Public Meeting Transcripts
Public Meeting Regarding Fleet Financial Group, Inc., and BankBoston Corporation
Wednesday, July 7, 1999
Transcript of Panel Sixteen
18 MR. COFIELD: Good afternoon to members of 19 the Federal Reserve Bank of Boston and the larger 20 community. I'm Juan Cofield, treasurer of the 21 NAACP, Boston branch. The NAACP is the oldest civil 22 rights organization in the country. It was founded 23 in 1909, almost a century ago. The Boston branch 24 was the first branch being established in 1911. 25 The NAACP is credited with being one of the 0412 1 organizations to make contributions -- the most 2 significant contributions to the goals of the 3 founding fathers of this great country, and we are 4 pleased to be credited with such. 5 The Boston branch is gravely concerned 6 about the proposed acquisition of BankBoston 7 Corporation by Fleet Financial Corporation. And I 8 want to make it clear, and there has been a misnomer 9 a lot. This is not a merger. It's an acquisition. 10 The application before the Federal Reserve is as an 11 acquisition and not a merger. That's very 12 important, and I will get to that in a minute, 13 because one of the entities is taking control of the 14 other. And what we have witnessed is a varied 15 difference in the philosophy of the two as it 16 relates to low-income communities and communities of 17 color. 18 Major differences have been exhibited by 19 the two institutions in serving the needs of 20 communities of color and low-income communities. 21 Fleet's lending and investment activities in 22 communities of color is significantly worse than 23 BankBoston. In fact, if the acquisition were 24 reversed, there probably would be far less 25 opposition than there is today. 0413 1 Much of the opposition is because of what 2 is perceived to be the policies and the philosophy 3 and certainly the activities of Fleet as opposed to 4 BankBoston. We believe that the two -- we believe 5 that the activities of the two institutions are 6 quite different because of the philosophies and 7 policies. 8 We are concerned because we feel that we 9 will be losing a bank that's philosophically 10 committed to serving communities of color and low- 11 and moderate-income communities. 12 As it relates to employees and the expected 13 layoffs, people of color are employed at Fleet in a 14 proportion -- in a disproportion to the population 15 of people of color in this area, and that's 16 throughout the ranks of Fleet. The percentages get 17 worse as we move up in higher echelons of the bank. 18 As Fleet has the expectation of laying off 19 as many as 5,000 employees, the potential for 20 disproportionate layoffs certainly exist. Such 21 disproportionate layoffs would be devastating to 22 such communities of color who have -- who already 23 suffer significantly higher unemployment rates, and 24 higher underemployment rates. 25 We believe that the Federal Reserve Bank 0414 1 must take action to see that people of color are not 2 disproportionately laid off. This is clearly a need 3 of the community to see that they are treated 4 equally, and it's -- and we believe that it's the 5 responsibility of the Federal Reserve Bank of Boston 6 as it looks at the needs of the community to address 7 this issue. 8 Further, we think that what needs to happen 9 is that there needs to be a firm legal commitment to 10 the Federal Reserve to ensure that that doesn't 11 happen. And that needs to come after a negotiation 12 between Fleet and the communities of color that 13 we're talking about. 14 We further think that all of the employees 15 that will be laid off should be given generous 16 severance packages, and Fleet should make a 17 commitment to retrain those employees. If in fact 18 there is no commitment and people throughout the 19 system -- not just people of color, but all of the 20 employees -- if there is not a commitment to retrain 21 and/or give a severance package, it will be harmful 22 to the communities of -- throughout the area where 23 they are coming from. 24 HEARING OFFICER SMITH: Thank you very 25 much. We would be happy to have additional comments 0415 1 submitted later, or would you like to take about ten 2 seconds to wrap-up? 3 MR. COFIELD: Yes, I would. I didn't 4 realize that I was that close to the end. 5 There has been a very different -- there 6 are very significant differences in the activities, 7 the lending practices and the investment in 8 communities of color that have been demonstrated 9 between Fleet and BankBoston. The problem is, Fleet 10 is the acquirer; and the management of Fleet is -- 11 will be at the top after this is over, and we think 12 that will bode very negatively for the new 13 institution and for communities of color and low- 14 and moderate-income communities. 