Home > Banking Information & Regulation > Public Meeting Transcripts > PMT - Agendas September 17, 1998
Public Meeting Transcripts
Public Meeting Regarding Norwest Corporation and Wells Fargo & Company
Thursday, September 17, 1998
Transcript of Panel Eleven
220 4 5 MS. NUGENT: Okay. Well, I just 6 wanted to thank you for allowing me to testify 7 in front of you today. My name is Danielle 8 Nugent, and I'm a senior at the University of 9 Minnesota Duluth. I'm also the Chair of the 10 State Board of Directors for the Minnesota 11 Public Interest Research Group, the group that 12 was listed to testify. They've asked me to 13 testify for them. 14 MPIRG is a student-run and funded 15 nonpartisan nonprofit organization. We work on 16 consumer and environmental issues that students 17 raise as concerns. I'm here today to 18 represented the concerns of MPIRG, its state 19 board, as well as the organization's 45,000 20 student and community members. 21 Our concerns over the proposed merger of 22 Wells Fargo/Norwest include the decreased 23 competition within the Minnesota marketplace, 24 the rise in banking fees that the merger could 25 cause the consumer, especially in light of Wells 221 1 Fargo's less consumer-friendly fee schedule; the 2 concern that this merger would move the 3 headquarters of Norwest, making the bank less 4 responsive to the Minnesota consumer. 5 I would first like to address my testimony 6 to the lack of competition this merger will 7 create. This lack of competition would mean 8 that the ever-growing emerging banks would be 9 the only ones left for consumers to choose 10 from. The Federal Deposit Insurance Corporation 11 reports this trend is continuing at an even 12 faster pace, showing 146 banks have been 13 absorbed just in the first quarter of 1998 14 alone. This trend is the same in Minnesota. 15 Fewer banks means fewer choices, according to 16 our research, and higher fees. In our report 17 last fall, the big fee squeeze, we showed that 18 bigger banks mean bigger fees. An example, 19 Minnesota, the cost of maintaining a regular 20 checking account is 40 percent -- 46 percent 21 higher in a large bank than a credit union and 4 22 percent higher than in a small bank. A 23 no-frills checking account at a big bank costs 24 54 percent more than at a credit union and 13 25 percent more than a small bank. Bank fees for 222 1 overdraft and ATM withdrawals are also on an 2 average higher at large banks. Large banks are 3 also more likely to charge service fees, which 4 impact low and fixed income consumers, such as 5 students, seniors are especially hit by this 6 fee. 7 On August 1st, 1998, Norwest raised its fee 8 for overdrafts from $21 to $25, almost a 20 9 percent increase. Is this because the new rate 10 is comparable with fees charged by Wells Fargo? 11 Can we expect these type of fee increases and 12 service costs to expand after the merger? Wells 13 Fargo discontinued its free checking for seniors 14 last year. Will we in Minnesota have the same 15 thing happen here? 16 Finally, we are concerned that the merger 17 would cause a lack of responsiveness from the 18 bank to the Minnesota consumer. If this merger 19 goes through, Norwest will be moving its 20 headquarters from Minnesota to San Francisco and 21 we no longer will have that management here. 22 Instead, they'll be on the other side of the 23 country. How will this new entity stay in touch 24 with the needs of the Minnesota consumer? 25 Instead of being a neighbor to Norwest, the 223 1 consumer becomes a number on a computer screen 2 in some far away headquarter. 3 As a student and a leader of a student 4 organization, I must tell you that these mergers 5 are not in our best interest. We do not have 6 disposable income to spend on large fees and 7 charges. We need access and affordability in 8 our financial services. We need banks that are 9 responsive to our credit demands. Lower prices 10 require competition. We are concerned that by 11 allowing more of these banks to take over the 12 marketplace, you are dooming us to a future 13 where banking becomes a luxury only the rich can 14 afford. If two or three large banks are allowed 15 to become the consumers' only choice, then what 16 will stop them from adding service charges to 17 every transaction, slowly taking the money from 18 people who need it the most? Low income 19 individuals, senior citizens, as well as 20 students will suffer from this. 21 Please, we are asking you to deny this 22 merger. Give us a chance to not only have 23 access to but the ability to afford our banking 24 services. 