- my name is 

         9   Mark Watkins.  I'm a Native American business out of 

        10   Tulsa, Oklahoma.  And I was asked to write a letter 

        11   expressing -- or stating how NationsBank had helped me.

        12             I incorporated in January of '97 and operated 

        13   out of my house for three employees.  Currently we have 

        14   about 30 employees in a 7,000 square feet building.  And 

        15   through the opportunities that direct support for the 

        16   minority development people, particularly in Dallas, 

        17   specifically Diane Kwayar, our business has had the 

        18   opportunity to grow and we continue to get their 

        19   support.

        20            They have networked us to other major people, 

        21   companies that do business with them first line.  And our 

        22   business is growing through the network.  This Diane 

        23   Kwayar has introduced me to other first lines that do 

        24   business with Nations, and our business continues to grow 

        25   and thrive, and I think it's directly associated with the 

        26   support of NationsBank.  
.
                                                                     561


         1            I'm active in a lot of minority groups in 

         2   Oklahoma, and I've never been to a minority trade show or 

         3   anything that Nations didn't have a presence.  And 

         4   they've gone out to great lengths to help me directly  

         5   and our company.  And we're now manufacturing some of the 

         6   bank product thanks to the opportunity through Nations.

         7            So we're -- of course, it's a little different 

         8   level.  We're out there, like I say, in the middle of 

         9   Oklahoma and I'm hearing some big pitchers here.  But I 

        10   haven't had anything but fantastic support from the bank 

        11   and their people.

        12            I feel a little insignificant with my story 

        13   but -- this is kind of overwhelming for an Okie to be out 

        14   here in San Francisco, first time anyway, and in front of 

        15   the Federal Reserve Board.  So I'm shaking a little bit.  

        16   But it's pretty awesome, and so is NationsBank has been, 

        17   and I'm sure Bank of America is the same.  So I have no 

        18   doubts that it wouldn't be good.  

        19            MS. SMITH:    We appreciate hearing from you and 

        20   from the middle of Oklahoma.  

        21            MR. WATKINS:   Thank you.  

        22            MS. SMITH:   Ms. Snay.

        23            MS. SNAY:   Thank you.  My name is Abby Snay.  

        24   I'm the director of Jewish Vocational Service, which is 

        25   an employment and training organization here in San 

        26   Francisco working with a very diverse group of 
.
                                                                     562


         1   individuals in San Francisco, including refugees from the 

         2   former Soviet Union and Bosnia, adults and youth with 

         3   disabilities, recent college graduates and adults in 

         4   transition, homeless individuals, and other individuals 

         5   making the transition from welfare to work.  

         6            In the last fiscal year, which just ended on 

         7   June 30th, our organization placed 1,100 such individuals 

         8   into employment throughout the Bay Area.

         9            I'd like to focus my remarks on Bank of 

        10   America's community involvement in San Francisco in the 

        11   realm of welfare to work.  And I should tell you that 

        12   outside of these initiatives, our agency over the last 

        13   five years has placed over 40 individuals with some kind 

        14   of barrier to employment within Bank of America.  

        15            Assisting public assistance recipients to 

        16   transition off of welfare and into the work force 

        17   certainly presents one of the major public policy 

        18   challenges of the decade, and this requires close 

        19   partnerships among the business, the public, and the 

        20   nonprofit sector.  Bank of America, in my opinion, has 

        21   begun to carve out a leadership role in corporate efforts 

        22   to train and employ public assistance recipients.

        23            B of A has created positions within the bank to 

        24   work with community groups and government entities and 

        25   the Department of Human Services to create training and 

        26   hiring opportunities for individuals on public
.
                                                                     563


         1   assistance.  Through the work of Susan Portugal and Karen 

         2   Shawcross, two managers in welfare-to-work programs, Bank 

         3   of America is working to identify appropriate positions 

         4   for such hiring within the bank and then coordinate 

         5   referrals through community groups.  And I'd like to 

         6   share several examples.  

         7            We have just completed a four-month training 

         8   program training refugees in office technologies, and two 

         9   hiring representatives from Bank of America came to this 

        10   class to both educate them on the hiring process in 

        11   general and to talk specifically about hiring 

        12   opportunities which may be appropriate within the bank.

        13            As of today, we have nine of these students in 

        14   the testing and interview process, with Karen Shawcross 

        15   serving as an internal advocate within the bank to 

        16   encourage and facilitate hiring.  And I'd like to come 

        17   back in several weeks and let you know that they have all 

        18   been hired.  And these would be cash handling, security 

        19   guard, and other administrative positions.  

        20            Also, we are in negotiations with Bank of 

        21   America, which approached our organization, to explore 

        22   two training partnerships for welfare recipients, one to 

        23   train proof operators and one to train tellers and 

        24   customer service representatives.  Through such 

        25   partnerships, the bank would provide training resources, 

        26   space, and instructional staff, as well as hiring 
.
                                                                     564


         1   opportunities, and support our organization financially 

         2   to provide the soft skills, training, the work readiness, 

         3   the appropriate behavior, work attire, what we call the 

         4   soft skills, case management, and retention support after 

         5   hiring.  

         6            Bank of America has also provided funding 

         7   support to our agency as a corporate sponsor of one of 

         8   our employees of the year last year at our annual 

         9   business luncheon.  And this was a young woman with 

        10   severe emotional disabilities who, through employment at 

        11   the Exploratorium, really transformed from a young woman 

        12   with such dread and antagonism towards authority into a 

        13   model employee and someone who is now headed towards 

        14   premedical study at college.  It's really been a great 

        15   success story.  

        16            I also know that Bank of America is working with 

        17   other community-based organizations in similar ways, 

        18   trying to match hiring needs of trainees and 

        19   welfare-to-work programs with hiring opportunities within 

        20   the bank and also, in one example, donating space for 

        21   training in unused office space that Bank of America 

        22   has.  

        23            Although I can only address these narrow aspects 

        24   of employment and training within this large sphere of 

        25   the whole merger decision, Bank of America has clearly 

        26   made a strong commitment to welfare to work and is one of 
.
                                                                     565


         1   the largest employers in San Francisco with significant 

         2   numbers of entry level jobs and has taken a leadership 

         3   position to provide important employment and training

         4   opportunities to San Franciscans.  And I would assume and 

         5   encourage a merged entity to maintain that commitment -- 

         6   I would assume that it would -- to community programs, to 

         7   hiring individuals coming off of welfare and, perhaps 

         8   most importantly, to retaining those entry level 

         9   positions within San Francisco.  Thank you.  

        10            MS. SMITH:    Thank you very much.  

        11   Mr. Friedman.  

        12            MR. FRIEDMAN:   Yes, thank you.  My name is 

        13   Jason Friedman.  I'm the vice president and director of 

        14   economic development for the Institute for Social and 

        15   Economic Development in Iowa City, Iowa.  ISED is a 

        16   statewide nonprofit agency that helps low-income, 

        17   unemployed, and underemployed individuals to start small 

        18   businesses as a way to become economically

        19   self-sufficient.  ISED also works in economically 

        20   distressed urban and rural areas, partnering with 

        21   communities seeking to revitalize their local economies 

        22   and create new businesses and jobs.  

        23            The proposed merger between NationsBank and Bank 

        24   of America has propound significance for my organization 

        25   and so I'm very pleased to be able to explain why today.  

        26            ISED is a micro-enterprise development agency.  
.
                                                                     566


         1   We provide training in self-employment for Iowans that 

         2   see small business development as a way to become 

         3   self-sufficient, provide for their families, and enter 

         4   the mainstream economy.  Over 65 percent of the nearly 

         5   1,000 Iowans we serve each year are on welfare or have 

         6   incomes under 150 percent of the federal poverty level.  

         7            The critical element of our success stems from 

         8   our relationships with the financial community.  We are 

         9   not a direct lender, so we rely very heavily on financial 

        10   institutions as one important source of capital to help 

        11   our clients start small businesses.  However, many of our

        12   clients fall outside traditional credit guidelines.  Over 

        13   the past ten years, we have been successful in 

        14   encouraging some banks in Iowa to look at the LMI market 

        15   as a profitable market for new customers and new business 

        16   opportunities.

        17            However, Iowa, unlike California, North 

        18   Carolina, New York, Maine, and many other states, does 

        19   not have a history of community development corporations, 

        20   community development financial institutions, and other 

        21   public/private models for revitalizing distressed 

        22   neighborhoods and creating jobs and businesses in

        23   low-income communities.  That is not to say that Iowa's 

        24   financial community is not committed to community 

        25   development.  Rather, we have not yet fully explored the 

        26   newer approaches to bank-driven public-private 
.
                                                                     567


         1   investments in low-income communities.

         2            However, in 1997 NationsBank bought Boatmen's 

         3   Bank, which was based in St. Louis and which had a small 

         4   presence in Iowa.  In many ways, that will be remembered 

         5   as the beginning of a new era of banking in Iowa.  For 

         6   the first time, a bank came to us and said, quote, "We 

         7   know what you do and we embrace it.  What can we do 

         8   together to increase business activity, jobs, and 

         9   investment in the communities that we work in together?"

        10            Needless to say, that was a breath of fresh air 

        11   for us.  And we didn't need to convince NationsBank that 

        12   serving the LMI market made good business sense.  They 

        13   were already doing it.  In fact, one of the first things 

        14   they did when the bank took over was to establish a 

        15   branch in the inner city of Des Moines, the capital city.

        16            Last summer, NationsBank Iowa made a major 

        17   investment in ISED to help subsidize the cost of our 

        18   business training programs in both urban and rural areas.  

        19   Today, Al Gross, the bank's vice president for community 

        20   investment, serves on our advisory council in Des Moines, 

        21   and Al and I are now exploring ways to strengthen and 

        22   grow our business relationship in ways that achieve our 

        23   mutual goals.

        24            Honestly, the attention we're getting from 

        25   NationsBank is great and the investment is very much 

        26   appreciated, but the bottom line is that Iowa now has a 
.
                                                                     568


         1   major financial institution that views the health and 

         2   growth of inner city markets as a major focus and 

         3   opportunity.  And we are proud to be a partner with 

         4   NationsBank in fulfilling those objectives.

         5            The proposed merger between Nations and Bank of 

         6   America will only serve to strengthen and expand that 

         7   commitment.  The new bank will provide a remarkable depth 

         8   and breadth of products and services to rebuilding 

         9   neighborhoods and increasing economic opportunity.  We 

        10   look forward to welcoming the new bank and the 

        11   opportunities it will provide to widen the circle of 

        12   economic opportunity for all Iowans.  Thank you.

        13            MS. SMITH:   Thank you.  Questions?  We don't 

        14   seem to have any questions for you, but we thank you very 

        15   much for coming and appreciate having your testimony.  

        16   Thank you all.

        17

        18

        19

        20

        21

        22

        23

        24

        25

        26
.
                                                              569

       1              MR. BLASDELL:  I have a prepared statement
           
       2   for anybody that wants them or needs them.  
           
       3              Introduction:  NEH and SALT, the Suburban
           
       4   Alternatives Land Trust, are two affiliated Marin
           
       5   County-based nonprofit community development and
           
       6   affordable home finance corporations.  I was a founder
           
       7   of NEH in 1978 and in 1993 of SALT, which incorporated
           
       8   this year, 1998.  As a developer/builder of new homes
           
       9   for almost two decades, I have known the difficulties of
           
      10   seeking and securing the cash and the credit needed to
           
      11   build and finance subdivisions and individual homes,
           
      12   sales and purchases, we produced over 2,500 homes, more
           
      13   than one in four affordable.  
           
