Public Meeting Regarding Norwest Corporation and Wells Fargo & Company
Transcript of Thursday, September 17, 1998
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Public Meeting Regarding Norwest Corporation and Wells Fargo & Company |
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7 NORWEST CORPORATION AND WELLS FARGO & COMPANY
8 PROPOSED MERGER
9 PUBLIC MEETING
10 September 17, 1998
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13 The Norwest Corporation and Wells Fargo & Company
14 public meeting, taken before Holly J. Nordahl, a Notary
15 Public in and for the County of Rice, State of
16 Minnesota, on the 17th day of September, 1998, at the
17 Federal Reserve Bank of Minneapolis, 90 Hennepin Avenue,
18 in the City of Minneapolis, Minnesota, commencing at
19 approximately 9:00 a.m.
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1 APPEARANCES:
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3 Board of Governors: Dolores Smith, presiding
4 Niel Willardson
5 Kenneth Binning
6 Deborah Awai
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8
9 * * *
10 WHEREUPON, the following proceedings were duly had:
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14 CHAIRPERSON SMITH: Well, I'm pleased to 08:59:58
15 welcome you to this important public meeting on the 09:00:00
16 application by Norwest Corporation to acquire Wells 09:00:04
17 Fargo & Company. I'll start by introducing myself. 09:00:08
18 I'm Dolores Smith, Director of the Division of 09:00:10
19 Consumer and Community Affairs at the Federal 09:00:14
20 Reserve Board in Washington, D.C. I'll be the 09:00:18
21 presiding officer for this public meeting. Our 09:00:20
22 other panelists are, starting from my extreme right, 09:00:24
23 Niel Willardson, vice president in charge of banking 09:00:28
24 supervision from the Federal Reserve Bank of 09:00:32
25 Minneapolis. Next to him, Kenneth Binning, director 09:00:34
3
1 of applications and financial analysis from the 09:00:38
2 Federal Reserve Bank of San Francisco. To my right, 09:00:40
3 Deborah Awai, senior counsel legal division from the 09:00:46
4 Federal Reserve Board. 09:00:50
5 We're here today because Norwest Corporation, 09:00:54
6 Minneapolis, Minnesota, has applied for approval to 09:00:58
7 acquire Wells Fargo & Company, San Francisco, 09:01:02
8 California. When the Federal Reserve system 09:01:06
9 considers one of these applications, we look at a 09:01:10
10 number of factors under the Bank Holding Company 09:01:12
11 Act. These include financial issues, managerial 09:01:16
12 issues, competitive issues, and the convenience and 09:01:22
13 needs of the communities affected. In doing so, we 09:01:26
14 particularly look at the record of performance of 09:01:30
15 the parties under the Community Reinvestment Act. 09:01:34
16 The CRA requires the Board to take into account an 09:01:38
17 institution's record of meeting the credit needs of 09:01:42
18 its entire community. 09:01:46
19 The Norwest-Wells Fargo application also 09:01:50
20 involves the proposed acquisition or retention of 09:01:54
21 nonbanking companies engaged in activities 09:02:00
22 permissible for bank holding companies. The Board 09:02:02
23 must therefore determine whether the proposed 09:02:06
24 nonbanking activities can reasonably be expected to 09:02:10
25 produce benefits to the public that outweigh 09:02:14
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1 possible adverse effects such as undue concentration 09:02:16
2 of resources, decreased or unfair competition, 09:02:22
3 conflicts of interest, or unsound banking practices. 09:02:28
4 The purpose of the public meeting today is to 09:02:32
5 receive information regarding these factors. We 09:02:36
6 will be seeking to elicit this information and to 09:02:40
7 clarify factual issues related to the application. 09:02:44
8 I'll make a few remarks about our procedures 09:02:50
9 today. This is what we call an informal public 09:02:54
10 meeting. Members of the panel may ask those who are 09:02:58
11 testifying about their testimony. This is not a 09:03:02
12 formal administrative hearing, so we are not bound 09:03:08
13 by the rules regarding evidence, cross examination, 09:03:12
14 and some of the more formal trappings for that kind 09:03:16
15 of proceeding. 09:03:20
16 We will have about 70 groups and individuals 09:03:22
17 represented today at this public meeting. We are 09:03:26
18 pleased that so many people have been willing to 09:03:30
19 come and testify, but we do have a full schedule and 09:03:32
20 we will be trying to stay to the timed agenda pretty 09:03:36
21 closely so that everyone who has asked to offer oral 09:03:42
22 testimony will have the opportunity to do so. We 09:03:46
23 will ask witnesses to be mindful of the needs of 09:03:48
24 others and to stay within their allotted times. 09:03:52
25 We're using a signal system with regard to timing. 09:03:58
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1 We have two timekeepers over here to the right, just 09:04:02
2 right in front of the panels that will be 09:04:06
3 testifying. There will also be some individuals who 09:04:10
4 were unable to sign up in advance to testify at this 09:04:16
5 meeting, and so to the extent possible, we will give 09:04:18
6 them a chance to speak. At the end of the meeting 09:04:22
7 today, we will make the microphone available to 09:04:26
8 anyone who would like to make a presentation, time 09:04:28
9 permitting. Also, if witnesses have not yet turned 09:04:34
10 in copies of your written testimony, or if you have 09:04:38
11 any other written statements to put into the record, 09:04:42
12 please leave them with the Federal Reserve staff at 09:04:44
13 the registration table because it's important that 09:04:48
14 we get all of this information for the record. 09:04:52
15 A transcript of the meeting will be available 09:04:56
16 by next Tuesday, September 22nd, through the Federal 09:04:58
17 Reserve Bank of Minneapolis and also from the Board. 09:05:04
18 In addition, the official transcript will be 09:05:06
19 available by close of business on September 23rd on 09:05:10
20 the Board's public web site, which is 09:05:16
21 www.bog.frb.fed.us.
22 One more comment about the testimony. 09:05:28
23 Witnesses may submit a written supplement to their 09:05:30
24 oral testimony, but they must do so by next 09:05:34
25 Thursday, September the 24th. Then the record will 09:05:38
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1 be closed. Any written supplements should be 09:05:40
2 directed to Jennifer J. Johnson, Secretary of the 09:05:44
3 Board, Board of Governors of the Federal Reserve 09:05:48
4 System, Washington, D.C. 20551. They must be 09:05:52
5 received by 5 p.m. eastern daylight time on 09:05:58
6 September the 24th. Submissions may be faxed to 09:06:02
7 202-452-3462. This is information that I believe as 09:06:08
8 witnesses you have already been given in writing. 09:06:14
9 So with that I think we're ready to begin the 09:06:18
10 proceedings. I will be calling on the witnesses, 09:06:20
11 but please, and this goes not only for the first 09:06:24
12 panel but also for succeeding panels, start by 09:06:28
13 stating your name and the name of your organization 09:06:32
14 for the record. So with that, let's begin. And I 09:06:34
15 believe, Mr. Hazen, that you are first. 09:06:40
16
17 APPLICANT PRESENTATION:
18
19 MR. HAZEN: Thank you very much. Good 09:06:44
20 morning. I'm Paul Hazen. I'm the chairman of Wells 09:06:46
21 Fargo. Les Biller is here, and Les is the president 09:06:48
22 of Norwest. He and I have coordinated our remarks 09:06:54
23 so that we believe that between us we will have 09:06:58
24 covered everything that's relevant with regard to 09:07:02
25 the proposed merger between our two companies. 09:07:04
7
1 I'm going to divide my remarks this morning 09:07:06
2 into two parts. First, I'll describe what the 09:07:10
3 Norwest-Wells Fargo merger will mean for the 09:07:12
4 communities where we do business, specifically what 09:07:14
5 values will guide the new company as we move 09:07:20
6 forward. And, secondly, I'll also describe Wells 09:07:22
7 Fargo's record since 1852 of keeping its promises to 09:07:24
8 the communities where it does business, and assure 09:07:30
9 you that we'll continue to use best practices with 09:07:32
10 respect to CRA lending, services, and investments. 09:07:36
11 The new Wells Fargo & Company will have one of 09:07:40
12 the most widely known brand names in the financial 09:07:42
13 services industry, a name that has endured for 146 09:07:46
14 years. Since the gold rush, Westerners have relied 09:07:50
15 on Wells Fargo for honest, reliable banking service. 09:07:54
16 It may surprise you to know that Minnesotans, too, 09:07:58
17 once counted on Wells Fargo for express delivery 09:08:02
