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Public Meeting Transcripts

Public Meeting Regarding First Chicago and Banc One

Thursday, August 13, 1998


          3                      TO MERGE WITH
          7            Proceedings had in the above-mentioned
          8   cause, on Thursday, the 13th day of August, 1998,
          9   at The Federal Reserve Bank of Chicago, 230 South
         10   LaSalle Street, Chicago, Illinois at 9:00 o'clock
         11   a.m.
         20   REPORTED BY:  Brenda S. Tannehill, CSR
         21   LICENSE NO.:  084-003336
         22            - and -
         23   REPORTED BY:  Jeanette A. Sandei, CSR
         24   LICENSE NO.:  084-003685
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1       MS. SMITH:  I think we can get started.  Let me
          2   start by welcoming you to this important public
          3   meeting on the application of Banc One Corporation
          4   to merge with First Chicago NBD Corporation.
          5            And I'll start by introducing myself.  I'm
          6   Dolores Smith, the director of the division of the
          7   Consumer and Community Affairs for the Reserve
          8   Board in Washington, D.C.  I'm also the presiding
          9   officer for this public meeting.
         10            Our other panelists are Scott Alvarez,
         11   who is the Associate General Counsel for the
         12   Federal Reserve Board, and Alicia Williams, who is
         13   Vice President and Community Affairs Officer from
         14   the Federal Reserve Bank of Chicago.
         15            We are here today because Banc One
         16   Corporation, Columbus, Ohio, has applied for
         17   approval to merge with First Chicago NBD
         18   Corporation, Chicago, Illinois.
         19            When the Federal Reserve Board considers
         20   one of these applications, we look at a number of
         21   factors under the Bank Holding Company Act.  These
         22   include financial issues, managerial issues,
         23   competitive issues and the convenience and needs of
         24   the communities affected.
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1            In doing so, we particularly look at the
          2   record of performance of the parties under the
          3   Community Reinvestment Act.
          4            The CRA requires the Board to take into
          5   account an institution's record of meeting the
          6   credit needs of its entire community.
          7            The Banc One application transaction also
          8   involves the proposed acquisition or retention of
          9   non-banking companies engaged in activities that
         10   are permissible for bank holding companies.
         11            The Board must determine whether the
         12   proposed non-banking activities can reasonably be
         13   expected to produce benefits to the public that
         14   outweigh possible adverse effects such as undue
         15   concentration of resources, decreased or unfair
         16   competition, conflicts of interest or unsound
         17   banking practices.
         18            The purpose of the public meeting today is
         19   to receive information regarding these factors.  We
         20   will be seeking to elicit this information and to
         21   clarify factual issues related to the application.
         22            We are very pleased that so many people
         23   have been willing to come and testify at this
         24   public meeting.  We will have more than 90 groups
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   and individuals represented over the course of the
          2   day.
          3            Let me tell you a little bit about the
          4   procedures that we'll be following.  First, this is
          5   what we call an informal public meeting.  Members
          6   of this panel may ask those who are testifying
          7   about their testimony.
          8            This is not a formal administrative
          9   hearing, so we are not bound by rules regarding
         10   evidence, cross-examinations and some of the formal
         11   trappings that accompany that type of proceeding.
         12            As you can see from the agenda that you
         13   have picked up, we do need to stick to the schedule
         14   very carefully so that everyone who has asked to
         15   offer oral testimony will have the chance to say
         16   what they would like to say.
         17            We are going to ask the witnesses today to
         18   be mindful of the needs of others and to help us
         19   stay on schedule.  The panels and panelists will be
         20   expected to keep within their allotted times.
         21            And we do have a system for reminding
         22   people about their time.  We have two
         23   time-keepers.  They're up front.  They will give a
         24   signal when the presenter has one minute left to
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   speak.  We'll hold up a sign.  And then we have
          2   another sign when the time has expired.
          3            And then if that doesn't work, we have --
          4   we go to audio and we have a little bell.  We don't
          5   have a hook, so you have those opportunities.
          6            Now, we have accommodated everyone who
          7   made a timely request to present testimony, but
          8   there may be some individuals who were unable to
          9   sign up in advance.  And to the extent possible, we
         10   do want to give them a chance to speak as well.
         11            So at the end of the meeting this
         12   afternoon when all of the panelists who have been
         13   listed have offered their testimony, we will make
         14   the microphone available to anyone who would like
         15   to make a presentation, time permitting.
         16            Witnesses may submit a written supplement
         17   to their oral testimony and have until next
         18   Thursday, August the 20th, to do so, and then the
         19   record will be closed.
         20            Any written supplements should be directed
         21   to Jennifer J. Johnson, Secretary of the Board,
         22   Board of Governors of the Federal Reserve System,
         23   Washington, D.C.  20551.  They must be received
         24   by 5:00 p.m. Eastern Daylight Time on Thursday,
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   the 20th.  Submissions may be faxed to area code
          2   (202) 452-3462.
          3            Also, for witnesses who have not already
          4   turned in copies of written testimony or if there
          5   are any other written statements to put into the
          6   record, we're asking you to leave them with Federal
          7   Reserve Bank staff at the registration table.
          8            It's important that we get this
          9   information and material for the record.  A
         10   transcript of the meeting will be available by
         11   August the 18th through the Federal Reserve Bank of
         12   Chicago and also from the Board.
         13            In addition, the official transcript will
         14   be available by close of business on August 19th on
         15   the Board's public web site, which is at
         17            And with that, I think we're ready to
         18   begin with our proceedings.  We will start first
         19   with the applicant panel.
         20            We have Mr. Istock from First Chicago and
         21   Mr. McCoy from Banc One.  And they have with them
         22   Ms. Decker and Ms. Williams, so if you will --
         23   Ms. Johnson.  I'm sorry.  I'm so sorry.
         24            If we can -- Mr. Istock, are you going
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   first?
          2       MR. ISTOCK:  Yes.
          3            Thank you and good morning.  As indicated,
          4   I'm Verne Istock, chairman, president and chief
          5   executive officer of First Chicago NBD.
          6            And with me this morning, in addition to
          7   Mary Decker, our senior vice president is David
          8   Vitalle, who is the vice chairman of the
          9   corporation and also president of First National
         10   Bank of Chicago.
         11            And also with me, as indicated, is John
         12   McCoy, who is chairman and chief executive officer
         13   of Banc One Corporation, and Julie Johnson, who is
         14   senior vice president.
         15            The banking business, even when you're
         16   talking about banks the size of the new Banc One,
         17   is an intensely local business.
         18            As with customers, you have to understand
         19   the needs of your communities and then try to
         20   design solutions that will work.
         21            This doesn't happen quickly or easily.  It
         22   takes time, effort and commitment.  It takes
         23   bankers who know their communities, who care and
         24   who get involved.
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1            At First Chicago NBD, we've had a long
          2   history of community commitment.  Over time,
          3   we've built solid working relationships with
          4   organizations that know and understand their
          5   neighborhoods and who can partner with us to design
          6   products and programs that respond to community
          7   needs.
          8            It's pretty obvious that we can't please
          9   everyone, but those organizations that have chosen
         10   to work with us have found us to be good partners.
         11   We've learned a lot from each other and together
         12   we've achieved meaningful results.
         13            Let me quote from a letter from Sokoni
         14   Karanja, president for the Centers for New Horizons
         15   here in Chicago, that really captures that spirit.
         16            He writes, and I quote, this partnership
         17   in my 30-plus years of community development
         18   experience, has been a unique one, for no other
         19   lending institution I have worked with over the
         20   years has demonstrated the capacity to first listen
         21   to the community and then find ways to make
         22   philanthropic as well as strictly business
         23   investments that generate wins to both the
         24   community and the bank, end of quote.
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1            There is a synergy between what we do
          2   that's strictly business, as Dr. Karanja put it,
          3   and what we do because these are the communities
          4   where we live, work and raise our families.
          5            We recently published a booklet titled
          6   Your Community/Our Community that highlights some
          7   of the ways in which First Chicago NBD supports its
          8   many communities.  And I've submitted a copy for
          9   the record.
         10            We are especially proud of our record of
         11   lending in our major urban markets, Chicago,
         12   Detroit and Indianapolis.
         13            In Chicago and Detroit, for example, we
         14   are by far the largest locally based small business
         15   lender.  In Indianapolis we are the leading SBA
         16   lender.  And we are the number-one in Capital
         17   Access programs in Michigan, Illinois and Indian.
         18   We are also a leader in mortgage credit in all
         19   three markets.
         20            First Chicago NBD has developed many
         21   innovative lending practices to serve the needs of
         22   all applicants.
         23            For example, we offer a number of flexible
         24   mortgage loan programs that include either down
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   payment assistance or support for closing costs.
          2            Our community pride loan is targeted to
          3   households with less than 50 percent of median
          4   family income.  This loan can be used for home
          5   improvements, new or used car financing or home
          6   equity loan for any purpose, including business
          7   development and education.
          8            Sometimes traditional bank lending isn't
          9   enough.  We've chartered community development
         10   corporations that can also make direct investments
         11   in community projects.
         12            In Detroit, for example, our CDC partnered
         13   with the city and the local hospital group to
         14   develop Virginia Park, a subdivision of new single
         15   family homes in the core city.
         16            We have for 15 years been an active
         17   participant and are the largest investor in
         18   Chicago's Community Investment Corporation, a
         19   non-profit mortgage banking organization that
         20   specializes in affordable housing development.
         21            In July, CIC announced a $500 million loan
         22   pool, the largest in the midwest, including a
         23   $100 million flex-fund to finance deals that
         24   stretch the limits on what we can accomplish in
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   distressed neighborhoods.
          2            And we've been an important partner in the
          3   Indianapolis Neighborhood Housing Partnership,
          4   providing leadership in operating support and
          5   participation in affordable loan pools.
          6            Microlending is an important tool to spur
          7   business development and one we're using throughout
          8   our business areas.  Through support of non-profit
          9   lending organizations, such as ACCION in Chicago,
         10   the Detroit Entrepreneurship Institute, the Lake
         11   County Small Business Center and Collier County
         12   Economic Development Council in Naples, Florida,
         13   First Chicago NBD is helping to strengthen our
         14   communities by giving entrepreneurs a start.
         15            Education is an important priority for us,
         16   and we're particularly interested in programs that
         17   promote financial literacy.
         18            Through a program called Credit: Tool or
         19   Trap, NBD Bank in Michigan teaches high school,
         20   community college and adult education students
         21   about the power of using credit wisely.
         22            This program is offered in partnership
         23   with non-profit organizations and churches
         24   throughout the state.
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1            We sponsor more than 130 in-school banks
          2   in Michigan, Indiana and Illinois where grade
          3   school students learn money management, math and
          4   employment skills.
          5            The merger of First Chicago NBD and
          6   Banc One Corporation is a merger of equals.
          7   Neither company is taking over the other by paying
          8   an extraordinary premium.
          9            We think that's important because it means
         10   that we don't have to do the kinds of extraordinary
         11   cost-cutting that could damage our franchise, hurt
         12   our employees and compromise our ability to serve
         13   our communities.  Certainly there will be
         14   efficiencies and, yes, we will reduce costs, but
         15   this merger is about growth.
         16            And that growth benefits our customers,
         17   our employees and our communities as well as our
         18   shareholders.  It promotes innovation, the creation
         19   of new and better products and services.
         20            It allows the creation of new jobs,
         21   including many at entry levels, and the opportunity
         22   for achievement and advancement.  And growing
         23   earnings allow growing support of communities.
         24            I know that when companies merge,
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   communities always fear the loss of support.  We
          2   heard that concern when First Chicago and NBD
          3   merged three years ago.
          4            But as the earnings of the combined
          5   First Chicago NBD Corporation have grown, so have
          6   our contributions to the civic, educational and
          7   cultural institutions of all of our communities.
          8            Whether it's lending, investment or
          9   philanthropy, it means being part of the community,
         10   being involved, knowing and understanding its
         11   needs, its hopes and its dreams and being part of
         12   making it all happen.  And that's our goal for the
         13   new Banc One.  Thank you.
         14            And now it's my pleasure to introduce my
         15   colleague, John McCoy.
         16       MR. McCOY:  Thanks, Verne.
         17            We appreciate very much the opportunity
         18   to appear here today.  We appreciate the work
         19   that the Fed staff has done.  We appreciate all
         20   the panelists, pro or con.  I think it's a very
         21   healthy atmosphere and look forward to a very
         22   interesting day.
         23            Banc One couldn't be more pleased to join
         24   with First Chicago NBD in creating the new
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   Banc One.
          2            Verne has talked about some of the
          3   strengths of First Chicago.  And I'd like to talk
          4   about a few of the great things Banc One will bring
          5   to the table.
          6            The first of these is our legacy of
          7   innovation.  Banc One is an entrepreneurial
          8   company.  32 years ago in 1966, we introduced the
          9   first credit card outside of California.  And in
         10   1971, we launched the first automatic teller
         11   machine in the nation.
         12            Eight years later in 1979, we experimented
         13   with one of the first home banking systems.
         14   Today, credit cards, ATMs and home banking are
         15   commonplace.
         16            Banc One's culture of innovation has
         17   created important new products and services in all
         18   lines of business, including community
         19   reinvestment.
         20            Some of the CRA products may even seem
         21   commonplace today, while other leading-edge
         22   initiatives can become tomorrow's standard.
         23            CRA at Banc One means business.  It means
         24   designing products that meet the needs of our
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   customers and constantly refining them to make them
          2   better, more affordable and more accessible while
          3   providing a fair return to the shareholder.
          4            Today, you will hear many success stories
          5   from our markets where we continue to innovate and
          6   also from our partners who are working with us to
          7   find new ways to finance affordable housing and
          8   small business.
          9            Our CRA record is one we are proud to
         10   stand on.  And I think you will agree that
         11   Banc One's entrepreneurial spirit has elevated this
         12   record to one of distinction.
         13            I'd like to review just a few of our
         14   singular achievements.  In 1987, Banc One was one
         15   of the first banks in the nation to finance a
         16   project utilizing low-income housing tax credits.
         17            Over the last 11 years, we have refined
         18   our expertise in this area so that today we can
         19   deliver direct assistance to projects which could
         20   not otherwise be accomplished because of their size
         21   or complexity.
         22            These projects include the rehabilitation
         23   of a former crack house in Wheeling, West Virginia,
         24   across the street from an elementary school.
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1            With Banc One's technical and investment
          2   support, that crack house is now a three-unit
          3   affordable housing project utilizing low-income
          4   housing tax credits.
          5            This project may rank as the smallest tax
          6   credit deal in the country, but to the kids and
          7   parents in Wheeling, it's a huge success.
          8            In Louisville, the city struggled for
          9   20 years with a severely troubled HUD Section 8
         10   project.  After entering the Louisville market in
         11   1992, Banc One's community development team went to
         12   work with the city, HUD and a private developer to
         13   create a solution.
         14            The turning point was an $8.8 million
         15   bridge loan structured by Banc One and participated
         16   to more than 13 lenders.
         17            Following our entry into Delaware,
         18   Banc One was approached to provide the expertise
         19   and financing for an affordable housing project
         20   serving low-income, chronically mentally ill
         21   residents in Wilmington.  This project is now
         22   underway.
         23            In Colorado, Banc One resources are
         24   assisting the Southern Ute Indians in developing
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   50 single family homes which will be available on a
          2   lease purchase basis to low-income members of the
          3   tribe.
          4            Elsewhere, our CDC designed a small loan
          5   program to provide long-term fixed rate financing
          6   for small, affordable, multi-family projects that
          7   lacked a way to deliver that product efficiently.
          8            We teamed up with the Wisconsin Housing
          9   and Economic Development Authority and put together
         10   a partnership where WHEDA markets and underwrites
         11   the loans while Banc One CDC provides the funding.
         12            Together, Banc One and WHEDA share the
         13   risk.  Together we created a delivery system that
         14   is a win-win for Banc One and WHEDA.  The people of
         15   Wisconsin are the beneficiaries.
         16            We are now exploring opportunities to take
         17   what we have developed in Wisconsin and roll it out
         18   in other Banc One states, including Kentucky, Texas
         19   and Illinois.
         20            In the small business area, Banc One
         21   stepped forward to pilot the SBA's Fastrack and
         22   Microloan programs.
         23            Today, Banc One is recognized as the
         24   national leader in both programs and has
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   established a reputation as a leading
          2   microenterprise expert.
          3            Banc One is generating more SBA microloans
          4   than any other bank in the nation and has
          5   established a network of microenterprise experts
          6   extending from Milwaukee all the way to the Mexican
          7   border.
          8            Recently, these experts joined Banc One in
          9   Cleveland to help the city reinvest their local
         10   microlending program.
         11            In another first, Banc One is the lead
         12   investor in Capital Across America, the first small
         13   business investment company focused on providing
         14   capital to women-owned businesses.
         15            There are two special ingredients in
         16   Banc One's recipe for its successful CRA program.
         17            One is knowledgeable employees who devote
         18   all of their time and expertise to designing
         19   sustainable and profitable solutions that meet
         20   community credit needs.
         21            The other is strong and respected local
         22   partners who are knowledgeable about their markets
         23   and share our commitment to sustainable solutions.
         24            At Banc One, community needs represent
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   business opportunities and collaboration creates
          2   customers.
          3            Finally, I would like to take a moment to
          4   express a concern which has been addressed by
          5   certain community groups.
          6            Banc One has entered a partnership with
          7   HomeSide Lending to provide servicing for Banc One
          8   Mortgage Corporation loans.
          9            The servicing of our portfolio by HomeSide
         10   does not negatively affect Banc One's loan
         11   organization business.  Banc One will continue to
         12   originate mortgage loans.  I think it is important
         13   that this be clearly understood.
         14            In fact, we recently entered a new
         15   partnership with Self-Help to assist low-income and
         16   minority home buyers in all of our bank markets.
         17            This new program is a joint initiative
         18   between Fannie Mae, the Ford Foundation and four
         19   lenders to generate 35,000 affordable mortgages
         20   over the next five years.
         21            This program is focused on serving home
         22   buyers who have difficulty meeting conventional
         23   lending standards because of inadequate savings or
         24   weaker credit.  While HomeSide will service the
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   loans, Banc One will be the originator.
          2            We're excited about serving new markets,
          3   new places where the next CRA innovations may
          4   develop with new partners.  We look forward to
          5   sharing our expertise and learning from new
          6   partners in Chicago and Detroit.  Thank you.
          7       MS. SMITH:  Questions?
          8       MR. ALVAREZ:  I've got a question.  Many of
          9   the --
         10                      (Whereupon, there was a
         11                      vocal demonstration from the
         12                      audience.)
         13       MS. SMITH:  I would appreciate it if we could
         14   have a little quiet, please.
         15       MR. ALVAREZ:  I'd like to ask a question,
         16   actually, many of the commentors have asked in the
         17   written remarks.
         18            They expressed a view that neither
         19   Banc One nor First Chicago has adequately addressed
         20   the minority lending needs or the needs of loan
         21   individuals.  And they have charged that there's
         22   been substantial disparities in the loan rates in
         23   many communities once they are combined institution
         24   to reach out to the low and moderate income
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   communities that are served by the organization and
          2   to minorities and to ensure that credit decisions
          3   are complying.
          4       MR. ISTOCK:  I would help the Chair out and
          5   suggest that common courtesy would be that people
          6   in the audience would let the other people in the
          7   audience hear the response.
          8            I believe both of us have addressed -- and
          9   I'll speak for the First Chicago NBD -- minority
         10   lending.  And we've worked with many, many
         11   community groups to really expand minority lending,
         12   both African Americans and Hispanics and others.
         13   And we'll stand on our record.  We've expanded
         14   these types of loans in all of the markets in which
         15   we've serviced.
         16            There has been some criticism that our
         17   denial rates are higher than others, but I also
         18   will say that the number of loans that we have
         19   approved are higher as well.  And we have
         20   aggressively sought more applicants.  And I suspect
         21   that as you do that, you will find that there will
         22   be more denials.
         23            But, nevertheless, we had a number one
         24   position here in Chicago in approving mortgages in
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          1   '96.  And in 1997, we had a 40 percent increase in
          2   the number of loans approved and it was well over a
          3   hundred million dollars.  So we're very proud of
          4   our record.
          5       MR. McCOY:  As you are aware, we have done a
          6   number of mergers.
          7       MR. ALVAREZ:  Move the microphone.
          8       MR. McCOY:  We've done a number of mergers and
          9   are constantly being examined by both the Fed and
         10   the OCC.  I think the exams speak for themselves.
         11   We've had very good ratings.
         12            Secondly, there is rigorous monitoring
         13   that goes along in all of our markets to make sure
         14   that we are absolutely in compliance and also
         15   rigorous training of our employees to ensure that
         16   we are reaching minorities.
         17            And I think the other thing that we found
         18   in the acquisitions that we've done is everybody
         19   does it a little bit differently.
         20            And I think that there are things that
         21   First Chicago has done that we applaud.  I think
         22   Verne would say the same thing.
         23            And I think with joining together, as we
         24   will in many areas, there will be synergies.  And
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   we will take the best of both programs and, I'm
          2   sure, come out with even a better program.
          3       MR. ALVAREZ:  A question for Mr. McCoy.
          4   Banc One has recently completed a reorganization
          5   project called, I guess, Project One that's
          6   resulted in more centralization of management and
          7   operational structure.
          8            Will this centralization combined with the
          9   merger eliminate local credit decision-making and
         10   local points of contact and the ability of the
         11   organization to understand the particular needs of
         12   the local communities and address in special ways
         13   the special needs of local communities?
         14       MR. McCOY:  Absolutely not.  The key to the
         15   banking business, especially the community banking
         16   business, is to be knowledgeable of your individual
         17   communities.
         18            And there are differences between Chicago,
         19   Detroit and Columbus.  And if you're not aware of
         20   what those differences are or what the needs are,
         21   you are not going to be successful.
         22            So our philanthropic giving is done by the
         23   local communities in the local communities, not
         24   centrally.  And we have market managers in each
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          1   market who are challenged to make their markets
          2   successful.  And in reality, our CRA is done at the
          3   local market level, not centrally.
          4            So the key to our success is to really
          5   compete with the competitors in the local market,
          6   not on a national basis.
          7       MR. ISTOCK:  I would just add to that question
          8   that John and I are in full agreement on this; that
          9   while certain functions are better managed from a
         10   centralization standpoint, the closer we can get
         11   the decision-making individual to the individual
         12   applying for a loan or whatever the case may be,
         13   the better off we are, the better off the customer
         14   is and the better off the community is.  And we
         15   subscribe to that philosophy.
         16       MS. SMITH:  I would ask you one question; and
         17   that is, can you tell us something about your plans
         18   for merging the CRA programs of your two
         19   institutions?  Any detail that you might give us
         20   on that?
         21       MR. ISTOCK:  I can start with that.  We have
         22   just announced internally that Jerry Bulldike, who
         23   is here in the audience, will be in charge of
         24   public affairs for the corporation.
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          1            And it will be Jerry's responsibility to
          2   put together the organizational structure for
          3   public affairs, which will include the community
          4   reinvestment activities.
          5            And both Julie Johnson and Mary Decker
          6   will be involved in those activities in the
          7   corporation going forward.
          8            We have not finalized that structure, but
          9   you have our commitment that the intensity of our
         10   effort in all of the local communities that we
         11   serve will not decrease.  It will, in fact,
         12   increase.
         13            As I think John indicated, we will learn
         14   from one another and apply whatever pluses we have
         15   from the Banc One organization to the communities
         16   that First Chicago NBD has served and vice versa.
         17            So we think overall the products and
         18   services that we provide will actually increase in
         19   the communities and the customers will benefit.
         20       MR. McCOY:  I would simply add to that that it
         21   is so important to be involved in the local
         22   community.
         23            And I've had the opportunity with Verne to
         24   meet a number of groups in Chicago and a number of
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          1   groups in Detroit.  And so I think that you will
          2   see a very strong orientation to local communities,
          3   which has worked well for us in the past.
          4       MR. ALVAREZ:  There has been some concern
          5   expressed that in moving corporate headquarters of
          6   Banc One from Columbus to Chicago that there might
          7   be a lessening of the new organization's commitment
          8   to Ohio and Columbus, in particular.  Can you
          9   address that?
         10       MR. McCOY:  I think that that same concern was
         11   echoed with First Chicago when the headquarters was
         12   moved from Detroit.
         13            And I think that based on what I know --
         14   and I met with the Mayor of Detroit -- that they
         15   are happy with the support.  I've certainly met
         16   with our Mayor in Columbus and the Governor of Ohio
         17   and others.
         18            We have a strong commitment to that
         19   market.  We have a large number of employees still
         20   there.  We're having -- several of our businesses
         21   will be headquartered there.
         22            And so I don't worry about that at all.
         23   And Verne will let me go back every once in a
         24   while.
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          1       MR. ISTOCK:  That same concern was raised with
          2   the First Chicago NBD merger.  And I think over the
          3   past three years, we have, in fact, proven in the
          4   Detroit market that they have not been abandon.
          5            In fact, what we have accomplished in that
          6   market has actually been expanded.  And we have
          7   terrific franchises in all of the major cities, not
          8   just Columbus, Detroit, but Flint, Grand Rapids,
          9   Indianapolis and in some other states.
         10            And we would be making a grave mistake if
         11   we abandoned any of those communities as long as
         12   this continues to be successful.
         13            And John and I are committed to that
         14   effort.  We will continue to be able to use that
         15   success to enhance our relationships with those
         16   communities.
         17       MS. WILLIAMS:  You mentioned that you had
         18   entered into a new partnership with Fannie Mae and
         19   it's a Self-Help program for home buyers.
         20            Could you talk a little bit about what
         21   market would be impacted by that.
         22       MR. McCOY:  Basically, as I understand it, it
         23   will be a program we will introduce in all of our
         24   markets.  It is one that, as we learn how it works
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          1   and how to make it work, it will expand hopefully
          2   past the 35,000 loans that we've set as a goal.
          3       MS. SMITH:  Any other questions?
          4       MR. ALVAREZ:  I don't think so.
          5       MS. SMITH:  If not, we thank you very much for
          6   coming here this morning and we will move on to
          7   Panel 2.
          8                      (Whereupon, there was a
          9                      vocal demonstration from
         10                      the audience.)
         11       MS. SMITH:  We'll follow the order given in the
         12   agenda.  And I will ask each person to indicate
         13   your affiliation, so we'll start with the Honorable
         14   Julia Carson.
         15       MS. CARSON:  Thank you very much.  I'm Julia
         16   Carson, Congresswoman, Indianapolis, Indiana,
         17   member of Congress, sit on the banking committee
         18   for US Congress.  Is this microphone on?
         19       MR. ALVAREZ:  It's not on, ma'am.
         20       MS. CARSON:  Okay.  I'm Julia Carson,
         21   Congresswoman, Indianapolis, sit on the banking
         22   committee for the United States House of
         23   Representatives.
         24            I have listened with interest.  I have
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          1   another more painful side to tell of the latest
          2   story of merger mania.  I urge a conservative
          3   course, a careful investigation of the facts, the
          4   history and the harm.
          5            They claim that mergers benefit companies,
          6   employees and consumers, increasing competition.  I
          7   favor growth, but not at the cost of harm to the
          8   community and to the people.
          9            Indianapolis is where the two giant merger
         10   partners have, perhaps, the greatest business
         11   overlap, facing each other next to the Federal
         12   courthouse, a massing $17.6 billion in assets
         13   between them.
         14            Court is where this matter will end up if
         15   this process is not well and thoroughly conducted.
         16   There is a better way.
         17            Our Indianapolis Star newspaper warns the
         18   most pressing concern is customer service and
         19   cost.  If history is any guide, the former will
         20   drop and the latter rise as banks become more
         21   competitive.
         22            Joining the Star, grassroots
         23   organizations, community groups and activists from
         24   Indianapolis and across the country warn, too,
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          1   because of the harms threatened.  These voices
          2   cannot all be wrong.
          3            The point of business is to beat the
          4   competition.  We believe the competition is healthy
          5   because it benefits the consumer.
          6            Our law, our public policy, encourages
          7   competition by legal protection.  Beating the
          8   competition is okay, but killing it is not.
          9            And antitrust law will make the superbank
         10   reduce its markets here.  Selling deposits will
         11   make the purchaser a new competitor.  The
         12   requirement to slim down is powerful.  Branches
         13   will be closed, operations consolidated.
         14            Each bank now has 60 or more branches in
         15   central Indiana.  Banc One alone has 27 on the
         16   block.  Each branch is a center of local commerce,
         17   competing with others.
         18            Closing cuts consumer choice.  Merger
         19   will close competitive branches, neighborhood by
         20   neighborhood, as the new superbank makes the
         21   rational decision not to compete with itself.
         22   I doubt that the buyer bank will keep these
         23   branches going.
         24            The incentive is small.  Deposits are the
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          1   most portable form of assets.  Real estate and bank
          2   worker -- 6,000 in central Indiana -- complicate
          3   the bottom line.  This plan makes them expendable.
          4            More harm is predicted by history.  A Wall
          5   Street Journal analysis of the five largest bank
          6   acquisitions last year showed that small business
          7   lending fell six percent through business lending
          8   increase, less for beginning businesses.
          9            In Indianapolis, we need more business
         10   formation, not less.  Small business opportunity
         11   based at home, growing over time into big
         12   business.  That's what works for our people.
         13            Our law forbids mergers which
         14   substantially lessen competition unless these facts
         15   are outweighed in the public interest by the
         16   probable effect of the transaction in serving the
         17   convenience and needs of the community.
         18            Our law is devoted to preservation, the
         19   conservation of economic values vital to our way of
         20   life.  Our people ask that the law be applied to
         21   save their jobs, their prosperity, our
         22   neighborhoods.
         23            For American banking, a great windfall
         24   approaches.  Printing and mailing of most
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          1   government checks will end in 1999.  These
          2   transfers will be made by electronic means, flowing
          3   billions of dollars through the banks, especially
          4   on September the 3rd of every month when the Social
          5   Security checks are transferred.
          6            For direct deposit, you will need a bank
          7   account.  To get one, you will have to find a
          8   branch, harder and harder where I live.
          9            Fewer branches mean less access for a
         10   whole new throng of American consumers brought into
         11   the banking system by this way of the future.
         12            The longer it takes to cash a check, the
         13   more the money earns for the bank holding the
         14   funds.
         15            Nationally, we are at the door of a new
         16   era in competition.  This merger threatens to slam
         17   doors firmly closed Indianapolis just as they begin
         18   to crack open across the country.
         19            For Indianapolis, the view differs
         20   painfully.  You will hear complaints about bank's
         21   behavior hurting those with low income, about an
         22   investigation for lending discrimination against
         23   low to moderate income borrowers, Hispanics and
         24   Blacks.
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          1            I fear untold number of bank workers out
          2   of work with more pain.  And Community Reinvestment
          3   assessments tell us that tale.
          4            I'm happy that I had an opportunity to
          5   come today because, for the first time, I've met
          6   the chairmen of those two banking institutions and
          7   had myself approached them and introduced myself to
          8   them.  Thank you very much.
          9       MS. SMITH:  Thank you.  Mr. Davis.
         10       MR. DAVIS:  Ms. Smith, members of the panel,
         11   Mr. Istock, Mr. McCoy and other participants, I'm
         12   Danny Davis, Congressman of the 7th Congressional
         13   District here in the state of Illinois.
         14            And for those of you who are from out of
         15   town, let me welcome you to the city of Chicago,
         16   the most fascinating city in all of America, and to
         17   the 7th District, which I represent, and it also
         18   happens to be the most intriguing of all
         19   Congressional districts in the country.
         20            I want to begin by thanking the Federal
         21   Reserve for holding these hearings.  As I will
         22   indicate in my testimony, the issues before us are
         23   critical to the well-being of this and many other
         24   communities throughout America.
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          1            We need to guarantee that the merger
          2   before us meet the criteria of protecting workers,
          3   minorities, consumers depositors, businesses,
          4   non-profits and other partners with special needs
          5   in community development.
          6            We've set our public policy for bank
          7   mergers based on some historical lessons, and as
          8   a result of some laxness to the financial sector.
          9   These decisions once taken cannot be undone.
         10            In his classic 1946 film, It's a Wonderful
         11   Life, Frank Capra laid before us two fundamental
         12   questions which have resonated with great empathy
         13   with the American public.
         14            He asked us to ponder the role of the
         15   community bank and the community banker in the life
         16   of the community.
         17            And he asked us to think about the nature
         18   of history in the highly divergent paths which
         19   history can take, to be changed for better or for
         20   worse by the actions of those of us who make
         21   decisions.
         22            Those are precisely the questions we face
         23   in these hearings this morning.  It is not my
         24   intent or desire to romanticize the state of
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          1   community banking in Chicago.
          2            However, the relations between Chicago's
          3   First National Bank and Chicago's extraordinarily
          4   rich economic, social and cultural life have
          5   developed over many years and as the result of the
          6   efforts of many individuals and institutions.
          7            We simply cannot afford to throw away or,
          8   through our inaction, allow years of community/bank
          9   relationships to dissipate.
         10            In response to those who say the mythical
         11   unregulated market is best arbiter economic
         12   structures, I would assert that lack of control of
         13   markets brought us the ubiquitous crack salesman,
         14   one in seven children without health insurance, a
         15   mountain of garbage in Lawndale and the lamentable
         16   need in this day and age for a task force on
         17   sweatshops in Chicago.
         18            I would urge that the Federal Reserve
         19   consider the impact of this merger on the health of
         20   the financial industry as well as the rest of the
         21   community.
         22            And I am certain that you're making a
         23   careful analysis of that aspect, but I would like
         24   to suggest that the financial industry's health is
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          1   inseparable from the health of the broader
          2   community.
          3            It follows logically that we should strive
          4   to understand the impact of this merger on the
          5   larger community and weigh that impact against any
          6   benefits which may accrue.  At a minimum, we should
          7   consider structuring the merger to minimize
          8   negative impacts on the broader community.
          9            I would hope that the Fed would consider,
         10   attempt to quantify and to take into account these
         11   concerns; the number of jobs which may be lost,
         12   especially those in the back rooms and not up
         13   front, the number of jobs which may be accessible
         14   to welfare to work participants; the amount of CIC
         15   lending and community development investment with
         16   community partners, the agreements with the Chicago
         17   CRA Coalition can serve as a model for all markets
         18   served by the merged companies.
         19            Certainly such agreements would go far in
         20   stabilizing the process of community reinvestment.
         21   Lack of such agreements would certainly threaten
         22   the process of reinvestment both in their direct
         23   impact and as a negative signal to other investors
         24   and institutions.
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          1            The impact on minority lending, both the
          2   availability of loans and any disproportion in the
          3   rates which loans are offered.  Serious questions
          4   have been raised regarding the Banc One record
          5   regarding minority lending such as Denver and
          6   Milwaukee.
          7            We believe that personnel have been
          8   developed in the city of Chicago, but we would want
          9   to make absolutely certain they are, in fact,
         10   retained and those experiences used as Banc One
         11   continues to proliferate and carry on its activity
         12   in all of its marketplaces.
         13            I guess there's no doubt about my time
         14   being over.  Lights go out.  I thank you very
         15   much.
         16       MS. SMITH:  Mayor Goldsmith.
         17       MR. GOLDSMITH:  Thank you, Congressman.
         18            I will be sensitive to time.  The
         19   Congresswoman got a bell and the Congressman got
         20   the lights off, so I worry about the next step.
         21            I'm the Mayor of the city of
         22   Indianapolis.  And the heart of our city is the
         23   district represented by Congresswoman Carson, so we
         24   have many of the same concerns.  I appreciate the
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          1   attention of the Federal Reserve in this matter.
          2            These two banks are both extraordinary
          3   citizens of the city of Indianapolis, both have
          4   outstanding records and both have been partners of
          5   the city around the community for some time through
          6   community lending and other initiatives.
          7            This hour is a very important moment in
          8   the future of our city.  Because of the leadership
          9   and partnership of these institutions, if the
         10   merger is not done correctly, then the progress in
         11   our city and its citizens are threatened.  If it's
         12   done correctly, the leadership played by the banks
         13   is continued.
         14            This is a defining point in the future of
         15   Indianapolis.  It's not the merger, per se, that
         16   concerns us.  We've been there.  We've done that.
         17            Banc One purchased American Fletcher
         18   National Bank.  And its record after the purchase
         19   and merger was every bit as good as they had
         20   been before.
         21            Indiana National Bank was purchased by
         22   NBD, which was then purchased by First Chicago or
         23   merged or whatever the right word would be.  And
         24   their records continue to be very strong and their
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          1   community participation are every bit or greater
          2   than they had been previously.
          3            So to me, the issue is not one of merger.
          4   It's more an issue of attitude, commitment on the
          5   part of management and their approach going
          6   forward; not the size of the bank, but the attitude
          7   of the bank that makes a difference.
          8            In that regard, I'd like to make brief
          9   points about what I regard to be the role of banks
         10   in urban communities.
         11            It is clear from the 30 years up to the
         12   1990s, there will be structural investments.  The
         13   cash just flowed out of the center of cities and
         14   into suburban communities.
         15            Some of this is because the cities didn't
         16   manage their own communities very well, with high
         17   taxes and high prime and the capital found
         18   friendlier places to go after this merger occurs.
         19            It's been my goal that the merged banks
         20   pay attention to the urban core and in four ways.
         21   One, these banks can locate their business centers
         22   and their employees anywhere in the world.  They're
         23   international banks.  And we would appreciate the
         24   sensitivity to the core that has existed
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          1   premerger.
          2            Secondly, community lending.  There are a
          3   number of great cities in the midwest.  And we hope
          4   that the bank will use its size to bring the best
          5   practices of Chicago or Detroit or Columbus to the
          6   citizens of Indianapolis, particularly those
          7   citizens who are the poorest and in the most need
          8   of access to capital, many of those living in
          9   Congresswoman Carson's district.
         10            Third, we need small business lending.
         11   In this regard, Indianapolis is different than
         12   the other cities.  I think what will drive small
         13   business lending is competition.  And the Justice
         14   Department is looking at the anticompetitive
         15   effects in Indianapolis from the merger of the
         16   banks.
         17            So the size of the divesture and the
         18   ability of the new bank to compete with the merged
         19   banks will be, to me, the most important element of
         20   assuring small business access to capital.
         21            Fourth, and perhaps a little bit
         22   different, this merger truly will be a grand thing
         23   if I were the Mayor of Chicago, but my prediction
         24   is the headquarters of the bank will be in Chicago
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          1   and not in Indianapolis, therefore, I am sensitive
          2   about the fact that decision-making needs to be
          3   decentralized as it relates to community investment
          4   and civic participation.
          5            What concerns me most about the merger is
          6   the ability of the people located in Indianapolis,
          7   a fairly good-sized business center for the banks,
          8   to make decisions that are in the best interest of
          9   Indianapolis citizens.
         10            So the fourth area is civic involvement.
         11   These banks have had a great history.  They've had
         12   a great history because local officials have had
         13   the authority to make decisions.
         14            If these four issues are addressed, then
         15   we can receive some confidence.
         16            And in conclusion, essentially our
         17   position is that our citizens have a right to
         18   certain expectations to be filled.
         19            Those expectations would include a
         20   commitment to recognizing that the core of a
         21   regional economy is important, that the regional
         22   economy cannot succeed without the core being
         23   successful and that the employment in the core is
         24   critical, real estate decisions in the core are
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          1   critical and lending policies in the core are
          2   critical as well.
          3            Our citizens have a right to expect the
          4   best possible access to capital.  The best
          5   practices anywhere in the world engaged in by this
          6   bank should be available to the citizens of
          7   Indianapolis.
          8            We've conducted our due diligence.  We
          9   have lawyers who've hired financial experts.  We've
         10   met with the chairman and the president.  We've met
         11   with officials in both banks.  And we've looked at
         12   this in great detail.
         13            We've received assurances from both banks
         14   that the issues that I have raised will be
         15   addressed and they'll be addressed in a
         16   constructive way.
         17            Based on these assurances and the track
         18   record of those banks, I remain anxious, but
         19   confident, that the merger will be done in a way
         20   that will continue the important role that the
         21   banks have played in the city's past; and that
         22   these banks after the merger, if they conduct their
         23   affairs with some degree of commitment, can be done
         24   equally good and equally to the benefit of our
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          1   citizens.  Thank you.
          2       MS. SMITH:  Mayor King.
          3       MS. CARSON:  You were way past your time.
          4       MR. KING:  Good morning.  I'm the Mayor of
          5   Gary, Indiana, a city of about 120,000, about 30
          6   miles around the lake from here.
          7            It's a pleasure to have been afforded the
          8   opportunity to speak from our perspective.  And it
          9   was interesting listening to Mayor Goldsmith's last
         10   comment about his fears of the impact of moving
         11   decision-making out of his city to Chicago and what
         12   his concerns are.
         13            And to quote your children, Mayor, been
         14   there, done that, in Gary.  And it's not a good
         15   prospect.
         16            One of the problems that I see with this
         17   merger, quite frankly, is that individually these
         18   banks in the city of Gary, whose population is
         19   85 percent African American, have not individually
         20   established an appropriate track record of lending,
         21   of investing, of involving the community that
         22   they're in.
         23            And I suspect it's not due to any malice
         24   on the part of the top executives of either
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          1   entity.  I suspect it's due, in part, to the larger
          2   you get, the more difficult it is within any
          3   institution to have policy implemented at the top
          4   actually carried out by middle management and
          5   below.
          6            I can tell you, as Mayor, I have never had
          7   the occasion of a department head to walk into my
          8   office and say, Mayor, I'm doing a lousy job of
          9   implementing the policy that you asked my
         10   department to do.  It doesn't happen.
         11            And I suspect for both the gentlemen who
         12   preceded us on this panel, it's not a matter of
         13   malice, it's a matter of a lack of awareness.
         14            In the banking industry and in African
         15   American communities, the truth is, whether in Gary
         16   or wherever in this country, they do not have --
         17   they do not enjoy a good track record.
         18            One of the remaining vestiges of
         19   historic race discrimination today is economic
         20   discrimination.  That remains a barrier for the
         21   people I serve, to get into the mainstream of our
         22   economy.
         23            The banks, along with other industry in
         24   the city of Gary and the other cities in the
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          1   so-called rust bill, have about three decades of
          2   disinvestment in the cities.
          3            The banks went.  The mills went.  The jobs
          4   went.  And what was left was a community that
          5   continued to make it day-to-day, but was cut off
          6   from resources enabling it to be competitive.  This
          7   is made all the more frightening to me with some
          8   recent studies.
          9            Historically, I believe banks have
         10   presupposed unfairly that investment in inner
         11   cities is high risk, bad investment.
         12            Well, lo and behold, a bank, Bank of
         13   America, several years ago decided to find out
         14   scientifically was that true or not as a premise.
         15            They commissioned a study.  And lo and
         16   behold, the results of their study was that that
         17   was a myth and a false one.
         18            The truth is, the inner cities, the urban
         19   centers, are good places to invest in small
         20   business and housing to promote home ownership.
         21   These studies commissioned by banks are there.
         22            Now, I'm a realist.  I'm a realist.  I
         23   understand we may very well face the prospect of
         24   this merger being approved.
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          1            If it is approved, if we are going to
          2   truly be sensitive, whether it's Indianapolis,
          3   Gary, whatever city we're talking about, I believe
          4   it is up to this board and this entity to put some
          5   teeth in the tiger of the Credit Reinvestment Act,
          6   to carefully scrutinize when you're getting
          7   reporting, go behind the numbers.
          8            I can tell you, we've not had -- we have
          9   not had more good than bad.  I will not castigate
         10   either bank.
         11            There are some things they have done in
         12   our community that have been credible, but on the
         13   whole, my concern is it will get worse.
         14            We have some new banks that have come into
         15   our city.  And I can tell you, it's been a
         16   refreshing change to see honest enthusiasm about
         17   making lending opportunities to the people I
         18   serve.
         19            My concern is by making this merger occur
         20   and making them bigger, it could thwart the
         21   competitiveness that's just starting our city in
         22   banking and continue the legacy of what I believe
         23   to be unfair practices in making capital available
         24   in minority communities.
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          1            I thank you for the opportunity.
          2       MS. SMITH:  Congresswoman Carson, would you
          3   like to have another minute or so?
          4       MS. CARSON:  I was feeling jumped upon.
          5       MS. SMITH:  Maybe you can have the mike.
          6       MS. CARSON:  I really appreciate your
          7   courtesy.  I feel more at home now.
          8            But I, too, am optimistic about the
          9   ultimate outcome of this application for merger.  I
         10   would simply like to echo the words of the
         11   Honorable Mayor King from Gary, and that is to
         12   ensure that CRA is enhanced for the benefit of the
         13   urban community.
         14            An urban community, regardless of
         15   someone's view, does not necessarily mean Black
         16   community.  People who are low income and moderate
         17   income are persons who live in urban America.  And
         18   all of them don't come with the same color on their
         19   faces.
         20            And so it is an equal opportunity for all
         21   American citizens to be able to access economic
         22   opportunities to financial institutions who thrive
         23   on the profits that they generate from urban
         24   America.
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          1       MS. SMITH:  Thank you very much.
          2       MR. ALVAREZ:  Ms. Carson, you had a written
          3   statement.  If you would give us a copy of that,
          4   we'll make sure the whole statement is put into the
          5   record.
          6       MS. CARSON:  We have left several copies of my
          7   statement, but not the latter part.  I didn't know
          8   I was going to get another minute.
          9       MR. ALVAREZ:  That's all right.  And anyone
         10   else on the panel that wasn't able to finish.
         11       MS. SMITH:  Thank you very much for coming this
         12   morning.  We appreciate it.
         13            Okay.  With Panel 3, we will start with
         14   the Honorable Hiawatha Davis, Junior.
         15       MR. DAVIS:  Good morning.  I'm Denver City
         16   Councilman Hiawatha Davis.  I represent Denver's
         17   City Council District Number 8, a predominantly low
         18   to moderate income and minority community.
         19       AUDIENCE MEMBER:  Can hardly hear you.
         20       MR. DAVIS:  Is that better?  Let me start all
         21   over.
         22            I'm the Denver City Councilman Hiawatha
         23   Davis.  I represent Denver's City Council Number 8,
         24   a predominantly low to moderate income district.
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          1            This council district is in the city
          2   center, and it is being impacted by dramatic
          3   economic surge and a population increase that has
          4   contributed to increasing rents and virtually loss
          5   of low to moderate income house choices in the
          6   city.
          7            As rents increase, moderate income
          8   families would do better if they could purchase a
          9   home before they are completely priced out of this
         10   city's housing market.  Rental opportunities and
         11   home ownership opportunities are shrinking to the
         12   point of crisis.
         13            Yes, Denver is in the midst of an upscale
         14   housing boom with downtown loft projects and middle
         15   income housing developments springing up all over
         16   the city.
         17            Denver is also in the midst of its worst
         18   crisis in terms of affordable, low and moderately
         19   priced housing.
         20            There is very little capital being made
         21   available for low and moderate income home buyers,
         22   and not much being made available to non-profit
         23   developers of low and moderately priced housing.
         24   If trends continue, this crisis will only get
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          1   worse.
          2            I'm here today to ask for your help in
          3   getting Banc One to live up to the principles
          4   articulated in the Community Reinvestment Act as it
          5   pertains to Denver.
          6            Prior to the close of initial comments
          7   on this merger, I was joined by 10 of my 13
          8   colleagues on City Council, Denver's Congresswoman,
          9   three Colorado State representatives and a State
         10   Senator, all of whom were concerned about
         11   Banc One's discriminatory lending practices toward
         12   minorities especially in the areas of home
         13   mortgages.
         14            We all requested an extension to the
         15   comment period, which we thank the Federal Reserve
         16   Board for granting, and requested a public hearing
         17   in Denver.
         18            While we are disappointed a hearing in
         19   Denver could not be accommodated, I'm honored to be
         20   here today to testify on the merger between
         21   Banc One and First Chicago.
         22            This merger is of no small matter to my
         23   community and constituents.  The new entity will be
         24   the biggest bank in between the Appalachians and
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          1   the Rockies serving millions of consumers who will
          2   be directly affected by the way it does business.
          3            And if the way it is conducting its
          4   business currently is any guide, Banc One needs to
          5   significantly change its approach to lower income
          6   and minority communities.
          7            Its record of providing mortgage financing
          8   in Denver has been appalling.  In 1995, Banc One
          9   made 12 mortgage loans to African Americans and
         10   Latinos.  In 1996, it made none.  It took no
         11   applications from Latinos or African Americans in
         12   1996, either.
         13            As I mentioned earlier, I represent a
         14   predominantly minority district.  I have plenty of
         15   constituents struggling with high rent, struggling
         16   to get ahead, who want to achieve the American
         17   dream of becoming home owners, but that dream won't
         18   be achieved with any help from Banc One.
         19            They could not find a single minority in
         20   the city of Denver in 1996 to even take an
         21   application for a mortgage from.
         22            Something is wrong.  And unless Banc One
         23   makes some commitments to change this record, when
         24   my constituents ask me where to go in terms of
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          1   their banking, I won't be able to say Banc One.
          2            This lack of service to the minority
          3   community in Denver is outrageous.  Latinos make up
          4   23 percent of the population in Denver and African
          5   Americans account for 12.8 percent of the
          6   population.  To ignore over one out of three
          7   consumers in the Denver area is unconscionable.
          8            Access to credit is essential to breaking
          9   the cycle of poverty.  Home ownership is the best
         10   route to building wealth and achieving the American
         11   dream.
         12            One of the most important measurements of
         13   an institution's commitment to move American
         14   families to self-sufficiency and economic stability
         15   is the entrance into home ownership.
         16            Renters have greater difficulty
         17   accumulating and maintaining wealth than home
         18   owners.
         19            Particularly for African Americans, home
         20   ownership is a bellwether for wealth.  According to
         21   the Department of Housing and Urban Development,
         22   African American renters have a net worth of $500
         23   on average, while African American home owners have
         24   a net worth of more than $48,000.
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          1            Banc One's failure to provide this needed
          2   credit demonstrates its disregard for Denver's
          3   minority communities and consumers.
          4            The vast bulk of Banc One's mortgages went
          5   to the wealthiest and the whitest Denver
          6   neighborhoods.  42 percent of its mortgages were
          7   made in census tracts where the population was more
          8   than 90 percent white.
          9            An additional 41 percent of its home
         10   purchase mortgages were made to neighborhoods where
         11   whites made up between 75 and 90 percent of the
         12   population.
         13            Only one of its loans under two percent
         14   went to a census track where minorities were more
         15   than half the population in 1996.  And that loan
         16   was not even made to a Latino or African American,
         17   since we know that no applications were taken from
         18   this population in 1996.
