Public Meeting Transcripts
Public Meeting Regarding Fleet Financial Group, Inc., and BankBoston Corporation
Wednesday, July 7, 1999
Transcript of Panel Two
9 MAYOR MENINO: Thank you very much and 10 thank you for allowing me to testify this morning. 11 In my remarks I want to focus on the impact that the 12 proposed merger would have on my city and ask you to 13 consider that impact in your deliberations. 14 This merger comes at a time when the local 15 and national economies are on a roll. The 16 consolidation of firms into larger institutions is 17 happening in many industries. This evolution is not 18 only fueling the stock market, it's also changing 19 the way we do business and the way companies can 20 grow within a region and even across international 21 borders. 22 Boston's banks can't hide from this trend. 23 They must go out and compete in these expanding 24 markets like any others. But the consolidation of 25 capital in this merger will take Fleet to a position 0046 1 where the banking needs of ordinary citizens will 2 seem insignificant compared to the attraction of 3 foreign markets and bigger deals, including 4 additional mergers. 5 As fewer banks survive and grow into bigger 6 players on the national and international stage, the 7 fundamental question we face is this: Who will care 8 whether a community grows or dies? The number of 9 banks whose fates are tied to the fate of Boston is 10 shrinking. The Bank of New England is gone. 11 Shawmut Bank is gone. BayBank is gone. With this 12 merger BankBoston will also be gone. Gone, too, 13 will be more local jobs and BankBoston's spirit of 14 dedication to every segment of our community. 15 In banking, the idea of fair service to all 16 is a result of the Community Investment Act. It was 17 written into law because Americans saw what happened 18 when banks ignored some of our neighborhoods and 19 wrote off credit-worthy neighborhoods. The 20 Community Reinvestment Act has brought people on the 21 margins into the mainstream of American life. 22 Without it, Boston would not be a city of come-back 23 neighborhoods. It would see fewer first-time home 24 buyers, more abandoned houses, and whole 25 neighborhoods rotting from disinvestment. 0047 1 Take Blue Hill Avenue, for example. For 2 years it was little more than a depressing 3 collection of vacant lots and boarded-up buildings. 4 Since I became mayor we've invested over $65 million 5 up and down the avenue. By building new homes and 6 businesses, we're rebuilding a whole community. And 7 soon we'll start construction on the Grove Hall 8 Mall. And some people said that would never happen. 9 A new shopping center with a supermarket, a 10 drugstore, a Dunkin' Donuts and other shops. 11 Our partner on this deal is BankBoston. We 12 ended up with BankBoston because they could handle 13 the financing. The bank wants to do this deal. 14 Chad Gifford knew this was important to the city, so 15 he put a good team on it, and today we have a deal. 16 Some banks are better than others. In 17 spite of generous ratings from regulators, Fleet has 18 a troubled lending history in our community and 19 Fleet's approach to this merger leads me to believe 20 it will adopt a take-it-or-leave-it approach to 21 lending in our neighborhoods. That troubles me, and 22 it should trouble every business leader in Greater 23 Boston, because the health of a city sets the tone 24 for investing throughout the wider region. 25 Some big banks believe the Community 0048 1 Reinvestment Act gets in the way of their growth 2 strategy. They see it as a nuisance. They have 3 enlisted the help of their friends in Congress to do 4 away with it, people like Senator Phil Gramm of 5 Texas, who is no friend of the people in America's 6 cities. For years Phil Gramm has been telling 7 government to get out of the business of rebuilding 8 communities. Now he's telling business to get out 9 of that business, too. 10 Here in Boston the two banks have told us 11 their merger would mean a 20 percent reduction in 12 combined lending to our community. If you want to 13 know what happens to a community when lending 14 disappears, try to remember the conditions of our 15 neighborhoods in the early 1970s. Or follow 16 President Clinton's trip across the country with 17 business leaders this week. Whether in Boston or 18 East St. Louis or Los Angeles, one stubborn fact 19 remains the same: Capitalism does not work in a 20 community when that community is denied access to 21 capital. 22 As the mayor of this city I am concerned by 23 any merger that would deny my capital city in favor 24 of expanding markets somewhere else. I am concerned 25 about a reduction in home mortgage loans, a 0049 1 reduction in community development loans and small 2 business loans, and I'm concerned that the new bank 3 will not act as if it's life depended on the health 4 of our neighborhoods. 5 I ask you, how can any bank call itself a 6 local bank with pride if the bank is less than fully 7 committed to the local economy? 8 I am sorry to say that I have yet to hear 9 why this merger is a forward step for my community. 10 So until the Federal Reserve Board can convince me 11 otherwise, I cannot offer the City of Boston's 12 support for this merger. 