15 Lastly, let me say that we believe that 16 there -- well, two other things quickly. The 17 proposed commitment of 14.6 billion in a community 18 commitment by Fleet is woefully inadequate. That 19 commitment level does not meet the current level of 20 the combination of Fleet and BankBoston. It is 21 woefully inadequate. 22 Lastly, let me say that the bank -- the 23 Boston Bank of Commerce figures into this. They 24 are -- maybe a few of you who may know that I was 25 the founder of the Boston Bank of Commerce. I am 0416 1 speaking in an official position as the treasurer of 2 the NAACP, expressing the position of the NAACP and 3 not mine personally; but I assure you that you I 4 have no formal association with the Boston Bank of 5 Commerce today, neither am I a director or officer 6 or receive any compensation from the Boston Bank of 7 Commerce. 8 When the Boston Bank of Commerce was 9 founded, it had -- in addition to all the kinds of 10 missions that other banks have, it had a special 11 mission. And that special mission was to serve the 12 needs of the Roxbury and Dorchester communities, in 13 essence, the communities of color. The Boston Bank 14 of Commerce, I believe, has done a very good job in 15 fulfilling that commitment, certainly with its level 16 of capital and level of assets. 17 The community needs a strong and viable 18 institution with a special commitment if it is going 19 to serve the economic development of that community. 20 It is absolutely essential. The NAACP firmly 21 believes and supports the Boston Bank of Commerce in 22 its attempt to acquire 18 of the 293 branches that 23 Fleet is proposing to divest itself of. And I 24 think, given the mission of the Boston Bank of 25 Commerce, that they should get it. It will allow 0417 1 the Boston Commerce to continue that special 2 commitment, to spread it further, and to be 3 competitive in the environment that we are facing 4 today. 5 Thank you very much. 6 HEARING OFFICER SMITH: Reverend Kelly. 7 REV. KELLY: Thank you. 8 My name is Frank Kelly. I am the senior 9 pastor of the Way of the Cross Church in Dorchester 10 bordering Mattapan, Morton Street. I'm also the 11 economic chair for the Black Ministerial Alliance. 12 My voice is one of many faith-based 13 organizations representing a constituency of over 14 200 strong, and they will be sent a press release 15 along with a copy of my request to testify here, as 16 well as the statement. 17 In greater Boston, over 200 faith-based 18 organizations -- or FBOs as they are popularly 19 known -- service over a hundred thousand people. 20 And that includes 25,000 plus families. 21 My affiliation with these FBOs grew out of 22 my early career of 20 years in a major Boston bank. 23 By the way, that was merged in 1995. 24 From there, I was called out into full-time 25 community service in 1987 and then into the pastoral 0418 1 ministry in 1990, founding and chairing the United 2 Christian Financial Services Association, a broad 3 based nonprofit corporation, open doors for 4 networking and relationship building. 5 The concern is obvious. Questionable 6 resources and options. There are questionable 7 resources for our people. There are questionable 8 facilities and options for the community in our 9 neighborhoods and the FBOs that serve them. There 10 are significant gaps, and we have heard them, 11 potentially 5,000 jobs lost, over 270 branch 12 closings which introduce barriers to service access. 13 Two banks will become one. Those two banks 14 committed monies separately. These commitments will 15 probably be withdrawn or significantly changed. 16 The resulting need, however, is viable 17 programs written into the plans of the new megabank 18 if this passes to address these gaps. A community 19 voice is needed now as a necessary tool in program 20 planning to be present at the planning tables, to 21 provide input on specifics of programs to address 22 these gaps, and to link the community with the 23 approval process. The necessary tool, Boston's 24 network of faith-based organizations, the FBOs, the 25 faith-based organizations are continually being 0419 1 challenged to grow, challenged by the community, and 2 lately by government and other sectors; and they 3 have grown up. 4 Under the IRS guidelines of 501(c)(3)s and 5 (c)(4)s, related nonprofit structures, a diverse 6 representation of the city having increasingly taken 7 on responsibility for the prosperity of their 8 neighborhoods and surrounding communities resulting 9 in corporate financial accountability as never 10 before. 11 I have a list of twelve of many who edify 12 our urban communities which includes the Black 13 Church Capacity Building Project, Black Ministerial 14 Alliance, Greater Boston Interfaith Organization, 15 Mattapan and Dorchester Action, Churches in Action, 16 United Christian Financial Services, Ten Point 17 Coalition, and United Pentecostal Ministers' 18 Conference. 