Public Meeting Transcripts
Public Meeting Regarding Fleet Financial Group, Inc., and BankBoston Corporation
Wednesday, July 7, 1999
Transcript of Panel Twelve
4 MS. ALLEYNE: My name is Sonia Alleyne. 5 I'm the director of community investment for the 6 Massachusetts Affordable Housing Alliance. 7 Our question for you today isn't should the 8 Federal Reserve Board approve the merger of 9 BankBoston and Fleet. Everyone in this auditorium 10 knows that the Fed will approve this merger. The 11 Fed almost always approves mergers whether or not 12 they benefit consumers, so let us suggest a 13 different question: 14 Will the Fed use its power to require an 15 aggressive, detailed Community Reinvestment Act 16 agreement from Fleet and BankBoston? Will the Fed 17 insist that low-income communities be better served 18 after this merger than they are now? 19 The Massachusetts Affordable Housing 20 Alliance is a statewide nonprofit organization 21 working to increase public and private sector 22 investment in affordable housing. Our campaigns 23 since 1985 have resulted in over $2.2 billion in 24 commitments to lower-income neighborhoods throughout 25 the Commonwealth. Our Grass-Roots Home Buyers Union 0306 1 based in Dorchester negotiated CRA agreement with 2 ten area banks, including Fleet and BankBoston, for 3 over $500 million in below-market mortgages, 4 mortgage commitments, since 1990. 5 Fleet and BankBoston have a tremendous 6 opportunity to create the best urban community bank 7 in the country, and the Federal Reserve can help 8 them get there. In Massachusetts, Fleet has a 9 chance to go much further in developing a model for 10 a true bank-community partnership. 11 Fleet's history in Massachusetts has been 12 decidedly mixed. Fleet has demonstrated an ability 13 to pump out low-cost mortgages to lower-income, 14 first-time home buyers. Indeed, Fleet and 15 BankBoston have been the leading lenders in the 16 state's most affordable mortgage program, the soft 17 second, first-time home buyers program. 18 On May 12 of this year, Fleet and 19 BankBoston pledged to make 1100 of these mortgages 20 in Boston before 1200 people, community residents at 21 a MAHA meeting in the athletic center in Roxbury. 22 But yet, as UMass Professor Jim Campen points out in 23 his recent study, Fleet has fallen far short of 24 meeting the goal of one plus one equals two in 25 mortgage lending to minority and low- and 0307 1 moderate-income borrowers after their merger with 2 Shawmut Bank in 1995. 3 We have asked Fleet to commit another 1500 4 soft second mortgages outside of Boston over the 5 next five years. If they do this, one plus one will 6 be greater than two in this program, which has both 7 lower than normal delinquency rates and saves home 8 buyers up to $200 a month. 9 Fleet should build on the success of 10 BankBoston, which has shown the country how to make 11 an urban branch network profitable through its First 12 Community Bank. Fleet must challenge all of its 13 executives to add innovation and flexibility to 14 their game plan in urban neighborhoods. 15 BankBoston, during its merger with BayBank, 16 made an impressive statement about innovation when 17 they agreed to convert the $90 million loan 18 commitment to the Massachusetts Housing Partnership 19 to $10 million in equity contribution. 20 For the past year and a half, Fleet has 21 looked at this possibility but ultimately rejected 22 it. Now Fleet has another chance. This merger will 23 result in a loan commitment of somewhere between 24 $300 million and $600 million to MHP. In today's 25 market, developers need more equity. Fleet can help 0308 1 solve the equity gap, and the Federal Reserve can 2 help them get there. Fleet and BankBoston can 3 welcome lower-income customers instead of driving 4 them into the greedy arms of check cashers. 5 The Massachusetts Community and Banking 6 Council has developed a Basic Banking for 7 Massachusetts Program which established minimum 8 criteria for qualifying low-cost checking and 9 savings accounts. Both Fleet and BankBoston 10 participate in the program, but more needs to be 11 done. It is not just enough to have an account; you 12 must market it. 13 Fleet should build on the success of the 14 marketing campaign done by BayBank in 1994 and 1995 15 and make a commitment to open 42,000 new basic 16 banking accounts for low-income consumers in 17 Massachusetts over the next two years. Fleet can do 18 this, and the Federal Reserve can help them get 19 there. Fleet and BankBoston can create a new model 20 for megamergers. 21 Fleet did not use its press conference on 22 March 14, 1999, to hype a multibillion dollar CRA 23 plan that would have been meaningless and hopelessly 24 short on details as other banks have done. Fleet 25 then decided to meet with 125 groups in 30 days to 0309 1 listen to suggestions from community banks and 2 organizations. 