13 You as regulators hold great power over the 14 future of banking in America. You hold great power 15 over the economy of our communities and you have a 16 responsibility to protect the public interest. So I 17 respectfully request that you remember the interests 18 of my constituents whose banking needs rest upon 19 your shoulders while you deliberate and decide the 20 merits of this merger. 21 In closing, let me say, my office would be 22 happy to supply you with some of the facts of my 23 detailed statement. Also -- let me just finish up. 24 This might be a good deal for the stockholders, but 25 I don't believe this is a good deal for the 0050 1 stakeholders. Thank you very much. 2 (Applause) 3 PRESIDING OFFICER SMITH: And we will not 4 exactly follow the order. We'll go next to 5 Congressman Capuano. 6 CONGRESSMAN CAPUANO: Thank you. First of 7 all, I'd like to thank the Federal Reserve for 8 having this hearing because it wasn't on the 9 original schedule when this merger was announced, 10 and I know that the Federal Reserve listened to the 11 requests of many people in this community to have 12 this. I also know you have a very long day ahead of 13 you and I respectfully send my regrets for that, but 14 my thanks for having me here nonetheless. 15 As each of you know, the Congressional 16 delegation of Massachusetts has sent several letters 17 on this matter to the Federal Reserve and to others. 18 We have another one in the record today that 19 basically reiterates what we have said in the past, 20 naming four points that we've tried to focus on. 21 The fact that we want our community banks to have a 22 fair opportunity to bid and then purchase a fair 23 portion of the divested parts of this merger if and 24 when it happens; that we want both the remaining 25 bank of this particular item and whoever wins the 0051 1 divestitures to continue and to expand their 2 neighborhood investment. 3 We want the Federal Reserve to make sure 4 that all employees are fairly treated and honestly 5 treated, and, of course, we want local charities to 6 continue the relationship they've had with the banks 7 in the past. That's what the delegation has said. 8 For myself, for the last four months as a 9 member of the banking community and a new member of 10 Congress I've actually worked a little harder on 11 this than most because I've had a lot of catching up 12 to do on these kinds of matters. And when this 13 merger was announced, right from the beginning I 14 asked for several pieces of information -- I think 15 pretty easy pieces of information -- such as the 16 details of charitable giving, some statistics on low 17 and moderate income loans, things like that. 18 Since then we've had a study done by a 19 professor at UMass-Boston that's come out that's 20 raised some serious questions on the lending 21 practices of these institutions. We've had comments 22 from a group called Inner City which has raised 23 serious questions. We've had the bank itself come 24 out with a 14.6 billion dollar community investment 25 proposal that has virtually no detail to it. 0052 1 Those are serious issues and I believe they 2 have been seriously presented. However, not until 3 yesterday at three o'clock in the afternoon did any 4 representative from the bank have anything to say 5 about any of those matters. 6 Now, I'll tell you that I do think that 7 both Fleet and the Bank of Boston have done a good 8 job going out and listening and I do think it's 9 important to maintain a strong regional bank in 10 Boston. I think that's fine. And I congratulate 11 the banks for going out to listen. But listening is 12 only one half of the equation. The second half of 13 the equation is then responding to what you have 14 heard. Not necessarily agreeing with it, not 15 necessarily disagreeing with it, but simply 16 responding. Do you agree? Don't you agree? Let's 17 work this out. There has been none of that until 18 three o'clock yesterday. 19 Today has been an extended period of time 20 for public comment. I don't think that less than 24 21 hours for people to respond or to react to the 22 response is a fair amount of time. I think it's an 23 inappropriate amount of time. (Applause) And I 24 think it could raise any number of questions. I 25 know that this is a difficult merger. I understand 0053 1 that and I respect the fact that the bank has been 2 busy. If that's the case, okay; great. It also 3 raises potential questions that the bank is being 4 insensitive to community input. If that's the case, 5 that's the worst possible scenario. 6 The whole reason we're doing this is to 7 make sure that the successful bidders and the merged 8 entity are responsive to community needs. If there 9 wasn't a community component to that, we wouldn't be 10 here. If it was simply banking, bottom-line 11 banking, you wouldn't do this, you wouldn't need our 12 input, we wouldn't have a whole lot to offer. 