18 services. 09:08:04
19 If I may, I'd like to give you a one-minute 09:08:04
20 history of Wells Fargo. In 1852, Henry Wells and 09:08:08
21 William Fargo founded Wells Fargo & Company to 09:08:12
22 provide reliable banking and express services to 09:08:16
23 Western pioneers, and they opened their first office 09:08:18
24 in San Francisco. 09:08:22
25 By 1858, as Minnesota became a state, Wells 09:08:22
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1 Fargo had established 78 offices. These offices and 09:08:28
2 stage coaches linked mining camps and towns all over 09:08:32
3 the West. In May 1869, the completion of the 09:08:34
4 transcontinental railroad allowed Wells Fargo 09:08:38
5 express messengers to ride the rails. By April 1, 09:08:42
6 1897, Wells Fargo was operating in the upper Midwest 09:08:46
7 aboard the trains of the Chicago Great Western 09:08:50
8 Railroad, and had 31 offices in Minnesota. The Twin 09:08:52
9 Cities locations became part of Wells Fargo's ocean 09:08:56
10 to ocean express network of offices around the 09:09:00
11 country and around the world. By 1910, Wells Fargo 09:09:02
12 had offices in 194 Minnesota communities, from Adams 09:09:06
13 to Zumbrota. 09:09:10
14 In 1918, Wells Fargo changed abruptly when as a 09:09:12
15 wartime measure due to the first world war, the 09:09:18
16 federal government took over all of the 10,000 then 09:09:22
17 Wells Fargo offices throughout the U.S. as our 09:09:24
18 express operations, and the Wells Fargo name 09:09:28
19 disappeared from depots and storefronts throughout 09:09:30
20 Minnesota. However, Wells Fargo's banking 09:09:34
21 operations continued in the West, carrying on the 09:09:36
22 most famous name in Western banking. 09:09:40
23 This year our history adds a new chapter with 09:09:42
24 our merger with Norwest. We want to build a strong 09:09:44
25 foundation for the new Wells Fargo that will last a 09:09:48
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1 long time. We pledge to make the transition as 09:09:52
2 smooth as possible, and I can assure you that we 09:09:54
3 will take the time to do it right. 09:09:58
4 In bringing Norwest and Wells Fargo together, 09:10:00
5 we find that our cultures have much in common. 09:10:06
6 These similarities include high performance 09:10:08
7 orientation, commitments to customer service, high 09:10:12
8 quality of team member talent, and strong records of 09:10:14
9 community involvement. 09:10:18
10 One value that we find that Norwest and Wells 09:10:18
11 Fargo share is our belief that people are the best 09:10:22
12 competitive advantage we have. At Wells Fargo, our 09:10:24
13 employees do whatever it takes to come through for 09:10:28
14 the customer. 09:10:30
15 Both Wells Fargo and Norwest believe in the 09:10:32
16 strong linkage between a diverse work force and 09:10:36
17 business success in an increasingly competitive 09:10:38
18 global economy. For Wells Fargo, nowhere is this 09:10:44
19 more evident than in California, a state that is a 09:10:48
20 true mosaic of ethnicities. The new Wells Fargo 09:10:50
21 will continue in its effort to recruit, retain and 09:10:54
22 promote women and minority employees in key 09:10:58
23 positions throughout the company in all of our 09:11:02
24 combined markets, just as we have since the 09:11:04
25 company's founding in 1852. 09:11:08
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1 It is true that our banks do have different 09:11:12
2 business models, based on our geographic origins and 09:11:14
3 the different types of businesses we are in. For 09:11:18
4 example, Norwest grew up here in the Midwest with 09:11:20
5 more community banks than Wells Fargo's 09:11:24
6 predominantly urban markets. But that does not mean 09:11:26
7 that the new Wells Fargo would adopt an urban model 09:11:30
8 in areas where a community banking model would work 09:11:32
9 better. Both banks have been looking for a model to 09:11:36
10 cultivate the other's marketplace. We'll gain by 09:11:38
11 sharing our different business models that fit each 09:11:42
12 type of community in combining them into a common 09:11:44
13 operating philosophy. 09:11:48
14 Our commitment to all of the communities in 09:11:48
15 which we do business is to take best practices, 09:11:50
16 those things that work well in both organizations, 09:11:54
17 and apply them to the new Wells Fargo. 09:11:56
18 First, let me emphasize that the new Wells 09:12:02
19 Fargo will honor all of Wells Fargo's and Norwest's 09:12:04
20 previous CRA commitments. Wells Fargo is a leader 09:12:06
21 in outreach to women and minority-owned small 09:12:10
22 businesses in the West, if not the nation. These 09:12:14
23 commitments include a $10 billion, ten-year goal for 09:12:16
24 women-owned small businesses, a $1 billion, six-year 09:12:22
25 goal for providing loans to Latino-owned small 09:12:26
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1 businesses, and a recently announced one billion, 09:12:28
2 12-year goal for loans to African-American-owned 09:12:34
3 small businesses. The new Wells Fargo will continue 09:12:36
4 to aggressively market its products to low income 09:12:38
5 and minority communities to ensure equal access to 09:12:42
6 credit and banking services to all citizens. 09:12:44
7 It is worth noting that in 1990, Wells Fargo 09:12:48
8 was the first major bank in the country to announce 09:12:50
9 a multi-year CRA lending goal, and the first bank to 09:12:54
10 exceed its goal. Our CRA goals and lending results 09:12:58
11 are shared with the communities we serve on an 09:13:02
12 ongoing basis. You can find state-by-state results 09:13:04
13 of our lending, service, and investment programs at 09:13:08
14 our web site, which is www.wellsfargo.com. 09:13:12
15 Some have asked, how can the new Wells Fargo 09:13:18
16 set goals when no one knows what will happen ten 09:13:22
17 years from now? Well, we can't predict the future, 09:13:24
18 but we do know that we'll be there to meet the 09:13:28
19 credit needs of communities and consumers, however 09:13:30
20 those needs change. We know that from our past 09:13:34
21 experience with our CRA program. It is flexible and 09:13:36
22 can accommodate new or special local programs as 09:13:40
23 needed. 09:13:42
24 Wells Fargo's most current CRA lending goal, 09:13:44
25 which is $45 billion over ten years, was announced 09:13:48
12
1 in December 1995, at the time of our merger with 09:13:50
2 First Interstate. This goal is a public commitment 09:13:52
3 to provide community lending and investments through 09:13:58
4 a comprehensive and focused CRA strategy that 09:14:00
5 capitalizes on the bank's unique small business and 09:14:04
6 community development lending strengths. We will 09:14:08
7 continue to honor this commitment. 09:14:10
8 To date, Wells Fargo has accomplished over 16 09:14:14
9 billion of this goal, resulting in the creation of 09:14:16
10 over 340,000 jobs and over 13,000 affordable living 09:14:18
11 spaces. 09:14:26
12 Wells Fargo and Norwest intend, through our 09:14:26
13 current and future community reinvestment programs, 09:14:28
14 to be the unrivaled banking leader in CRA lending 09:14:32
15 throughout our new 21-state territory. Wells Fargo 09:14:36
16 has achieved outstanding CRA ratings from its 09:14:38
17 primary regulator and will continue to do so. 09:14:42
18 Let me give you examples from two areas, small 09:14:46
19 business and community development lending, where 09:14:48
20 Wells Fargo has exemplified community reinvestment 09:14:50
21 best practices. 09:14:54
22 Since 1996, Wells Fargo has lent over $11 09:14:56
23 billion to small businesses and small farms. 09:15:00
24 According to the most current public data available, 09:15:02
25 Wells Fargo provided more small business loan 09:15:06
13
1 dollars to low and moderate income communities in 09:15:08
2 the U.S. than any other bank in both 1996 and 1997. 09:15:10
3 With Norwest's expertise in small farm lending, 09:15:16
4 Wells Fargo expects to outlocal the nationals and 09:15:20
5 become the premier small business and small farm 09:15:22
6 bank in the nation. 09:15:26
7 Wells Fargo is already a national leader in 09:15:28
8 community development financing for both the 09:15:32
9 construction of multi-family housing units and 09:15:32
10 financing to middle market businesses for job 09:15:36
11 creation. We believe that the creation of a 09:15:38
12 community development corporation, CDC, will further 09:15:40
13 enhance our community programs. Through the 09:15:44
14 creation of a new national CDC, Wells Fargo will 09:15:46
15 lend to nonprofit organizations that develop 09:15:50
16 affordable houses or provide technical assistance to 09:15:52
17 micro and very small businesses in low income 09:15:56
18 communities.