3 Last week, however, Fleet unveiled to the 4 community groups a $14.6 billion plan that was short 5 on details. Yesterday, Fleet filled in some but not 6 all of these details. It is still a work in 7 progress. Fleet has listened to some of our 8 concerns, but Fleet's work is not done. 9 We join other groups throughout the 10 Northeast in asking the Federal Reserve Bank to 11 extend the comment period for a period of two weeks, 12 or as Congressman Capuano says, for 30 days, fine 13 with us, from the date on which Fleet delivers its 14 final plan to the community groups. Fleet needs to 15 made make a statement to the community and others 16 that bigger can be better. 17 This agreement should push Fleet to do 18 more. Fleet should assure that one plus one is 19 greater than two, as stated by Terry Murray and Chad 20 Gifford when they announced the megamerger. And 21 Fleet and the community groups should demand and 22 expect mutual accountability, and you can help us 23 get there. 24 Do not approve this merger until or unless 25 Fleet agrees to sign a detailed, verifiable CRA 0310 1 agreement that meets the needs identified by 2 community organizations throughout the Northeast. 3 And with your help, we can get there. 4 Thank you. 5 MR. CALLAHAN: Thank you. My name is 6 Thomas Callahan. I'm from the Mass. Affordable 7 Housing Alliance. I will be very brief. 8 Fleet has told us -- Fleet and BankBoston 9 told us this morning a lot about the merger, what 10 will happen after this merger, but there is a lot 11 more that we don't know about this merger. 12 Some of the questions we still have are: 13 What is Fleet's commitment? What will Fleet's 14 commitment to the statewide soft second mortgage 15 program that Sonia talked about, what will it be? 16 Will they convert the MHP loan commitment to an 17 equity commitment as is needed by rental housing 18 developers? How many basic banking accounts will 19 Fleet open in Massachusetts over the next two years? 20 Will Fleet continue to fund post-purchase 21 homeowner counseling and foreclosure prevention that 22 is so needed in this era of trying to create 23 sustainable home ownership? How many loans and 24 housing tax credits in Massachusetts will Fleet 25 invest in? Will they be members of the Federal Home 0311 1 Loan Bank? 2 I could go on and on. There are too many 3 unanswered questions for the Federal Reserve Board 4 to approve this measure at this time. 5 One last comment I would have is we have 6 seen a couple of large panels with one minute each 7 talking about supporting this merger. It is 8 interesting to watch those panels as they come up 9 and speak. By my observation, most of those folks 10 talked about grants and charitable contributions. 11 In 1977, CRA was not passed because 12 community groups complained they couldn't get a 13 grant from a bank. I respectfully submit to those 14 organizations that this is not about charity, this 15 is not about grants. This is about investments, and 16 we should keep the focus, and hopefully the Federal 17 Reserve will keep the focus, on loans and 18 investments that the banks can make, not about 19 charitable contributions. 20 HEARING OFFICER SMITH: Thank you very 21 much. 22 Mr. Lozada. 23 MR. LOZADA: Thank you for your 24 consideration and having me speak today. Good 25 afternoon. My name is John Lozada, and I'm an 0312 1 attorney in private practice with a law firm called 2 Sessa Glick Quiroga & Hibbard in Boston, 3 Massachusetts, where I serve clients on small 4 business matters, employment discrimination, 5 education law, real estate law, and general legal 6 concerns. 7 My focus as an attorney has been to use the 8 legal profession to help build infrastructure 9 principally within the Latino community in 10 Massachusetts. And I have been fortunate to join a 11 law firm that both respects my career choices and 12 plays a major role in community economic development 13 in the field of affordable housing. 14 By way of background, I was raised in 15 public housing in East Harlem, New York, by a 16 single-parent mother. I'm of Puerto Rican and 17 Mexican heritage and reflect the third generation of 18 my family to live in the United States. I have 19 studied, worked and lived in eastern and western 20 Massachusetts for over 24 years, during which time 21 I've come to know much of the infrastructure of 22 Massachusetts and the Latino community of this 23 Commonwealth. 24 I have been president of the Massachusetts 25 Association of Hispanic Attorneys and have served on 0313 1 the Board of the Massachusetts Chapter of the 2 National Congress of Puerto Rican Rights, a 3 statewide grass-roots network. My experience has 4 taught me to value, respect and encourage diversity, 5 achievement, and ethics across dimensions of 6 difference, poverty, wealth, power, humility and 7 integrity. 