      14              I particularly have had extensive experience
           
      15   assisting low-income first-time home buyers buying their
           
      16   first home in Marin, one of our nations most
           
      17   unaffordable and difficult own housing markets, and more
           
      18   recently with CASA HOME Loan contracts in ten Bay Area
           
      19   cities.  
           
      20              Support for the merger:  On behalf of NEH and
           
      21   SALT and the many low-income clients and working
           
      22   families we have served over the last two decades, I
           
      23   support the merger as I understand it from the publicly
           
      24   available materials that have been provided to me and to
           
      25   us.  
           
      26              At this time, as this is the first merger
           



                                                             570

       1   discussion in which I have participated, I am unclear
           
       2   about the roles and process after today's hearing is
           
       3   closed.  However, I offer the following additional
           
       4   comments for your considered action:  
           
       5              Whether or not the Federal Reserve Bank of
           
       6   San Francisco retains review and control over subsequent
           
       7   CRA evaluations of New Bank, as I referred to this, I
           
       8   think clear and adequate written direction is important
           
       9   now in case any other Federal Reserve Bank gets
           
      10   jurisdiction.  This can assure that California's diverse
           
      11   credit and banking needs are properly and adequately
           
      12   understood as well as provided for by those farther
           
      13   away, measurable and profitable result must be the
           
      14   standard achieved by the New Bank from a perspective of
           
      15   its new stockholders, any new regulators and ultimately
           
      16   by the number of new customers they secure beyond all
           
      17   existing customers they retain.
           
      18              Second item.  New Bank should make adequate
           
      19   written commitments establishing the numerical targets,
           
      20   goals and/or minimum CRA activities for California,
           
      21   e.g., make separate California commitments especially
           
      22   for program areas such as charitable giving, foundation
           
      23   operations and maintaining the state/community bank
           
      24   staff headquarters here.
           
      25              I would like to say on a personal and more
           
      26   anecdotal level that the Federal Reserve Bank is who I'm 
           



                                                             571

       1   speaking to directly obviously very directly in this
           
       2   hearing, not the two banks involved in the merger.  But
           
       3   I want to thank the Federal Reserve Bank for being so
           
       4   helpful with the programs that our nonprofit has
           
       5   developed throughout the Bay Area recently,  
           
       6              There is an attachment here from your
           
       7   community for quarterly from '96, it has really been
           
       8   helpful.  
           
       9              We have never done business with Bank of
           
      10   America, although I am a valued customer, have a
           
      11   personal account, over 25 years in my personal accounts. 
           
      12              We have brought projects to Bank of America,
           
      13   we have been supported with grants, we have had people
           
      14   volunteer from Bank of America, but we have never done a
           
      15   deal with Bank of America.  So I have no business
           
      16   conflict or position with respect to why I support the
           
      17   merger.  
           
      18              I would like to say for having been -- I'm a
           
      19   fifth-generation Californian, my father's family came
           
      20   here from Scotland via Boston a decade of the Gold Rush. 
           
      21   And I think the 33 million people that came after that
           
      22   have made California a very powerful, wonderful, nation
           
      23   and state.  
           
      24              I think the efforts of Mr. Giannini in
           
      25   creating the Bank of Italy here in San Francisco was
           
      26   very fortuitous and powerful.  
           



                                                             572

       1              For those of you that haven't had the
           
       2   opportunity to read the biography of the bank, the story
           
       3   of Bank of America, into the record should go this
           
       4   publication done in 1954, written by Mark Heath James
           
       5   and Betsy Jessie Rollin James, and it sets forth that
           
       6   this is the completion of A. P Giannini's dream from
           
       7   North Beach where people not being served because they
           
       8   were the Italian community in the wrong pat of town.  I
           
       9   think this in fact completes the dream of the Trans
           
      10   American vision 
           
      11              MS. SMITH:  Mr. Bonnett
           
      12              MR. BONNETT:  Thank you.  I want to thank the
           
      13   Federal Reserve Bank for providing this forum to testify
           
      14   in the proposed merger.  
           
      15              My name is Alvin Bonett.  I am here
           
      16   representing Ecumenical Association for Housing.  It's a
           
      17   nonprofit housing development housing corporation that's
           
      18   been in existence for some 30 years.  Our headquarters
           
      19   are in the San Rafael, California.  Just a comment that
           
      20   the corporate name may be a little misleading, we're not
           
      21   a religious organization.  
           
      22              We have over the years developed more than 50
           
      23   affordable properties throughout many different kinds of
           
      24   communities in California and Hawaii.  Those are home
           
      25   ownership type developments, rental developments for
           
      26   seniors, family, disabiled, a really wide-ranging number
           



                                                             573

       1   of properties and residents.  The properties so far
           
       2   total more than a quarter of a billion dollars that we
           
       3   have developed.  Most importantly, all of those
           
       4   permanently affordable.  
           
       5              We have done business with many different
           
       6   lenders over the years and we consider the Bank of
           
       7   America Community Development Bank to be a leader in
           
       8   lending in affordable housing.  We just don't see a
           
       9   whole lot of comparable structure there, which I want to
           
      10   comment.  
           
      11              EAH itself is not opposed to the proposed
           
      12   merger, nor do we support it, but there are two remarks
           
      13   that I do want to make.  One about the community
           
      14   development bank itself.
           
      15              We found that in comparison that the
           
      16   structure of that bank is really very special.  It has
           
      17   the most appropriate structure in terms of being
           
      18   vertically integrated and being able to serve our needs
           
      19   as a developer and manager of affordable housing.
           
      20              That structure allows them to make rapid and
           
      21   accurate decisions on credit and that is not shared by
           
      22   all lenders.  They are able to quickly distinguish
           
      23   between routine matters and very important matters in
           
      24   lending.  That is also not shared by all lenders when it
           
      25   comes to affordable housing. 
           
      26              Their way of working with credit decisions
           



                                                             574

       1   and being able to speak as almost a single voice from
           
       2   top to bottom is not shared by many lenders today.  They
           
       3   understand the business of nonprofit housing
           
       4   development, which, in California, is a very large
           
       5   activity.  They also understand the lower-income housing
           
       6   markets, which is not shared by all lenders.  
           
       7              They understand California, which is really
           
       8   like four different states.  The Northern California,
           
       9   Southern California, the coastal and the inland all
           
      10   operate in -- as market areas very differently from each
           
      11   other and have to be handled differently. 
           
      12              The other point that I wanted to comment on
           
      13   is that Nationsbank has its own community development
           
      14   corporation, which, if brought to California, will
           
      15   provide a competitor to organizations like ourselves and
           
      16   other private and nonprofit developers here.  That gives
           
      17   us a great deal of concern given the level of
           
      18   competition. 
           
      19              In conclusion, I want to say that the merger
           
      20   should not diminish nor compromise the business
           
      21   structure in the capacity of the Community Development
           
      22   Bank.  It's done very, very well and I'd hate to see
           
      23   anything change that. 
           
      24              Secondly, the merger should not produce
           
      25   business activities that compete with or compromise the
           
      26   existing client relationships that we share with the
           



                                                             575

       1   Community Development Bank. 
           
       2              Thank you all once more.
           
       3              MS. SMITH:  Thank you very much.  
           
       4              Ms. Guilfoil. 
           
       5              MS. GUILFOIL:  Good afternoon.  My name is
           
       6   Martina Guilfoil.  I am Executive Director of Inglewood
           
       7   Neighborhood Housing Services in Inglewood, California. 
           
       8              INHS is one of 181 member organizations of
           
       9   the National NeighborWorks Network, a network that works
           
      10   to revitalize, urban, suburban and rural neighborhoods
           
      11   across America.  
           
      12              NeighborWorks organizations create healthy
           
      13   communities by working with residents, business peoploe,
           
      14   government officials and and other partners.  Together
           
      15   these partners create new housing, rehabilitate existing
           
      16   housing, develop multi-family housing and help lower-
           
      17   income families become homeowners.  
           
      18              NeighborWorks also identify and help develop
           
      19   resident leaders, stimulate residents to work together
           
      20   to improve the appearance and safety of their
           
      21   communities and work with other civic organizations and
           
      22   solve social problems and improve the quality of life in
           
      23   their communities. 
           
      24              Today I'm here on behalf of the National
           
      25   NeighborWorks Housing Network, a membership organization
           
      26   of NeighborWorks organizations.  NNHN acts as an
           



                                                             576

       1   advisory group on public policy that promotes community
           
       2   development activity in our communities.  Since the
           
       3   primary activity of most NWOs is to channel loan
           
       4   capital, mostly through conventional lending
           
       5   institutions to lower-income communities and borrowers,
           
       6   bank modernization is a concern to us. 
           
       7              NNHN wants to ensure that reinvestment and
           
       8   access to flexible lending and credit products continues
           
       9   to happen through this modernization process in our
           
      10   neighborhoods.  To this end, we have hosted several
           
      11   meetings with Bank of America and NationsBank to discuss
           
      12   partnership opportunities that will help them deliver on
           
      13   their $350 billion commitment to the community.  
           
      14              These opportunities include multi-family
           
      15   lending and investment, first and second mortgage
           
      16   lending for home ownership, investments and
           
      17   participations with local NWOs and home ownership
           
      18   counseling and education. 
           
      19              Presently, there are at least 60 NWOs
           
      20   operating in 22 states that have formed partnerships
           
      21   with Bank of America and NationsBank or other
           
      22   institutions acquired by one of them.  In addition,
           
      23   there are approximately 50 other NWOs that exist in
           
      24   these bank service areas that could enter into similar
           
      25   partnership. 
           
      26              From 1995 to 1997 the NeighborWorks network
           



                                                             577

       1   captured a total of $1.3 billion in direct investment. 
           
       2   Of that total direct investment, 65 percent or 863
           
       3   million occurred within the 25 states where Bank of
           
       4   America and NationsBank operate.  Seventy-two percent of
           
       5   that 863 million was invested in home ownership units at
           
       6   an average cost of $69,203.  The remaining investment
           
       7   was for rental and mutual housing.  And, just to note,
           
       8   60 percent of all of the network's first mortgage
           
       9   borrowers are minority households. 
           
      10              NNHN is supportive of this merger providing
           
      11   this does not does not dilute the cumulative efforts
           
      12   that the two banks would make independently of one
           
      13   another, but, in fact, leads to a significant expansion
           
      14   and investment in distressed communities.  
           
      15              NNHN believes Bank of America and NationsBank
           
      16   will need to develop strong partnerships in order to
           
      17   deliver on their $350 billion commitment. 
           
      18              In addition, in order to increase their
           
      19   lending rates to minority household borrowers and
           
      20   maintain deliveries of special niche products that are
           
      21   so vital to our local communities, we encourage strong
           
      22   partnerships to be developed so that lending can occur
           
      23   at a local level.  
           
      24              MS. SMITH:  Thank you very much. 
           
      25   Mr. Gottschall. 
           
      26              MR. GOTTSCHALL:  Good afternoon.  My name is
           



                                                             578

       1   Bruce Gottschall and I am Executive Director of
           
       2   Neighborhood Housing Services of Chicago, one of the
           
       3   member organizations of NeighborWorks network. 
           
       4              Just to give you a little background on NHS
           
       5   in Chicago, we are a 23-year-old partnership of
           
       6   residents, lenders and in the city government.  We are
           
       7   actively working in 18 differrent neighborhoods in the
           
       8   City of Chicago and partnered with about 200 financial
           
       9   institutions in that area.  
           