19 Additionally, Wells Fargo has developed a 09:16:00
20 portfolio of diverse and innovative CRA investments 09:16:04
21 to meet local community financing needs. Currently 09:16:08
22 Wells Fargo has a CRA investment portfolio of $213 09:16:10
23 million towards its $500 million, ten-year CRA 09:16:16
24 investment goal. 09:16:20
25 A significant portion of Wells Fargo's 09:16:20
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1 investments are focused on rural markets. Wells 09:16:22
2 Fargo is the largest bank investor in the Rural 09:16:24
3 Community Assistance Corporation, RCAC, a nonprofit 09:16:28
4 agency dedicated to improving the lives of low 09:16:32
5 income, rural Americans. RCAC provides technical 09:16:36
6 assistance, loans, grants, and operational support 09:16:40
7 for organizations in rural communities. 09:16:44
8 When it comes to CRA contributions, both Wells 09:16:46
9 Fargo and Norwest have solid records of making 09:16:46
10 grants throughout their markets. In 1995, Wells 09:16:50
11 Fargo pledged that 75 percent of our contributions 09:16:52
12 would support credit counseling, affordable housing, 09:16:56
13 job training programs, schools serving low to 09:17:00
14 moderate income students, and programs that provide 09:17:04
15 social services in low income and rural communities. 09:17:08
16 Last year 78 percent of our contribution dollars 09:17:08
17 funded such activities. 09:17:10
18 We intend to continue to be a leader in a wide 09:17:12
19 range of cultural (sic) community reinvestment in 09:17:16
20 contribution-related issues. 09:17:18
21 Now to the business aspects of the merger. The 09:17:20
22 new Wells Fargo will have nine of the ten fastest 09:17:24
23 growing state economies in our markets. To serve 09:17:28
24 our customers, the new Wells Fargo will have a 09:17:30
25 strong delivery system across the new 21-state 09:17:34
15
1 territory, including traditional branches, 09:17:36
2 supermarket branches, business centers, ATMs, 09:17:38
3 24-hour telephone service, Internet banking, and PC 09:17:42
4 banking. These choices cover all income segments. 09:17:46
5 In our major metropolitan areas approximately 09:17:50
6 half of Wells Fargo's branches are located within a 09:17:54
7 mile of low income communities. In fact, to be 09:17:58
8 where our customers want or need us, we expanded our 09:18:00
9 network. In the past two years, we added 506 new 09:18:02
10 staffed offices, which include 353 supermarket 09:18:06
11 branches. 09:18:10
12 Just as Wells Fargo historically expanded its 09:18:10
13 delivery system from the stagecoach to the railroad 09:18:14
14 lines, we are embracing new banking technology and 09:18:16
15 new formats for branch offices. We will continue to 09:18:20
16 be a leader in community banking. 09:18:22
17 So, in a sense, today we are where we started 09:18:24
18 in 1852 - we are spanning the Western territories 09:18:26
19 and back to serving Minnesota communities. 09:18:30
20 Wells Fargo looks forward to merging with a 09:18:34
21 strong partner, Norwest, and continuing our historic 09:18:36
22 role as a leader under the Community Reinvestment 09:18:38
23 Act. We pledge to become the best financial 09:18:40
24 institution in this marketplace and in every 09:18:44
25 community we serve. Thank you. 09:18:46
16
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2 CHAIRPERSON SMITH: Thank you. Mr. 09:18:50
3 Biller.
4
5 MR. BILLER: Thank you, and good morning. 09:18:52
6 I'm Les Biller, president of Norwest Corporation, 09:18:54
7 and I'm pleased to represent Norwest at this 09:18:58
8 important meeting. Our chairman, Dick Kavosovich, 09:19:00
9 very much wanted to be here today. Unfortunately, 09:19:02
10 he had a commitment in Washington, D.C., that's been 09:19:04
11 on his calendar for approximately a year, which he 09:19:06
12 was unable to change. But with me today is Jim 09:19:08
13 Campbell, president of our Minnesota bank, and the 09:19:12
14 person responsible for all of our Minnesota 09:19:14
15 marketplace. 09:19:16
16 The benefits to this merger for our team 09:19:18
17 members, our shareholders, and importantly for our 09:19:20
18 customers and our communities are clear and 09:19:24
19 compelling. We would not have entered into this 09:19:26
20 merger with Wells Fargo if we did not believe it was 09:19:28
21 in the best interests of all our stakeholders, our 09:19:32
22 shareholders, our 60,000 team members, our almost 09:19:36
23 ten million customers, and our communities. 09:19:38
24 For our customers, it means more convenience, 09:19:40
25 more products, and more service than ever before. 09:19:42
17
1 For our team members, it means more opportunities 09:19:44
2 for growth, both personally and professionally. For 09:19:46
3 our communities, it means a continued commitment to 09:19:50
4 investing in every single one of them with our 09:19:52
5 dollars, our resources, and our team members, not 09:19:56
6 because we're a charity, but because it's good 09:19:58
7 business. When our communities succeed, we succeed, 09:20:00
8 and it's impossible to have a healthy bank in a 09:20:04
9 struggling community. For our shareholders it means 09:20:06
10 the prospects of creating an even greater value for 09:20:10
11 their investment with a combined company. 09:20:12
12 I'd like to respond point by point to the six 09:20:14
13 primary concerns that I've heard about this merger. 09:20:18
14 Those concerns are job losses, branch closings, 09:20:20
15 fees, the conversion of our computer systems, 09:20:26
16 community lending and contributions, and the move of 09:20:28
17 corporate headquarters to San Francisco and its 09:20:30
18 effect on local decision-making. Let's take them 09:20:34
19 one at a time. 09:20:38
20 First, job losses. Some are concerned this 09:20:38
21 merger will result in significant job losses for the 09:20:40
22 Twins Cities and Minnesota. There will not be 09:20:42
23 significant job losses. I can pledge here, as I've 09:20:46
24 pledged to our own team members on several 09:20:48
25 occasions, the merger's effect on job losses here in 09:20:52
18
1 the Twin Cities, and indeed across all of Norwest, 09:20:54
2 will not be significant. The largest group of 09:20:58
3 Norwest people directly affected by this merger is 09:21:00
4 our headquarters staff here in Minneapolis. These 09:21:04
5 830 team members are approximately 1.4 percent of 09:21:08
6 our total work force of 60,000. Yes, a number of 09:21:10
7 these 830 jobs will go away, but that does not mean 09:21:14
8 that all of the people go away. We take seriously 09:21:18
9 the loss of even one job. However, we've already 09:21:22
10 proven in the recent consolidation of our banking 09:21:24
11 operation centers that we can eliminate jobs and 09:21:28
12 become more efficient, but there's still a way to 09:21:30
13 keep most of the people. We call it retain and 09:21:34
14 retrain. 09:21:36
15 We're being faithful to our retain and retrain 09:21:36
16 process in this transition. Our goal is to offer as 09:21:40
17 many opportunities as we can to our effective team 09:21:44
18 members for comparable positions in the new company. 09:21:46
19 Now thanks to technology, we'll keep some corporate 09:21:50
20 functions right here in Minneapolis by using virtual 09:21:54
21 offices. We're going to take our time. Our retain 09:21:56
22 and retrain process allows us to overstaff 09:22:00
23 temporarily in some areas so we can keep good 09:22:02
24 people. We're going to do it right. 09:22:04
25 Second, some have expressed concern that the 09:22:08
19
1 merger will result in a disproportionate share of 09:22:10
2 closing of banking stores in the low to moderate 09:22:14
3 income neighborhoods. That is not true. We expect 09:22:16
4 this merger will not result in any loss of services 09:22:20
5 in any of our markets. The only exception is a few 09:22:22
6 communities in Arizona and Nevada where our banking 09:22:26
7 stores overlap with Wells Fargo, and in those 09:22:28
8 communities, government regulators will require us 09:22:32
9 to sell certain assets to be consistent with federal 09:22:34
10 anti-trust rules. Even in those two states, 09:22:38
11 however, we'll continue to serve the vast majority 09:22:40
12 of those overlapping markets either through our 09:22:42
13 stores or through Wells Fargo's stores. 09:22:46
14 Third is fees. We're in a competitive 09:22:50
15 business. Our fees are and will remain competitive 09:22:52
16 in every market in which we do business. If our 09:22:54
17 customers don't believe they're getting value for 09:22:58
18 our fees, they'll take their business elsewhere. 09:23:00