8 I am here today to speak against the 9 proposed measure of the Fleet Bank and BankBoston as 10 it is currently before the Federal Reserve Bank. My 11 reasons for opposing this merger are fourfold. 12 First, I am deeply troubled by the overall 13 lack of cultural competency and commitment of Fleet 14 Bank and of the proposed merged bank and the Fleet 15 Bank's lack of vision into the multicultural 16 character, potential, and needs of the Latino 17 community. 18 Second, based on my experience and the 19 experience my law firm, the lack of lending done by 20 Fleet Bank in the area of affordable housing 21 development causes grave concern for the future. 22 And, frankly, billion dollar promises without 23 substantive written commitments should not suffice 24 for the Fed to approve this merger, based on Fleet 25 Bank's track record on similar promises, which are 0314 1 well documented. 2 Third, based on my experience and belief, 3 Fleet Bank and BankBoston must be challenged by the 4 Federal Reserve Bank to quantify and revise their 5 proposed $15 million investment towards technical 6 assistance in low- and moderate-income areas, 7 because that figure, spread across the states 8 Fleet-Boston will serve, will not meet the needs of 9 the Latino community to sustain technical support in 10 the area of business development. 11 Fundamentally, it is the lack of 12 understanding about how businesses function in this 13 country which poses the most daunting challenge to 14 the development of effective Latino businesses and 15 communities in Massachusetts. 16 Fourth, it is my perception and belief that 17 Fleet Bank and BankBoston have presented no position 18 on how their commitment to community reinvestment 19 will help to combat the reluctance of Latinos to use 20 commercial banking services and reduce our 21 communities' excessive reliance on check-cashing 22 institutions. 23 Finally, while I am in opposition to the 24 proposed merger of Fleet Bank and BankBoston as 25 currently presented, I see great potential for this 0315 1 merger to make a major positive difference for many 2 citizens and residents in Massachusetts, 3 particularly among Latinos, who have the gift of 4 their multiculturalism but have been most left out 5 of the economic boom that is shaping Massachusetts 6 and this nation. 7 Unfortunately, it is certain that the Fleet 8 Bank and BankBoston merger seeks, in Fleet Chairman 9 Terry Murray's words today, to be able to meet the 10 sophisticated needs of consumers. How does CEO 11 Murray respond to the question of the needs of 12 Latino borrowers who may not be as sophisticated as 13 he might like, but who are in dire need of access to 14 the resources that his megabank has to offer? 15 How many Latinos own a computer, how many 16 have achieved high school or college educations, and 17 how many have dared to dream of careers or 18 professions? In Massachusetts, a state with an 19 estimated 500,000 Latino population, the Latino 20 community is the largest minority population in this 21 Commonwealth. 22 Our numbers are explosive, as is our need 23 for education, leadership development, mentorship, 24 and finances. These are the needs that must be met 25 for the Latino community to become self-reliant, 0316 1 visionary and successful in this society, and the 2 Fleet Bank-BankBoston merger fails to address any of 3 these questions. 4 What has Fleet Bank done with respect to 5 the Latino community along the lines I have 6 mentioned? It is hard to say. I know that they 7 have supported parties and cultural events, as have 8 many other banks and institution in this state. I 9 know that they have promised $25 million in 10 charitable contributions upon the merger. And this 11 appears to be a large figure, but based on what 12 economy of scale? 13 The Latino community needs service, 14 assistance and meaningful access to resources, not 15 simply charity. How many small business loans has 16 Fleet Bank made within the Latino community? What 17 is the experience of Latino borrowers in seeking 18 loans from Fleet Bank? How difficult is it for 19 Latino businesspeople to meet the lending 20 requirements of Fleet Bank? What flexibility 21 commitment has Fleet demonstrated in its lending 22 practices? How many among the 500,000 Latinos in 23 this Commonwealth even realize that this merger is 24 pending, and what has Fleet Bank's outreach to the 25 Latino community been? 0317 1 There was apparently an outreach to 125 2 community groups. How many of those groups were 3 within the Latino community and how many Latino 4 leaders are reflected in these hearings today? 