Home > Banking Information & Regulation > Public Meeting Transcripts > PMT - Agendas July 9-10, 1998
Public Meeting Transcripts
Public Meeting Regarding NationsBank and BankAmerica
Friday, July 10, 1998
Transcript of Panel Twenty-Five
546 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.
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