Public Meeting Transcripts
Public Meeting Regarding Fleet Financial Group, Inc., and BankBoston Corporation
Wednesday, July 7, 1999
Transcript of Panel Eight
3 MR. MARKS: I wonder if there are others 4 who oppose this merger and if you'd be willing to 5 stand up at this time in the room. (People stand) 6 PRESIDING OFFICER SMITH: We're going to 7 start with Mr. Anderson. 8 MR. MARKS: We would like to start only 9 because there have been a lot of people waiting here 10 for the half hour. 11 PRESIDING OFFICER SMITH: That will be 12 fine, Mr. Marks. We'll start. And we have a total 13 of 10 minutes for Mr. Marks's speakers total, 10 14 minutes among the three people who I understand will 15 be speaking. So you may start. 16 MR. MARKS: We are going to translate what 17 we're saying into Spanish. 18 My name is Bruce Marks, I am the executive 19 director of the Neighborhood Assistance Corporation 20 of America. (Remarks translated into Spanish) 21 And with me are some of the homeowners and 22 some of the people who are in the process who have 23 taken advantage of the best mortgage product in the 24 country. Because what was happening, over five 25 years ago, we said that people work hard, people 0214 1 here work hard. It's tough to save. People should 2 be able to buy with no downpayment with no closing 3 costs. 4 What I would like to start off with is to 5 have Reverend Hagler, who is the development 6 director of NATCA, he is going to say a few words, 7 and then we're going to make some other comments 8 about Fleet's acquisition of the Bank of Boston. 9 REV. HAGLER: I am Reverend Grayland Scott 10 Hagler. And I want to just start off by saying, 11 like was said, in 1991 Fleet was ripping off the 12 poor and elderly communities, stealing homes, and 13 destroying neighbors. And every single soul in the 14 communities knew this to be true, and yet, and yet, 15 basically the Federal Reserve shirked in their 16 duties and disregarded the law and expeditiously 17 approved Fleet's acquisition of the Bank of New 18 England. And NATCA had to spend the next four years 19 doing the job which should have been done here, 20 monitoring Fleet and holding it accountable to its 21 predatory and discriminatory lending practices. 22 In 1994 it was the Neighborhood Assistance 23 Corporation of America, and unfortunately not the 24 Federal Reserve, that paved the way for the new and 25 innovative mortgage products that have helped to 0215 1 create thousands of new homeowners in previously 2 destabilized communities and therefore is a major 3 participant in revitalizing inner cities like Boston 4 and Lawrence, Massachusetts. Fleet's community 5 initiatives moved from an institution which had a 6 total disregard for low- and moderate-income 7 communities to one with a satisfactory lending 8 record. 9 Now we have before us the Fleet acquisition 10 of Bank of Boston. We are at the crossroads again. 11 On one hand, we have Fleet, with a better community 12 lending record than it had five years ago, only 13 because of community pressure, and the Bank of 14 Boston, with a much better institutionalized 15 community lending program. But the differences, 16 they are very significant. 17 Fleet categorizes its branches as tier one, 18 two, or three. The tier three branches are the 19 least staffed and with the fewest resources. The 20 Fleet branch, for example, on Gallivan Boulevard 21 with $40 million in assets has four staff people. 22 It used to have nine when it was a Shawmut branch. 23 A similarly sized branch of U.S. Trust also located 24 in Dorchester has nine staff members. 25 Why is it that the majority of the tier 0216 1 three branches are in low- and moderate-income 2 communities serving a primarily of color base? 3 Isn't this discriminatory on the surface? Surely 4 when you look at the numbers, it is. 5 Fleet still sees community lending as a 6 necessary evil. This is what is reflected in the 7 current community proposals. They have made the 8 absolute minimum commitment. They have taken each 9 bank's community lending commitment, downsized it, 10 and combined the two. This does not demonstrate a 11 genuine commitment to community lending, and we 12 cannot afford, and you cannot afford, to allow Fleet 13 to backslide into their previous posture of over 14 five years ago. 15 The Federal Reserve must not sit back and 16 ignore its obligations in this case and its 17 obligations under the law. Surely the Neighborhood 18 Assistance Corporation of America will not sit back 19 and allow Fleet to backslide. And the Federal 20 Reserve cannot do anything less than this. It must 21 hold them accountable, it must hold their feet to 22 the fire, and as Reverend Al Sharpton said, "Don't 23 let Fleet fleece the community." (Remarks 24 translated into Spanish) 25 MR. MARKS: Let me add a few more comments. 