5 The fundamental reality is that the Latino 6 community must be included as a player. If we are 7 ignored, if we are not brought into these decisions 8 and processes that affect our lives, then as a 9 community, we will never be a fully contributing 10 member of this society. Fleet Bank and BankBoston 11 have the power, if not the will, to accomplish 150 12 billion times what I could ever achieve in my 13 lifetime. 14 I respectfully implore the Federal Reserve 15 Bank, please delay your approval. Make these banks 16 account to my community. Make them answer to the 17 questions I have posed. And make them put their 18 commitment into writing. 19 Thank you. 20 HEARING OFFICER SMITH: Now, Mr. Hacobian, 21 Ms. Gonzales Levine, are you sharing your time, or 22 is just one of you speaking? 23 MR. HACOBIAN: We're sharing our time. 24 MS. GONZALES LEVINE: Good afternoon. My 25 name is Rita Gonzales Levine. I'm the chairman of 0318 1 Urban Edge Housing Corporation, a nonprofit housing 2 development and economic development corporation in 3 Jamaica Plain and Roxbury sections of Boston. Thank 4 you for the opportunity to testify regarding the 5 proposed merger. 6 This testimony is informed by recent 7 meetings and conversations with representatives of 8 the two banks and includes our initial reactions to 9 a document entitled "Community Commitment: A 10 Proposal for the Fleet Boston Transaction," dated 11 June 22, 1999. 12 As we will detail later, both Fleet and 13 BankBoston have been strong partners for Urban Edge 14 during the past several years. In fact, Urban 15 Edge's history goes back nearly 25 years with both 16 banks, if we include banks that have merged with or 17 been acquired by Fleet and BankBoston. Urban Edge's 18 success of the past 10 to 15 years would have been 19 impossible without the strong partnership with Fleet 20 and BankBoston. 21 We ask you for your support for the 22 following four requests that we have already made to 23 Fleet and BankBoston in our recent meetings with 24 their representatives. 25 No. 1: We must monitor the impact of the 0319 1 Fleet-Boston merger on Boston's neighborhoods and 2 ensure that the City and its neighborhoods gain and 3 not lose ground. We must work together to determine 4 the best indicators for this effort, and we must 5 have a way of measuring and reporting the impact 6 credibly and consistently over time. 7 We urge, secondly, that there be a written 8 agreement between Fleet Boston and coalitions of 9 community groups and public sector entities. Urban 10 Edge is a signatory to the proposal submitted to 11 Fleet and BankBoston by the MACDC, the Massachusetts 12 Affordable Housing Alliance, and the Organization 13 for a New Equality. 14 An agreement or comparable written 15 statement is important for several reasons. First, 16 an agreement will clearly articulate the commitments 17 being made by the banks. Second, it will provide 18 details to be monitored and, if necessary, adjusted 19 over time. Third, with the possibility that the new 20 bank may itself merge with another bank in the 21 future, commitments contained in a written agreement 22 have a greater likelihood of surviving future bank 23 consolidations. 24 We urge that the commitment of the merged 25 bank to the Mass. Housing Partnership Fund be 0320 1 converted to equity. There is a critical need for 2 resources to produce and preserve affordable rental 3 housing in Boston and throughout Massachusetts. 4 With reductions in federal and state rent subsidies, 5 we find it difficult to use loan capital for 6 affordable rental housing production. The estimated 7 $30 million to $50 million in equity that the 8 proposed merger could yield would go a long way to 9 help meet the urgent affordable housing needs of 10 Boston and its neighborhoods. 11 Lastly, we ask that the Eggleston Square 12 branch of Fleet Bank remain with Fleet-Boston and be 13 exempt from divestiture. We urge that Fleet and 14 BankBoston branches that were established as a 15 result of negotiations with the Community Investment 16 Coalition be considered in a special category of 17 branches. Two of these branches are located in the 18 Urban Edge service area. We are pleased that the 19 BankBoston branch in Hyde Square will continue to 20 operate as part of the Fleet-Boston system. 21 The Fleet branch in Eggleston Square is the 22 first bank branch ever in this neighborhood and was 23 opened as part of the commitment to take over Bank 24 of New England. The Eggleston Center development 25 was made possible by the Fleet commitment to open 0321 1 this branch and led to considerable economic 2 development in the Eggleston Square area. 3 With the sale of this branch, Fleet-Boston 4 risks sending a message to the community that its 5 needs are not as important anymore. We believe this 6 is not the intention of either bank. We are told 7 that it is a regulatory requirement. 