         19            Banc One has a comparable disregard for
         20   low income communities.  In 1995, more than
         21   one-third of those under 50 percent of the median
         22   income were rejected for home mortgages, more than
         23   three times the rate of Africans earning
         24   120 percent of the area median income.
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          1            In 1996, it took more than 80 percent
          2   fewer applications from low income people.  Just 4
          3   or less than 7 percent of its mortgage loans went
          4   to neighborhoods with 50 percent of the area median
          5   income.
          6            Additionally, Banc One has so far refused
          7   to make a lending commitment for the Denver area.
          8   It has pledged 4 billion for Chicago and 3 billion
          9   for Detroit, but not one penny for Denver.
         10       MS. SMITH:  Mr. Davis, could you bring it to a
         11   conclusion.  We'll be glad to have your entire
         12   statement put into the record.
         13       MR. DAVIS:  I have submitted 11 copies of that
         14   statement to the folks where I checked in.
         15            But essentially the point I'm trying to
         16   make here is that Banc One still has a long way to
         17   go.  We think that, in other words, for them to get
         18   there that this merger needs to be put on hold
         19   until they're able to really establish some real
         20   relationships with low-moderate income communities
         21   in Denver and minority communities.
         22            And I am asking you to, in fact, put this
         23   merger on hold until they have been able to work
         24   out and really develop some serious commitments
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          1   that allow them to live up to the principle and the
          2   objectives of the Community Reinvestment Act.
          3            Thank you very much.
          4       MS. SMITH:  Thank you.  Mr. Ries.
          5       MR. RIES:  Hello.  My name is Leo Ries.  I'm
          6   the director of Housing and Neighborhood
          7   Development for the city of Milwaukee.  And I'm
          8   here representing Mayor John Norquist, who sends
          9   his regrets that he was not able to be here
         10   personally.
         11            My purpose in being here today is not to
         12   really speak in favor of the merger or to protest
         13   the merger, but rather to report on our experience
         14   with Banc One as a corporate citizen.
         15            Clearly, all banks can do a better job,
         16   especially in terms of lending to low and moderate
         17   income communities.
         18            And clearly, the effect of this merger
         19   will be different in various communities.  For
         20   example, unlike Indianapolis, there is very little
         21   overlap in Milwaukee between First Chicago and
         22   Banc One's services.
         23            But having said that, I also have to say
         24   that our experience with Banc One in Milwaukee has
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          1   generally been very positive.  And we have no
          2   reason to believe that that will change after the
          3   merger.
          4            That didn't occur after Banc One purchased
          5   Milwaukee-owned Marine Bank in 1987 and we don't
          6   suspect it will happen after this merger.
          7            I would like to provide a couple examples
          8   which will provide a basis for assessment.  First
          9   of all, in 1991, Mayor Norquist, along with
         10   Congressman Jerry Blejka (phonetic), called
         11   together a number of local banks and community
         12   agencies to talk about the problem of affordable
         13   lending.
         14            What grew out of that discussion was a
         15   locally based coalition called NOHOM or New
         16   Opportunities for Home Ownership in Milwaukee.
         17            This has been a collective effort
         18   involving community groups and local lenders to
         19   focus on the issue of affordable lending and to
         20   address -- to look at products that will meet that
         21   market need and to also work with lenders to expand
         22   the availability of credit.
         23            Banc One was a leader in helping to form
         24   this partnership and they have continued to be a
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          1   very active member to this day.  As a matter of
          2   fact, one of their senior bank officials chaired
          3   this effort for a couple of years.
          4            We're currently working on an effort
          5   involving the whole problem of home improvement
          6   lending.  And, again, Banc One is very active on
          7   that task force.
          8            But more significant, I think, is their
          9   actual practice of lending or their actual history
         10   of lending patterns in Milwaukee.
         11            Annually, the office of the City
         12   Comptroller prepares an analysis in which we
         13   analyze the lending patterns of various financial
         14   institutions in the Milwaukee area and especially
         15   focus on their lending in what we've designated as
         16   the local target area, which is the area that has
         17   the lowest level of home ownership in the city.
         18            And in the most recent report, copies of
         19   which I've shared and I've left with the Board of
         20   Governors, Banc One was listed as the best lender
         21   in the target area of banks having assets of over
         22   150 million.
         23            And so I think it does demonstrate that,
         24   again, clearly banks can all do a better job, but
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          1   based on our analysis of other lenders in the
          2   Milwaukee area, Banc One has done a better than
          3   average job.
          4            Banc One has also been very active in
          5   various other community development efforts through
          6   their CDC by investing in low income housing, tax
          7   credit projects and also through their various --
          8   through their Banc One Foundation.
          9            And so for all of these reasons, I can --
         10   I want to just say on behalf of the Mayor that we
         11   have been very satisfied with their performance as
         12   a corporate citizen in Milwaukee.
         13       MS. SMITH:  Thank you very much.  Mr. Flood.
         14       MR. FLOOD:  Yes, good morning.  My name is
         15   Lawrence Flood.  I'm special council to the
         16   Attorney General of Illinois.
         17            And I would like to preface my remarks by
         18   telling you that our office has no position
         19   regarding the merger, the Banc One merger.
         20            We would tell the Federal Reserve Board
         21   that we would cooperate with them if we were called
         22   upon to provide some assistance to you here in the
         23   state of Illinois.
         24            Several months ago, the Office of the
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          1   Attorney General was appointed receiver for the
          2   now-dissolved Dixmoor Park District after a finding
          3   in chancery court that the Park District was
          4   totally lacking in organization and financial
          5   record-keeping.
          6            It was also learned that certain
          7   commissioners and members of that Park District
          8   Board had misappropriated certain monies received
          9   from the issuance of bonds on behalf of the Park
         10   District.
         11            Banc One was the underwriter.  And the
         12   amount of the bonds issued totaled approximately
         13   $700,000 over a period of several years.
         14            Criminal charges were filed against
         15   members of the Board.  Some of those defendants
         16   have pled guilty, and some of those cases are still
         17   pending.
         18            When our office was appointed receiver,
         19   the court directed that we review processes by
         20   which the bonds were issued by Banc One.
         21            We have substantially reviewed documents
         22   provided by Banc One and have interviewed several
         23   of the bank personnel involved in the transaction.
         24            Banc One has fully cooperated with us in
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          1   providing documents and also making available to us
          2   for interview bank personnel familiar with this
          3   matter.
          4            At this point in time, we have no reason
          5   to believe that Banc One acted inappropriately in
          6   the issuance of those bonds.  And I bring that to
          7   you for your information.  Thank you.
          8       MS. SMITH:  Thank you.  Mr. Smithers.
          9       MR. SMITHERS:  Good morning.  My name is Ralph
         10   Smithers, and I'm executive assistant to Greg
         11   Lashutka, Mayor of Columbus.
         12            I'm here today at the request of the
         13   Mayor, who's travelling in Europe and unable to
         14   present his testimony in person.
         15            As you know, the merger of Banc One and
         16   First Chicago is a bittersweet development for the
         17   people of Columbus.
         18            On one hand, it signifies that our
         19   hometown bank has truly become a national company;
         20   but on the other hand, its decision to relocate its
         21   headquarters from Columbus to Chicago is difficult
         22   for us to accept.
         23            Perhaps an apt analogy would be one of a
         24   parent who has watched their child grow up, but sad
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          1   to see the child leave home to go out into the
          2   world.
          3            But in a sense, this is different.
          4   Banc One is growing up, but not really leaving us.
          5   Banc One employs more than 10,000 in Columbus.  And
          6   following the merger, that number is not expected
          7   to diminish.
          8            In fact, the continued prosperity of the
          9   company will likely cause an increase in employment
         10   in the Columbus market.  Many of Banc One's
         11   significant businesses, including their retail
         12   banking and computer operations center, will remain
         13   in Colorado.
         14            Along with these important lines of
         15   business, many people will also remain.  The people
         16   of Banc One are leaders.
         17            They have made important contributions to
         18   Columbus, starting with the Chairman, John B.
         19   McCoy, who has chaired one of the City's most
         20   significant urban renewal programs in our history,
         21   the Capital South Community Urban Redevelopment
         22   Corporation.
         23            Mr. McCoy has committed to the Mayor that
         24   he will continue on in his capacity as chairman of
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          1   Capital South and other Banc One officers will also
          2   continue to serve in leadership roles for our
          3   Riverfront Development, our Chamber of Commerce,
          4   the City's Neighborhood Development Loan Committee,
          5   the Columbus Compact and Fannie Mae's Columbus
          6   Partnership Office and many other initiatives which
          7   are important to our community.
          8            The people of Banc One volunteer to help
          9   children with their school work through our
         10   Adopt-a-school program.  They provide help to the
         11   homeless and food to the needy.
         12            They're actively engaged in supporting
         13   quality healthcare in our community and have
         14   consistently set the pace for one of the most
         15   successful United Way Organizations in America.
         16            Perhaps less well-known are the many
         17   unsung personal contributions made by the employees
         18   of Banc One who, as they have prospered on an
         19   individual basis, have provided significant support
         20   to the Columbus Foundation.
         21            The Columbus Foundation is one of the
         22   largest community foundations in America.  The
         23   generous contributions from people who work for
         24   companies like Banc One have made this possible.
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          1            With respect to economic and community
          2   development, Banc One has been a reliable partner
          3   as long as I can remember.  And I've been around
          4   for more than 30 years.
          5            When the City undertook a large and risky
          6   central city redevelopment project in the 70s,
          7   Banc One stepped forward to help with the
          8   financing.
          9            When the federal government threatened to
         10   pull its financial support, Banc One lenders flew
         11   to Washington to change their minds.
         12            When the City of Columbus decided to
         13   launch a major public-private partnership with the
         14   Enterprise Foundation to promote home ownership and
         15   foster community based development, Banc One
         16   stepped out in front with both it's human and
         17   financial capital.
         18            During the last five or so years, Banc One
         19   has financed more than 1,200 units of affordable
         20   rental housing in the city of Columbus, including
         21   two major YMCA and YWCA single room occupancy
         22   projects and the first redevelopment of a public
         23   housing project in the State.
         24            Last year alone, Banc One made more than
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          1   12,000 loans to consumers residing in low and
          2   moderate income neighborhoods of the Columbus area
          3   and financed $162 million in small business loans
          4   to more than 1,800 small business owners.
          5            Recently, a group of neighborhood
          6   representatives wanted to undertake a comprehensive
          7   revitalization of their community.
          8            They went to Banc One for help in getting
          9   started.  Banc One's staff took the group to other
         10   markets where they had participated in similar
         11   initiatives.
         12            I accompanied the group to Indianapolis to
         13   study how projects started.  The one thing we
         14   learned is that partnership is the foundation of
         15   community development and that partnerships are
         16   built on local resources and local commitment.
         17            No two cities are the same.  And the
         18   beauty of a company like Banc One is that it has
         19   the local capital -- financial, human, technical
         20   and philanthropic -- and the autonomy to commit to
         21   worthy local endeavors.
         22            There are some folks who think this merger
         23   will cause Banc One to turn its back on the
         24   Columbus community or who think that the commitment
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          1   of its people will somehow diminish if the
          2   corporate headquarters leaves the city.
          3            But I don't think this merger is about
          4   creating something less or dismantling the culture
          5   that made Banc One a great institution.
          6            I have seen what Banc One has accomplished
          7   in other markets.  And their commitment to the
          8   community is no less today than it will be in
          9   Columbus tomorrow.
         10            We look forward to your approval of this
         11   merger and to a bright future with a strong
         12   company.  We are proud to be a Banc One community
         13   and look forward to working together in the days to
         14   come to address the needs of our common
         15   constituencies.
         16       MS. SMITH:  Thank you very much.
         17            Any questions from the panel?  Thank you
         18   very much for coming this morning.  We'll, again,
         19   be glad to have your entire statements entered into
         20   the record.  And we'll move onto Panel 4.
         21            I will mention as the panelists are coming
         22   to the table that there have been some changes from
         23   the names that were listed on your agenda, so we
         24   will -- we do have -- we will have people introduce
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          1   themselves and say their names for the benefit of
          2   the audience who may not be able to see the name
          3   plates.
          4            We are going to start with Ms. Coleman.
          5       MS. COLEMAN:  Good morning.  My name is Cora
          6   Coleman, and I am a Board member of Local 880 of
          7   the Service Employees International Union.
          8            I am here to talk about what things could
          9   be like for minorities here in Chicago when
         10   Banc One takes over the local control of
         11   First Chicago.
         12            If it's anything like what went on in
         13   Akron, Ohio, it could get ugly.  In the early 90s,
         14   Banc One took over the Local Central Trust in
         15   Akron.  Soon after, minority job applicants filed
         16   employment discrimination complaints with the
         17   Department of Labor.
         18            After a two-year investigation, the
         19   Department found that 31 qualified minority job
         20   applicants were unfairly turned down for jobs at
         21   Banc One, a clear-cut case of employment
         22   discrimination.
         23            For five years, Banc One fought the
         24   Department of Labor's attempts to reform the bank's
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          1   hiring practices.
          2            Finally, just last year, the bank was
          3   forced to hire 12 of the complainants and to
          4   provide financial compensation to those minority
          5   applicants it had refused to hire.
          6            First Chicago NBD is a larger operation
          7   than Central Trust.  And squeezing the two
          8   companies together is going to involve all sorts of
          9   job changes, all sorts of chances for Banc One's
         10   record in the lending office of turning down
         11   minority applicants to come shining out in the job
         12   interview.
         13            We know the Federal Reserve is not
         14   sympathetic to this issue since they themselves are
         15   facing a large class action lawsuit from its
         16   minority employees, but Banc One should be careful
         17   because we will be watching with our trial
         18   lawyers.
         19            Banc One also has violated lending
         20   discrimination laws.  In March of this year,
         21   Banc One Mortgage Corporation signed a lending
         22   discrimination settlement with HUD after their Fort
         23   Worth Humans Relation Commission filed their
         24   lending complaints.  They found that Banc One
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          1   offered African Americans and Latinos loans at
          2   worse terms than offered to whites by steering them
          3   to inferior and more expensive products than their
          4   conventional loan product.
          5            As a result of this case, Banc One
          6   Mortgage committed to provide 10 million in
          7   mortgages to low and moderate income and minority
          8   borrowers.
          9            This pattern of discrimination continued
         10   in Arizona where Banc One recently settled a case
         11   with the Attorney General by agreeing to provide
         12   5 million in mortgages to low and moderate income
         13   residents of Yuma County.  This agreement came only
         14   after the state investigated complaints from five
         15   Latino families who claimed they were denied
         16   mortgages because of their ethnicity.  Banc One
         17   denied these claims, citing internal processing
         18   problems.
         19            One family said they received the run
         20   around from Banc One Mortgage until their
         21   application was delayed long enough that they lost
         22   their house to another buyer.
         23            When a second attempt with Banc One
         24   mortgage met similar delays, they took their
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          1   application to another bank and were approved
          2   within a week.
          3            In another instance that is strikingly
          4   similar to the Phoenix example, a Dallas homeowner
          5   who applied for a Banc One home improvement loan in
          6   1996 cannot get his loan processed or even his
          7   application rejection.
          8            This practice of deterring applications of
          9   prospective minority borrowers at the outset helps
         10   understate the minority rejection rates.
         11            These cases indicate a pattern of
         12   discrimination through a series of delays and
         13   deceptions that help Banc One pad their humble
         14   reporting.
         15            They also show us that under the threat of
         16   a lawsuit, Banc One seems able to provide
         17   alternative financing to meet the needs of low
         18   income and minority borrowers.
         19            Banc One clearly has a problem when it
         20   comes to serving the banking and employment needs
         21   of African Americans and Latinos.  They don't seem
         22   to understand that discrimination is against the
         23   law.
         24            The burning issue of today is does the
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          1   Federal Reserve Board understand that
          2   discrimination is against the law, does the Federal
          3   Reserve Board have the guts to finally say no to a
          4   renegade like Banc One.
          5            On behalf of my union's 10,000 members, I
          6   implore you to do the right thing.
          7            Thank you.
          8       MS. SMITH:  Thank you very much.
          9            Mr. Shea.
         10       MR. SHEA:  Ted Thomas is going to speak next.
         11       MS. SMITH:  Okay.
         12       MR. THOMAS:  Good morning.  My name is Ted
         13   Thomas.  I'm the president of Illinois ACORN.
         14            Banc One has a history of refusing to
         15   negotiate lending agreements to meet the needs of
         16   the low income communities.  The only time Banc One
         17   has quantifably made a lending commitment to a city
         18   was when it was forced to do so by Michael White,
         19   the Mayor of Cleveland.
         20            Mayor White was so disturbed by Banc One's
         21   unwillingness to help him rebuild the central city,
         22   he actually filed a CRA protest against the bank
         23   and forced the bank to set CRA lending goals for
         24   his city.
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          1            ACORN has negotiated lending agreements
          2   and partnership with scores of banks throughout the
          3   nation.  For example, we worked with Nations Bank
          4   in 12 cities and with Chase Bank in ten cities.
          5            Our partnerships have a proven track
          6   record of performance.  Since 1987, we have helped
          7   over 10,000 low income families, mostly African
          8   American and Latino heritage, achieve the American
          9   dream of home ownership.
         10            We were amazed at Banc One's flat-out
         11   refusal to even discuss the formation of a
         12   partnership or a corporate-wide CRA lending
         13   commitment.
         14            Banc One's Senior Vice President, Julie
         15   Johnson, sent a rejection letter to several ACORN
         16   officers.  She said we do not believe in negotiated
         17   CRA programs.
         18            In Denver, Banc One officials have
         19   canceled and postponed every meeting that has been
         20   scheduled with ACORN members.  To this day,
         21   Banc One has not set CRA lending goals or made
         22   commitments to Denver.
         23            In Milwaukee, Banc One's met with ACORN
         24   members.  They said that they were unwilling to
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          1   negotiate a lending agreement and pulled out
          2   Mrs. Johnson's letter to justify their position.
          3   They told the same thing to the city's Fair Lending
          4   Coalition.  Today, Banc One has not set CRA lending
          5   goals or made a commitment to Milwaukee.
          6            In Louisiana, Banc One officials have also
          7   refused to enter into a partnership discussion.
          8   Instead, they sent a letter saying that they
          9   already do enough.  To this day, Banc One has not
         10   set CRA lending goals of any kind in New Orleans,
         11   Baton Rouge, Shreveport or anywhere else in the
         12   State of Louisiana even though they are by far the
         13   largest bank in the state.
         14            Unlike other bigger mergers this year,
         15   Banc One has refused to make corporate-wide lending
         16   CRA commitments.  What Banc One has done is allow
         17   the First Chicago NBD CRA team to promise a lot of
         18   grants to non-profits here in Chicago and in
         19   Detroit.
         20            Four weeks ago, ACORN thought it had a
         21   commitment from First Chicago NBD.  This commitment
         22   was personally given to me by the CEO of
         23   First Chicago, Mr. Verne Istock.  He looked me
         24   right in the eye and said Ted, we value the
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          1   partnership with ACORN.  He said that they wanted
          2   to keep it going in Detroit and Chicago and
          3   possibly expand it to other cities.
          4            Following that meeting, his staff told us
          5   that we could expand our partnerships to Milwaukee
          6   and perhaps to a couple of the bank's other
          7   cities.  They told us that they would value the
          8   ACORN mortgage counseling program because it helped
          9   them to make mortgages in places like Ingallwood,
         10   North Lawndale, places where for years, banks had
         11   not been able to make a single loan on its own.
         12            I left the meeting feeling like things
         13   were going to work out.  After all, I had received
         14   the word of the top dog, so I thought.  Can you
         15   imagine to my surprise just three days later,
         16   Banc One suddenly terminated our negotiation with
         17   no notice or explanation of any kind.
         18            The First Chicago CRA team were very
         19   apologetic and said that they would still be
         20   willing to continue our program in Detroit and
         21   Chicago but that they were not allowed to form CRA
         22   partnerships in any additional cities.
         23            When we asked what had happened to the
         24   commitment from Verne Istock, they sheepishly
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          1   explained that Mr. Istock had been overruled by
          2   John McCoy, the CEO of Banc One.  They reminded us
          3   John McCoy, and not Verne Istock, was going to be
          4   the CEO, the new top dog.
          5            Thank you.
          6       MS. SMITH:  Thank you very much.
          7       MR. SOZA:  Hello.  Good morning.
          8            My name is Nelson Soza.  I'm an organizer
          9   with Chicago ACORN, and I want to thank the Federal
         10   Reserve Bank for having reopened this comment
         11   period.  I think it's key for our community such as
         12   the one I work in.  I also want to thank the
         13   members of ACORN and Local 880 that come from
         14   everywhere.
         15            There is justice to be made, and we think
         16   that this is one of those cases, red lining.
         17   People in our community understand it that way so I
         18   thank everybody for being here today.
         19            I proceed to read the statement.
         20            The merger between Banc One and
         21   First Chicago NBD poses very serious issues for the
         22   residents of Chicago.  It represents a loss of one
         23   of the last local major banks in Chicago, one of
         24   the last major banks rooted in our communities.
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          1            Not that there isn't room for improvement
          2   at First Chicago.  Banks in Chicago reject African
          3   Americans and Latinos for home loans more
          4   frequently than banks in other cities, and
          5   First Chicago is worse than the rest of the banks
          6   here.
          7            First Chicago NBD rejected African
          8   Americans nearly four times as frequently as whites
          9   for home loans, and Latinos were denied home loans
         10   more than twice often as whites.  This is far
         11   higher than the citywide averages for all lenders.
         12            This performance is unacceptable from a
         13   bank that touts its hometown image.  Incredibly,
         14   even the wealthiest African Americans and Latinos
         15   are rejected at the same high rates.
         16            The Woodstock Institute found similar
         17   patterns when looking at lower income borrowers.
         18   First Chicago has much larger shares of the Chicago
         19   small business and mortgage lending market for
         20   wealthy borrowers than lower income borrowers.
         21            Yes, First Chicago has some cracks in
         22   their record, but they are nothing compared to the
         23   problems of Banc One.  They seem small.
         24            Banc One is already in the Chicagoland
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          1   area, but as you can see from the map behind me or
          2   on the side over there if you look in the corner,
          3   there is a map.  If you look at the map there, as
          4   you can see, it just isn't in Chicago.
          5            Banc One isn't in Chicago really in fact
          6   with exception of its branch on LaSalle Street in
          7   the Loop across the street, Banc One has avoided
          8   the City of Chicago as if it were the plague.
          9            Its branches are located in wealthier
         10   suburban neighborhoods like Schaumburg, Winnetka
         11   and Highland Park.  So if people from the West Side
         12   want to open an account, they have to go all the
         13   way there, for instance.
         14            We know if past track record is any
         15   indicator, then it is very likely that once
         16   Banc One takes over First Chicago, it will close
         17   the few First Chicago NBD branches that are in our
         18   neighborhoods.
         19            Banc One has always closed branches
         20   following mergers no matter what the overlap in the
         21   merging bank's service areas.  In fact, Banc One
         22   has recently announced that it will close between
         23   200 and 500 branches, and somehow, I don't think
         24   that it would be the branches in Winnetka and
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          1   DuPage County that will be closed.
          2            Banc One is planning on replacing the
          3   branches with ATMs in regional outlets and
          4   convenience stores where Banc One already charges
          5   its own customers one dollar for each use.  Compare
          6   this to First Chicago, which provides unlimited ATM
          7   use to its own customers for free.
          8            Banc One is also teaming up with
          9   Texas-based Mr. Payroll to install check cashing
         10   stores across the country.  These operations will
         11   cash a check for you but only if you submit to
         12   video identification or fingerprinting.  After
         13   treating you as if you were a common criminal, they
         14   will then charge you one percent for payroll and
         15   government checks, two percent for money orders and
         16   three percent for personal checks.
         17            Sadly enough, even these high rates may be
         18   cheaper than the flat $8 fee Banc One charges to
         19   cash a government check at its own branches, $8 for
         20   a government check.
         21            Again, compare this to First Chicago where
         22   government checks are oftentimes cashed for free by
         23   tellers who get to know their customers who have
         24   government checks, many of whom are older and
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          1   disabled.
          2            Given the choice between locally-based
          3   First Chicago and notoriously customer unfriendly
          4   Banc One, we'll keep what we've got.
          5            I urge you to reject this merger and the
          6   high cost, low volume customer services that come
          7   with it.
          8            Thank you very much.
          9       MS. SMITH:  Ms. Vargas.
         10       MR. VARGAS:  Good morning.  My name is Shirley
         11   Vargas.  I live in Pleasant Grove, Dallas, Texas.
         12            Me and my fiancee went to Banc One to get
         13   a home loan, and when we went in there, my fiancee
         14   had worked for his job -- he started in '91 and the
         15   company changed over.  He was a regular employee,
         16   and they changed over to independent contractors so
         17   he had already filed for that independent
         18   contractor, and we hadn't been there -- he hadn't
         19   filed very long.
         20            After that, we went there, and they said
         21   that he had to have at least four years tax returns
         22   for an independent contractor before we could even
         23   consider a loan.
         24            The money I was making, he said that I
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          1   didn't qualify for the $65,000 home that we wanted
          2   to purchase.  We had $4,200 to put down on it, and
          3   they didn't even consider that.  They said that I
          4   didn't make enough money and that for us to come
          5   back in two years for us to get a loan.  And that
          6   was just unfair.
          7            We didn't go anywhere else after that
          8   because we thought we couldn't get a loan, we
          9   couldn't get a loan from any other bank.
         10            Because I had an account there, I thought
         11   that Banc One would be able to help me out, and
         12   they didn't.  They said no, and that was it, and I
         13   think it was very unfair.
         14            And they didn't even look at our
         15   application, they didn't even do a credit check.
         16   They just said no, that we needed to come back in
         17   two years after we had tax returns, we had all the
         18   information that they asked us for.
         19            They didn't even consider it.  They just
         20   said no, you need to come back.  And I just think
         21   that's really unfair.
         22       MS. SMITH:  Thank you very much.  Mr. Shea.
         23       MR. SHEA:  Good morning.  My name's Mike Shea
         24   I'm Executive Director of ACORN Housing
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          1   Corporation.
          2            The merger of First Chicago NBD and
          3   Banc One is not a merger of equals, so let's get
          4   that straight, it's an acquisition.
          5            We are losing First Chicago and a more
          6   open and efficient cosmopolitan culture that it has
          7   developed.  It has been replaced by the arrogant
          8   big fish in a small pond approach by Banc One, an
          9   approach that is both inefficient and racially
         10   prejudiced.
         11            And in case anyone here still has any
         12   doubts about which bank's culture will survive,
         13   consider the remarks made by John McCoy to the
         14   Arkansas Business Journal during another merger.
         15   He he said, "I don't believe in a merger of
         16   equals.  We want to be sure it is the Banc One
         17   culture that survives."
         18            And what happened with the golden
         19   parachutes recently provided to First Chicago's
         20   senior management?  They are very unusual in that
         21   Verne Istock, David Pitalle and others must leave
         22   the new bank in order to get the money.  If they
         23   stay, they get nothing.
         24            And finally, why wasn't the outstanding
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          1   First Chicago CRA team headed by Mary Decker and Ed
          2   Jacob appointed to be the national CRA directors
          3   for the new bank?  We like Mary.  She understands
          4   our communities and how to make workable
          5   partnerships with the community.
          6            We have supported other candidates for
          7   appointment to the Board of Governors of the
          8   Federal Reserve.  Why is it that McCoy has hired
          9   someone who has never negotiated a single CRA
         10   agreement in his life to hold this key position?
         11            So let's look at the Banc One culture
         12   starting with politics.  So Banc One is one bad
         13   bank unless you are a right-wing Republican trying
         14   to kill the CRA, cut the guts out of federal
         15   programs that feed children and women and house the
         16   poor.  Then Banc One is your friend and will reward
         17   you with lots of campaign money.  But if you are a
         18   Democrat, then this merger is very bad news
         19   indeed.
         20            First Chicago has always divided its
         21   political contributions fairly evenly between
         22   Democrats and Republicans, for example, they hosted
         23   a dinner to help U.S. Senator Carol Mosely-Brown
         24   retire her campaign debt from the last election,
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          1   but not so with Banc One.
          2            The Banc One PAC gives four times more
          3   campaign money to Republicans than the Democrats.
          4   Banc One is buying First Chicago.  Guess which
          5   political party stands to gain.  Banc One PAC's
          6   largest political donations just don't go to
          7   Republicans, they go to the most extreme
          8   Republicans who are trying to cut the CRA, for
          9   example, Exhibit A, Representative Bill McCullom of
         10   Florida received $17,000 from Banc One.
         11   Representative McCullom is the guy that supported
         12   the amendment that passed the House Subcommittee
         13   this week that would exempt 85 percent of all banks
         14   in the Community Reinvestment Act.
         15            Exhibit B, Senator Lloyd Faircloth, Jesse
         16   Helms, heir apparent in North Carolina, gets
         17   $15,000 from Banc One, Exhibit C.  Congressman
         18   Casich, Chair of the House Budget Committee and
         19   architect of many of the Republicans Urban
         20   Transportation and Children's Nutrition Programs,
         21   he gets $17,000.
         22            The Banc One PAC is very large.  This is a
         23   very politically active bank.  In the 1996 election
         24   cycle, Banc One PAC was the seventh largest PAC
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          1   contributing more money than the American Medical
          2   Association, American Bankers Association or
          3   Phillip Morris.  In the '98 cycle, they have
          4   already given more $535,000 with reactionary
          5   Republicans again enjoying a four-to-one edge in
          6   contributions over Democrats.  So when Banc One
          7   grows, so does the Republican Party.
          8            Secondly, Banc One is one bad bank for
          9   Chicago shareholders.  Banc One's market value has
         10   collapsed since the merger was announced in April,
         11   and it's pulled down First Chicago with it.
         12            The stock price on the date of the merger
         13   announcement in April, First Chicago closed at
         14   96.25.  Banc One closed unchanged at 61.70.  At the
         15   close of trading on August 11th, First Chicago was
         16   at $72, a decrease of 25 percent.  Banc One was
         17   also a decrease of 26 percent.
         18            Compare this to Citibank.  Citibank's
         19   stock has actually increased one percent since the
         20   announcement of their deal with Travelers in spite
         21   of the downturn in financial stocks.
         22            With this merger, we have an extremely
         23   efficient bank being bought out by an extremely
         24   inefficient one.  According to the Wall Street
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          1   Journal two weeks ago, First Chicago is the most
          2   efficient bank in the country.  Banc One, on of the
          3   top ten, was rated eighth or ninth.
          4            The track of Banc One's other mergers
          5   reflects the fact that they are not efficient.
          6   They have had tremendous cost overruns in every
          7   other merger.
          8            So to wrap up, I would say that our
          9   opposition of Banc One will not stop this merger.
         10   Make no mistake about it, we know that the Fed is
         11   going to approve this merger like they have every
         12   other single merger.  Doesn't matter how bad the
         13   bank is, we know the Fed's going to approve it.
         14   However, we're just putting Banc One on notice at
         15   this meeting that we will take our case to other
         16   more impartial venues, we will take our case to
         17   shareholders, take our case to the labor movement,
         18   we will take our case to the community, and we will
         19   take our case to the courts.  We will not stop
         20   until we have forced this bank to change.
         21            Thank you.
         22       MS. SMITH:  Mr. Williams.
         23       MR. WILLIAMS:  Madam Chairperson and
         24   distinguished members of the Federal Reserve Panel,
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          1   the Coalition of Neighborhoods is a non-profit
          2   coalition of six racially and economically
          3   integrated communities.
          4            The Coalition, in keeping with our mission
          5   to maintain, expand and promote healthy, integrated
          6   communities, have trained our leadership to
          7   integrate the compliance requirements of HMDA, CRA,
          8   ECOA, RESPA, EEO and the Fair Housing Act.
          9            It is our belief that the Federal Reserve
         10   System which has contributed significantly to the
         11   establishment of these laws and regulations must
         12   now contribute more significantly to their
         13   enforcement.
         14            The coalition stands behind all of the
         15   statements in our July 13th, 1998 challenge of this
         16   merger.  Banc One's July 22nd, 1998 response to our
         17   challenge may have some slightly different numbers
         18   than we submitted, but the conclusions are the
         19   same.
         20            Their weak mortgage loan production is not
         21   responsive to the need of a 38 percent home
         22   ownership rate in Cincinnati.  The unresponsive
         23   business lending speaks for itself, but I have
         24   attached to this testimony a couple of antidotal
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          1   situations that we believe illuminate what some
          2   black and white businesses experienced with
          3   Banc One Cincinnati.
          4            We believe that a public hearing at the
          5   Cincinnati Federal Reserve Bank, comparison of the
          6   '96, '97 HMDA data and residential mortgage and
          7   business loan file review will support what we have
          8   alleged.
          9            Our challenge and the bank's responses
         10   adequately describes a needs to improve performance
         11   based or our prospective of the lack of innovation,
         12   no complexities solved and the unresponsiveness of
         13   Banc One relative to the overall needs in the
         14   Cincinnati area.
         15            This hearing today and the subsequent
         16   merger decision has more to do with the credibility
         17   of the regulatory agencies than that of the two
         18   banks involved.
         19            Renowned HMDA, CRA and financial experts
         20   from all over the country in independent
         21   assessments of Banc One's performance have
         22   condcluded that the bank's approval and patterns in
         23   Black, Hispanic and LMI census tracts suggest
         24   violation of fair lending and consumer protection
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          1   laws, and therefore, non-compliance with CRA.
          2            And First Chicago NBD's 1996 data shows
          3   that the bank only originated a total of 29 loans
          4   in MSA 1640.  All 29 went to white borrowers.
          5            We find it odd that as the government,
          6   regulatory and financial industries move to
          7   implement direct deposit programs under the EFT 99
          8   that Banc One would close one of only three
          9   branches it has in Cincinnati's Black community,
         10   thereby reducing access.
         11            The Roselawn branch closure which is in a
         12   middle class Black neighborhood closed and reduced
         13   competition which may lead to overpricing of loans
         14   and services by the one remaining bank in that
         15   community.
         16            We also find it odd that the OCC nor the
         17   Federal Reserve found issue with the isolated North
         18   Fairmount location and the fact that it has no ATM
         19   or drive-through window.  How does this meet the
         20   convenience and needs of that community?
         21            Banc One's poor record in the appointment
         22   of Blacks its Board and officer positions and its
         23   poor record in procuresment of services from Black
         24   providers in comparison to whites, especially in
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          1   the area of marketing and advertisement was ignored
          2   on the basis that they don't fall under CRA.
          3            This is a form of unsophisticated denial
          4   and a sense of certainty that the Federal Reserve
          5   won't integrate the analyses of these concepts in
          6   context of their relationship to discriminatory
          7   lending.
          8            We strongly believe that a mentality and
          9   culture that refuses to properly serve Blacks in
         10   the areas above will have no problem in
         11   rationalizing away the indications of underserving
         12   and discrimination.
         13            In addition, you cannot penetrate a market
         14   if you don't advertise and through it and to it.
         15   Since Banc One does very little in this area, the
         16   low number of Black applications to Banc One from
         17   Black borrowers is the result.
         18            Finally, with respect to partnership, we
         19   know that many NDC/CDC type organizations have and
         20   will provide honest testimony as to how Banc One
         21   partnered to help them achieve certain projects,
         22   but projects should not substitute for a broader
         23   economic substitute for a broader economic
         24   development strategy and plan to address
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          1   comprehensive reinvestment needs.
          2            Banc One has a business plan with a
          3   budget.  The Federal Reserve is deeply involved in
          4   the development of its year 2000 plan and the
          5   budget to get it done.
          6            Given this insight, we encourage the
          7   Federal Reserve to push the envelope on performance
          8   and partnerships by giving the proposed Banc One/
          9   First Chicago merger a conditional approval until
         10   market level negotiated agreements substitute
         11   agreements similar to the agreement between
         12   First Chicago NBD and the Chicago CRA Coalition
         13   have been established with budgets.
         14            Finally, Madam Chair, I bring this
         15   testimony that was handed to me on my way out of
         16   town by Ms. Lavera Kosin, a businesswoman, and we
         17   will resubmit it in a typed form.
         18       MS. SMITH:  We will be glad to have it for the
         19   record.
         20            I also wanted to ask Mr. Soza, are those
         21   exhibits we saw part of our testimony?  Did you
         22   include that in your testimony?
         23       MR. SOZA:  We can get copies before the end of
         24   the hearings today.
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          1       MS. SMITH:  That would be great, and then we
          2   will incorporate them.
          3            Any questions?
          4            Thank you very much for coming this
          5   morning.  We appreciate your comments.
          6            We're up to Panel 5, and we're going to
          7   start with Mr. Bush.
          8       MR. BUSH:  Ms. Smith, other parties and
          9   concerned citizens, I'm speaking on behalf of the
         10   Woodstock institute, a non-profit that promotes
         11   reinvestment and economic development in lower
         12   income communities and as a member of the Chicago
         13   CRA Coalition.  I'm also a member of the National
         14   Community Reinvestment Coalition.
         15            The proposed merger of two large companies
         16   that would constitute the largest bank in the
         17   Midwest raises serious concerns for residents of
         18   low income communities and the organizations that
         19   work with them.
         20            The Community Reinvestment Act in its
         21   21-year history has been much more honored in the
         22   breach than in the observance, a fact that has
         23   contributed to the economic decline of huge areas
         24   of urban, small town and rural America.
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          1            In the last few years, however, because of
          2   a variety of pressures and opportunities, the Act
          3   has produced very important improvements in home
          4   lending to lower income and minority borrowers and
          5   communities.
          6            In Chicago, in many ways, the hometown of
          7   community reinvestment activity, one of those
          8   pressures and opportunities has been the practice
          9   dating from 1983 of community organizations
         10   requesting and persuading banks, small and large,
         11   to commit to significant community reinvestment
         12   goals for specific periods of time and then
         13   monitoring the bank's progress towards those goals
         14   on a regular basis.
         15            On the announcement of this proposed
         16   merger, the Chicago CRA Coalition which Woodstock
         17   convenes, entered a dialogue with First Chicago NBD
         18   to set new CRA commitments in the Chicago region
         19   for the new bank.  We believe that if implemented,
         20   the provisions of the CRA agreement will constitute
         21   a good CRA program for the new bank in the Chicago
         22   region by improving the bank's record in lending
         23   investments and services to the benefit of the
         24   regions's lower income communities.
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          1            My colleagues from the Chicago CRA
          2   Coalition on this panel will speak to some of the
          3   details of this agreement.
          4            In my view, the highlights of the
          5   agreement include the following items.
          6            The bank committed to small business and
          7   home loan goals based on a measure of its size and
          8   market presence, namely a specific ratio of its
          9   market share in lower income communities to its
         10   market share in other communities.  These ratios to
         11   be achieved at stated rates from 1999 are 1.10 for
         12   home loans and 1.15 for small business loans, and
         13   this will result in massively increased lending.
         14            The bank committed to open four full
         15   service branches in lower income neighborhoods.
         16   These neighborhoods are seriously underbranched on
         17   a per capita basis compared to other
         18   neighborhoods.
         19            The bank committed to a high level
         20   feasibility study of an affordable retail banking
         21   account for lower income households which currently
         22   do not have banking relationship with the goal of
         23   establishing such an account.
         24            The CEOs of both banks personally assured
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          1   the Coalition that the new bank will have a
          2   vigorous home mortgage operation in all its
          3   markets.  The agreement will be monitored like
          4   other Chicago CRA agreements in regular meetings.
          5            Unfortunately, Banc One has not negotiated
          6   similar agreements in its current markets which
          7   leaves it without a detailed and adequate CRA
          8   plan.  Absent such an agreement, we do not
          9   understand how the Federal Reserve Board can
         10   evaluate whether the merged institution will in
         11   fact meet the convenience and needs of its
         12   communities.
         13            We note that the recent spate of so-called
         14   mega commitments by such institutions as Nation's
         15   Bank, Bank America, Travelers and Citicorp raises
         16   precisely the same problem.
         17            In the case of both those mergers, more
         18   than half the dollar commitment so proudly
         19   announced were for products not targeted to lower
         20   income communities.  The commitments were not
         21   broken down by market area nor established with
         22   reference to such concrete objective measures as
         23   market share ratios.
         24            Detailed CRA plans and sound community
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          1   agreements should be a necessary part of an
          2   adequate bank merger application.  Agreements
          3   between citizens and their institutions is after
          4   all a hallmark of a Democratic society.
          5            The First Chicago NBD agreement for the
          6   Chicago region contains community reinvestment
          7   details that should be standard for all bank
          8   applications as Congressman Davis argued this
          9   morning.  The bank regulators should demand such
         10   details as a matter of course.
         11            It also contains in our opinion
         12   commitments that reflect the size of the bank and
         13   that will promote significant, safe and sound
         14   community reinvestment in the Chicago regions's
         15   lower income communities.
         16            Thank you.
         17       MS. SMITH:  Thank you very much.
         18            Mr. Wysocki, are you next or have we
         19   changed the order.
         20       MR. WYSOCKI:  Good morning.
         21            In 1977, over 20 years ago, I introduced a
         22   community lending resolution at that year's
         23   shareholder's meeting of the First National Bank of
         24   Chicago.
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          1            The resolution was based on the bank's
          2   poor performance at that time that was documented
          3   by the first year of the Home Mortgage Disclosure
          4   Act data.  The resolution was defeated by 98
          5   percent of the shareholders in 1977.
          6            I start with this point because I think it
          7   exemplified the corporate arrogance of this time
          8   that required Congress to pass the Community
          9   Reinvestment Act that same year.
         10            Now over 20 years and three First Chicago
         11   mergers later, we are here to discuss this morning
         12   the need for continued regulatory vigilance and
         13   community advocacy on behalf of neighborhood
         14   reinvestment and in this era of financial
         15   modernization and merger mania.
         16            I'm also here today to share with you the
         17   strength of bank partnerships that have grown as a
         18   result of CRA and are now providing access to
         19   affordable credit and financial services to
         20   revitalize local communities.
         21            At the end of 1983 was when First Chicago
         22   applied to acquire American National Bank, itself
         23   proclaimed intent to be the premiere bank in the
         24   Midwest.  In staffing those CRA negotiations, they
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          1   led to become the largest CRA lending agreement at
          2   that time of 100 million over five years.  That's a
          3   million.  Now we're talking billions.
          4            We have progressed over the last 20
          5   years.  That commitment was renewed in 1989, and in
          6   1990 a five-year evaluation of the Chicago's
          7   lending program was conducted, and I wish to quote
          8   from a conclusion.
          9             "The fundmental test of the success of
         10   neighborhood lending programs and of investment in
         11   general is whether lenders, community groups and
         12   community based development organizations can
         13   develop and implement loan programs together in
         14   partnership."
         15            From my years of experience, the key
         16   element to fostering and furthering such
         17   partnerships is regular monitoring and reviewing of
         18   progress so that continued dialogue can lead to
         19   further product innovation and market penetration.
         20   The key for both sides is learning to deal.
         21            One example of product development through
         22   our work with First Chicago is the financing of
         23   mixed use real estate.
         24            Chicago's neighborhoods are built around
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          1   main streets with block after block of properties
          2   with apartments above store fronts.  Back in 1983,
          3   no conventional lender offered financing for such
          4   properties.
          5            At the urging of the Chicago Association
          6   of Neighborhood Development Organization,
          7   First Chicago was the first lender to offer 20-year
          8   fully amortized mortgages for the purchase and
          9   rehab of such mixed use real estate.
         10            In 1995, with the merger of First Chicago
         11   and NBD, this neighborhood lending program was
         12   renegotiated and it is part of the new commitment
         13   of two billion dollars in community lending.
         14   First Chicago agreed to do a pilot program of ten
         15   percent down for mixed use buildings.
         16            We all know that the affordable housing
         17   has developed a variety of low down payment
         18   programs for residential lending.  This was an
         19   effort to do this for mixed use real estate.
         20            Now as part of our recent agreement, the
         21   bank has found this to be good business and they're
         22   committed to doing this as an ongoing loan product
         23   in their portfolio and now they are willing to
         24   pilot a low down payment mortgage for commercial
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          1   real estate.
          2            This new commitment will provide a wide
          3   range of local ownerhsip, I want to emphasize local
          4   ownership, not absentee ownership, and will extend
          5   investment opportunities to to a whole generation
          6   of other businesses.
          7            My point is here this community credit
          8   need was being addressed now by the private market
          9   because the bank was willing to sit down and
         10   jointly hammer out the design of this product.
         11   It's good reinvestment, it's an example of the
         12   value of CRA agreements.
         13            Now, his testimony talked about the market
         14   share analysis that Woodstock had done that is now
         15   leading to aggressive goals for small business
         16   lending.  The purpose of these observations is to
         17   make this final point.
         18            The Federal Reserve Board should exercise
         19   its regulatory authority to assure that Banc One
         20   adopts the First Chicago NBD approach to community
         21   reinvestment throughout its service area.
         22            As Mayor Goldsmith said this morning, this
         23   is an issue of attitude, and the corporate
         24   arrogance or refusing to negotiate CRA agreements
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          1   whether in Indian or Ohio in this case or in the
          2   case of the Nation's Bank's merger with Bank of
          3   America should be unacceptable as a matter of
          4   Federal Reserve Board policy.
          5            So while endorsing our agreement with
          6   First Chicago NBD and being pleased that Banc One
          7   is willing to honor it, I am disappointed that
          8   Banc One is unwilling to engage themselves in
          9   designing similar agreements in other markets.
         10            As Vice Chair of the Bank Regulation
         11   Committee of the Federal Reserve Board's Consumer
         12   Advisory Council I challenge the Federal Reserve
         13   Board to only grant conditional approval,
         14   conditioned on parity and market shares of specific
         15   geographical markets.  Let the market work.  Use
         16   your regulatory authority to make sure it works in
         17   every market.
         18            Thank you.
         19       MS. SMITH:  Thank you very much.
         20            Mr. Jackson.
         21       MR. JACKSON:  Good morning.  Good morning,
         22   Ms. Smith, Ms. Williams and Mr. Alvarez.
         23            My name is Kevin Jackson.  I'm Executive
         24   Director of the Chicago Rehab Network, a
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          1   20-year-old coalition of 43 non-profit housing
          2   development organizations in Chicago.  We are a
          3   member of the steering committee of the CRA
          4   Coalition here and the Chair of the Housing Task
          5   Force.
          6            Financial institution's responsiveness to
          7   individuals and families in local neighborhoods is
          8   at the heart of the importance of the Community
          9   Reinvestment Act.  Recognition of this is clear
         10   from the proceedings today.  Public involvement in
         11   the decisions that impact communities, regions in
         12   the country is fundmental to the Democratic process
         13   and and ultimately despite its difficulties at
         14   times, a good thing.
         15            We congratulate the Federal Reserve Board
         16   Bank for calling this hearing and acknowledging the
         17   importance of all the people gathered here today.
         18   We would also congratulate ACORN helping to create
         19   the momentum item that resulted in this hearing in
         20   the first place.
         21            And finally, we congratulate First Chicago
         22   NBD on demonstrating the utility and possibility of
         23   CRA agreements that mean good business for the
         24   institution and our communities.
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          1            The Chicago Rehab Network has a long
          2   history with the First National Bank of Chicago.
          3   In 1984 when First Chicago acquired American
          4   National Bank, we were a part of that coalition
          5   that negotiated the first neighborhood lending
          6   agreement.
          7            Since then, we have sat on the quarterly
          8   Review Board, packaged hundreds of multi-family
          9   loans and provided detailed input on community
         10   credit needs.
         11            When First Chicago merged with NBD three
         12   years ago, we were a part of that CRA Coalition
         13   that negotiated a detailed CRA agreement.
         14            As I stated in my opening, CRA is vital.
         15   The process that led to our present CRA agreement
         16   with First Chicago NBD and Banc One if it continues
         17   occurred because CRA strengthens our government's
         18   mediating role between the private sector and the
         19   common good.
         20            The CRA agreement reached by and the
         21   proposed merger of First Chicago NBD and Banc One
         22   is a model for CRA agreements in both its process
         23   and substance.
         24            After the merger was announced, the CRA
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          1   Coalition moved to hold a public meeting and had
          2   task force meetings to gather substantive input
          3   from community organizations throughout the
          4   region.
          5            The Housing Task Force met three times to
          6   develop the framework.  We then met many times with
          7   the First Chicago NBD and Banc One staff from the
          8   highest levels on down.
          9            For the first time in CRA negotiations, we
         10   were able to use a market share analysis to develop
         11   mortgage lending targets.  As a result, over the
         12   next six years, First Chicago NBD has committed to
         13   increasing their residential lending by more than
         14   8,200 loans over current levels.
         15            In 1995, First Chicago established a
         16   $100,000 downpayment pool for home buyers in
         17   Chicago's empowerment zones.  With this agreement,
         18   the pool has been increased to 900,000 and extended
         19   to more low and moderate income areas.
         20            In discussing credit needs with
         21   organizations in Chicago, there was a sense that
         22   particularly in this time of mega mergers and
         23   predatory lending, simply establishing lending
         24   targets is barely adequate.
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          1            Without a thorough analysis of the credit
          2   needs of low and moderate income communities on
          3   which to base lending targets, there will continue
          4   to be unmet needs and borrowers who are forced to
          5   get inferior high cost credit products.
          6            First Chicago NBD has committed to
          7   participate in the design and development of an
          8   analysis of credit that serves needs in low and
          9   moderate income communities and to contribute to
         10   its implementation.
         11            They further agreed to work with the
         12   Chicago Rehab Network to expand the impact of the
         13   City of Chicago Department of Housing second
         14   Five-Year Affordable Housing Plan approved by the
         15   City Council this past July.
         16            We were particularly concerned to read in
         17   the merger application that Banc One had
         18   discontinued its mortgage lending business except
         19   for the convenience of its customers and its CRA
         20   division.
         21            We believe that mortgage lending at all
         22   income levels is the foundation of community
         23   development and a bank's investment in a
         24   community.
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          1            After discussion with both bank's CEOs and
          2   many of the senior staff, the bank announced that
          3   through their best practices evaluation of the
          4   bank's business, they would resume full mortgage
          5   lending throughout the Banc One system.
          6            This is one of two system-wide commitments
          7   we see from Banc One.  The second is that the bank
          8   will conduct a credit analysis on all am applicants
          9   to the subprime lending unit and refer them to
         10   appropriate loan products.