13 We're not bankers. We're here representing 14 the community, and if the community is not listened 15 to, not necessarily agree with them on every point, 16 what have we done? You're wasting your entire day. 17 I'm wasting an awful lot of time and most of the 18 people in this audience have wasted an awful lot of 19 time. (Applause) 20 To my way of thinking, I want this merger 21 to end up in one plus one is greater than two. I 22 really do. Not just for the shareholders; also for 23 the communities and, as the mayor put it, for the 24 stakeholders. That's why today the written 25 testimony that I've given, which is a little bit 0054 1 more detailed than the verbal comments, I'm asking 2 for a couple of things: 3 If the Federal Reserve finds it in the 4 interest of the community, which I think it is 5 obviously, I ask that the Federal Reserve delay any 6 decision-making and extend the public comment period 7 of time to at least 30 days after these responses 8 have been given by the bank, because we need a fair 9 amount of time to see whether their responses are 10 fair or not fair, reasonable or not reasonable. 11 Absent that extension of time, then I have to 12 strongly oppose this merger at this time. 13 (Applause) And I have to oppose it not because I 14 have made a final decision in my own mind as to 15 whether this merger serves the needs of the 16 community, but because I haven't been allowed the 17 time to do that. So I respectfully ask the Federal 18 Reserve to extend the period of time to 30 days 19 after receipt of responses by the banks, and if they 20 can't do that, then I have to oppose this merger. 21 Thank you. 22 (Applause) 23 PRESIDING OFFICER SMITH: Senator 24 Wilkerson. 25 SENATOR WILKERSON: Good morning to you, 0055 1 Presiding Officer, members of the Board. For the 2 record, my name is Dianne Wilkerson and I currently 3 serve as State Senator in Massachusetts and I have 4 done so for seven years. Prior to that I practiced 5 law in Massachusetts and was a member of the 6 Community Investment Coalition which negotiated with 7 Fleet Bank in 1990 when it took over the Bank of New 8 England. The CIC also negotiated again in 1994 the 9 Shawmut-Fleet merger, and I represented as a lawyer 10 over 600 individuals who were victims of the 11 infamous second mortgage scam, one of the most 12 devastating financial scandals that destabilized 13 both the Boston and Springfield Afro-American home 14 ownership communities. 15 I also was a member of the team that 16 negotiated the second mortgage scam settlement with 17 BayBank, the former BayBank and the former Shawmut 18 Bank. And I have previously testified before this 19 Board where I have raised serious issues and 20 concerns to this body. 21 However, I have never testified in 22 opposition to a merger until now, and I do so with 23 sadness and disappointment. (Applause) Since April 24 of this year I have served as the convener of what 25 is called the Community Advisory Committee for the 0056 1 Fleet Bank-BankBoston merger. The committee is a 2 40-plus member group comprised of racial, gender and 3 professional, university, government and religious 4 areas from across the Commonwealth who came together 5 to solicit comments and concerns from interested and 6 impacted parties across the state. The committee 7 hosted a statewide town meeting in May. Over 200 8 persons turned out to offer testimony, and we have 9 provided the videotape of that meeting to the banks 10 and to this Board. 11 The committee met with members of our 12 Congressional delegation. We met with officials 13 from the Department of Justice Antitrust Division, 14 the Federal Reserve Bank of Boston, the Attorney 15 General of the Commonwealth of Massachusetts, and 16 the Massachusetts Division of Banks. We've had the 17 unprecedented support and collegiality from our 18 entire Congressional delegation from the mayor of 19 our City of Boston and it's never happened before, 20 and I think that that unified position ought to tell 21 you something, because this is different. 22 We also met with the bank principals early 23 in June and at that meeting we transmitted to them a 24 lengthy written document in addition to other 25 information that the committee had gathered. It was 0057 1 our hope and expectation that those concerns would 2 be taken into account as the proposal was developed. 3 The committee waited for some time to offer public 4 comment because we were optimistic that the 5 committee would be able to engage in a productive 6 dialogue with bank principals to ensure that the 7 banking needs and the needs of the Massachusetts 8 communities, in particular women and people of color 9 in low and moderate income communities would be met. 10 I'm sorry to say that that June 4th communication 11 and the detailed concerns and issues that have been 12 raised have never had the courtesy of a response. 13 On June 24th we received the bank's 14 proposal and have spent a considerable amount of 15 energy reviewing this plan. In sum, the proposal 16 does not meet the regulatory standards that the 17 Federal Reserve Bank must have satisfied in order to 18 approve this merger application. There is much that 19 I could offer, but I will focus my testimony on two 20 pieces of the criteria of review for this Board 21 under the Bank Holding Company Act. That is, 22 competition and convenience and needs of the 23 community. 24 As to competition, among other things, this 25 application would involve the largest branch 0058 1 divestiture in the history of the United States. 