8 If the branch must be sold, we urge that 9 the purchasing bank be required to commit to 10 continue to operate the branch and continue the 11 important position the Fleet branch has gained in 12 the community during the past seven years. 13 HEARING OFFICER SMITH: Would you take 14 about a minute. 15 MR. HACOBIAN: Yes. I'll wrap up. 16 I'm Mossik Hacobian, also from Urban Edge. 17 In response to the package that we received 18 a couple of weeks ago, we understand there's a new 19 interpretation of the initial statement of one plus 20 one equals greater than two. 21 As we understand, we are to measure that by 22 the performance of the BankBoston-Fleet merger, the 23 merged entity, plus the incoming bank. This is a 24 more practical, perhaps, interpretation of what was 25 initially announced, but it requires a much more 0322 1 complicated monitoring process and implementation, 2 which we urge the Fed to require both the merging 3 banks and the incoming bank to commit to monitor and 4 implement. 5 I would like to stress that, as Rita said 6 earlier, a great deal of success has been achieved 7 in our neighborhood with Fleet and BankBoston's 8 commitments. The Eggleston branch -- the Fleet Bank 9 branch in Eggleston Square started the whole 10 revitalization effort that continues. 11 BankBoston was the major contributor to the 12 CDC Tax Rate Collaborative Fund with a $625,000 13 grant, which with Fleet's $200,000 grant and the 14 former BayBank $200,000 loan together make up more 15 than half of this $2 million fund which we're using 16 to invest in the growth of existing businesses and 17 incoming new businesses. Both banks have 18 contributed to production of thousands of units of 19 affordable housing. 20 We think all of this can continue, but it 21 can be achieved better and monitored more 22 effectively with a written agreement that we can all 23 follow over the years to come. 24 Thank you. 25 HEARING OFFICER SMITH: Thank you very 0323 1 much. 2 Staying with the order on the agenda, I 3 would like to go to Mr. Hudson. 4 MR. HUDSON: Good afternoon. My name is 5 Ozell Hudson, Jr. I am the executive director of 6 the Boston Lawyers Committee for Civil Rights. I am 7 here on behalf of my client, the client of the 8 Lawyers Committee, the Fair Housing Center of 9 Greater Boston. 10 Fist of all, I want to thank you for this 11 opportunity and thank many of the other panelists 12 who spoke earlier, especially those who urged some 13 study, some conditions be considered by the Federal 14 Reserve Board before approving this merger. 15 I want to specifically adopt and affirm 16 both the prior oral and written comments that were 17 offered by Senator Dianne Wilkerson, as well as the 18 written objections of the inner city press regarding 19 Fleet's diminished lending, mortgage lending, 20 especially to communities of color. 21 Now, basically, my theme is this, and we 22 don't have a lot of time: It's basically that due 23 to Fleet's predatory and racially discriminatory 24 mortgage lending practices and history, it is 25 imperative that the Federal Reserve Bank use its 0324 1 regulatory authority under the Community 2 Reinvestment Act to establish the parameters by 3 which the Fleet-BankBoston merger may be approved. 4 I most certainly think that it will probably be 5 approved, but I think that there should be some 6 strong conditions. 7 Now, I'm not here to bury Fleet. I can't 8 do that; it's too big a behemoth. But I am here to 9 praise it. I want to praise it for all its 10 charitable contributions, and I want to give it all 11 the recognition it deserves for its long history and 12 pattern of racial discrimination in communities of 13 color across the Commonwealth, in New England, and 14 in my home state of Georgia. 15 Because I know that in the early '90s, I 16 personally directed attorney friends of mine to 17 proceed with negotiating with Michael Bowers, the 18 Attorney General in Georgia, to take up the case 19 against Fleet, to solicit Michael Bowers' help. And 20 sure enough, as reported right here in the Federal 21 Reserve's own publication, Fleet settled the case, 22 home improvement fraud of what, $120 million, 18,000 23 borrowers. 24 That was just only one case. There was 25 another case in Augusta. Then later on, they 0325 1 settled one with the Department of Justice for 2 multimillion dollars, and that's how Bruce Marks got 3 his money. I was surprised to see him standing up 4 here this morning, but welcome on board the 5 struggle. 6 I'm here to praise Fleet for its long 7 history of doing it in very legal ways, doing it in 8 ways through its subsidiary, Fleet Investment 9 Mortgage Company -- I'll get it right eventually in 10 terms of the name, but they know who I'm talking 11 about -- and after Fleet made billions of dollars 12 through this company, then they sold it off, got rid 13 of that dirty laundry. They made billions of 14 dollars. They settled those cases. What's the 15 price of doing discrimination in America today? 