         11            The process I have described created a CRA
         12   agreement that is responsive to the service and
         13   credit needs of low to moderate income communities,
         14   businesses and households in Chicago and the
         15   region.
         16            With this agreement, we have a solid
         17   foundation to build on for the next six years.  The
         18   same type of commitment must be made to low or
         19   moderate income people in communities throughout
         20   the Banc One system.
         21            In the end, the communities in which the
         22   members of the Chicago Rehab Network operate are
         23   not unlike communities throughout this country
         24   starting to build better neighborhoods through
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          1   affordable housing and economic development and
          2   fighting the growing tide of an ever growing
          3   economic disparity.
          4            Our mission at the Chicago Rehab Network
          5   is to promote community development without
          6   displacement in our communities requires us to
          7   stand in solidarity with communities across this
          8   country in their relationship to financial
          9   institutions.
         10            We believe that First Chicago NBD's
         11   leadership here should be replicated throughout the
         12   country, and we call on the Federal Reserve Board
         13   to ensure that same type of commitments and process
         14   is made to all low and moderate income people and
         15   communities.
         16            Thank you.
         17       MS. SMITH:  Thank you very much.
         18       MS. RAND:  Dory Rand.  I'm a staff attorney
         19   with the National Clearinghouse for Legal Services,
         20   a non-profit organization based here in Chicago.
         21            We represent tens of thousands of low
         22   income people on welfare and housing policy issues
         23   through our poverty law project, and we also
         24   provide support to the poverty law community and
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          1   others through our Web site, our printed
          2   publications, our library and our training and
          3   information services.
          4            I'd like to focus my comments this morning
          5   on something that Congresswoman Carson mentioned
          6   earlier, and that is the advent of electronic
          7   benefit transfer of government benefits and what
          8   banks can and should do to serve the community
          9   needs of low income people who receive government
         10   benefits and who do not have bank accounts.
         11            As a staff attorney with the Poverty Law
         12   Project and editor of its Welfare News, I've been
         13   monitoring the development and implementation of
         14   electronic delivery systems both, EFT and EBT.
         15            Illinois Link is the Illinois electronic
         16   benefit transfer program for the delivery of cash
         17   and food benefits in Illinois.  EFT is the federal
         18   program that are for electronic fund transfer of
         19   government benefits such as Social Security,
         20   Supplemental Security Income or SSI, Veteran's
         21   benefits and Railroad Retirement benefits.
         22            These EBT and EFT programs produce
         23   tremendous cost savings for the federal and state
         24   governments, and they also help to reduce misuse of
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          1   benefits and they provide some security and
          2   convenience advantages for clients, but their
          3   advantages could be multiplied if people who
          4   receive government benefits had their benefits
          5   directly deposited into bank accounts.
          6            Some of the examples include funds
          7   deposited in bank accounts would be protected by
          8   the Federal Consumer Protection Regulation E.  EBT
          9   funds are not protected by Regulation E.
         10            Funds deposited in bank accounts have the
         11   protection and insurance of the FDIC.  EBT funds do
         12   not.
         13            People who deposit their government
         14   benefits or employee checks can pay their bills.
         15   People who don't have bank accounts have to pay
         16   very high fees for check cashiers.  They can be
         17   used as references with landlords, utility
         18   companies.  People without bang accounts cannot use
         19   banks as references.
         20            People who deposit their money in bank
         21   accounts that earn interest, can increase their
         22   assets.  And also people who establish a good
         23   relationship with a bank can possibly build on that
         24   relationship later as their income increases when
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          1   they go to establish a home mortgage, a car loan.
          2   They can save money in savings accounts to buy a
          3   car, to get further education to help them escape
          4   poverty.
          5            But despite these many advantages of
          6   having bank accounts, many low income individuals
          7   do not have bank accounts, and there are a lot of
          8   reasons for that.
          9            Some of those reasons are that there are
         10   not enough branches in low income communities,
         11   there is not sufficient financial literacy among
         12   many communities, there are not enough low cost and
         13   free bank accounts.  And also, bank practices of
         14   screening applicants' credit histories further
         15   limit access.
         16            I think that banks can and should play a
         17   major role in helping to address these problems by
         18   ing more full service bank accounts and ATMs in
         19   underserved communities, low income communities, by
         20   conducting and funding financial literacy and
         21   credit counseling programs and by developing and
         22   marketing low cost and free checking accounts that
         23   do not have credit screening.
         24            To that end, I did participate as a member
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          1   of the Chicago CRA Coalition Steering Committee in
          2   the negotiations that led to the recent agreement
          3   with First Chicago and Banc One, and I'm
          4   particularly pleased that the banks agreed to open
          5   at least four new full service bank branches in low
          6   and moderate income communities, that they have
          7   agreed to allocate $50,000 a year towards financial
          8   literacy programs and that they're conducting a
          9   high level feasibility study to develop low cost
         10   bank accounts to serve the needs of individuals
         11   with limited or poor credit histories or limited
         12   experience in dealing with banks.
         13            Financial chairman and CEO Verne Istock
         14   sent a letter to the CRA Coalition expressing his
         15   personal recognition of the need for these
         16   financial services, his commitment to working on
         17   developing an account that will serve those needs
         18   and his willingness to continue to work with the
         19   CRA Coalition on this.
         20            I look forward to that, however, I have to
         21   add that I am very troubled by Banc One's failure
         22   to enter into similar agreements through all its
         23   markets.  If they really want to serve the needs of
         24   the community, they must do that, and they could
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          1   use our agreement here as an example.
          2            Thank you.
          3       MS. SMITH:  Thank you very much.
          4            Ms. Durban.
          5       MS. DURBAN:  Good morning.  My name is Kate
          6   Monter Durban.  I am the Assistant Director of the
          7   Cleveland Housing Network.
          8            The Cleveland Housing Network is a
          9   coalition of 17 CDCs spread across the city of
         10   Cleveland, and our primary focus is affordable
         11   housing development in those communities.
         12            I am here to let you know that Banc One
         13   and Banc One CDC have been a strong and consistent
         14   partner in our work.
         15            The Cleveland Housing Network to date has
         16   rehabilitated about 2,000 houses across the city,
         17   and we believe that that investment has absolutely
         18   made a difference in turning the -- stemming the
         19   tide of disinvestment in many of those
         20   communities.
         21            To date, Banc One has invested over four
         22   million dollars in equity investments in the lease
         23   purchase program which is the program that I'm here
         24   to speak about today in part.
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          1            The average income of lease to purchase
          2   residents is about $12,000.  The majority are
          3   minority single moms with two to three kids, so
          4   what we know as developers is the equity investment
          5   in those partnerships are absolutely critical to
          6   our ability to produce an affordable monthly
          7   payment.  So, you know, that kind of investment has
          8   made our work possible.
          9            And the other way that Banc One has
         10   partnered with us is they have lent us technical
         11   assistance in areas when we have asked for their
         12   help.
         13            For example, in 1990, the Federal Low
         14   Income House Tax Credit was changed in such a way
         15   that jeopardized our ability to transfer title to
         16   our low income residents at the end of the 15-year
         17   lease purchase period.  Needless to say, we were
         18   very concerned about the change in the federal law
         19   and immediately began to mobilize trying to change
         20   the law.  We were unsuccessful and ultimately
         21   turned to Banc One and Banc One CDC, specifically
         22   Joe Hagen, and asked him if he couldn't help us
         23   based on the relationships that he had built at the
         24   IRS.
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          1            So Joe, being the absolutely great guy
          2   that he is, jumped into the fight with us,
          3   established dialogue with the IRS, and in the
          4   Summer of 1995, the IRS published a ruling
          5   clarifying the law and once again clarifying our
          6   ability to transfer title and home ownership to
          7   families at the end of 15 years.
          8            So for us, that was just an example of the
          9   willingness of Banc One CDC to step in and use
         10   their time and expertise to help us in a way that's
         11   very critical to our organization's goals.
         12            You know, undoubtedly, the work that we do
         13   in Cleveland and our partnership with Banc One has
         14   benefitted from the CRA agreement that has been
         15   negotiated with the City of Cleveland.
         16            The Mayor of the City of Cleveland through
         17   these agreements has established a platform for
         18   investment, and our work has absolutely benefitted
         19   from that platform.
         20            So for us, the bottom line is as
         21   non-profit developers with the goal of affordable
         22   housing development, we can't do it without
         23   significant equity investment in our work, and
         24   we've seen that from Banc One and Banc One CDC.
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          1            Thank you.
          2       MS. SMITH:  Thank you.
          3            Mr. McDaniel.
          4       MR. McDANIEL:  Thank you.
          5            Good morning.  I'm Mark McDaniel, and I'm
          6   the President of the Michigan Capital Fund for
          7   Housing.
          8            The Capital Fund is a non-profit housing
          9   corporation that was founded in 1993 for the
         10   purpose of raising and providing investment equity
         11   to create affordable housing in Michigan.
         12            The fund's mission in providing equity is
         13   to invest in projects that meet at least one of the
         14   follow criteria:  The development is located in a
         15   distressed community, smaller-sized projects,
         16   non-profit involvement as sponsors and serving
         17   special needs populations.
         18            With that mission, the fund has raised and
         19   invested over $80 dollars in equity since 1993
         20   creating over 2,000 units of affordable housing.
         21   79 percent of those funds have gone into distressed
         22   communities.
         23            Through our relationship with the
         24   Enterprise Social Investment Corporation, the
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          1   Enterprise Foundation, and our financial
          2   institution investors, the fund now offers a
          3   multitude of financial resources to the development
          4   community in Michigan.  This includes permanent
          5   debt financing, construction lending, technical
          6   assistance, predevelopment loans and grants and
          7   charitable activities contributions.  As a result
          8   of our growth and structure, we have come to
          9   understand the banking industry much clearer.
         10            I'm here today to tell you very simply
         11   that the merger between Banc One and First Chicago
         12   NBD is the best news that we've had in a long time
         13   as an organization.
         14            I know this is good news because this is
         15   the first time that a merger has got the bankers on
         16   our board grumbling.  This is indicative that
         17   Banc One will be very competitive and push other
         18   banks to become more aggressive and more innovative
         19   than they're used to being.  That is in my view
         20   what Banc One is bringing to Michigan, and that's
         21   good.
         22            Based on my 21 years of experience in
         23   planning, housing development and community
         24   development, I'm convinced that Banc One has a
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          1   social and financial commitment to revitalizing and
          2   supporting community investment and development
          3   through its market area.  This is true in our case
          4   even when they weren't in the Michigan market.
          5            In the formative stages of the fund, Joe
          6   Hagan, the President of Banc One CDC, advised us on
          7   how to structure the fund and selecting our board
          8   members and working with developers as we started.
          9   They have provided me with input whenever I've
         10   faced -- have been faced with complex issues, which
         11   I've found very unusual when compared to other
         12   banks.
         13            Banc One has invested $125 million in
         14   several national equity funds managed by
         15   Enterprise.  They have invested $20 million in
         16   funds managed by the Ohio Capital Corporation for
         17   Housing.  In addition, Banc One is providing bridge
         18   financing to Ohio Capital.  Their commitment to
         19   Illinois, to Chicago, Cleveland, Delaware, Texas
         20   and Milwaukee equity funds has been similar.
         21            There are some who will say so what.  Tell
         22   that to the single mother living in a transitional
         23   housing development who without Banc One's and
         24   others' investments would still be suffering the
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          1   beatings of an abusive boyfriend or be on the
          2   street with nowhere to go.  The same mother who has
          3   got her life together because of this housing
          4   opportunity is ready to move into a Habitat for
          5   Humanity Home.
          6            Tell that to the senior citizen in
          7   Cleveland who was living as a hostage in her home
          8   in a crime ridden neighborhood who as a result of a
          9   Banc One investment was able to move into a new,
         10   safe, secure senior community.  She now has quality
         11   of life in her golden years she never thought she
         12   would have.
         13            And finally, tell that to the young couple
         14   with little ones who are forced to live in a
         15   slumlord-owned house with no security, broken
         16   plumbing and windows and lack of adequate heat who
         17   with the help of Banc One's investment in a
         18   national fund was able to find safe and decent
         19   housing to raise their family in.
         20            There are thousands of stories like this,
         21   and I don't think those tens of thousands of people
         22   who have benefited who say so what.
         23            NBD is represented on our Board of
         24   Directors and has as compared to other financial
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          1   institutions been a significant but not as major of
          2   a player as they could be.
          3            We appreciate the support and effort that
          4   they have put into the fund, and we especially
          5   appreciate the personal efforts of people like ^
          6   Jack Love whose works in the Detroit bank for what
          7   he's been able to do and the rest of the staff in
          8   promoting what NBD is able to do in Michigan.
          9            There has never been a single bank merger
         10   in Michigan where the lead bank has taken the time
         11   or made the effort to discuss with the fund or
         12   others how they can best get involved in the
         13   community development in the state.  Banc One is
         14   the first one to do that with us, and we appreciate
         15   that and believe it is indicative of how Banc One
         16   will be committed to working in Michigan.
         17            In closing, the Michigan Capital Fund is
         18   exited and supportive of the proposed merger
         19   between Banc One, First Chicago NBD.  We are
         20   looking forward to Banc One being one of our major
         21   investors and supporters.  This merger will not
         22   only be good for the fund but most probably for the
         23   less fortunate residents in Michigan who need
         24   affordable housing.
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          1            Thank you for your time, and I look
          2   forward to the significant marriage between these
          3   two entities.
          4       MS. SMITH:  Thank you very much.
          5            Any questions from the Panel?
          6       MR. ALVAREZ:  I have one question.
          7            A couple of speakers spoke about the
          8   agreement in terms of market share, Banc One
          9   bringing up its lending to certain market share in
         10   various communities.  I was curious what data was
         11   used to compute market share and what the benchmark
         12   is that you're asking them to bring their level up
         13   to.
         14       MR. BUSH:  We're happy to see that some of your
         15   regulators are now using this market share, so you
         16   can perhaps talk to them too.  It's a very simple
         17   notion, and the notion is that if a bank is making
         18   equal effort in low income neighborhoods, its
         19   market share in low or middle income neighborhoods
         20   will approach its market share and indeed exceed
         21   its market share in middle and upper income
         22   neighborhoods so that ratio will be 1.0 or
         23   greater.
         24            And we use Mortgage Act Disclosure data in
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          1   this case for the six-county region in Metropolitan
          2   Chicago to calculate market share for
          3   First Chicago.
          4       MR. ALVAREZ:  So it's a comparison of lending
          5   in low and moderate income areas to middle and
          6   upper income areas or --
          7       MR. BUSH:  It's a comparison of a bank's market
          8   share in moderate and low neighborhoods to low.
          9   Using small business data, same analysis.
         10       MS. SMITH:  Thank you very much for coming this
         11   morning.
         12            We are going to take a short break, maybe
         13   of the order of five minutes.
         14            And unless Panel 6 has appeared in the
         15   meantime, we plan to move to Panel 7, but it just
         16   depends.  My managers will tell me what to do.
         17                      (Whereupon, a short recess
         18                      was taken.)
         19       MS. SMITH:  I think we're ready to reconvene.
         20   Could we have Panel 7, please?  Six we're skipping
         21   because they weren't here.  Well, we're ready to
         22   start, so why don't we?  We'll go to Mr. Hagaman,
         23   and the others will join us as they can.
         24   Mr. Hagaman, we can start.
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          1       MR. HAGAMAN:  Good morning.  My name is Frank
          2   Hagaman, and I'm the President of Partners in
          3   Housing Development of Indianapolis.
          4            Partners in Housiing was founded in 1993
          5   to create housing opportunities for special needs
          6   populations.  These include individuals with
          7   chronic mental illness, AIDS/HIV, substance and
          8   alcohol abuse and the frail elderly.
          9            Today, our focus is on supportive housing
         10   which links directly affordable housing
         11   opportunities with social services.
         12            In 1993, as we assembled the financing for
         13   our first project, we possessed a net worth.  As I
         14   often explain to people, it consisted of a folder
         15   chair and a Princess phone.  Regardless, we
         16   approached NBD First Chicago which made a one-year
         17   non-interest bearing loan to us for working
         18   capital.  The purpose of the loan was to provide us
         19   with predevelopment funds.
         20            We repaid that loan ahead of schedule and
         21   have subsequently borrowed on numerous occasions
         22   from time to time for various predevelopment needs
         23   on our projects.
         24            I think the two points that are very
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          1   important about this particular loan program, and
          2   they are, one, working capital was made available
          3   at a critical time for a very small company with
          4   obviously little financial strength, and the second
          5   was that the bank demonstrated a flexibility to
          6   lend on character.
          7            I am a reform banker, and character loans
          8   used to be very interesting, but in point of fact,
          9   this loan was made based on character and on the
         10   mission of our organization.
         11            Additionally, NBD and First Chicago have
         12   now made corporate contributions to Partners in
         13   Housing Development and is currently an investor in
         14   our current project, a five and a half million
         15   dollar, 96-unit, single-room occupancy residence.
         16   This represents the first housing of its kind in
         17   Indianapolis to meet the housing needs for homeless
         18   men and women.
         19            By the same token, Banc One has been an
         20   equally strong and long-standing partner of ours.
         21   It has been a major investor in all of our projects
         22   and has stood beside us on many occasions offering
         23   its support and help.
         24            Our station in life has increased and has
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          1   improved, and I must say it's a tip of the hat
          2   again to Banc One.
          3            All of our office furniture has been
          4   contributed by Banc One, and quite honestly, we are
          5   very happy to have one of our Board members who is
          6   a Banc One employee, the former CRA director for
          7   Indiana.  She represents one of our most thoughtful
          8   and helpful Board members.
          9            In conclusion, I guess that I would like
         10   to say that I can't speculate on the future of what
         11   this merger means.  Frankly, I don't have the time
         12   to worry about it.
         13            My purpose in coming here today is to
         14   recognize publicly two good corporate partners of
         15   ours and to encourage that their unification
         16   continues to make important investment and
         17   contributions to our community of low income
         18   individuals and families.
         19            Thank you.
         20       MS. SMITH:  Thank you very much.
         21            Ms. Morris.
         22       MS. MORRIS:  I'm Cora Morris, owner of Greek
         23   Grandeur in Champaign, Illinois.
         24            Greek Grandeur was established in December
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          1   of 1991.  It is a retail and embroidery business
          2   that specializes in fraternal organization and
          3   company logos.
          4            I am here today on behalf of African
          5   American small businesses, a small business owner
          6   for which Banc One has assisted for a business
          7   loan.
          8            I am only one of many African American
          9   business owners who have experienced a great deal
         10   of difficulty in financial assistance in starting a
         11   business and staying in business.
         12            I went to four different financial
         13   institutions within my community in order to obtain
         14   a small business loan and was denied.  Finally, I
         15   went to Banc One, who received my business plan,
         16   reviewed my business plan and began to give me a
         17   criteria and qualification for how to obtain a
         18   small business loan.  Through this, I gained
         19   valuable information.  Banc One helped me when no
         20   one else would.
         21            When I ran into trouble, they were
         22   flexible and understanding with payment
         23   arrangements.  Due to their willingness to give me
         24   a chance, we not only stayed in business but were
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          1   able to expand including a Web page on the World
          2   Wide Web.
          3            I would also like to add that there are
          4   other Afro-Americans within our community that was
          5   able to go to Banc One for assistance.  One
          6   included my mother.  In 1996, she wanted to
          7   relocate to the Champaign-Urbana area to live with
          8   my sister.  We wanted to buy a house for her and
          9   she did not want to live in a high-rise, so we
         10   started house hunting, my sister and I and my mom.
         11            We went to another financial institution
         12   to obtain a home mortgage loan, and we were
         13   denied.  We went to Banc One and were accepted.
         14            In closing, Banc One has been an asset in
         15   our community through their relationship with
         16   Afro-Americans.  My experience with this
         17   organization has been beneficial, valuable and a
         18   great pleasure.
         19            Thank you.
         20       MS. SMITH:  Thank you very much.
         21            Mr. Odem.
         22       MR. ODEM:  First of all, I want to say good
         23   morning and thank you for the opportunity to
         24   testify.
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          1            Again, my name is Jerome Odem, and I am a
          2   member of the Organization of the Northeast, better
          3   known as ONE.  I am also the President of the
          4   Lakeview Towers Residents Association and currently
          5   working to purchase our 500-unit HUD subsidized
          6   unit in the uptown area.
          7            Now, the Organization of the Northeast was
          8   founded in 1974, and it's an organization of 60
          9   dues-paying member institutions in the Uptown and
         10   Edgewater communities here in Chicago.
         11            Now, the mission of ONE is to sustain and
         12   build a successful multi-ethnic mixed income
         13   community in the Uptown and Edgewater community.
         14   To this end, ONE has enjoyed a close working
         15   relationship with First Chicago NBD.
         16            Now, First Chicago has been a member of
         17   the organization for the past nine years.
         18   Currently First Chicago invests greatly in these
         19   two communities financially and by close working
         20   relationships with many organizations to support
         21   housing development, small business development and
         22   industrial retention.
         23            Now, several years ago, First Chicago NBD
         24   and three other banks created a commercial loan
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          1   program to provide below market financing to
          2   commercial credit borrowers as a way to enhance
          3   small business development and job creation in the
          4   area.
          5            First Chicago NBD and Banc One recently
          6   committed to a new CRA agreement with ONE and six
          7   other community organizations through the National
          8   Training and Information Center.
          9            Now, the agreement which constitutes a
         10   nearly four billion, ten-year investment for all of
         11   Chicago with targets for investment in specific
         12   communities, this commitment is for single-family
         13   housing, multi-family housing, small business
         14   development, marketing and services.  It provides
         15   for a bank representative to work closely with each
         16   of the six areas to target this agreement to
         17   neighborhood needs.  This agreement builds on
         18   First Chicago's history of being a strong presence
         19   in this community.
         20            Now, the Organization of the Northeast has
         21   no prior experience working with Banc One but view
         22   their commitment to the CRA agreement and their
         23   willingness to continue the great work that
         24   First Chicago has done here in Chicago as a
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          1   positive sign.
          2            We look forward to working with Banc One
          3   and First Chicago to fully utilize the
          4   opportunities created by the agreement.  We support
          5   this merger with the confidence that there is a
          6   genuine commitment to this agreement in the hope
          7   that similar commitments will be made for the rest
          8   of Banc One and First Chicago's market.
          9            Thank you.
         10       MS. SMITH:  Thank you.  Ms. Ryan.
         11       MS. RYAN:  Good morning.  I'd also like to
         12   thank you for the opportunity to be here.
         13            My name is Liz Ryan.  I'm the lead Housing
         14   and Banking Staff for the National Training and
         15   Information Center.  Gayle Stuccato regrets she was
         16   out of town and unable to be here today.
         17            The NTIC is a resource center that has
         18   been working with grassroots, community-based
         19   organizations for over 25 years.  Throughout our
         20   history, we have assisted literally hundreds of
         21   community groups enter into partnerships with banks
         22   to better their neighborhoods.  Billions of dollars
         23   have gone for single-family housing, small business
         24   and multi-family lending through these agreements.
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          1            NTIC itself has been directly involved in
          2   several community reinvestment partnerships in the
          3   City of Chicago, and one of the most successful has
          4   been with First Chicago NBD.
          5            Throughout three renewals and 14 years,
          6   NTIC with other non-profits in the city has forged
          7   innovative programs and lending products to better
          8   serve the credit needs of the city.
          9            A critical component to this agreement
         10   have been a quarterly review board meetings, a
         11   process engaged in by the banks and participating
         12   non-profits.  The open lines of communication have
         13   enabled the members to establish a real level of
         14   accountability and has paved the way for true
         15   problem solving.  The firm commitment of
         16   First Chicago and Banc One to continue on with the
         17   review board process after the proposed merger is a
         18   major reason for NTIC's support.
         19            Recently, in the context of the merger,
         20   NTIC and six neighborhood organizations which
         21   Jerome just told you about also entered into a
         22   ten-year reinvestment agreement with both of the
         23   banks.  As he said, this nearly $4 billion
         24   agreement covers a range of lending products.
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          1            The bank itself a committed to working
          2   very closely with the individual groups.  It is a
          3   way to get loans actually out the door working side
          4   by side with the community groups, having lending
          5   officers that with interpreters and bi or
          6   multi-lingual people in the community, and we're
          7   very encouraged by it.
          8            As a basis for comparison, the recent
          9   nationwide pledge of $350 billion made by Nations
         10   Bank and Bank of America in addition to falling
         11   short of their current lending levels would
         12   compromise only about 23 percent of their
         13   residential lending.
         14            Conversely, the Chicago commitment made by
         15   Banc One and First Chicago would compromise a full
         16   46 percent of their residential lending.  Instead
         17   of an empty promise and sound bytes, First Chicago
         18   and Banc One have made a commitment of substance.
         19            We will of course keep the Board apprised
         20   of the progress on this commitment and will lodge a
         21   protest if the commitments made by First Chicago
         22   and Banc One are not fulfilled.
         23            With the assumption that the banks will be
         24   faithful in fulfilling the commitments they have
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          1   made, NTIC would support the merger of these
          2   institutions.  We are hopeful that the good
          3   experiences we have had with First Chicago in the
          4   past and renewed commitments to serve Chicago will
          5   extend to the entire Banc One and First Chicago
          6   market.
          7            It would seem that if Banc One and
          8   First Chicago see the value of well-thought-out and
          9   comprehensive CRA agreements in Chicago it would
         10   see the benefit of these agreements in the rest of
         11   the country.  We expect the Federal Reserve to
         12   fulfill its responsibility and assure that this
         13   will be the case.
         14            Thank you.
         15       MS. SCHMIDT: Thank you very much.
         16            Mr. Schmidt.
         17       MR. SCHMIDT:  Thank you.  Good morning.
         18            My name is Raymond Schmidt, and I'm an
         19   Executive Director of a non-profit corporation in
         20   Milwaukee, Wisconsin called Select Milwaukee.
         21            Select Milwaukee was formed in 1991 and is
         22   dedicated to promoting supporting and facilitating
         23   affordable home ownership in Milwaukee
         24   neighborhoods through collaboration with private
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          1   and public sectors and non-profit organizations as
          2   well.
          3            We do a number of different things to
          4   fulfill our mission, including providing direct
          5   services to potential home buyers, first time buyer
          6   urban market training for mortgage lenders and real
          7   estate professionals, produce neighborhood
          8   marketing events, and we have developed and
          9   administer for several Milwaukee employers their a
         10   employer assisted home ownership and walk to work
         11   programs.
         12            My comments today really are designed to
         13   reflect our organization's valued and long-standing
         14   relationship with Banc One Wisconsin, and it's
         15   based on that relationship that I extend
         16   Milwaukee's support of Banc One's proposed
         17   acquisition of First Chicago NBD.
         18            As noted, collaboration is a major piece
         19   of everything we do at Select Milwaukee.  All of us
         20   in this line of work have had the opportunity over
         21   the years to meet with and try to enlist the
         22   support of many different businesses and
         23   institutions and organizations.
         24            For the past several years, Select
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          1   Milwaukee has developed a number of relationships
          2   on various levels with many mortgage lenders in
          3   Milwaukee.  During that time, we've had many
          4   opportunities to to work directly with Banc One
          5   Wisconsin and to observe its affordable lending and
          6   other community development efforts.  It's those
          7   experiences with Banc One that lead me to suggest
          8   that Banc One is among one of Milwaukee's most
          9   savvy, thoughtful and more committed affordable
         10   housing financial institutions and also a very
         11   valued corporate partner in many other ways in the
         12   City of Milwaukee.
         13            In our view, Banc One Wisconsin is clearly
         14   distinguished from most Milwaukee lenders by its
         15   thoughtful, serious approach to collaboration with
         16   our organization and with our colleagues in
         17   Milwaukee and a variety of ventures, and I'm being
         18   quite candid -- and Liz eluded to this just a
         19   second ago -- when I suggested that unlike some
         20   other institutions, Banc One doesn't embarrass
         21   itself or organizations like ours merely by talking
         22   a good game, by glad handing or with product or
         23   service gimmickry.
         24            For us, Banc One is the respected and
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          1   valued corporate citizen it is because of a
          2   corporate philosophy, and it's that philosophy that
          3   I believe is also responsible for the highly
          4   competent and diverse staff with which we've had
          5   the pleasure to work within the past several
          6   years.
          7            Through my vantage point, there's probably
          8   no more significant example of Banc One's
          9   commitment to affordable lending here than the
         10   leadership, dedication and support extended to the
         11   launch of the coalition in Milwaukee called New
         12   Opportunities for Home Ownership in Milwaukee or
         13   NOHIM.
         14            NOHIM is nationally recognized, and it's
         15   comprised of 55 members including most banks,
         16   thrifts and credit unions in the Milwaukee area,
         17   several community-based counseling organizations,
         18   MI firms, City of Milwaukee and the Wisconsin
         19   Housing and Economic Development Authority.  NOHIM
         20   has had dramatic impact on housing opportunities
         21   for Milwaukee.
         22            Since its inception in 1991, NOHIM is
         23   directly responsible for nearly 2,000 new modest
         24   income homeowners and over $85 million in mortgage
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          1   investment in our neighborhoods, and I'm convinced
          2   that it has been Banc One's leadership and
          3   significant financial and staff support that
          4   nurtured NOHIM, and it's really these that it's
          5   largely responsibile for Milwaukee's reknown and
          6   successes in affordable lending.
          7            Organizations like Select Milwaukee has
          8   had the garnered the support of Banc One for our
          9   marketing activities, and these are home ownership
         10   expositions and neighborhood tours that we believe
         11   are valuable to introduce first-time home buyers to
         12   the buying process and also to their housing
         13   opportunities in the city as well as to expand
         14   their range of options in terms of neighborhoods
         15   and housings.
         16            And of course there's the next component
         17   of support for these types of activities, but in
         18   the case of Banc One, its involvement and support
         19   has always gone beyond just dollars, and I know
         20   this may sound funny, but it's really easy to write
         21   a check in my view, but reflecting the seriousness
         22   with which the bank takes its community involvement
         23   and our experience of its trademark professionalism
         24   in these endeavors, significant dedication of staff
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          1   has always been a part of the bank's support of our
          2   activities.
          3            Corporate community affairs and marketing
          4   staff lend their time and their expertise to ensure
          5   that these city events are as successful and
          6   well-produced as any new suburban subdivision
          7   promotion.
          8            I would like to say Select Milwaukee has
          9   benefitted a great deal from the professional
         10   comradery developed and obtained with Banc One and
         11   government relations staff persons.  On many
         12   occasions, covering a variety of issues covering
         13   regulatory matters, legislative issues, Banc One
         14   served as a sounding board, provided us advice and
         15   very valuable insight.
         16            It doesn't mean we've always agreed, but
         17   we've consistently gained from the impressive level
         18   of interest their accessibility to us and their
         19   thoughtfulness.
         20            In conclusion, I wish to reiterate Select
         21   Milwaukee's support.  Our organization hopes the
         22   merger can only enhance the bank's commitment and
         23   capacity to invest in affordable homeownership for
         24   modest income families and other community
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          1   development initiatives in Milwaukee and
          2   elsewhere.  Thank you.
          3       MS. SMITH:  Thank you very much.  Any questions
          4   from the Panel?
          5            All right.  Be sure if you haven't already
          6   done so to give your written statements to the
          7   people at the registration desk so that we can have
          8   them for the record.  And thank you very much for
          9   coming this morning.
         10            We're moving on to Panel 8.  We're going
         11   to start with Reverend Buzza.
         12       MR. BUZZA:  I am John Buzza, Pastor of Hope
         13   Presbyterian Church in Springfield, Illinois.  I am
         14   here as a part of the Central Illinois Organizing
         15   Project, and I am here because I care about my
         16   city.
         17            A busload of us from Central Illinois have
         18   come here because we are deeply concerned about the
         19   proposed merger between Banc One and
         20   First Chicago.
         21            Banc One has an extremely poor record of
         22   making loans to low and moderate income residents
         23   in Central Illinois.
         24            I would like you to look at this map
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          1   showing the 1996 aggregate owner-occupied housing
          2   loans made in the city where I live, Springfield,
          3   Illinois.
          4            The census tracts in solid red received
          5   less than $100,000 per tract.  Those outlined in
          6   red received only slightly more.  By contrast, the
          7   solid green tracts received loans between 1.5 and
          8   $3 million per tract.  My city is only as healthy
          9   as its least healthy neighborhood, and Census Tract
         10   14 got no loans last year at all.
         11            Home ownership improves property, improves
         12   value, improves people's lives, and Banc One has
         13   chosen to eliminate home ownership and home
         14   improvement from whole sections of our city.
         15            In addition, Banc One's record of loans to
         16   African Americans is reprehensible and
         17   indefensible.  In 1996, Banc One under performed in
         18   the market to African Americans in the following
         19   areas:  Home mortgages, home improvement loans and
         20   refinancing.
         21            Our point here today is to let you know
         22   that what is happening in Milwaukee is not
         23   happening in Central Illinois, and we would like a
         24   meeting with Mr. John McCoy to help facilitate how
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          1   Banc One can help in 1999 in Central Illinois.
          2            I thank you for your time.
          3       MS. SMITH:  Thank you very much.
          4            Mr. Heuerman.
          5       MR. HEUERMAN:  Jack Cramer-Heuerman.  I'm a
          6   United Methodist pastor from Champaign-Urbana,
          7   Illinois, also a part of the same organization, and
          8   I wish to address some remarks related to the
          9   Community Reinvestment Act.
         10            The Central Illinois Organizing Project
         11   has had an initial meeting with Banc One related to
         12   the Community Reinvestment Act in terms of some
         13   particular proposals for communities in
         14   Bloomington-Normal, Illinois, Springfield,
         15   Illinois, Champaign-Urbana, Illinois.  We presented
         16   some needs, looking again for that kind of valued
         17   corporate partner sort of unique in creative use of
         18   the Community Reinvestment Act funds, working
         19   cooperatively to address some basic human needs.
         20            It's our understanding that the Community
         21   Reinvestment Act has a standard that those funds
         22   need to benefit low income persons, and all of our
         23   proposals certainly meet that standard.
         24            What we talked about in Bloomington-Normal
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          1   is a project called Partners for Community that
          2   addresses the domestic violence issue from the side
          3   of working men in particular involved in the
          4   domestic violence issues, a neighborhood health
          5   clinic in Springfield, Illinois again in some of
          6   those census tracts underserved in a number of ways
          7   that would particularly address the low and
          8   moderate income person's health needs in their
          9   community and access nearby to those, in
         10   Champaign-Urbana, the Center for Women in
         11   Transition that deals specifically with women and
         12   children transitioning from homelessness to
         13   self-sufficiency.  These are basic human needs that
         14   can be met through the Community Reinvestment Act,
         15   housing, health, safe neighborhoods.
         16            We know that Banc One has worked with the
         17   Arizona Diamond Backs stadium for leisure activity,
         18   and we celebrate, and we also want to work together
         19   as that corporate partner addressing basic human
         20   needs.
         21            Thank you.
         22       MS. SMITH:  Thank you.
         23            Mr. Matejka.
         24       MR. MATEJKA:  Thank you.  Good morning.  My
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          1   name's Mike Matejka, Second Ward Alderman for
          2   Bloomington, Illinois, also with the AFLCIO in the
          3   city.
          4            I appreciate your patience here today
          5   because I've sat in that chair.
          6            I brought a few props with me.  Brought my
          7   money bag.  This is from Marine Bank which is
          8   Banc One which is American State Bank.  As we know,
          9   those banks merge all the time because that's what
         10   it's all about, two-and-a-half-by-six-inch strips
         11   of paper.
         12            If we've got these
         13   two-and-a-half-inch-by-six-inch green strips, we
         14   can do a lot, but if we don't have these things, we
         15   can't get very far in this society.
         16            According to the government, you would
         17   characterize me as a low to moderate
         18   European-American living in a slum-like area.
         19   That's what I'm characterized as in this society.
         20            Let me tell you about that slum-like area
         21   I live in.  It's actually an area of single family
         22   homes racially integrated where people go to work
         23   every day and do their jobs and we can get these
         24   strips of green paper to take care of ourselves,
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          1   take care of our families, to buy gas, to feed our
          2   families, but we need help when we want to buy a
          3   home and when we want to improve a home, and
          4   Banc One is not there to help us in that process.
          5            When I look at statistics under the
          6   Community Reinvestment Act of what Banc One does in
          7   Bloomington, Illinois, it's pretty disappointing.
          8   I look at 1996, and I see that 272 affluent white
          9   families got loans but only ten African American
         10   families could get a loan, and of those ten African
         11   American families, only one was a low income family
         12   or two of those were low income families who got
         13   less than $14,000 from Banc One.
         14            Our area is a prosperous area.  State Farm
         15   Insurance is there, and Banc One moved its market
         16   ratio from four percent to nine percent in 1995 and
         17   '96, but at the same time, they quit giving loans
         18   in my area.  We went from 79 loans to 54 loans, but
         19   they more than doubled their loans in the affluent
         20   areas of town.
         21            We're asking Banc One not to shut out the
         22   working class family, not to shut out us folks
         23   characterized as low to moderate income folks
         24   living in a slum-like area.  Give us access to
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          1   credit to.
          2            And the pattern from Banc One in the last
          3   few years is to shut us out of the process.  We
          4   want them involved, want them involved in our
          5   neighborhoods, and we are here to protest this
          6   merger until we see the Community Reinvestment Act
          7   is going to be lived up to.
          8            I thank you for your time today.
          9       MR. ERICKSON:  I'm pleased to share my view of
         10   what's a real concern on my part.  I'm Reverend
         11   Joel Erickson, Pastor at Resurrection Lutheran
         12   Church in Bloomington.
         13            And my concern is where are the people
         14   from Banc One?  I just want to know is there anyone
         15   from Banc One here?  Is there anyone from Banc One
         16   here?
         17            Okay.
         18            We'd like to say that the question that we
         19   have asked as we have negotiated and wanted to talk
         20   to the people of Banc One is we want to know where
         21   John McCoy is, Mr. McCoy.  We wanted to speak to
         22   him because in our negotiating with National
         23   Citicorp we challenged the merger of National
         24   Citicorp with First of America, and as a result of
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          1   that challenge, Dave Deberco, the CEO of that bank,
          2   came and talked to us along with Danny Cameron, the
          3   Vice President.  We know them personally, we've
          4   talked about them, and we value that relationship,
          5   and we've built a relationship with them.
          6            And we're wondering where is the CEO from
          7   Banc One because what's necessary is for us to
          8   develop a relationship because we're the ones that
          9   own the homes, we're the ones that live on the
         10   streets, we're the ones that buy the groceries.
         11   This is our community, and we want a relationship
         12   with the leaders of this bank.  And there's been no
         13   talk.  And we need to make those kinds of
         14   connections.
         15            And we have a good relationship and do
         16   know Dave Deberco and Danny Cameron of NCC, and
         17   they're doing fine. They've not suffered as a
         18   result of our relationship.  We have a good
         19   relationship with them, and that's what we're
         20   expecting from Banc One.
         21            You notice we have a wanted poster for
         22   Mr. John McCoy.  Why doesn't this man want to meet
         23   us?  We want to meet with him, we want to talk with
         24   him and express the concerns that have been shared
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          1   here at this table, and we want a good relationship
          2   where we can build a community that's positive
          3   because we're the ones living in the local
          4   communities.
          5            Our concerns is as the mergers take place,
          6   people move further away from our community, and we
          7   represent Bloomington-Normal, Peoria, Springfield,
          8   Decatur, Champaign-Urbana, this whole region.  Its
          9   concern is that we reach out and respond to the
         10   needs of a community, and that's where we're coming
         11   from is our own local community.
         12            So we hope to see Mr. John McCoy present
         13   with us, talk with us, and then we'll see whether
         14   that bank is really one that's desired to be
         15   connected with the community of our region.
         16            And we're very thankful, very privileged
         17   that we have an opportunity to express this
         18   concern.
         19            As a Pastor of a local congregation of 500
         20   members, I want you to know it matters to us that
         21   organizations such as banks are responsive to the
         22   local community.
         23            Thank you very much.
         24       MR. ALVAREZ:  A question for Reverend Buzza.
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          1            You showed us your chart.  I'm not
          2   familiar with the Springfield area.  Could you
          3   explain a bit about the census tracts?
          4            The ones, for example, that received no
          5   loans, what characteristics are those?
          6       MR. BUZZA:  They are primarily the ones in the
          7   center of Springfield occupied primarily by low and
          8   moderate income families, and most of our ethnic
          9   minority families live in those census tracts.
         10            The only public housing area is in Census
         11   Tract -- Rudy, help me -- 15.
         12       AUDIENCE MEMBER:  12 or 14.
         13       MR. BUZZA:  And the area around the outside is
         14   the fast growing area particularly to the west side
         15   and down in the corner here around what is Lake
         16   Springfield.  Census Tract 31 is where the figures
         17   are 1.5 to $3 million of loans in that tract.
         18       MS. WILLIAMS:  I'm sorry.  I have a question.
         19            Can you say the level of home ownership in
         20   those tracts that got no loans, and also could you
         21   describe if there's like home sales, because I'm
         22   not as familiar with Springfield as well?
         23       MR. BUZZA:  Well, this just has to do with the
         24   number of loans that Banc One made last year for
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          1   mortgages, for home improvement and for refinancing
          2   and, it's by income in those areas, but those of us
          3   who live in Springfield also realize that the
          4   majority of our African American neighbors live in
          5   that central neighborhood that is either red or
          6   red-and-white striped.
          7            Have I answered your question?
          8       MS. WILLIAMS:  I guess as far as like the level
          9   of owner occupied, is that a 20 percent in that
         10   area or 40 percent or less?
         11       MR. BUZZA:  I'm not sure I know the answer in
         12   terms of statistics, but many of the homes in that
         13   area are now rental property and have been
         14   purchased by non-resident rental owners, and that
         15   is one of our great concerns because the upkeep of
         16   those houses does not match what homeowners do when
         17   they have the chance to own it themselves.
         18       MS. SMITH:  Thank you very much.
         19       MR. MATEJKA:  Could I ask our folks who came up
         20   with us, drove up with us today, to stand up?
         21       MS. SMITH:  Please.
         22            we had a panel this morning that didn't
         23   show up, unless they have come in.  I don't think
         24   they have.
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1            Let me say the names in case there has
          2   been any confusion.  James Hall, Robert Hawhtorne,
          3   the Reverend Carey Long, Patrick Quinn, James
          4   Taylor.
          5            We will want if they come this afternoon
          6   to work them into the schedule, but we may want
          7   to -- would we want to start a little earlier than
          8   1:00?  We're scheduled to reconvene at 1:00.  If we
          9   have the next -- if we can either have or can
         10   construct a panel starting at a quarter of 1:00, we
         11   would like to do that.
         12            So those of you who are scheduled for a
         13   later panel but who are here now, you might check
         14   in with our registration people and see what we can
         15   do to work you up a little earlier into the
         16   schedule.
         17            So thank you very much.  We'll see you.
         18            I am supposed to announce to keep your
         19   name tags on so that you can get back into the
         20   conference center if you go out.
         21            Thank you.
         22                      (Whereupon, a short recess
         23                      was taken.)
         24       MS. SMITH:  I think we're ready to start with
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          1   our next panel.  This is Panel 9, and we're going
          2   to start with Ms. Cannon.  You'll need to pull the
          3   mic.
          4       MS. CANNON:  Thank you.
          5       MS. SMITH:  I will -- in case -- well, let's
          6   see, since many of you drove -- were driving this
          7   morning, you didn't hear my announcements, but I
          8   will -- we have two timekeepers.  They will give a
          9   signal when you have one minute remaining and then
         10   they will hold up another card when your time has
         11   expired.
         12            Sometimes you might try looking up every
         13   once in a while, but if you miss it, we'll give you
         14   a few extra seconds, but then we go to audio and
         15   we'll give you a little musical note.
         16       MS. CANNON:  That means you finished.
         17       REVEREND LONG:  In more ways than one.
         18       MS. SMITH:  So Ms. Cannon?
         19       MS. CANNON:  Good afternoon.  My name is
         20   Bessie Cannon and I am President of SEIU Local
         21   880.  I appreciate the opportunity to testify on
         22   Banc One's awful record throughout the Midwest.
         23            It is terribly unfortunate that the
         24   Federal Reserve is not holding hearings in more
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          1   than one city.
          2       REVEREND LONG:  Amen.
          3       MS. CANNON:  Millions of Americans cannot
          4   possibly be represented at one hearing to give
          5   input on a merger that will affect citizens from
          6   Canada to the Gulf of Mexico.  And if anyone has
          7   the resources to hold hearings in every city
          8   affected by this merger, it is the Federal
          9   Reserve.
         10            One thing is clear about both Banc One and
         11   First Chicago NBD.  They are first -- first of the
         12   worst!  In Denver, Detroit, and Milwaukee,
         13   minorities were rejected much more frequently than
         14   white applicants for every kind of housing loan
         15   that the bank makes.  Even more troubling, it
         16   appears that Banc One routinely steers minorities
         17   to more costly and inferior subprime loans.
         18            In Denver, Banc One received no
         19   applications from either African Americans or
         20   Latinos for conventional mortgages in 1996.  Not a
         21   single applicant in 1995.  In 1995, it took only
         22   six applications from either African Americans or
         23   Latinos.
         24            Moreover, there is not -- this is not
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          1   because Denver is a predominantly white city.
          2   Indeed, the majority of the residents of the city
          3   of Denver are now members of racial minorities, nor
          4   is it because the minority population of Denver is
          5   so poor that they can't afford to buy homes.  Over
          6   half of Denver's minority households are
          7   homeowners.
          8            The reason that Banc One gets no home
          9   loans applications from minorities in Denver is
         10   because Banc One doesn't market to minority
         11   communities.  Instead, Banc One pumps credit into
         12   the very whitest parts of Denver like it was
         13   water.
         14            In 1996, more than 40 percent of Banc
         15   One's mortgage loans were made to neighborhoods
         16   where more than 90 percent of the residents are
         17   white.  An additional 40 percent of the bank's
         18   loans went to the neighborhoods where whites made
         19   up between 70 and 90 percent of the population.
         20            Just two percent of the mortgages were
         21   made to neighborhoods where over half the
         22   population is nonwhite.  And since the data shows
         23   that the bank made no loans to Latinos or blacks
         24   that year, we know that two percent of the loans
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          1   that did go to our neighborhoods did not go to us.
          2            In Detroit, First Chicago NBD's
          3   performance is similar, but even more sinister,
          4   given the size of the African American population
          5   there.  Although the City of Detroit is over
          6   70 percent black, the entire Metro area is 22
          7   percent black.
          8            In 1996, NBD took only two percent of its
          9   applications from blacks.  The bank took 93 percent
         10   of applications from whites.  In real terms, this
         11   means that African Americans are 11 times more
         12   likely to reside in Detroit than First Chicago
         13   NBD's applicant pool.
         14            While there was fewer applications from
         15   minorities, the few that did apply were rejected
         16   more frequently than white applicants.  African
         17   Americans were rejected nearly 40 percent more
         18   frequently.
         19            Incredibly, this disparity widens for the
         20   wealthiest minority applicants.  Upper-income
         21   African Americans were rejected twice as frequently
         22   as upper-income white applicants.
         23            In Milwaukee, Banc One has aggressively
         24   pushed its home improvement lending and refinanced
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          1   loans while ignoring conventional mortgages.  But
          2   with Banc One, we find that no matter what type of
          3   home loan we look at, the pattern is the same;
          4   African American applicants are rejected many times
          5   more frequently than whites.  African Americans
          6   were rejected three times more frequently than
          7   white applicants for refinance and home improvement
          8   loans in 1996.
          9            Last time I looked, racial discrimination
         10   is still against the law in our country.  And when
         11   a multi-million dollar bank like Banc One breaks
         12   the law and denies people access to credit on the
         13   basis of their skin color, they should be punished,
         14   not rewarded.  It is time for the Federal Reserve
         15   Board to punish Banc One.  It is time for the
         16   Federal Reserve to just say no.  Thank you.
         17       MS. SMITH:  Thank you very much.
         18   Reverend Long?
         19       REVEREND LONG:  I bring you greetings from the
         20   near east side of Indianapolis where I pastor a
         21   congregation and also serve as board member for the
         22   Near East Side Community Organization.
         23            I've been asked by the Board President,
         24   who could not come today, to speak as the official
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          1   representative of the Near East Side Community
          2   Organization and also a copartner with the
          3   Organization for a New East Side and to say to the
          4   Federal Reserve Board:  Please listen to us.
          5            Listen to the fact that over 50 percent of
          6   our populant folks are neighbors who live in and
          7   around the Banc One branch that was closed in a
          8   rather cold-hearted way in the midst of the
          9   winter.
         10            They have affected us -- excuse me.  They
         11   have affected us quite negatively.  They have cared
         12   little for listening to us.  And so we come here
         13   asking that this not be the last time that you hear
         14   folks from Indianapolis, that rather than Chicago,
         15   that you come to Indianapolis, preferably, send
         16   whatever faction you need to the East Side, since
         17   our residents are too poor to make this journey.
         18   They cannot afford to.
         19            So I come speaking on behalf and along
         20   with my brothers and sisters of the East Side
         21   saying Banc One has been a horrible neighbor to
         22   us.  I don't need to quote you all the raw data.
         23   You all have that.  I trust that your education
         24   lets you glean that for yourself and understand
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          1   what bad business partners Banc One and NBD are.
          2            I want to share with you an example of how
          3   that has lived out in the Near East Side.  The
          4   Woodriff Place Branch on 10th Street, which is a
          5   major corridor for the Near East Side, we were
          6   notified was closing, not might close, would close
          7   because it was no longer a money-making, profitable
          8   branch.
          9            They were a self-fulfilling prophecy, as
         10   we say in the church business, because they made
         11   sure it was not profitable by cutting business
         12   services right and left, cutting personnel
         13   services, and as their records shows to us
         14   constantly, they are not making adequate small
         15   business loans or adequate home mortgage loans
         16   available in our census tracts.  They have all our
         17   money.
         18            I am a Banc One client, have been in the
         19   two years I've been in Indianapolis, because they
         20   have such an overwhelming majority that trying to
         21   get to another branch to adequately access services
         22   is virtually impossible because they've run
         23   everybody out of town.
         24            If this merger goes through, we fear the
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          1   real loss of the NBD branch that is in the Near
          2   East Side.  In spite of feigned attempts by
          3   Banc One/NBD to say that they are going to ask the
          4   Department of Justice to exempt that branch from
          5   divestiture, we believe them as far as we can throw
          6   them.  And since we can't throw them, we don't
          7   believe them.