2 However, even if a large bank were to purchase all 3 the branches, the most it could represent would be 4 six percent of the Massachusetts market share. The 5 merged institution would be at least 30 percent, 6 leaving its next closest competitor about five times 7 smaller, hardly an encouraging picture for 8 competition. 9 The divestment discussion to date has 10 ignored an important and serious issue for the 11 communities which I represent, and that is that many 12 of the branches on the divestment list were cited 13 specifically to fill a void in urban and rural 14 markets which until the last five years were 15 woefully underserved by banks and saturated with 16 check-cashing stores. The citing of many of the 17 branches on the sale list were negotiated in the 18 aftermath of the last two mergers. Several of the 19 branches were cited based on an acknowledgment and a 20 determination that the convenience and needs of a 21 certain segment of our community were not being met. 22 Special care must be taken by this Board to 23 ensure that we don't go backwards. It would be our 24 position that no grant cited in an urban market to 25 fill a void should be sold to anyone who does not 0059 1 intend at least to keep the branch open. Who gets 2 these branches is also of critical importance to us. 3 We have been fortunate in the Greater Boston 4 community of color to have a bank that is certified 5 with the United States Treasury as the only bank 6 community development finance institution in the 7 state and whose focus market is urban, the urban and 8 LMI communities, and especially people of color, 9 African-American, Latino. 10 Local and community banks should be 11 strengthened by this merger, not weakened. You must 12 pay special attention to the Boston Bank of Commerce 13 and the market that they serve. 14 Lastly, much has been made about the 15 expectation of the applicant banks that there would 16 be competition in the market to pick up market share 17 in areas where the applicant will decrease lending 18 and spending; for example, in mortgage lending. It 19 is our contention that there is simply no basis for 20 such an assumption, and in fact history tells us 21 different. With the slim pickings to be left in the 22 bank market for mortgage seekers, there is no 23 rational expectation that the purchasing bank or the 24 remaining Massachusetts banks soon to be but one, if 25 the next merger is approved, could pick up the slack 0060 1 with the merged bank to continue the double-digit 2 decreases in mortgages that have been made to 3 African-Americans and Latinos that we have been 4 sustaining every year for the past four years. 5 Oddly enough, the biggest hits have come 6 post merger of BankBoston and BayBank and even 7 bigger decreases in the post Fleet-Shawmut Bank 8 merger, and unless the Federal Reserve takes special 9 consideration of the need to ensure contingent 10 competition for the low and moderate income market, 11 there will be little or none available. 12 And please note that we do not consider 13 second-mortgage companies charging 20-plus percent 14 interest competition for the LMI and minority income 15 market. 16 I know that Professor Campen is going to be 17 testifying later, but I think that the analysis that 18 he has done is uncontroverted and would hope that 19 this Board would take some special note to look at 20 those numbers, and not only the numbers for Boston, 21 but for the Commonwealth of Massachusetts as a 22 whole. The loans to black borrowers decreased 52 23 percent. From 1997, 1998, the loan to 24 Latin-American, Latino borrowers decreased 49 25 percent and the loan to LMI borrowers decreased by 0061 1 fifty percent as a result of both the BayBank- 2 BankBoston merger and the Fleet-Shawmut merger. And 3 we accept this concept that there would be some 4 decrease, but the double-digit decreases that we 5 have sustained in these two particular communities 6 are irrational, inexplicable, and can only be 7 explained by racial factors. And even the 8 Massachusetts Banking Council has supported that 9 position. 10 This Federal Reserve did a study which set 11 off a whole litany of similar studies across this 12 country, and I think that it's important to note 13 that the Federal Reserve Bank of Boston led the way 14 nationally on what became a higher standard and 15 reported for tons of data. 16 Given what we understand to be the standard 17 of review for the Federal Reserve in assessing 18 merger applications, we believe in order for the 19 Federal Reserve to recommend approval of this 20 merger, the bank would have to find that the bank's 21 proposal of June 24th which provides for a 14.6 22 billion dollar commitment for six states over five 23 years meets the convenience and needs of the 24 community, although the figure represents less 25 resources from the combined bank than the two banks 0062 1 provided separately in 1998. 