      10              Ourselves directly have been involved making
           
      11   10,000 loans for housing rehabilitation, home
           
      12   improvement, home ownership and community development
           
      13   over that 20-years-plus activity impacting more than
           
      14   20,000 units.  We're involved nationally with the
           
      15   NeighborWorks campaign for home ownership and with the
           
      16   Neighborhood Housing Network. 
           
      17              In Chicago, the Bank of America and its
           
      18   predecessor organizations, Continental Bank and Bank of
           
      19   America Illinois, have been leaders in assisting NHS of
           
      20   Chicago to serve the credit and community development
           
      21   needs of an increasing number of people and
           
      22   neighborhoods over the last 23 years.  
           
      23              This is one example, ten years ago, then,
           
      24   Continental Bank made a $20 million commitment at
           
      25   below-market rates to develop the Chicago home ownership
           
      26   program, which assisted NHS of Chicago to become
           



                                                             579

       1   Illinois now only not-for-profit mortgage bank and
           
       2   substantially increased our capacity to be a community
           
       3   development lender.  
           
       4              Five years ago, when Bank of America entered
           
       5   the market, they expanded that commitment to the home
           
       6   improvement program to $40 million and invested in the
           
       7   development of a new NHS operation had the West Humboldt
           
       8   neighborhood, assisted in funding increased commitment
           
       9   to NHS's lending capacity, to market the lending
           
      10   programs, to assist in funding the high interest --
           
      11   excuse me, high risk revolving loan fund -- it's not
           
      12   high interest, it's usually low interest -- to support
           
      13   the NHS operation in other Chicago neighborhoods.  
           
      14              Bank of America community development staff
           
      15   have provided personal leadership in the expansion of
           
      16   NHS staff activity in Chicago neighborhoods.  Among
           
      17   other things, their consultation in financial planning
           
      18   prepared NHS to submit and be approved for matching
           
      19   funds as a community development financial institution. 
           
      20              In Chicago, the Bank of America's leadership,
           
      21   involvement, investment, lending and grant relationship
           
      22   has produced benefits for neighborhoods and families. 
           
      23              In past mergers, the new entities have
           
      24   increased their resources to NHS of Chicago and to the
           
      25   community.  
           
      26              As NHS of Chicago continues to fulfill its
           



                                                             580

       1   community development and lending commitments in the
           
       2   neighborhoods, our expectation, based on past
           
       3   experience, is that Bank of America and NationsBank will
           
       4   increase resources based on their size and institutional
           
       5   capacity.  
           
       6              We're supportive of this merger because of
           
       7   our very positive history and working relationships with
           
       8   Bank of America in Chicago.  In addition, our
           
       9   discussions with Bank of America and NationsBank
           
      10   representatives make us optimistic about their
           
      11   commitment to communities and to partnerships. 
           
      12              The $350 billion commitment demonstrates this
           
      13   in the interest in developing local partnerships give
           
      14   specific avenues that these resources can be delivered
           
      15   in local communities.  Because of this, we believe it
           
      16   will result in increased resources for community
           
      17   development. 
           
      18              Community development, by its very nature, is
           
      19   local.  In order to fully transform those underserved
           
      20   neighborhoods, like the neighborhoods which NHS
           
      21   operates, specialized programs and products are needed
           
      22   that address very specific problems that cause decline. 
           
      23   The NeighborWorks network is actively engaged with Bank
           
      24   of America and NationsBank in developing innovative
           
      25   partnership to bridge this gat and creative mechanism
           
      26   responive to local communities. 
           



                                                             581

       1              We are working with Bank of America and
           
       2   Nations to strengthen and enhance the national
           
       3   commitment as well as, extremely importantly, build on
           
       4   local partnerships and strengthen their capacity. 
           
       5              We are confident this working relationship
           
       6   and the commitment to community development and
           
       7   innovative local and national partnerships will result
           
       8   in effective and additional resources. 
           
       9              NHS appreciates the opportunity to testify at
           
      10   these hearings because it focuses the attention on the
           
      11   need to sustain and enhance local community development
           
      12   efforts and resources.  Thank you 
           
      13              MS. SMITH:  Thank you very much.  Ms. Reese. 
           
      14              MS. REESE:  Thank you and good afternoon.  My
           
      15   name is Kate Reese.  I'm the executive director of
           
      16   Neighborhood Housing Services of St. Louis.  Our
           
      17   organization is one of 181 nonprofit and community-based
           
      18   housing corporations of the NeighborWorks networks. 
           
      19              Neighborhood Housing Services of St. Louis
           
      20   provides services to low-to-moderate-income households
           
      21   in the form of home repair loans and home buyer and
           
      22   insurance education to allow for successful home
           
      23   ownership experiences in neighborhoods throughout the
           
      24   St. Louis region. 
           
      25              The board of directors of Neighborhood
           
      26   Housing Services of St. Louis is in support of the
           



                                                             582

       1   merger of Bank of America and NationsBank, due in part
           
       2   to a leadership role that NationsBank has played in
           
       3   redevelopment efforts in the St. Louis area. 
           
       4              Since their acquisition of Boatmen's Bank,
           
       5   NationsBank has put together a team of St. Louis's in
           
       6   their community investment and development departments
           
       7   that already has made an impact in St. Louis and with
           
       8   our particular organization. 
           
       9              I really would like to stress the importance
           
      10   of having the right St. Louis since taking the right
           
      11   job.  I think that was key to the success they've had in
           
      12   the last year. 
           
      13              Last year and again this year, NationsBank
           
      14   has been one of our top private-sector partners and has
           
      15   provided important funding to enable us to market our
           
      16   product, undertake crucial planning efforts and grow our
           
      17   home ownership program to provide critical, one-on-one
           
      18   counseling and education to make the goal of home
           
      19   ownership a reality. 
           
      20              We expect to have more than doubled our
           
      21   capacity during 1998 with the assistance of NationsBank
           
      22   and our outreach program.  
           
      23              On the national level, I have been involved
           
      24   in some preliminary conversations with both Bank of
           
      25   America and NationsBank.  They look more than promising
           
      26   towards the end of, one, increasing development and
           



                                                             583

       1   production of affordable housing units, two, making
           
       2   mortgages available to low and moderate income families
           
       3   to help stabilize our neighborhoods, and, three provide
           
       4   the important counseling and education that ensures that
           
       5   the home ownership experience is successful for both the
           
       6   family and the community in which they choose to buy. 
           
       7              With the local track record in St. Louis and
           
       8   the promise of a very comprehensive plan for the future,
           
       9   I say, without a doubt, that I look forward to the
           
      10   merger of NationsBank and Bank of America and the
           
      11   commitment they are making to the work of community
           
      12   development organizations across the country. 
           
      13              It was exactly one year ago, and maybe to the
           
      14   day, when Nations officially opened their doors in 
           
      15   St. Louis.  I have to admit that those of us in the
           
      16   nonprofit world in St. Louis were a little bit nervous. 
           
      17   We'd had a very good track record with Boatmen's in the
           
      18   past and our nerves were on edge. 
           
      19              But I can truthfully say that nations has
           
      20   lived up to prior commitments made by Boatmen's, and,
           
      21   indeed, exceeded their goals in the past year in
           
      22   reinvestment in our community.  
           
      23              Thank you.  
           
      24              MS. SMITH:  Thank you very much. 
           
      25   Ms. Wagstaff. 
           
      26              MS. WAGSTAFF:  Thank you.  My name is Fran
           



                                                             584

       1   Wagstaff, and I'm pleased to be here this afternoon
           
       2   representing the Nonprofit Housing Association of
           
       3   Northern California, NPH.  
           
       4              NPH is a membership organization of some 500
           
       5   members, including regional and community-based housing
           
       6   nonprofits, service providers, consultants, lenders
           
       7   public agencies and other parties involved in the
           
       8   production of management of affordable housing in
           
       9   Northern California. 
           
      10              I'm a nonprofit developer and a member and
           
      11   past president of NPH.  As director of Mid Peninsula
           
      12   Housing Coalition, I secured the first CRA multi-family
           
      13   loan in California by the Bank of America for
           
      14   multi-family housing and I've used Bank of America for
           
      15   numerous loans since that time. 
           
      16              Nonprofit Housing Association has not taken a
           
      17   position for or against the merger, but I am here today
           
      18   to emphasize NPH's concerns regarding the proposed
           
      19   merger and its effect on our constituents. 
           
      20              First I want to describe the active and
           
      21   strong network of Nonprofit Housing Organization which
           
      22   exists here.  NPH last conducted a poll of nonprofit
           
      23   housing production in 1995-'96.  In the nine Bay Area
           
      24   counties we found that non-profits had produced over
           
      25   15,000 units of houseing in the prior six years at a
           
      26   development cost exceeding $1 billion.  In one year
           



                                                             585

       1   alone, 1994, nonprofit housing production accounted for
           
       2   61 percent of all multi-family housing built in the
           
       3   region.  Eighty-six percent of this housing serves
           
       4   low-income households and over 50 percent is targeted to
           
       5   very low-income households. 
           
       6              Unlike for-profit housing, this housing
           
       7   promises to remain affordable for the long term. 
           
       8              Our active nonprofit community has been
           
       9   involved for many years in helping to shape the programs
           
      10   that are offered by the Bank of America Community
           
      11   Development Bank.  This bank, based in California, has
           
      12   understood the unique needs of the housing market which
           
      13   has the dubious distinction of being the least
           
      14   affordable in the nation, according to a recent study by
           
      15   the Center for Budget and Policy Priority.  
           
      16              We have benefited by this California presence
           
      17   and have counted Bank of America as an important partner
           
      18   in addressing local needs and in building local
           
      19   capacity.  For example, the Bank of America Challenge
           
      20   has encouraged talented graduate students to study
           
      21   affording housing development and compete with their
           
      22   peers by developing affordable housing proposals.  This
           
      23   Challenge competition has generated competent staff for
           
      24   many nonprofit agencies, thus helping to build capacity. 
           
      25   We would like to see this and other innovative community
           
      26   development programs continued.  
           



                                                             586

       1              NPH is concerned that NationsBank will extend
           
       2   the use of their own for-profit CDC to California and
           
       3   with thereby compete for scarce resources and
           
       4   inadvertently undermine local organizations. 
           
       5              In addition, the BankAmerica Foundation has
           
       6   been an important source of support for our industry. 
           
       7   If this foundation is integrated into the central
           
       8   corporate in North Carolina, our access to these funds
           
       9   will almost certainly diminish.  We would like to see a
           
      10   written commitment to contribute a percentage of the
           
      11   bank's earnings to charitable contributions in Northern
           
      12   California. 
           
      13              Since most of NPH's members are engaged in
           
      14   producing multi-family housing, we expected to see an
           
      15   increased CRA commitment to multi-family housing as a
           
      16   result of this merger.  We note with disappointment that
           
      17   the bank's proposal is not targeted in regards to
           
      18   serving low-income families, nonprofit developers or in
           
      19   regards to offering a flexible mix of financing,
           
      20   including construction, term, bridge, bond programs and
           
      21   tax credit investments.  All these goals need to be
           
      22   specific and in writing. 
           
      23              The business relationships of our members
           
      24   with Bank of America have developed over many years.  We
           
      25   don't want this local presence, nor do we want a huge
           
      26   new bank replacing local staff in making decisions from
           



                                                             587

       1   North Carolina or reinventing the wheel when it comes to
           
       2   community lending.  Our members have benefited from the
           
       3   lively spirit of competition in community lending which
           
       4   has result in lower cost for loans and more flexible
           
       5   terms.  The merger which is proposed will in the long
           
       6   run curtail competition and roll back the gains we have
           
       7   made, therefore, we urge you to consider these issues
           
       8   completely.  Thank you.  
           
