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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