2 For the record, I never expected one plus 3 one to equal greater than two. I was prepared to 4 declare victory of one plus one equal to one and a 5 half. It doesn't. Apparently the comments from 6 Fleet-BankBoston suggest even they acknowledge that 7 the formula has changed. On July 1st there were two 8 statements issued that said, one, it was never our 9 intention when we made that statement in March to 10 suggest that between us we would be greater than the 11 two. What we really meant was that the divestiture 12 bank would be responsible with us and we would hold 13 them accountable to the community. 14 Also, this proposal represents 80 percent 15 of what we have been doing because we are divesting 16 20 percent of our branches, so we're going to be 17 smaller. In some categories it's more than 80 18 percent. We haven't found them yet. 19 Various members of the committee have run 20 the numbers in different variations and we all keep 21 getting the same results. The numbers simply don't 22 support the bank's representation of this equaling 23 even 80 percent, the current activity, let alone 24 100. 25 Meeting the needs of the convenience and 0063 1 needs of the community is not just about CRA. One 2 of the best indicators of future performance is past 3 history. That being the measure, the Federal 4 Reserve Bank must look very carefully not only at 5 the recent data it studied on the bank's 6 performance, but also on the compliance or lack 7 thereof to prior commitments and agreements. The 8 history is substantial. I have included some 9 information that attests to this history, which we 10 will submit to you for the record, including the 11 committee's June 4th letter to the bank, which never 12 received the courtesy of a response. 13 We believe there's at least a segment of 14 the community; namely, the LMI urban and rural 15 communities and women whose needs are not being 16 adequately served. There is a fear that with 17 another merger history suggests these communities 18 will sustain yet another decrease. 19 PRESIDING OFFICER SMITH: Thank you very 20 much, and we'll be glad to have your full statement 21 for the record. 22 SENATOR WILKERSON: If I could end by 23 making a request to you, as the Congressman and the 24 Mayor have done, and that would be that you would 25 use your regulatory powers to do the right thing by 0064 1 the communities who depend on the regulatory 2 authority for protection. Whatever this proposal 3 is, it's not complete. Even the bank principals 4 referred to it yesterday afternoon as a work in 5 progress. You can say no. You can say go back to 6 the drawing board. You can say you need more 7 information. You can say to the banks, respond to 8 the questions that have been asked. But whatever 9 you say, don't say that this is enough to meet the 10 standard, because it's not, and the community has 11 nowhere else to go but to you. 12 PRESIDING OFFICER SMITH: Thank you very 13 much. (Applause) Now we have Ms. Boone on behalf 14 of Senator Kerry. 15 MS. BOONE: My name is Jeanette Boone, and 16 I currently serve as senior issues manager in the 17 Boston office of Senator John Kerry. On behalf of 18 Senator John Kerry I want to thank you for the 19 opportunity to express the Senator's views on the 20 Fleet-BankBoston merger. While Senator Kerry is 21 unable to give this testimony in person, I want to 22 thank you for the opportunity to place his full 23 testimony in the record today. 24 As a member of the Senate Banking 25 Committee, I have witnessed an unprecedented amount 0065 1 of consolidation in the banking and financial 2 services industry. The Fleet-BankBoston merger is 3 further proof that the continued consolidation of 4 financial services markets is one of the 5 inevitabilities of the new global economy. 6 Today there are 30 percent fewer banks in 7 the United States than there were just 10 years ago. 8 Our banks are competing beyond city limits and 9 neighborhood borders, competing against banks across 10 the country and literally across the world. To do 11 so effectively they must have the strength, the 12 market share and the ability to deliver high-quality 13 service. 14 This proposed merger will make the planned 15 Fleet-Boston Corporation the eighth largest bank in 16 the country and one of the most significant 17 financial presence in New England. I believe it is 18 imperative to maintain a strong and robust financial 19 services industry based in New England. To this 20 end, it is critical that we take the appropriate 21 steps to ensure that Boston remains a hub of 22 financial services in the new century and that New 23 England-based banks will continue to be available to 24 depositors in New England. 25 We must move forward in that process in a 0066 1 careful and measured way with government, business, 2 and community leaders working together to ensure 3 that high standards of customer service and 4 corporate community engagement are maintained. 5 Corporate citizenship should be a part of a 6 redefined bottom line in banking. Everyone 7 understands the importance of capital in developing 8 our low-income neighborhoods. Access to credit, 9 along with education, healthcare and decent housing, 10 is one of the most important tools working Americans 11 need to compete successfully in this country. 