          8            They have lied to us time and again.  They
          9   told us that they were going to work with us in
         10   trying to find an alternative way to use that
         11   branch that would best serve the neighborhood.  And
         12   that simply meant they weren't going to allow it to
         13   be a pawn shop or a check-cashing organization.
         14            You know, there are other distracting
         15   factors to our neighborhood besides pawn shops,
         16   bars, and check-cashing organizations.  We try and
         17   sit down with them in good faith negotiations.
         18            According to their response to you all
         19   from the Near East Side Community Organization's
         20   letter asking for denial of this merger, what they
         21   have in paper isn't, in fact, what they did.  It is
         22   not what they said to us.  It is not how they
         23   treated us.
         24            There again, they have the money.  They
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          1   have the attorneys.  They can write it to make it
          2   sound just exactly like they hope you will want to
          3   hear.  They don't want you to hear the truth.  They
          4   don't want you to hear us say they did not
          5   negotiate in good faith with us.
          6            They told us that the branch would be
          7   donated to the Near East Side Community Development
          8   Credit Union.  And they gave us first one month to
          9   make that a reality.  You cannot transact that kind
         10   of business in four weeks' time.  They then backed
         11   it up.  We won a small victory.
         12            They said they would give us three
         13   months.  And by the time that that three months was
         14   up, we had already found out that they had sold the
         15   building to the holding company that is purchasing
         16   property around Indianapolis for CBS Drugstore.
         17            The drugstore is not what's going in
         18   there.  We have found out, through East Side
         19   Community Development Corporation that, in fact,
         20   they are in high-level negotiations with another
         21   credit union to go in place in that branch.  But
         22   quite frankly, we don't know what that will be
         23   either, nor how it will be a detracting factor to
         24   our small community development credit union.
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          1            They've been poor partners.  They always
          2   tell us that the ultimate answer has to come from
          3   Columbus.  When we ask who that is, they tell us
          4   too bad, so sad, you lose.  We won't tell you.  You
          5   only get to talk to us.  That is not good faith.
          6   Thank you.
          7       MS. SMITH:  Thank you.  Ms. Rice?
          8       MS. RICE:  Good morning -- I'm sorry, good
          9   afternoon.  My name is Bobby Rice.  I'm from
         10   Dallas, Texas and I am here to speak about the
         11   problems we are all having in Dallas, Texas.
         12            I am from a low- and moderate-income area
         13   in Dallas, Texas.  I am against Banc One merging
         14   because of my own experiences with Banc One and
         15   because of stories that I have heard from others
         16   about their treatment by the bank.
         17            Banc One is not a bank that does a very
         18   good job servicing people in my community.  Some
         19   people in my community have a difficult time
         20   understanding the complex banking fee structure and
         21   no one takes the time to explain the fee to them
         22   until it is too late or they're just rude to us,
         23   insensitive, and in some cases, they are racist.
         24            For example, there's a man that lives in
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          1   Dallas, Texas by the name of Ogan Defreeze.
          2   Mr. Defreeze is an -- I'm sorry, African American
          3   senior citizen living on a fixed income of about
          4   $500 a month.  He has been a Banc One customer for
          5   many years.  He even banked at the same bank before
          6   it got its name changed to Banc One.
          7            He always went in to use the teller
          8   because that is what he had always done.  The only
          9   problem was that Banc One decided to charge people
         10   two dollars to use a teller.  Now, two dollars may
         11   not sound a lot to you all or some people, but as
         12   low-income people, we have to think of our budget
         13   and not waste our money.
         14            Now, Mr. Defreeze wrote checks to pay
         15   bills, all money he thought he had, but because of
         16   the fee, he bounced checks and had to pay bounced
         17   check fees.  He estimated that Banc One took almost
         18   $200 from him in bouncing check fees before someone
         19   explained about the teller fee.  $200 is nearly
         20   half of his monthly income.
         21            Banc One also lost a $10 deposit of
         22   Mr. Defreeze's.  Then they found it.  Banc One
         23   found the $10 deposit.  You know what they done?
         24   They refused to refund a bounced check fee that
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          1   occurred due to their mistake, which is Banc One.
          2            I have had a similar experience myself.  I
          3   have a saving account at Banc One.  The reason I
          4   have a saving account is exactly -- I have a saving
          5   account at Banc One.  And the reason why I'm having
          6   the account is because I need to save my money.  I
          7   am also on a fixed income.  I am supporting my
          8   grandchildren by adopting them and I must save as
          9   much as I can.
         10            However, Banc One charged me ten dollars
         11   per month to maintain my account.  That's not
         12   fair.  The only way the service charge is forgiven
         13   is if I maintain -- maintain a $1,500 balance at
         14   all time.  If I cannot possible afford to keep this
         15   amount, then why must I pay this outrageous sum of
         16   money per month?
         17            I am penalized just for being poor.  I
         18   used to have a checking account also with Banc One,
         19   but I found it is impossible to balance my book
         20   accordingly to the statement.  Many time there were
         21   mistakes on the statement, but the bank never took
         22   credit for them.  I don't know how they do this,
         23   but somehow or another the statement will win, not
         24   correct, win.  It's no way that you can prove it
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          1   the way they do the statement.
          2            I would have certain of my drafting twice
          3   monthly instead of once.  So what Banc One does, I
          4   wanted Banc One only to draft one check per month,
          5   but nothing were ever done because they drafted
          6   twice.  When they drafted twice on my account, that
          7   made three of my bank -- three of my check bounce.
          8   Because as a low income person, I only have certain
          9   time -- I mean, a certain amount of money to
         10   spend.
         11            Many time there was mistakes on the
         12   statement, but the bank never took credit for
         13   them.  I would have certain amount of draft -- of
         14   twice instead of one, but nothing was ever done to
         15   make these correction to my account.
         16            Oftentime because mine was drafted more
         17   than once or my deposit was not added to my account
         18   when they was supposed to, my check will bounce.
         19   Rather than the bank pick up the charge for their
         20   mistake, I would have to pay the overdraft fee of
         21   25 per check.  That's not fair.
         22            I try calling several time to speak to
         23   someone in a management position, but I was not
         24   able to speak to the person or I also left a
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          1   message and no one called me back.  The Soria
          2   family had similar problems with Banc One and their
          3   account.
          4       MS. SMITH:  Ms. Rice, we'll be glad to enter
          5   the remainder of your statement into the record.
          6   If you'd like to take half a minute to bring it to
          7   conclusion.
          8       MS. RICE:  Oh, I'm sorry.  I got off into it.
          9   I just got off into it.  I told them it was like
         10   I'm -- okay.  Only thing -- I thought you said I
         11   had three minutes.
         12       MS. SMITH:  No.  30 seconds, half a minute.
         13       MS. RICE:  Half a minute, okay.
         14            Only thing I want to comment on Banc One,
         15   that they should realize that there are low income
         16   people as well as people that has money.  We also
         17   would like to buy a boat and a Cadillac too, but we
         18   cannot.  So help us too.
         19       MS. SMITH:  Thank you very much.
         20       MR. SIMS:  Good afternoon.  My name is Reverend
         21   Wesley Simms, and I'm from Dallas, Texas.
         22            We're opposed to the merger of Banc One/
         23   First Chicago, and I'm here to testify to Banc
         24   One's service in low income and minority
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          1   communities and consumers.
          2            In general, Banc One under serves and red
          3   lines minority neighborhoods and rejects African
          4   Americans and Latinos.
          5            Banc One's performance in Dallas lagged
          6   significantly behind the market averages.  First,
          7   in Dallas, African Americans were rejected for home
          8   purchase loans nearly three times as frequently as
          9   white applicants in 1996.  This rate is higher than
         10   the market average of conventional home lenders
         11   rejecting African Americans at twice a rate of
         12   white applicants.
         13            Even African Americans above 120 percent
         14   of the median income were rejected more than two
         15   and a half times as frequently as whites of similar
         16   incomes.  In fact, the African American were
         17   rejected at rates double than that of moderate
         18   income and white applicants, 35 and 17 percent
         19   respectively.
         20            In Dallas, Latinos receive comparable
         21   treatment at the Banc One offices.  Latinos were
         22   rejected more than twice as frequently as white
         23   applicants for conventional mortgages in 1996.  And
         24   this rate, again, is higher than the market average
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          1   rejection rate of 1.78 for all Dallas lenders.
          2            Upper-income Latinos were also rejected
          3   twice as frequently as upper-income white
          4   applicants.
          5            A similar pattern is found in Houston
          6   where the African Americans and Latinos are
          7   rejected much more frequently than white
          8   applicants.  African Americans were rejected more
          9   than three and a half times as frequently as whites
         10   in 1996, up slightly from the 1995 of just shy of
         11   three and a half.
         12            This figure is more than double the market
         13   average of African Americans being rejected, more
         14   than one and a half times as frequently as white.
         15            Incredibly, the rejection rates for
         16   upper-income African Americans is nearly triple
         17   that of moderate income white applicants, 29 and 11
         18   percent respectively.
         19            The picture was no brighter for Houston
         20   Latinos.  Latinos was rejected nearly twice as
         21   frequently as white applicants in 1996.  This
         22   figure is also an increase from the one and a half
         23   times Latinos were rejected in comparison to white
         24   applicants in 1995.
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          1            Again, the ratio is measurably higher than
          2   the market average, where Latinos were rejected 27
          3   percent more frequently than whites.  Upper-income
          4   Latinos were rejected nearly twice as frequently as
          5   moderate-income white applicants.
          6            These figures are appalling.  If the
          7   stories from Dallas consumers are any guide, these
          8   numbers may be understating the problem.
          9   Minorities in Texas don't have a chance at Banc One
         10   lenders' office.
         11            Meanwhile, many neighborhoods are in
         12   desperate need of access to credit and new
         13   homeowners.  It is unlikely that they will find it
         14   at Banc One.  ACORN has discovered that Banc One is
         15   most likely to lend to the whitest and wealthiest
         16   neighborhoods in Houston and in Dallas.
         17            In Dallas, 23 percent of the nearly 400
         18   conventional mortgage loans Banc One made in 1996
         19   went to census tracts where whites made up more
         20   than 90 percent of the population.  Only 11 percent
         21   went to census tracts where minorities made up the
         22   majority of the population.  A mere 4 percent of
         23   those originations went to census tracts below
         24   50 percent of the area median income.  88 percent
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          1   of those low-income tracts received no loans at
          2   all.
          3            In Houston, the pattern was, if anything,
          4   more troubling.  45 percent of Banc One's more than
          5   700 conventional loans went to census tracts where
          6   whites made up more than 80 percent of the
          7   population.  Only 13 percent of the loans went to
          8   census tracts where minorities made up the majority
          9   of the population.  Less than half of those went to
         10   the census tracts where minorities made up more
         11   than 75 percent of the population.  A mere 2
         12   percent of the conventional mortgages went to
         13   census tracts where a household income was below
         14   50 percent of the area median.  Of the 117
         15   low-income census tracts in Houston, 86 percent
         16   received no conventional mortgages.
         17            Taken together, these two facts show a
         18   dual pattern of rejection of Banc One in Texas.
         19   Minority individuals are frequently turned down for
         20   loans at Banc One, more frequently than their white
         21   counterparts.  Low income and minorities
         22   neighborhoods are likewise unserved by Banc One.
         23   The road to home ownership is essential to build
         24   wealth of families and to shore up neighborhoods
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          1   and communities.  Homeowners build equity in their
          2   families and their neighborhoods benefit.  With
          3   inadequate access to fair credit, these
          4   neighborhoods and families suffer unduly.  Banc One
          5   is a contributor to this unfairness.
          6            ACORN has tried to get commitments from
          7   Banc One to turn these problems around.  ACORN met
          8   with Banc One with the help of our Congresswoman
          9   Eddie Bernice Johnson.  I was at that hearing.  And
         10   I asked weren't they concerned that so few loans
         11   went to African Americans.  They kept changing the
         12   subject talking about other lending like credit
         13   card lending and personal loans.  Well, getting
         14   people in debt is not the same thing as helping
         15   people to become homeowners.  We need more
         16   homeowners in our neighborhoods.
         17            The banker at the meeting also kept
         18   talking about the loans they do with affordable
         19   housing groups.  We heard some of that here this
         20   morning.  That's great, but ACORN is a group that's
         21   concerned about what happens to the ordinary
         22   everyday person who walks into the bank.  With Banc
         23   One, they seem not to make very many loans to make
         24   people homeowners.
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          1            At the meeting, we asked -- just one
          2   thing -- that Banc One do one of two things.
          3   Either make a commitment matching the commitments
          4   in Detroit and Chicago as to how much they will
          5   lend to minority and low- to moderate-income
          6   neighborhoods or tell what program they would use
          7   to do a better job of lending to minorities.  They
          8   did not make either commitment.
          9            The Federal Reserve should take this
         10   opportunity to address this inadequate record and
         11   reject the proposed merger without practical and
         12   workable changes in Banc One's operation.  I thank
         13   you very much.
         14       MS. SMITH:  I do think you have the record
         15   today for how fast you speak.
         16       MR. RICE:  They gave us a book to read, and now
         17   they said read it in four minutes.  No way.
         18       MS. SMITH:  Mr. Taylor.
         19       MR. TAYLOR:  Good afternoon.  My name is James
         20   Taylor.
         21       MS. SMITH:  Would you use the mic, please?
         22       MR. TAYLOR:  Is that better?  Good afternoon.
         23            First give an honor to the great creator.
         24   My name is James Taylor.  I'm a community organizer
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          1   for the organization for a New East Side.
          2            Our organization opposes the merger of
          3   these banks unless there are clear and definite
          4   commitments to lending, investments, employment,
          5   services and procurement of services for low and
          6   middle income Indiana residents, senior citizens,
          7   handicapped, those on fixed incomes and Indiana
          8   residents of color.
          9            Mega mergers often have a harmful effect
         10   on communities, but this merger would create an
         11   unprecedented mega bank in Indianapolis, banking
         12   service monopoly that's going to decrease
         13   competition.
         14            In the last several years, branches have
         15   closed and fees have gone up for most of us.
         16   First-time home buyers have decreased lending, as
         17   we've heard before, especially after mergers.
         18            Some of the harmful effects of mega
         19   mergers, -- and I'll just be brief and give other
         20   folks a chance to speak, too -- the creation of
         21   these large banks, if it doesn't create a monopoly,
         22   it definitely diminishes competition.  And from
         23   what I understand, competition is good for
         24   consumers because true competition gives us the
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          1   best services at the lowest rate.
          2            Branches close.  That adds to the
          3   instability in any neighborhood when a financial
          4   institution like a bank leaves.  And there are too
          5   many institutions, financial institutions, in
          6   communities like banks.  Higher fees affect all of
          7   us, low to moderate income, moderate to high
          8   income.  Some can afford that better than others,
          9   as you can see.
         10            What happens if these mega mergers fail?
         11   I don't want to wish anything bad on Banc One, NBD
         12   or anything else, but if my memory serves me
         13   correctly, the American public has paid 800 billion
         14   dollars to bail out a savings and loan fiasco that
         15   wasn't insured as well.
         16            This addresses the safety and soundness
         17   and stability of banking services in Indiana and in
         18   Indianapolis.  And even though Indianapolis is the
         19   capital, the city that appears from the data we've
         20   looked at that will be most affected will be
         21   Lafayette, where Banc One will have a 56 market
         22   share.  And I may be a little over on that, so, you
         23   know, that stands to be corrected.
         24            Special devastation to the low and
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          1   moderate income communities.  Most of the folks in
          2   our communities -- when I speak of low to moderate
          3   income, that's 40 percent of the American public,
          4   too, if my numbers are right.  But in these lower
          5   income communities and these low to moderate income
          6   communities, transportation is limited to go the
          7   distance to the nearest bank -- the nearest bank as
          8   these other branches close.
          9            Limited financial resources are eaten away
         10   by higher fees.  Loss of banking services yield
         11   less financial stability to our neighborhoods.
         12            What that puts in place are check cashing
         13   places, pawn shops -- oh, and underground economy.
         14   We all know that means guns, drugs, theft, violence
         15   and the things that go with underground economies.
         16   We don't need that in our neighborhood on the Near
         17   East Side.  We have it.  We'd rather have banks in
         18   and guns out.
         19            What we're asking for pretty simply is a
         20   moratorium on the venture and have the Fed have
         21   local public hearings.  That could be in
         22   Indianapolis.  That could be in Lafayette.  As long
         23   as you have one in the state of Indiana, I think we
         24   can get folks there to satisfy that.
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          1            We believe it's time and demand that it's
          2   time for the banks to work with communities toward
          3   a plan to provide more sound financial planning for
          4   our communities.  We want the banks to provide for
          5   stronger CRA agreements with our federal
          6   communities.
          7            We don't need bureaucrats who aren't the
          8   experts in our communities.  We need community
          9   folks who can speak to the banks so that the banks
         10   know how they affect us and how, in fact, we can
         11   help them.
         12            The banking situation is a win-win
         13   situation if the bank takes the aggressive posture
         14   that it's going to lend to us with the products and
         15   services that are designed to work in our
         16   communities, but they don't.
         17            And last, we would like to provide for a
         18   community monitoring mechanism for our state so
         19   that we can enjoy the luxury of seeing how the
         20   banks are working with our communities.
         21            In our community, Banc One and NBD are the
         22   two largest real estate renters downtown.  When
         23   these banks combine, we're going to have a deficit
         24   for office space because they're the number one and
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          1   the number two occupants.  That's not going to be
          2   just bank employees.  That's going to have an
          3   effect on folks that run the elevators, wash the
          4   windows, park the cars in the garages.  It's going
          5   to have a devastating effect.
          6            I thank you for your time.
          7       MS. SMITH:  Thank you very much.
          8            Any questions?
          9            And I want to remind you that -- to be
         10   sure to give your written statements if you haven't
         11   already provided them to our people at the
         12   registration desk so that they can be entered fully
         13   into the record.  So thank you very much for coming
         14   this afternoon.
         15            Okay.  We'll start with Ms. Rangan,
         16   please, if someone will pass her the mic.
         17       MS. RANGAN:  Good afternoon.  My name is Rashmi
         18   Rangan.  I'm the Executive Director of Delaware
         19   Community Reinvestment Action Council.  I am also a
         20   board member of the National Community Reinvestment
         21   Coalition, which is a great association of 650 plus
         22   organizations.  I am also a member of Inner City
         23   Press Community on the move.
         24            And I am here today to testify against
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          1   this merger.  And this is the second time I'm
          2   testifying against Banc One acquiring another
          3   bank.
          4            And the last time, we had brought selfish
          5   use before the Federal Reserve Board and many of
          6   them have been justified in today's testimony.
          7   Every concern that we raised earlier has been
          8   spoken today.
          9            The treatment of the consumers, the
         10   customers at Banc One's hands, the fair lending
         11   concerns that we have had, the predatory lending
         12   concerns that we have had about Banc One have been
         13   attested to today.
         14            Before I address my concerns with Banc
         15   One, let me address my concerns with this
         16   particular process today.
         17            It is probably appropriate that you have
         18   renamed public hearings by calling it public
         19   meetings.  Apparently you're no longer willing to
         20   hear what we have to say, but we do have a lot to
         21   say, particularly about Banc One's record.
         22            Based on the factors that the Board must
         23   consider in approving this application and the
         24   managerial issues, many, many concerns have already
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          1   been addressed, but I will refer you to a few.
          2            The first one, Dr. Kenneth Thomas has
          3   already commented on in his July 27th, 1998,
          4   communication to you regarding the management's
          5   apparent violation of confidentiality of individual
          6   examination ratings on Y2K.
          7            In Arizona, the Attorney General's case,
          8   and in Texas the HUD's apparent acceptance that
          9   there is discrimination, Banc One has been charged
         10   with discrimination, and this after the Fed's own
         11   conditional approval in recent application by Banc
         12   One where Banc One acquired First USA, a Delaware
         13   bank.
         14            Apparently, Banc One failed to meet the
         15   Fed's condition.  On these grounds alone, this
         16   application should be denied.
         17            Banc One, we charged previously -- we'll
         18   repeat this charge today -- is a predatory lender
         19   through its finance company.  And while we have
         20   raised this issue many times, we sense that the
         21   Feds really do not understand the full import of
         22   our accusations.  Therefore, attached as Exhibit A
         23   to my testimony today is a catalogue of predatory
         24   mortgage lending abusive practices prepared by
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          1   Mr. Bill Brenan of Atlanta Legal Aid Society.
          2   Please review that very carefully.
          3            We have asked the Feds previously to
          4   review the finance company's subsidiary of the bank
          5   holding company and its lending record.  We repeat
          6   again today, we and others have presented ample
          7   evidence of the existence of predatory and
          8   discriminatory lending practices practiced by Banc
          9   One finance companies.
         10            In 1995 through the finance company, it
         11   approved 7,805 loans.  1996, 32,712.  So it has
         12   actually grown in size, a 319 percent increase of
         13   lending through its finance company.
         14            You have seen many HMDA analyses all point
         15   to the very same concern that we have for the
         16   second time presented today.
         17            On convenience and needs issues, how can
         18   the convenience and needs of my community be served
         19   when the acquirer, Banc One, has shown a remarkable
         20   disdain for Delaware?
         21            May I remind the Board of concerns we
         22   raised when Banc One applied to acquire First USA?
         23   First USA, a limited purpose bank, cited its
         24   inability to meet its CRA obligations and, hence,
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          1   established First USA, FSB.
          2            When Banc One acquired First USA, the
          3   thrift was gone.  Relative to Banc One/First USA,
          4   after the merger, meeting the convenience and needs
          5   of my community, it is abysmal.
          6            In comparison, FCC and its CRA officer,
          7   Mr. Roland Ridgeway, have not let the standard
          8   excuse that.  The limited purpose bank status nor
          9   the Delaware Financial Center Development Act
         10   restrictions get in the way of meeting these
         11   obligations under the CRA.
         12            At issue here is not -- I'll take only
         13   half a minute.  At issue is not who, where and how
         14   much each bank does or gives individually or
         15   collectively.  At issue here today is the who from,
         16   the where from and the how much does Banc One take
         17   away from the community through its predatory
         18   lending practices.  On these grounds alone, this
         19   application must be denied.
         20            Thank you.
         21       MS. SMITH:  Thank you very much.
         22            Mr. Reynolds.
         23       MR. REYNOLDS:  Thank you.  Greetings.  My name
         24   is Jerry Reynolds.  I will be delivering the
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          1   remarks of Rebecca Adamson, President of First
          2   Nations Development Institute, a Native American
          3   economic development organization of 18 years
          4   standing headquartered in Fredericksburg,
          5   Virginia.
          6            Ms. Adamson could not be here today, but
          7   from our Information Services Department, I monitor
          8   Community Reinvestment Act issues as they pertain
          9   to our country.  I'm a board member of the National
         10   Community Reinvestment Coalition.
         11            I spoke with a consultant to a tribal
         12   council some weeks ago.  In the midst of our
         13   conversation, he made the statement:  The tribe is
         14   isolated.  It's a 200-mile round trip for
         15   necessities like cash.
         16            More than three-quarters of one million
         17   Native Americans and tribes reside in the market
         18   area that would be created in the proposed
         19   acquisition of First Chicago NBD Corporation by
         20   Banc One.  Many of them are as remote to the
         21   nearest banking services, and some more so.
         22            Sadly, a First Nations Development
         23   Institute survey, which is attached to our written
         24   testimony, of Native American banking needs within
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          1   the merged entities' market area found that much
          2   less remote tribes, tribes within a 20 to 40-mile
          3   range of Banc One branches, have been regularly
          4   neglected by Banc One.
          5            My point is that geography is a major
          6   hurdle to the provision of banking and financial
          7   services to Native Americans.  The proposed merger,
          8   if approved, would provide the new entity with the
          9   resources to get over this geographic hurdle.  With
         10   these resources, the bank should be able to absorb
         11   the development cost of products and services that
         12   would enable it to surmount some of the geographic
         13   challenges to lending in Indian Country.
         14            Given that Banc One's record of services
         15   to Native American communities according to our
         16   survey findings is characterized by a concentration
         17   on a cream of the crop, on those native communities
         18   whose more evolved economies translate to lower
         19   risk for banking activities, the Board's approval
         20   of the merger should be contingent upon substantial
         21   improvements in Banc One's outreach and deliverable
         22   services to native communities, including urban
         23   native populations who starve for credit in cities
         24   with an abundance of Banc One branches.
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          1            Again, the augmented resources of the
          2   merged entities should provide the incentive for
          3   business initiatives.
          4            Further, the new Banc One should be
          5   required to develop plans for native specific loan
          6   products in coordination with the diversity of
          7   Native American groups, an approach recommended
          8   toward other community groups by First Chicago
          9   chairman Verne Istock.  This would contribute in
         10   future to sidetracking such avoidable debacles as
         11   Banc One's disaster and with mobile unit banks.
         12            When the initiative first began to bring
         13   credibility Banc One's way through newspaper
         14   articles and conference presentations, First
         15   Nations was reluctant to criticize a financial
         16   institution that was at least trying to make credit
         17   available in Indian Country.
         18            Still, we had strong doubts about an
         19   initiative that amounted to little more than
         20   rolling out 20th Century technology, the
         21   automobile, to serve 19th Century needs, personal
         22   and consumer loans.
         23            Now that Banc One having reaped a windfall
         24   of publicity but no profit has garaged this
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          1   antiquated road show and left Indian Country to
          2   overcome its failure, we can assert with certainty
          3   that sustained collaboration with the diversity of
          4   native groups has been the missing ingredient in
          5   Banc One's limited approaches to Indian Country.
          6            For starters, mobile units in the 21st
          7   century must be fully operational banks securitized
          8   through satellite communications technology.  No
          9   one will have to ride shotgun.
         10            In the event the merger is approved, we
         11   trust the Federal Reserve to urge the updated
         12   approach to mobile unit banking on Banc One's
         13   attention.
         14            I want to digress briefly from my prepared
         15   remarks to say that I was in a major meeting in
         16   banking in Indian Country, and already, some Native
         17   Americans are saying that they can't see mobile
         18   unit banking as a way to serve Indian Country. .
         19            I believe that Banc One's failure in this
         20   regard has a chance to make mobile unit banking a
         21   nonstarter in Indian Country.  That would be a
         22   great misfortune.
         23            First Nations also wishes to acknowledge
         24   some of the outstanding lending services that Banc
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          1   One does provide in some native communities.
          2            Some of these include a recent grant to a
          3   North American Native Bankers Association.  They
          4   recently went on a site visit to Wisconsin to visit
          5   some of the tribes there and their lending needs --
          6   of course this happened while the merger process
          7   was in full swing -- Gila and Camp Verde Yavapai
          8   Apache Nation in Arizona as well as an internal
          9   appointment of a team to familiarize Banc One
         10   Mortgage Corporation with HUD Section 184 loan
         11   guarantee programs show a flexibility and
         12   consideration worthy of the merged entity.
         13            Give me half a minute here.
         14            Such commitments are considerable in
         15   themselves, not to be minimized.  But on this
         16   momentous occasion, First Nations can affirm the
         17   proposed merger only on the understanding that all
         18   of Banc One's efforts in Indian Country to date
         19   amount to a modest beginning.
         20            We call upon bank regulators to ride herd
         21   on their post-merger follow-through and upon Banc
         22   One to establish a collaborative task force on
         23   Native American lending and services as merging --
         24   as other merging entities have done.
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          1            Thank you.
          2       MS. SMITH:  Thank you very much.
          3            Mr. VanTol.
          4       MR. VANTOL:  Good afternoon, Members of the
          5   Panel.  I am Hubert VanTol.  I am the Cochair of
          6   the Legislative Committee of the National Community
          7   Reinvestment Coalition.  I'm testifying this
          8   afternoon on behalf of John Taylor, our President
          9   and CEO, who is unavoidably unable to be here
         10   today.
         11            NCRC is the nation's CRA trade association
         12   of over 680 community reinvestment organizations
         13   from inner city neighborhoods and rural areas.
         14   NCRC's members are dedicated to revitalizing low
         15   income and minority communities.
         16            As a trade association, we do not
         17   regularly comment on applications to the Federal
         18   Reserve Bank.  We usually provide the research and
         19   other support to our members who do the commenting
         20   during the application process.
         21            However, we have recently decided that we
         22   do need to comment on the applications that present
         23   significant public policy issues.
         24            I am addressing two main issues this
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          1   afternoon:  Community reinvestment performance and
          2   fair lending.
          3            On the topic of community reinvestment
          4   performance, simply put, mega mergers are harmful
          5   for low income and minority communities if they
          6   result in massive branch closures and drastic
          7   decreases in lending and investing.  This is why
          8   NCRC has asked the Federal Reserve to require banks
          9   to submit community reinvestment plans to the Board
         10   and the reserve banks as part of their application
         11   process.
         12            These plans would outline how the merging
         13   banks plan to maintain and increase the number of
         14   loans, investments and services in lower income and
         15   minority communities after mergers.
         16            The community reinvestment plans would be
         17   developed for each urban and rural community the
         18   bank serves.  Moreover, they would not be
         19   unilateral like the mega pledges recently announced
         20   by other large banks.
         21            Instead, they would be responsive to
         22   specific credit needs in various communities
         23   because they would be developed with the input of
         24   community organizations.
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          1            The community reinvestment plans would
          2   explain how lenders would preserve their CRA
          3   performance in all of their major markets in the
          4   wake of post-merger institutional changes.
          5            For example, the CRA performance of Banc
          6   One and First Chicago could deteriorate
          7   substantially in the state of Indiana due to the
          8   branch closures and divestiture requirements.
          9            And you know, the State of Indiana is the
         10   market where the bank's operations substantially
         11   overlap, yet despite the looming changes
         12   confronting Indiana's traditionally underserved
         13   communities, Banc One has neither negotiated a CRA
         14   agreement with the community organizations in
         15   Indiana, nor has it submitted a community
         16   reinvestment plan to the Federal Reserve explaining
         17   how CRA performance will be maintained in the
         18   state.
         19            NCRC is pleased that First Chicago and NBD
         20   have worked out CRA agreements with NCRC members in
         21   Chicago and Detroit, however, these agreements
         22   address CRA performances in two of Banc One's
         23   markets.
         24            In order for community reinvestment
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          1   performance to be preserved in all of the bank's
          2   markets, NCRC believes it is the responsibility of
          3   the Federal Reserve Board to require the bank to
          4   offer in detail the community reinvestment plan
          5   explaining how it will maintain and improve its
          6   post-merger CRA performance.
          7            These plans would also be a starting point
          8   for negotiations leading to CRA agreements with
          9   community organizations.
         10            In addition, the Federal Reserve Board
         11   should issue conditional approvals in instances
         12   where the applying banks do not satisfactorily
         13   outline how CRA performance will be maintained in
         14   places like Indiana and many others that are likely
         15   to be affected by the merger.
         16            On the topic of fair lending, over a year
         17   ago, the Federal Reserve Board approved Banc One's
         18   acquisition of First USA, a credit card lender,
         19   despite unresolved fair lending issues.
         20            In its approval order, the Federal Reserve
         21   stated that it would impose conditions at a later
         22   date if its investigation revealed fair lending
         23   violations.  NCRC and its members strongly believe
         24   that this was an indication -- that this was an
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          1   abdication of the Federal Reserve's responsibility
          2   to enforce the nation's fair lending laws.
          3            Fair lending problems will intensify if
          4   the Federal Reserve does not complete fair lending
          5   investigations and issue the necessary conditions
          6   before acting on these latest Banc One
          7   applications -- this latest Banc One application.
          8            We ask the Federal Reserve to follow the
          9   lead of its regulatory counterparts in seriously
         10   investigating and issuing fair lending and CRA
         11   conditional approvals when necessary.  The Federal
         12   Reserve should be leading its counterparts, but it
         13   should at least follow them.
         14            The OTS approval order of the Travelers
         15   application is an example, likewise, the Office of
         16   the Comptroller of The Currency's recent
         17   conditional approval of First Union/Money Store
         18   merger, which would require access for all
         19   applicants to both prime and subprime lending
         20   products.
         21            We appreciate this opportunity to express
         22   these significant reinvestment issues before you
         23   that are associated with this merger.
         24            We hope that the Federal Reserve Board
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          1   does everything in its power to ensure fair lending
          2   and continued progress in community reinvestment.
          3       MS. SMITH:  Thank you very much.
          4            Ms. Wilkins.  Wilmington good evening.
          5            Can you hear?  Is the mic on?
          6       MS. SMITH:  Yes, that's good.  Wilmington can
          7   you hear me?
          8       MS. SMITH:  Bring it a little closer.
          9   Wilmington okay.  I know I'm the short one in the
         10   bunch.
         11            My name is Betty Wilkins, and I would
         12   like, first of all, to thank you for the
         13   opportunity to testify on Banc One's unfair and
         14   ugly lending record in Colorado, and I am the board
         15   member of Colorado ACORN.  It's an organization of
         16   over 1,300 low and moderate income families in my
         17   community who is working and trying to make a
         18   decent place to live and to increase hope --
         19   hopefully that we can increase the community
         20   reinvestment and increase jobs and city services in
         21   our community.
         22            And the members of the Colorado ACORN
         23   urges the Federal Reserve Board not to allow this
         24   merger because of Banc One is not making loans to
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          1   low and moderate income and minority people in the
          2   City of Denver.
          3            You have heard some of the statistics, and
          4   when I heard that, I -- it was unbelievable.
          5            First of all, when Banc One opened up in
          6   my community, it was a beautiful and a welcome
          7   sight because we really did need a bank that was
          8   close where we don't have to hop on a bus every
          9   time we want to go to the bank.
         10            But within the past two and a half years
         11   since I have been banking and trying to help my
         12   community bank with Banc One, we have received
         13   absolutely nothing as far as a community
         14   reinvestment by -- put back into our community, and
         15   I think this is very unfair and it's a very ugly
         16   thing.
         17            I took it on myself to do some
         18   investigating on Banc One.  I went by the bank last
         19   Saturday morning about 9:00 o'clock.  That's what
         20   time the banks open.  And there was a line there of
         21   Afro and Latinos waiting to get in the bank to
         22   deposit their money.
         23            My thought was then -- I didn't say that
         24   to the clients, but I thought to myself, where is
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          1   this money going to go today, it definitely is not
          2   going to my community because Banc One is not that
          3   kind of bank to low and moderate income
          4   neighborhoods.
          5            And I can say it truthfully today because
          6   I live it.  And then I asked myself, I said, well,
          7   now, how can this be?  I'm not going to give you
          8   any statistics at this point.  I'm going to give
          9   you some stories as to how this happened.
         10            It seemed impossible, but it is not.  And
         11   I got permission from the community to do this to
         12   give you some stories of what really happens.
         13            One of our members, Betty Fortenberry, who
         14   is African American, heard an advertisement on the
         15   radio and said that she could get approved over the
         16   phone for a mortgage loan.
         17            She proceeded to call the number and was
         18   switched over to three different people and holding
         19   for a very long time.  And that never did come --
         20   there never did come an answer.  And then after she
         21   called back, she went through the same procedure,
         22   except she was transferred to a fourth person and
         23   then she was disconnected.
         24            And she called back.  And she was
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          1   transferred to two different people.  And finally,
          2   one -- she spoke with the person who acted like she
          3   knew what she was talking about.  The woman asked
          4   her a few questions which included name, address,
          5   zip code and her annual monthly income.
          6            The woman proceeded to tell her.  And then
          7   she said, well, I'll tell you now, you will not be
          8   approved because you will have to have $10,000 of
          9   your own money saved to proceed with just getting
         10   the application.
         11            It seemed to me that Banc One basically
         12   told her she need to not apply.  Mrs. Fortenberry
         13   certainly could pay because she pays $800 a month
         14   in rent.
         15            A second story, Sandra Neville, who is
         16   African American, another one of our members, saw
         17   an ad on TV.  And being able to be approved in 24
         18   hours over the phone for a home improvement loan?
         19   She called and gave them the information they asked
         20   for.  It took 72 hours for her to hear back, and
         21   she was told that she was being denied because of a
         22   problem of her credit report.  And about a month
         23   later, Ms. Neville was approved for the same loan
         24   from her credit union.
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          1            Another Latino member which did not want
          2   me to use her name, but she is a member of our
          3   organization who at this time wants to disclose
          4   recently what happened to her.  Okay.
          5            What she did and -- she went to the ACORN
          6   Housing Corporation where she had them to pull up
          7   her savings and checking account number to check on
          8   what had gone wrong with her credit.  Come to find
          9   out, it was Banc One that has caused this problem
         10   and caused this flaw on her credit.  They said that
         11   she owed Banc One the whole amount of $5.  And just
         12   because of this, they did not take her
         13   application.
         14            Now, will you tell me, is this bank worthy
         15   of a merger with -- to get any bigger and able to
         16   treat more people as they've been doing in the
         17   past?
         18            I would urge you today, please, that you
         19   can do this.  Please take a closer look at what
         20   we're telling you.  It is true.  Please don't have
         21   this merger take place until they have their CRA
         22   practices in place where me, my community, Latino
         23   community or any other community can receive
         24   services just like anyone else.  Even though we
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          1   live in a certain zone, we do work, and we do pay
          2   our bills, and we're worthy of credit.
          3            Thank you.
          4       MS. SMITH:  Thank you very much.
          5            Any questions?
          6            Okay.  Thank you very much for coming this
          7   afternoon.
          8            And we'll move on to Panel 11.  All
          9   right.  We'll start with Reverend Anthony.
         10       MR. ANTHONY:  We're together.  Mr. Parker's
         11   going to go first.
         12       MS. SMITH:  All right.
         13       MR. PARKER:  Thank you and good afternoon.
         14            My name is Bernard Parker.  I am the
         15   Co-Chair of Alliance For Fair Banking out of
         16   Detroit's coalition of organizations.  They came
         17   together about 12 years ago.  And I'm also a Wayne
         18   County Commissioner serving the East Side of the
         19   City of Detroit.  And I'm the Executive Director of
         20   a community organization Operation Get Down for 28
         21   years now.
         22            I'm here to speak in support of the merger
         23   for one particular reason, and that is the history
         24   of what we have had in relationship to working with
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          1   National Bank of Detroit NBD in the City of
          2   Detroit.
          3            Back in 1986, we had a similar type of
          4   situation where we came together to express some
          5   real concerns about the disinvestment and the lack
          6   of involvement of NBD and other banks in the City
          7   of Detroit, and we came together and negotiated an
          8   agreement with them under the leadership of the
          9   NAACP, and they were able to come to an agreement
         10   at that particular time.  And then after that, we
         11   reached another agreement with them.
         12            What we have found is that as we've had
         13   many concerns, opposed what they were doing, we
         14   found that communication, working with them and
         15   meeting with them on a regular basis at least twice
         16   a year and going through our agreements and going
         17   through the various items that we have and working
         18   with them to try to improve their investment in the
         19   community really was a way that we were able to, I
         20   think, achieve some outstanding type of agreements
         21   and loans to the City of Detroit.
         22            Just some examples of that, in 1995, we
         23   reached an agreement with NBD and for $677 million
         24   over a three-year period, and by working with them,
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          1   though, and by encouraging and by on a regular
          2   basis having a staff that worked with their staff,
          3   they were able to achieve 1.5 billion dollars worth
          4   of lending in that same three-year period,
          5   surpassing the low income mortgages by 144 percent
          6   of the goal that we have set as small businesses
          7   under $1 million located in the City of Detroit by
          8   765.  An outstanding achievement what they were
          9   able to do by us working with them.
         10            Under procurement, when we went with them,
         11   they admitted that they did not even know if there
         12   was any minorities that were serving their company
         13   to any degree and particularly African Americans.
         14   And Detroit representatives 75 percent African
         15   Americans.  We were very concerned about that.
         16            The CEO at that time put it as a major
         17   objective for him to increase that, and we worked
         18   with them, and they created a division called the
         19   Minority Procurement Division and appointed a
         20   person there that was very supportive in the
         21   community.  And as a result of that, they have
         22   increased that minority procurement and now has
         23   become a model that is used throughout our
         24   grievance with other financial institutions, and
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          1   that is used throughout the country in setting up a
          2   department that does procurement.
          3            In employment, we're very pleased that
          4   they have one of the highest levels of senior
          5   management that there is in the banking community
          6   in Detroit and as we understand across the country
          7   and they have promoted people from within and
          8   brought in others in order to have a diverse type
          9   of senior management and unemployment level also.
         10   We think that has been very helpful.
         11            So what we believe is that this merger is
         12   something that is happening throughout the city.
         13   It's something that is probably going to happen
         14   even more so in the future.
         15            And what is important is that we're going
         16   to have to -- they are going to have to understand,
         17   Banc One as well as First Chicago NBD and those
         18   entities, that it is important to work with all the
         19   communities that have come out here and expressed
         20   some concerns as we were able to do in Detroit by
         21   coming together and meeting on a regular basis.  We
         22   think that they will be able to achieve some of the
         23   similar goals that we've been able to do in Detroit
         24   with NBD.  And we think that those are very
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          1   important goals.
          2            Some of the things that we think are going
          3   to allow us to make sure that we continue to have
          4   representation in Banc One and continue to have
          5   some influences there, one, we have met with John
          6   McCoy and we have had very enlightening discussion
          7   with him about exactly what we want to see happen.
          8            There's agreement that we will have one of
          9   our members that we select that will be on the
         10   advisory board of NBD, their advisory council, that
         11   is formerly the board members of NBD before the
         12   merger with First Chicago.
         13            there's an agreement there will be a real
         14   effort on diversity in the senior management of
         15   Banc One, and we'll be looking at those numbers on
         16   a regular basis whenever we meet with them to make
         17   sure there is diversity on all levels of management
         18   and that we want to continue to have that type of
         19   communication with them.
         20            And we feel confident that NBD has agreed
         21   and have said -- it has been a good business
         22   decision to work with us.  It has increased their
         23   time and their relationship with the community and
         24   they're now recognized as a real leader in the City
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          1   of Detroit.
          2            Thank you very much.
          3       MS. SMITH:  Thank you.
          4       MR. ANTHONY:  Thank you very much.
          5            My name is Wendell Anthony.  I'm president
          6   of the Detroit Branch of the NAACP and also
          7   Co-Chair of the Detroit Alliance For Fair Banking.
          8            Pardon me if I leave when I finish because
          9   I have a flight to catch.
         10            I do want to echo some of the concerns
         11   that Mr. Parker said.
         12            One of the things I think that is
         13   important for us to point out is that several years
         14   ago, many persons in our community along with the
         15   local news media did an expose on all of the banks
         16   in the City of Detroit, and we found that all of
         17   them were guilty of noncompliance to access to
         18   capital, to discriminating against minorities, to
         19   not including us in procurement, to not including
         20   us in the full benefits of what banks do derive
         21   from their communities.
         22            So the alliance was formed.  The first
         23   agreement that we reached with NBD at that time,
         24   the National Bank of Detroit, was for $1 million.
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          1   Today, we have an agreement with them for $3.25
          2   billion for the next three years.  That came after
          3   negotiations and pain and some gain.
          4            We believe that it's important for us to
          5   engage in the community.  We certainly understand
          6   where a lot of people are in terms of their own
          7   local communities, but I think it was Diane
          8   Karmasol that said one must be true to his or her
          9   own reality.
         10            Our reality is what we're pointing out to
         11   you today, and that is that we have reached a point
         12   in Detroit particularly that is driven by First
         13   Chicago NBD in conjunction with Banc One with this
         14   new agreement.
         15            The Detroit Alliance For Fair Banking is
         16   made up of several organizations, almost a
         17   hundred.  We have, in fact, enlisted not only their
         18   thoughts but also tapped into the sources and the
         19   thinking that our community would have this merger
         20   presents an opportunity to open the door even
         21   wider.
         22            Just recently in Detroit, over 400
         23   businesspersons, African Americans 99 percent of
         24   them, were at a Detroit sit-in in which we talked
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   about the debriefing which would be accomplished as
          2   a new plan.  The new plan accomplishes new homes,
          3   commercial development, small business development,
          4   hiring of minorities in various areas of the bank.
          5            One of the things that we were very
          6   concerned about was how this is going to transfer
          7   itself, if, in fact, this merger would take place.
          8   Would Banc One be driving the other way or would
          9   the other way be driving Banc One.
         10            We believe that this marriage has some
         11   promise to the degree the two cultures can come
         12   together and impact each other.
         13            We have found that First Chicago NBD has
         14   been a good culture and a good experience for us,
         15   otherwise, we would not be here talking to you.
         16            For so many years, banks have been talking
         17   loud and doing nothing.  Well, in Detroit, they are
         18   now talking loud and they're doing something.  The
         19   fact that we do have businesses we can point to who
         20   have been the recipients of loans from the bank,
         21   the fact that we do have African Americans and
         22   women and other minorities who have received home
         23   mortgage improvements and loans and start up
         24   capital is a fact that we can point to.
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1            The fact that in this recent agreement
          2   they have predevelopment moneys which allow
          3   businesses who are trying to develop a business
          4   plan heretofore might not have the expertise to do
          5   that, but they can now back out of their grants or
          6   their loans.
          7            Money for predevelopment is a major, major
          8   factor.  We've also set up a program where they
          9   will now work with the local community colleges so
         10   that students can be trained in the banking
         11   community.
         12            As you may or may not have heard, Detroit
         13   is on the cusp of getting casinos in our
         14   community.  Usually, though, it's the persons who
         15   are from banks, the tellers and the financial
         16   people, are the first ones that are snatched to
         17   work in those industries.  What we believe that's
         18   going to occur, then there should be a constant
         19   flow going into the banking community.
         20            So we structured a program whereby through
         21   a feasibility study and work with other banks that
         22   we can train students in Wayne County Community
         23   College and in Detroit at the Lewis College of
         24   Business inside the City of Detroit to prepare them
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   for the future in the banking industry.
          2            We believe that while this merger may not
          3   be perfect, it certainly puts us in a situation of
          4   being able to impact and to influence the bank, and
          5   we believe that in other communities, if they
          6   begin -- and I'm sure they are already -- doing the
          7   same types of things that we are doing, and perhaps
          8   we can loan some expertise to them in some other
          9   areas.  We'll be glad to do that.  There will be
         10   some new pavement that will be open to all of us.
         11            We support the merger.  It's drawn from
         12   our experience which to us has been a good
         13   partner.  We believe through their impact, Banc One
         14   can also become a good partner.
         15            Thank you.
         16       MS. SMITH:  Thank you very much.
         17            Mr. Cardona.
         18       MR. ANTHONY:  Please excuse me.
         19       MR. ALVAREZ:  Thank you very much.
         20       MS. SMITH:  Thank you for coming.
         21       MR. CARDONA:  Good afternoon.  My name is Hugo
         22   Cardona.  I'm the President and Chief Executive
         23   officer for SER Jobs Progress National.
         24            I'm here to speak on behalf of Banc One
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   and its merger with Bank Chicago.
          2            SER is the largest in serving minorities,
          3   especially Hispanics.  We empower people to go from
          4   welfare to work.  We were founded in 1964;
          5   therefore, we have been 34 years serving the
          6   communities.
          7            We were founded by LAUC, the Latin
          8   American United Citizens, and the GI Forum, the two
          9   organizations that serve the Hispanics minorities
         10   and Hispanic minorities for civil rights.
         11            Our mission is very simple.  We empower
         12   the individual to find the skills that they need to
         13   be useful to the communities.  We give the
         14   education, the training, the housing, whatever they
         15   need.
         16            Our challenge is very simple.  We need to
         17   empower the 21st Century work force to have the
         18   skills in such a way that at this time that we have
         19   a good economy, everybody's being hired, but two
         20   years from now, if we have organization, they will
         21   be the first ones to go if we don't empower them to
         22   have the skills to survive.
         23            To do that, we have our national
         24   headquarters in Dallas.  We have 38 affiliates
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   located in 17 states, the District of Columbia and
          2   Puerto Rico.  We are in 91 locations.  We have more
          3   than 180 programs.  We serve more than 400,000
          4   individuals a year, of which we place more than
          5   30,000 in meaningful jobs, meaning jobs beyond the
          6   minimum wage with full benefits.
          7            This means for the economy between $701
          8   billion in purchasing power that these individuals
          9   that were on welfare now have as a Hispanic
         10   community.  Our funding exceeds $68 million a
         11   year.
         12            To do this empowerment, we have different
         13   programs.  We have programs like One Stop Career
         14   Centers where anybody can come and we will take
         15   care of them.  We will evaluate their needs and we
         16   will find a way for them.  We have housing in which
         17   we assist minorities to buy their first homes.  We
         18   have distance learning.  Through the computer, we
         19   are able to give today from your home Associate's
         20   Degrees, K-4 to K-16 education, GED, English as a
         21   second language, basic skills, whatever you need.
         22            We have different programs for women, for
         23   youth, for children.  And we have peoples with
         24   disability, homemakers that are disabled.
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1            Whatever it is, we take care of our
          2   minorities before they are born until they are --
          3   until they die.  To do that, we have two sources of
          4   funding; the government, who take cares of the
          5   present.  They give us through competitive grants
          6   the ability in these locations to serve the needs
          7   of the people, but we must take care of the
          8   future.
          9            And this is where Corporate America and
         10   individuals like you come into place.  You are the
         11   ones who give us the money to develop the things
         12   that we need to be better, all the distance
         13   learning and all these programs that we need to
         14   serve the minorities.
         15            And this is where Banc One comes into
         16   play.  They have been our partners in our housing
         17   program.  In the last three years, we have placed
         18   more than 270 individuals in homes, people that did
         19   not have a credit record, people that did not have
         20   the down payment.  We were able with the assistance
         21   of Banc One to put them in homes.  Their
         22   contribution to our work will be this year more
         23   than $100,000 dollars.
         24            And we are negotiating right now a million
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   dollar credit line on what we need to replace all
          2   the computers in our network, and we will be able
          3   to place the old computers in the homes of the
          4   minorities.
          5            This is an outstanding record for an
          6   organization that is working with us into making
          7   this positive.
          8            So as I said, look at Banc One as a
          9   partner that with this measure we increase the
         10   support to the community, but we work for the
         11   community in making this possible.  So we do
         12   support this merger.
         13            Thank you so much.
         14       MS. SMITH:  Thank you very much.
         15            Ms. Hunt.
         16       MR. CARDONA:  And I apologize, but I also have
         17   to leave.
         18       MS. HUNT:  Good afternoon.
         19            My name is Gladys Hunt, and I am with the
         20   Community Collaboration for Economic Development in
         21   Champaign, Illinois.
         22            And I'm here to represent the Community
         23   Collaboration for Economic Development.  It's a
         24   relatively young organization.  It was initially
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   convened as an informal community group in June of
          2   1997.