16 What's the risk? 17 In other words, Fleet made a conscious 18 choice, I believe, that is, how much can we get away 19 with, and how much are we willing to pay for it? 20 And then it got to the point that they felt they 21 paid enough, they unloaded that baggage, and that 22 was that subsidiary. 23 So let's not be here to bury Fleet. No, 24 we're here to praise them for all their racially 25 discriminatory practices. 0326 1 Now, moving forward, where we need to get 2 to on this thing is the Federal Reserve Board 3 definitely needs to set some parameters, not only to 4 guide this merger, but any of the other megamergers 5 that are going to come forward in the future that 6 will speak to mergers in this area. 7 So, basically, my theme is that, and I want 8 to say this: Not only was it the mortgage lending 9 discrimination, it was the home improvement fraud, 10 because Fleet is saying, "Let the mortgage companies 11 take up the slack." 12 But these mortgage companies are predators. 13 They wouldn't stay in business unless they were 14 getting lines of credit from the banks. And we have 15 dealt with the cases where there was one mortgage 16 company -- well, it was nine of them, Resource, 17 Incorporated, each one of them set up to get a 18 different line of credit from a specific bank. And 19 Fleet settled cases in that regard as well. 20 Also more importantly, why we need this 21 written agreement, Fleet, when it acquired the Bank 22 of New England, the Bank of New England had $100 23 million offered to the community to resolve the 24 Community Reinvestment Act services. Fleet acquired 25 it. It rejected that $100 million commitment, 0327 1 walked away from it, had a side deal with Mayor 2 Flynn over some $11 million. 3 Yes, we need a written, enforceable, 4 specific agreement broken down by geographical area, 5 types of financial services that will be offered, 6 who is to benefit, what is to be the vehicle for the 7 delivery of those services, how it's to be 8 structured. And that's the important theme in order 9 to bring this matter to some type of wholesome, 10 conclusive end. 11 Thank you very much. 12 HEARING OFFICER SMITH: Ms. Malmstrom. 13 MS. MALMSTROM: Tough act to follow. 14 My name is Cathy Malmstrom. I'm the 15 banking and housing organizer for New Jersey Citizen 16 Action, which is New Jersey's largest consumer 17 watchdog coalition with 90 affiliate organizations 18 and 60,000 individual and family members. A 19 sampling of the names of our organizations is 20 included in the written testimony. I won't list 21 them here. 22 In the last 13 years, Citizen Action has 23 negotiated written CRA agreements with 28 banks 24 across the state, including the largest and smallest 25 institutions. As a result of these agreements, more 0328 1 than $8 billion has been set aside for below-market 2 interest mortgages and home improvement loans for 3 low- and moderate-income families, loans to 4 nonprofit developers for construction and permanent 5 financing, and loans to small businesses owned by 6 women and minorities in low- and moderate-income 7 areas. 8 Through 16 loan counseling offices located 9 in urban areas throughout New Jersey, Citizen Action 10 offers free loan counseling to low- and 11 moderate-income, first-time home buyers, as well as 12 home improvement counseling. Two of these offices, 13 by the way, are cosponsored by Fleet Bank. 14 In order to help banks reach targeted 15 populations, Citizen Action has worked to develop 16 and help market special products such as loans for 17 lead abatement and disabilities access remodeling. 18 Because Fleet Bank has not been 19 particularly forthcoming with regard to its overall 20 CRA pledge, and has given absolutely no indication 21 of what portion of its overall pledge will be 22 allocated to the State of New Jersey, Citizen Action 23 is requesting that the public comment period on this 24 merger be extended at least two weeks from the day 25 that Fleet submits a final and specific pledge. 0329 1 Moreover, we request that the merger 2 approval be denied unless the CRA loan and 3 investment commitment of the merged bank is greater 4 than the current level of CRA loans and investments 5 of the two separate banks. 6 When two powerful banks merge, the 7 resulting synergy creates an entity more powerful 8 than the sum of its parts. Nevertheless, the record 9 has shown that big bank mergers often result in 10 lower levels of lending to low- and moderate-income 11 communities than before a merger. 