19 Since dismantling of the welfare system and 20 proposing more local solutions, the federal 21 government and others are looking to the FBOs for 22 proven expertise in service delivery at the 23 community level. The City of Boston Empowerment 24 Enterprise Zone, Initiative Rounds 1 and 2, a 25 Baystate organization initiative tied to the Boston 0420 1 Empowerment Zone Center. 2 Interest has been heightened among 3 university academic admissions towards the 4 faith-based organization in recent years, which 5 include Harvard University, Kennedy School of 6 Government, Brandeis University, Yale University, 7 and others. Several colleges and universities have 8 been recognizing and working together developing 9 curriculum through the experience participation and 10 leadership of the FBOs. 11 In conclusion, there are three steps. 12 There is a three-step call to action. There needs 13 to be intentional and inclusiveness when addressing 14 the above-mentioned gaps and needs. There needs to 15 be a seat provided at the table for representation 16 and representatives of the organized faith-based 17 organized community to contribute their knowledge 18 and expertise and networking resources to the 19 research and proposal-writing process. 20 Finally, call upon the faith-based 21 organizations to issue support for the merger 22 approval process from the needs assessment through 23 the program writing and approval sign-off. 24 Thank you for this time to speak and to 25 provide a voice for the faith-based organizations. 0421 1 Continuous community input is welcome through the 2 faith-based organization voice mailbox at (617) 3 929-0352, and I have come copies of my testimony. 4 HEARING OFFICER SMITH: Thank you very 5 much. 6 MR. ASTOLFI: Hi. Thanks for having me. 7 My name is Drew Astolfi. I'm with at 8 Anti-Displacement Project out of Springfield, Mass.; 9 and I guess I'm here to say that I know that you 10 won't, but I wish that you would refuse to accept 11 this merger. Since you probably aren't going to do 12 that, I guess I'm going to ask you to extend the 13 comment period two weeks after Fleet has 14 disclosed -- fully disclosed what it plans to do to 15 meet its CRA obligations. 16 My organization is a coalition of tenant 17 associations in western Mass., 950 units of which 18 are low-income cooperative housing, 300 of which 19 would not have been developed and converted into 20 low-income co-op without the assistance of the 21 Federal Home Loan Bank, which Fleet has still 22 refused to say whether or not the new entity is 23 going to be a member of the Federal Home Loan Bank. 24 And I just feel it is outrageous that they're saying 25 that they're not going to do it until the charter 0422 1 issues are worked out. I'm very suspicious of that 2 and so are the people that I represent who couldn't 3 come here today because they're at work. 4 But there's an overarching attitude of sort 5 of, I don't know, of arrogance that Fleet has 6 approached, at least western Mass. from what I here 7 today, other groups, other parts of the New England 8 region as well; and that arrogance is characterized 9 a couple of different ways. One is just in their 10 refusal to say whether this is a part of the Federal 11 Home Loan Bank or not, and when they don't say it, I 12 kind of think they're not going to do it. 13 I'm just going to give you two stories 14 really quickly about sort of smaller examples of 15 that arrogance as well. And I just say if they 16 can't negotiate with ACORN and MAHA and the Mass. 17 Association of CDCs, then a group like mine, which 18 is a much smaller group, has got no chance. So 19 without sort of your intervention, I know we're not 20 going to get their attention; and I hope you guys 21 will consider that when you make your decision. 22 Just to give you two stories. There 23 there's group called Friends of the Homeless which 24 operates the only supportive services SRO in 25 Springfield or in the greater Springfield area. It 0423 1 also operates the only homeless shelter in the 2 Springfield area, and the only one that's open all 3 year-round in the whole sort of Southern Pioneer 4 Valley. And this shelter has -- was created by a 5 consortium of local banks, and their mortgage was 6 later taken over by Fleet. And it had been at 8 7 percent; and the State subsidies increased, and 8 Fleet raised the interest rates to 10 percent, and 9 that place is now in danger of foreclosure. 10 Two years ago when the foreclosure became 11 sort of a visible reality to Friends of the 12 Homeless, they tried to get a meeting from Fleet; 13 and they have been trying for two years, and Fleet 14 still hasn't talked to them. They won't even meet. 15 I just find that kind of behavior to be outrageous. 16 It is not fair. 17 A second example sort of closer to home for 18 me is that our own neighborhood of Liberty Heights 19 in Springfield, which has been mentioned here 20 earlier, in which Fleet does not have a good lending 21 record according to their own HMDA data, we have the 22 ongoing participation of BankBoston in the 23 neighborhood. They have been going to meetings. 