          3            This group came together to address the
          4   needs of the low income and minority community in
          5   terms of small business development.  It's an
          6   informal community group comprised of
          7   representatives from the African American business
          8   community, from municipal government, nonprofit
          9   civic groups like the NAACP and the Urban League of
         10   Champaign County, women's business groups and the
         11   University of Illinois.
         12            In the Spring of 1998, the Community
         13   Collaboration for Economic Development was legally
         14   incorporated as a nonprofit organization.
         15            Our mission is to create an ongoing
         16   economic development project to increase the number
         17   of businesses within the low income and minority
         18   community.
         19            The mission is to develop human capital to
         20   promote unique ideas through business education,
         21   technical assistance and targeted economic
         22   development programs.
         23            To date, we have graduated one
         24   entrepreneurial small business development class
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   this past spring.  We graduated 14 out of 15
          2   persons who started in the class.  And in the
          3   class, people were given technical assistance and
          4   business development information.
          5            Our next class will start August 29th, and
          6   we have 18 people signed up in that class, and we
          7   have 28 people on the waiting list to start a class
          8   next spring.
          9            In addition, this month, we're going to
         10   start a support organization to assist not only our
         11   graduates but other small business -- other
         12   minority and low income business owners, a minority
         13   business council of sorts.
         14            The project started, as I mentioned, in
         15   the Spring of 1997 with a partnership Illinois
         16   grant, which is a new funding program through the
         17   University of Illinois to encourage the university
         18   to become involved in the local community.
         19            We received an initial seed grant through
         20   that program and we worked with local city
         21   government and banks, including Banc One in our
         22   area, to receive matching funds to fund the
         23   program.
         24            At this point, we're seeking -- well,
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   we've made it to the second round of the community
          2   development financial institutions, the CDFI,
          3   technical assistance grant, and we're in the
          4   process of seeking monies from global banks and
          5   from municipal governments to start a revolving
          6   loan fund so that not only will we give our low
          7   income and minority community technical and
          8   business assistance, but we will also be able to
          9   help them with financial assistance in starting
         10   their business.
         11            Now, what does all this have to do with
         12   Banc One and the proposed merger?  In our efforts
         13   to put this community collaboration together, Banc
         14   One has been there every step of the way from the
         15   beginning.  They were at the table at the first
         16   meeting that took place in the Spring of 1997, and
         17   they've continued to provide leadership on the
         18   committee as a whole and in various subcommittees,
         19   specifically the Alternative Funding Committee, the
         20   Future Funding Committee, the Mentoring Committee
         21   and the Small Business Development Workshop
         22   Committee.
         23            They provided leadership in the form of
         24   staff and financial resources.  Banc One has led
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   the way in sponsoring financial -- various
          2   financial aspects of the CCED, -- or the CCED --
          3   I'm using the initials -- the Community
          4   Collaboration for Economic Development Operations.
          5   Wherever we needed to partner with financial
          6   institutions in continuing and expanding our
          7   operations, they've been at the table to help us.
          8            For example, when we decided that we
          9   needed this revolving loan fund to help fund our
         10   small business development class because they did
         11   not meet the criteria for some of the traditional
         12   business funding, again Banc One staffs were at the
         13   table providing that leadership helping us develop
         14   new and innovative strategies to bridge that
         15   between -- to bridge that gap in meeting the needs
         16   of low and income minority business community.
         17            Finally, I must add that in working with
         18   Banc One in developing this outstanding
         19   entrepreneur program for our community with the
         20   CCED, this was not my personally first encounter
         21   with them, this their proactive -- in what I
         22   consider a proactive and progressive stance in
         23   reaching out to the low income and minority
         24   community.
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1            In 1991, as Assistant Executive Director
          2   of the Housing Authority of Champaign County, I was
          3   appointed to serve on Banc One's Community
          4   Reinvestment Advisory Committee to assist the bank
          5   in developing strategies and policies to serve the
          6   needs of low income and moderate neighborhoods.
          7            I served in that capacity until 1995.  And
          8   during those four years, I saw Banc One work
          9   diligently and proactively to meet the needs of the
         10   low income community.  And we did that in the
         11   housing area, and we're do -- oh, it's expired --
         12   we're doing -- I'm sorry -- in the business area.
         13            But I just want to say that we at the
         14   Community Collaboration for Economic Development
         15   wholeheartedly endorse and support the proposed
         16   merger between Banc One and First Bank NBD, and we
         17   would just -- I would just add that I would --
         18   well, my time has expired.  I'll stop.  I won't go
         19   so fast.
         20       MS. SMITH:  Mr. Smith.
         21       MR. SMITH:  Thank you.  Thanks for letting me
         22   come before you here.
         23            My name is Charlie Smith.  I'm Director of
         24   the housing authority in Wilmington, Delaware, and
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   I was a little nervous and reluctant to come speak
          2   when I saw such great opposition to this merger,
          3   especially since I'm in favor of -- my agency as
          4   well as my community is in favor of the merger with
          5   Banc One and FCC.  And you ask, well, why?
          6            At least we have some people -- at least
          7   we're all on the same page in terms of going along
          8   with this merger.  I think it's going to enhance
          9   the relationship that I have established with both
         10   banks.
         11            My first encounter has been with FCC.
         12   Well, FCC has been very creative in working with
         13   our community, especially in the public housing
         14   arena, to address some of the concerns as ways to
         15   employment opportunity, business development and as
         16   well as home ownership in our community.
         17            And I know Roland Ridgeway, who's very
         18   active in our community, who's been a leader in our
         19   city with FCC to try to encourage collaboration and
         20   partnership not only with communities, but he's
         21   also in his efforts to try to get them more
         22   involved in the neighborhoods with other banks and
         23   pulled together banking interest and collaborated
         24   in development programs and activities that have
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   helped facilitate opportunities of our community in
          2   Wilmington.
          3            Banc One has been good corporate partner
          4   as well as FCC, and that's a good corporate
          5   partner.
          6            It's not often I've had an opportunity to
          7   work with an institution that will come to you and
          8   say, look, what can we do to assist you in your
          9   efforts in your community?
         10            And Banc One took the lead in coming to
         11   the Wilmington Housing Authority because the
         12   Wilmington Housing Authority has had the
         13   distinction of having so many vacant units in its
         14   inventory throughout the City of Wilmington,
         15   somewhere around 500.  And we put up a plan to
         16   address those vacant units.
         17            And when the newspaper reported our plan,
         18   how we proposing to do it, Banc One and FCC were
         19   one of the first banks who came in and said what
         20   can we do to facilitate and participate in your
         21   efforts to address your home ownership as well as
         22   your vacant units?  One specifically.
         23            FCC is right now pulling together several
         24   banks in which they're taking the lead on putting
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   together a $5 million pool, revolving pool we're
          2   referring to it as.
          3            One of the reasons this pool is necessary
          4   for us is because we cannot collateralize our
          5   property, our public housing.  We can't use it as
          6   collateral.  This pool will be used to help
          7   collateralize some property so we can get some
          8   money from private as well as state to help us
          9   facilitate elimination of our vacant units that
         10   we're having.
         11            So FCC has really taken a lead on getting
         12   some banks together to be partners with them to
         13   help put together this pool of money so we can use
         14   to -- acquire some money for us to do something
         15   with these units that we have in this old city.
         16            Banc One came and said, look, what can we
         17   do, how can we be a partner with you to help
         18   dealing with not only housing, but what other
         19   areas?
         20            So we're talking about community
         21   development, about funding some programs as it
         22   relates to mortgages.
         23            Wilmington has a distinction.  We have
         24   like 54 banks just in Wilmington alone.  In our
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   case, we have so many banks falling on each other
          2   to get to do things in the community that we have
          3   the luxury, we can almost pick and choose who we'd
          4   like to work with, but Banc One and FCC has stepped
          5   up to the plate and really has demonstrated some
          6   guts in trying to work with public housing.
          7            I don't know how often they have an
          8   opportunity to do that, but they came to us.  They
          9   brought the thing to us and say, look, you guys sit
         10   down and talk and see where we can help you in your
         11   community and facilitate programs and activities
         12   that would help enhance.
         13            And they have done a tremendous job.  one
         14   of the things I've asked them to do and consider,
         15   personally give me some technical assistance.  They
         16   took two of my staff people recently, about two or
         17   three months ago they had a conference for their
         18   staff, Banc One staff, on how to put together
         19   packages for development of corporations and
         20   housing development, that stuff.  And they invited
         21   two of our staff to go to Texas to participate in
         22   that program.
         23            As a result, we're doing a private
         24   development on our own where we take one of our
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   largest high-rises and turn it into a private
          2   market venture and using tax credits and all that
          3   and provided us technical assistance on pulling
          4   this whole process together.
          5            So we've had good experience with Banc One
          6   and FCC.  And I'm kind of surprised that we have
          7   such opposition.  The relationship we've had has
          8   been a positive one.  This merger I think is going
          9   to enhance the relationship.  I've had work with
         10   both FCC and Banc One.  So I think that merger is
         11   going to enhance not only the opportunity for us to
         12   do more work in our community and our neighborhood
         13   but also is going to help facilitate some greater
         14   opportunities for economic development in home
         15   ownership as well as community development in our
         16   community and neighbors in our community in
         17   Wilmington.
         18       MS. SMITH:  Thank you very much.  We'll hear
         19   now from Mr. Reid.
         20       MR. REID:  Thanks very much.  I appreciate the
         21   opportunity to be here.
         22            I'm Jim Reid, President and founder of the
         23   Southern Dallas Development Corporation.  We're a
         24   nonprofit community development financial
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   institution that concentrates on business lending,
          2   and I'm glad to have this opportunity.  I'm glad to
          3   be where it's a little cooler than Texas.
          4            I'd like to provide some background on our
          5   organization, talk about our experience with Banc
          6   One and draw some conclusions with some of the
          7   issues before this group.
          8            Our organization, its mission is to assist
          9   businesses, create jobs and promote investment in
         10   Southern Dallas.  Southern Dallas is -- about half
         11   the City of Dallas, 45 percent of the population,
         12   75 percent of the population, is a minority
         13   population, African American and Hispanic, but it
         14   only has 13 percent of the commercial tax base, and
         15   the median income is about 60 percent of the
         16   northern sector, so Dallas is really bisected in
         17   terms of our economy.
         18            We were created to help create jobs and
         19   started out with one loan fund, and now we manage
         20   five different loan funds including an SBA
         21   microloan program, CDFI-funded fund and indirectly
         22   a bank CDC and an SBA community development
         23   corporation.
         24            With those funds, we've been able to lend
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   22 million directly, leverage about 27 million in
          2   our community, 2,500 jobs where they're needed
          3   most, including a thousand jobs in the last two
          4   years for a small community-based organization.
          5            We did that with the support of partners
          6   in the community like Banc One.  And Banc One,
          7   although they're not the largest bank in our
          8   market, they are the largest investor in our
          9   multi-bank CDC, and that's especially important
         10   because with a community loan corporation bank, you
         11   can do things banks cannot.
         12            We provide a lot of money in terms of
         13   subordinated debt, and that's very important to
         14   minority businesses.  That's about 70 percent of
         15   our portfolio is minority businesspersons.
         16            They have participated with us in 29
         17   deals, joint and financing where they brought money
         18   to the table totaling about 34 million dollars.
         19   They provided match to about $100,000 for the
         20   Community Development Financial Institutions Funds
         21   and pledged 200,000 in match.
         22            The underwriter newspaper that we put out
         23   every year going through all of the people who
         24   receive the Dallas Morning News telling about the
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   positive features of our community, one thing that
          2   we found, trying to promote investment is the
          3   negative image of what can happen to low and
          4   moderate income communities, so we publish our own
          5   newspaper, and we know it's the truth because we
          6   write it.
          7            They have helped us in terms of providing
          8   loan bankers and have helped us in terms of a
          9   volunteer member of our board, in fact, our current
         10   Board Chairman is a member of Banc One.
         11            Now, three issues.  Would they be
         12   responsive in a new community?  They came into
         13   Texas and bought a bank there.  And they were
         14   responsive in our community.  Will they lend to the
         15   minority community?  Our experience in terms of
         16   managing a portfolio that's 70 percent has gone to
         17   minority borrowers, we believe the answer is yes.
         18            And then finally, in terms of an issue
         19   before people doing small business lending, right
         20   now small business lending has changed dramatically
         21   in the last two years, and it's because credit's
         22   growing.  You know credit's growing if offering
         23   lower transaction charges and quicker turnaround.
         24   It also means if you don't make the profile, you
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   don't get money.  That's where alternative lenders
          2   like us have come in.  Banc One has worked with us
          3   in two ways.  There are people out there that are
          4   on the bubble and are not getting funded because of
          5   credit.
          6            We get referrals from Banc One and we
          7   provide an award to one of their staff persons
          8   providing the most referrals last year.
          9            The second thing I think is more
         10   important; they have created a community
         11   development lending arm within the bank that has
         12   special regulations, special allowances in terms of
         13   the time that they can spend with clients and their
         14   loan losses they are allowed and so forth.
         15            Basically, in this credit storing system,
         16   if you're a special kind of a deal that needs more
         17   help, you get put to the bottom of the pile.  This
         18   means that organizationally, they've helped address
         19   this just as we have addressed it by delivering
         20   alternative products.
         21            So we're very positive about this merger
         22   because of our experience.  People today have had
         23   different experience.  Our experiences have been
         24   positive, and we urge you to support the merger.
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1       MS. SMITH:  Thank you very much.
          2            Any questions?
          3            Then we thank you very much for coming
          4   this afternoon.  Be sure and give your written
          5   statements, if you haven't already, to the people
          6   at the registration desk so they can be fully
          7   entered into the record.
          8            And we're going on to Panel 12.
          9            We're going to start with Mr. Bromley.
         10       MR. BROMLEY:  My name is Charles Bromley.  I'm
         11   the Director of a statewide fair housing
         12   organization called Metropolitan Strategy Group
         13   based in Cleveland, Ohio.  I also serve as the
         14   Chair for the Ohio Community Reinvestment Project,
         15   a statewide coalition of community-based
         16   organizations committed to fair lending throughout
         17   the State of Ohio.
         18            Because a picture is worth a thousand
         19   words and I've been allocated five minutes, I've
         20   prepared some pictures that outline a snapshot of
         21   the lending behavior of Banc One and its affiliates
         22   in the State of Ohio.
         23            Let me first review Banc One's behavior in
         24   an area where they are ranked as a very large
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          1   volume lender, which is small business lending.
          2   They are third in the country.
          3            According to Ken Stevens, who is the head
          4   of this unit or retail lending, I guess it is, a
          5   small business customer doesn't care where the
          6   corporate headquarters are.  What they care about
          7   is local execution, are they doing a job for me, is
          8   my relationship manager serving my needs?
          9            Apparently, Mr. Stevens forgot to review
         10   his small business lending record with Blacks in
         11   greater Cleveland.
         12            Let me look at some of the statistical
         13   data in our first chart, which in theory -- the
         14   A.V. crew, if I remember them from junior high,
         15   always had problems.  Apparently, as adults, we are
         16   still struggling with this equipment.  Maybe
         17   eventually we'll get it right.  I don't know.
         18            But what you see here in terms of the
         19   picture of their lending in census tracts, this is
         20   the census tracts of greater Cleveland.  There are
         21   685 census tracts.  There are 185 census tracts
         22   that have a minority population of 50 percent or
         23   more.  The percent of tracts with no Banc One small
         24   business loans is 68 percent, nearly 70 percent,
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          1   and census tracts that are under ten percent
          2   minority, in other words, predominantly white, they
          3   have a percent of tracts with no Banc One loans of
          4   38.58.
          5            Now, when you look at the issue of the
          6   next chart which looks at stratification by income,
          7   and the percent of tracts with no Banc One loans is
          8   65.22.  As you go to the upper income part of the
          9   chart, you'll see it's 39.86.
         10            So this is a bank that has an affinity for
         11   wealthy, white census tracts in terms of their
         12   small business lending.  There is no question about
         13   that pattern as it occurs in greater Cleveland.
         14            Now, we mapped this data so you can see
         15   it, which should be the next -- I don't know if
         16   we're on the wrong -- okay.  Stop.  Okay.  There
         17   you go.  That's fine.
         18            This is the map of our standard
         19   Metropolitan statistical area.  In the middle of
         20   the map, there is kind of like a county, and you
         21   can't really see it, but it's the white area, and
         22   that's the area where there are no small business
         23   loans.
         24            Cuyahoga County has the largest percentage
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          1   of minorities in that statistical area.  The area
          2   that is predominantly blue is the area that is all
          3   white.  So you get a sense of where their small
          4   business lending is and also where it's not.
          5            Next.
          6            Now, that's just a highlight of Cuyahoga
          7   County.  So you can see specifically that in
          8   addition to red lining in Cuyahoga County, they
          9   also red line the first ring suburbs, which is
         10   those integrated communities, that which is closest
         11   to the City of Cleveland.  I hope a picture really
         12   does tell you something.
         13            It's difficult with small business lending
         14   because you don't know how many loans per tract.
         15   All you know is whether they made one or they could
         16   have made a dozen.  You do know where they made
         17   none.  So we do have that data there.
         18            Next.
         19            This is much less clear, I guess, in terms
         20   of coming out.  This is the data for Cuyahoga
         21   County, and the screen on this is low to moderate
         22   income tracts.  And you can see there's a strong
         23   correlation between the tracts and where their
         24   loans are.
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          1            I realize I have one minute left.  Maybe
          2   we can flip here to Toledo.
          3            It's hard to see, but in the stuff here,
          4   you can see this is their market share.  Their
          5   large product that they have in Ohio is home
          6   improvement lending, and as you go into the
          7   minority tracts, you find two things:  One, the
          8   lack of applications and, two, their market share
          9   shrinks to zero.  This is their major product.
         10   They seem to have an affinity to stay away from
         11   those neighborhoods.
         12            The last one is Cincinnati, and you can
         13   see the same pattern is seen there where their
         14   applications are very low in minority census
         15   tracts, and you can see that their market share is
         16   very low in those census tracts and very high in
         17   those other tracts.
         18            I've included in my testimony -- I just
         19   want to take 30 seconds.
         20            We have taken our testimony, we have
         21   turned it over to the Assistant Attorney General
         22   for Civil Rights at the Department of Justice.  We
         23   hope that they will give a thorough review.
         24            We believe there are serious fair lending
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          1   issues relative to Banc One in the State of Ohio.
          2            And before the Federal Reserve Bank acts
          3   on this merger, the Department of Justice should be
          4   given the opportunity to completely review the fair
          5   lending record of Banc One in the State of Ohio.
          6            Thank you so much.
          7       MS. SMITH:  Mr. McDermitt.
          8       MR. McDERMITT:  Good afternoon.  My name is
          9   Matt McDermitt.  I'm a Policy Specialist with the
         10   Chicago Coalition for the Homeless.
         11            The Coalition is a 17-year-old advocacy
         12   organization focusing on the root causes of
         13   homelessness and working to find permanent
         14   solutions to the problem.
         15            The Coalition has nearly 15,000 members in
         16   the greater Chicago area and nearly 800
         17   organizational members, shelters, churches and
         18   other organizations serving the homeless.
         19            The Coalition has very serious concerns
         20   about the proposed merger between Banc One and
         21   First Chicago NBD.
         22            We understand that Banc One has a very
         23   poor CRA record and a wavering commitment to the
         24   very important mortgage lending business, very
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          1   important to the housing market.
          2            In addition, Banc One has refused to
          3   negotiate directly with community groups and
          4   coalitions.  While they maintain all agreements
          5   made by other parties to the merger will be
          6   honored, there is unfortunately no guarantee of
          7   that.
          8            All three parties related to the merger,
          9   Banc One, First Chicago and NBD, also have less
         10   than admirable records of lending in African
         11   American and Latino communities.
         12            These shortcomings by major market
         13   institutions seeking to increase their market
         14   dominance have tragic consequences.
         15            The lack of capital in many communities --
         16   the lack of capital in many communities prevents
         17   the creation of new housing and new employment
         18   opportunities.
         19            While many of these potential
         20   opportunities might not directly be available to
         21   the people I represent, the absence of -- excuse me
         22    -- their absence is the beginning of a spiral that
         23   winds up impacting the poorest members of our
         24   communities, those who we don't often think of when
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          1   we think about banks, but homeless people.
          2            Because bank capital is not available to
          3   create these opportunities, we increasingly see a
          4   reliance on government funding for housing and job
          5   creation for middle and moderate income folks.
          6            This demand on government resources,
          7   usually a successful demand over those needs of
          8   very low income folks, truly -- I'm sorry.  Lost my
          9   place here.
         10            This demand on government resources
         11   competes against funding for projects for very low
         12   income and homeless people which truly cannot be
         13   served by market institutions like banks.
         14            With 80,000 homeless people in Chicago
         15   every year and more children among them every year,
         16   we have an average age of homeless people in
         17   Chicago and across the nation now of only nine
         18   years old.  Because we have so many children in the
         19   population today, we must have greater commitment
         20   from our banks to serve the entire community rather
         21   than profiting from creating more disparities in
         22   our country.  If we do not, the results will be
         23   even greater tragedy in the next generation.
         24            For this reason, the coalition opposes the
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          1   Banc One/First Chicago merger until all parties
          2   make direct community investment commitments.
          3            Thank you very much.
          4       MS. SMITH:  Thank you.
          5            I'm going to let you say your own name.
          6       MR. GIERUT:  My name is Father Casimir Gierut.
          7            As a consumer seeking banking services, I
          8   strongly oppose the proposal by Banc One
          9   Corporation to merge with First Chicago Corporation
         10   for the following reasons:  First, the merger will
         11   destroy competition between the two banks.
         12            Competition is a financial asset in the
         13   favor of all consumers.  We have the opportunity to
         14   compare different interest rates offered by the two
         15   banks.  The final decision is in our favor to
         16   accept a bank offering a higher interest rate in
         17   reference to the purchase of a Certificate of
         18   Deposit or to accept a bank offering the lowest
         19   interest rate toward a loan.
         20            This merger will force the consumer to
         21   deal only with one mega bank.  Our freedom to
         22   choose the other bank will be gone.  There will be
         23   no alternative but to accept whatever interest
         24   rates the bank wishes to offer to the public.  That
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          1   is not the right way to do business in a
          2   capitalistic society.
          3            To possess financial power at the hands of
          4   few bankers as a byproduct of merging banks into
          5   mega banks is to be feared.
          6            Secondly, I oppose the merger of Banc One
          7   with First Chicago because it will become a huge
          8   monopoly.
          9            The United States Attorney General, Janet
         10   Reno, should file suit, an antitrust suit, against
         11   this merger to stop this becoming the biggest
         12   monopoly in the United States.
         13            Banks are not an agency of the Federal
         14   Government which will exempt them from any
         15   antitrust laws.  Banks are privately-owned
         16   financial institutions.  The title corporation and
         17   the name following Banc One Corporation tells us it
         18   is a private corporation.  The title again
         19   corporation in the name following First Chicago
         20   corporation tells us again that this is a private
         21   corporation.
         22            It is not fair nor just to file an
         23   antitrust suit against Bill Gates' Microsoft
         24   Corporation merging with another giant computer
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          1   corporation because the merger is considered to be
          2   a monopoly and not applying the same antitrust suit
          3   against Banc One and the First Chicago which
          4   obviously is a monopoly.
          5            Justice is not served equally in the
          6   application of the antitrust laws to private
          7   corporations.  To allow Banc One and First Chicago
          8   to merge into a monopoly is unlawful, illegal and
          9   contrary to the antitrust laws.
         10            Thirdly, the mergers are not made for the
         11   good of consumers.  The bottom line is how much
         12   profit is made for the good of the bank, and this
         13   leads to greediness.
         14            I recall standing in line to open an
         15   account at the First Chicago.  As many tellers
         16   there are accounts for so many long lines of people
         17   standing patiently to be assisted by the teller.
         18   Instead of First Chicago being pleased to see long
         19   lines of people, the greedy bank decided to charge
         20   a fee of three dollars for a teller's assistance.
         21            I heard many complain that the three
         22   dollars may be a fee in the mind of the banker, but
         23   I call the three dollars an act of extortion.
         24   Either you turn over three dollars or you will not
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          1   be served by the teller.  Such a procedure is
          2   extortion and unacceptable in the lawful business
          3   world of finance.
          4            Lastly and the most important reason why I
          5   oppose the merger of Banc One with First Chicago is
          6   that this kind of a merger decreases the existence
          7   of any growth of banking.
          8            In the year 1985, there were 14,480
          9   banks.  Today, the year of 1998, the number of
         10   banks has dwindled down to 9,435 banks and
         11   decreasing in number with each new merger.
         12            For the power to be vested in the hands of
         13   a few bank presidents and bank directors is
         14   contrary to principles of capitalism which is the
         15   way of life for 231 million Americans.
         16            I want to quote Robert Hamphil, the former
         17   credit manager of the Federal Reserve Bank of
         18   Atlanta, Georgia, who said:  "We are completely
         19   dependent on commercial banks.  If the banks create
         20   ample supply of money, we are prosperous.  If they
         21   don't, we starve.  The banking problem is so
         22   important that our present civilization may
         23   collapse banking unless it is wisely understood and
         24   the defects remedied very soon."
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          1            Merging of banks is one of those defects
          2   will bring about a new kind of slavery.  Financial
          3   dominance in the hands of a few will create a
          4   financial enslavement of people and civilization.
          5            And this is why I oppose the merging of
          6   Banc One with First Chicago.
          7            Thank you.
          8       MS. SMITH:  Thank you very much for your
         10            We'll go to Mr. Kamp.
         11       MR. KAMP:  On behalf of the Wisconsin Rural
         12   Development Center, I would like to thank the
         13   Federal Reserve Board for the opportunity to speak
         14   with you on the proposed merger of First Chicago
         15   and Banc One.
         16            We are a 300-member statewide community
         17   organization which has worked with family farmers
         18   and rural small businesses for over 15 years.
         19            Our mission is to support family farm
         20   agriculture, rural development and enhance economic
         21   opportunities for rural residents throughout the
         22   state.
         23            Our organization previously submitted
         24   formal comments on this application.  Specific
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          1   concerns cited in those comments included Banc
          2   One's low-level of originations to low and moderate
          3   income conventional home buyers, its lack of
          4   participation in state and federal guaranteed
          5   programs designed to assist LMI first-time home
          6   buyers, small farms and small businesses, its
          7   systematic targeting of loans to upper income
          8   borrowers and consequently the bank's disinvestment
          9   in low income and underserved rural communities.
         10            An analysis of 1997 HMDA and CRA aggregate
         11   data shows that Banc One continued to make
         12   significant cuts in conventional home ownership and
         13   small business originations in our state.
         14            Based on deposit share, Banc One is the
         15   third largest commercial institution in Wisconsin.
         16   Clearly, how it conducts its business and meets
         17   reinvestment obligations has a substantial impact
         18   on our state's economy and the communities it
         19   serves.
         20            Changes in lending policies and practices
         21   can often have devastating consequences, especially
         22   for a state's poor.
         23            According to 1997 data, these changes are
         24   beginning to occur.  Nationally, Banc One is the
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          1   second largest home mortgage lender.  However,
          2   fewer than two percent of all conventional home
          3   mortgages are originated by Banc One in our state,
          4   and that share appears to be declining.
          5            Between 1996 and 1997, conventional home
          6   ownership dropped by over 35 percent.  At the same
          7   time, loans to LMI borrowers were cut by nearly 43
          8   percent.
          9            In six of the seven MSAs which we looked
         10   at, LMI borrowers consistently received a
         11   disproportionately low share of one to four family
         12   conventional home mortgages while upper income
         13   borrowers consistently exceeded MSA share averages.
         14            Banc One also accounts for significant
         15   business lending in the state.  The bank is the
         16   third largest business lender in Wisconsin with 2.8
         17   billion in loans outstanding.  However, according
         18   to FFIEC small business data, substantial cuts were
         19   also reported in 1997.  Business originations
         20   declined by nearly 21 percent, over $90 million
         21   from the previous year.  Over one-third of those
         22   cuts were to businesses with gross revenues of less
         23   than one million.
         24            Although numerous studies have stressed
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          1   the need for small business development in the
          2   state, fewer than 49 percent of all loan numbers
          3   and 38 percent of all dollar amounts went to
          4   businesses with gross revenues of under
          5   $1 million.
          6            Of particular concern is Banc One's
          7   minimal use of state and federal guaranteed
          8   programs which are designed to serve the needs of
          9   LMI borrowers.  In 1997, less than eight percent of
         10   all conventional home loans were guaranteed under
         11   the Wisconsin Housing and Economic Development
         12   Authority's Home Ownership Mortgage Program, the
         13   WHEDA Home Program.
         14            Banc One's assessment areas include 11
         15   rural counties.  Deposits within these assessment
         16   areas represent 60 percent or 738 million of all
         17   Banc One deposits in the state.
         18            In our initial comments, we criticized the
         19   bank's low-level of lending in rural areas,
         20   specifically regarding small farm originations.
         21            In their written response, Mr. Steven
         22   Bennett and Ms. Julie Johnson stated that Banc One
         23   serves a predominantly urban market and they
         24   implied are under no obligation to meet all the
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          1   credit needs within rural areas.
          2            However, we believe this attitude raises
          3   serious questions about the bank's lack of
          4   commitment in meeting the convenience and needs of
          5   communities they are supposed to serve.
          6            Are we done?  30 seconds.
          7            Simply, a bank cannot ignore credit needs
          8   within its delineated area and then originate the
          9   same type of loan in other more affluent
         10   nonassessment areas.  However, according to the
         11   1997 FFIAC small farm data, over 21 percent of all
         12   farm loan numbers and 23 percent of all dollar
         13   amounts were originated outside of delineated
         14   assessment areas.  The eight highest income rural
         15   counties in the state received 78 percent of all
         16   Banc One small farm originations.
         17            In rural Wisconsin, the percentage of low
         18   income families often exceeds rates found in
         19   central cities.  Clearly, a need exists, however,
         20   the bank's use of federal and state programs is
         21   minimal.
         22            Based on Banc One's CRA performance in
         23   Wisconsin, we request that the Board of Governors
         24   deny the proposed merger until the bank can take
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          1   affirmative steps to address the deficiencies cited
          2   above.
          3            Thank you.
          4       MS. SMITH:  Thank you very much.
          5            Mr. VanTol is wearing a different hat.
          6       MR. VANTOL:  Yes.
          7            I want to thank you for allowing me to
          8   double dip here.  Now I get to speak my own piece
          9   instead of that of a coalition.
         10            My name is Hubert VanTol of Sparta,
         11   Wisconsin.  I am the President of Bank Watchers.
         12   We provide information and other services for
         13   community-based organizations on banking and
         14   community reinvestment issues.
         15            As I said, in speaking for John Taylor, I
         16   also serve as a board member of the National
         17   Community Reinvestment Coalition.
         18            I agree with most of the issues that have
         19   been raised about Banc One's deficient CRA record,
         20   and since I can't possibly do justice to those many
         21   complex issues in this short time, I'm going to
         22   focus just on the one issue of how CRA gets
         23   interpreted for rural areas.
         24            My colleague, Marv Kamp, has outlined some
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          1   of the concerns about how Banc One provides
          2   services and loans to rural Wisconsin.  I think his
          3   comments highlight the importance of the Federal
          4   Reserve giving more careful thought than it has in
          5   the past to how the Community Reinvestment Act
          6   should be enforced in rural areas.
          7            With mega mergers like these happening,
          8   they're transforming the shape of the banking
          9   industry, and it's very important that we think
         10   these issues through better.
         11            What does providing fair access to credit
         12   in rural America mean for huge institutions that
         13   are buying up the branches and the ability to
         14   provide services in suburban and in some cases
         15   inner city markets but are leaving the rural
         16   counties and particularly the lower income rural
         17   counties that span the areas between those urban
         18   areas completely out of the picture?
         19            You've heard that Banc One is providing
         20   agricultural loans at a much higher rate in some of
         21   the wealthier rural counties of Wisconsin than in
         22   the poorer ones, and you've heard that they've
         23   closed a number of rural branches in Ohio.
         24            In the enforcement of CRA, what is the
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          1   practical difference between an urban bank which
          2   draws a bright red line around the low to moderate
          3   income census tract in its local assessment area
          4   and says it won't provide services and loans within
          5   that area and a super regional bank like Banc One
          6   which draws an invisible line around the poorest
          7   rural counties in the several states that it
          8   operates in and then closes branches, does away
          9   with services, makes very little proactive effort
         10   to meet the credit needs of the residents of those
         11   areas?
         12            I live in a moderate income section of a
         13   rural Wisconsin, and we are seeing the same results
         14   of disinvestment that low income inner city
         15   neighborhoods have seen for a long time.
         16            The subprime and predatory lenders have
         17   started opening up shop.  It's becoming harder to
         18   get loans with a fair rate.  Indeed, it's becoming
         19   harder to get fair rates on related financial
         20   services like property insurance.
         21            This is happening because the largest
         22   institutions have decided that they can make more
         23   money meeting the credit needs of wealthy
         24   communities or putting money into derivatives or
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          1   whatever the current hot money fad is than they can
          2   make in communities like ours.
          3            It's not that they can't make money in our
          4   communities.  They just can't make enough to please
          5   Wall Street.
          6            As a result, we still have competition in
          7   financial services in our communities but not the
          8   kind of competition that middle and upper income
          9   suburbanites can count on.
         10            We have the competition between the very
         11   smallest financial institutions, the
         12   semi-legitimate, subprime lenders and the loan
         13   sharks, but if the Community Reinvestment Act were
         14   enforced with rural communities in mind, we could
         15   enjoy the same fruits of real competition in the
         16   same way that suburbanites do.
         17            I think the testimonies of the various
         18   people have given you a clear picture of different
         19   ways in which community reinvestment needs can be
         20   met, the very promising road we can do down, the
         21   Chicago and Detroit road, or the negative road that
         22   some of the other communities have testified to.
         23            So if this mega merger provides for
         24   specific agreements with measurable and reasonable
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          1   targets similar to what the Chicago Reinvestment
          2   Coalition negotiated with First Chicago for each of
          3   the urban and rural sections of the state, most of
          4   us wouldn't be here today.  Most of my colleagues,
          5   I'm sure, would watch such a merger happen without
          6   the outrage that we feel now.
          7            In this case, however, it seems clear what
          8   the dominant philosophy that survives in the
          9   surviving bank will be.
         10            So we ask you to go ahead and make our
         11   day, surprise us and do the right thing.
         12       MS. SMITH:  Thank you very much.  Thank you
         13   very much for coming.
         14       MR. ALVAREZ:  Can I ask a quick question?  I am
         15   sorry.
         16            Mr. Kamp, and Mr. Bromely in particular,
         17   you had further remarks than the time allowed and
         18   you had a lot of statistics.  Are all of these
         19   statistics in your packages and explained in the
         20   material?
         21       MR. KAMP:  Yes.
         22       MR. ALVAREZ:  And the numbers that you put
         23   together for your comparisons of loans in low to
         24   moderate income neighborhoods versus other areas,
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          1   is that based on number of loans or dollar amounts
          2   or --
          3       MR. KAMP:  For my analysis, both number and
          4   dollar.
          5       MR. BROMLEY:  We had numbers.
          6       MR. ALVAREZ:  And you used the numbers?
          7       MR. BROMLEY:  Yes.
          8            And ours, the home improvement lending was
          9   aggregated.  We rolled up all the Banc Ones in Ohio
         10   and made one master file.  So they have a number of
         11   Banc Ones, and we put them all together.  I think
         12   corporately, they rounded them up in
         13   '97 so you can see it, and it's applications and
         14   then it's market share.
         15       MR. ALVAREZ:  Thank you very much.
         16       MR. KAMP:  Market share is also.
         17       MR. ALVAREZ:  Okay.
         18       MS. SMITH:  All right.  We are ready to start,
         19   Ms. Carrillo.
         20       MS. CARRILLO:  Thank you.  My name is Rita
         21   Carrillo.
         22       MS. SMITH:  Oops, oops, I guess we're not
         23   ready.
         24       MS. CARRILLO:  My name is Rita Carrillo.  I'm
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   the Executive Director of Neighborhood Housing
          2   Services of Phoenix.
          3            The NHS of Phoenix is a nonprofit
          4   organization founded in 1975 and is dedicated to
          5   neighborhood revitalization through the creation of
          6   home ownership opportunities for low and moderate
          7   income families.
          8            To accomplish this, the NHS provides home
          9   buyer education and counselling, develops new and
         10   rehabilitated, affordable single-family homes and
         11   develops flexible mortgage financing programs to
         12   meet the credit needs of low and moderate income
         13   borrowers.
         14            In the last three years, the NHS of
         15   Phoenix has provided home buyer education to over a
         16   thousand families, created 251 new homeowners and
         17   developed 30 affordable new single-family homes for
         18   a total community investment of over $17 million.
         19            I mention this because Banc One Arizona
         20   has been a strong and long-standing partner of the
         21   NHS in all of these endeavors.
         22            Banc One and its predecessor, Valley
         23   National Bank, have been leaders in corporate
         24   support for community development in the Phoenix
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   Metropolitan area.  And in the Phoenix area, this
          2   is very significant because we are not headquarters
          3   to many major corporations and banks have
          4   traditionally been the corporate leaders in our
          5   community.
          6            Banc One is the NHS's single largest
          7   financial contributor and a major contributor to
          8   numerous other community development efforts in the
          9   City of Phoenix.  It is also exemplary in the
         10   leadership provided by top management on important
         11   community issues.
         12            Banc One Arizona's CEOs are and have had a
         13   tradition of being active members of the
         14   community.  They volunteer their time and resources
         15   to organizations and initiatives for the betterment
         16   of the community.  This includes issues such as
         17   mass transportation programs, homelessness and
         18   public education programs.  This commitment to
         19   volunteerism filters down to all levels of the
         20   bank.
         21            As the largest bank in Arizona, Banc One
         22   sets the tone and level of commitment provided by
         23   the other financial institutions in the state.  For
         24   example, the NHS of Phoenix recently launched an
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   effort to create a second mortgage loan pool that
          2   would provide below-market interest rate loans to
          3   low and moderate income families.  Banc One was the
          4   first to make a verbal commitment for a major
          5   investment in the loan pool.  With that commitment,
          6   the other banks at the table quickly signed on as
          7   well.
          8            The current Banc One Arizona CEO, Michael
          9   Wellborne, is a member of the NHS Board of Trustees
         10   and as such assists the NHS by soliciting other
         11   corporate support for our programs.
         12            Banc One staff sit on the NHS Board of
         13   Directors and participate on the NHS Loan
         14   Committee.
         15            As mentioned by others testifying here
         16   today, of most importance to a community is a
         17   financial institution's approach to community
         18   development and corporate social responsibility.
         19            Banc One has always sought to be
         20   knowledgeable on community issues.  It is an
         21   approach that seeks to understand diverse
         22   perspectives and respond to rather than dictate
         23   community needs and priorities.
         24            Of significance to the nonprofit and
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   minority communities in the City of Phoenix and to
          2   me personally was my appointment four years ago to
          3   the Banc One Arizona Corporate Board of Directors.
          4            Of its own accord, Banc One chose to
          5   become the first and still the only major bank or
          6   any bank in Arizona, in the state, to appoint a
          7   representative of a nonprofit community development
          8   organization and a minority woman to its legal
          9   Board of Directors.
         10            With the continuation of this commitment
         11   and this approach to community activism and
         12   development, the merger of Banc One and First
         13   Chicago NBD will create a stronger bank and, thus,
         14   should bring additional resources and stability to
         15   the community development efforts in the City of
         16   Phoenix.
         17            As a result, the NHS of Phoenix
         18   anticipates a continued and strengthened
         19   partnership with the post-merger Banc One.
         20            Thank you.
         21       MS. SMITH:  Thank you.
         22            And we'll go to Ms. Coleman.
         23       MS. COLEMAN:  Good afternoon.  My name is Marva
         24   Coleman.  I am the Executive Director of the Five
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   Points Business Association in Denver, Colorado.
          2            We are a nonprofit organization that has
          3   been founded since 1963.  We promote economic
          4   development in our area.  Also, we do business
          5   counselling, special events, business improvement,
          6   marketing and we provide economic development in
          7   our area.
          8            The demographics of the area that I do
          9   work in is 65 percent African American, 35 percent
         10   Hispanic and Asian.
         11            The area that we work in, that I work in,
         12   is a seven-block area that is very important to
         13   keep because it's the only African American strip
         14   that is left in Colorado that is seven blocks
         15   long.  It has restaurants and it provides many
         16   entrepreneurs that are minorities, and we need to
         17   keep that alive.
         18            One of the roles of Banc One is to provide
         19   financial support for my office.  Because we're
         20   nonprofit, it's very difficult to find funding, and
         21   Banc One has provided this kind of support for six
         22   years.
         23            They provide things such as technical
         24   assistance.  We have Ma and Pa restaurants,
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   existing business, new businesses that really does
          2   need technical assistance.  They provide
          3   scholarship funds for us.  They provide a lot of
          4   funding for an event that we put on in Colorado, in
          5   Denver especially, called Juneteenth.  And this
          6   year, we were able to provide a huge, huge number
          7   of support.  180,000 people went to our Juneteenth
          8   event, which has made us larger than Texas, which
          9   was very interesting.
         10            They also provide banking education, which
         11   means that they come into our establishment,
         12   provide classes.
         13            One of the very, very important things
         14   which I mentioned before is the scholarship
         15   program.  We have given over $100,000 worth of
         16   scholarships, and without Banc One's support, we
         17   are not able to do this.  And it's very important
         18   for the education of the African Americans, Asian
         19   and Hispanics in our area.
         20            I would like to at this time support the
         21   merger because Banc One is one of the banks that's
         22   always been in our corner.  They've always provided
         23   services for us.  We can call on them at any time.
         24   They've been there.
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1            We also have an employee that is on our
          2   board, and that is very important.  She keeps us in
          3   line, she supports us tremendously and makes sure
          4   that we are on target and also makes sure that we
          5   know exactly what's going on in the banking
          6   industry.
          7            I thank you very much for your time.
          8       MS. SMITH:  Thank you, Ms. Coleman.
          9            Mr. Fairfield.
         10       MR. FAIRFIELD:  My name is Steven Fairfield.
         11   I'm the Executive Director of Fifth Ward Community
         12   Redevelopment Corporation in Houston, Texas, a
         13   resident-founded and resident-governed CDC in
         14   Houston's lowest income community and the home of
         15   Barbara Jordan, Mickey Leland, George Foreman and
         16   other trailblazers in the African American
         17   community.
         18            I agree with my colleagues that public
         19   subsidy in the form of Federal Deposit Insurance
         20   creates an obligation to provide a corresponding
         21   public benefit and that too much industry
         22   consolidation can adversely affect the scope and
         23   depth of investment and credit available in low
         24   income communities.
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1            However, I am here to testify that Banc
          2   One has delivered the goods in our community and
          3   their entry into the Houston market earlier this
          4   decade through the acquisition of an old Texas
          5   institution served to expand the scope and depth of
          6   investment and credit available in our community.
          7            Our first experience with Banc One in 1991
          8   was not a positive one with the mortgage shop
          9   saddled with peculiar southern operating practices
         10   remaining from the institution they acquired
         11   previously in Houston.
         12            After complaining about these practices,
         13   Banc One instituted a housecleaning resulting in
         14   the creation of the city's friendliest mortgage
         15   shop for our low income clients, something that was
         16   later copied by other local lending institutions.
         17            The bank has subsequently donated
         18   furniture for our offices, provided general
         19   operating grants to us, offered us construction
         20   lines of credit, financed a neighborhood finance
         21   center on an environmentally troubled tract of land
         22   will feature an electronic banking kiosk for Banc
         23   One, as well as a roaming loan officer, a small
         24   business center, consuming credit counselling
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   services case manager, policed storefront, new home
          2   ownership center and a one-stop insurance center.
          3            The bank has also offered competitive
          4   investment and mortgage financing for a mixed use
          5   retail and residential project we have under
          6   construction.  In fact, unfortunately, the bank has
          7   offered us so much credit that we haven't been able
          8   to use it all because we have a policy of working
          9   with multiple lenders, but they're always there
         10   with an offer for us when we have a new project.
         11            As an advocate six years ago, I and four
         12   Texas colleagues formed the Texas Housing Finance
         13   Corporation to raise investment equity for
         14   hard-to-do affordable housing transactions that
         15   were small or rural or had special uses and were
         16   more difficult to originate.
         17            Banc One was our first multi-million
         18   dollar investment commitment for that fund and has
         19   continued as a lead investor in subsequent funds,
         20   and they are now entertaining an investment in a
         21   new venture capital fund we have created in Houston
         22   to invest in minority-owned businesses in Houston's
         23   inner city.
         24            In short, seven years ago, we were a CDC
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   on paper only.  Since that time, we have developed
          2   over 300 units of new rental affordable housing,
          3   nearly a hundred scattered site homes, over 200
          4   senior home repairs and improvements, two
          5   neighborhood clinics, a Head Start center, a
          6   finance center, a policed storefront, the equity
          7   funds I mentioned and other economic development,
          8   public safety and beautification initiatives.
          9            Through this time, Banc One has been the
         10   best top-to-bottom person who's committed to what
         11   we're trying to do in Houston's lowest income
         12   community of banks that are not based in our city.
         13   And we haven't, in fact, been able to use all of
         14   the resources that they have offered to us.
         15            So I speak here in support of what Banc
         16   One has done in our community for our low income
         17   residents.
         18            Thank you.
         19       MS. SMITH:  Thank you very much.
         20            We'll go to Mr. Garcia.
         21       MR. GARCIA:  I want to first thank you for the
         22   opportunity to come here today before you.  I'm the
         23   past president of the Indiana Hispanic Chamber of
         24   Commerce.
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1            I was the president for five years and
          2   have a long relationship with the Banc One
          3   organization.  And fortunate enough, we have a
          4   relationship with NBD and First Chicago NBD, so we
          5   have the best of both worlds in Indianapolis.
          6            I've heard a lot of opinions and
          7   definitely a lot of facts here today, but I can
          8   only speak in regards to Indianapolis and the
          9   Indiana community.
         10            Banc One and First Chicago NBD continue to
         11   provide us with leadership and support within our
         12   community.
         13            I have been involved in three mergers
         14   individually and as the representative of the
         15   Indiana Hispanic Chamber of Commerce, and some of
         16   them have been very uncomfortable, and I would say
         17   that the last one -- maybe we're getting it down
         18   now, but it has it has become more comfortable.
         19            And through those mergers, the success has
         20   been primarily dependent upon maybe three things,
         21   and one is definitely communication with community,
         22   commitment to that community.  And probably most
         23   important is the adherence, if you will, or
         24   maintaining of the current leadership.
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1            Our leaders, our bank leaders, the bank
          2   leaders from Banc One and NBD in Indianapolis,
          3   Indiana continue to fight, continue to promote the
          4   involvement in our community of Indianapolis.
          5            Many of those founders or I would
          6   primarily say Andy Payne and Joe Barnett, who are
          7   the leaders there in Indianapolis founded many
          8   minority and women-owned minority programs that
          9   still live today, and these are programs that have
         10   been in existence for ten or more years.
         11            So with the culture that we have received
         12   in Indianapolis, it's been very positive in
         13   strengthening all through the mergers that we have
         14   experienced.
         15            The merger of First Chicago NBD and Banc
         16   One can propose success or failure.  It's really
         17   dependent upon, again, the continuity of the
         18   culture and the individuals that stay within that
         19   area.  And that's why we are cautious but we are
         20   confident that NBD, First Chicago NBD -- there's so
         21   many names, I can't get them all out -- and Banc
         22   One will be positive to the communities that we
         23   work in and have.
         24            I can say a few things about the Hispanic
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   Chamber of Commerce and my company.  I'm President
          2   of GM Construction in Indianapolis, Indiana, but I
          3   take a very proactive approach within the community
          4   that we work in.
          5            First Chicago and Banc One and NBD
          6   continue to support organizations like statewide
          7   certified development corporations which provides
          8   funding and guidance and leadership to small
          9   businesses.
         10            They also provide leadership and
         11   involvement to the Indiana Hispanic Chamber of
         12   Commerce, the Black Chamber of Commerce, also
         13   Indiana's Business Development Corp.  They supplied
         14   us with two million dollars of a loan pool that we
         15   could draw on.  Our MESBIC, which we call LINKS,
         16   which is primarily -- I believe it's quarter of a
         17   million dollars and above in loans, they supplied
         18   $2 million for that fund also.
         19            And again, it goes back to my previous
         20   statement, which is our leaders are involved in the
         21   Indianapolis community, and that's why we're
         22   successful.
         23            Banc One has never turned down one of my
         24   clients, if you will, or my representatives with
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   the Indiana Hispanic Chamber of Commerce.  I've
          2   brought numerous numbers, over 25 people or more,
          3   and we have never walked away from the table
          4   without some type of positive result.
          5            Now, maybe those individuals at that time
          6   or those companies could not perform or provide the
          7   information needed for that criteria, but we always
          8   had a secondary plan, and Banc One stood at the
          9   table and stayed there until we came up with that
         10   secondary plan.  And we thank them for that.
         11            And because of that, in Indianapolis, I
         12   know that we have in the top 100 companies in the
         13   Hispanic 500, we have two of them.  And in the 200,
         14   we have five of them.
         15            So in Indianapolis, which has an Hispanic
         16   community of only about two percent, has been very
         17   progressive and forthcoming as far as experience
         18   and success, and part of that is due to the
         19   relationship with Banc One.
         20            I would say in closing that the Latino
         21   community, Hispanic community, of Indianapolis, we
         22   support this merger.
         23            We have had individuals that continue to
         24   sit on the CRA Advisory Council for Banc One for
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   the State of Indiana, and they listen to us.  They
          2   take our recommendations and implement them.
          3            Our only concern, again, is that both
          4   entities continue with the proactive approaches
          5   towards the Hispanic community of Indianapolis and
          6   other cities and that the new Banc One, as it's
          7   been deemed, is even more sensitive to the needs of
          8   our community.  So we support it in totality.
          9            Thank you.
         10       MS. SMITH:  Thank you.
         11            Ms. Gnau.
         12       MS. GNAU:  Thank you for the opportunity to
         13   speak with you today about our relationship with
         14   Banc One.
         15            My name is Debbie Gnau, and I'm one of
         16   three female owners of the Chesapeake Group in
         17   Cincinnati, Ohio.
         18            We started the Chesapeake Group in 1994,
         19   and we specialize in package designs for consumer
         20   package goods companies.  Our clients include
         21   Hines, Starkist, Jergens, Paragon Trade Brands,
         22   Marzetti, Chiquita and many others.
         23            Our business has grown from $600,000 in
         24   1995, our first full year of business, to
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   $1.4 million last year, and we're on target to do
          2   $2 million this year.