12 To assure that low- and moderate-income 13 communities are not harmed by this merger, there 14 must be a public pledge to increase the commitment 15 to the community by more than the sum of the two 16 entities' previous investments. One plus one must 17 equal more than two. 18 Fleet Bank rose to prominence in New Jersey 19 with the 1996 acquisition of NatWest, a bank with an 20 excellent record of commitment to low- and 21 moderate-income communities in our state. Fleet is 22 currently the fourth largest bank in the state, but 23 has had to struggle to bring up its level of lending 24 to low- and moderate-income communities. 25 In 1995, Fleet, Shawmut and NatWest were 0330 1 all actively lending to single-family borrowers in 2 New Jersey. Combined, they issued a total of 5,344 3 loans. By the end of 1997, more than a year after 4 Fleet had acquired both banks, Fleet Bank made only 5 3,572 loans to single families in New Jersey. 6 Lending to black and Hispanic households had 7 decreased by 32 percent and 29 percent respectively, 8 and loans to low- and moderate-income borrowers and 9 census tracts had decreased about 40 percent. 10 During that time, communication between New 11 Jersey and Fleet's home bases in Boston and in 12 Providence had more static and was less frequent 13 than that between the planet Naboo and the Imperial 14 City on the planet Corescat. We sent out signals 15 but got no help. 16 Fleet's New Jersey CRA staff had little 17 authority of their own, and lines between our 18 outpost and home base often seemed to be down. 19 Since September 1996, New Jersey Citizen Action has 20 had a letter of understanding with Fleet, which we 21 considered to be an agreement, as it contains 22 specific loan products and lending goals for New 23 Jersey. 24 Fleet Bank has already indicated to us -- 25 and this is at one face-to-face meeting and at least 0331 1 two phone calls -- that it will not renew this 2 letter when it expires in September, because the 3 expiration would probably occur before the merger is 4 completed. 5 During the past year, the bank has made 6 some progress in meeting goals of this agreement, 7 but only with lots of hard work, guidance, and 8 direct participation of community organizations. 9 The bank put together a new team and seems to be 10 moving forward, but it took almost two years to get 11 a strong program underway. 12 Because there was a New Jersey plan up and 13 running, we were finally able to get Fleet to pay 14 attention to the people in our state and figure out 15 how to serve them. Considering the history, we are 16 very uneasy about Fleet's unwillingness to define 17 its pledge to New Jersey before this merger. 18 Admittedly, if you look at raw numbers, 19 Fleet's 1998 lending throughout the state has almost 20 tripled its 1997 record. We're not going to hide 21 that. But much of this activity may be attributed 22 to the flurry of refinancing activity, more than 23 four times the level of 1997. 24 Let me skip to the end. We respectfully 25 request that the Federal Reserve extend the public 0332 1 period at least two weeks from the time the bank 2 makes its detailed CRA pledge public and further 3 request that, before any merger is approved, Fleet- 4 BankBoston's total commitment be required to exceed 5 the sum of the individual banks' previous 6 commitments. 7 Please keep in mind that each affected 8 state must know what the monetary pledge to that 9 state will be. Our Fleet contacts keep telling us 10 that the bank will be doing, quote, business as 11 usual, unquote. Considering the troublesome record 12 of Fleet's activities in New Jersey, that may not be 13 an entirely comforting promise. 14 And there are details with regard to some 15 things in Jersey City and other figures that are in 16 the written testimony. 17 HEARING OFFICER SMITH: Thank you very 18 much. We appreciate it. 19 Ms. Pearson. If you can just pull the mike 20 to you. 21 MS. PEARSON: My name is Susan Pearson. 22 I've worked as a program developer and 23 psychotherapist for 25 years, ten of them in the 24 Action Center in South Boston. 25 In my work, I've been profoundly moved by 0333 1 the courage and generosity of those whom I've known. 2 I've seen people struggle to stretch too limited 3 funds in the hope that their children might thrive. 4 I've seen them conduct these tasks with dignity and 5 spirit, despite the undermining messages around them 6 which measure worth by wealth and blame them for 7 their economic status as being too lazy, too 8 unworthy, or too inadequate to pull themselves up by 9 their presumably accessible bootstraps. 10 I am here today to advocate for affordable 11 housing, and more precisely, I am here to advocate 12 for affordable housing which is affordable for 13 people of low income. Much affordable housing 14 requires an income of at least $30,000 to $60,000. 15 Very few of those I know in South Boston earn this 16 much money. 