       9              MS. SMITH:  Thank you very much.  Questions
           
      10   or comments.  
           
      11              MR. FRIERSON:  Mr. Blasdell, you indiated you
           
      12   are a little unclear on the process.  Let me give you a
           
      13   somewhat two-minute summary of we're doing. 
           
      14              The Board of Governors has an application
           
      15   before it for NationsBank to acqauire Bank of America. 
           
      16   The board is seeking the comments of the public, both in
           
      17   written form and also the comments in this two days of
           
      18   public meetings we've had in San Francisco.  
           
      19              All of these comments will be made are part
           
      20   of the record.  They will be reviewed by the board, and
           
      21   they will be viewed in light of the statutory factors
           
      22   that the board is required to consider under the Bank
           
      23   Holding Company Act. 
           
      24              The focus of a lot of the comments we've
           
      25   received, both written and today and yesterday in public
           
      26   meetings, deal with what we call the convenience in
           



                                                             588

       1   needs.  The board is required to consider the effect of
           
       2   the proposal on the convenience and needs of the
           
       3   communities to be served.  And the information that we
           
       4   receive will be made a part of the record and will be
           
       5   carefully reviewed and taken into account when the board
           
       6   makes its final decision.
           
       7              MS. SMITH:  If we don't have any other -- any
           
       8   questions, then we thank you very much for coming this
           
       9   afternoon, and we'll move on to the next panel. 
           
      10              (Pause in proceedings.) 
           
      11              MS. SMITH:  We'll start with Mr. Lee. 
           
      12              MR. LEE:  Thank you.  I am executive director
           
      13   of the Chinese American Voters Education Committee, a
           
      14   nonprofit, nonpartisan Asian American grass roots voter
           
      15   registration education organization in San Francisco,
           
      16   which operates throughout the Bay Area in immigrant
           
      17   communities educating new communities about voter
           
      18   registration and civic participation.  We have been in
           
      19   existence since 1976.  
           
      20              Our relationship with Bank of America began
           
      21   over a decade ago when our local bank representative,
           
      22   Irene D. Riley, then manager of the Chinatwon branch,
           
      23   became one of the first supporters of voter
           
      24   registration.  Irene and the bank have supported us
           
      25   generously every year since. 
           
      26              In 1995, Bank of America and the Asian
           



                                                             589

       1   Business Association were the first to support our most
           
       2   ambitious effort to reach new citizens through the first
           
       3   coordinated bilingual print, television, radio, public
           
       4   service campaign to encourage voter registration
           
       5   participation amongst the new immigrant community, some
           
       6   of them the most under-represented communities in the
           
       7   Bay Area. 
           
       8              We developed and designed a public relations
           
       9   campaign, I brought along a poster.  Sort of like this
           
      10   (indicating), in Chinese and English.  This one campaign
           
      11   alone over the last three years has helped us register
           
      12   over 50,000 Asian American voters in the San Francisco
           
      13   Bay Area, a phenomenal increase in terms of voter
           
      14   registration for a new counter-community.  We went from,
           
      15   in 1991, from 13 percent of the registered voters in San
           
      16   Francisco to, as of 1996, some 18 percent of the city's
           
      17   registered voters, a phenomenal increase. 
           
      18              This would not have been possible without the
           
      19   support of Bank of America, Irene and many of the
           
      20   dedicated people that we work with at the bank.  More
           
      21   recently, we worked with Irene to develop a pole for
           
      22   Chinese American voters in San Francisco to help better
           
      23   understand the issues that were of interest to the
           
      24   community. 
           
      25              Last year we -- last month we executed the
           
      26   pole, and, for the first time, developed a comprehensive
           



                                                             590

       1   plan as to what were the top priorities within our
           
       2   community and Bank of America has led, in terms of its
           
       3   support, in disseminating the results of the pole to
           
       4   nonprofit groups, elected officials and other people in
           
       5   positions of public policy.  
           
       6              We have been told by Bank of America and by
           
       7   Irene E. Riley and others that this merger is good for
           
       8   the health of the bank and that investment in the
           
       9   community, charitable contributions, will increase and
           
      10   not decrease with the merger, therefore, we are
           
      11   supportive of the merger.
           
      12              MS. SMITH:  Thank you very much.  Ms. Garcia. 
           
      13              MS. GARCIA:  Good afternoon.  I'm Donna
           
      14   Garcia.  I am the Executive Director of the Community
           
      15   Housing Services located in Wichita, Kansas.  My
           
      16   organization is a chartered member of the National
           
      17   Neighborhood Networks, which consists of 181 local work
           
      18   -- local groups working throughout the United States at
           
      19   the grass roots level improving housing standards and
           
      20   promoting affordable housing. 
           
      21              We are a relatively new nonprofit, having
           
      22   been formed less than three years ago.  At the time that
           
      23   we started, NationsBank stepped forward and provided us
           
      24   with funding for development, not an easy risk to take
           
      25   for an organization with no track record at all.  They
           
      26   recognized and made a commitment to the low and moderate
           



                                                             591

       1   income residents of our community.  
           
       2              Since that time, we have continued to receive
           
       3   both strong and consistent support financially and, more
           
       4   importantly, perhaps, from NationsBank employees and
           
       5   they serve on our board and on committees in several
           
       6   different capacities. 
           
       7              We work to revitalize the lower-income
           
       8   neighborhoods in Wichita, and we try to create healthy
           
       9   communities by working with residents, business people,
           
      10   government officials and other partners.  These
           
      11   partnerships join together and rehabilitate housing and
           
      12   do provide home ownership opportunities for the low to
           
      13   moderate income residents of our area. 
           
      14              We also identify and assist in the
           
      15   development of resident leaders.  We try to encourage
           
      16   residents to work together and improve both the
           
      17   appearance and the safety of their neighborhoods. 
           
      18              We collaborate with other organizations to
           
      19   solve problems and improve the quality of life. 
           
      20              NationsBank has assisted us greatly, however,
           
      21   by allowing us to channel local loan capital, mostly
           
      22   through conventional lending forms, to lower income
           
      23   communities.  NationsBank has provided specialized loan
           
      24   products that lower the down payment and the closing
           
      25   costs and they have enabled us to assist home buyers in
           
      26   purchasing their home. 
           



                                                             592

       1              They've also continued to provide operating
           
       2   capital to our organization.  This enables us to do
           
       3   planning, outreach, marketing and counseling.  These are
           
       4   the first and the most critical steps in creating new
           
       5   housing opportunities in our community. 
           
       6              In our community there is a significantly
           
       7   underserved population located in the northeast area of
           
       8   Wichita.  NationsBank has led the redevelopment of that
           
       9   area by opening a new branch in the heart of that
           
      10   community.  It resulted in nearly three-quarters of a
           
      11   mile of new economic development in the area including
           
      12   the fact that the City of Wichita has now gone in and
           
      13   redone the streets in that area also.  
           
      14              Community Housing Services welcomes the
           
      15   merger of NationsBank and Bank of America and truly
           
      16   believes that it will lead to a significant expansion of
           
      17   their investment in the distressed communities in
           
      18   Wichita.  CHS anticipates being able to maintain the
           
      19   excellent relationship it has with this local partner
           
      20   and appreciates the potential strength and support which
           
      21   should result from a stronger national partner.  A
           
      22   national community bank development program can only
           
      23   better the low and moderate income residents of our
           
      24   area. 
           
      25              Thank you.
           
      26              MS. SMITH:  Yes, Ms. Fentress, you're next. 
           



                                                             593

       1              MS. FENTRESS:  Good afternoon, my name is
           
       2   Marvalette Fentress.  I am the Executive Director of the
           
       3   Third Ward Redevelopment Council in Houston, Texas.  The
           
       4   Third Ward Redevelopment Council, or TWRC, is a
           
       5   community-based umbrella organization representing over
           
       6   40 different organizations and institutions within the
           
       7   greater Third Ward.  We represent an area of
           
       8   approximately 35,000 people, 12 different neighborhoods,
           
       9   the majority of which are low and moderate income
           
      10   families. 
           
      11              I am here today representing our organization
           
      12   and the fact that we have six community development
           
      13   corporations that work under our umbrella, and they are
           
      14   intricately involved with the provision of affordable
           
      15   housing and economic development opportunities within
           
      16   that area.  
           
      17              I am here to support the merger between
           
      18   NationsBank and Bank of America and speak specifically
           
      19   on the relationship that we have been able to develop
           
      20   over the last six years with both NationsBank and Bank
           
      21   of America.  They have basically supported several of
           
      22   our initiatives to provide affordable housing and
           
      23   business development opportunities in that area, and
           
      24   they've served even in a greater capacity, not just as 
           
      25   a lending institution, but as a community partner and a
           
      26   stakeholder in many of the things that we have tried to
           



                                                             594

       1   undertake in that underserved part of Houston. 
           
       2              We support the merger because of the 350
           
       3   billion, of course, increased lending opportunities
           
       4   within that area, but we also support it for several
           
       5   other related initives that the new bank proposes.  One
           
       6   of them in particular is the community development
           
       7   intermediary financing that the merger will basically
           
       8   impact.  
           
       9              We have, as I stated, six community
           
      10   development organizations and many of them are in their
           
      11   formative years, which means they are really struggling
           
      12   in need of financial as well as technical assistance,
           
      13   and NationsBank and Bank of America have proved
           
      14   themselves to be supportive of these institutions.  By
           
      15   funding these intermediaries, we basically help to get
           
      16   the financial and technical assistance to these
           
      17   organizations directly. 
           
      18              Secondly, the Special Purpose Lending
           
      19   Initiative, where NationsBank and Bank of America
           
      20   basically realized the significance of supporting these
           
      21   other types of institutions, religious institutions,
           
      22   community-based organizations such as ours.  
           
      23              We are not involved directly with the bricks
           
      24   and mortar of development.  We are a planning and
           
      25   coordinating organization.  We help to facilitate the
           
      26   development of these projects and NationsBank has
           



                                                             595

       1   realized our significant contribution to actually making
           
       2   a project happen, and we're very grateful for that. 
           
       3              We support NationsBank because of the
           
       4   tremendous relationship that we've already experienced
           
       5   with them and we think that past performance is probably
           
       6   the greatest indicator of future performance, and they
           
       7   have performed in an exemplary fashion with basically
           
       8   our organization from inception.  They serve on our
           
       9   board of directors, every initiative that we undertake
           
      10   they have been right there in the forefront as community
           
      11   leaders and stakeholders. 
           
      12              So we urge you to support this merger, not
           
      13   delay it in any way, because we feel that even a day's
           
      14   delay in this merger in making those funds available to
           
      15   these much needed communities could result in years
           
      16   delay of low and moderate income family and realizing
           
      17   their dream of home ownership and small business and
           
      18   entrepreneur's realizing his dream of business.  
           
      19              I want to thank you for the opportunity to
           
      20   speak to you.  
           
      21              MS. SMITH:  Thank you.  Any questions?  No
           
      22   questions, so we thank you very much for coming this
           
      23   afternoon.  Just a reminder, if you have any
           
      24   supplemental comments, they will be due by a week from
           
      25   today. 
           
      26              (Pause in proceedings.)
           



                                                             596

       1              MS. SMITH:  Ms. Scott will be a panel of one. 
           
       2              MS. SCOTT:  Thank you.  I hadn't anticipated
           
       3   that.  
           