24 And when the merger was announced, we tried to get 25 Fleet to say that after the merger, they would 0424 1 continue to attend sort of meetings with the local 2 community groups there and to make some loans in a 3 more aggressive way in the neighborhood. And we 4 also said, you know -- "Will we have, you know, sort 5 of a permanent CRA officer to service the 6 Springfield area?" which I think our mayor, Mayor 7 Albano, asked about earlier today. And in the same 8 way that they have refused to meet with the Friends 9 of the Homeless, they haven't answered the question. 10 If fact, we haven't heard anything from them. 11 And just -- it has sort of come down to 12 the wire for us, and so we're hoping that you will, 13 at least, if not deny the merger, give us the extra 14 two weeks after the Fleet makes its announcement 15 which we feel like has not been fully disclosed. 16 Thank you very much. 17 HEARING OFFICER SMITH: Thank you very 18 much. 19 Mr. Haskell. 20 MR. HASKELL: Good evening. My name is Jim 21 Haskell, and I come here today in my dual capacity 22 as the executive director of the Salem Harbor 23 Community Development Corporation and as the 24 chairperson of the Mass. Association of Community 25 Development Corporations, MACDC. 0425 1 During its 20-year history, Salem Harbor 2 CDC has developed affordable housing. We've 3 assisted small businesses, helped families obtain 4 their first homes, and allowed people to get a job 5 by helping them with their English skills. And we 6 have done much of our work in an immigrant Latino 7 neighborhood that most people had simply written off 8 20 years ago. 9 As the chair of MACDC, I represent 68 such 10 organizations across this Commonwealth; and we are 11 but a small part of 3500 CDCs nationwide, and all of 12 us do the same thing, help turn areas that were 13 previously considered beyond repair into thriving 14 working class communities. And we have accomplished 15 this impossible feat by bringing a lot of parties 16 together into a partnership to try to figure out how 17 best to affect this turnaround, because the solution 18 has often been different in different communities. 19 And, frankly, it's very difficult for me to 20 sit here today and oppose this merger, because, 21 frankly, we're much better at building bridges than 22 we are at burning them. But we feel that we have no 23 alternative but to oppose the merger of Fleet and 24 BankBoston since it appears that the resulting 25 institution will be one where this partnership will 0426 1 not be respected. 2 Pronouncements from corporate headquarters 3 will take the place of thoughtful, effective, and 4 meaningful determinations of how best to meet the 5 credit needs of low- and moderate-income 6 communities. 7 The recent decision by major banks to merge 8 has resulted in significant community reinvestment 9 agreements being negotiated which resulted in the 10 development of community reinvestment products to 11 benefit a wide range of low-income communities. In 12 all of these instances, it would have been 13 impossible for the bank to promulgate a 14 one-size-fits-all approach to community development. 15 On the other hand, it would have equally 16 been impossible for the community-based 17 organizations to have developed the types of 18 products that the bank did in order to meet those 19 needs. In the truest sense of partnership, each 20 side depended on the other. 21 Unfortunately, our recent experience with 22 Fleet has shown us that this sense of partnership 23 has not been taken to heart. Once the three-year 24 term of the Fleet-Shawmut agreement, MACDC and MAHA 25 attempted to extend this agreement. After a year of 0427 1 futile meetings at which I was personally in 2 attendance, we were told that no such agreement 3 would occur. 4 Similarly, a large group of community 5 organizations and public officials has attempted to 6 begin negotiations about an agreement concerning 7 this proposed merger. Once more to no avail. 8 Most distressing of all, we have found that 9 Fleet's actual performance in mortgage lending to 10 low- and moderate-income families and small business 11 lending is significantly less in the absence of 12 agreements than when they are required to reach 13 performance targets within the framework of an 14 agreement. 15 The merger of Fleet Bank-Boston threatens 16 to become a monolithic force that will unilaterally 17 determine how its community development resources 18 will be allocated in low- to moderate-income 19 communities. 20 We have seen far too many examples where 21 lots of dollars have effectively destroyed our 22 communities. We only need to look at urban renewal 23 to see that. Dollars alone are not the answer. 