          3            We view Banc One as a key partner in this
          4   success, our provider of choice.  They serve as a
          5   lender and cash management provider as well as an
          6   important advisor to our company.
          7            Our relationship with Banc One began in
          8   November of 1994 with a meeting in Cincinnati with
          9   Dave Outcalt, a Banc One officer.  Dave met with
         10   Geralyn Curtis, our president, and reviewed our
         11   five-year start-up business plan.
         12            Despite limited prospects for any
         13   tremendous business from us at the offset, he
         14   nonetheless spent several hours with her getting to
         15   know our business plan, understanding what we felt
         16   we would uniquely bring to the party and
         17   understanding our detailed financial assumptions
         18   and business plans.
         19            They reviewed financing options, cash
         20   management details, and importantly, Dave also
         21   provided us with a few recommendations for other
         22   key advisors, including our attorney who we believe
         23   to be one of the best at what he does.
         24            We decided initially to self-fund our
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   start-up, so based on the helpfulness Dave
          2   provided, we moved our checking account from
          3   Provident Bank to Banc One with our incorporation
          4   in January of 1995.  We've had our checking account
          5   with Banc One since that time.
          6            Starting with the day we opened our
          7   account, the branch managers have typically gone
          8   above and beyond the call of duty.  On that first
          9   day enabling us to leave the bank with the check we
         10   needed to sign our office lease that day.
         11            The managers have been consistently
         12   helpful and timely with all of our requests,
         13   including the time one of us accidently threw away
         14   our check register and we had to try and
         15   restructure it.  Unfortunately, I have to admit to
         16   be the one that did that.
         17            Finally and very important to us, Banc One
         18   has loaned us money to help meet our cash
         19   management and growth needs.  Kevin Plaugher met
         20   with us in 1996 and spent a great deal of time
         21   learning about what we do.
         22       MS. SMITH:  You're fading.
         23       MS. GNAU:  Learning about what we do.
         24       MS. SMITH:  That's better.
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1       MS. GNAU:  Learning about what we do, what our
          2   growth plans were and where we needed help.
          3            As a result of our meeting, we were able
          4   to obtain both a term loan to fund commuter
          5   equipment we needed as we hired additional
          6   designers as well as to obtain a line of credit to
          7   address the lag in receivables which was growing
          8   large.  Since that time, we've expanded our line of
          9   credit as our business has grown.
         10            Wanda Walker-Smith joined Kevin in working
         11   with us, too.  She, too, has spent a good deal of
         12   time getting to know us and our business.  She was
         13   also kind enough to nominate Geralyn Curtis, our
         14   president, for Woman Entrepreneur of the Year,
         15   which Geralyn was awarded in June.
         16            Wanda has also worked with us to make sure
         17   we're aware of and utilizing any specific services
         18   that can make our work easier.
         19            We also had the opportunity to talk over
         20   lunch with Kevin, Wanda and Larry Bradley, the
         21   Senior Vice President of the Business Banking Group
         22   in Cincinnati, about our needs and to provide our
         23   insight for the future in an effort to make sure
         24   Banc One has the appropriate products in place for
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   customers like us.
          2            We look forward to working with Banc One
          3   as our company continues to grow and appreciate
          4   their ability to take time to counsel us on ways to
          5   better manage our money and our future growth.
          6   Thank you.
          7       MS. SMITH:  Thank you very much.  We'll now go
          8   to Mr. Gary.
          9       MR. GARY:  My name is Printice L. Gary, and I'm
         10   the managing partner of Carlton Residential
         11   Properties located in Dallas, Texas.
         12            Carlton Residential is a for-profit
         13   developer and general contractor of affordable as
         14   well as market rate housing throughout the State of
         15   Texas.  Carlton also happens to be a 100 percent
         16   minority owned company.  I have two other partners
         17   in the business.
         18            I founded Carlton Residential in 1991, and
         19   my first transaction was the acquisition of a
         20   192-unit affordable housing project in South
         21   Dallas, which is predominantly a minority
         22   community, and this acquisition was funded by a
         23   $2.9 million acquisition loan from Banc One at a
         24   time when the banking industry in Texas was pretty
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   much in chaos.  And this kind of marked what I
          2   considered to be a truly outstanding banking
          3   relationship with Banc One looking at that time
          4   going forward.
          5            Since that time through different project
          6   level entities, Banc One has provided more than $67
          7   million in construction, permanent and equity
          8   financing for Carlton Residential.  This has
          9   produced 1,240 units of housing, 740 of which are
         10   affordable strictly, rent restricted, and obviously
         11   has enhanced the growth of our company.
         12            Our relationship with Banc One has been
         13   one distinguished by their ability to be innovative
         14   and their willingness to venture with us in new and
         15   creative development formats and financing
         16   structures.
         17            By way of example, and I'm going to use
         18   two, both are in impacted areas and both projects
         19   have public housing projects within a stone's throw
         20   of each of these developments.  By way of example,
         21   consider the Trainmore City Place, 192 units, mixed
         22   income, new development in Texas.
         23            In this transaction, Banc One provided a
         24   $2.5 million bridge loan as well as a $2.8 million
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   tax credit equity for the transaction.
          2            The key element here is that the entire
          3   transaction became a reality when Banc One
          4   committed early to the transaction at a time when
          5   other banks in Texas wouldn't touch a mixed income
          6   type project development.  As it turns out today,
          7   mixed income across the nation is the way of the
          8   future.
          9            The project was very successful, and it
         10   was so outstanding that we proceeded to Phase 2
         11   which included 70 units, and in that transaction,
         12   Banc One performed as our permanent lender, and as
         13   it turned out, First Chicago was our equity
         14   investor and they purchased the tax credits in what
         15   turned out to be a pretty seamless transaction.
         16            As a second case in point, a local
         17   nonprofit community development organization, Maple
         18   Avenue Development Corp, in Dallas, discovered a
         19   six-acre land parcel in their neighborhood that
         20   appeared to be appropriate for multi-family
         21   affordable housing production.
         22            Carlton combined with Maple Avenue and we
         23   got the land under contract, produced a site plan
         24   that included 144 affordable units and went out
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   looking for equity, someone that would partner with
          2   us and provide the necessary financing.
          3            While this urban neighborhood clearly was
          4   improving, the gentrification was showing, because
          5   of the presence of the project housing project
          6   nearby, most Texas banks wouldn't even take a look
          7   at it.
          8            Banc One CDC stepped in and after
          9   thoroughly reviewing the market with us provided a
         10   $1.4 million equity commitment for the project and
         11   also provided a seven and a half million dollar
         12   permanent takeout through Banc One CDC which
         13   supported a seven and a half million dollar
         14   construction loan from their local affiliate in
         15   Dallas, Banc One of Texas.
         16            Believe me, at that time, there's no other
         17   bank in Dallas that would have provided that kind
         18   of comprehensive commitment for the production of
         19   affordable housing.
         20            A couple of other points.
         21            I really applaud Banc One's approach to
         22   community development where they take a partnering
         23   approach as opposed to some other institutions
         24   forming their own development corporations, and
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          1   that partnering approach allows people like myself
          2   as well as some of the local community people to
          3   build to capacity and to experience and development
          4   their companies.
          5            Looking forward, Texas is going to
          6   probably experience greater growth than most of the
          7   other -- many other cities in the nation and
          8   thereby create a real need for affordable housing.
          9            The way I see it, I think that Banc One
         10   has its delivery system already in place.  The
         11   combination with First Chicago will add more
         12   capital and overall provide for more -- 30
         13   seconds -- financing for affordable housing in the
         14   state.
         15            If I could show you just one image, and it
         16   just shows the quality that can be produced by
         17   local developers if you've got the right kind of
         18   financial partner.  This is the Trainmore City
         19   Place.  And without Banc One's help, this simply
         20   wouldn't have happened.
         21            Now right in that neighborhood is a public
         22   housing project.  They have applied for Hope 6
         23   funding.  Together with the development of the
         24   Trainmore, which is a real cornerstone that helps
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          1   revitalize that neighborhood, hopefully, that
          2   entire area will be revitalized.
          3            Obviously, I'm very much in favor of the
          4   Banc One/First Chicago merger.  I think that it
          5   will enhance the ability to do more affordable
          6   housing in Texas, and hopefully, they will continue
          7   their relationship with us.
          8            Thank you.
          9       MS. SMITH:  Thank you very much.
         10            Any questions?
         11            I have an announcement.  Nancy Hayne, you
         12   have a fax, if you would stop by the registration
         13   table.
         14            We'll be starting with Mr. Bellamy, if we
         15   can hand him the mic.
         16       MR. BELLAMY:  Thank you.
         17            My name is Paul Bellamy, and I'm with the
         18   Coalition for Reinvestment in Lorain County.
         19   Lorain County is due west of Cuyahoga County, which
         20   is Cleveland, Ohio.
         21            I've been asked to read on behalf of some
         22   coalition members short portions of testimony which
         23   they wanted to enter into the record.  I will
         24   confine these to two rather short versions and then
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          1   get on to my own summarized version of the facts
          2   and figures that we feel compel us to come out
          3   against the merger with Banc One.
          4            The first statement I want to read is from
          5   the Board of Commissioners for Lorain County, and
          6   in summary, it goes like this.
          7            The Board of Lorain County Commissioners
          8   supports the Coalition for Reinvestment in Lorain
          9   County's efforts to ensure that the results of the
         10   above-referenced bank merger are advantageous to
         11   Lorain County residents, organizations and
         12   political subdivisions.  The Board further
         13   acknowledges the right and obligation of banks to
         14   make sound financial business decisions.
         15            However, the Board of Commissioners does
         16   not feel that Banc One is committed to serving the
         17   low and moderate income communities unless it is to
         18   lend money on credit cards or on real estate at
         19   higher interest rates to borrowers with credit
         20   problems.
         21            While this may serve stockholders, as a
         22   bank, they are chartered to serve the communities
         23   where they do business.
         24            It appears that Banc One has been cutting
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          1   back on their commitments to the service of our
          2   county while refusing to agree to specific goals to
          3   improve their performance under CRA.
          4            Please encourage Banc One to address those
          5   issues prior to approving any merger.
          6            And that is, of course, addressed to the
          7   Federal Reserve board.
          8            I'd also like to read a short portion of a
          9   statement from Rebecca Siegal, who is representing
         10   or had hoped to represent the Catholic Action
         11   Commission of Lorain County.  It's a social action
         12   office for the Diocese of Cleveland in the state of
         13   Ohio.
         14            We have some major concerns regarding the
         15   increase in mega mergers of our banking
         16   institutions and the effects these mergers have on
         17   our local communities.
         18            When these mega mergers occur, these are
         19   local communities urban and rural alike and
         20   particularly the areas that are most populated by
         21   minorities and low and moderate income families who
         22   suffer the most.  Branches close, banking services
         23   decrease, service fees increase, jobs are lost.
         24            It is the stockholders of the banks who
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          1   most often have no vested interest in our local
          2   communities that make the decisions and the
          3   profits, yet in the case of Banc One, depositors,
          4   not stockholders, make up 70 percent of the
          5   assets.  Stockholders make up only about 15 percent
          6   on average.  It is the stockholders and senior
          7   management who walk away with gilded pockets while
          8   the depositors receive little or no return on their
          9   money.
         10            We are scraping the bottom of the pyramid
         11   with no return and placing it on the top, and if
         12   this trend is allowed to continue, the pyramid will
         13   be inverted and most likely tumble because there
         14   will no longer be support from the solid bottom.
         15            The principal difficulty that the Lorain
         16   County Coalition has with Banc One's record is not
         17   with actual dollar amounts that have gone into low
         18   and moderate income neighborhoods.
         19            In fact, I don't know if this is true in
         20   other areas, but certainly in Lorain County,
         21   there's been a great deal of money proportionately
         22   put into the low and moderate income
         23   neighborhoods.
         24            The difficulty we have is what kind of
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          1   money it is and does it, in fact, serve the needs
          2   of Lorain County?
          3            Lorain County is a Midwestern urban
          4   center.  Single-family homes are the norm.  Home
          5   ownership is the way in which a community
          6   development strategy would work in these
          7   neighborhoods.
          8            Now, let's break out all of the money that
          9   Banc One claims to be using to meet its CRA
         10   commitments.
         11            One is the purchase mortgage product,
         12   which we herald and we want to encourage them to do
         13   more of.  Unfortunately, they don't seem committed
         14   staying in that market and they don't do
         15   proportionately very much of that lending.
         16            Where we do see a heavy emphasis on their
         17   real estate lending is in refinancing.  Refinancing
         18   may serve the interest of the particular homeowner,
         19   but it does absolutely nothing to increase the
         20   value of the homes or to raise the wealth within
         21   the neighborhood.  In fact, it only inserts a lot
         22   more debt on what you might call the neighborhood
         23   balance sheet.
         24            The positive side of Banc One has to be
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          1   mentioned, and that is that they have a strong home
          2   improvement product, and in these older 70 to
          3   50-year-old houses, that's a very important tool,
          4   but it must be recognized that this is a half
          5   measure at best when there is a refusal to do the
          6   hard work included in a meaningful community
          7   redevelopment purchase 30-year mortgage product
          8   that requires meeting cost value gaps and doing the
          9   difficult work of underwriting loans to first time
         10   home buyers who are most often attracted to these
         11   neighborhoods.
         12            The other problem with the home
         13   improvement product is most of it is sold through
         14   their branch network.  In Lorain County in the last
         15   three years, Banc One has gone from 19 to 4
         16   branches.
         17            In closing, I just want to mention one
         18   last development which we find very difficult, and
         19   that is the subprime lending.  It has increased
         20   from three percent in the low to moderate
         21   neighborhoods in '93 up to 15 percent of the total
         22   lending going on in the low to moderate
         23   neighborhoods now.
         24            Thank you.
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          1       MS. SMITH:  Ms. Jones.
          2       MS. JONES:  Good afternoon.  My name is Rebecca
          3   Jones.
          4            I guess I need a microphone.
          5            My name is Rebecca Jones.  I'm a resident
          6   of Wellington, Ohio, which is the southern part of
          7   Lorain County and is a rural area.
          8            My remarks at first were intended to be
          9   addressed to the Wellington area, however, I'm also
         10   the Director of a nonprofit CDC in the City of
         11   Lorain, and the Mayor of Lorain has asked me to
         12   make some remarks on his behalf today, so my
         13   comments will really be coming from the Mayor's
         14   testimony or letter to you, which is attached to my
         16            The City of Lorain is about 25 miles west
         17   of Cleveland on Lake Erie.  It is a Rust Belt
         18   city.  It's a city of 71,000 people, 30 percent of
         19   whom are minorities, and they break down 13 percent
         20   African Americans, 17 percent Hispanic.
         21            The citizens of Lorain, Ohio, which is a
         22   community of mostly low to moderate income
         23   families, have traditionally supported homegrown
         24   financial institutions such as Lorain National
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          1   Bank, Central Trust Bank, First Federal Savings and
          2   Loan, Citibank, EST and Lorain County Savings and
          3   Trust.
          4            Mergers and acquisitions of the 80s and
          5   90s have introduced a new banking trend, the
          6   establishment of regional banking organizations in
          7   the City of Lorain.
          8            This trend was substantiated by the
          9   following mergers and acquisitions:  Elyria Savings
         10   and Trust being acquired by First National Bank of
         11   Akron which created First Merit bank.  Central
         12   Trust Bank being bought by Banc One.  Citibank
         13   closing all branches.  Lorain County Savings and
         14   Trust Bank acquiring a number of Central Trust Bank
         15   locations and changing their name to Premier Bank
         16   and Trust.
         17            Most recently, in May of 1998, First Merit
         18   and Premier Bank merged, closing 17 branches,
         19   including two in the City of Lorain, and laying off
         20   approximately 200 people.
         21            You should be aware that the City of
         22   Lorain has lost additional banking service
         23   facilities and their related jobs.  Banc One has
         24   just closed two branches serving the low to
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          1   moderate income neighborhoods of South Lorain, and
          2   the Cityview, Sheffield areas.  They were closed in
          3   late Spring and early Summer, 1998, and these
          4   closures parallel the proposed merger of Banc One
          5   and First Chicago NBD.
          6            The significance of these closings is
          7   monumental, as they send a strong signal to the
          8   city's low income population that even with Banc
          9   One deposits at branches serving Lorain exceeding
         10   $85 million, their business is not important.
         11            Since the branches closed serve many low
         12   to moderate income families who do not have
         13   adequate transportation, many people will have
         14   trouble getting to the remaining Banc One
         15   branches.
         16            According to Community Reinvestment Act
         17   regulations, banks are supposed to reinvest in
         18   communities like Lorain where they obtain their
         19   deposits.
         20            Banc One bought approximately 15 Central
         21   Trust Bank branches in the 1980s, and today, they
         22   have eliminated numerous jobs and closed or sold 12
         23   branch locations, leaving three branches serving
         24   Lorain.  This appears to be disinvestment rather
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          1   than investment.
          2            Further, the City of Lorain has learned
          3   from Kathleen Kaufin, the CRA Vice President of
          4   Banc One, that branch locations ideally need to
          5   have 35 to $40 million in deposits to meet Banc One
          6   guidelines for profitability.
          7            If Banc One continues to follow this rule
          8   after the merger, it is likely that another branch
          9   in Lorain will be closed.  This would leave only
         10   two locations in the city and only one of those
         11   serving a low to moderate income area.
         12            The City of Lorain has joined the
         13   Coalition for Reinvestment in Lorain County and
         14   other community groups from across the nation to
         15   closely examine this merger which will result in
         16   disinvestment in central cities and urban areas
         17   across America, lost jobs, vacant and abandoned
         18   buildings and an inaccessibility to convenient
         19   banking services and products.
         20            Ultimately, if uncontested and not
         21   addressed by the Federal Reserve Bank, this mega
         22   merger and acquisition progress will lead to the
         23   erosion of high-quality, competitive banking
         24   services only to be replaced by nonpersonal,
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          1   high-cost electronic banking services provided by a
          2   few large banks with almost no competition.
          3            Working class families and individuals
          4   such as the citizens of Lorain do not need to have
          5   their disposable income further eroded due to
          6   higher banking fees and costs.
          7            Without a commitment to future
          8   participation in our community along the lines
          9   outlined above and as previously detailed in our
         10   meeting with Banc One, it is not in the best
         11   interest of the City of Lorain to endorse a mega
         12   merger such as that being proposed by Banc One and
         13   First Chicago NBD.
         14            Thank you.
         15       MS. SMITH:  Thank you.
         16            And we'll go to Ms. Rangan, who is
         17   speaking on behalf of Inner City Press Community.
         18       MS. RANGAN:  Good afternoon.
         19            My name is Rashmi Rangan, and I'm reading
         20   the written testimony prepared by Matthew Lee,
         21   Executive Director of Inner City Press Community on
         22   the Move and of the Inner City Public Interest Law
         23   Center, together, ICP.
         24            ICP on April 28th filed a 38-page protest
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          1   to this application along with Black Citizens for
          2   Justice, Law and Order of Dallas, Texas and the
          3   Delaware Community Interaction Council.
          4            We are opposed to this proposed merger
          5   primarily due to Banc One's continued predatory and
          6   discriminatory practices through its Banc One
          7   Financial Services subsidiary and due to the
          8   anticompetitive and branch closing effects the
          9   proposed merger will have, particularly in Indiana.
         10            The commitments that First Chicago has
         11   made in Detroit and Chicago do nothing to address
         12   these issues, nor is Banc One's divestiture
         13   proposal to sell off certain branches in Indiana
         14   sufficient.
         15            The proposed merger would also result in
         16   substantial branch closings, making all the worse
         17   Banc One's cynical manipulation of the target First
         18   Chicago to make lending pledges in Chicago and
         19   Detroit but not in the communities that would be
         20   most affected by this merger, including through
         21   branch closings.
         22            In 1997, the Federal Reserve Board stated
         23   in an order that it had unresolved questions about
         24   the fair lending compliance of Banc One Mortgage
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          1   Company and that its approvals were explicitly
          2   conditioned on Banc One taking such actions as the
          3   Federal Reserve might require.
          4            Since then, the Arizona Attorney General
          5   has charged Banc One with discrimination as
          6   implicitly has HUD in Texas.  The Fed has made no
          7   disclosure of how or if this important issue has
          8   been resolved, but 40 days ago, on July 2nd, we
          9   made a request for this under the Freedom of
         10   Information Act.  The Fed has yet to provide the
         11   documents.
         12            The written comments we have submitted
         13   show that in market after market, Banc One's normal
         14   interest rate lenders disproportionately exclude
         15   African Americans and Hispanics from credit, while
         16   Banc One Financial Services, a high interest rate
         17   lender, targets these communities for higher-priced
         18   credit.
         19            For example, in the Akron, Ohio MSA in
         20   1996, Banc One Mortgage Company denied 55 percent
         21   of mortgage applications from African Americans and
         22   only 17 percent of applications from whites, a
         23   denial disparity of 3.24.
         24            The mortgage company originated 164 loans
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          1   to whites and only seven to African Americans.
          2            ICP's comments calls loans to African
          3   Americans divided by loans to whites the index.
          4   The ratio between BOMC's index and BOFS's index
          5   calculated for each market can be viewed as the
          6   targeting index.
          7            In this particular MSA, for the mortgage
          8   company, it was .043, and for the finance arm, it
          9   was .193, 4.49 times higher than the mortgage
         10   company.  In Cleveland, Ohio, 4.47 times higher
         11   than the mortgage company.  In Dallas, 17.86 times
         12   higher than the mortgage company.  In Detroit, 5.61
         13   times higher.  In Gary, Indiana, 5.52 times
         14   higher.  Milwaukee, 8.53 times higher.  These are
         15   just examples of what the difference between the
         16   two is.
         17            The above analysis makes out a prima facie
         18   case or red flag that Banc One Corp through its
         19   normal interest rate lenders, including Banc One
         20   Mortgage, and through its higher interest rate
         21   lender, Banc One Financial Services, are engaged in
         22   lending discrimination, including pricing
         23   discrimination.
         24            On this record, the Federal Reserve Board
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          1   must conduct on-site fair lending examinations of
          2   Banc One financial services.
          3            On the current record, this mega merger
          4   proposal which would expand Banc One's practices
          5   could not legitimately be approved.
          6            There are other adverse issues, including
          7   the foreseeable loss of various First Chicago
          8   programs and Banc One's record in its existing
          9   states have been raised by Ohio and others.
         10            For all the reasons stated, this proposed
         11   merger should be denied.
         12            Thank you.
         13            And we will submit additional comments by
         14   August 20th, 1998.
         15       MS. SMITH:  Thank you very much.
         16            Ms. Sharpley.
         17       MS. SHARPLEY:  Hello.  My name is Adenike
         18   Sharpley.  I'm a board member of the Zion Community
         19   Development Corporation of Oberlin, Ohio.
         20            Our target area is the southeast
         21   quadrangle of Oberlin, which is a semi-rural area.
         22            I am going to talk about the effects of
         23   the Banc One merger on Oberlin, Ohio as a resident,
         24   from a customer and employee point of view.
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          1            The Oberlin Bank Building at 5 South Main
          2   Street, Oberlin, Ohio, until the mid 1980s, was
          3   primarily one bank.  The Oberlin Bank Company
          4   founded in 1889 would in 1904 combine with the
          5   State Savings Bank and move to 5 South Main
          6   Street.  That same year, it would be renamed The
          7   Oberlin Savings Bank.  So for 76 years, the
          8   community of Oberlin has had pretty much the same
          9   bank.
         10            In the mid-1980s, the musical bank
         11   management began at 5 South Main Street.  This
         12   included in 1990 Central Trust, in 1996 Banc One,
         13   in 1998 Premier Bank and the Merit transfer on
         14   Labor Day of this year.
         15            In 15 years, two local banks were lost,
         16   Oberlin Savings Bank and People's Bank, with a host
         17   of players to become one mega bank, one small local
         18   bank, one savings and loan bank which is located or
         19   comes its home out of Cleveland and one credit
         20   union which is also based in Cleveland.
         21            The staff working in these banks feel
         22   intense stress from both bank officials, management
         23   and customers.
         24            The customer does not understand the
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          1   changes in rules and regulations.  The employee
          2   must learn changes from old to new systems,
          3   learning new rules and regs from the new bank and
          4   absorb job shifts, moving from new offices to
          5   maintain jobs while branches are closing.
          6            These changes also include shifts in pay
          7   scale which would be from lower to higher or vice
          8   versa.
          9            Most of the people absorbing these changes
         10   are at the bottom of the chain, tellers, clerks, et
         11   cetera, and most of these are women, head of
         12   households or who are major bread winners in their
         13   family.
         14            From the customers' point of view,
         15   customers have to deal with new hours, new staff,
         16   new rules, new regulations and usually new banking
         17   and service products.
         18            The control of these banks are moved
         19   further away from the customer.  Their bank
         20   managers are usually there a few days per week
         21   along with what I call the roving loan officer.
         22            Usually the new staff is less familiar
         23   with the new branch and its customers are not
         24   usually hired locally, therefore, do not know the
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          1   community.
          2            The new staff do not have a connection to
          3   the community they serve.  They are less willing to
          4   cash checks for those without ID because they don't
          5   know the customer.  And in turn, the staff asks for
          6   ID each time they see the customer, no matter how
          7   many times they see them.
          8            For the customer, this means fewer what I
          9   call service value for their dollar, and this is
         10   especially true for the low and moderate income
         11   individual.  This results in a transfer of wealth
         12   aware from the community, benefitting the
         13   stockholders, as I say, upstairs.
         14            Along with no services such as utility
         15   bill payment, no product for those who maintain
         16   small balances in checking and savings accounts
         17   without incurring charges against their account
         18   each month, these charges will sometimes result in
         19   customers finding that their account has been
         20   closed by the end of the month.  These customers
         21   are usually low and moderate income people, seniors
         22   on fixed incomes or those due to disabilities and
         23   minorities.
         24            At times, the above-mentioned group would
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          1   receive unfriendly and discriminating treatment by
          2   tellers, adding insult to injury, this classist and
          3   racist behavior by tellers who treat their
          4   constituency as if they have little or no money.
          5   This leads to fewer service values for the elderly,
          6   the disenfranchised and the people of color in the
          7   Oberlin community.
          8            Thank you.
          9       MS. SMITH:  Thank you very much.
         10            And we'll go next to Ms. Tyler.
         11       MS. TYLER:  Why is it that Banc One has made no
         12   commitment to Ohio but they have made commitments
         13   in Michigan and Illinois?
         14            Why is it that Banc One Financial Services
         15   which offers higher interest rate loans has a more
         16   aggressive marketing strategy in low income and
         17   minority communities?
         18            And how is it that the largest Midwest
         19   bank can decide to get out of the home purchase
         20   business?
         21            These are questions on which I would like
         22   to focus your attention for the nest few minutes.
         23            I am Dawn Tyler representing the Ohio
         24   Community Reinvestment Project, a project of the
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          1   Coalition on Homelessness and Housing in Ohio.
          2            OCRP's mission is to promote investment in
          3   Ohio's low income communities and communities of
          4   color.
          5            Members of OCRP met with Banc One for
          6   several months.  Constructive dialogue took place
          7   with representatives of the bank.
          8            On numerous occasions, the bank gave us
          9   every indication that they were willing to enter
         10   into a community action agreement that would
         11   ultimately increase lending, service and investment
         12   opportunities within Banc One's service areas.
         13            Some areas we were willing to set
         14   reasonable benchmarks include home purchase loans,
         15   small business lending, multi-family housing
         16   investments and lending and community development
         17   grants.
         18            At the eleventh hour, however, about less
         19   than a week before the end of the comment period,
         20   the bank decided they did not want to move forward
         21   with negotiations, and for those of you that were
         22   here this morning, it sounds very similar to a
         23   story told by Ted Thomas from ACORN.
         24            Banc One's refusal to negotiate a
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          1   meaningful community action plan for Ohio raises
          2   questions about their commitment to Ohio
          3   post-merger.  The bank did not operate in good
          4   faith.
          5            Our primary concern is that this proposed
          6   merger could have dramatic consequences for
          7   financial services consumers throughout the State
          8   of Ohio since the corporate headquarters of Banc
          9   One currently based in Columbus will move to
         10   Chicago.  This merger could result in substantial
         11   disinvestment in Ohio communities.
         12            My second point is the disparate treatment
         13   of African Americans in accessing credit for
         14   mortgage loans from Banc One and its mortgage
         15   company.
         16            Low and moderate income consumers are
         17   denied access to mortgage loans more frequently
         18   than by other lenders, and Banc One lacks
         19   aggressive marketing efforts to African American
         20   and low and moderate income applicants,
         21   particularly by the bank's affiliates and Banc One
         22   Mortgage Company.
         23            Rashmi has done a sufficient job of
         24   sharing some statistics from Akron and Cleveland,
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          1   so I will not repeat those details, but Banc One
          2   Mortgage Company does not have an aggressive
          3   lending record to minorities and low and moderate
          4   income applicants.
          5            Banc One Financial Services, the BNC
          6   lender, charges customers higher interest rate
          7   loans compared to rates offered by Banc One
          8   Mortgage Company and is engaged in extremely
          9   aggressive marketing practices through direct mail
         10   and phone solicitation which targets low and
         11   moderate income people in minority census tracts.
         12            This is a clear illustration of the
         13   predatory lending practices of Banc One Financial
         14   Services which disproportionately targets African
         15   Americans for higher interest rate credit,
         16   originates loans at a higher rate than the mortgage
         17   company.
         18            The bank should offer A loans to all
         19   applicants who qualify, regardless if they come
         20   into the bank, the mortgage company or financial
         21   services.
         22            We encourage the Feds to follow the lead
         23   of the OCC as in the case of First Union Money
         24   Store and mandate that Banc One offer prime loan
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          1   products to all who qualify.
          2            Thirdly, Banc One has decided to get out
          3   of the home purchase business.
          4            It was interesting to hear about the new
          5   self-help product that was mentioned this morning,
          6   however, historically, the bank has ignored the
          7   credit needs of LMI communities.  This is
          8   unacceptable for a bank the size of Banc One.
          9            And my fourth issue relates to small
         10   business lending which Chuck Bromley, our OCRP
         11   Chairperson, has shared on the previous panel.
         12            Time does not permit for me to talk about
         13   the over 60 branch closures that have taken place
         14   in Ohio or the $8 check cashing fee that's imposed
         15   on Banc One customers.
         16            In closing, we do not dispute the fact
         17   that Banc One, especially the CDC, has been active
         18   in areas such as tax credit projects and community
         19   development grants to nonprofits, however, there
         20   are no safeguards in place to ensure that this is
         21   continue after the merger.
         22            We ask the bank to make some very basic
         23   commitments to minimize the potential negative
         24   impacts, and after dragging us along for several
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          1   months, they refused, despite the fact that they
          2   are planning to honor similar commitments in the
          3   communities of Chicago and Detroit.
          4            The bank claims that no market will be
          5   abandoned and the commitment will continue.  If
          6   this is the case, why is there such a hesitancy on
          7   the part of the bank to put such a commitment in
          8   writing?
          9            Earlier today, Banc One mentioned one part
         10   of their recipe for success is relationships with
         11   local partners.  How can I as a local partner be
         12   part of that recipe for success when I've been
         13   kicked out of the kitchen?
         14            Please consider carefully the information
         15   that has been presented today.  I urge the Federal
         16   Reserve to postpone the merger until mutually
         17   beneficial community action plans have been reached
         18   in all of Banc One's markets.
         19            Your meaningful intervention can
         20   facilitate fair lending, service and investment
         21   opportunities in Ohio's low income communities and
         22   communities of color that have historically been
         23   overlooked and underserved.
         24       MS. SMITH:  Thank you.
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          1            Ms. Walker.
          2       MS. WALKER:  I'd like to thank the Federal
          3   Reserve to have the freedom to speak today.
          4            I am Marge Walker, and I'm a resident of
          5   the City of Lorain, 30 miles west of Cleveland, and
          6   I'm speaking on behalf of the South Lorain
          7   Merchants Association.
          8            I have been a hairdresser for a long time,
          9   and due to situations, I have been had to be
         10   retrained because I can no longer stand for long
         11   periods of time.
         12            My neighborhood is adjacent to an old
         13   steel plant that once employed 7,000 men.  It now
         14   employs less than 2,000 people.  Can you imagine
         15   what it does to a community?
         16            Once Banc One's retail operations have --
         17   the severe cutback in Lorain County.  We are told
         18   that the cutback has nothing to do with the
         19   merger.  In my perspective, it has everything to do
         20   with the merger because that is the trend of the
         21   country these days.
         22            Money loaning and the -- are joining with
         23   the money grabbing businesses.  Our Banc One branch
         24   that just closed, it has five million dollars in
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          1   it.  I guess it's not enough money.  They says it's
          2   nothing personal, but business is business.
          3            I would like to talk about trends.  The
          4   Federal Reserve reports -- own report seems to
          5   conclude that small business lending suffers when
          6   big banks buy smaller banks.
          7            Small bank -- small business lending
          8   depends upon relationships with neighborhoods,
          9   merchants, and big banks don't look at their
         10   operations over the long-term with the investment
         11   in the community.
         12            We are told that the United States is fast
         13   approaching a time when whites will be in the
         14   minority.  I recently read that the buying power in
         15   the Black community has grown recently to 8.2
         16   percent in the consumer economy.  With this kind of
         17   trend underway, how is it that the bottom line,
         18   conscientious banks haven't the foresight to
         19   actively pursue the growing minority market.
         20            If all these bank branches and the lending
         21   institutions are, in fact, race neutral, why aren't
         22   we seeing fierce competition for the minorities?
         23            People forget the depositors contribute
         24   more money to the banks than the stockholders, but
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          1   every time I turn around, there are always fewer
          2   advantages for depositors and more and more for the
          3   stockholders.
          4            The depositors have fewer banks to go to,
          5   fewer hours to get service from and fewer staff who
          6   are shifted around in the system so that there is
          7   no relationship with the community.  Deposits earn
          8   less and less interest while fees go up and up.
          9            So while some executives get very rich and
         10   stockholders look to increase their return on
         11   investments and lower returns on their deposits and
         12   increased costs.
         13            Now banks have made it clear that they
         14   don't want to be banks anymore, they want to be
         15   stockbrokers, insurance agents, pension advisors,
         16   investment specialists, et cetera.  They want to
         17   cross-sell their customers into every conceivable
         18   financial imaginary product except plain,
         19   old-fashioned human-oriented service.
         20            Just once I would like to see the
         21   announcement of another bank merger or acquisition
         22   that would conclude with the following sentence:
         23   The merger is subject to regulatory and depositor
         24   approval.
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          1            If depositors had a voice in these
          2   matters, maybe the executives, high fliers and
          3   golden parachuters would have to promise them
          4   higher interest rates on a deposit, lower fees and
          5   more locations and longer hours and better service
          6   to people.
          7            This regulatory body is all that stands
          8   between the voice of depositors and the greedy
          9   money grabbing depositors -- at depositors'
         10   expense.
         11            You are duty bound to look at the
         12   competition, convenience and the needs of the
         13   communities.
         14            On behalf of South Lorain Merchants
         15   Association, I want to tell you to deal with
         16   this -- tell you this deal does not create
         17   competition.  We need competition in the
         18   community.  We have an example right now with BP
         19   and Amoco merging.  We're losing a thousand jobs in
         20   Cleveland and the space that it takes for rental in
         21   Cleveland.
         22            If you continue along the lines of having
         23   less competition, there's going to be no
         24   competition.  How many banks are going to be left
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          1   when we get through with all this?
          2            As somebody earlier had commented about
          3   having 9,000 banks at one time and now it's getting
          4   down to less and less, what are you going to do
          5   when there's no competition, when there's nobody to
          6   go to?
          7            That's it.
          8       MS. SMITH:  Thank you very much.
          9            Any questions?
         10       MS. WILLIAMS:  I've got one.
         11       MS. SMITH:  Okay.  We have a question.
         12       MS. WILLIAMS:  This is for Mr. Bellamy.
         13            You mentioned that subprime lending went
         14   from 3 to 15 percent.  Was this in Lorain County,
         15   and over what period, and was this percentage for
         16   one institution?
         17       MR. BELLAMY:  This is for Banc One.  This is in
         18   Lorain County only.  This is for Banc One.
         19            And the financial services subprime
         20   lending branch of Banc One just came into the
         21   county in '93, and at that time, they had, as I
         22   say, only three percent of the total investments in
         23   the low to mod areas.
         24            In 1996, the financial services branch,
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          1   the subprime lender, is up to 15 percent of the
          2   residential lending in that same category of low to
          3   mod areas.
          4       MS. WILLIAMS:  Okay.  Thank you.
          5       MS. SMITH:  Thank you very much.
          6            I will remind people that you may submit
          7   written supplements to your oral testimony by next
          8   Thursday, August the 20th.  And the information
          9   about where to provide them has, I think, been
         10   given to you, or you can get them from the
         11   registration desk.
         12            We're scheduled for a ten-minute break.
         13   We're about a half an hour behind schedule.  I
         14   think we're going to save five minutes by cutting
         15   it to a five-minute break, so we'll see you here
         16   very soon.  And I think the timers are going to
         17   time us.
         18                      (Whereupon, a recess was
         19                      taken.)
         20                      (Whereupon, further proceedings
         21                      were had which are bound under
         22                      separate cover.)
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          3                      TO MERGE WITH
          7            Proceedings had in the above-mentioned
          8   cause, on Thursday, the 13th day of August,
          9   1998, at The Federal Reserve Bank of Chicago,
         10   230 South LaSalle Street, Chicago, Illinois, at
         11   9:00 o'clock a.m.
         15                        VOLUME II
         20   REPORTED BY:  Brenda S. Tannehill, CSR
         21   LICENSE NO.:  084-003336
         22            -and-
         23   REPORTED BY:  Jeanette A. Sandei, CSR
         24   LICENSE NO.:  084-003685
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1                      (Whereupon, proceedings were
          2                      previously had which are bound
          3                      under separate cover.)
          4       MS. SMITH:  We're starting with Mr. Ruf.
          5       MR. RUF:  My name is Fritz Ruf.  I'm the
          6   Executive Director of Wisconsin Housing And
          7   Economic Development Authority and here to testify
          8   in support of the merger of Banc One and First
          9   Chicago NBD.
         10            Wisconsin Housing and Economic Development
         11   Authority is a State Housing Finance Authority
         12   created in 1973.
         13            Our mission is to serve Wisconsin
         14   residents and communities by working with others to
         15   provide creative financing and technical resources
         16   to stimulate and preserve affordable housing, small
         17   business and agriculture.
         18            One of our oldest and most reliable
         19   partners has been Banc One and its predecessor,
         20   Marine National Exchange Bank.  Together, we have
         21   provided millions of dollars of affordable
         22   financial resources to Wisconsin home buyers,
         23   farmers and small business owners.
         24            Consider the following track record
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          1   established by WHEDA and Banc One.  And incidently,
          2   these numbers are not included in the HMDA data
          3   that has been referred to previously because we are
          4   still in the process of working with the Federal
          5   Reserve Bank of Chicago to determine a method to
          6   permit this information to be accumulated as the --
          7   in the HMDA data to give a more accurate reflection
          8   of low to moderate income lending in Wisconsin.
          9            1,539 home purchase loans totaling
         10   $72,765,867; 41 home improvement loans totaling
         11   $350,000; 2 beginning farmer loans totaling
         12   $288,000; 133 agricultural production loan
         13   guarantees totaling $1,758,000; 10 small business
         14   loan guarantees totaling $1,055,000; and 23 small
         15   business loan subsidies totaling $683,000.
         16            Moreover, Banc One is the first
         17   corporation to invest in Wisconsin whole
         18   income housing credit development.  Today, Banc One
         19   has debt or equity investments in 35 Wisconsin
         20   communities.
         21            While we are pleased with this record,
         22   we continue to seek opportunities to do more.
         23   Recently, Wisconsin Housing and Economic
         24   Development Authority talked to numerous investment
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          1   bankers, underwriters, insurance companies and
          2   banks in an effort to find some parties interested
          3   in providing financial assistance for the
          4   development of low-income, multi-family housing in
          5   rural areas in Wisconsin where the need is very
          6   acute and the ability to meet that need has been
          7   very limited by the size of the loans and the
          8   inability to acquire adequate capital to be -- who
          9   would be attracted to this market.
         10            Banc One was the first and only
         11   institution to respond to this search of ours.  And
         12   we have developed with them a corporation known as
         13   the Wisconsin Affordable Housing Alliance, LLC.
         14            The purpose of the alliance is to provide
         15   a permanent loan product for financing of small,
         16   nonmetropolitan, multifamily developments that
         17   use low-income housing tax credits, to leverage
         18   private capital for multifamily development, to
         19   fill a market need with a product not otherwise
         20   available in Wisconsin, and to create quality
         21   rental housing for low to moderate income
         22   Wisconsinites in small income markets.
         23            Until the alliance, Wisconsin tax credit
         24   developers had difficulty accessing long-term
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          1   credit.  Many relied on short-term organizations
          2   with uncertain and unknown future terms.  This
          3   mismatch of resources to purpose was limited to
          4   production of smaller-scale developments that are
          5   badly needed in many Wisconsin communities.
          6            Through the alliance, developers can now
          7   plan their projects with more confidence and also
          8   readily assess equity from investors who favor such
          9   long-term financing.
         10            This program has allowed us to put forth
         11   $1,975,000 in three developments containing 92
         12   units.  Presently, the alliance is committed -- has
         13   committed to additional loans of up to $5,124,000,
         14   this from a corporation in which we have
         15   contributed $1 million of equity, Banc One CDC
         16   contributed a million dollars in equity and a line
         17   of credit of up to $10 million.
         18            We feel very strongly that Banc One has
         19   been and will continue to be a very aggressive
         20   provider of lending product to low to moderate
         21   income families in Wisconsin.  And we'd urge the
         22   Federal Reserve Bank to favorably consider the
         23   merger that is before them today.  Thank you.
         24       MS. SMITH:  Thank you very much.  We'll go to
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          1   Mr. Barbash.
          2       MR. BARBASH:  Good afternoon.  I appreciate
          3   your allowing me to move up.  It allows me to get
          4   back to Columbus and not miss the Savage Garden
          5   concert, which my 15-year old daughter has insisted
          6   I be back for.
          7       MR. ALVAREZ:  Lucky for you.
          8       MR. BARBASH:  Yeah, lucky me.
          9            My name is Mark Barbash.  I'm Executive
         10   Director of Columbus Countywide Development
         11   Corporation.  We are what's called a certified
         12   development company.
         13            We've been in existence since 1981.  And
         14   our mission in life is to create jobs.  We do this
         15   by filling the capital access gap for small
         16   businesses by providing financing which takes
         17   substantially greater risk than conventional bank
         18   financing and which may involve substantial
         19   technical assistance to entrepreneurs.
         20            The purpose of my appearance here today is
         21   to strongly support the merger of Banc One and NBD
         22   First Chicago.
         23            And I do this primarily based upon the
         24   record of practical day-to-day partnership that
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          1   exists in Columbus between Banc One, and not just
          2   Columbus Countrywide, which is the primary
          3   small business lender in the area, but a whole
          4   range of other economic development, social
          5   service organizations, the Ohio State University,
          6   and so on.
          7            Let me give you four specific examples of
          8   Banc One's involvement.
          9            The first is their involvement in regular
         10   standard small business lending through the SBA 504
         11   program.  In our business, we make loans -- second
         12   mortgage loans to small businesses for real estate
         13   expansions so they can grow and hire people.
         14            Since 1981, Banc One has financed
         15   $60 million in SBA 504 financing in essentially
         16   three counties of central Ohio.  This is about
         17   14 percent of the total investment that our
         18   certified development company has made in SBA 504
         19   financing.  They are the lead bank in this area.
         20            Second is the area of microenterprise
         21   financing.  In 1993, we established a central Ohio
         22   microloan program.  We did this by using funding
         23   from the Small Business Administration, but it
         24   required contributions of area lenders to establish
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          1   a loan loss reserve fund.
          2            Banc One was the first in the gate.  They
          3   contributed $14,000 to this program.  It was a
          4   small amount, but since then we've put out just
          5   under a million dollars in financing to 150
          6   start-up small businesses primarily in the inner
          7   city of Columbus.  30 percent of this has gone to
          8   minority-owned businesses, 49 percent to
          9   women-owned businesses and 40 percent to low-income
         10   business owners.
         11            The third area is microenterprise
         12   training, which you discover when you make loans to
         13   start-up small businesses is it's not just the
         14   money, it's the ability to run the business.
         15            Banc One was the lead founder of a program
         16   in Columbus called Fast Track, which was set up by
         17   a group called the Ohio Foundation for
         18   Entrepreneurial Education, which is a practical
         19   day-to-day training program to help entrepreneurs
         20   become better entrepreneurs.
         21            To date, they've put $65,000 in
         22   operational funding in and have funded $15,000 in
         23   scholarships.  In 18 months, we've basically
         24   trained 150 small businesses.
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          1            Fourth, recently Banc One participated in
          2   the establishment of the Columbus Growth Fund,
          3   which is a Mezzanine Financing Fund between debt
          4   and equity targeted at minority women-owned
          5   businesses in the city of Columbus.
          6            Banc One's specific involvement has been
          7   $545,000 towards this project.  Banc One's
          8   involvement is not just money.  It's day-to-day
          9   involvement by their officers, both line lenders,
         10   by senior managers and loan review committees,
         11   evaluations of applications.  They really put in
         12   thousands of hours.
         13            Let me stress a couple of points.  The
         14   first one is our organization, as I've said, is not
         15   the only game in town.  I represent but one facet
         16   of Banc One's involvement in Columbus economic
         17   development activities.
         18            Second thing is that there's been some
         19   concern about the impact of Banc One's local
         20   economic development activities by the impact of
         21   the merger.
         22            In another role, I am the President of an
         23   organization called the National Association of
         24   Development Companies, which is an association of
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          1   groups like ours around the country.
          2            And when Banc One would buy a local bank,
          3   I would get calls from local certified development
          4   companies around the country saying, you're from
          5   Columbus, tell us about Banc One.  I tell them
          6   about my good experience.
          7            And with almost universal response, six
          8   to twelve months later these certified development
          9   companies call back and say, you know, you were
         10   right, it took them a little while, but, in fact,
         11   they're very active in local economic development.
         12   Around the country, they seem to be having this
         13   effect.
         14            A lot has been said here about the
         15   desirability of having special agreements.  I want
         16   to finish by saying that we don't have a special
         17   agreement with Banc One.  We don't have a written
         18   piece of paper.
         19            What we have is a practical, day-to-day
         20   working relationship with the bank that caused --
         21   has obligations on our part to do our job,
         22   obligations on Banc One's part to help do this.
         23   And we strongly support the merger.
         24       MS. SMITH:  Thank you very much.
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          1       MR. BARBASH:  Thank you.
          2       MS. SMITH:  Ms. Carlstedt.
          3       MS. CARLSTEDT:  Is this --
          4       MS. SMITH:  I'm not sure that that -- here,
          5   just use that one.
          6       MS. CARLSTEDT:  Thank you for this opportunity
          7   to address the Federal Reserve Panel.  My name is
          8   Moria Carlstedt, and I am the President of the
          9   Indianapolis Neighborhood Housing Partnership.
         10            The partnership was formed in 1988 and is
         11   a catalyst and intermediary to support the
         12   creation of affordable housing opportunities in
         13   Indianapolis, as well as just to support the
         14   sustaining of our current affordable housing
         15   stock.
         16            Through partnerships with Federal, State
         17   and local governments, as well as our philanthropic
         18   institutions, community development corporations
         19   and the financial institutions, the Indianapolis
         20   Neighborhood Housing Partnership has been involved
         21   in counselling, credit counselling, home ownership
         22   training and direct lending through loan pools.
         23            Since 1988, we have counselled
         24   approximately 5,000 customers.  We have conducted
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          1   150 classes.  And we've been involved in
          2   approximately 2,000 units of home ownership
          3   opportunity and/or quality rental opportunities.
          4            The Housing Partnership has had a
          5   long-standing relationship with Banc One and First
          6   Chicago NBD.  They have been with us since the
          7   beginning.  Both institutions have participated in
          8   two single-family loan pool opportunities, as well
          9   as one multi-family loan pool.
         10            Banc One and First Chicago represented --
         11   First Chicago NBD, excuse me, represented
         12   approximately 46 percent of our first loan pool,
         13   they represent 40 percent of our existing loan
         14   pool and about 66 of our multi-family lending
         15   loan pool.
         16            The pools have been the primary source
         17   of funds dedicated to creating affordable and
         18   low-income housing opportunities in Indianapolis.
         19            Additionally, among the financial
         20   institutions, since 1988 Banc One and First Chicago
         21   NBD have been the single largest donating -- they
         22   have donated more money to our partnership and
         23   supported our operations.
         24            They also have membership on our Board of
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          1   Directors and have been actively involved in our
          2   community in the -- supporting the affordable
          3   housing delivery system.
          4            The Housing Partnership has been working
          5   with Banc One and we have been in communications
          6   with Banc One to ensure that the momentum and
          7   significant community -- the significant community
          8   development activity that has taken place over the
          9   years remains at a pace that will meet the needs of
         10   our citizens.
         11            The Housing Partnership recognizes and
         12   respects the business activities or the business
         13   reasons for the merger.  And we believe that
         14   Banc One will, in fact, remain a strong community
         15   partner.
         16            We are always there in communication with
         17   Banc One to remind them that the post-merger bank
         18   will need to remain committed to our organization
         19   and other organizations such as ours, like the
         20   Community Development Corporations and other
         21   partners and stakeholders.
         22            It is imperative that Banc One remain
         23   involved in order to enable us to sustain the pace
         24   at which we are developing affordable housing
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          1   opportunities.
          2            We are communicating with Banc One on a
          3   regular basis to remind them of the tremendous
          4   financial investment that has taken place in
          5   Indianapolis over the years.
          6            Our philanthropic institutions and our
          7   community development corporations, the government
          8   and the private sector, have worked well together
          9   and we have made tremendous accomplishments.  And
         10   Banc One and First National and NBD have been there
         11   primarily in the form of the loan pools and by
         12   supporting the partnership.
         13            We are always reminding Banc One of the
         14   need for them to continue to play a significant
         15   role.  Our community has just completed a task
         16   force which will guide our growth and our community
         17   in the form of its housing policy for the next ten
         18   years.  And it is clear that Banc One and all of
         19   the financial institutions will be imperative -- it
         20   will be imperative that they participate in our
         21   growth in the next ten years.