       4              Good afternoon.  My name the Lue Venia Scott
           
       5   and I'm a program manager in the Oakland office of the
           
       6   California Community Economic Development Association of
           
       7   CCEDA.  My testimony today is on behalf of CCEDA and our
           
       8   Executive Director, Ralph Lippman
           
       9              CCEDA is a statewide membership association
           
      10   of community-based organizations that are actively
           
      11   engaged in the revitalization of California's low-income 
           
      12   neighborhoods.  In their respective communities, CCEDA
           
      13   members produce results in many areas of community
           
      14   building, including, but not limited to the production
           
      15   of housing, industrial and commercial space, employment
           
      16   training, job creation, business startup and expansion
           
      17   and the provision or facilitation of human services. 
           
      18              State associations provide clearinghouses for
           
      19   information and action.  To build the capacity and
           
      20   expand the resources for community-based organizations,
           
      21   30 state associations advocate on behalf of the nation's
           
      22   2,200 CDCs. 
           
      23              Critical partners are banks like NationsBank
           
      24   and the Bank of America.  Forty-eight percent of the
           
      25   nation's community development corporations reported the
           
      26   receipt of more than $50,000 in grants, investments or
           



                                                             597

       1   loans in a National Congress of Community Economic
           
       2   Development study, which was published in 1993, called
           
       3   "Against All Odds."  This amount has substantially
           
       4   increased over the last five years as deal structure
           
       5   changed, subsidies shrunk and our members grew more
           
       6   financially sophisticated. 
           
       7              State associations and CDCs are very
           
       8   concerned that mergers may result in the attenuation of
           
       9   partnerships with banks for community economic
           
      10   development projects.  In this time of devolution and
           
      11   consolidation of resources at the state level, any
           
      12   decline is a serious concern.  
           
      13              We have found that local groups and state
           
      14   associations have a much more difficult time negotiating
           
      15   support from their banks following a merger. 
           
      16              This is particularly underscored today.  The
           
      17   Bank of America, its foundation and Community
           
      18   Development Bank have been unflagging partners of the
           
      19   work of in CCEDA and its members. 
           
      20              Jim, Wagele, Susan Howard, Don Mulland and
           
      21   Mike Mantle have been responsive and supportive.  
           
      22              The rural initiative and the economic
           
      23   initiative are national models.  To be at this juncture
           
      24   in the merger and still have uncertainty in the absence
           
      25   of written commitment about the organizational fate of
           
      26   the Community Development Bank, the initiatives and the
           



                                                             598

       1   foundationss targeting is, in our view, unacceptable. 
           
       2   California deserves better. 
           
       3              We believe that CD Bank has acquired
           
       4   considerable knowledge and expertise regarding
           
       5   development in California.  We would like to see it stay
           
       6   here.  
           
       7              We note the integral role the foundation has
           
       8   played in the operation of California's community-based
           
       9   groups.  A percentage of the bank's earnings would
           
      10   ideally be earmarked for California's communities with
           
      11   the decision-making group that is close to the ground in
           
      12   the west, not the southeast. 
           
      13              We would like to see an established target
           
      14   goal that would help us to back into conclusions
           
      15   regarding how far the new initiatives will go. 
           
      16              Finally, the nations state CDC associations
           
      17   want a firm commitment from banks that are merging to
           
      18   work with their state associations.  We want every
           
      19   financial institution to recognize that policy advocacy
           
      20   and training are important to the viability of community
           
      21   economic development. 
           
      22              We suggest that merging institutions invest a
           
      23   portion of their resources to support the work of state
           
      24   CDC associations.  An alternative approach beyond a
           
      25   direct multi-year commitment to CCEDA and groups like us
           
      26   such as housed in California could be for the banks to
           



                                                             599

       1   utilize the National Congress for Community Economic
           
       2   development as an intermediary which would serve as the
           
       3   granting entity and then distribute funding to
           
       4   affiliated state groups in which the newly-merged entity
           
       5   would do business. 
           
       6              We believe that banks understand that a rich
           
       7   and vibrant environment is good for the community and
           
       8   for business.  We believe that they understand that
           
       9   public policy is moving to the states.  We urge a
           
      10   written commitment to support California and state
           
      11   associations.  Thank you.
           
      12              MS. SMITH:  Thank you very much.  Any
           
      13   questions? 
           
      14              Thank you very much for coming this
           
      15   afternoon.  
           
      16              We have gotten ahead of schedule.  So, to
           
      17   make up for all the breaks we didn't have yesterday,
           
      18   we're going to take a one-hour break now.  
           
      19              (Recess taken.)                             
           
      20   
           
      21   
           
      22   
           
      23   
           
      24   
           
      25   
           
      26   
           





                                                                   600


         1            MS. SMITH:  All right, we are reconvened.  This

         2   is Panel 28, and we're going to start with Mr. Lawhorne.

         3       MR. LAWHORNE:  Good afternoon.  I am Don Lawhorne,

         4   President and CEO of MESBIC Ventures Holding Company, I'm

         5   also cofounder and managing director of Pacesetter Growth

         6   Fund.  These two funds exist in Dallas, Texas to provide

         7   equity capital to promising competitive minority-owned

         8   firms.

         9            In light of time restraints, I have submitted my

        10   remarks in writing at my entry to the panel.

        11            The strategic and economic realities for the

        12   proposed merger of NationsBank and Bank of America are

        13   being triggered by global market pressures and perhaps

        14   more importantly today's fast growing digital economy.  It

        15   is well-known today that our nation has entered a new

        16   industrial revolution where technology will change how we

        17   work, how we shop and how we handle use finance.

        18            The digital economy will further fuel consumer

        19   expectations for excellent services and competitive

        20   products.  This will require competitive and extraordinary

        21   capacity for the nation's banking system.

        22            I am here to support NationsBank/Bank of America

        23   merger because it will provide access to larger amounts of

        24   equity capital for the nation's most underserved equity

        25   market, that is firms owned and led by minority

        26   entrepreneurs.
 .

                                                                   601


         1            NationsBank Texas came into being as a result of

         2   an acquisition, one of the state's largest financial

         3   institutions.  In 1992, it announced an unprecedented goal

         4   to provide 10 billion over ten years for community

         5   development investing and lending.

         6            At the same time, NationsBank selected our firm,

         7   MESBIC Ventures, as a national benchmark for providing

         8   equity financing and management assistance to create

         9   competitive small businesses owned and managed by minority

        10   entrepreneurs.  After much due diligence, we received an

        11   equity commitment of $2 million and had the personal

        12   endorsement of Ken Lewis, president of NationsBank.

        13   Cathie Bessant, chief investment officer in the Texas

        14   executive team.  The initial commitment went beyond

        15   dollars, they took an active role in our fund by serving

        16   on the board of directors, which included Deborah Cannon,

        17   a local executive vice president for Nations.

        18            NationsBank's financial commitment did not end

        19   with just this initial investment.  They subsequently, in

        20   1997, made a $5 million investment in our second fund,

        21   Pacesetter, making it the single largest limited partner.

        22   Again, Ken Lewis and the executive team in Texas, Tim

        23   Arnoult and Deborah Cannon made this possible.

        24            Because of NationsBank's leadership, vision, and

        25   unwaivering commitment to our underserved niche, we have

        26   provided over $100 million of equity type financing to
 .

                                                                   602


         1   over 100 minority-owned firms throughout the southwest,

         2   particularly Texas and California.

         3            Let me illustrate just how important this market

         4   is.  Several years ago, the Small Business Administration

         5   was contacted by the auto makers who had an unusual and

         6   unexpected problem.  They said by the year 2000 unless --

         7   their smallest supplier had to have sales between two and

         8   300 million a year.  That would not happen, as it turned

         9   out, from minority-owned companies.  They would not make

        10   the cut.  As they studied it further, it was revealed that

        11   the reason they wouldn't make the cut is the capital

        12   wasn't available to build larger competitive firms. As a

        13   result of this, there was numerous efforts done,

        14   particularly by Congress leaders, Congressional leaders

        15   such as Maxine Waters here in California, along with

        16   Esteban Torres here in California and Bill Jefferson in

        17   Louisiana, there was an attempt made by them and others to

        18   facilitate getting capital to the underserved market.

        19            Since 1993, there's been an estimated hundred

        20   billion dollars placed in private equity partnerships here

        21   in the U.S.  The good news is that sounds like plenty of

        22   capital.  The bad news is less than one percent of that

        23   capital went to funds focused on providing equity capital

        24   to build larger, more competitive firms owned and led by

        25   minority entrepreneurs.  Banks play a major part in these

        26   partnerships throughout the country.
 .

                                                                   603


         1            This merger will help address this horribly

         2   underserved market.  Again, I speak from experience.

         3   NationsBank has 20/20 vision when it comes to serving its

         4   markets.  As I mentioned earlier, barely five years ago

         5   they made a $10 billion commitment including low-income

         6   housing, small business lending and equity investing to

         7   build larger firms in our various communities.  The

         8   NationsBank/Bank of America pledge for 10 billion -- 350

         9   billion over ten years is unprecedented and it will make a

        10   difference for that niche.

        11            I also want to say a few words about Bank of

        12   America.  They, too, are a shareholder and I have the

        13   personal experience of working with the person to my left

        14   who I did not know would be here, Peter Thompson, he has a

        15   fund like ours and I wanted to acknowledge that Bank

        16   One -- Bank of America helped us as well as has helped

        17   Peter.  And between the two of us, we felt we create some

        18   of the nation's largest minority firms.

        19            I submit to you my testimony in writing and urge

        20   the support for this merger.  Thank you very much.

        21            MS. SMITH:  Thank you.  And we'll go next to

        22   Ms. Garland.

        23            MS. GARLAND:  Good afternoon, my name is Ruth

        24   Garland-Dewson.  I came here more or less on a personal

        25   note.  When I read in the Chronicle this morning what was

        26   going on down here, I felt I got to go down there and
 .

                                                                   604


         1   speak for Bank of America.  I own Mrs. Dewson's Hats on

         2   Fillmore Street and I've been a partner with Bank of

         3   America for some 27 years.

         4            When the stock market took a dive, I took a dive

         5   recently.  I went to Bank of America and I tried to get a

         6   loan in the traditional manner and I just couldn't get it.

         7   So I wrote Mr. David Coulter and I said, "David, my name

         8   is Ruth Dewson --" Mr. Coulter, I didn't dare call him

         9   David at the time, now I can.  I said, "Mr. Coulter I

        10   really need this loan, you're obligated to take care of

        11   me.  I've been with you for 27 years and I really need a

        12   loan.  And Mr. Coulter took care of that matter.

        13            And in each phase of my growth, Bank of America

        14   has always been there to support me.  I've gone from point

        15   A to top ten.  Last year I gained national prominence and

        16   again I went to Bank of America.  They are my partners,

        17   they've come through for me, and whether they should merge

        18   or not, I don't know.  But I know about their credibility

        19   and I'm here to tell you that Bank of America is my friend

        20   and I know they're going to do the right thing wherever

        21   they are.

        22            MS. SMITH:  Thank you very much.  Mr. Funk.

        23            MR. FUNK:  My name is Joseph Funk, I'm here

        24   speaking for Victor Weisser who is President of the

        25   California Council for Environmental and Economic Balance.

        26   He's asked that I read this letter into the record today.
 .

                                                                   605


         1   It's addressed to Ms. Joy Hoffman, Community Affairs

         2   Officer of the Federal Reserve Bank of San Francisco.

         3            Dear Ms. Hoffman, The California Council for

         4   Environmental and Economic Balance, CCEEB, is a coalition

         5   of California business, labor and public leaders

         6   established in 1975 by the late former Governor Edmund G.