19 They do have plenty of choices. And if our fees 09:23:02
20 aren't competitive, we'll lose customers. Our goal 09:23:06
21 is to grow and prosper with our communities. We 09:23:08
22 know that to do this, our fees must be competitive. 09:23:12
23 Fourth, the conversion of our computer systems. 09:23:16
24 Now here we're taking the time to do it right. 09:23:18
25 We're beginning every discussion during this 09:23:20
20
1 transition by asking, what's in the best interest of 09:23:22
2 the customer? We're committed to the goal of 09:23:24
3 flawless execution, and if we do have some problems, 09:23:28
4 we'll fix them. Courteous service people will be 09:23:32
5 available to help customers through this transition. 09:23:34
6 Also, both companies are on schedule to meet 09:23:38
7 their year 2000 plan, and the merger will not change 09:23:40
8 this course. We will not combine any systems until 09:23:44
9 we believe we're year 2000 compliant. 09:23:46
10 Fifth, community lending and contributions. 09:23:50
11 Norwest has been and will continue to be, as part of 09:23:52
12 the combined company, a leader in community lending 09:23:56
13 in each of the markets in which we serve. We're 09:24:00
14 proud of our performance. Two years ago Norwest 09:24:02
15 Banks, holding more than three quarters of our 09:24:04
16 banking assets, were rated outstanding for their 09:24:08
17 performance under the Community Reinvestment Act by 09:24:10
18 the office of the controller of the currency, and 09:24:12
19 the remaining office has received satisfactory 09:24:16
20 ratings. Last year we loaned and invested almost 09:24:18
21 $12 billion in qualified community development loans 09:24:22
22 and investments to low and moderate income families, 09:24:26
23 to small businesses or small farms. Our banks in 09:24:28
24 North and South Dakota, Iowa, Colorado, the Twin 09:24:32
25 Cities, greater Minnesota and Nebraska, are the 09:24:36
21
1 number one S.B.A. lenders in their states. Our 09:24:38
2 Arizona bank, for example, is number one among all 09:24:40
3 banks in that state in the percent of loans made to 09:24:44
4 small businesses with gross annual revenues of less 09:24:46
5 than one million dollars. We're the number one ag 09:24:50
6 lender in the Midwest, the Rocky Mountains, and the 09:24:52
7 Southwest, and number three nationally, and will 09:24:56
8 become the number one nationally when we do combine 09:24:58
9 with Wells Fargo. Thirteen and a half percent of 09:25:02
10 Norwest's assets are invested in qualified community 09:25:06
11 development loans and investments. There are few 09:25:10
12 other large financial services companies that can 09:25:12
13 even come close to that performance. 09:25:14
14 Now, our goal is to continue to be a national 09:25:16
15 leader in community lending and development. We 09:25:20
16 want to make sure these loans and investments for 09:25:22
17 where they'll deliver the greatest value that is in 09:25:26
18 the individual local communities. One by one, we've 09:25:30
19 been asked by some to make large, nationwide 09:25:32
20 commitments. Our total lending and investment in 09:25:34
21 any state where we have banks already is large, but 09:25:38
22 it is also local. Our practice has been to set 09:25:40
23 local goals rather than corporate-wide goals because 09:25:44
24 we believe the best community investment decisions 09:25:46
25 are made in local communities by community bankers 09:25:50
22
1 working with local community groups. We believe our 09:25:52
2 philosophy of local community decision-making has 09:25:56
3 served our communities and our customers very well. 09:26:00
4 For example, over the past seven years our community 09:26:04
5 home ownership program has provided more than $670 09:26:06
6 million in mortgage loans to nearly 13,000 low to 09:26:10
7 moderate income home buyers in 15 states. Each of 09:26:14
8 these programs is designed and managed locally. Due 09:26:18
9 to the Norwest Housing Foundation, Norwest Mortgage 09:26:22
10 has pledged $16 1/2 million over the next five
11 years, one of the largest donations ever, to Habitat
12 for Humanity.
13 We've also reached out to underserved 09:26:34
14 communities. One example is the Navajo nation. 09:26:36
15 Between 1994 and 1996, we invested $4 million to 09:26:40
16 build four new banking stores in the Navajo nation, 09:26:42
17 each designed by a Navajo architect. Over 90 09:26:46
18 percent of the staff of these banks are Navajo; so 09:26:50
19 are the consumer managers of all of these stores. 09:26:54
20 Our consumer loans on the Navajo nation tripled in 09:26:56
21 four years to almost $6 million. We created a $22 09:27:00
22 million partnership with Norwest Mortgage and the 09:27:02
23 federal government to build almost 300 homes in the 09:27:04
24 Navajo nation. We also created a program to loan up 09:27:08
25 to $25 hundred each to Navajos with little or no 09:27:10
23
1 credit history who take courses in personal money 09:27:14
2 management. 09:27:18
3 Another example is right here in the Midwest. 09:27:18
4 Norwest Mortgage has launched a program in South 09:27:20
5 Dakota, North Dakota, and Nebraska, to reduce loan 09:27:22
6 approval time for American Indians living on 09:27:24
7 allotted trust land. 09:27:28
8 Six is local decision-making, the role of our 09:27:30
9 corporate headquarters. The decision to move our 09:27:34
10 corporate headquarters was the most difficult 09:27:36
11 decision we had to make. This decision was driven 09:27:38
12 by the need to locate our headquarters closest to 09:27:40
13 the highest concentration of banking deposits, which 09:27:42
14 is in California, by a factor of almost four times 09:27:46
15 that of Minnesota. But I can assure you, the 09:27:48
16 decision to move our corporate headquarters will 09:27:52
17 have absolutely no effect on our commitment to local 09:27:54
18 decision-making in each of our communities. Our 09:27:58
19 business philosophy in the combined company will 09:28:00
20 continue to be based on this principle. Local 09:28:02
21 decision-making is the key to serving our 09:28:06
22 communities effectively because we believe the best 09:28:08
23 decisions are local decisions. Decisions at the 09:28:10
24 local level at Norwest are made by people we trust, 09:28:12
25 people who know our communities better than anyone 09:28:16
24
1 else, the people who live and work in their 09:28:18
2 communities and who have firsthand knowledge of what 09:28:20
3 really matters there. And to a centralized company 09:28:22
4 such as Norwest, what matters is not where our 09:28:28
5 corporate headquarters is but how we serve our 09:28:30
6 customers locally one at a time when they walk into 09:28:32
7 any one of our 4,000 stores, half of which, by the 09:28:36
8 way, are located in smaller communities, many with 09:28:38
9 less than 50,000 people in them. 09:28:40
10 Let me give you an example. We bought United 09:28:44
11 Banks of Colorado in 1991. It was the state's 09:28:46
12 largest bank. We closed its corporate headquarters, 09:28:50
13 but as we do in all of our banking states, we kept 09:28:50
14 local decision-making in each of our Colorado 09:28:54
15 markets. Today we're the number one bank in 09:28:56
16 Colorado, an outstanding corporate citizen, a leader 09:28:58
17 in the community, and the generous supporter of 09:29:00
18 hundreds of nonprofit organizations in that state. 09:29:04
19 The president of Colorado Bank, John Nelson, is 09:29:06
20 chairman of the board of the Denver United Way, and 09:29:08
21 his bank has been named Colorado's best by the 09:29:12
22 Colorado Business Journal. It is only one of five 09:29:14
23 businesses in the nation recognized by the U.S. 09:29:18
24 Labor Department for hiring, training and promoting 09:29:20
25 women and people of color. Here in Minnesota, Jim 09:29:24
25
1 Campbell, who's been with Norwest 34 years, who has 09:29:26
2 run our Twin Cities market for over a decade, is 09:29:28
3 staying here. He and his team will continue to call 09:29:32
4 the shots here. Jim is the chairman of the United 09:29:34
5 Way Campaign for the Minneapolis area this year. 09:29:38
6 These are just two examples of what we see across 09:29:40
7 Norwest. 09:29:42
8 I want to thank you for the opportunity to 09:29:44
9 speak on behalf of Norwest this morning. I also 09:29:46
10 want to thank all of the concerned citizens on both 09:29:48
11 sides of this proposed merger who took the time to 09:29:52
12 attend this meeting today. Thank you. 09:29:54
13
14 CHAIRPERSON SMITH: Questions from the 09:29:58
15 panel?