0217 1 That we're not just concerned about Fleet's low- and 2 moderate-income community lending. Fleet is loved 3 by Wall Street. The stockholders, the investors 4 love Fleet because of the low cost of doing 5 business. But the consequence of that is some of 6 the worst services of any lending institution in the 7 country. 8 So what we've done is we've taken the name 9 and address and gotten the information on every 10 customer within New England, within Rhode Island, 11 Massachusetts, Connecticut, who has gotten a 12 mortgage from Fleet, from '94 forward, over 74,000 13 people. And we commit to the record the names of 14 the 74,000 people, names and addresses of those 15 people, and expect that to be put into the 16 Congressional record -- into the record. 17 Those 74,000 people are going to receive a 18 Fleet customer service questionnaire to ask what 19 type of business they've done with Fleet. How would 20 they rate their services with Fleet? Where one is 21 excellent; two, good; three, satisfactory; four, 22 poor; or five, very poor; or six, not applicable. 23 We constantly, because we've been known to 24 have some issues with Fleet, get calls from people 25 who are fed up with doing business with Fleet. And 0218 1 those people come from throughout New England. They 2 cross geographic/racial/income barriers. It seems 3 like everybody hates working with Fleet. But maybe 4 that's just anecdotal, but we need a comprehensive 5 survey. So we want to know from people, and we want 6 to know from other people who bank at the branches 7 who might not have a mortgage, what they think of 8 Fleet. 9 So we're requesting that the Federal 10 Reserve open up the process, to keep it open, to 11 take those 74,000 names, so that they can submit 12 their comments, so you're hearing more than just 13 from the activists, from the politicians, from the 14 union leaders, you're hearing from people who have 15 an everyday experience with Fleet. So you can judge 16 whether Fleet, as the feudal landlord, because 17 they're going to be the one institution within New 18 England, whether they're going to be the feudal 19 landlord that's going to be held accountable or the 20 feudal landlord that's going to stamp on the 21 customer needs for everybody. 22 So we think that this is fundamental. 23 These are the names. We would like that to be put 24 into the record. (Documents submitted to Board) 25 (Remarks translated into Spanish) 0219 1 MR. MARKS: And now as part of the survey, 2 we are going to ask people to give us the authority, 3 to give NATCA the authority, to submit all their 4 complaints to the appropriate bank -- to the 5 appropriate bank regulators. So as an ex-Federal 6 Reserve employee, I understand I had to spend, and a 7 lot of the Federal Reserve staff has to spend, a lot 8 of time investigating every one of the complaints 9 that someone sends in. 10 So we hope and expect that you're going to 11 take all those 74,000 names there and do your own 12 output, but we're doing ours just to make sure you 13 don't do the same thing you did in 1991. When Fleet 14 Finance was documented as being a predatory loan- 15 sharking operation, you ignored that, and you 16 approved Fleet's acquisition of the Bank of New 17 England, even though they used blood money to do 18 that, because 55 percent of the profits were from 19 Fleet Bank. 20 So we hope you're going to take it more 21 seriously. We don't have a lot of confidence you're 22 going to do that, so we're going to be out there 23 doing that, to get these surveys to submit the 24 information and expect that you're going to 25 investigation every one of what we anticipate being 0220 1 thousands of people who have had concerns but no 2 vehicle to address their issues about Fleet. 