         7   "Pat" Brown to collaborate on creative approaches to

         8   achieve both our environmental and economic goals.  We

         9   focus on issues such as job creation and economic

        10   development, regulatory reform, environmental protection,

        11   infrastructure investment and fiscal reform.

        12            Everyone should be aware of Bank of America's

        13   exemplary internal efforts to lower their own corporate

        14   environmental operational impacts.  But perhaps what is

        15   less well-known is the commitment and leadership the bank

        16   has shown in helping Caliornia face up to the broader

        17   environmental public policy challenges confronting us.

        18   Their landmark efforts in crafting workable proposed

        19   solutions to California's most intractable issues, such as

        20   land use and sprawl, water and habitat conservation, are

        21   nothing less than remarkable.

        22            For several years we have worked with Bank of

        23   America to help bridge the gap between the environmental

        24   and business communities.  In these efforts Bank of

        25   America has repeatedly demonstrated their commitment and

        26   skills in building collaboration between historically
 .

                                                                   606


         1   adversarial interests.  We are proud to have a good

         2   working relationship with Bank of America and share the

         3   same values.  In fact, CCEEB gave special recognition to

         4   Bank of America in 1995 by presenting our prestigious

         5   Edmund G. "Pat" Brown award to Richard M. Rosenberg, Bank

         6   of America's former chairman and CEO, for exemplifying the

         7   spirit of environmental and economic balance.

         8            Currently, we're pleased that Bank of America's

         9   environmental program is actively participating in the

        10   California Environmental Dialogue, CED, a collaboration

        11   between environmental business and government leaders

        12   working to find common ground and workable solutions to

        13   thorny challenges in such areas as cost effectively

        14   reducing mobile sources of air pollution and demonstrating

        15   the linkage between habitat protection and sustainable

        16   economic growth.  Leaning heavily on Bank of America's

        17   past experience and collaboration, we have seen the CED

        18   members move from conflict to dialogue to actionable

        19   solutions.  The bank's leadership role in this work has

        20   been key in making the CED successful.

        21            We fully expect the merged Bank of America

        22   Corporation to continue working in California on our

        23   established bridge between the business, government and

        24   environmental communities.  In fact, I would anticipate an

        25   expansion and export of these efforts to other areas as

        26   the merged Bank of America Corporation pursues new
 .

                                                                   607


         1   national partnerships between various stake holders in our

         2   environment and economy.  I see this merger as an

         3   opportunity to leverage Bank of America's leadership role

         4   on a national scale and in more geographic locations.

         5            CCEEB looks forward to a continued relationship

         6   with the new merged Bank of America Corporation.

         7            Sincerely, Victor Weisser, President.

         8            MS. SMITH:  Thank you very much.  We'll go next

         9   to Mr. Alcasas.

        10            MR. ALCASAS:  Good afternoon, my name is Gerald

        11   Alcasas, I'm the Executive Director for the Nevada

        12   Microenterprise Initiative.  I appreciate the opportunity

        13   to inform this distinguished panel and/or other interested

        14   parties by means of personal testimonial on the subject of

        15   the proposed merger.  Upon completion of this testimony,

        16   it is my intention that there is understanding of the past

        17   involvement and commitment Bank of America has provided to

        18   Microenterprise in Nevada.

        19            The Nevada Microenterprise Initiative is a

        20   statewide microenterprise organization.  In our capacity

        21   as a nonprofit organization, we aim to help low- and

        22   moderate-income individuals achieve economic

        23   self-sufficiency through entrepreneurialship.  NMI offers

        24   entrepreneurial training, technical assistance and

        25   microloans to develop the entrepreneurial skills of our

        26   clients.
 .

                                                                   608


         1            Our training classes focus on what to consider

         2   when starting a business as well as the development of a

         3   sound business plan.  Topics include determining your

         4   market, cash flow, bookkeeping and financing your

         5   business.  We believe this training is key to the success

         6   of our clients who, in most cases, have little or no

         7   business experience.

         8            Our Microloan fund was established in 1993 to

         9   fill a gap in access to credit for individuals wishing to

        10   start or expand a business.  Our clients typically have

        11   small loan requests, poor credit or poor or no job history

        12   and little, if any, business experience which makes them,

        13   in other terms, unbankable.  With our nontraditional

        14   financing, a client can access up to $7500 for a start-up

        15   loan and $25,000 for expansion.  Our successfulness in

        16   this risky lending is based on our technical assistance

        17   programs.  We work one-on-one with our clients to assist

        18   them with any concerns or challenges they may encounter.

        19   This support is critical and crucial to the success of a

        20   business and repayment of a loan.

        21            Since the creation of the Microloan fund in 1993,

        22   Bank of America has played a key role in the establishment

        23   and continuation of the program.  BankAmerica Foundation

        24   was the second contributor to help establish the Microloan

        25   fund by giving $15,000.  The following year the Bank of

        26   America established a $100,000 Micro/MBEWEBE program
 .

                                                                   609


         1   exclusively for the Nevada Microenterprise Initiative

         2   participants.  Those who utilized this opportunity are now

         3   very successful in their businesses.  In 1995, Bank of

         4   America matched various programs with grants in the amount

         5   of $85,000 and recently committed to 15,000 for NMI

         6   operations.

         7            Bank of America has also supported NMI through

         8   its participation of its employees, opened a second branch

         9   in Las Vegas in 1995.  Bank of America staff served as

        10   founding board members and were instrumental in the

        11   creation of the Las Vegas office.  Other employees offered

        12   assistance to the Nevada Microenterprise Initiative over

        13   the years.

        14            For the past two years, Ms. Joselyn Cousins,

        15   Community Development Officer and who runs the Community

        16   Development Department, serves as the president of our

        17   board of directors and previously she was on our Loan

        18   Review Committee.  Her time and dedication to the

        19   organization has created many opportunities for our

        20   organization.  Ms. Cousins has helped to establish a

        21   referral system between our organization and Bank of

        22   America.  Funds have been set aside for individuals who

        23   bank with Bank of America and who are unable to be

        24   assisted with their lending needs at that time.  Those

        25   clients are then referred to our training program, they

        26   fine-tune their plans, hopefully they become successful
 .

                                                                   610


         1   and eventually become Bank of America clients once again.

         2            As you can see, Bank of America has shown real

         3   commitment to the community through its extensive support

         4   of the Nevada Microenterprise Initiative.  Therefore, we

         5   support the merger between Bank of America and

         6   NationsBank.  Thank you.

         7            MS. SMITH:  Thank you very much.  Mr. Thompson.

         8            MR. THOMPSON:  Thank you.  My name is Peter

         9   Thompson and I'm President of Opportunity Capital

        10   Corporation and also managing partner of Opportunity

        11   Capital Partners.  Our companies, similar to Don's, are

        12   private equity firms that provide financing to

        13   minority-owned companies.  And I would just like to take a

        14   few minutes to share a few comments with you.

        15            Regarding our company's relationship with the

        16   bank, a relationship that is noteworthy, in part, because

        17   it spans a time period of more than 25 years.  And it's a

        18   relationship that started back in 1971 when the BofA made

        19   its first investment in Opportunity Capital.  The

        20   investment at that time was critical, not only because of

        21   the capital that it provided, but also because other Bay

        22   Area companies seemed to regard the bank as a leader in

        23   the minority economic development arena and seemed

        24   inclined to follow the bank's lead and the bank's example.

        25            Ten years later, in 1981, the bank made its

        26   second investment and, again, as was the case in 1971, we
 .

                                                                   611


         1   were able to leverage the bank's involvement with

         2   additional investments from other Bay Area companies.

         3   Fortunately for us, not only did the bank provide capital

         4   and serve as a pacesetter, of sorts, but the bank also

         5   invested time in providing guidance in the form of making

         6   available to us on a consistent basis senior executives

         7   who served as members of our boards of directors and as

         8   members of our various advisory committees.

         9            This capital and this guidance, as provided by

        10   the bank, assisted us in successfully providing capital to

        11   a sizable number of minority-owned companies and allowed

        12   us to become successful in producing what the investment

        13   community, I think, would regard as both respectable and

        14   competitive investment results.

        15            Rolling the tape on a fast-forward basis over

        16   from 1981 to 1992, we realized at that point that the size

        17   and shape of our marketplace had evolved to a point where

        18   we needed to raise a substantially larger pool of capital

        19   in order to remain responsive to the growing needs of our

        20   target marketplace.

        21            As a consequence, we went back to the bank for a

        22   third time, we made a proposal and fortunately the bank

        23   responded.  And the bank responded with a capital

        24   commitment of $15 million.  Now, a commitment which we

        25   believe was at the time the largest single corporate

        26   commitment of capital to a single minority focused venture
 .

                                                                   612


         1   capital company.  And the commitment was for us doubly

         2   important because it played a key role in our success in

         3   obtaining a similar matching $15 million commitment from a

         4   funding source based in Connecticut.

         5            The result of these two excursions into the

         6   capital market was that we were able to increase our

         7   capital base to about $35 million.  And those funds were

         8   used to provide capital to companies and industries

         9   ranging from health care to broadcasting to manufacturing

        10   and companies that have provided employment to, oh, more

        11   than 2,000 people and companies that have a current

        12   combined gross market value of probably over $700 million.

        13            Of course, you know, we are proud of these

        14   results.  But, as importantly, I think it's key to note

        15   that accomplishing those results would have been very

        16   difficult, if not impossible, had it not been for the

        17   continuing willingness of the the bank to provide not only

        18   capital but also time over a time period again which spans

        19   more than two and a half decades.

        20            So just in closing, I'll just say that I

        21   appreciate the opportunity to make these comments, and I

        22   would be pleased to further discuss them with you at any

        23   point.  Thanks a lot.

        24            MS. SMITH:  Thank you very much.  Is that Acree?

        25            MR. ACREE:  Acree.

        26            MS. SMITH:  Acree.  Mr. Acree.
 .

                                                                   613


         1            MR. MAN:  I'm Stephen Acree, the director of

         2   Community Development in the City of St. Louis.

         3            In 1997, NationsBank acquired Boatmen's Bank

         4   which was the oldest and largest banking institution in

         5   St. Louis.  And Boatmen's had been a leader in the

         6   community development field in St. Louis, they had a

         7   reputation for pushing the envelope for worthwhile

         8   projects.  And certainly we in St. Louis at that time were

         9   concerned that this very proactive stance would be altered

        10   with the NationsBank merger with Boatmen's Bank.

        11            In fact, however, NationsBank has assumed a

        12   tremendous leadership role in the community particularly

        13   in our downtown.  Not only has Nations fulfilled the

        14   commitment made by Boatmen's but they have brought

        15   tremendous additional resources to our community.

        16            In the year that NationsBank has been actively

        17   involved in St. Louis, it has invested $2.1 million in the

        18   St. Louis Equity Fund to provide equity to small housing

        19   developers for the creation of low- and moderate-income

        20   housing.  NationsBank has partnered with my agency in a

        21   number of housing developments, including McCormack House,

        22   a 100 unit supportive housing development for the elderly

        23   where NationsBank provided $6.4 million in low-income

        24   housing tax credit equity in affordable housing assistance

        25   program contribution dollars.

        26            NationsBank also contributed $100,000 to the
 .

                                                                   614


         1   day-care center at Murphy Park which is a leading edge

         2   mixed-income development of a large public housing site in

         3   St. Louis.  NationsBank also helped to raise $2.4 million

         4   in equity for this project.