24 Thoughtful solutions and effective partnerships are. 25 Several colleagues of mine have outlined or 0428 1 will outline specific reasons why their 2 organizations are deeply concerned about this 3 merger, as well the chair of the Board of Salem 4 Harbor CDC, Wayne Burton. 5 Although we will express our opposition, 6 please be mindful of what I initially said. This is 7 not an action we relish nor a decision we have come 8 to lightly; however, on behalf of the communities we 9 serve, we believe it is the only one we can make. 10 HEARING OFFICER SMITH: Thank you. 11 Are you going to take about a minute or -- 12 MR. BURTON: Can I restart and take one 13 minute? 14 HEARING OFFICER SMITH: One minute. 15 MR. BURTON: Very quickly. By day, I'm the 16 dean of the School of Business at Salem State 17 College and teach capitalism and the joys of the 18 capitalist system. By night, as president of the 19 Salem Harbor CDC, I try to find that capital to fund 20 development projects and housing in Salem. It has 21 been an eye-opening experience for me. I wouldn't 22 have been here seven years ago. There is a 23 desperate need for capital that has to be available 24 to meet the needs of Salem and the other low-income 25 communities. 0429 1 The very existence of our organization is 2 proof that the capitalist system does not work for 3 everyone. It takes human intervention. 4 Let me make one last point. My presence 5 here today is inspired by the words of Ira Jackson, 6 the vice-president of BankBoston who he had the 7 privilege of hearing on four separate occasions this 8 year, because he is the only business leader I could 9 find that spoke from conscience about the value of 10 community service. He made two points I would like 11 to just reiterate today. I'm sure we came to 12 different conclusions on the merger, but I would 13 like to reiterate the points that he made. 14 One is that BankBoston became renowned for 15 its community service by making community service a 16 core strategy of the bank for its success. It has 17 to become part of the culture. They call that 18 managing value with values. 19 The second point he made is he made such an 20 impression on people in Salem that he was invited to 21 be our commencement speaker in May. Now, most 22 commencement speakers are the only thing standing 23 between parents and ending their child's tuition 24 bills. He had people spellbound. His point was 25 very simple. He said that capitalism has no 0430 1 conscience. Capitalism distributes goods and 2 service in ways that leave people out. It's only 3 through the intervention of people like yourselves 4 who are in a position to introduce conscience into 5 this debate that we get a public good advanced. 6 And the conclusion I have reached is that 7 on balance, the MACDC position as outlined by Jim 8 Haskell, executive director of our agency, is the 9 appropriate one to take; and I fully support it. 10 Thank you. 11 HEARING OFFICER SMITH: Thank you very 12 much. 13 Miss Peters. 14 MS. PETERS: Thank you. My name is Marcia 15 Peters. I have a small community-based law practice 16 in Jamaica Plain. I was asked to come here today 17 when I let it be known that I had seen specific 18 examples in my law practice of overappraisals by 19 Fleet. I understand that that issue has been put to 20 this panel by at least two speakers today and I 21 don't have to introduce it as an issue. 22 I didn't really understand what I was 23 seeing at the beginning, but I now do; and I really 24 found it quite shocking. 25 Family A was an African-American couple who 0431 1 were buying a house in Roxbury which needed a gut 2 rehab. They were going through UNAC. They put down 3 $1500. Fleet loaned them $207,140 on a sale price 4 of 125,000 because the difference was needed for 5 rehab. 6 I -- from my knowledge of the market, I 7 thought the place would be worth about a $135,000 8 when it was all fixed up. I called some experts I 9 knew, and they said I was absolutely on the money, 10 that it couldn't possibly be worth more than 11 135,000; and yet -- after the work, and yet Fleet 12 was loaning 207. 13 I asked to see the appraisal because I had 14 learned from my other example -- which I guess I 15 should have given you first that I should be looking 16 at these things -- I found it to be totally 17 dishonest. The way they got the value up so high 18 was to go an entire mile to a completely different 19 neighborhood of Boston for one of their comps. They 20 called it in better condition and adjusted it by 21 only $11,200. An honest adjustment would have been, 22 I would think. $60,000, $70,000. That faraway 23 mansion in a completely different neighborhood was 24 so uncomparable. It was just flagrantly dishonest 25 to put it into the average and come up with a 0432 1 justification for lending this family $207,000. 2 The other one which I actually saw earlier 3 was a Haitian couple buying on the 4 Dorchester-Mattapan line, probably close to Reverend 5 Kelly's church. It was a City-foreclosed property. 