         22            Finally, we don't hesitate to remind Banc
         23   One and the other banks in our community about the
         24   profitable business opportunities in remaining in
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          1   partnership and remaining actively engaged in the
          2   community development movement.
          3            Through our counselling, we refer
          4   hundreds, hundreds of citizens to Banc One and
          5   other banks in our community who and then -- who
          6   then are able to access traditional mortgage
          7   products.
          8            Banc One and the Indianapolis Neighborhood
          9   Housing Partnership have communicated throughout
         10   this entire process.  And we are optimistic that
         11   that communication will continue to the benefit of
         12   the community.
         13            Therefore, based on the significant level
         14   of participation of Banc One and the history of the
         15   Community Development Corporation of the community
         16   development movement and in their commitment to the
         17   partnership, as well as assurances that we have
         18   received during this process and a belief that
         19   local bank management will, in fact, be making
         20   decisions for the local community, the Housing
         21   Partnership is encouraged about the future.
         22            And we believe that Banc One will remain
         23   committed to the Indianapolis community, to the
         24   partnership and to community development.  Thank
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          1   you for this opportunity.
          2       MS. SMITH:  Thank you.  Ms. Jones-Kibby.
          3       MS. JONES-KIBBY:  Hello.  I want to thank
          4   you -- I need a microphone.
          5            Good afternoon.  I want to thank you for
          6   the opportunity to speak out in support of the
          7   merger between Banc One and First Chicago NBD.
          8            My name is Denise Jones-Kibby, and I'm the
          9   Policy Director at Women's Self-Employment Project,
         10   as well as the Chair of Illinois State
         11   Microenterprise Initiative, also known as ISMI.
         12            Women's Self-employment Project founded
         13   ISMI in the fall of 1995.  ISMI is a coalition of
         14   service providers, financial institutions, State,
         15   local and private agencies.
         16            Our mission is to provide an organized
         17   voice to advocate for community economic
         18   empowerment and to create growth opportunities
         19   for microenterprise development throughout the
         20   state of Illinois.
         21            Microenterprise are defined as very small
         22   businesses having fewer than five employees,
         23   limited access to the commercial banking sector,
         24   are able to utilize a loan under $15,000 and are
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          1   generally sole proprietors.
          2            A study by the Aspen Institute found that
          3   entrepreneurs served by microenterprise development
          4   programs are predominantly women, people of color
          5   and low to moderate income.
          6            Many microenterprise businesses are
          7   located in residential communities.  By providing
          8   business services in residential communities,
          9   microenterprise affords economic fabric that is
         10   critical to maintaining economically viable
         11   neighborhoods.
         12            There are over 200,000 microenterprise
         13   businesses in Chicago.  Microenterprise is growing
         14   at an annual rate of 7 to 8 percent.  The number of
         15   microenterprise businesses is expected to reach
         16   27.8 million nationwide by the year 2001.
         17            66 percent of the new jobs created
         18   in Illinois between 1992 and 1996 were
         19   microenterprises compared with the net loss of
         20   jobs in firms over 100 employees.
         21            As a number of microenterprise businesses
         22   increase in Illinois, it is imperative that the
         23   government and private sector leaders recognize and
         24   support microenterprise as an essential component
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          1   of economic development and welfare-to-work
          2   strategies that result in job creation and
          3   self-sufficiency.
          4            I am testifying today to inform you that
          5   Banc One Illinois has been very supportive of
          6   ISMI's efforts to promote microenterprise in
          7   Illinois.  Banc One was one of the first financial
          8   institutions to join ISMI and has taken a
          9   leadership role in several of its initiatives.
         10            In March of 1998, ISMI held its first
         11   statewide microenterprise conference in
         12   Springfield, Illinois.  Banc One financially
         13   sponsored the conference, assisted in the planning
         14   and facilitated discussions.
         15            Banc One has also taken a leadership role
         16   in the development of a database and a directory of
         17   microenterprise organizations in Illinois.  We
         18   anticipate that both items will be accessible
         19   through the Internet in the near future.
         20            Access to information is often cited as an
         21   impediment to microenterprise development.  And
         22   ISMI anticipates that this second edition of the
         23   directory will be as popular and useful statewide
         24   as the first.
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          1            Banc One is working with other ISMI
          2   members to research and develop a report
          3   identifying the barriers faced by
          4   microentrepreneurs in Illinois.
          5            We will use this report to increase our
          6   advocacy for creating a public and private sector
          7   environment in Illinois that fosters
          8   microenterprise development in fund-raising.
          9            As ISMI works towards its goals of
         10   developing a comprehensive public policy agenda
         11   that promotes microenterprise as a viable economic
         12   development alternative, especially for communities
         13   with limited access to resources, addressing the
         14   needs of microenterprise development programs and
         15   building a network to exchange information between
         16   microenterprise organizations in Illinois, ISMI
         17   believes that Banc One will continue to be a
         18   valuable partner and, therefore, ISMI supports this
         19   merger application.  Thank you.
         20       MS. SMITH:  Thank you very much.  Mr. Kudek.
         21       MR. KUDEK:  Thank you.
         22            My name is Ken Kudek.  I'm Assistant
         23   Director and Vice President of Focus Hope in
         24   Detroit.  Focus Hope is a human and civil rights
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          1   organization.  And we are this year celebrating our
          2   30th anniversary.
          3            I think it's fair to say, up front, that
          4   First Chicago NBD is one of three major banks that
          5   we do a lot of business with in Detroit.  We have
          6   an operating budget of $60.2 million and usually
          7   have a capital devolvement budget of $20 million a
          8   year operating, okay?  At least two of those banks
          9   probably wish I wasn't here testifying in favor of
         10   this merger today.
         11            The programs that we run, let me start
         12   with the key program, the Food Prescription
         13   Program.  It's a Federal Commodities Supplemental
         14   Food Program for low-income pregnant women,
         15   postpartum women, infants and children to six years
         16   of age and senior citizens in Detroit.
         17            During the first Reagan administration, we
         18   actually got it introduced as a pilot legislation
         19   when every other program -- social program in the
         20   United States was coming under jeopardy.
         21            The Food Prescription Program in the last
         22   depression that we had in Detroit, which was in
         23   1991, fed 90,000 people a year.  It's that
         24   experience that drives us as a civil and human
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          1   rights organization to community and economic
          2   development.
          3            We chose human skill development as the
          4   primary driver, the one thing that could not be
          5   relocated easily and the kind of thing that put
          6   us into technical training in the deals that
          7   we're in.
          8            Effectively, those technical training
          9   programs are viewed as breakthrough.  They're
         10   copied in the United States from Los Angeles
         11   through St. Louis to Philadelphia.  And we now have
         12   a clone coming up in Port Elizabeth, South Africa.
         13            In those programs, high school graduates,
         14   who in the United States come out with Sixth Grade
         15   math and Eighth Grade reading functionally, can end
         16   up with a Bachelor's of Manufacturing Engineering
         17   and human experience time.
         18            We take people from Eighth Grade math and
         19   Eighth Grade reading in seven weeks to be able to
         20   do technical training; that is, Eleventh Grade math
         21   and about Tenth Grade reading in the seven weeks,
         22   all in human time.
         23            These are all poor folks.  80 percent of
         24   the population is African American, 45 percent in
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          1   a nontraditional field of manufacturing and
          2   machining and engineering are female, 80 percent
          3   are low income.
          4            The place in which we live is
          5   a low-income section of Detroit.  We see poverty
          6   day in and day out.  We don't like it.  We want to
          7   change it.  That is our mission, to eliminate
          8   poverty, racism and adjust it.
          9            To -- I've heard a number of concerns
         10   about housing care.  By the way, our bias on that
         11   is, if you create the human skills so that people
         12   are productive, you draw jobs.  Jobs create money.
         13   Money creates housing.  I don't need Federal
         14   Legislation to create housing.  I need jobs, okay?
         15            We have had, for the last 20 years -- we
         16   looked at it last year -- fiduciary responsibility
         17   for over one-half billion of Federal dollars alone,
         18   500 million Federal dollars.  The departments that
         19   have put their confidence in us are Agriculture,
         20   HHS, DOD, DOL, DOE, DOC, HUD, to name a few.  Okay?
         21            I say all this because bona
         22   fese (phonetic) are important.  And I've
         23   listened in the audience for a while to my brother
         24   and sister colleagues who are in community and
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          1   economic development who are on the other side of
          2   this issue.
          3            We've known NBD -- and I'll refer to them
          4   as NBD because it's the old name.  I don't change
          5   that easily.
          6            We've known NBD since we had $110.48 to
          7   put in the bank.  In the 30 years of history, one
          8   sees both good times and bad times as a civil human
          9   rights organization.  NBD was always there.
         10            As I said, we had a fiduciary
         11   responsibility for a lot of Federal money, State
         12   money, local money, foundation money all over the
         13   place.  And in each of those cases, particularly on
         14   the Federal Government, the State side and the
         15   local governmental side, it is extremely, extremely
         16   slow pay.  NBD has been there with a line of
         17   credit.
         18            I only have one minute left, so I'll take
         19   on the two objections.  One is Banc One, who I
         20   don't know, has a bad history of lending, possibly
         21   discriminatory.  You guys need to look into that.
         22   I'm a civil and human rights guy.  You need to look
         23   into that.
         24            The second is that consolidation may lead
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          1   to disinvestment.  I don't believe that's true.  My
          2   experience with NBD and Bank -- First of Chicago
          3   NBD since the merger is that there has been more
          4   re-investment and not less re-investment in
          5   Detroit.  And thank you for your time.
          6       MS. SMITH:  Thank you.  Ms. Ratner.
          7       MS. RATNER:  I'm Hedy Ratner, and I'm
          8   Co-President of the Women's Business Development
          9   Center.
         10            Thank you for the opportunity to present
         11   my response to the proposed merger of Banc One with
         12   First Chicago NBD in support for Chicago NBD and
         13   Banc One's merger and commitment to both the letter
         14   and spirit of the Community Reinvestment Act.
         15            Representing thousands of women and
         16   minority business owners in the Chicagoland area,
         17   the WBDC is involved in First Chicago NBD's
         18   continuing investment into low and moderate income
         19   families, business and neighborhoods and
         20   specifically in its efforts to provide access to
         21   credit in those communities.
         22            The Women's Business Development Center
         23   has a positive first-time experience with First
         24   Chicago NBD since the inception of our organization
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          1   in 1986.
          2            The WBDC provides counselling,
          3   entrepreneurial training, financial assistance,
          4   business and strategic planning, marketing and
          5   procurement assistance and assistance with loans to
          6   start-up, emerging and mature businesses.
          7            Our organization is now the oldest and one
          8   of the largest and most comprehensive women's
          9   business assistance centers in the United States.
         10            First Chicago has been our partner in
         11   economic development providing support for our
         12   organization, loans to our client, funds for our
         13   collateral pool to collateralize small business
         14   loans, program-related investments for microlending
         15   to women and minority start-up businesses, involved
         16   with our Board of Directors, participation as a
         17   lender in our women's business bank loan program
         18   and participation in our annual events at
         19   conferences and marts, and is committed to vendor
         20   development and purchasing from minority and women
         21   business owners, one of our major missions.
         22            Recently, the Women's Business Development
         23   Center and First Chicago NBD began a wonderful new
         24   partnership to provide business development,
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          1   financial assistance and banking services to low
          2   and moderate income communities.
          3            First Chicago NBD and the WBDC are taking
          4   our programs and services on the road with the
          5   Wheels of Business mobile van to make our programs
          6   and services more available and accessible in
          7   low-income communities.
          8            This innovative new business program will
          9   bring information and services, counselling and
         10   entrepreneurial training, banking services, credit
         11   advice and counselling, financial assistance,
         12   Internet training and access to that technology, as
         13   well as self-employment opportunities to
         14   economically disadvantaged communities.
         15            Women, and specifically those in
         16   low-income communities, have been left out of
         17   economic opportunities.  Women face numerous
         18   barriers to economic self-sufficiency because of
         19   lack of affordable child care and access to
         20   transportations, quality education and jobs.
         21            The First Chicago NBD Worlds -- Wheels
         22   of Business -- First Chicago NBD-WBDC-Wheels of
         23   Business approach helps us provide resources,
         24   information and support to those who need --
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          1   most need help.
          2            The WBDC is also a partner with Banc One.
          3   It has been part of the Women's Business Bank Loan
          4   Program, participated in our annual conferences and
          5   supports the WBDC and provides loans to our
          6   clients.
          7            WBDC is also partnering with ACCION, a
          8   neighborhood microlender which has received
          9   considerable support and encouragement from First
         10   Chicago NBD.
         11            With ACCION providing loans and WBDC
         12   providing business assistance, the small businesses
         13   in economically disadvantaged neighborhoods have a
         14   better chance for success in the communities and
         15   increased opportunities neighborhood
         16   revitalization.
         17            CANDO, a microlender and a neighborhood
         18   development organization, has also been our partner
         19   and a partner of First Chicago NBD for many years,
         20   lending, developing and supporting Chicago's
         21   economic strength.
         22            The partnership of private and public
         23   sector, nonprofit and for-profit entities is
         24   also evident in First Chicago's involvement with
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          1   the Illinois Capital Access Program, a
          2   state-based small business loan initiative begun
          3   in early 1997.  CAP is now one of the most
          4   successful programs for access to capitals for
          5   small businesses.
          6            First Chicago NBD is the most active
          7   lender in this successful program.  CAP's incentive
          8   program provides more ways for First Chicago to
          9   approve loans for small business.
         10            For the WBDC and other community
         11   development organizations, to truly understand the
         12   issues of small business lending in low and
         13   moderate income communities, gender and race based
         14   lender data that has been available for housing is
         15   not available for small business.
         16            With good research, gender and race based
         17   data, we can develop the successful policies and
         18   programs for small business lending in the next
         19   century.  We, therefore, look to First Chicago with
         20   Banc One to be the precedent-setter and to lead
         21   national efforts in changing Regulation B.
         22            This is a tiny window of opportunity.
         23   The Federal agencies are requesting comment and
         24   recommendations on Reg B from the general public.
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          1            Although our organization and hundreds
          2   of community and economic development organizations
          3   agree that the requirement of gender and race
          4   based commercial lending data is necessary for
          5   policy and appropriate development, we would like
          6   to see the participation of major banks in this
          7   effort as well.
          8            The WBDC and many of our colleagues across
          9   the nation are also very concerned about the effect
         10   bank mergers will have on small business lending.
         11            The standardization of underwriting
         12   criteria, the removal of lending decision-making
         13   from the first-line banker, which is the continuing
         14   trend in larger and merged banks, is detrimental
         15   to the growth of small businesses in the inner
         16   cities.
         17            Although intermediaries like ours -- oops,
         18   am I off?  I'm off.  Well, I'm done, I guess.
         19       MS. SMITH:  Thank you very much.  We will
         20   keep -- we will put your entire statement into the
         21   record.
         22       MS. RATNER:  Thank you.
         23       MS. SMITH:  Any questions?  All right.  We're
         24   ready for Panel 16.
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          1            All right.  We're going to start with
          2   Mr. Ellis, if someone will give him the mike.
          3       MR. ELLIS:  Ladies and gentlemen, my name is
          4   Walter Ellis.  I'm the Director of an organization,
          5   United Affirmative Action Development Corporation.
          6            In 1995, UAD began negotiations with
          7   the then Premier Bank in Ruston and Baton Rouge,
          8   Louisiana, to expand banking opportunities for our
          9   underserved communities.
         10            The discussions specifically focused upon
         11   creating more employment opportunities for African
         12   Americans within the bank and making more loan
         13   capital available to support African American
         14   entrepreneurship.
         15            Thus, the discussion with Premier began,
         16   raising the issue of whether it was meeting the
         17   needs of Grambling, clearly an underserved
         18   community.
         19            Discussions continued over a period of
         20   months with UAD and Premier Bank attempting to
         21   effect an agreement that would result in a
         22   consulting relationship, wherein Premier would
         23   provide capital for commercial loans, create an
         24   internship program for Grambling University
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          1   students and graduates, and UAD would assist in
          2   providing applicants for each.
          3            Through the course of events, UAD worked
          4   with Grambling University and community officials
          5   toward bringing the internship program to
          6   fruition.
          7            Following what initially appeared to be
          8   an interest, the bank began to stonewall under
          9   the pretext of its acquisition by Banc One,
         10   subsequently breaking off all discussions.
         11            During this same period, UAD also
         12   presented to what has become Banc One of Louisiana
         13   several commercial loan applications.  None of
         14   these, at least one of which has been pending more
         15   than a year, have been funded, nor has an averse
         16   action been taken upon them.
         17            Though Banc One acknowledges an agreement
         18   between Premier, its predecessor in interest, and
         19   UAD, it now says that it, Banc One, is not bound by
         20   this agreement, refusing to honor same.
         21            It appears now that Banc One, first in
         22   anticipation of the Premier Bank acquisition, then
         23   the First Chicago merger, continued insincere
         24   dialogue with UAD to minimize the possibility of
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          1   UAD filing a complaint pursuant to the Community
          2   Reinvestment Act or existing FDIC Federal Reserve
          3   Regulations.
          4            I, therefore, respectfully request that my
          5   testimony be made part of the record of these
          6   proceedings and that the Federal Reserve approval
          7   of the subject merger with First Chicago be
          8   withheld until such time as a complete and thorough
          9   audit of Banc One's compliance with the spirit of
         10   the reverent acts and regulations in view of its
         11   behavior in African American communities throughout
         12   the nation generally and in Louisiana particularly
         13   can be completed.
         14            My first approach to Premier Bank was to
         15   close my account because I thought I had been
         16   treated in an unfair manner, racially discriminated
         17   against.  And from that, I was invited to sit down
         18   to talk to the manager at the bank.
         19            And at that time, Premier was in the
         20   process of merging with Banc One and they didn't
         21   want any racial complaints, in particular, to be
         22   lodged against them apparently.
         23            I didn't know what process was taking
         24   place, but I approached the local bank manager and
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          1   told him that I was working with a bank in
          2   California and that we believe we could help them
          3   with some of their solutions under the Community
          4   Reinvestment Act as we were working with banks in
          5   California.
          6            And from there, we began to sit down and
          7   negotiate an agreement that later led to some
          8   things in writing and some back and forth
          9   communications between Premier Bank and Banc One.
         10            Things seemed like they fell apart for a
         11   while.  And then when these other mergers started
         12   taking place, in particular the one in Louisiana,
         13   we were again negotiating with Banc One and
         14   appearing that it was done in good faith.
         15            Once this merger took place in Louisiana,
         16   then the negotiations fell apart again.  And now,
         17   Banc One officials are saying that there is no such
         18   thing as an agreement; and if it is, it's between
         19   premier and UAD; and that Banc One don't intend and
         20   never have and never will sign any type of
         21   agreement.  And I think they should.
         22       MS. SMITH:  Thank you very much.
         23            Ms. Hain, you've been around a long time
         24   waiting for this.
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          1       MS. HAIN:  My name is Nancy Hain.  I'm the
          2   Secretary/Treasurer of the Paul A. Stradtman
          3   Construction Company in Cleveland, Ohio.  I'm also
          4   Mrs. Paul A. Stradtman.
          5            We're a customer with an 18-year
          6   relationship with Banc One.  We're an underground
          7   utility contractor in a very high-risk business
          8   that had several extremely bad years and have been
          9   in a rough situation with the bank as a result of
         10   those bad years.
         11            I recently -- with the news that were in
         12   the papers of the Banc One merger, I saw references
         13   to their interest in small business and how they're
         14   pursuing the small business lending.
         15            As a result of that article that I read, I
         16   contacted some of the senior people in the Banc One
         17   of Columbus.  And I've had a series of letters
         18   going back and forth, which have taken the
         19   situation that was not good to start with.  Each
         20   letter, the response gets worse.
         21            My most recent communication, which I'm
         22   going to read because it presents our position and
         23   the -- it gives a look at where a small business
         24   person is at if the world isn't a great and
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          1   wonderful place and if the bank doesn't happen to
          2   like your numbers.
          3            This is responding to a letter from the
          4   legal department.  And it says, I received your
          5   letter in response to my correspondence dated
          6   July 22nd.  We appreciate the review of the issues
          7   raised by my letter, but it appears that the
          8   purpose of the letter has been overlooked.
          9            This letter was asking for intervention or
         10   someone in the community reinvestment area to put
         11   me in contact with someone that could intervene in
         12   the situation we're in.
         13            The relentless collection methods and
         14   scorched Earth policy being followed by the bank
         15   representative and outside counsel representing
         16   Banc One against our business is what is at issue.
         17   The letter was an appeal for someone in
         18   the policy-making area of the bank to review our
         19   situation and hopefully intervene on our behalf.
         20            Contrary to your statement, I want to say
         21   that Paul Stradtman Construction always has and is
         22   honoring its commitments to Banc One.  The fact is
         23   evidenced by the uninterrupted payment history over
         24   the preceding 80 months, which totals $1,442,742.50
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          1   in principal and interest.
          2            PASCO's financial performance was severely
          3   impacted by three very bad municipal sewer projects
          4   undertaken during the '95 and '96 construction
          5   seasons, all of which we -- apparently were
          6   subsequently completed and were accepted by the
          7   municipalities.
          8            In spite of the severe losses incurred on
          9   these jobs, PASCO has and continues to live up to
         10   commitments to Banc One to retire the subject
         11   indebtedness.
         12            I would like to point out, once again,
         13   that PASCO began repayment of the $400,000 line of
         14   credit on its own volition at the rate of $10,000
         15   per month plus interest before Banc One demanded
         16   repayment in full.
         17            The obligation was reduced from
         18   the original $400,000 to $190,000 between
         19   February 1997 and July 1998, a period of
         20   18 months.  All of the payments included interest
         21   accrued to date on the outstanding balance.
         22            Although you've stated that we have failed
         23   to yield a satisfactory payment of debt, we feel we
         24   have made considerable progress under the
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          1   circumstances.
          2            In order to reassure the bank of our
          3   intent and ability to repay our obligation, we
          4   offer your representative, in addition to the
          5   collateral already held by the bank consisting of
          6   $2 million of construction equipment, a life
          7   insurance policy of $300,000 of Mr. Stradtman and
          8   our personal guarantees, to provide Banc One with a
          9   second mortgage on our piece of industrial real
         10   estate valued at over $3 million or a second
         11   mortgage on our piece of land zoned multifamily and
         12   valued at approximately a millions dollars.
         13            Our only request to Banc One through your
         14   representative was that PASCO be permitted to repay
         15   the line through the normal course of business at
         16   the rate of $10,000 per month and interest until
         17   paid in full.
         18            Your representative refused all of our
         19   offers to further secure the bank's position,
         20   demanded immediate repayment and, once again,
         21   pushed forward with legal action.
         22            The balance of the company's obligation --
         23   the balance of the loan is a company obligation.
         24   And the company is not able to repay the $190,000
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          1   demanded at this time.  The company has been
          2   hindered in securing a new banking relationship for
          3   a number of reasons.
          4            One of those reasons is the ongoing legal
          5   actions taken by Banc One against PASCO and Paul
          6   and I personally and their demands for immediate
          7   repayment.
          8            We are currently using personal assets for
          9   working capital until the company is strong enough
         10   to run on its own.  Large amounts of working
         11   capital are required to fund our construction
         12   projects before cash flow begins.  To repay the
         13   obligation from personal funds would leave us
         14   unable to meet the day-to-day operating needs of
         15   the company.
         16            We have good jobs in progress with almost
         17   all equipment working on job sites.  Our volume is
         18   ahead of last year.  We have every reason to expect
         19   a good year.
         20            For the bank to take the equipment, in
         21   lieu of our offers of additional security, would be
         22   disastrous to our company and the developers for
         23   whom we are working.
         24            It would mean the loss of jobs for our
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          1   24 employees, most of whom are highly-paid Local 18
          2   operating engineers and Local 860 laborers, many of
          3   whom have been with the company since it started
          4   business in 1980.
          5            I need another few seconds to wrap
          6   this up.
          7            We appreciate your commiseration with the
          8   unfortunate circumstances in which we find
          9   ourselves, but what we do not understand is why
         10   Banc One has chosen to relentlessly pursue the
         11   liquidation of PASCO's construction equipment and
         12   the ultimate destruction of the construction
         13   company and the life's work of the owners when:
         14            One, Banc One holds $2 million in
         15   construction equipment as collateral for a $190,000
         16   obligation.
         17            The original $400,000 obligation has been
         18   reduced every month since February, 1997, by at
         19   least $10,000 per month plus interest from the
         20   operating proceeds of the business, $210,000 in
         21   18 months.
         22            PASCO's original business checking
         23   accounts, both general and payroll, are with Banc
         24   One, as they have been for over 18 years.
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          1            Banc One is collecting interest every
          2   month on the declining balance.  PASCO is paying
          3   fringe benefits to union welfare funds administered
          4   by Banc One.
          5            In spite of what Mr. Sanford says, PASCO,
          6   by its actions, has demonstrated integrity,
          7   commitment and its intent and ability to meet
          8   obligations under extremely difficult and adverse
          9   conditions.  It would seem that these should be
         10   desirable qualities in a human or business
         11   relationship.
         12            PASCO's asking only for consideration that
         13   is totally within the power of the policy-makers of
         14   Banc One to grant that the company be permitted to
         15   repay the remaining balance of the line of credit
         16   of $190,000 at the rate of $10,000 per month plus
         17   interest until paid in full.
         18            The response to this is that we will be in
         19   court a week from tomorrow to be held in contempt
         20   for not turning our equipment over to the bank.
         21            So I think that in view of this situation
         22   with the small business, as this merger goes
         23   forward, I think the practices of the bank and
         24   their handling of small business accounts should be
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   examined because there -- small businesses are
          2   risky by their very nature.  And it's not a pretty
          3   picture when you end up creating a bad situation
          4   with them.
          5       MS. SMITH:  Thank you.
          6       MS. HAIN:  Thank you for your listening.
          7       MS. SMITH:  Mr. Hawthorne.
          8       MR. HAWTHORNE:  Hello, and thank you for
          9   allowing me to speak today.
         10            My name is Robert Hawthorne.  I am the
         11   Executive Director of Martindale Bright Community
         12   Development Corporation, a grassroots development
         13   corporation in Indianapolis.
         14            And I represent today Indianapolis
         15   Coalition for Neighborhood Developers, whose
         16   membership organization represents 15 grassroots
         17   community operations in Indianapolis who serve over
         18   200,000 people residing in low-income neighborhoods
         19   in Indianapolis.
         20            I'm here today, I guess, not to speak
         21   directly against the merger, but to ask for an
         22   extension of the comment period to allow for
         23   additional negotiations or conversations to take
         24   place with Banc One and NBD and hopefully,
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          1   subsequently, the new bank which will be a result
          2   of this merger.
          3            ICND -- I'm going to read from a prepared
          4   statement of the organization.
          5            ICND is extremely concerned about the
          6   pending merger of Banc One and NBD, particularly as
          7   it relates to the future development and leadership
          8   of the banking industry in Indianapolis community
          9   development with Indianapolis community development
         10   movement.
         11            All ICND members have enjoyed a strong and
         12   committed relationship with NBD, many for nearly
         13   20 years.  The relationship between ICND members
         14   and Banc One -- excuse me, and NBD have resulted in
         15   general operating support for our members, various
         16   financing mechanisms for projects, technical
         17   assistance and affordable housing products that are
         18   critical in our efforts to revitalize our inner
         19   city neighborhoods.
         20            In addition, NBD Bank has provided a
         21   community leadership within the banking industry,
         22   brought the necessary attention to community
         23   development and, most importantly, clearly values
         24   the work of our members from both a business
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   perspective as well as a philanthropic
          2   perspective.
          3            For this reason, it's critical that the
          4   comment period be extended to allow the community
          5   time to delineate precisely what Banc One's
          6   commitment will be to community development
          7   corporations in Indianapolis.
          8            One aspect of this merger which will be
          9   unique to Indianapolis is the divestiture that Banc
         10   One will have to complete.
         11            This divestiture will result in the
         12   introduction of a new, likely unknown bank who will
         13   immediately capture the third largest market share
         14   in Indianapolis, as well as the first and second
         15   largest market share among African American people,
         16   of which the community development corporation
         17   represent a great deal.
         18            ICND requests that this new bank be
         19   required to fill the same commitment to community
         20   development corporations as NBD has and articulate
         21   these comment -- these commitments in a five-year
         22   CRA plan.
         23            I'll just briefly take time to just go
         24   through the items.  One, we're looking to -- for
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          1   Banc One and the new bank to increase the number of
          2   types of mortgage project products which are for
          3   low-income people with special circumstances.
          4            We also look for Banc One to increase its
          5   commitment to retail development in Indianapolis,
          6   as well as small minority business development.
          7            We look for ICND members to have a direct
          8   relationship with NBD Bank over the last years.
          9   And cooperating support has been a part of that
         10   relationship.
         11            ICND requests that Banc One commit to
         12   creating endowment fund with the proceeds of
         13   divesture for the purpose of providing cooperating
         14   support to ICND and our members who serve to
         15   eliminate deterioration in inner city communities.
         16            In closing, both Banc One and NBD have
         17   been excellent Indianapolis corporate citizens
         18   supporting the business community, as well as the
         19   African American community.
         20            In a city where many of the low-income --
         21   low- and moderate-income communities are seeing a
         22   resurgence in quality housing, it is extremely
         23   important that both Banc One and the new bank
         24   commit to furthering the development of
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          1   Indianapolis inner city community and
          2   neighborhoods.
          3            We ask that the comment period be extended
          4   to allow for community -- more community input in
          5   this matter.  Thank you.
          6       MS. SMITH:  Thank you very much.  Ms. Haste.
          7       MS. HASTE:  Good afternoon.  My name is
          8   Bridgette Haste.  I'm the chairperson for a local
          9   community group, ACORN in Milwaukee.  I'm here
         10   today to tell you about my experience with Banc
         11   One's lending group.
         12            Back in 1991, I applied for a home loan
         13   with Banc One and was denied.  I had been on my
         14   present job for over five years.  I had deposits of
         15   over $16,000 in Banc One.
         16            Once they checked my credit record, I was
         17   told that would probably take me a couple of years
         18   to fix my credit to the position that would qualify
         19   me for a loan with Banc One.
         20            They told me that I could request a copy
         21   of my credit report from the local credit bureau.
         22   When I received it, the only thing that I could see
         23   on my credit record that would disqualify me was a
         24   doctor bill that was minimum in amount and that had
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          1   been paid.
          2            They could not tell me the reason why I
          3   was denied, only that I would need to contact my
          4   local credit bureau.
          5            Since then, in the same year I received
          6   several loan -- other type of loans, major credit
          7   cards, a credit line of $10,000 and a home loan
          8   with no questions asked and my credit report was
          9   submitted to them through factual data.
         10            I am now the proud owner of a duplex
         11   home on the north side of Milwaukee in which I have
         12   been living there for seven years, no thanks to
         13   Banc One.
         14            My loan denial was not an isolated
         15   incident.  In 1996, Banc One's own lending
         16   practices and data shows the rejection rate for
         17   African American and Latinos in the city of
         18   Milwaukee of 54 percent.  This is not acceptable.
         19            I am recommending that the proposed merger
         20   between Banc One and First Chicago NBD Corporation
         21   be denied.  Thank you very much.
         22       MS. SMITH:  Thank you.  Ms. Howard.
         23       MS. HOWARD:  Good afternoon.  My name is
         24   Minnie Howard, and I'm a member of Wisconsin ACORN
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          1   also.  I will testify today on the racial and
          2   discriminatory lending practices of Banc One in
          3   Milwaukee.
          4            The statistics that I will be using were
          5   taken from Banc One's own HMDA data.  I will also
          6   point out that Banc One is not making an effort to
          7   provide services that match the needs of minority
          8   communities.
          9            In light of these practices, I will also
         10   recommend that the proposed merger between Banc One
         11   Corporation and First Chicago NBD Corporation be
         12   denied.
         13            Banc One is holding over $1.16 billion in
         14   deposits from its central city branches, where the
         15   majority of African American and Latinos live.
         16            However, in 1996, only 2 single-family
         17   conventional mortgages went to African Americans
         18   and only 3 to Latinos, as compared to 79 for
         19   Whites.
         20            Furthermore, 57 percent of African
         21   American applicants were denied mortgages, more
         22   than 5 times the rate of denial for White
         23   applicants.
         24            Rates of home ownership among African
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          1   Americans and Latinos are drastically below home
          2   ownership rates for Whites.
          3            Banc One is contributing to a tremendous
          4   disparity and actually increasing it by providing
          5   such a disparate proportion of its mortgages to
          6   Whites.
          7            As home ownership rates among African
          8   Americans continued to decrease in Milwaukee,
          9   Banc One should be responding by increasing
         10   mortgage loans.
         11            However, at a meeting with Connie
         12   McDonald, CRA, Officer for the Eastern Region, and
         13   Milwaukee's CRA representative, Gwen Dansby, they
         14   said that rather than responding to the community
         15   needs, they will be putting even less emphasis on
         16   mortgage loans.
         17            The Banc One CRA representative that we
         18   met with claimed that mortgages were not their
         19   specialty.  So we looked at their record for home
         20   improvement loans and refined loans in Milwaukee,
         21   I'm going to say, which is approximately 20 percent
         22   minority.
         23            Banc One provided an incredible 3,596
         24   refinancing loans in 1996 to Whites and only 165 to
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          1   Blacks and 59 to Latinos.  In this case, 523 Blacks
          2   applied for refinancing loan and more than half or
          3   54 percent were rejected.
          4            Even though Milwaukee is one of the most
          5   segregated cities in the country, other banks do
          6   not approach Banc One's rejection rate for Blacks.
          7            For all banks in the market area,
          8   34 percent of Black African Americans were denied.
          9            For all banks in the market area,
         10   34 percent of Black applicants were denied
         11   refinance loans, but at Banc One the rejection rate
         12   for Blacks topped 50 percent, an almost incredible
         13   figure.
         14            In home improvement loans, the pattern
         15   holds.  In 1996, Banc One made 1,176 home
         16   improvement loans to Whites and only 147 to Blacks
         17   and 28 to Latinos.
         18            Banc One's record of lending in Milwaukee
         19   is one of the most racially discriminatory lending
         20   records of any bank in any city in the country.
         21            We have had meetings with CRA
         22   representatives over the past several years where
         23   they have promised to improve, yet their own data
         24   shows no improvement.
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          1            Furthermore, they are ignoring the very --
          2   they're ignoring the minority community's needs for
          3   access to home ownership by turning their focus
          4   away from mortgage loans.
          5            In light of this information, it is the
          6   recommendation of Wisconsin ACORN that the proposed
          7   merger between Banc One Corporation with First
          8   Chicago NBD Corporation be denied.  Thank you.
          9       MS. SMITH:  Thank you very much.  Any
         10   questions?  Thank you very much for coming this
         11   afternoon.  We've been through a very long day.
         12            And we will move on to Panel 17 now.
         13   Ms. Johns, if you'll grab the mike, we'll start
         14   with you.
         15       MS. JOHNS:  I thank the Federal Reserve Bank
         16   for the opportunity to come and talk about this
         17   pending merger.
         18            I am CEO of Capital Across America and
         19   also President-Elect of the National Association of
         20   Women Business Owners and Board member of the
         21   National Foundation for Women Business Owners.
         22            And I'm here today to address Banc One's
         23   investment in Capital Across America as the first
         24   SBIC in the history of the Small Business
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          1   Investment Corporation Program that focuses on
          2   investments in women-owned businesses.
          3            Capital Across America is an investment
          4   fund created to provide growth capital to
          5   women-owned firms who are growing their companies.
          6   We are located in Tennessee, but we intend to serve
          7   businesses nationwide.
          8            In the beginning, however, we are limited
          9   to the areas in which we have financial partners or
         10   states contiguous to Tennessee.  With Banc One's
         11   investment in our fund, we're able to go into areas
         12   in which Banc One is located.
         13            So we're very excited about the
         14   opportunity for this pending merger to occur so
         15   that we can go into some dynamic areas, such as
         16   Chicago, Detroit and Indianapolis, to name some of
         17   the larger cities in this area.
         18            We are -- in the SBIC program, which is
         19   administered by the Small Business Administration,
         20   we had to raise a minimum amount of capital in
         21   order to become a licensed SBIC.
         22            We were able to raise approximately
         23   $7 million, but our largest investor and our first
         24   institutional investor was Banc One.
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          1            And I would say they came to the table not
          2   only with money, but also with resources behind
          3   that money and talented people who have become
          4   involved with Capital Across America.
          5            Having gone through the process of trying
          6   to raise money for the first fund of its kind in
          7   the country, I can tell you it was rather difficult
          8   in approaching the financial institutions.  And
          9   Banc One was a very receptive institution and was
         10   the first, in my opinion, to make a significant
         11   investment in the fund of our type.
         12            Their $3 million investment is the
         13   largest of its kind in the country in a fund that
         14   focuses on women business owners that has been
         15   licensed as an SBIC.
         16            Banc One has a division of -- let's see,
         17   it's called the Women's Entrepreneur Initiatives
         18   Division, which I believe is directly responsible
         19   for their interest in a fund such as ours.  It's
         20   through Vanessa Freytag's efforts that she became
         21   aware of Capital Across America and made the bank
         22   known of the opportunity to invest in us.
         23            Through their community development
         24   corporation and Lynn Gellermann, the bank made a
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          1   decision to make that investment.  And they've
          2   allowed Lynn Gellermann the opportunity to serve on
          3   our Board of Directors, which is a great asset for
          4   a fund such as ours.
          5            Since Banc One has become involved with
          6   our fund, other banks have followed suit.  And I
          7   think that Banc One has been a role model as far as
          8   approaching the underserved market of women
          9   business owners who have growing companies in this
         10   country.
         11            And a little bit about that, there are
         12   approximately 8 million women business owners in
         13   the United States, which is approximately
         14   40 percent of all businesses now in this country.
         15   They employ 18 and a half million people, which is
         16   one out of every four U.S. workers.  That's
         17   35 percent more than the Fortune 500 employees
         18   worldwide.
         19            So women business ownership is an
         20   important part of our economy and one reason why I
         21   think our economic cycle has continued to remain
         22   very strong in this day and age.
         23            And it is very important that we continue
         24   to provide growth capital to the women business
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          1   owner community so that they can continue to add
          2   employees to their companies and grow their
          3   companies and be community leaders within where
          4   their businesses are located.
          5            So this potential or pending merger is
          6   very important to us in Capital Across America so
          7   that we can reach more women business owners in
          8   this part of the country.  There's this dynamic
          9   opportunity for us as the first debenture SBIC in
         10   the country to focus on women business owners.  So
         11   thank you.
         12       MS. SMITH:  Thank you very much.
         13   Ms. Paycheaud.
         14       MS. PAYCHEAUD:  You having fun with that?
         15   Phonetically, it's Paysho, P-A-Y-S-H-O.  It doesn't
         16   look like that, but then I'm from Louisiana, so
         17   everything that you see in Louisiana does not
         18   always look the way it actually is.
         19            And I think that that -- my name is
         20   Rosalyn Paycheaud.  I'm Executive Director of the
         21   Neighborhood Development Foundation.
         22            And the Neighborhood Development
         23   Foundation is a program that was established in
         24   1986 on the belief that decent, safe, affordable
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          1   housing is essential to an individual's
          2   well-being.
          3            And to that end, that is what we do.
          4   We don't develop houses.  We empower people to go
          5   out and get the money that they need in order to
          6   buy a house.
          7            I want to tell you a little bit about
          8   NDF because I think that credibility is very
          9   important.
         10            We were established, again, in 1986.  We
         11   have a pristine Board of Directors that includes
         12   representatives from Banc One on our Board.  We're
         13   well-respected in the community.  We're certified
         14   housing counselling agency by HUD, by Fannie Mae,
         15   by Freddie Mac, by our local lending authority.
         16            We own a list of organizations to provide
         17   home buyers training for our local funding
         18   authority.  We prepare a minimum of 150 first-time
         19   home buyers each year to own their own piece of
         20   New Orleans.
         21            We're a 501(c)3 nonprofit organization
         22   that believes that, even though we're nonprofit, we
         23   ought to be able to operate like a business.  We
         24   are identified as a national model by the
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          1   Enterprise Foundation, which was involved in our
          2   establishment in 1986.
          3            We think that we're good at what we do.
          4   We work with our clients, we say, from the
          5   beginning to the end.  We provide pre-purchase
          6   counselling, budget planning, a 12-hour home
          7   training class.  And we're a little rigid about
          8   that class because you're either there 15 minutes
          9   into the class and you're there when it ends or you
         10   take the class over.  And that's part of our
         11   commitment to prepare people for home ownership.
         12            We believe that education is the key.
         13   And if an individual knows what's expected of them,
         14   then they'll be able to achieve.  We don't train
         15   anyone that's not bankable to us.  We can't do it
         16   because you can't buy a house if you don't have
         17   any money.
         18            And when we were established in 1986,
         19   First NBC, who now Banc One owns, or First NBC
         20   is -- and Banc One, in my mind, are one.  They were
         21   pioneers for us.  And we don't anticipate any
         22   change in that.
         23            First NBC put money in an affordable
         24   marketing pool that our clients were able to access
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          1   when no one else did that.
          2            So, you know, we're looking forward to
          3   change.  We're not intimidated by change.  We
          4   welcome the opportunity to have products that
          5   Banc One is bringing into our state.
          6            One of the things that I've learned today
          7   in this room is that there's a lot of fear and a
          8   lot of resistance to change.  And a lot of it has
          9   to do with the misinformation and the fact that
         10   people don't really understand what's going on
         11   with them.
         12            We needed to have Banc -- we need to have
         13   Banc One involved in what we do because we can't do
         14   it without having financial support.  We're used to
         15   having the kind of technical assistance that we
         16   need and expertise that we need in order for our
         17   organization to continue doing what we do.
         18            We need the resources as well.  Our
         19   clients need to have access to affordable housing
         20   dollars.  We also prepare them to recognize when
         21   they're being discriminated against.  It's a part
         22   of our training.
         23            Everyone that's involved in that mortgage
         24   process comes to our class and teaches a segment of
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          1   that class, so that when our clients go into any
          2   bank looking for a loan, they know what -- they're
          3   prepared when they go in.  And they know when an
          4   insurance company is red-lining them and they know
          5   when they're being discriminated against and they
          6   know we'll be there for them.
          7            So I'm here today to let you know that we
          8   work with Banc One.  We look forward to continuing
          9   to work with Banc One and encourage you to, like,
         10   do what you do in terms of monitoring the process.
         11            And this open forum is very important,
         12   but look at it for what it is, because not
         13   everyone has had the same type of experience that
         14   I've heard described in this room today.  Thank you
         15   very much.
         16            Oh, one more thing.  I brought you
         17   some visuals because I'm a visual person.  We do
         18   an annual fund-raiser every year.  And I'm in
         19   Chicago, okay?  This is Mike Ditka in an issue.  I
         20   have Banc One on here.  I have the clergy.  I have
         21   Fannie Mae, Freddy Mac.  I have Arial Lenders.  I
         22   have my clients.
         23            That's what it's about, building
         24   coalitions.  And that's what Banc One does for the
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          1   community.  These are yours.
          2       MS. SMITH:  Thank you very much.
          3   Mr. Pritscher.
          4       MR. PRITSCHER:  Thank you, and thank you.
          5            Hello.  I'm John Pritscher, the President
          6   of Community Investment Corporation in Chicago.
          7   Like I know other people travelled long distances,
          8   it took me about a two-minute walk, and for which I
          9   am very grateful.
         10            I'm here, though -- I would have gone long
         11   distances, though, to support this merger because
         12   of my experience, predominantly with First Chicago
         13   NBD, but also in a lesser way with NBD because
         14   they're not as big in Chicago.
         15            The Community Investment Corporation is a
         16   not-for-profit mortgage lender.  We're the largest
         17   multifamily rehab lender in Chicago.  This year
         18   we'll do about 45 to $50 million in multi-family
         19   rehab loans, about 85 or 90 loans with about
         20   over 2,000 apartment units.  So we're a good-sized
         21   lender.
         22            I've been with them for 14 years.  We were
         23   founded by the banking community to make sure that
         24   funds were accessible in all parts of the city.
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          1            And we've really come a long way, thanks,
          2   in part, to the Community Reinvestment Act, thanks
          3   also to the fact that I think banks have gotten
          4   religioned by being involved with neighborhoods and
          5   communities and seeing that it's a profit center
          6   and that it works, that it's good business, and
          7   that they can't let their cities go to hell around
          8   them and still have a good source.  That's been my
          9   experience in Chicago, at least.
         10            In today's world of bank mergers, the real
         11   world we're in, I think it's very important that in
         12   strengthening the Midwest that this merger move
         13   forward and that First Chicago and NBD stay and be
         14   controlled as a Midwest entity.
         15            First Chicago is extraordinarily important
         16   to Chicago.  And they're the largest bank.  I could
         17   perhaps give some -- an example of the role they've
         18   played with Community Investment Corporation.
         19            We have a 525 million revolving loan pool
         20   that we were happily in this very room on July 8th
         21   celebrating the fact that this pool was extended
         22   from the year 2000 to the year 2010 and that a
         23   hundred million of this pool was set aside to do
         24   loans that nobody else could do.
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          1            And I'll go into that briefly, but that a
          2   pool risk lender that specialized in apartment
          3   rehab lending could sensibly do and that maybe an
          4   individual bank might not be able to do.
          5            CIC was encouraged by First Chicago to
          6   move forward and to take this step to do loans that
          7   nobody else could possibly do, plus to extend the
          8   pool through 2010 with the same revolving basis so
          9   that, in fact, we'll have, like, close to a billion
         10   dollars lent by the end of that period because the
         11   money revolves.  As we pay it back -- someone pays
         12   back a loan, it's as if the loan was never made and
         13   we can use it again.
         14            When we work -- we've worked with First
         15   Chicago NBD and Banc One over these 14 years that I
         16   have been with them.  And we worked with
         17   predecessor banks that were absorbed, if you will,
         18   by the merger process.
         19            And First Chicago has -- and NBD both, but
         20   especially First Chicago in Chicago, has always
         21   taken on and accepted the responsibilities of
         22   American National, Gary Wheaton, NBD, you know, all
         23   of the others that have come on.
         24            And we asked -- the only thing that we
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          1   asked of NBD was that they had only a $1 million
          2   commitment, where we have $120 million through the
          3   First Chicago entities, that they extend this.
          4   They volunteered a loan committee member.
          5            And they've both been active in that.
          6   They're also -- when we started to look at what we
          7   can do to beat MMBs (phonetic), First Chicago
          8   shared the information of what they were doing in
          9   their own neighborhood lending program.
         10            They were doing -- they are doing --
         11   they do aggressive lending.  They've worked in
         12   partnership with us as aggressive lenders over
         13   the years.
         14            And I think that if the merger doesn't
         15   take place, I'm fearful that some other type of a
         16   merger will take place without the Midwest control,
         17   without the local commitment that both -- that
         18   First -- certainly that First Chicago has shown in
         19   the Chicago Metropolitan area.
         20       MS. SMITH:  Thank you very much.  We'll go to
         21   Mr. Roberts.
         22       MR. ROBERTS:  Thank you for the opportunity to
         23   be here today to speak in favor of this merger.  My
         24   name is John Roberts.  I am president of Mezzanine
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          1   Capital Management, which is the administrator of
          2   the Ohio Mezzanine Fund.
          3            The Ohio Mezzanine Fund is a multi-bank
          4   community development corporation organized and
          5   funded in February of 1996.
          6            The fund was organized and is owned by
          7   eight Ohio banks, who invested nearly $10 million
          8   for the purpose of providing creative and flexible
          9   financing that otherwise would not be available to
         10   small and mid-sized businesses.
         11            This financing is provided in the form of
         12   subordinated debt in amounts from $100,000 up to
         13   $750,000, again to small and mid-sized businesses
         14   who are young and growing rapidly, but which are
         15   not yet fully bankable.
         16            While equity in mezzanine debt sources are
         17   plentiful for large companies that need $1 million
         18   or more, there are very few organized sources for
         19   this type of risk capital under $1 million for
         20   small businesses.  This is a niche on which the
         21   Ohio Mezzanine Fund focuses.
         22            The Ohio Mezzanine Fund is unique in
         23   that the fund is actively managed by its investor
         24   banks at the board of managers and investment
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          1   committee levels.
          2            In addition, the Fund relies on referrals
          3   for investment opportunities from the investor
          4   banks and each investment that the fund makes in a
          5   smaller mid-sized business must be matched at least
          6   dollar for dollar by a new senior loan from one of
          7   the investor banks.
          8            This allows the Fund and each of its
          9   investor banks to form a unique partnership to
         10   provide complete financing packages which otherwise
         11   would not be available to small and mid-sized
         12   businesses.
         13            To date, in a little over two years, the
         14   Ohio Mezzanine Fund has invested over $5.5 million
         15   in 11 Ohio businesses.  This investment has
         16   leveraged over $15 million of senior bank financing
         17   from the Fund's investment banks.
         18            That financing would not have been
         19   available to those 11 businesses without the
         20   participation of the Ohio Mezzanine Fund.
         21            This financing has made possible the
         22   expansion of these businesses, which has led to job
         23   growth and other economic benefits for the Ohio
         24   communities where they are located.
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          1            Also in its first two years, the Fund has
          2   enjoyed several success stories in the form of
          3   three businesses that have improved their operating
          4   and financial track records to the point that
          5   their bank has increased its financing with the
          6   business to allow the business to prepay the Ohio
          7   Mezzanine Fund and become fully bank financed at a
          8   lower cost.
          9            This partnership between banks and the
         10   multi-bank community development corporation format
         11   is important in delivering flexible higher-risk
         12   capital that otherwise would not be available to
         13   small and mid-sized businesses in Ohio.
         14            From the beginning, Banc One has been an
         15   active and supportive partner and has taken the
         16   leadership role in the formation and operation of
         17   the Fund.  Banc One was the first bank to verbally
         18   commit to providing capital to the Fund and
         19   subsequently invested $1.75 million in the form of
         20   $250,000 of equity and a $1,500,000 line of
         21   credit.
         22            In addition, Banc One hosted several
         23   organizational meetings in which other banks in
         24   Ohio were invited to attend and considered
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          1   investing in the Fund.  Banc One personnel also
          2   talked with other bank decision-makers to influence
          3   their involvement in the Fund.