         5            Nations provided 2.5 million in low-income

         6   housing tax credit equity for the Etzel Place Apartments

         7   which is a 42 unit affordable housing development.  And

         8   they provided the construction loan and the equity through

         9   purchase of tax credits for Parkview Gardens, a

        10   not-for-profit development of the Parkview Gardens

        11   Neighborhood Association who originally began their

        12   efforts under the predecessor Boatmen's Bank.

        13            There are a number of very exciting projects that

        14   can be accomplished in St. Louis now exclusively because

        15   of the addition financial resources and financing tools

        16   brought to the community by NationsBank.

        17            NationsBank Community Development Corporation is

        18   undertaking the $5.3 million acquisition and

        19   rehabilitation of an eight story 60,000 square foot

        20   warehouse building in our Downtown Loft District.  The

        21   building is being converted to 26 affordable loft

        22   apartments with a first floor art gallery and studio

        23   space.  The bank CDC will own the project long term in

        24   partnership with a local nonprofit, the Regional Housing

        25   and Community Development Alliance.  NationsBank CDC

        26   invested cash equity and purchased the state and federal
 .

                                                                   615


         1   low-income housing tax credits and the historic rehab tax

         2   credits.  They will provide the construction financing, a

         3   bridge loan and permanent financing, as well.  This

         4   project does not work financially as a mixed-income

         5   development without the NationsBank CDC's ability to

         6   invest patient capital.  NationsBank is essentially

         7   funding 100 percent of the debt and equity for this

         8   project, as well as taking a long-term ownership position.

         9            They're also pursuing the redevelopment of a

        10   140,000 square foot historic warehouse with 42 apartments

        11   again in partnership with a not-for-profit Regional

        12   Housing and Community Development Alliance.  This $9

        13   million project will commence in the third quarter of this

        14   year.  And in the short-term, NationsBank is providing

        15   $200,000 to replace the roof and stabilize the building.

        16            Our partnership with NationsBank is helping us to

        17   create a mixed-income and vibrant residential presence in

        18   our downtown that is absolutely critical to re-energize

        19   and spur the redevelopment of that area.  Their projects

        20   and their commitment serve as a catalyst to encourage

        21   other corporations and institutions to invest in downtown

        22   St. Louis.

        23            They've committed to invest $100 million in

        24   downtown, and as a part of that commitment, the bank

        25   advanced $425,000 to the city to pay for our planning

        26   study and they were the first contribution that allowed
 .

                                                                   616


         1   the team to move forward with the process.  They made a

         2   $2.5 million loan to the city to acquire a long vacant

         3   hotel as part of the city's effort to attract a team to

         4   build a state of the art convention headquarters hotel

         5   there.

         6            They're considering taking a major role in the

         7   redevelopment of a historic warehouse group of buildings

         8   in downtown St. Louis where Western Hotels has recently

         9   announced plans to locate a new property.

        10            On the neighborhood level, NationsBank has made a

        11   commitment to invest $100 million in low- and

        12   moderate-income communities for neighborhood projects such

        13   as mortgages, home improvement loans, small business loans

        14   and small scale community development lending.

        15            In closing, the one thing I was impressed with

        16   most when NationsBank began to assemble their staff in

        17   July of 1997 was that they hired from the community, from

        18   community development professionals, from the former

        19   director of Neighborhood Housing Services to the director

        20   of the Community Development Program in St. Louis County.

        21   It showed their commitment to working with the city on

        22   community development.  Thank you.

        23            MS. SMITH:  Thank you very much.  Any questions?

        24            We don't have any questions for you but we do

        25   thank you very much for coming this afternoon to share

        26   your views with us and having them become part of the
 .

                                                                   617


         1   record on this application.  So thank you.

         2                         (Short break.)

         3

         4

         5

         6

         7

         8

         9

        10

        11

        12

        13

        14

        15

        16

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        18

        19

        20

        21

        22

        23

        24

        25

        26
 .                                                              618

       1              MR. SMITH:  We have Tunua Thrash speaking on
           
       2   behalf of Senator Barbara Boxer.
           
       3              MS. THRASH:  I am Tunua Thrash.  I have
           
       4   submitted the written statements of Senator Barbara
           
       5   Boxer.  I have a few remarks regarding her statement.
           
       6              The comments of Barbara Boxer echo and
           
       7   underscore those of the protesters of yesterday in
           
       8   opposing the merger.  Senator Boxer is concerned that
           
       9   NationsBank will not have been the BofA that we have
           
      10   known as the corporate citizen of San Francisco and
           
      11   believes the pledge that NationsBank has put forward is
           
      12   hollow in so much that it makes no specific commitment.  
           
      13              Senator Boxer is not yet convinced that
           
      14   Californians will be well served, especially those
           
      15   vulnerable communities by the combination of these two
           
      16   banks.  Senator Boxer would like to remind NationsBank
           
      17   that California is no North Carolina and NationsBank must
           
      18   be prepared to compete in California among its diverse
           
      19   and emerging markets.  Thank you.  
           
      20              MS. SMITH:  Thank you very much.  We already
           
      21   have the statement for the record, right?  
           
      22              MS. THRASH:  Yes.  
           
      23              MS. SMITH:  We will here from Mr. Baird.  
           
      24              Do we have any other panelists?  
           
      25              (Off the record discussion.) 
           
      26              MS. SMITH:  We'll start with Mr. Baird.
           



                                                             619

       1              MR. BAIRD:  Thank you very much for the
           
       2   opportunity to appear before you today.  I'm Jim Baird. 
           
       3   I'm the Executive Director of an organization known as
           
       4   Bay Area Development Company.  We're a nonprofit economic
           
       5   development corporation that operates in the nine San
           
       6   Francisco Bay Area counties as an SBA-504 certified
           
       7   development company.  
           
       8              Since 1981, we've done financings for small
           
       9   companies with over five different banks in the
           
      10   nine-county San Francisco Bay Area.  We've provided over
           
      11   a half a billion dollars in expansion capital to these
           
      12   companies resulting in the creation of over 7,000 small
           
      13   business jobs.
           
      14              I'm also past president and current director
           
      15   of an organization known as NADCO, the National
           
      16   Association of Development Companies.  NADCO is the
           
      17   national trade association for the country's 300 SBA-504
           
      18   lenders.  The 504 program is one of the most effective
           
      19   and cost-efficient economic development financing
           
      20   programs in the country today.       
           
      21              Since 1981, the 504 program has financed over
           
      22   $300 billion of small business expansion resulting in the
           
      23   creation of over 500,000 full-time private sector jobs.
           
      24              I'd like to provide several observations
           
      25   regarding economic development and small business
           
      26   financing in my testimony today.  
           



                                                             620

       1              First I'd like to indicate that, just like
           
       2   their conventional lending counterparts, economic
           
       3   development financiers and financing programs are subject
           
       4   to the ebbs and flows of both the business cycle and the
           
       5   credit or lending cycles in the economy.
           
       6              Today the economy is in good shape.  Interest
           
       7   rates are low and lending appetites for small business
           
       8   loans are very competitive and in fact at unprecedented
           
       9   levels.  But things change.  Just last week I read in our
           
      10   local newspaper of the Fed warning that, quote, "The
           
      11   nation's banks are not being careful enough about the
           
      12   commercial loans they make, and an economic downturn
           
      13   could seriously harm the industry."
           
      14              I urge the board to remember that lenders are
           
      15   generally herd creatures.  It is essential to our economy
           
      16   to retain the type of lenders who provide community
           
      17   development lending leadership and who will stand against
           
      18   the tide of regular lending and the herd creatures when
           
      19   times are not as good.
           
      20              Bank of America Community Development Bank has
           
      21   been the epitome of this type of lender.  Using the
           
      22   SBA-504 program as an example, the Bank of America
           
      23   Community Development Bank was there when others weren't.
           
      24              As a long-term participant in economic
           
      25   development, the recession of the early 90s displayed
           
      26   several trends that exposed quite a few things with SBA
           



                                                             621

       1   and small business lending.
           
       2              First of all, most of the lenders, both large
           
       3   and small, just flooded away from the small business and
           
       4   commercial real estate market in droves.
           
       5              Secondly, to hedge their risk, many of the
           
       6   small lenders turned to the Small Business Administration
           
       7   that utilized the SBA's 7-A guarantee program in large
           
       8   part because of its very high lender profits.
           
       9              Many of these banks that participated in the
           
      10   7-A lending program wouldn't even disclose to their
           
      11   borrowers or clients the existence of the SBA-504
           
      12   program.
           
      13              Although other lenders around the country,
           
      14   some other lenders continue to participate in the SBA-504
           
      15   program, Bank of America Community Development Bank led
           
      16   the charge, and, because of their participation
           
      17   nationally, we were able to establish the 504 program as
           
      18   a mainstream economic development tool.
           
      19              In looking at the numbers of BofA Community
           
      20   Development Bank's participation from '92 through '97,
           
      21   what you see is a 900 percent pace of growth overall.
           
      22              At this point in SBA's Region 9, which is
           
      23   California, Arizona, Nevada and Hawaii, the four-state
           
      24   area, Bank of America Community Development Bank provides
           
      25   17 percent of all SBA-504 financing.
           
      26              I agree with the recent NationsBank press
           



                                                             622

       1   release which indicates that the bank will, quote,
           
       2   "Continue to operate Bank of America Community
           
       3   Development Bank once the merger is complete."  I believe
           
       4   this should be made a condition of the merger, as well
           
       5   the location and the headquarters of Bank of America
           
       6   Community Development Bank should be required to be in
           
       7   California.
           
       8              In my opinion, the 504 program has experienced
           
       9   a level of commitment and leadership from Bank of America
           
      10   Community Development Bank that cannot be expected from
           
      11   any other bank in the country.  
           
      12              As a realist, I believe that regulatory
           
      13   activity cannot require this level of leadership, but I
           
      14   believe that it should do its best to try to encourage
           
      15   it.
           
      16              Thank you.  
           
      17              MS. SMITH:  Thank you.  Dr. Hall.
           
      18              DR. HALL:  Thank you.  Good afternoon, and I
           
      19   am, too, very pleased to have an opportunity to have a
           
      20   few words.
           
      21              I'm Doris Hall from Baltimore, Maryland.  A
           
      22   member of the Board of Directors of the Public/Private
           
      23   Corporation founded to manage Baltimore's empowerment
           
      24   zone initiative.               
           
      25              In this capacity, one of my concerns is job
           
      26   development, job creation and job retention in the areas
           



                                                             623

       1   of Baltimore City where there are no jobs, poor and no
           
       2   housing and sometimes no hope.
           
       3              As a part of this empowerment zone strategy,
           
       4   six village centers were created, one of which is
           
       5   Poppleton.  Downtown Baltimore, next to the University of
           
       6   Maryland, behind our new football and baseball stadium
           
       7   and close to Harbor Place.
           
       8              The Poppleton neighborhood then created its
           
       9   community development corporation to develop and help and 
           
      10   re-engineer its community.  It's made up of residents,
           
      11   both tenants and homeowners as well as public housing
           
      12   residents, business owners and faith based institutions.  
           
      13              I am here as Chairperson of that community
           
      14   development corporation to speak about the support,
           
      15   technical assistance and dollars received from
           
      16   NationsBank and NationsBank CDC as we redevelop our
           
      17   entire neighborhood.  The highrise public housing area in
           
      18   this neighborhood was imploded and in its place for-sale
           
      19   and for-rent townhouses will be built with six dollars.
           