12 Massachusetts banks, large and small, have 13 the responsibility, the very real responsibility of 14 providing access to capital to our underserved 15 communities. They are integral partners in our 16 effort to lead the transition to a new economy where 17 no one is left behind. Through the Community 18 Reinvestment Act, Congress set standards for the 19 private sector in building an economy in which we 20 can all participate. CRA has been extremely 21 successful in Massachusetts where financial 22 institutions have made more than 1.6 billion in 23 commitments to assist low-income neighborhoods. 24 It's making a difference in Boston's inner city 25 neighborhoods from Roxbury and Jamaica Plain to the 0067 1 South End and has increased home ownership, 2 affordable housing development and minority small- 3 business lending across Massachusetts. 4 However, even at this time of record 5 economic growth, there is much work left to be done. 6 The Boston Federal Reserve showed conclusively that 7 African-Americans get turned down on mortgage 8 applications 1.6 times more often than whites, even 9 after taking into account many economic, income and 10 creditworthiness differences. 11 More than 35 million Americans still live 12 in poverty. Almost one in five children lives in 13 poverty. We must continue to expand the winner's 14 circle to empower every community to participate in 15 this economic expansion. We must not allow any 16 community to be denied access to credit or new 17 banking facilities and services. It is with these 18 principles in mind that together with the entire 19 Mass. Congressional delegation I signed a letter to 20 the new Fleet-Boston Corporation to stress the 21 importance of maintaining a vigorous community 22 reinvestment effort. 23 I am pleased that the new Fleet-Boston 24 Corporation has begun a dialogue with the major 25 organizations in Massachusetts that are dedicated to 0068 1 housing and community reinvestment. I am hopeful 2 that this dialogue will continue and that this 3 merger will result in progress toward the goals of 4 the Community Reinvestment Act and not an 5 opportunity to pass this responsibility to others. 6 I have also sent a letter with Senator 7 Kennedy to Assistant Attorney General Joel Klein 8 requesting that the Justice Department consider 9 allowing a small portion of the new Fleet-Boston 10 Corporation's assets to be sold to a Massachusetts 11 minority-owned community development financial 12 institution that has been providing access to 13 capital to many of our low-income neighborhoods and 14 working families. With your approval I would like 15 to make both letters part of the record. 16 We have other responsibilities as well, 17 particularly the responsibility of meeting the 18 immediate challenges of work force dislocations 19 caused by this merger. Any time two large firms are 20 combined, restructuring can be expected. Layoffs 21 seem to be an inevitability in the reshuffling to 22 maximize cost efficiencies. The Boston Globe has 23 estimated we expect to see the loss of 4,000 to 24 5,000 jobs as a result of this latest decision. 25 Every effort must be taken to minimize job loss and 0069 1 provide sufficient retraining and job placement 2 assistance to workers displaced by this decision. 3 I believe the best way to minimize the 4 anticipated job loss resulting from this merger is 5 to see that the required divested deposits, branches 6 and ATMs of the Fleet-Boston Corporation are sold to 7 banks based in New England. Back in April I wrote 8 to Assistant Attorney General Joel Klein to express 9 my opposition to any decision to sell all divested 10 funds to a single financial institution based 11 outside of Massachusetts. Any divestiture related 12 to this merger must encourage local competition and 13 expand consumer choice. 14 In that letter I also asked that every bank 15 in Massachusetts be given the opportunity to bid on 16 the assets that the merged banks will be required to 17 divest. I am pleased that the Justice Department 18 has taken my advice and will not insist that all 19 assets be acquired by a single buyer, so long as 20 there is a buyer in the mix that will preserve 21 competitive conditions in middle-market lending. 22 I am hopeful that the new Fleet-Boston 23 Corporation will seriously consider any competitive 24 bids from all New England-based banks. Small, 25 medium sized and independent banks have been an 0070 1 important source for financial services to small 2 businesses and low-income communities in 3 Massachusetts. This will also help ensure that 4 Boston remains a hub of financial services in the 5 next century and that Boston-based banks will 6 continue to be available to depositors in New 7 England. 8 Finally, it is the best way to minimize the 9 job loss related to the merger. Over the last years 10 in the Senate Banking Committee I have come to 11 realize that economic change, particularly in the 12 financial service industry, is an inevitability that 13 must be wisely managed. We cannot lull ourselves 14 into believing that we are powerless to shape the 15 contours of this new economy. We know the New 16 England banking industry can provide economic 17 leadership, but we also expect and demand that our 18 banks demonstrate leadership in customer service and 19 corporate citizenship as well. 20 I know that from our efforts on the Banking 21 Committee to your work here, we will be watching to 22 ensure that those goals are merged into one unifying 23 vision of banking in New England. 