3 (Remarks translated into Spanish) 4 We hope that you're going to join us with 5 the Fleet accountability project. Let me make two 6 more comments, two things that should be responded 7 to. 8 All this stuff how Fleet is so thrilled to 9 deal with Fannie Mae, well, certainly they are, 10 because Fannie Mae will buy the loans, Fleet has no 11 risks. That's just another pullback from the 12 community. They have to take some responsibility, 13 they have to assume some of the risk, not just push 14 that off on Fannie Mae. 15 The argument that says the combined 16 Fleet-BankBoston is going to be good for New 17 England, we're going to have a New England-based 18 institution here, I'm sure the First Unions, the 19 Bank of Americas, the Bank Ones, the Wells Fargos 20 are all looking there and saying, "We can't wait for 21 you to lay off 5,000 people to make this institution 22 so that we can come back in a year or two and 23 swallow the new Fleet up." So that idea that 24 somehow we're creating a New England-based 25 institution for the long term just doesn't carry 0221 1 water, just is not real. And we all know it but no 2 one will say that publicly. 3 So with that, the fact of the matter is, 4 Fleet should be better than these two single parts 5 of BankBoston and Fleet and try to backslide to 6 where they were, become the old Fleet. The Fleet 7 accountability project will ensure the people here, 8 and with the thousands of people who have benefitted 9 from the NATCA program and others involved in the 10 NATCA program, to help keep Fleet's feet to the fire 11 so Fleet cannot fleece our community. (Applause) 12 If you have any questions before we leave. 13 PRESIDING OFFICER SMITH: Yes? I don't 14 think so, but thank you very much. 15 (Applause) 16 PRESIDING OFFICER SMITH: Now we will go to 17 Mr. Anderson. 18 MR. ANDERSON: What's the line in 19 vaudeville? I have to follow them? I find it 20 ironic that Bruce uses the analogy about holding 21 Fleet's feet to the fire. When we tried doing that 22 back in '96, Bruce and NATCA protested us. 23 I sat down and started preparing about 15 24 different drafts of what I wanted to do today, none 25 of which I liked, so I threw them away and figured 0222 1 I'd come in here and wing it. So I'll apologize in 2 advance if I'm redundant and if I ramble. 3 PRESIDING OFFICER SMITH: Just so you do it 4 in four and a half minutes. 5 MR. ANDERSON: I sat on this very stage 6 during the Fleet-Shawmut merger hearings and tried 7 to summarize the work of myself and Adam Moser at 8 the time at the Codman Square Development 9 Corporation on work that we had done in revealing 10 mortgage irregularities involving first-time 11 homebuyers -- the First-Time Homebuyer Program at 12 Fleet Bank. And there was reference made to my 13 comments, and Fleet said that they'd address the 14 situation, and the Federal Reserve Board made them 15 promise to work with community groups to fix the 16 problems. 17 Unfortunately the problems were never 18 fixed. I handed federal -- I handed the Board on 19 that day in August a list of 100 properties flipped 20 by two people, two individuals in Dorchester, using 21 Fleet's financing. The sales of the properties was 22 financed by Fleet. The Codman Square group gave 23 them a list of 29. Fleet conveniently ignored my 24 list of 100 and decided to work with the Codman 25 Square group's list of 29. 0223 1 According to Kimberly Boyaton, a reporter 2 at the Boston Globe, Fleet will admit to having 3 fixed three of those loans. There were seven 4 condominiums that were mentioned in that list, Hale 5 Terrace and East Street and Capen Street. I've 6 included them in some of the information that I've 7 given you. Of those seven that were included, four 8 were foreclosed. So, in other words, Fleet fixed 9 them by foreclosing on more than they say that they 10 fixed. 11 The other argument at the time was that 12 these speculators were flipping properties and 13 charging grossly more than the market value of the 14 properties. Unfortunately, we had to wait for what 15 we were warned were going to be the foreclosures, 16 and the foreclosures are happening, to determine 17 what the value of the properties is. And one of 18 those condominiums on Hale Terrace, Unit No. 4, just 19 was foreclosed about a month ago, Unit 4. 