      20              Poppleton Community Development Corporation,
           
      21   NationsBank, CDC and the Housing Authority of Baltimore
           
      22   City have formed a limited liability corporation to build
           
      23   the Pairin J. Mitchell [phonetic] Business Center, which
           
      24   will provide jobs and retail parcels on the site of
           
      25   redevelopment.
           
      26              NationsBank CDC has a $500,000 equity
           



                                                             624

       1   investment in this project.  It represents 40 percent
           
       2   ownership of our LLC, the Housing Authority is 55 percent
           
       3   and our Village Center CDC five percent.
           
       4              The 40 percent ownership of NationsBank CDC
           
       5   becomes a community share at the end of our five-year
           
       6   process and we become 45 percent owners of the business
           
       7   center, able then to participate and make decisions in
           
       8   the business center and its job creation, job retention
           
       9   strategy.
           
      10              There is also a $4 million loan from
           
      11   NationsBank provided on this seven-and-a-half million
           
      12   dollar project.
           
      13              Now, this 66-square-foot space office space
           
      14   was difficult to lease.  It's in a market area of 73,000
           
      15   persons, but it was impossible to get anyone to be
           
      16   interested in it because of the negative image that the
           
      17   neighborhood has.
           
      18              The community was losing its determination to
           
      19   do this, its enthusiasm and the belief that it could even
           
      20   occur, when NationsBank CDC stepped in as our partner,
           
      21   helped us find tenants, tutored us on mortgage loan
           
      22   financing, construction financing and the team led by one
           
      23   of NationsBank's CDC people, Maria Johnson, really pushed
           
      24   until we found a major drug store that is coming into an
           
      25   area that has absolutely no store at all.
           
      26              And, because of that, we are now 90 percent
           



                                                             625

       1   leased prior to the beginning of our construction, and
           
       2   NationsBank CDC remains the managing partner of our LLC
           
       3   by election.
           
       4              So I think that demonstrates the commitment
           
       5   that they've made to us and our trust in the way they do
           
       6   that.
           
       7              But in a neighborhood where the last of our
           
       8   three banks has moved out, indicated no interest in
           
       9   providing serves in spite our interest in community need,
           
      10   having a supportive banking partner is a welcome change.
           
      11              I believe, as do other members of my community
           
      12   development organization, that NationsBank, about whom we
           
      13   were very nervous when they bought out our Maryland
           
      14   National Bank, has provided access and services to our
           
      15   city's neighborhoods as the other merging banks have
           
      16   decided to move out of Baltimore City to other more
           
      17   affluent areas and closed their city locations 
           
      18              So we are very much in support of NationsBank
           
      19   as it begins to make this merger with BankAmerica.  We
           
      20   think it brings more resources to a bank that has served
           
      21   the neighborhoods well, especially those poor
           
      22   neighborhoods where there has been no support in the
           
      23   past.
           
      24              Thank you for your time.  
           
      25              MS. SMITH:  Any questions?  Thank you very
           
      26   much for coming this afternoon.
           



                                                             626

       1              We're waiting for the next witnesses to
           
       2   arrive.  One of them is coming in from the airport and
           
       3   the second one is someone who was scheduled to appear at
           
       4   5:50 and we haven't been able to get hold of her to let
           
       5   her know that we have been running ahead of schedule.  
           
       6              So we're going to take a break until at least
           
       7   one of them shows up and maybe until both of them show
           
       8   up.             MS. YOUNG.  Madam Chairman, are you still
           
       9   going to have open mike thereafter?  
           
      10              MS. SMITH:  What we have been doing is working
           
      11   people into the schedule that we know were going to show
           
      12   up for open mike, or, not that we know, but who have
           
      13   expressed interested.  
           
      14              If there is anybody here in the audience that
           
      15   is here for open mike, then we're ready.
           
      16              Are you one of them?  
           
      17              MS. YOUNG:  No.  
           
      18              MS. SMITH:  We're ready to hear from
           
      19   Ms. Johnson and are very appreciative of the fact she
           
      20   came early.  Ms. Johnson.
           
      21              MS. JOHNSON:  I'm Marla Johnson.  I'm from
           
      22   Little Rock, Arkansas.  I'm the COO of a company called
           
      23   Aristotle Internet.  I'm also the chair of the Arkansas
           
      24   Small Business Coalition.  I'm here to speak favorably of
           
      25   NationsBank and their commitment to the Little Rock
           
      26   community.
           



                                                             627

       1              About a year ago some women business owners
           
       2   and me had found out the City of Little Rock was involved
           
       3   in some worthy goals to level the playing field and
           
       4   encourage small business in Little Rock, but the means by
           
       5   which they determined this, we felt, were a duplication
           
       6   of services and a waste of resources.  So we began to
           
       7   form the Arkansas Small Business Coalition around this
           
       8   problem and, in the meantime, became aware of similar
           
       9   problems in our community.
           
      10              We then became involved with NationsBank and
           
      11   we became aware that, besides the public policy people in
           
      12   our community, the corporate world and other government
           
      13   regulators and dispensers of services were really not
           
      14   connected to small businesses and that became a part of
           
      15   our purpose.  We realized that we weren't communicating,
           
      16   much less were we a unified force for economic
           
      17   development in the Central Arkansas area.
           
      18              So we struggled against turf battles and
           
      19   limited resources and we fought against a lot of people
           
      20   who were not really in favor of our taking that kind of a
           
      21   role, but the representatives of NationsBank were very
           
      22   supportive.  They were a new company in town, they
           
      23   supported us and guided us.  They saw that the goals that
           
      24   we had were worthwhile ones.  They lent us resources,
           
      25   faxing machines and legal resources and gave a lot of
           
      26   good advice.
           



                                                             628

       1              Since then, we've grown.  We've saved the
           
       2   taxpayers from spending over a million dollars to fund a
           
       3   program that would have actually competed with existing
           
       4   free services and small businesses in the Little Rock
           
       5   area.
           
       6              We began to close the gap between community
           
       7   leaders and small businesses, including women and
           
       8   minority business owners, and we began to develop a
           
       9   business resource center in downtown Little Rock.  And we
           
      10   are now providing many needed services and educational
           
      11   resources to small businesses.
           
      12              None of this would have been possible without
           
      13   NationsBank.  They have been a very valuable partner to
           
      14   us, to the small businesses in Arkansas.
           
      15              I would say that the qualities that
           
      16   NationsBank representatives have had have been dedication
           
      17   to services for the whole community including the small
           
      18   business community.  They have made a real effort to help
           
      19   level the playing field, again, for small businesses. 
           
      20   They're not a business-as-usual kind of a company.  They
           
      21   really came in and did not join the good-old-boy network
           
      22   but have provided real opportunities to minority and
           
      23   women in businesses.
           
      24              They have been generous, without strings
           
      25   attached to nonprofits like the Arkansas Small Business
           
      26   Coalition and have a corporate culture that nurtures
           



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       1   employees who want to serve the community.  There have
           
       2   been attentive to fairness with a broad view of economic
           
       3   development.  They have been resourceful and a skilled,
           
       4   brave and a diplomatic partner to small businesses.
           
       5              In other words, through the generous support
           
       6   to the Small Business Coalition in Arkansas, NationsBank
           
       7   has made a positive contribution to the Little Rock small
           
       8   businesses.  
           
       9              It may seem ironic, as the chair of the
           
      10   Arkansas Small Business Coalition and as a small business
           
      11   manager, I am here to testify in favor of making
           
      12   NationsBank an even bigger business, but it is true to
           
      13   state that, in my experience, when NationsBank came to
           
      14   Little Rock, small businesses gained the most effective,
           
      15   generous and inclusive partner it had ever seen.  As a
           
      16   result, good things are happening for small businesses in
           
      17   Little Rock.  
           
      18              MS. SMITH:  Thank you.  Any questions?  
           
      19              Thank you very much for coming this afternoon.
           
      20              MS. SMITH:  Our next witness is on his way up
           
      21   from the lobby.
           
      22              (Pause in proceedings.) 
           
      23              MR. KREHMEYER:  I want to thank everybody for
           
      24   the opportunity to speak here on behalf of the proposed
           
      25   merger of Bank of America and NationsBank.  
           
      26              The Ecumenical Housing, the organization I
           



                                                             630

       1   represent, is the largest not-for-profit housing provider
           
       2   in St. Louis County, Missouri.  We own and run almost 200
           
       3   scattered site, single-family rental homes.  We also
           
       4   provide support services for families living in those
           
       5   single homes, typically a single mom with three kids. 
           
       6   Through secure housing in good neighborhoods and the
           
       7   provision of  assistance with education and employment
           
       8   programs, money management training skills, we help our
           
       9   families long and continue them into economic
           
      10   independence and self sufficiency.  
           
      11              When NationsBank first entered our community,
           
      12   buying the largest banking institution and a friend of
           
      13   not-for-profit sector, there was the fear that this huge,
           
      14   out of town monolith would not be the partner and leader
           
      15   that its predecessor was.  While the dialogue to the
           
      16   community was good, the old Missouri adage of "Show Me"
           
      17   was very prevalent. 
           
      18              I am extremely pleased to report that
           
      19   NationsBank has exceeded most of our expectations in
           
      20   being a partner in our work and has become a leader in
           
      21   bettering neighborhoods in the lives of families that
           
      22   live there.
           
      23              They have been pro active and aggressive in
           
      24   looking at local problems and helping us fix them.  Their
           
      25   product experience in other markets has been invaluable
           
      26   to us.  St. Louis has a reputation of being unwilling to
           



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       1   try new things, but NationsBank has shown us that
           
       2   community development problems can have many solutions.  
           
       3              NationsBank has taken a leadership role in the
           
       4   much-needed revitalization of our downtown area and has
           
       5   committed significant resources to the new Regional
           
       6   Neighborhood Support Collaborative which provides much
           
       7   needed operating resources for neighborhood-based
           
       8   community development corporations.  
           
       9              In addition, the bank has impressed us by
           
      10   hiring key staff from our community.  Two of the leaders
           
      11   in the community investment and development divisions are
           
      12   the former Executive Director of our local Neighborhood
           
      13   Housing Services affiliate and the former Director of
           
      14   Community Development Agency for the City of St. Louis
           
      15   and St. Louis County.  
           
      16              These two individuals bring a wealth of
           
      17   knowledge about our community to the bank staff. 
           
      18   Further, these two individuals are well respected and
           
      19   accessible to the front line folks who toil every day to
           
      20   try to better their lives and the people in the community
           
      21   they serve.
           
      22              Our experience with NationsBank has been very
           
      23   positive.  It appears that as Ecumenical Housing,
           
      24   NationsBank believes in the adage that "doing good is
           
      25   good business."  
           
      26              We strongly support the proposed merger and
           



                                                             632

       1   hope that our comments somewhat allay the fears of those
           
       2   who may oppose it.  Thanks.  
           
       3              MS. SMITH:  Is there per chance anyone in the
           
       4   room who is interested in taking the opportunity to use
           
       5   our open mike session?
           
       6              If not, I do believe that we have brought to a
           
       7   conclusion our two-day meeting.  I sort have sort of come
           
       8   full circle to say this has been an important public
           
       9   meeting for collecting information that will be relevant
           
      10   to the board's determination on this application.  
           
      11              So we thank you very much.  We thank all of
           
      12   the other close to 200 people who came to present
           
      13   testimony, and we are adjourned.
           
      14              (Whereupon the proceedings concluded.) 
           
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Last update: December 3, 2010