6 Boarded up. Shell. Needed everything. 7 I talked to two people in the Boston city 8 government who told me that the place should not 9 have gone for more than $20,000 in the shape that it 10 was in. They said that contractors and people who 11 knew what they were doing came to the auction and 12 dropped out at $20,000 because they knew that 20 13 plus what it needed would equal what it would then 14 be worth. 15 But naive first-time home buyers stayed in 16 the bidding. It was their chance at the American 17 dream. They just didn't know what they were doing. 18 This family bid it up to $58,400. Fleet came up 19 with an appraisal which justified that sale price. 20 Fleet was not lending for rehab. Fleet was 21 not even asking if anybody was lending for rehab or 22 where the work was going to be financed. They 23 simply lent $58,000 on a shell will that was worth 24 $20,000 and have a nice day. That was really all 25 there was to that transaction. 0433 1 The result of this is manyfold. I would 2 hope that you as regulators would be concerned that 3 when Fleet tells you that their portfolio is worth 4 X, that maybe it really isn't. They are not 5 appraising honestly; and, therefore, their books are 6 not really telling you the picture of what their 7 assets are. 8 On a human level, these people cannot ever 9 have equity in their homes. They will work for 10 years and all they will do is pay down on that 11 difference between their large loan and their small 12 real value. 13 In closing, I would ask that you make a 14 condition of this acquisition -- not merger -- that 15 there be spot checks of appraisals, that there be 16 funding set aside for professional appraisers to 17 pull random files and check the honesty of 18 appraisers that are working for this merged entity. 19 Fleet is going to set the culture for the 20 new entity, and I'm concerned that it will not be a 21 culture of honesty. 22 Thank you. 23 HEARING OFFICER SMITH: Miss Pisacane. 24 MS. PISACANE: My name is Gail Pisacane, 25 and I'm deputy director of Valley Opportunity 0434 1 Council, the federally-designated community action 2 agency in Chicopee and Holyoke. 3 With an annual budget of approximately $9 4 million, we provide services to all 24 community 5 cities and towns of Hampden County, including 6 Westfield, Ludlow, West Springfield, and on 7 occasion, Springfield. Last year, we provided 8 direct services to over 26,000 low income and 9 disadvantaged residents of our service areas. 10 I testify today on behalf of the Valley 11 Opportunity Council and the low-income residents we 12 represent, addressing some of the very basic banking 13 issues that all of us must face on a daily basis. 14 John Rubins, author of Main Street, not 15 Wall Street, writing in the July-August 1999 edition 16 of Consumers Digest writes, "With few exceptions, 17 big banks have traditionally been inhospitable 18 places for small savers; and their penchant for 19 combining into bigger entities does not seem to be 20 changing that. The recent mergers are producing 21 higher fees, fewer branches, fewer ATMs, and fewer 22 tellers." 23 He cites Brian O'Connor, managing editor of 24 Bank Rate Monitor. "Our experiences suggest that 25 low-income individuals cannot be expected to 0435 1 maintain minimum balances which might qualify them 2 for lower or no-cost services within the bank. They 3 need inexpensive checking and ways to access their 4 minimal savings without accruing service charges. 5 They need bank branches and/or ATMs located in their 6 neighborhood. Few, if any, banks seem willing to 7 accommodate these needs." 8 According to O'Connor, we are seeing banks 9 charging $25 to $35 to print a couple of hundred 10 checks when a customer can get that done for $5 11 dollars by mail. 12 Some banks hit the customer for $20, $25, 13 or even $30 for a bounced check when returning the 14 check costs approximately $2. 15 When you open a checking account with a 16 large bank, you're inviting it to find every way it 17 can to rake you over the coals. 18 Why, then, should we, or any organization 19 that serves the poor and low-income, support this 20 merger? Without some assurances that the needs of 21 those whom we represent will be addressed, we would 22 be remiss in our duty as an advocate for the poor to 23 do so. 24 In human services, there is an expectation 25 that as the number of clients increases, the costs 0436 1 per client decrease. Economy of scale is a mantra 2 of those who espouse the bigger is better theory of 3 service provision. 4 In the private sector, however, the 5 elimination of competition through merger frequently 6 serves as the prelude to increased costs to the 7 consumer. 