20 In 1994, Fleet told everybody it was worth 21 $90,000, and the Fed certainly didn't make them fix 22 the problem, because they foreclosed. I think they 23 got $44,000 at the auction. None of the properties 24 in these condominiums that Fleet said were worth 25 $90,000 have gone for anything more than $75,000, 0224 1 despite a booming real estate market, the market in 2 Dorchester is up 60 percent. 3 These properties just didn't lose value, 4 they were grossly overpriced at the time, and the 5 Federal Reserve Bank did not make Fleet fix them, 6 and Fleet did not fix them. And these are low- 7 income, almost overwhelming blank homeowners who 8 were screwed in the process. 9 On this stage I mentioned when Fleet under 10 pressure cut off certain developers, they turned 11 around and they started flipping properties through 12 Shawmut. We had Shawmut foreclosures on these same 13 properties, one on Speedwell Street, in which I 14 asked the woman, "Did you have the downpayment?" 15 "No, I didn't have the downpayment." "How did you 16 get the downpayment?" "Well, this church I didn't 17 belong to, that I never heard of before, gave me 18 part of the downpayment." Who? "Well, did you have 19 the rest of the downpayment?" "No, we didn't have 20 the downpayment." 21 In this particular loan program, a family 22 member is able to give up to $2,000 to the 23 homebuyer. The homebuyer -- the seller gave the 24 homebuyer's sister the $2,000, who then gave it to 25 her. 0225 1 So we have lots of examples -- and we have 2 four examples of this -- of outright fraud going on 3 in these mortgage programs, and nothing has been 4 done about them. Now, this isn't just old news, 5 this continues to happen. And I'll be quick. 6 These are flips that took place in the last 7 year, financed by Fleet Bank: 2 Wyoming Street in 8 Roxbury which was foreclosed on for $103,000. It 9 was flipped a couple of months later for $180,000, a 10 $77,000 profit. There's no work permits listed in 11 the Inspectional Services for any work having been 12 done. 58 Leyland Way in Dorchester was foreclosed 13 for $123,000 by Fleet Bank. It was flipped a couple 14 of months later for $190,000 financed by Fleet Bank. 15 And 11 Vesta Road in Dorchester, which Fleet 16 foreclosed for $80,000, flipped it a couple of 17 months later for $187,000. Now, this one had about 18 $8,000 worth of work done. So, in other words, a 19 quick $100,000 profit. 20 I'll finish very quickly. But we also 21 discovered more irregularities. We have discovered 22 a series of non-owner-occupied investors using Fleet 23 loans -- ironically by NATCA; I informed Bruce of 24 this -- all of which we would not have noticed, 25 because they looked pretty normal, but they're all 0226 1 being foreclosed by Fleet. 2 Before you approve of the merger, which 3 you're going to do anyway, find out what is going on 4 in these programs. We had a woman speak eloquently 5 earlier about getting a mortgage through ACORN, and 6 how she has stability and how her kids are doing 7 well. That's wonderful. This is the other side of 8 the equation. 9 This isn't old news. This continues to 10 happen, as we speak, and the Federal Reserve Board 11 has not addressed it. The blood, the financial 12 blood of low-income homeowners is on the hands of 13 these speculators who prey on them. It's also on 14 the hands of the Fleet executives who finance them. 15 And unfortunately, it's increasingly on the hands of 16 the Federal Reserve Board who refuses to make the 17 banks accountable. (Applause) 18 PRESIDING OFFICER SMITH: Thank you very 19 much for coming. We're going to take our lunch 20 break now, and we'll reconvene in 30 minutes. 21 (Whereupon, at 2:00 p.m. the hearing 22 was adjourned for luncheon recess) 23 24 25 0227 1 AFTERNOON SESSION 2 HEARING OFFICER SMITH: We'll go ahead and 3 start. On our next panel, the witnesses have four 4 minutes each, and we truly would appreciate it if 5 you would keep an eye on the timekeeper and get the 6 signal for the one minute remaining, and when your 7 time's up, please close. 8 So we'll start with Ms. Aranjo.
Last update: December 3, 2010