16
17 MS. AWAI: Thank you. As you know the 09:29:58
18 Board is required to consider the effects of the 09:30:00
19 proposal on the convenience and needs of the 09:30:02
20 communities to be affected. This consideration will 09:30:04
21 take into effect both Wells' and Norwest's record of 09:30:08
22 performance on the Community Reinvestment Act. 09:30:12
23 You've alluded to a best practices approach in 09:30:14
24 determining which types of program will be retained. 09:30:20
25 At this point are you able to identify any of these 09:30:22
26
1 programs? 09:30:24
2 The other question that I had has been raised 09:30:26
3 by many of the written commentors, which we have had 09:30:28
4 an opportunity to review. Those commentors are 09:30:32
5 concerned that the proposed merger may result in a 09:30:34
6 decrease in services in rural communities. Could 09:30:38
7 you address both of those? 09:30:42
8
9 MR. HAZEN: I'll start off with the first 09:30:46
10 one. In terms of best practices, we obviously have 09:30:46
11 exchanged information and looked at the things that 09:30:50
12 both of our companies have done in terms of programs 09:30:52
13 that we can reach, and I, in my comments, spoke 09:30:58
14 specifically, for example, in the fact that in small 09:31:02
15 farming communities, Norwest has done a lot more 09:31:04
16 than Wells Fargo, whereas still Wells Fargo does 09:31:08
17 serve a lot of farming communities throughout its 09:31:12
18 geographic territories. So we will adopt a lot of 09:31:16
19 things that Norwest has been able to do there. 09:31:18
20 I think our small business programs for 09:31:22
21 specific groups which I mentioned, for example women 09:31:26
22 and Latinos and African-Americans, is something that 09:31:30
23 Norwest has been less focused, and we can continue 09:31:36
24 to combine that. Those would be examples of best 09:31:40
25 practices across both companies where we can share 09:31:42
27
1 it in the combined company. 09:31:48
2
3 MR. BILLER: Regarding the question about 09:31:50
4 rural communities, we don't see any reduction in 09:31:50
5 services in rural communities. It's been kind of a 09:31:54
6 hallmark of Norwest to be operating in smaller 09:31:58
7 communities. We think we know how to do that well 09:32:00
8 and profitably, and we would expect to continue to 09:32:02
9 do that. 09:32:04
10
11 CHAIRPERSON SMITH: Any other questions? 09:32:08
12 If not, thank you very much for being here this 09:32:10
13 morning. 09:32:12
14 And we'll move on to Panel No. 1. We're going 09:32:12
15 to start with Mr. Jacobson. 09:33:20
16
17 MR. JACOBSON: Thank you, and good 09:33:36
18 morning. My name is Jim Jacobson, and I'm assistant 09:33:38
19 attorney general appearing this morning on behalf of 09:33:42
20 Attorney General Hubert Humphrey. I'd like to begin 09:33:44
21 today by thanking the Federal Reserve Board for 09:33:48
22 holding this public meeting and for giving our 09:33:50
23 office and other interested parties an opportunity 09:33:52
24 to comment on the proposed merger between Norwest 09:33:54
25 and Wells Fargo. I would also like to thank Norwest 09:33:56
28
1 for its letter to Attorney General Humphrey 09:34:00
2 responding to some of the concerns addressed in our 09:34:04
3 written comments to the Board. Since time is 09:34:06
4 limited, I will get right to the point. 09:34:08
5 I'm here today because the Attorney General's 09:34:12
6 concerned that this proposed merger has the 09:34:14
7 potential to affect Minnesota consumers, small 09:34:16
8 businesses and communities on all three factors 09:34:20
9 considered under the Community Reinvestment Act: 09:34:22
10 lending, investment, and service. Our concerns on 09:34:26
11 these three points are heightened in view of Wells 09:34:28
12 Fargo's record following its recent merger with 09:34:32
13 First Interstate. For example, according to a study 09:34:38
14 conducted by the steelworkers, Wells Fargo closed or 09:34:42
15 sold all of its branches in 129 locations following 09:34:44
16 its merger, thereby reducing services to low income 09:34:46
17 and rural communities. 09:34:52
18 Specifically with regard to customer service, 09:34:52
19 Wells Fargo's post-merger record is not encouraging. 09:34:56
20 According to reports, Wells Fargo encountered 09:34:58
21 extensive service problems following its merger and 09:35:02
22 cut back on certain customer services. For example, 09:35:04
23 according to a recent report in the San Jose 09:35:08
24 newspaper, Wells Fargo discontinued First 09:35:12
25 Interstate's practice of providing free checking to 09:35:16
29
1 seniors and now imposes a $9 per month charge unless 09:35:18
2 seniors maintain a significant minimum balance. For 09:35:24
3 seniors on fixed incomes and limited budgets, $9 per 09:35:26
4 month, or 108 per year, can be a significant burden. 09:35:30
5 The Board indicated in its recent order 09:35:34
6 approving another merger that "the CRA does not 09:35:38
7 impose any limitation on the fees or other charges 09:35:42
8 that banks may assess for their services." We 09:35:46
9 believe, however, that fees and charges for banking 09:35:50
10 and deposit services are a highly important factor 09:35:52
11 that the Board should be taking into account under 09:35:56
12 its CRA analysis. 09:35:58
13 In addition to our concerns about Wells Fargo's 09:36:02
14 CRA record, I would like to acknowledge the concerns 09:36:04
15 raised by ACORN in its submission regarding 09:36:08
16 Norwest's lending practices in low and moderate 09:36:12
17 income communities. The statistics cited by ACORN 09:36:16
18 create additional grounds for concern about the 09:36:20
19 possible effects of a merger which would relocate 09:36:24
20 the headquarters to California. As Congressman 09:36:26
21 Vento points out in his comments, there already is 09:36:30
22 a "growing bi-coastal concentration of financial 09:36:32
23 services companies in the United States." 09:36:36
24 Relocation of Norwest's headquarters to 09:36:40
25 California only exacerbates concerns about its 09:36:42
30
1 lending policies and creates a real concern that low 09:36:46
2 and moderate income communities in Minnesota could 09:36:50
3 be overlooked following the merger. In its 09:36:52
4 application to the Board, Norwest recognizes the 09:36:56
5 importance of its CRA responsibilities and states 09:37:00
6 the merger will provide enhanced lending investment 09:37:02
7 and service to low and moderate income communities. 09:37:06
8 At this point, however, details as to how this will 09:37:08
9 be accomplished are lacking. 09:37:12
10 We recognize and appreciate the fact that the 09:37:14
11 Board already has requested and obtained from 09:37:16
12 Norwest additional information regarding its CRA 09:37:20
13 programs and future plans, and we know that the 09:37:24
14 Board will carefully review this information. 09:37:26
15 However, in light of the concerns set forth above, 09:37:28
16 Attorney General Humphrey also requests that the 09:37:32
17 Board, before it acts on the merger, require Norwest 09:37:34
18 to submit a detailed commitment for reinvestment in 09:37:38
19 small businesses and in low and moderate income 09:37:42
20 communities in Minnesota along the lines of the 09:37:44
21 recent Nations Bank/Bank America plan for $350 09:37:48
22 billion in community lending over ten years. 09:37:52
23 Moreover, Norwest should be required to make a 09:37:56
24 commitment that it will prevent branch closings in 09:37:58
25 low income and rural areas and prevent increases in 09:38:02
31
1 banking fees and decreases in banking services. 09:38:06
2 Finally, the Board should provide the 09:38:08
3 opportunity for public comment on Norwest's 09:38:12
4 commitments on these issues to ensure that the 09:38:14
5 convenience and the needs of the community truly 09:38:18
6 will be satisfied following the proposed merger. 09:38:20
7 Thank you very much for your time this morning. 09:38:24
8
9 CHAIRPERSON SMITH: Thank you. Ms. Clark. 09:38:26
10
11 MS. CLARK: Good morning. And I'd also 09:38:32
12 like to thank you for this opportunity to make some 09:38:34
13 public comments. My name is Karen Clark, and I am 09:38:36
14 state representative for five inner city 09:38:40
15 neighborhoods in south Minneapolis, and also the 09:38:42
16 chair of the Housing -- Housing and Finance 09:38:44
17 Committee of the Minnesota House of Representatives, 09:38:44
18 and also a member of the House Financial 09:38:46
19 Institutions and Insurance Committee. 09:38:50
20 I'm worried that the proposed merger between 09:38:52
21 Norwest and Wells Fargo will negatively affect my 09:38:54
22 constituents in their access to banking and to 09:38:56
23 credit. The Phillips neighborhood, in particular, 09:39:00
24 where I both live and represent, has suffered from a 09:39:02
25 history of neglect by banks. With 17,000 residents, 09:39:04
32
1 we are the largest neighborhood in Minneapolis, and 09:39:10
2 I might add, more populous than 35 of Minnesota's 09:39:12
3 counties, and yet we do not have a single major 09:39:16
4 banking facility located there. What does that tell 09:39:20
5 you about the banking industry's relationship to the 09:39:22
6 lowest income district in the state? 09:39:24
7 As you may know, the State of Minnesota is in 09:39:26
8 the throes of a serious crisis in affordable 09:39:30
9 housing. It's extremely hard to find an affordable 09:39:32
10 unit of housing to rent or even to buy in the many
11 areas throughout the state, but particularly in the 09:39:36
12 inner city where the vacancy rate in rental housing 09:39:38
13 is 1.3 to 1.8 percent. That's critically below the 09:39:42
14 7 percent that's considered a healthy rental market. 09:39:46
15 It's estimated that we are lacking 38,000 units 09:39:50
16 of affordable housing in the metropolitan area 09:39:52
17 alone. The problem is both one of not producing 09:39:56
18 enough new affordable housing and of not preserving 09:39:58
19 what affordable housing we already have.