25 Thank you. 224 1 CHAIRPERSON SMITH: Thank you. 2 Mr. Tatum? 3 4 MR. TATUM: Yes. My name is Steve 5 Tatum, and I am the President of New Century I 6 Community Lending Cooperative. And we have a 7 brief statement that we would like to read to be 8 included in the record. New Century I Community 9 Lending Cooperative's mission is to pursue the 10 economic development and well-being of its 11 members. New Century was established to provide 12 lending and borrowing opportunities to 13 individuals and organizations previously 14 excluded from the traditional sources of these 15 services. As a result of these exclusionist 16 practices, a fundamental economic incentive had 17 been created. This incentive joins us together 18 to provide for ourselves the capital that is the 19 economic life blood of our community. 20 Because of the -- our late notice of this 21 public hearing, we haven't had the opportunity 22 to review all the technical aspects of this 23 merger, but our members felt it was important 24 that we attend and participate. Because the 25 Federal Reserve Bank has the mandate to protect 225 1 the interests of all citizens of this country as 2 it pertains to banking and banking practices, we 3 are here to get the assurance of the Federal 4 Reserve that the important issues of 5 discrimination, access to banking services by 6 low-income individuals and the prevailing 7 practices of red lining minority and low-income 8 communities are addressed in this merger. 9 Also, we feel there should be a formal 10 commitment made by both financial institutions 11 involved in this merger that minority and 12 low-income individuals will have equal access to 13 the capital that will insure the continued 14 development of our businesses and communities. 15 In this situation, the standard rhetoric "We 16 will do better" is grossly inadequate. It is 17 our position to insure the fulfillment of this 18 commitment. A specific dollar figure should be 19 designated as investment in traditionally 20 underserved businesses and communities. Our 21 organization feels strongly that these issues 22 are important to a large and growing 23 constituency and be served the same 24 consideration as any other financial element of 25 this merger. 226 1 Lastly, financial institutions that operate 2 at the public trust have a legal, moral, and 3 ethical responsibility to insure equal treatment 4 of all citizens. And it is the responsibility 5 of the Federal Reserve Bank to insure that these 6 institutions are in compliance with this 7 mandate. We plan to collaborate with all 8 interested groups and organizations to monitor 9 this process. 10 Thank you. 11 CHAIRPERSON SMITH: Thank you. 12 Ms. Therkelsen. 13 14 MS. THERKELSEN: Thank you for 15 allowing me to speak. I was under the 16 impression that this had already been decided, 17 that -- that Norwest and Wells Fargo were going 18 to merge. So I appreciate your allowing me to 19 speak at this time. 20 I've been a customer of Norwest Bank since 21 1972. And I was a customer at the Nor -- 22 North -- Nor -- well, they call it Nordeast 23 Minneapolis office. And then when I moved to 24 south, I'm still a customer of the northeast 25 office. I'm very pleased with Norwest Bank. 227 1 They're very helpful. And I'm on direct deposit 2 so it goes directly into the bank. But, I mean, 3 joining a bank is not for me a thermos or a 4 blanket or something like that. That's not 5 what's important to me. 6 I understand when you have to pay for 7 checks. That I understand, and overdrafts and 8 things like that. That makes sense to me. But 9 being on direct deposit, I have 50 cents in the 10 bank right now. And I just -- you know, 11 Norwest, as long as I keep the 50 cents there, 12 is not going to be charging me extra money to 13 keep the 50 cents, like if you fall below a 14 certain amount, which is common for most banks. 15 I do miss more ATMs. Norwest doesn't have 16 enough. But I -- I just think that they are 17 known very much for their customer service and 18 their good record. And I'm opposing the merger 19 partly because of that basis. I had heard some 20 concerns about customer service of Wells Fargo. 21 I'm sorry. I can't tell you exactly where I 22 heard it, so I'm not going to quote somebody 23 that I might be wrong about. But it talked 24 about taking away the free checking and things 25 like that, and I can't afford it. And I don't 228 1 think a lot of other people who have the senior 2 rate can, and so I'm opposing it respectfully.
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