24 Over the past several months I have worked 25 with the Community Advisory Committee and a large 0071 1 number of groups involved with housing and economic 2 development from across Massachusetts. It is my 3 strong hope that you will listen carefully to the 4 testimony that representatives from these groups 5 will be making today and give serious consideration 6 to the level of need in the community. This merger 7 cannot deal a devastating blow to underserved 8 communities by undercutting the current programs by 9 BankBoston and Fleet, especially those in the areas 10 of small business lending, affordable housing and 11 mortgage lending to low and moderate income 12 homeowners, community development and consumer 13 lending and equity investment and technical 14 assistance and support. 15 I urge you to weigh and evaluate this 16 testimony as you reach decisions regarding this 17 proposed merger. Ultimately it will be our 18 responsibility to ensure that this process moves 19 forward with a fair and competitive merger and 20 divestiture process that encourages local 21 competition and investment while expanding consumer 22 choice. 23 PRESIDING OFFICER SMITH: Thank you very 24 much, Ms. Boone. We'll take it all and put it all 25 into the record. 0072 1 Mr. Ferguson on behalf of Congressman 2 Kennedy. 3 MR. FERGUSON: Thank you, Madam Presiding 4 Officer and members of the Board. For the record my 5 name is Larry Ferguson. I'm the District Director 6 for Congressman Patrick Kennedy of Rhode Island, and 7 I'm here today on his behalf. 8 Congressman Kennedy has a strong interest 9 in the financial industry of New England and most 10 notably his concern that integrity and competition 11 is upheld in the everchanging marketplace. He feels 12 strongly that the upcoming merger of Fleet Bank and 13 BankBoston will uphold the goals of integrity and 14 consumer choice through competition. 15 What I would like to do now is to read into 16 the record a letter that he sent to the Board dated 17 June 29th. "Dear Mr. Johnson: I write in support 18 of the proposed merger between Fleet Financial Group 19 and BankBoston and urge that the Board move 20 expeditiously to approve the merger. To comply with 21 the requisite regulatory and antitrust aspect of 22 this transaction, the two institutions have done an 23 excellent job in reaching out to a large number of 24 community-based organizations throughout its market 25 area. They have also reached out to elected 0073 1 officials on the state and local level and those of 2 us in Congress. As a consequence I believe that an 3 effective job has been done in explaining the 4 rational behind the merger, the plans for 5 restructuring the combined organizations in a most 6 efficient and effective way possible and in 7 anticipating and dealing with the impact of the 8 merger on customers of the institutions and the 9 communities impacted. 10 I am very pleased to learn that an issue of 11 major concern to me that local and regional 12 institutions be allowed to bid on some or all of the 13 assets being divested was clarified recently by the 14 Department of Justice. Furthermore, it is 15 reassuring to learn Fleet and BankBoston will soon 16 announce a major community reinvestment program 17 valued at more than fourteen million dollars over 18 the next five years. This plan will be designed to 19 deal with affordable housing, small business 20 lending, urban renewal and consumer education 21 programming. 22 I believe that the successful bidders on 23 the Fleet and BankBoston branches to be divested 24 will provide effective competition and enhanced 25 choices for consumers. I therefore urge the Board 0074 1 to approve this merger which should produce both 2 substantial short- and long-term public benefits. 3 Sincerely, Patrick Kennedy, member of Congress." 4 Again, I want to thank you for allowing me 5 the opportunity to submit this letter for the record 6 and allowing me to testify here today. 7 PRESIDING OFFICER SMITH: Thank you very 8 much. Questions from the panel? 9 MS. BROWNE: I have a question for Mayor 10 Menino. You expressed some deep concern about the 11 loss of BankBoston. Perhaps you might elaborate a 12 little bit more about what makes BankBoston special 13 from your perspective, what distinguishes it perhaps 14 from other institutions. 15 MAYOR MENINO: Well, my dealings in the 16 last six years with BankBoston have been on a 17 continual basis. We had an issue in the 18 neighborhoods that we developed a neighborhood or 19 needed money for housing, they were there. They 20 were the first ones out willing to work with us to 21 fashion different programs to our needs, and they 22 were very helpful to what we did on the 23 revitalization of a lot of the neighborhoods of the 24 City of Boston. 25 MR. KWAST: I have a question for Mayor 0075 1 Menino and Senator Wilkerson. Could you explain a 2 little bit more whether you think a bank 3 headquartered out of Boston could or could not enter 4 the Boston market and become an effective competitor 5 for the banks that are already in Boston? 