20 If you would walk with me around my 09:40:02
21 neighborhood, as I recently have been doing a lot 09:40:04
22 lately, you would count at least 200 units of 09:40:06
23 boarded or vacant houses in need of repair. Some of 09:40:10
24 these are scheduled for demolition, but many of 09:40:12
25 these homes could be repaired and purchased by our 09:40:14
33
1 hard-working, low income families that often pay 09:40:16
2 twice as much in rent as they would for a mortgage 09:40:18
3 with renovation rolled in for the same house or 09:40:22
4 similar house. 09:40:24
5 We need Norwest's help to develop better home 09:40:26
6 mortgage products that would be more responsive to 09:40:30
7 the particular credit needs of many of our 09:40:32
8 hard-working, low income families in order to allow 09:40:32
9 that to happen. 09:40:36
10 Last year in the state legislature, we had an 09:40:36
11 opportunity to both help rehabilitate and construct 09:40:38
12 more affordable housing and had an unprecedented 09:40:40
13 alliance with the private sector to do so. We 09:40:44
14 proposed that the state invest $40 million in a 09:40:46
15 combination of state housing and finance agency 09:40:48
16 funds and tax credits, and the private sector, with 09:40:52
17 strong leadership provided by the Minnesota Family 09:40:54
18 Housing Funds, proposed to match that with $20 09:40:58
19 million. Together that would have leveraged another 09:41:00
20 $180 million in private and federal funding for a 09:41:02
21 total of $200 million in housing rehabilitation and 09:41:04
22 new construction dollars for both home ownership and 09:41:08
23 rental housing. What you need to know is the result 09:41:10
24 would have created about 3,000 affordable housing 09:41:14
25 units. Unfortunately, Governor Carlson vetoed all 09:41:16
34
1 but $5 million for construction and rehabilitation.
2 My understanding is that Wells Fargo recently 09:41:20
3 pledged that if the merger is approved, they will 09:41:24
4 lend $5 billion a year in California to minority and 09:41:26
5 low income customers for home mortgages, small 09:41:30
6 businesses, and community development. Before 09:41:32
7 Norwest moves its headquarters out of Minnesota to 09:41:36
8 California, we need them to make a similar 09:41:40
9 commitment to the people of the Phillips 09:41:44
10 neighborhood, the people of Minneapolis and St. 09:41:44
11 Paul, and to all Minnesotans. With their new 09:41:46
12 savings and combined wealth, they should become a 09:41:48
13 major private sector leader to match the public 09:41:50
14 commitment the legislature has already shown it 09:41:52
15 could provide.