17 The circumstance of poverty makes 18 everything more difficult. Neighborhood grocery 19 stores, often the only option for those without a 20 car or cab fare, charge more money for food. Public 21 transportation can be slow and unpredictable, and 22 often child care, schools, workplaces, and homes are 23 located far from one another. And now rent is 24 becoming more costly than people can even consider 25 paying. There is no way that careful budgeting or 0334 1 fiscal counseling can alter the fact that there is 2 not enough money to cover a family's needs for food 3 and shelter. 4 I hear that we in this country are in the 5 midst of an exceptional economic surge. Business 6 Week reports that the annual salary of top U.S. 7 executives is now 419 times the annual wages of 8 their company's lowest paid workers. I do not see 9 this income trickling down as has been anticipated. 10 I can assure you that our country's lowest 11 paid workers do not work 400 times less hard, nor do 12 they perform functions which are 400 times less 13 valuable, nor do they love and want to provide their 14 children 400 times less than do the highest paid 15 workers. 16 According to National Low-Income Housing 17 Coalition figures, the hourly wage necessary for a 18 two-bedroom apartment in Boston is $16.82. This is 19 326 percent of the federal minimum wage. At minimum 20 wage, a worker would have to work 130 hours per week 21 to afford the 1998 fair market rent of $822. 22 Assuming a person worked seven days per week, that 23 would leave five hours per day to divide among such 24 activities as sleep, quality time with children, 25 errands, appointments, and transportation. 0335 1 If we are the most prosperous country in 2 the world, experiencing one of the most prosperous 3 times in our history, what does it say about us as a 4 people that so many of our citizens are being forced 5 into homelessness or abysmally substandard housing, 6 not only despite that prosperity but to a large 7 extent because of it. 8 Money is flowing into South Boston as 9 waterfront development plans progress. Three-family 10 houses are being purchased for $300,000, broken up 11 into condominiums, and sold for $300,000 for each 12 condominium. This will ultimately eliminate 13 middle-income residents as tax rates soar. 14 And now those with the lowest incomes are 15 facing homelessness. Apartments in the lowest 16 rental sections of town are listed for such rents as 17 $1200 per month for a one-bedroom apartment. Most 18 people in this area do not bring home that amount in 19 a month, and many are in need of more than one 20 bedroom. People who have lived in their apartments 21 for decades are being advised by landlords that 22 their rents will double. 23 Many public housing residences already 24 underfunded, and, as a consequence, in great 25 disrepair, are vacant and await demolition. Some of 0336 1 the remaining public housing buildings are scheduled 2 to become mixed-income residences, again, decreasing 3 the number of available low-income residences 4 available. 5 Not only are people despairing at the 6 fragmentation of their communities brought on by 7 this phenomenon, but those who resign themselves to 8 relocating to another area are discovering a similar 9 upsurge in rental prices elsewhere. 10 I cannot imagine where people are going to 11 live. For those in our culture who cannot afford 12 affordable housing, I am asking for equity so they 13 might create homes which are safe, healthy, and 14 nurturant sources of strength for meeting their 15 tasks in the larger world. 16 Over the past several months, organizations 17 have tried to develop plans for community investment 18 with banks, and the banks have refused to spell out 19 their intentions. I urge you to require banks to 20 develop precise plans and to do so in close 21 consultation with community organizations. I am 22 asking that if this merger is approved, that the 23 Federal Reserve require a dollar commitment per city 24 for low-cost housing and mortgages before it 25 approves the merger. 0337 1 In the long term, such investment is good 2 for the bottom line. Beyond the bottom line and the 3 self-interest, it is our caring and our generosity 4 which will create a world we want to live in and 5 model the image of humanity our children will 6 follow. 7 In South Boston, the same people -- 8 HEARING OFFICER SMITH: Wrap up, Ms. 9 Pearson. 10 MS. PEARSON: I'll stop there. 11 HEARING OFFICER SMITH: Thank you very 12 much. 13 Thank you very much for coming to share 14 your views with us. We appreciate it. And make 15 sure that we have your written statements for the 16 record. 17 On this next panel, we have five minutes 18 with each organization. Are we starting with Ms. 19 Bodington?
Last update: December 3, 2010