6 SENATOR WILKERSON: I don't believe I ever 7 said I didn't believe that they could. I suggested 8 that if a large bank bought all the branches, the 9 best they could do is 6 percent of the market and 10 that I don't consider that competition in the 11 literal sense of the word because this resulting 12 merged bank would be 30 percent, and they're going 13 to be the eighth largest in the country, not just in 14 Massachusetts. So it depends on what your 15 definition of "competition" is. 16 Our concern is that there will be no one 17 competing for the business of my constituents unless 18 this Board takes a special look at that and looks at 19 banks who have had track records in doing business 20 and believe that our communities are about business. 21 It's not about charity, and that's a very -- it's an 22 offensive discussion. We always get to that. We're 23 not asking for people to give us money, you know. 24 This is about mortgages. This is about if I present 25 the same kind of indicators as everyone else, that I 0076 1 shouldn't be denied. And the records are just 2 overwhelmingly supportive of the notion that that's 3 what's happening, and we don't think there's any 4 other competition outside of large banks like this 5 that are going to be picking up that market unless 6 you take that into consideration and are looking at 7 our small and local banks who see us as business and 8 are making money in ways. 9 So if you just talk about selling to a big 10 bank, we don't think that that particular sector and 11 segment of our community's banking needs are going 12 to be met. But I have no opposition to an outside 13 bank. I actually for the record also want to say, I 14 think we'd be better off having a bank that -- you 15 know, I want to keep Fleet-BankBoston here. We're 16 not opposed to that. Given the choice, I'd rather 17 have a Massachusetts headquartered bank. But that 18 doesn't mean I don't then get to raise questions 19 about this proposal and the plan that they put on 20 the table, because I don't think it's going to 21 satisfy what I understand to be your regulatory 22 standards in its present form. We could get there 23 with your help, but we're not there. 24 MAYOR MENINO: I agree with the Senator on 25 the fact that Fleet-BankBoston merged. No big 0077 1 problem. But what's the commitment? What's the 2 future? We can't talk about the past. I think 3 we're talking about the past. I'm talking about the 4 future. When this merger happens, what does the 5 future look like for the community that I represent 6 as Mayor of Boston, Senator Wilkerson, Congressman 7 Capuano. And sometimes, I'll tell you, having a 8 homegrown institution headquarters doesn't mean a 9 lot to you, but sometimes a foreign bank who might 10 have an office or an operation in the city will do 11 more for you. I have several world headquarters in 12 our city, and I get more out of some other 13 corporations that aren't home based. 14 So it's the attitude, and it's the attitude 15 of the folks. Do they really want to get involved 16 in the community or are they saying we're Boston 17 based. You have to love us. We don't have to love 18 you. We have to tolerate you, but you have to love 19 us. 20 CONGRESSMAN CAPUANO: I want to make it 21 clear that the delegation as a whole has opposed 22 bringing in someone from the outside. We feel that 23 bank competition is good. We understand what the 24 general goal is, but bank competition doesn't have 25 to be from the outside. There has been nothing that 0078 1 has stopped an outside bank from coming in for 2 several years now. You know as well as I do -- in 3 fact, better than I do -- Citicorp already had 4 several hundred people in Boston for years, for 5 years. It's not new. Most of the large banks do 6 business in Boston right now. Right now. It's not 7 new. Nothing could stop them at all -- well, not 8 nothing. You could. But theoretically you wouldn't 9 stop them from buying small branches today over the 10 last several years. 11 That's not the issue. The issue is what do 12 you want to do with the divested branches if this 13 merger is allowed now, and our argument has been, 14 build from the inside. Help your own family to get 15 stronger as opposed to giving it away to the 16 outside. The outside is going to come in. There's 17 nobody here trying to create a Chinese wall along 18 the borders of New England. They're here now. They 19 will continue to grow. When they grow, where's the 20 competition going to be? 21 And I just want to go back historically. 22 It strikes me that many of you were probably around 23 the last time, well before Tom Menino was mayor, 24 when Boston was in serious trouble back in the late 25 '70s. No bank in the world should have loaned them 0079 1 a nickel, but the Bank of Boston did because they 2 understood the benefits of having a strong City of 3 Boston instead of having the City of Boston go 4 bankrupt. That is the benefit of a regional -- 5 strong, locally based regional bank. And that's 6 what we're trying to keep and that's what we're 7 trying to grow. (Applause) 8 PRESIDING OFFICER SMITH: Thank you very 9 much. We'll go on to Panel Three. We will start 10 with Mr. Reilly.
Last update: December 3, 2010