16 Norwest and Wells Fargo have announced that 09:41:54
17 this merger will save them $630 million a year on 09:41:58
18 top of the already large profits these banks make. 09:42:02
19 We clearly need them to put more money back into our 09:42:04
20 community in the way that I've mentioned. 09:42:08
21 One other significant approach to increasing 09:42:10
22 home ownership opportunities is that the merged 09:42:14
23 Wells Fargo-Norwest Bank could provide would be to 09:42:14
24 raise the wages of its front-line workers. My 09:42:16
25 information is that the average wages of the workers 09:42:20
35
1 who work in the banking industry are such that they 09:42:22
2 can't afford housing in today's market without 09:42:24
3 public subsidy. For example, a bank teller at 09:42:26
4 Norwest-Wells Fargo would need to earn $12.38 an 09:42:30
5 hour just to be able to afford the fair market rent 09:42:36
6 for a two-bedroom home here, which is $644 a month, 09:42:38
7 or would need to earn $18.98, almost $19 an hour, to 09:42:42
8 rent a four-bedroom housing unit. My understanding 09:42:46
9 is that many of Norwest-Wells Fargo's bank employees 09:42:50
10 don't earn that kind of wage. Raising their wages 09:42:54
11 would be one significant way to help with the 09:42:54
12 housing crisis and community reinvestment. 09:42:58
13 I am concerned that even though Norwest is the 09:43:00
14 largest mortgage company in the country, they are 09:43:02
15 behind other Twin Cities banks in their lending to 09:43:04
16 people of color and in low income neighborhoods like 09:43:08
17 those I represent, according to their 1997 records 09:43:10
18 for conventional and FHA loans. What is Norwest 09:43:16
19 doing to address this? 09:43:16
20 On the House Financial Institutions Committee, 09:43:18
21 I fought for fairer bank fees for low income 09:43:22
22 consumers and senior citizens. Many of my 09:43:24
23 constituents have complained about exorbitant 09:43:26
24 bounced check fees and how hard that is on a fixed 09:43:30
25 income. We've heard testimony in particular from 09:43:32
36
1 many of our military veterans and pensioners. Now 09:43:34
2 Norwest just raised their bank check fee from $21 to 09:43:38
3 $25. Norwest is one of the biggest depositories of 09:43:44
4 state funds. In the 1998 legislature, I authored 09:43:46
5 legislation that in order for a bank to have the 09:43:50
6 privilege of being a state depository for Minnesota, 09:43:50
7 they would have to offer a life-line checking 09:43:54
8 account. Norwest fought this legislation. 09:43:58
9 I'm concerned in general that the Norwest-Wells 09:44:00
10 Fargo merger will make banking even less affordable 09:44:04
11 to low income people. And I understand, as was 09:44:06
12 mentioned earlier, that Wells Fargo stopped honoring 09:44:08
13 the free checking for seniors, and that was 09:44:12
14 described earlier. 09:44:14
15 Since my time is up, I just wanted to say that 09:44:16
16 I really would appreciate some assurances from the 09:44:18
17 Board in addressing these questions. My 09:44:20
18 constituents need to know, and I hope that you need 09:44:24
19 to know before you approve the merger. 09:44:24
20
21 CHAIRPERSON SMITH: Thank you. 09:44:26
22 Mr. Curley. 09:44:28
23
24 MR. CURLEY: Thank you, Ms. Smith. Thank 09:44:30
25 you for this opportunity to testify before the Board 09:44:30
37
1 this morning. I bring greetings from the -- from a 09:44:34
2 nation within a nation, and that is the Navajo 09:44:38
3 nation. My presentation will cover a few 09:44:40
4 experiences the Navajos have had with Norwest Bank, 09:44:44
5 Arizona, but before I move into these experiences, 09:44:50
6 let me express the fact that the Navajo nation is 09:44:52
7 pleased and honored to have four Norwest banks 09:44:54
8 located within the boundaries of our reservation. 09:44:58
9 Furthermore, we are proud to have gainfully employed 09:45:02
10 qualified Navajos within these banks. 09:45:06
11 In late 1993, Norwest Bank of Arizona made 09:45:10
12 commitments over a ten-year period, and there are 09:45:16
13 four commitments that they made that I want to cover 09:45:20
14 this morning. The first one is to open two 09:45:22
15 full-service banking facilities on the Navajo nation 09:45:26
16 and improve the two existing banking locations. 09:45:30
17 Second, to originate 60 million in loans over a 09:45:34
18 ten-year period. Third, an annual contribution of 09:45:38
19 $5,000 to the Navajo Nation College Scholarship 09:45:44
20 Fund. Four, establish a community advisory board 09:45:48
21 comprised of seven members representative of the 09:45:52
22 Navajo nation, and I'm one of those community 09:45:54
23 representatives. 09:45:58
24 Norwest's record against this commitment so far 09:45:58
25 has demonstrated the bank's sincerity and good faith 09:46:04
38
1 concerning the people of the Navajo nation. 09:46:08
2 Norwest's performance on each of the above 09:46:10
3 commitments through June 1998 is as follows. Number 09:46:14
4 one, Norwest Bank-Arizona has invested 4 million, as 09:46:18
5 Mr. Biller has said, to build its four full-service 09:46:24
6 bank branches within the boundaries of the Navajo 09:46:28
7 nation. These offices make up the Norwest Northeast 09:46:30
8 Bank. These branches are located in small towns 09:46:36
9 within the reservation. One is in Window Rock -- I 09:46:40
10 know you can't identify with this -- one is in Tubac 09:46:44
11 City, one is in Kayenta, and one is in Chinle. All 09:46:48
12 four branch managers are of Navajo descent, and the 09:46:54
13 remaining 35 employees all but two are of Navajo 09:46:56
14 decent. 09:47:02
15 Number two, over the first four and a half 09:47:02
16 years of the ten-year lending commitment, Norwest 09:47:04
17 has lent almost $35 million to the Navajo people. 09:47:10
18 And there's another side to this. Norwest has been 09:47:14
19 working directly with the Navajo nation government, 09:47:16
20 and they have lent to one of our enterprises out 09:47:20
21 there called the Navajo Agricultural Products 09:47:24
22 Corporation, a credit line -- or a loan of $7 09:47:28
23 million, a line of credit of $3 million. We also 09:47:34
24 have a Navajo Arts and Crafts Guild up there, and 09:47:38
25 they've loaned them $129,000,998.77. And then to 09:47:42
39
1 the Navajo nation itself, we have two term loans of 09:47:50
2 $1,640,000, $7,500,000. We also have a Navajo 09:48:00
3 Housing Authority, and there is a credit line of 09:48:04
4 $1,395,000. As I mentioned earlier, there's a $60 09:48:10
5 million commitment that Norwest made to the Navajo 09:48:14
6 nation. Part of this $60 million commitment was a 09:48:18
7 commitment of approximately 28 million in mortgage 09:48:20
8 loans on the reservation. 09:48:24
9 In order to help ensure that the mortgage 09:48:26
10 lending goal is achieved, Norwest has obtained the 09:48:28
11 approval offering the HUD 184 Loan Program to the 09:48:32
12 Navajo nation; has already closed seven mortgage 09:48:36
13 loans under the program. 09:48:40
14 Norwest has contributed to the Navajo Nation 09:48:42
15 Scholarship Fund each year, in addition to other 09:48:46
16 charitable contributions, to Navajo nation events 09:48:52
17 and organizations $5,000 plus, each and every year. 09:48:54
18 Number four, Norwest has had an active 09:49:00
19 Community Advisory Board in place within the Navajo 09:49:02
20 nation since 1994, and I've been on that board since 09:49:08
21 1994, the members of which are Navajo business and 09:49:10
22 community leaders. The Community Advisory Board 09:49:14
23 works with the local bank to provide input and to 09:49:16
24 ensure that the bank stays in touch with the local 09:49:20
25 needs and is able to be responsive to those needs. 09:49:24
40
1 Now, in conclusion, and from our perspective of 09:49:28
2 the Navajo nation, this is very critical. Norwest 09:49:32
3 has taken a bold step in banking with the Navajo 09:49:36
4 nation in that it is a pioneer from the financial 09:49:40
5 community which has truly invested in our nation and 09:49:44
6 has respected our sovereignty along this journey of 09:49:48
7 developing our economic basis. Thank you. 09:49:56
8
9 CHAIRPERSON SMITH: Thank you very much. 09:49:58
10 Questions from the panel? Thank you very much for 09:50:00
11 coming this morning. We appreciate hearing from 09:50:04
12 you. And I'll say both for your benefit and for the 09:50:06
13 benefit of subsequent panels that five minutes is a 09:50:10
14 very short time, and please, we do want to have your 09:50:14
15 full statements in the record. So if you have not 09:50:18
16 already given them to us, please leave them with the 09:50:22
17 Federal Reserve staff and we will make sure that 09:50:24
18 they all get into the official transcript. 09:50:28
19 I also will remind -- I don't know whether this 09:50:30
20 is a reminder or I'm saying it for the first time -- 09:50:34
21 if the next panel could come on up -- but we -- our 09:50:38
22 timekeepers will be holding up cards that let the 09:50:42
23 witness know when there is one minute remaining and 09:50:46
24 then another one when the time has expired. As a 09:50:50
25 last resort, if you happen not to be looking up at 09:50:56
41
1 them to get the signals, we do have a little bell 09:51:00
2 that we will ring -- or they will ring. 09:51:02
3 We're going to start with Mr. Bryant. We don't 09:51:24
4 have Mr. Bryant. Mr. Bansen -- Ms. Bansen. 09:51:30
5
6 MS. BANSEN: Good morning, Ms. Smith and 09:51:44
7 Members of the Board. Thank you for the opportunity 09:51:46
8 to be here this morning. My name is Kirsten Bansen. 09:51:48
9 I'm with the Minnesota Housing Partnership. We're a 09:51:52
10 state-wide nonprofit organization, and one of our 09:51:54
11 major roles is to support the nonprofit housing 09:51:58
12 sector in its work, particularly in greater 09:52:02
13 Minnesota. Before expressing our concerns related 09:52:04
14 to the merger, we'd like to make note of the value 09:52:08
15 of Norwest Corporation to Minnesota nonprofits 09:52:12
16 working in the field of affordable housing. 09:52:14
17 Norwest has been a generous and consistent 09:52:16
18 supporter of nonprofit developers and housing 09:52:20
19 agencies in many Minnesota communities. For 09:52:22
20 example, Norwest has committed five years of funding 09:52:24
21 at an interest rate of one percent to 27 Minnesota 09:52:26
22 based affiliates of Habitat for Humanity. Norwest 09:52:30
23 was an initial sponsor and has been a constant 09:52:34
24 supporter of the Home Ownership Center, the
25 organization funding and assisting nonprofit housing
42
1 counseling programs in the Twin Cities. Norwest has 09:52:42
2 also been a major contributor to the Twin Cities and 09:52:44
3 Duluth programs of the Local Initiatives Support 09:52:48
4 Corporation (LISC). This provides technical and 09:52:52
5 financial support to community development 09:52:54
6 corporations operating in these cities. Through its 09:52:56
7 affiliate, the National Equity Fund, Norwest has 09:53:02
8 invested 8 million in nonprofit-sponsored low income 09:53:04
9 housing tax credit projects. Norwest was one of the 09:53:10
10 founding members and is a continuing supporter of 09:53:10
11 the Greater Minneapolis Housing Corporation, a 09:53:14
12 nonprofit innovator of homeowner assistance 09:53:16
13 programs. 09:53:20
14 And, finally, Norwest has been a major 09:53:20
15 contributor to nonprofit housing agencies in smaller 09:53:22
16 metropolitan communities, such as Rochester, where 09:53:26
17 it was the first significant funder of the Community 09:53:28
18 Housing Partnership, a development agency serving 09:53:32
19 two southeastern Minnesota counties. 09:53:34
20 In addition to the direct financial support 09:53:36
21 provided to nonprofit housing agencies, Norwest 09:53:38
22 indirectly supports the work of these agencies in 09:53:42
23 two important ways. First, it has been a major 09:53:44
24 supplier of capital to the State Housing Finance 09:53:46
25 Agency, whose programs are utilized by nonprofits 09:53:50
43
1 across the state. 09:53:54
2 Second, and most importantly, Norwest, through 09:53:54
3 its many branches in Minnesota, particularly in 09:53:56