          4            Once the Fund was organized, Banc One
          5   again assumed the leadership role by providing
          6   senior level management to serve on the Board of
          7   Managers and on the investment committee.
          8            For example, the initial representatives
          9   from Banc One to the Board of Managers and the
         10   investment committee were an executive vice
         11   president and senior vice president respectively.
         12   Their management and credit experience has been
         13   instrumental in the Fund's success to date.
         14            Banc One has also played an important role
         15   in sponsoring investment opportunities to the Ohio
         16   Mezzanine Fund.
         17            Banc One lenders have referred many deals
         18   over the Fund's two-year period and Banc One has
         19   provided senior financing along with subordinate
         20   financing from the fund in two deals totaling over
         21   $5.8 million.
         22            In April of this year, the Fund's Board of
         23   Managers determined that the Fund was working very
         24   well and should expand its territory to include the
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          1   Columbus, Ohio, market area.
          2            Banc One assumed a leadership role in
          3   assisting the Fund's personnel in making contacts
          4   within the financial and small business community
          5   in the Columbus area and Banc One also facilitated
          6   communication within the bank with its lenders and
          7   the Fund's personnel and issued a press release
          8   introducing the Fund and advocating the Fund to the
          9   Columbus area.
         10            In summary, the Ohio Mezzanine Fund and
         11   its $10 million of risk capital pool available to
         12   small and mid-sized businesses in Ohio would not
         13   exist today had it not been for the support and
         14   leadership of Banc One.
         15            We have every reason to believe that
         16   that support and leadership will continue in the
         17   future.  Thank you.
         18       MS. SMITH:  Thank you very much.  Mr. Traylor.
         19       MR. TRAYLOR:  Ms. Williams, Mr. Alvarez,
         20   Ms. Smith, thanks very much for allowing me to be
         21   here today to share the story of the Southern
         22   Indiana Rural Development Project and the
         23   partnership -- the strong partnership that we've
         24   developed with Banc One over the past five years.
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          1            The Southern Indiana Rural Development
          2   Project or SIRDP is a not-for-profit organization,
          3   501(c)3 organization that represents the 34
          4   counties of southern Indiana.
          5            We primarily focus our efforts in
          6   southern Indiana on rural communities.  And we seek
          7   to basically improve the economies of those rural
          8   communities through a number of different
          9   mechanisms.
         10            We were originally set up through an
         11   initiative by Congressman Lee Hamilton in response
         12   to a study by the Hudson Institute, a think tank in
         13   Indianapolis, which basically had done a study on
         14   rural communities and came back with the report
         15   that primarily focused on all the bad things.
         16            If you were to read the report, you would
         17   look at yourself.  And if you were living in
         18   southern Indiana, you were wondering what the heck
         19   you were doing there.  And if you weren't living
         20   there, you would certainly say I'm never going to
         21   live there.
         22            It was a very negative report.  And the
         23   Congressman did come back to us to form this group
         24   to basically try to come up with action plans that
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          1   address some of those negative aspects and at the
          2   same time which tries to highlight some of the
          3   positive things, which there's certainly plenty of
          4   them in southern Indiana.
          5            SIRDP accomplishes its mission through a
          6   series of task forces, all of which are focused on
          7   a particular issue ranging from telecommunications
          8   and technology to leadership development to
          9   education work force development as well as
         10   housing.
         11            It was through the housing task force that
         12   I had my first working relationship with Banc One.
         13   Early in 1996, SIRDP's Board of Directors was
         14   trying to figure out a way to diversify our Board
         15   and to bring in a lot of different membership
         16   representing various factions, which we currently
         17   at that time did not have representation from.
         18            The financial institution was one that
         19   was very lacking.  And at that time the community
         20   affairs director from the Fed out of St. Louis,
         21   the Louisville branch, came to us with some
         22   recommendations as to some firms, some financial
         23   institutions that we might want to bring on board.
         24            One of those firms was Banc One.  And to
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          1   this date, Banc One and PNC have maintained a very
          2   strong involvement with our organization, while
          3   several of the other organizations -- many of them
          4   were smaller, but some of them were quite large
          5   institutions -- have fallen to the wayside and have
          6   not maintained that involvement.
          7            And we certainly appreciate Banc One's
          8   willingness to get involved from the onset and
          9   since then to basically jump in on a number of
         10   different issues that we've been focusing on in the
         11   area of housing.
         12            Banc One continues to this day to work
         13   diligently with our task force, our housing task
         14   force, to set housing need priorities for southern
         15   Indiana.
         16            Banc One has also supported SIRDP in a
         17   financial manner as well.  Through their
         18   contributions, we've been able to leverage funds
         19   from the Indiana Department of Commerce, the
         20   Indiana Housing Finance Authority, Indiana
         21   Department of Environmental Management and also
         22   from the local endowment out of Indianapolis.
         23            Quite honestly, without Banc One's support
         24   and other organizations like them, our organization
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          1   would not exist.  As a not-for-profit, we rely upon
          2   private contributions to maintain our existence.
          3   And they've been very supportive of that.
          4            Wow, time up, one minute already.  One of
          5   the most important initiatives that we focused on
          6   over the past year is a program which is a home
          7   buyer education assistance program.
          8            It's called Live The Dream, Own A Home.
          9   We've just created this.  Banc One and their
         10   representatives have been very involved with our --
         11   with helping us to create the program, which is
         12   modeled after a program in the state of Kentucky.
         13   And without their assistance, we would not have
         14   been able to do this.
         15            This is a program that the Indiana Housing
         16   Finance Authority has also adopted and which is
         17   supported by organizations, community housing
         18   development organizations, CDCs, community groups
         19   and a number of different groups all over the state
         20   of Indiana, not just within southern Indiana.
         21   And we appreciate Banc One's assistance in that
         22   respect.
         23            We thank them for their willingness to
         24   assist us and we support them in their endeavors in
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          1   this respect as well.  Thank you.
          2       MS. SMITH:  Thank you very much.
          3            Mr. Wilkinson, thank you especially for
          4   taking this later time and giving up your slot
          5   earlier.
          6       MS. WILKINS:  No problem.
          7            Good afternoon or, as the case will soon
          8   be, good evening.  My name is Tony Wilkinson.  I am
          9   the president and CEO of the National Association
         10   of Government Guaranteed Lenders, Inc.  And I like
         11   to use our shorter name, which is NAGGL.  It sure
         12   is a lot easier.
         13            We are headquartered in Stillwater,
         14   Oklahoma.  NAGGL represents those members of the
         15   lending community who are active participants in
         16   the Small Business Administration's 7(a) loan
         17   program.
         18            And during the last fiscal year, our
         19   membership accounted for approximately 80 percent
         20   of all of the SBA 7(a) loans made.
         21            I appreciate the opportunity to appear
         22   before you today and discuss Banc One's
         23   participation in the SBA 7(a) loan program and with
         24   our association.
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          1            For the last few years, I have had the
          2   privilege of working with Brian Burke, the national
          3   SBA program manager for Banc One, and with other
          4   Banc One representatives across the country.
          5            Mr. Burke currently serves on the NAGGL
          6   board of directors as our corporate secretary and,
          7   as such, is a member of the NAGGL executive
          8   committee.
          9            I applaud the commitment Banc One has
         10   made to SBA lending programs.  In particular in
         11   the 7(a) program, the bank has taken a leadership
         12   role in two specific areas that I'd like to talk
         13   about today.
         14            First, Banc One was one of the limited
         15   number of institutions chosen by SBA to pilot the
         16   Fast Track loan program, a loan program
         17   specifically designed to make smaller-sized loans.
         18   That program has deemed to be highly -- was deemed
         19   highly successful by the SBA.  And the agency is
         20   now in the process of expanding that program.
         21            Banc One representatives have been
         22   actively involved in the discussions with the SBA
         23   on how to expand the Fast Track program and do so
         24   in an efficient and responsible manner.
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          1            Banc One has also been actively involved
          2   in the special NAGGL committee, our task force on
          3   lending to the underserved.  This committee has
          4   worked diligently with the SBA over the last
          5   several months.
          6            And we have come to a conclusion that
          7   there are a number of markets with underserved
          8   financing needs.  These markets would include
          9   businesses that; A, are owned by African Americans,
         10   Hispanic Americans, Asian Americans, Native
         11   Americans, other minority groups, women, veterans
         12   or handicapped individuals; B, those small
         13   businesses that need financing for exporting; or,
         14   C, are located in distressed urban and rural
         15   areas.
         16            An announcement on both the Fast Track
         17   expansion and initiatives to increase the lending
         18   to the underserved markets is tentatively scheduled
         19   for September, so unfortunately I cannot go into
         20   greater detail just yet, but let me reiterate that
         21   Banc One representatives have played a major role
         22   in development of both the Fast Track and
         23   underserved lending initiatives.
         24            Regarding post-merger SBA lending
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          1   activity, Banc One's track record has been to turn
          2   less than active SBA lending operations into higher
          3   volume operations.
          4            For instance, Banc One has taken recently
          5   an Arizona bank's SBA lending operation which was
          6   nowhere to be found in the top ten in lending
          7   volume in the state to the number one SBA bank
          8   lender in that state.
          9            So in conclusion, Banc One has been a
         10   valuable participant in the 7(a) loan program.
         11   Banc One is also a valuable member of our
         12   association.  And Mr. Burke is held in high regard
         13   amongst the NAGGL leadership and membership.
         14            Banc One has made a long-term commitment
         15   to the program and they have shown how to be
         16   innovative with the SBA loan product.
         17            Even at a time when SBA loan volume was
         18   down nationally due to the nature of direct bank
         19   lending, Banc One still aggressively participates
         20   in SBA and NAGGL programs and activities.
         21            I believe that in the markets where Banc
         22   One operates, small businesses can expect to find a
         23   professional committed SBA 7(a) lender ready to
         24   help meet their long-term financing needs.
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          1            Thank you for the opportunity to comment
          2   today.
          3       MS. SMITH:  Thank you very much.  Any
          4   questions?  We thank you again.
          5       MR. ALVAREZ:  Thank you very much for coming.
          6       MS. SMITH:  And look forward to your submitting
          7   any written -- any additional comments by next
          8   Thursday, the sooner the better.
          9            And we're ready for Panel 18.  We'll start
         10   with Mr. Goldstein.
         11       MR. GOLDSTEIN:  Hello.  My name is Ken
         12   Goldstein.  I am an associate at Krislov and
         13   Associates.  And Ken Krislov regrets that he can't
         14   attend.  He was drawn out of town unexpectedly.
         15            We have made submissions to the Board, a
         16   public comment, and to which we had attached a
         17   complaint that we had filed in Federal court, a
         18   class action complaint on behalf of Meleia
         19   Robinson, which we have voluntarily dismissed
         20   pending this administrative process.  All of those
         21   submissions, I take, are incorporated by
         22   reference.
         23            My purpose now is to highlight and
         24   summarize some of the points in our testimony that
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          1   I've submitted today.
          2            The first point I'd like to make is that
          3   there's no benefit for consumers generally in this
          4   merger, only the elimination of competition and the
          5   certainty of increased fees and charges.
          6            This morning I heard the CEOs talk about
          7   the merger of equals, but we see this as a
          8   combination of competitors.
          9            The persons -- the people who are most
         10   injured by this merger, while CRA aspects are
         11   terribly important, are the general average banking
         12   customers, middle class consumers who are going to
         13   be affected by the lack of competition and by the
         14   combination of lack of choices.
         15            The concentration for -- of the
         16   marketplace is bad for average, middle class
         17   consumers and bank customers.
         18            We also have a problem with the
         19   divestiture plans, which we feel are incomplete.
         20   And lastly, we would request that the Board look
         21   closely at the relevant market areas and the
         22   antitrust standards in the bank merging -- Bank
         23   Holding Company Act and the merging -- and the
         24   antitrust laws.
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          1            First of all, this merger is not based
          2   only on CRA grounds and a poor record of lending
          3   patterns, which has been evident this whole
          4   afternoon.
          5            This merger hurts middle class average
          6   bank customers, the core depositors who make the
          7   bank's fortunes rise and fall.
          8            This merger eliminates the competition for
          9   most consumers, average middle class depositors,
         10   based on antitrust laws.  And we see this based on
         11   the shrinking number of banks over time, which
         12   causes less bank choices where people have nowhere
         13   else to go.
         14            In the past six years alone, we've seen
         15   the number of banks reduced from around 12,000 to
         16   around 9,000.  In some places, the merger will have
         17   the practical effect and literally be one-bank
         18   towns.
         19            In this way, average consumers lose
         20   because there's nothing to be gained in having a
         21   lack of competition.
         22            We have not heard this morning from the
         23   banks say any reason why this combination will have
         24   a positive effect on interest rates for savings or
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          1   how they would reduce bank fees or create better
          2   service at all because we've seen in every case
          3   where banks have merged and competition lessened,
          4   increased fees and market -- monopoly power market
          5   exercised.
          6            My next point is that the combination of
          7   these banks is that in the Federal Reserve Board of
          8   Boston's most recent article, we've seen that
          9   banking is local.  Consumers travel only two to
         10   five miles to their local bank.  With the
         11   elimination of branches, there will be less
         12   competition and we'll see an increase in fees.
         13            These banks are already leaders in
         14   generating fees and have been padding their bottom
         15   lines in just their last month's report and
         16   their -- and in the number of the amount that
         17   they've been collecting in fees.
         18            The last issue is on divesture.  We have
         19   not heard a full public disclosure of what the
         20   divestiture will be in Indiana or at all in
         21   northern Illinois.
         22            It has not been made fully public.  In
         23   fact, there's been speculation that the sale of the
         24   new banks will be to someone without a local
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          1   presence, which will only serve to strengthen the
          2   incumbent bank's position.
          3            In Illinois, we have not heard about any
          4   divesture and specifically in the time of -- in the
          5   towns of Evanston and Wilmette where banks are
          6   literally across the street from one another.
          7            To conclude, in short we ask that this
          8   merger be rejected unless and until these concerns
          9   to preserve competition and protect middle class
         10   core depositors are fully addressed.  Thank you.
         11       MS. SMITH:  Thank you very much.
         12   Mr. Harrington.
         13       MR. HARRINGTON:  My name is Bill Harrington,
         14   and I work in Gary, Indiana.
         15            I suppose I would be one of the people
         16   that would be the least thought to be here and
         17   express concerns over a merger because I probably
         18   am one of those people that's considered to be
         19   rather privileged.
         20            Had a great career, started a firm called
         21   Harrington Properties in Gary, Indiana, really with
         22   the idea of taking some areas that are rather
         23   depressed and through private industry rehabbing
         24   some houses and creating some in-fill housing to
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          1   create a neighborhood.
          2            In 1994, I happened to, as a favor to my
          3   parent company that I ran then as president and
          4   CEO, bought some commercial property.
          5            NBD had been my bank since -- or Gainer
          6   Bank had been my bank since 1984.  And I went to
          7   NBD Bank.  And they were very gracious and loaned
          8   me the money.
          9            I ended up with a $312,000 mortgage and
         10   also later a line of credit of $50,000, which they
         11   secured with a second mortgage on a house that the
         12   company owned and that I paid rent in excess of
         13   market value for.
         14            We had an agreement that when -- I asked
         15   when the release of this mortgage on the house
         16   would be, and that would be whenever the $50,000
         17   note was paid.
         18            And when the primary note was below
         19   $285,000, the formula was that they wanted to see
         20   the loan to the point that the developed land, the
         21   three acres with the buildings on it, were -- the
         22   debt was less than 80 percent of appraised value
         23   and 50 percent on the vacant land, which sounded
         24   reasonable.
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          1            1996, 97, our line of credit was
          2   established for 50,000 and later increased to
          3   $100,000, obviously secured by inventories,
          4   equipment, receivables, as well as a personal
          5   guarantee, which I have never had a problem
          6   giving.
          7            I guess my point is that when I was
          8   renewing the last line of credit in 1997 and I'm
          9   looking at the documents which are given to me to
         10   review, I happen to get one document I wasn't
         11   supposed to get, and that's the bank's internal
         12   document.  And that document said, CRA, yes.
         13            Now, the bank on a hundred thousand
         14   dollar line of credit when they had collateralized
         15   everything in the company and me personally
         16   guaranteed with a personal financial statement well
         17   in excess of a million dollars, it started to
         18   trigger me why we have difficulty in Gary, Indiana,
         19   in attracting capital to the inner city if the bank
         20   can satisfy its needs through nonrisk loans being
         21   qualified for Community Reinvestment Act credits.
         22            I guess if you really want to find out
         23   where the heart of your bank is, go ask them for a
         24   $250,000 nonrecourse line of credit to rehab a city
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          1   block that today looks like Beirut, Lebanon, which
          2   I did in writing, submitted a letter to NBD, who
          3   was at one time Gary National Bank, Gainer Bank,
          4   now NBD, and was pretty flatly rejected.
          5            They said, you know, if you want to
          6   come in and borrow some money and tie up your
          7   corporation and personally endorse the note, we'll
          8   loan you some money to do some work, but, you know,
          9   we want to be collateralized.
         10            I guess my point is this.  Six months ago
         11   through a developer that wanted to partner with me,
         12   I decided I would approach the bank to release the
         13   vacant land since by then the mortgage was well
         14   below $200,000, which certainly left them in an
         15   oversecured position.
         16            And, you know, they told me they'd be just
         17   more than happy to do that if I, again, would give
         18   them my house as collateral, which by then had no
         19   mortgage on it at all.
         20            And that's okay.  I'm not here to complain
         21   about the treatment that I've had with NBD Bank.  I
         22   guess my concern is Gary, Indiana, and all of the
         23   little people.
         24            And that is, if I have the kinds of
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          1   problems in -- with a lot of resources in
          2   attracting some capital into a city like Gary,
          3   Indiana, that people like Bennie Simmons, like
          4   other businesspeople that have little resources
          5   that want to reach out and rebuild a community, it
          6   really is a struggle.
          7            I don't know Banc One well.  And Jim
          8   Danduran called me one day from Merrillville.
          9   And I had a breakfast meeting, and he bought
         10   breakfast.  So I'm sure they're a pretty good bank
         11   and he's a pretty good guy.  I've never had any
         12   other dealings with Banc One.
         13            I guess I'm not saying that I'm totally
         14   opposed to the merger, but I would sure like to see
         15   a commitment, as those that we've read about in the
         16   paper to Chicago and to other communities, that the
         17   bank that at one time was Gary's bank, who now has
         18   at least partially abandoned Gary, would make a
         19   commitment to Gary, Indiana.
         20            And the one thing I would say not only to
         21   NBD and Banc One, but to every other bank, great
         22   community on the rebound and, you know, with
         23   everybody leaving it would be a great place to
         24   open a bank.  Thank you.
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          1       MS. SMITH:  Mr. Simmons, please.
          2       MR. SIMMONS:  Yes.  My name is Bennie
          3   Simmons.  I'm president, founder, CEO of the
          4   Marshall Plan for Gary.  I have some major problems
          5   with the merger, just some incidents.
          6            Number one is that I went into Banc One to
          7   request a CRA report.  And what they gave me was a
          8   report of the city of Indianapolis and not Gary.
          9            Reason why is because Banc One
         10   consolidated several years ago.  And when they
         11   consolidated, they moved a lot of their operations
         12   down in Indianapolis.  So when I make a phone call
         13   for help, I have to dial a 1-(800) number and talk
         14   to someone down in Indianapolis.  So I couldn't get
         15   a proper CRA report on what's happening inside of
         16   Gary, Indiana.
         17            Millions of dollars are deposited into
         18   Banc One and First Chicago NBD in Gary, Indiana;
         19   the City government money, the school City money,
         20   unions, churches every Monday, Gary residents.  And
         21   those millions of dollars are being used to finance
         22   the communities outside of Gary.
         23            The majority of the citizens will tell
         24   you -- just ask them -- that there is racial
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          1   discrimination in Banc One's banking system.  I
          2   think we need to adhere to what Matthew Lee
          3   was saying.
          4            Economic blight; I have some pictures here
          5   that my friend, Darryl Curie, kind of helped me
          6   with on Gary, Indiana.  And I think the panel has a
          7   copy and there's a copy out in the hallway there.
          8            And if you could see this, here's the
          9   beginning of Gary from Merrillville, but here is a
         10   senior citizen's building here, NBD and Banc One in
         11   a couple of blocks.  That's only about two
         12   businesses.  The rest of that area is nothing but
         13   blight, boarded-up buildings.
         14            Here is another picture here of a
         15   building, three and a half blocks, okay?  There's
         16   nothing but blight.  A picture here of two doors
         17   from -- one, it's a lady digging in the abandoned
         18   building looking for garbage, okay, right almost
         19   adjacent to Banc One.
         20            That's the reality of what is happening in
         21   my community.  I've been there all my life.  My
         22   father has too.  He's 75 years old.
         23            Senior citizens; there's a large senior
         24   citizens building right across the street from Banc
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          1   One.  The first of the month, the senior citizens,
          2   you know, they get their checks and they go down
          3   to -- across the street to the bank.
          4            They have seven teller windows and
          5   there's two windows being manned, operated.  So my
          6   grandparents have to stand in that line, sick and
          7   old.  And we complain and nothing is done.
          8            That's the relation.  There's almost an
          9   adversary relationship between Banc One NBD, First
         10   Chicago and Gary, Indiana, against our community.
         11   And that's a reality.
         12            So there's been a tale of two cities
         13   here.  I like to call it the doughnut.  You've
         14   heard people -- there's a part of the nourishing
         15   part of the doughnut.
         16            They've been telling you that Banc One is
         17   great.  And they're telling the truth.  Oh, they
         18   helped build our community.  It's wonderful.
         19            But then there's other areas like Lorraine
         20   area of Ohio and Gary, Indiana, and Milwaukee where
         21   there's nothing there.  There's a doughnut hole.
         22            So you cannot base your decisions to
         23   approve this merger based on the nutrition outside
         24   the doughnut hole.
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          1            I'm not saying that this merger should be
          2   denied because I imagine no bank mergers have been
          3   denied.  What I'm asking is that for this bank
          4   merger to be delayed until Banc One and NBD First
          5   Chicago make the same commitments that they made
          6   with Woodstock here in Chicago, to places like Gary
          7   that is right next door.  In fact, we got an
          8   airport called Gary-Chicago Airport.  So this is
          9   what we ask you for.
         10            Now, why is that the doughnut hole?  Is it
         11   because that is John McCoy's intentions?  No, I
         12   don't believe that.
         13            But what I believe is this.  I believe
         14   there's been a lack of managerial responsibility.
         15   So if you got a racist bank president or racist
         16   bank managers, they do what they want to to these
         17   communities.  And we complain, you know, but
         18   nothing's done.
         19            So I'm asking -- they had an advertisement
         20   in northwest Indiana saying, we want to give
         21   $2 billion.  Well, I'm asking John McCoy to commit
         22   $1 billion to Gary, Indiana, over the next eight
         23   years to rebuild that community in loans, in
         24   grants, business loans, mortgages to Gary, Indiana,
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          1   and then do the same to those other doughnut holes
          2   across the country.  And if you do that, Banc One
          3   would be a great bank.
          4            Lastly, Citibank; the mayor of
          5   South Dakota went to Citibank and said, look, we
          6   need help.  We think that we can handle your
          7   database and your credit cards at one-third the
          8   cost.  And whoever is in the leadership of Citibank
          9   said okay.  So you know when you get your statement
         10   back, it says South Dakota.
         11            I think there's ways in which creatively
         12   Banc One and places like Gary and Milwaukee can --
         13   we can barter together.  We can sit down and reason
         14   together, you know, and not paint a glowing picture
         15   like everything is okay because it's not.
         16            So it is my recommendation that this
         17   merger be not denied, but delayed until such
         18   commitments can be made, just like they did with
         19   Woodstock here in Chicago.  Thank you.
         20       MS. SMITH:  Thank you very much.  We appreciate
         21   your being here this afternoon.
         22            And we will go onto, I think, another
         23   panel.
         24       MR. ALVAREZ:  Mr. Simmons, you left a copy of
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          1   the pictures?
          2       MR. SIMMONS:  They out there, yeah.  I left two
          3   copies.  One's on the desk and then --
          4       MR. ALVAREZ:  Thank you very much.
          5       MR. SIMMONS:  Yes, thank you.
          6       MS. SMITH:  We'll start with Mr. Reyes.
          7       MR. REYES:  I'm a politician.  I was going to
          8   borrow some time from some of the panel members,
          9   but this is a full panel.  I'm not saying that to
         10   gain any more credibility.  I'm just saying that.
         11   Actually, it works against me, I think.  We're
         12   ready?
         13            Well, my name is Tony Reyes, and I am the
         14   executive director of a not-profit group called
         15   Comite De Bienestar.  Comite De Bienestar is a
         16   nonprofit that dedicates itself to providing
         17   housing opportunities for low-income minority farm
         18   workers.
         19            It's located in a city called San Luis,
         20   Arizona.  It's the border with Mexico.  So, I mean,
         21   we've got a lot of people there to help.
         22            We've been doing that for the last fifteen
         23   years.  We have developed five subdivisions so far
         24   with over 1,700 lots for the same number of
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          1   families.  There's over a thousand homes built out
          2   in that area.
          3            We have worked with Banc One over the
          4   last few years, but essentially we started a
          5   relationship with that bank when it was still Bally
          6   National Bank in Arizona.
          7            And as I was trying to get myself moved up
          8   here in the panel system here, I was thinking about
          9   the times that I was mayor and I had to testify
         10   against the bank mergers.
         11            And I remember testifying in the Senate
         12   Committee for red -- you know, in red-lining of
         13   banks.  And I was saying, maybe I'm a little
         14   confused, I should be in the other group.
         15            But, no, this time I don't want to leave
         16   any trace of doubt.  I am testifying in favor of
         17   this merger.  You know, I've had my reservations.
         18   And we can go on and bore you with details.
         19            Suffice it to say that when Bally National
         20   Bank and Banc One were going through the merger
         21   process, I was really concerned that a lot of the
         22   fears that past panel members have expressed
         23   regarding the fact that a bank becomes so big that
         24   it loses touch with its constituencies or, in this
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          1   case, with its clients, that's going to happen
          2   now and then.
          3            But I'm happy to report, it didn't happen
          4   in San Luis, Arizona.  I don't know about other
          5   areas, but in San Luis, Arizona, we've got nothing
          6   but support and help from Banc One and its
          7   officers.
          8            Over the last couple of years, they
          9   have loaned us over $10 million.  Our last
         10   subdivision is a 495-lot subdivision.  We're
         11   in construction now.
         12            They've also loaned us money to begin a
         13   multi-family development project for over a hundred
         14   families, low income and very low income people.
         15   So I'm really proud to say that that has been a
         16   very, very good working relationship.  On top of
         17   that, I've actually gotten more support now than I
         18   ever did before.
         19            So I can sum this up by telling you we're
         20   highly in support of this merger and we think and
         21   hope that this will continue to be the case when
         22   Banc One merges with First Chicago.
         23            See, that was pretty cut and dry.  And
         24   thank you very much for allowing me to go first.
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          1   I've got to catch a flight.  I love Chicago, it's
          2   been fun, but I've got to get back and it's a long
          3   ways home.  Thank you very much.
          4       MS. SMITH:  Thank you very much.
          5   Mr. Gigerich.
          6       MR. GIGERICH:  Yes.  I'd like to thank the
          7   Federal Reserve Board for today's opportunity to
          8   speak with all of you.
          9            My name is Larry Gigerich.  I'm president
         10   of Indianapolis Economic Development Corporation.
         11   We are a 501(c)6 in Indianapolis structured with a
         12   Board of Directors of about 50 members.
         13            Our primary mission in Indianapolis is to
         14   serve the residents and businesses of our region.
         15   Our primary responsibility is to foster the
         16   creation of new jobs, the retention of existing
         17   jobs and attraction of new business and, most
         18   importantly, capital investment into our area.
         19            One of the things that is important to
         20   us and has been throughout the history of our
         21   organization is the relationship that we've had
         22   with Banc One and First Chicago NBD.
         23            Previous to those organizations, their
         24   predecessors, American Fletcher National Bank and
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          1   Indiana National Bank, were also very active in our
          2   economic development efforts in Indianapolis.
          3            One of the things that has been of
          4   particular importance is their support on the
          5   Center City Economic Development projects.
          6            They have helped us finance some of the
          7   most complicated economic development projects in
          8   the Center City.  They have helped us significantly
          9   with Brownfield Redevelopment Projects in some of
         10   our most challenged neighborhoods.
         11            And they've also worked with us on a
         12   number of projects in our downtown core that have
         13   provided significant number of job opportunities
         14   for the residents of the Center City.
         15            One of the things that we've been doing
         16   with them in particular recently is looking at
         17   opportunities to bring high technology businesses
         18   into our community.  And it's important to note
         19   that both banks have been active supporters of us
         20   launching this effort.
         21            We have taken the approach in Indianapolis
         22   under the Mayor's leadership of utilizing high
         23   technology as the vehicle for our Center City
         24   residents to be able to move into jobs that provide
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          1   good pay but, most importantly, family wage jobs
          2   that they can raise their families.
          3            And we view technology as the key for the
          4   Center City residents to move up economically in
          5   our community.  And that's something that we think
          6   has been a unique approach.  And the banks have
          7   been very supportive both financially and with
          8   their volunteer and staffing efforts for this
          9   project.
         10            One of the things also that has occurred
         11   with the bank's strong support and leadership,
         12   we've reversed the trend in Indianapolis of a
         13   number of businesses fleeing our inner city, moving
         14   out to our suburbs.
         15            In fact, we have brought a number of
         16   businesses from our suburbs into our downtown and
         17   Center City area.  And that's been of particular
         18   importance to our economy.
         19            And I would note that our unemployment
         20   rate currently is about 2.4 percent, but in our
         21   Center City it is down to about 6 percent.  And
         22   just a few years ago, it was much higher.  It was
         23   close to 20 percent in our Center City.
         24            And as a result of the bank's strong
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          1   support of our efforts, we've been able to really
          2   tackle some of the most difficult areas of our
          3   community for redevelopment purposes.
          4            Just a couple other things I'd like to
          5   note.  One of Indianapolis' greatest strengths has
          6   been the public private partnership philosophy that
          7   we've had in Indianapolis.
          8            And the predecessors at Banc One and
          9   First Chicago NBD were original founders of our
         10   organization in 1983, over 15 years ago.  Since
         11   that time and even with those acquisitions, their
         12   support has been even stronger in Indianapolis.
         13            But in particular, I'd like to note two
         14   statistics.  In those 15 years, we've been able to
         15   attract $10 billion of investment to our city and
         16   create and retain over 150,000 jobs.
         17            The banks and their leaders have served as
         18   the -- on our executive committee for Indianapolis
         19   Economic Development Corporation, but have been
         20   very strong leaders with all of our initiatives
         21   and, in particular, with our organization.
         22            A couple final things I'd like to touch
         23   on.  One of them is we had a project in downtown
         24   Indianapolis, the Circle Center Mall Project, that
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          1   had been on the books for about 15 years.
          2            And four years ago, the Mayor and the
          3   leaders of Banc One and First Chicago NBD and a
          4   handful of other businesses were able to pull that
          5   complicated project and its financing together.
          6            And as a result, we now have a
          7   $300 million mall and about a thousand jobs that
          8   are there, many of which have been provided for
          9   Center City residents.
         10            So I appreciate the opportunity to be here
         11   today.  We fully believe the support will continue
         12   from these banks.  And we had the same concerns in
         13   our community fifteen years ago that have been
         14   voiced today.  And not only had those concerns been
         15   unfounded, but the support of those banks after the
         16   acquisitions of the original entities have been
         17   even stronger in our community.  Thank you very
         18   much.
         19       MS. SMITH:  Thank you.  Mr. Lewis.
         20       MR. LEWIS:  My name is Cornelius Lewis.  I'm
         21   one of the founders and the president of a company
         22   called Gulf Coast BIDCO, located in Baton Rouge,
         23   Louisiana.  The acronym, BIDCO, B-I-D-C-O, stands
         24   for Business and Industrial Development
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          1   Corporation.
          2            Some people are familiar with them.  There
          3   are not that many of us around.  BIDCO is very,
          4   very prominent in the state of Michigan.  Well,
          5   we're in Louisiana.
          6            We also happen to be a certified community
          7   development financial institution.  In fact, we're
          8   the only CDFI certified in Louisiana as of today to
          9   the best of our knowledge.
         10            Gulf Coast BIDCO is a minority-owned,
         11   for-profit financial institution, nondepository
         12   financial institution.  And we are engaged in
         13   the business of providing mezzanine or growth
         14   capital to small businesses in Louisiana in need of
         15   such financing for be it expansion, modification or
         16   growth purposes.  Periodically, we will do a
         17   start-up too.
         18            We're designed to basically fill the
         19   moderate-risk moderate-return void or capital void
         20   that exists between bank financing and what is
         21   historically high-risk high-return capital that's
         22   generally provided by venture capitalists around
         23   the country.
         24            We've been in business and began
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          1   operations in September of 19 -- I'm sorry, in
          2   January of 1995, and we've been doing quite well.
          3            The thing that makes Gulf Coast BIDCO
          4   unique -- and I'm not going to dwell too much on
          5   what we do, but I think it has a lot of bearing on
          6   how Banc One fits into this -- we are very, very
          7   flexible or have the ability to exercise a great
          8   deal of flexibility in the types of financing
          9   structures or methods that we can employ to
         10   accommodate the needs of small businesses in
         11   Louisiana, including, as I think the gentleman
         12   Mr. Reid from the Southern Dallas CDC mentioned,
         13   subordinated debt and equity that is direly needed
         14   by small businesses so that they can, in fact,
         15   become bankable in dealing with traditional
         16   lending sources.
         17            Gulf Coast BIDCO raises money, its own
         18   capital, to reinvest in small businesses through
         19   one of two means.  One is either through equity,
         20   individuals as well as institutions and others
         21   investing in Gulf Coast BIDCO by buying stock in
         22   our company or debt.
         23            In terms of our relationship with Banc
         24   One, Banc One is today the largest nongovernment
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          1   institutional investor in Gulf Coast BIDCO.
          2            We initially approached Banc One back in,
          3   I think it was 94, 1994, when its predecessor bank
          4   in Louisiana was Premier Bank.
          5            We spent the time and the money in
          6   developing a private placement memorandum or an
          7   offering and a very, very sound business plan and
          8   what we believed to be a sound management team and
          9   approached the Banc One or Premier Bank at the
         10   time.
         11            And they were our initial institutional
         12   investor and led the charge of assisting us in
         13   enticing other institutional investors.
         14            Today, as I mentioned, they are the
         15   largest nongovernmental institution investor in
         16   Gulf Coast BIDCO with approximately $1.8 million in
         17   our company.
         18            The reason they invested is because they
         19   realized that there were a substantial number of
         20   small businesses in Louisiana that have weathered
         21   the -- that had weathered the storm of the
         22   recession in the 1980s that Louisiana experienced
         23   as a result of a decline in oil prices and that
         24   these companies were still poised -- or they were
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          1   poised and mature and ready to go and were in need,
          2   dire need, of growth capital.
          3            But the bank also realized that in many
          4   instances the type of capital that these types of
          5   companies needed, banking institutions
          6   traditionally don't provide.  So, therefore,
          7   there was a need for an alternative financing
          8   vehicle to accommodate this need.  And Gulf Coast
          9   BIDCO exercised the wisdom and foresight to
         10   invest in us.
         11            I've got one minute left.  Well, I was
         12   going to cite some examples.
         13            We invest in rural as well as urban
         14   communities.  I think the problems in Louisiana
         15   have been well, well documented.  We are all --
         16   most of the time 49th and 50th in the wrong
         17   categories.
         18            But as a result of Gulf Coast BIDCO and as
         19   a result of our partnership with Banc One, we've
         20   been able to accommodate and make some serious end
         21   roads in assisting small businesses in Louisiana,
         22   which ultimately will reduce the unemployment
         23   levels and poverty levels throughout the state of
         24   Louisiana.
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          1            So with that, I'm here for the record to
          2   endorse and strongly support this merger and
          3   hopefully it will go through.  I cannot see where
          4   it can be of any harm to the state of Louisiana
          5   and, in particular, Gulf Coast BIDCO.  Thank you.
          6       MS. SMITH:  Okay.  Next, I have Ms. Vaughn.
          7       MS. VAUGHN:  Thank you.  I'm Vicky Vaughn.  I'm
          8   the vice president of Enterprise Social Investment
          9   Corporation.  I'm here today representing the
         10   Enterprise Foundation, which is our parent
         11   organization.
         12            The Enterprise Foundation is here today to
         13   testify in support of Banc One's proposed merger
         14   with First Chicago NBD.
         15            I'm pleased to have this opportunity to
         16   talk about our partnership with Banc One, which we
         17   feel has been very productive in producing
         18   thousands of units of affordable housing across the
         19   country.
         20            The Enterprise Foundation is a national
         21   nonprofit housing and community development
         22   organization launched in 1982 by Jim and Patty
         23   Rous.  Enterprise works with more than a thousand
         24   community-based organizations in more than 300
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          1   locations to make America's low-income communities
          2   a better place to live and to work.
          3            Our mission is to see that all low income
          4   people in the United States have the opportunity --
          5   can you hear me -- for fit and affordable housing
          6   and to move up and out of poverty into the
          7   mainstream of American life.
          8            Through the use of the Federal low-income
          9   housing tax credit, our subsidiary, the Enterprise
         10   Social Investment Corporation, or ESIC, has raised
         11   more than $2.5 billion in equity, which is helping
         12   to produce approximately 55,000 units of affordable
         13   housing nationwide.
         14            Besides investing directly in affordable
         15   housing through their subsidiary bank, the Banc One
         16   CDC and Banc One Capital as examples, Banc One has
         17   been an important partner of the Enterprise
         18   Foundation's work, investing nearly 37 and a half
         19   million dollars in national and regional equity
         20   funds managed by ESIC.
         21            To date, Banc One's equity commitments in
         22   their marketplace, including Texas, Illinois, Ohio,
         23   Colorado, are greater than $15 million and will
         24   play a part in producing nearly 5,000 units of
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          1   affordable housing in 61 different projects.
          2            These funds target a variety of project
          3   investments within Banc One's market, including
          4   housing for senior, for families and for persons
          5   with special needs and projects located in
          6   disadvantaged neighborhoods.
          7            Banc One has been particularly supportive
          8   of ESIC's work with nonprofit organizations that
          9   sponsor and develop special needs housing and
         10   provide innovative services to communities.
         11            For example, Banc One invested in the
         12   Renaissance at Concord Plaza Project, which is
         13   located in Lakewood, Colorado.  This is a project
         14   that was developed by a nonprofit called the
         15   Colorado Coalition for the Homeless.
         16            It will provide 25 units that are targeted
         17   as transitional housing for homeless individuals
         18   and families and 50 units to working families who
         19   earn as little as $10,000 a year.
         20            This project will provide supportive
         21   services to the tenants, including case management
         22   and access to programs such as substance abuse
         23   programs, job training programs and child care.
         24            As another example, Banc One has played an
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          1   integral part in supporting the work of the
          2   Cleveland Housing Network.  They have invested
          3   through our equity funds more than $4 million in
          4   the Cleveland Housing Network's lease purchase
          5   program.
          6            In this program, single family homes
          7   throughout the city of Cleveland are rehabbed using
          8   financing from the sale of the low-income housing
          9   tax credit.  These houses are then rented to
         10   families for as little as $175 a month.  After the
         11   tax credit compliance period, these tenants have
         12   the opportunity to buy their home.
         13            This opportunity for home ownership could
         14   be very difficult to achieve for these tenants but,
         15   otherwise, this program does provide that
         16   opportunity.
         17            In addition, there are more than a
         18   thousand units through this lease purchase program
         19   that have been rehabilitated, making a substantial
         20   difference in neighborhoods throughout the city of
         21   Cleveland.
         22            Banc One has also provided some grant
         23   support to several local offices of the Enterprise
         24   Foundation, including the Dallas -- our Dallas and
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   Cleveland offices.
          2            These offices work closely with local
          3   nonprofits providing training and technical
          4   assistance to nonprofits that are providing
          5   affordable housing in their communities.
          6            We greatly value our relationship with
          7   Banc One, applaud the bank's commitment to
          8   affordable housing, its creativity and approach and
          9   their outreach in their communities.
         10            We look forward to developing our
         11   partnership and building upon the positive impact
         12   the partnership between the Enterprise Foundation
         13   and Banc One has had on communities.  Thank you.
         14       MS. SMITH:  Thank you very much.
         15   Ms. Werkmeister.
         16       MS. WERKMEISTER:  Good afternoon.  My name's
         17   Wendy Werkmeister, and I'm the president of the
         18   Wisconsin Women's Business Initiative Corporation.
         19            And I learned this afternoon that -- oh,
         20   it got loud.  I learned this afternoon that I have
         21   been working in the middle of a doughnut hole for
         22   12 years that's the heart of Milwaukee.
         23            But the thing that the gentleman failed to
         24   comment upon is that now they sell those doughnut
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          1   holes individually and that they cost a lot more
          2   and the profit margins are much higher than regular
          3   doughnuts.  So just food for thought, maybe Banc
          4   One wants to jump on a little bit quicker than some
          5   of the other banks.
          6            What we do at our organization is impact
          7   lives.  And we do that on an economic basis.  We're
          8   a statewide economic development corporation.  And
          9   we started nearly ten years ago with a twofold
         10   mission.
         11            One is to provide quality business
         12   education and training, and the second is to
         13   provide access to capital.
         14            We're able to deal with anybody in the
         15   state of Wisconsin, tall people, short people, big
         16   people, little people.  However, we focused our
         17   efforts specifically on women and on people of
         18   color and on the poor.
         19            Banc One has been a partner since day
         20   one.  So in our piece of the world in Wisconsin and
         21   my work with them in terms of microenterprise
         22   development and entrepreneurship and small business
         23   development, they've been a true partner.
         24            Banks, I believe, need to do what they
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          1   need to do best and they need to do it
          2   resourcefully and then they need to partner with
          3   organizations such as ours and many others in the
          4   room to do what they do best and allow them with --
          5   to provide resources to enable them to do that.
          6            The resources that I'd like to just
          7   highlight briefly here for testimony are really
          8   three; people, time and money.
          9            In terms of money, Banc One has been very
         10   significant in helping us fund loan loss reserves
         11   that we've been required to fund through SBA
         12   microloans programs.
         13            They've also provided specific donations
         14   and sponsorships of our training programs and other
         15   pilot programs that we've tried to develop and have
         16   successfully implemented in the state of
         17   Wisconsin.
         18            More recently, they were one of the very
         19   first to become involved in a pilot program through
         20   the SBA.  We are one of the very first microlenders
         21   through the SBA program about seven years ago.
         22            Now, it's a permanent program.  We've
         23   borrowed over $2 million from the SBA.  We are one
         24   of 10 agencies to be allowed to be in a pilot
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          1   program where you could borrow this money directly
          2   from a bank and then SBA would guarantee it.  Banc
          3   One was first in line.  And last year, we closed a
          4   loan for about $720,000 with Banc One.  That was
          5   the very first deal Banc One did and we're very
          6   proud to be part of that in Wisconsin.
          7            And I think that, knock on wood, all those
          8   little deals in Milwaukee from a hundred dollars to
          9   25,000 will do well and we'll pay all that money
         10   back to Banc One.
         11            In terms of time, Banc One has really, in
         12   my mind, given unprecedented time in terms of
         13   listening to what microcredit is about and
         14   fostering programs in the state and providing
         15   advocacy on behalf of microcredit and
         16   microenterprise development and how their bank can
         17   be a part of it.  That's not only been locally, but
         18   it's been regionally.
         19            They've also listened to us and provided
         20   guidance and advice on managing our loan portfolio,
         21   on utilizing new loan portfolio management systems,
         22   and also on providing coverage of how they do
         23   things through their loan-by-phone programs and
         24   other programs that they have at Banc One.
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          1            In terms of people, they've provided
          2   individuals to be speakers at our classes, of which
          3   we have approximately 250 every single year and see
          4   over 2,500 people throughout the year in different
          5   business training classes.
          6            They've provided bankers as mentors,
          7   mentors as consultants and also loan executives for
          8   three-month periods where these individuals are on
          9   Banc One payroll but working for us for the sake of
         10   the cause.
         11            So I'd like to say that I do fully
         12   recommend Banc One's merger.  I only see with
         13   greater capacity that they'll be stronger and be
         14   able to do more of what they're already doing.
         15   Thank you for letting me share those few words.
         16       MS. SMITH:  Thank you.  And now, we will go to
         17   Mr. Pacheco.
         18       MR. PACHECO:  Thank you, Ms. Smith,
         19   Mr. Alvarez, Ms. Williams, for letting me speak
         20   today.
         21            My name is Leroy Pacheco.  I'm president
         22   and CEO of ACCION Chicago.  We're a nonprofit
         23   microlender.  We make small business loans from
         24   $500 to $25,000 throughout the Chicago area.
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          1            We are an affiliate of ACCION
          2   International, who has been lending money in Latin
          3   America for over 35 years.  Last year alone, they
          4   lent out $500 million to 340,000 people.  Average
          5   loan was $891 with a payment rate of 99 percent.
          6            Let me tell you what we're doing here in
          7   Chicago thanks to our friends at First Chicago
          8   NBD.  Since 1993, First Chicago provided the seed
          9   money to start ACCION Chicago.
         10            Since that time, we have lent close to
         11   $2 million throughout the Chicago area to over 300
         12   businesses with a payment rate of 98.5 percent.
         13            First Chicago Bank has provided us over
         14   $200,000 in grants since we began the operations in
         15   1993 and currently we have about $175,000 in lines
         16   of credit for specific initiatives.
         17            We right now have initiatives for the
         18   south and west sides of Chicago for African
         19   American loans.
         20            I can tell you today that we have almost
         21   $100,000 in African American loan businesses that
         22   are thriving and doing very well.
         23            We create jobs.  We impact communities.
         24   Banc One has also been a very important player for
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          1   our ACCION office in Texas, in San Antonio, Texas.
          2            We have been taking people off welfare.
          3   We have been creating jobs.  If you all know where
          4   a little village is, La Vita on the west side, the
          5   second highest business revenue generating street
          6   in Chicago behind the Magnificent Mile is 26th
          7   Street.
          8            We are very proud to be there, and thanks
          9   to First Chicago, we are very glad that they have
         10   made a big impact in that area.
         11            We have chocolatiers, tree trimmers,
         12   contractors, store owners, medical transcription
         13   services, sculptors, artists, bookkeepers.  We lend
         14   to anybody who has a good idea and is willing to
         15   work.  And thanks to First Chicago, we've been
         16   allowed to do that.
         17            The major investment First Chicago has
         18   done, I believe, over the last four or five years
         19   helping us is their investment in people.
         20            ACCION Chicago is chaired by Mary Decker
         21   from First Chicago Bank.  Our loans are handled by
         22   Ed Jacobs from First Chicago Bank, our lines of
         23   credit.  We have four individuals who mentored in
         24   our businesses from First Chicago bank on their own
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          1   time and volunteered hundreds of hours.
          2            We have another First Chicago, Dory
          3   Flores, who sits on our External Loan Committee.
          4   They do it on their own time after hours, before
          5   hours and do it because they want to.
          6            I always tell people that banks have
          7   stockholders, we have stakeholders.  And we enjoy
          8   our relationship.
          9            First Chicago bank, I believe, services
         10   the community of Chicago not just by putting up ATM
         11   machines.  They invest people and they invest
         12   money.
         13            We are very, very pleased to be a partner
         14   with First Chicago, and we think that it makes
         15   great sense, and it has attracted other lenders.
         16   We now have close to $2 million in our loan fund
         17   for small businesses throughout the Chicago area.
         18            Facts that are ignored do not cease to
         19   exist.  First Chicago has been working in this
         20   doughnut hole that you heard about for a lot of
         21   years.  We are very pleased to be a partner with
         22   them.
         23            It's everybody's job, not just the banks';
         24   community service, activists, aldermen, ourselves
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          1   to donate when we have time to -- I always say
          2   healthy businesses can give.  If I can provide a
          3   business with the money that they need and their
          4   equipment isn't broken down, they don't have to
          5   worry about their employees, they can donate to the
          6   Chamber of Commerce, they can join the YMCA, they
          7   can become a mentor, they can become a part of a
          8   church.  Healthy businesses can give back to the
          9   community, and ACCION Chicago is a definite example
         10   of that.
         11            First Chicago Bank and Banc One are doing
         12   something about the business attitude and the
         13   climate in Chicago.  They're not just talking about
         14   it.  They're doing something about it.  And ACCION
         15   Chicago is here to tell you that with partners like
         16   this, it makes great sense, good financial sense
         17   and good community sense for this merger.
         18            Thank you very much.
         19       MS. SMITH:  Thank you.
         20            And I want to take this opportunity to
         21   thank you and to thank all of the witnesses who
         22   went before you for the views and perspectives that
         23   you have shared with our panel and thank you for
         24   your patience.
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          1            I believe that is the final panel, unless
          2   we had any unscheduled speakers who have indicated
          3   that they would like to present testimony.  But
          4   unless I see some hands going up, I will adjourn
          5   this public meeting.  And thank you again.
          6                      (Whereupon, proceedings in
          7                      this cause were adjourned.)
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          1   STATE OF ILLINOIS  )
          2                      )   SS:
          3   COUNTY OF W I L L  )
          5            JEANETTE A. SANDEI, being first duly
          6   sworn, on oath says that she is a court reporter
          7   doing business in the City of Chicago; and that she
          8   reported in shorthand the proceedings of said
          9   hearing, and that the foregoing is a true and
         10   correct transcript of her shorthand notes so taken
         11   as aforesaid, and contains the proceedings given at
         12   said hearing.
         14                 ______________________________
         15                  Certified Shorthand Reporter
         18   before me this______day
         19   of________________1998.
         22   _______________________
         23       Notary Public
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   STATE OF ILLINOIS  )
          2                      )   SS:
          3   COUNTY OF K A N E  )
          5            BRENDA S. TANNEHILL, being first duly
          6   sworn, on oath says that she is a court reporter
          7   doing business in the City of Chicago; and that she
          8   reported in shorthand the proceedings of said
          9   hearing, and that the foregoing is a true and
         10   correct transcript of her shorthand notes so taken
         11   as aforesaid, and contains the proceedings given at
         12   said hearing.
         14                 ______________________________
         15                  Certified Shorthand Reporter
         18   before me this______day
         19   of________________1998.
         22   _______________________
         23       Notary Public
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                       CHICAGO, ILLINOIS - (312) 263-0052
Last update: December 3, 2010