8 In addition to the effect of the merger on 9 clients, we must consider the effects on Valley 10 Opportunity Council itself. As an agency that has 11 been involved in housing development, 12 rehabilitation, and management, we have had cordial 13 relationships with the local banking community. As 14 the merger takes place and decision making is 15 centralized, our ability to deal with decision 16 makers on a local level is impaired. Currently, the 17 only way to call Fleet Bank located across the 18 street from our office is to call Boston. 19 We would hope that prior to approval of 20 this merger, the Federal Reserve will require that 21 Fleet and BankBoston develop a detailed and 22 publicly-verifiable reinvestment plan which has been 23 negotiated with community organizations and elected 24 officials with specific commitments ensuring a net 25 benefit to low- and moderate-income in minority 0437 1 communities. 2 We also ask that the public comment period 3 be extended for two weeks after such a plan has been 4 released. 5 It is essential that this merger be 6 approved and that the stipulations regarding 7 lifeline banking services for the poor, access to 8 branches and ATMs, and economies of scale for 9 service fees are attached to said approval. 10 We would also hope that some allocation in 11 of money to support local nonprofit needs and 12 committed bank involvement in the local community is 13 considered. 14 Thank you for this opportunity. 15 HEARING OFFICER SMITH: Thank you very 16 much. 17 Are there any questions? 18 HEARING OFFICER McDONOUGH: I have a brief 19 question for Marcia Peters. 20 You gave two examples of inappropriate 21 loan-to-value ratios, and I think one of those you 22 cited as being a UNAC loan. And I don't recall 23 whether the other loan was a UNAC loan. 24 MS. PETERS: No. 25 HEARING OFFICER McDONOUGH: What role did 0438 1 you play in the process to allow such disparate 2 loan-to-value ratio? 3 MS. PETERS: I'm not sure that I can answer 4 that. There was a work write-up which I think was 5 done by UNAC staff person that said the property 6 would need -- I think it was $82,000 worth of work. 7 But UNAC isn't doing the appraisals. They're doing 8 the first-time home buyer counseling and getting 9 people to understand the process, et cetera. 10 But when the thing goes into Fleet, Fleet 11 is hiring its own appraiser to justify the huge 12 price. So I'm not sure. 13 If UNAC had something to do with getting 14 the numbers up so high and getting the hopes up so 15 high, I would still have hoped that Fleet's 16 appraiser would have said, "Whoa. No can do." 17 HEARING OFFICER BROWNE: My I ask a 18 follow-up question? 19 Ms. Peters, when did these -- when were 20 these properties purchased? Is this something that 21 happened fairly recently or several years ago? 22 MS. PETERS: The first one that I talked 23 about where there was the purchase plus rehab loan 24 was less than a year ago. 25 The City foreclosure one was approximately 0439 1 two years ago. 2 HEARING OFFICER ALVAREZ: I have a question 3 for Mr. Haskell. 4 You said that you were beginning some 5 discussions with Fleet about an agreement -- 6 renewing an agreement that your group had or other 7 groups had. I would like to you speculate for a 8 minute, if you would, feel comfortable about what 9 kind of reasons you might think -- what was actually 10 going on with Fleet's decision not to enter into an 11 agreement. And what I'm looking for is for a sense 12 of whether you had the sense that Fleet was 13 withdrawing its support from the community or was 14 Fleet more changing its approach to dealing with 15 communities to become more like some other banks 16 that we have seen where they still have a commitment 17 to the community but they choose not to have formal 18 agreements in implementing their programs. 19 MR. HASKELL: When I know what Terry Murray 20 is thinking, I'm sure I will be much richer. 21 Sorry. 22 HEARING OFFICER ALVAREZ: No. I appreciate 23 that. 24 MR. HASKELL: I wouldn't want to speculate 25 what is in Fleet's thought process. 0440 1 Overall, in my experience in negotiations 2 with Fleet, the approach to community groups is that 3 everything that is given by the bank is viewed 4 somewhat as a net loss to the bank, that they do not 5 see -- they do not see their commitments to the 6 community as somehow figuring out a way to make the 7 investment in the community; and our experience, 8 frankly, with BankBoston through its mergers was the 9 exact opposite, that the bank was, in fact, 10 attempting to find a way that they could, in fact, 11 do banking in low-income communities and by that 12 certainly making a profit. 13 And that attitude hasn't been evident in 14 several different forums with Fleet. 15 HEARING OFFICER SMITH: Thank you very 16 much, and especially for waiting so long into the 17 afternoon and evening to make your appearance. We 18 really do appreciate it. 19 (Pause) 20 HEARING OFFICER SMITH: We are starting 21 with Mr. Sarkissian.
Last update: December 3, 2010