4 smaller towns, provides a source of community 09:54:00
5 leadership. Frequently Norwest branch managers and 09:54:02
6 loan officers contribute their financial expertise 09:54:06
7 and advocate on behalf of community development 09:54:10
8 projects, thereby enabling nonprofit agencies to 09:54:12
9 make Minnesota communities more viable. 09:54:16
10 It is because Norwest has been so significant 09:54:18
11 to this industry in Minnesota that we ask for a 09:54:22
12 concrete assurance that the merged corporation, once 09:54:24
13 headquartered in California, will not forget its 09:54:26
14 reinvestment obligations in this state. We agree 09:54:30
15 with Minnesota's U.S. Representative Bruce Vento 09:54:32
16 that there's a risk that the bi-coastal 09:54:34
17 concentrations of financial services may lead to 09:54:38
18 diminished community involvement and investment in 09:54:42
19 the nation's heartland. 09:54:44
20 In the September 10 letter to the Federal 09:54:44
21 Reserve Bank of San Francisco, Stanley Stroup, the 09:54:50
22 Executive Vice President and General Counsel of the 09:54:50
23 Norwest Corporation, addressed many of our concerns. 09:54:52
24 Mr. Stroup wrote that, post-merger, the strong ties 09:54:56
25 to Minnesota will remain, branch locations will not 09:55:00
44
1 be changed, and the bank will remain a member of the 09:55:02
2 Des Moine Federal Home Loan Bank. It is vital to 09:55:06
3 Minnesota that the merged institution follow through 09:55:08
4 on Mr. Stroup's assurances. 09:55:10
5 In addition to what he wrote, however, we 09:55:12
6 believe that it is equally important that as a part 09:55:14
7 of this merger, Wells-Norwest, the new Wells Fargo, 09:55:16
8 make a commitment to an investment pledged to 09:55:20
9 Minnesota and other states in its service region 09:55:22
10 that is similar to the multi-billion dollar 09:55:26
11 commitment that was made to California. The new 09:55:28
12 Norwest should make parallel pledges to these states 09:55:30
13 proportionate to that one made in California based 09:55:34
14 on the relative amounts of deposits obtained by the 09:55:36
15 bank from the respective states. 09:55:40
16 In conclusion, we appreciate what has been done 09:55:42
17 and what has been promised by Norwest Corporation 09:55:44
18 and Wells Fargo & Company, but we also believe that 09:55:46
19 the risks are very high for our state. Minnesota is 09:55:50
20 losing one of its most important corporate 09:55:52
21 headquarters. In addition to the general 09:55:56
22 commitments made by these banks to Minnesota, 09:55:58
23 Norwest-Wells should identify a dollar amount that 09:56:00
24 they can commit that will enable Minnesota and like 09:56:04
25 states to meet their needs for community 09:56:08
45
1 reinvestment. 09:56:10
2 Thank you for your time. 09:56:10
3
4 CHAIRPERSON SMITH: Thank you very much. 09:56:12
5 We'll go next to Mr. Bryant. 09:56:12
6
7 MR. BRYANT: Good morning. 09:56:14
8
9 CHAIRPERSON SMITH: Good morning.
10
11 MR. BRYANT: In an effort to keep my 09:56:16
12 remarks within the lines of your time line, I'm 09:56:16
13 going to abridge my remarks. The full text of the 09:56:20
14 testimony is available outside for anyone who wants 09:56:24
15 a copy. 09:56:26
16 Allow me to begin my prepared remarks by 09:56:26
17 reminding us all that CRA is not a government 09:56:30
18 mandated corporate give-away program or that 09:56:34
19 minority thing that a company does, nor the 09:56:38
20 loss-leader activity a financial institution engages 09:56:40
21 in in order to simply continue to conduct its normal 09:56:44
22 or traditional business practices. In short, CRA 09:56:48
23 simply means new markets. 09:56:52
24 Former U.S. Comptroller Ludwig often referred 09:56:56
25 to the democratization of credit America as it 09:56:56
46
1 relates to the historic evolution of credit 09:56:58
2 availability and access to credit in this country. 09:57:02
3 Bless you. In fact, in the year 1901, most 09:57:04
4 middle-aged, middle income Caucasians -- arguably 09:57:10
5 the underwriting standard that modern day criteria 09:57:12
6 has been fashioned around -- could not themselves 09:57:14
7 obtain credit, precisely because the only credit 09:57:16
8 available in 1901 was a commercial credit. 09:57:20
9 Continuing along this line of thought, one of the 09:57:22
10 safest and most acceptable forms of credit 09:57:26
11 collateral during this time was in fact inventory, 09:57:28
12 one of the least perceived safe forms of collateral 09:57:30
13 today. The point here is that CRA is not about some 09:57:32
14 new form of social subsidy, but a serious new, 09:57:36
15 substantial and permanent evolution in the 09:57:40
16 democratization of credit process. Low to moderate 09:57:42
17 income communities are growing segments of our 09:57:44
18 larger national economy and community, and, as such, 09:57:46
19 should represent a substantial component of any 09:57:50
20 bank's future business strategy. 09:57:52
21 Turning my attention to this new merger 09:57:54
22 proposal, let me say that the company I know best 09:57:56
23 here is Wells Fargo & Company, or as we say in 09:57:58
24 California, Wells Fargo. It is, of course, no 09:58:02
25 secret that Wells Fargo has moved aggressively away 09:58:04
47
1 from their traditional branch network that most of 09:58:08
2 us grew up on, and they have likewise moved toward 09:58:10
3 the technology and information based system on 09:58:12
4 banking. It is also fairly common within the bank 09:58:16
5 that I have sparred with officials from Wells Fargo 09:58:18
6 on occasion concerning their inner city strategy. 09:58:20
7 This said, from a business perspective, I happen to 09:58:24
8 believe that the bank's overall strategy is a smart 09:58:28
9 one. Branch banking as we know it is a memory of 09:58:32
10 the past, but our communities are not. 09:58:36
11 Wells Fargo's general success with this new
12 approach to banking over the past few years is 09:58:40
13 precisely why Wells Fargo loves their stock. The 09:58:40
14 downside to this general strategy, unfortunately, is 09:58:44
15 that relationship based communities were less than 09:58:46
16 thrilled. Wall Street is a left brain thinker, and 09:58:48
17 communities tend to be more contextual in their 09:58:52
18 understanding, or as I would call right brain 09:58:54
19 thinkers. In short, communities were saying we want 09:58:56
20 high-touch, too, Wells Fargo. 09:58:58
21 To the bank's credit, in time they began to 09:59:00
22 realize there was a true win-win business strategy 09:59:04
23 here in marrying high tech and high touch. Our 09:59:06
24 recent $1.4 million partnership between Operation 09:59:10
25 HOPE and Wells Fargo to build and operate an 09:59:12
48
1 Operation HOPE banking center in the low income 09:59:16
2 Watts/Willowbrook area of Los Angeles, is in our 09:59:18
3 opinion one of the many examples of how the bank has 09:59:20
4 successfully moved to bridge the gap. This new 09:59:22
5 banking center, like the two we currently operate in 09:59:26
6 black and Latino communities, will focus on economic 09:59:28
7 education, borrower readiness, and credit 09:59:32
8 availability, in that order. Our $32 million in 09:59:34
9 performing loans and investments in over 20,000 09:59:36
10 adults educated in economic education suggest it's a 09:59:38
11 strategy that works. 09:59:42
12 We are pleased that Wells Fargo was able to see 09:59:42
13 the bigger picture, and then adapt their business 09:59:46
14 model to include this make-sense strategy. 09:59:48
15 I also want to note, for the record, we do 09:59:50
16 business with people and not companies. And without 09:59:52
17 a doubt, I know that one of the reasons that the 09:59:54
18 bank decided to ultimately move on this proposal and 09:59:56
19 others like it was the organizational focus and 09:59:58
20 leadership provided by the Wells Fargo Community 10:00:02
21 Development Group and the Wells Fargo Foundation. 10:00:04
22 Our communities know these people, and, more 10:00:06
23 importantly, they know and understand our 10:00:10
24 communities. It's called mutual respect. 10:00:10
25 Yes, Norwest is known for its successful high 10:00:14
49
1 touch community banking approach to doing business, 10:00:18
2 but with great respect, generalized strategies and 10:00:20
3 approaches used successfully in the past in other 10:00:22
4 regions of the country simply will not fly in 10:00:26
5 California, which I might remind everyone is the 10:00:28
6 largest banking market in the continental United 10:00:30
7 States. Just like the City of Minneapolis requires 10:00:34
8 that all new buildings in downtown Minneapolis 10:00:34
9 connect to neighboring businesses by way of a 10:00:38
10 secondary walkway called a skyway, community 10:00:40
11 development organizations in California and other 10:00:42
12 cutting edge regions have a different type of 10:00:44
13 relationship with their banks. 10:00:48
14 As an example, you have the $18 million Urban 10:00:48
15 League in Los Angeles, or the 17,000 member First 10:00:52
16 A.M.E. Church, with 180 full-time employees, or 10:00:56
17 TELACU with $200 million in annual revenues, or the 10:01:00
18 Church of God in Christ was building a $50 million 10:01:02
19 cathedral in South Central, creating a hundred 10:01:08
20 million dollars in spin-off economic activity, or 10:01:08
21 take Operation HOPE, with three quarters of a 10:01:10
22 million dollars on deposit at any time in a bank in 10:01:14
23 Los Angeles. These organizations will not respond 10:01:18
24 well if their local decision-making capacity is 10:01:20
25 taken away. 10:01:24
50
1 I did hear the bell. Thank you. 10:01:24
2
3 CHAIRPERSON SMITH: By all means, make 10:01:30
4 sure that we have a copy of your full statement and 10:01:32
5 we'll enter it into the record. 10:01:34
6
7 MR. BRYANT: Seventy-five copies are 10:01:44
8 available in your lobby.
9
10 CHAIRPERSON SMITH: Thank you very much.
11 We'll go to Ms. Haines.
12
13 MS. HAINES: Thank you. I'd like to thank 10:01:46
14 the Federal Reserve Board for this opportunity to 10:01:46
15 speak. My name is Anne Haines Yatskowitz, and I'm 10:01:48
16 the president and CEO of ACCION New Mexico, which is 10:01:52
17 an Albuquerque based micro-lending organization. I 10:01:54
18 wish to comment today on the positive impact that 10:01:58
19 support from both Norwest Bank and Wells Fargo Bank 10:02:02
20 has had on ACCION New Mexico's ability to serve 10:02:06
21 disenfranchised and emerging entrepreneurs and also 10:02:12
22 to strengthen the economies of Albuquerque's low and 10:02:16
23 moderate income neighborhoods. 10:02:20
24 I'd like to first begin by giving you just a 10:02:20
25 little background about ACCION New Mexico. ACCION 10:02:24
51
1 New Mexico was created four and a half years ago in 10:02:28
2 response to the escalating poverty conditions in New 10:02:32
3 Mexico. And, unfortunately, New Mexico is the state 10:02:36
4 now that has the highest poverty rate in the 10:02:38
5 country. An associate of ACCION International, 10:02:42
6 ACCION New Mexico is a local private nonprofit 10:02:48
7 organization that extends a life-line to very small 10:02:50
8 or micro businesses in New Mexico by offering tools 10:02:52
9 of economic self-reliance; namely, business credit 10:02:58
10 and business training. It is these hard-working 10:03:02
11 entrepreneurs, home-based mechanics, seamstresses, 10:03:08
12 artists, woodworkers and others, who make up a 10:03:12
13 growing sector of self-employed families and 10:03:14
14 individuals in New Mexico. 10:03:18
15 And because of a lack of collateral, credit 10:03:20
16 history or the need for only a small loan amount, 10:03:24
17 many emerging entrepreneurs do not have access to 10:03:28
18 business credit from traditional sources. Yet, 10:03:34
19 capital is an essential ingredient in helping boost 10:03:36
20 a small business from subsistence to 10:03:42
21 self-sufficiency and to success. 10:03:44
22 Today ACCION New Mexico, since we started 10:03:48
23 lending about four and a half years ago, has made 10:03:52
24 over 760 micro loans of an average size of $12 10:03:54
25 hundred to over 400 businesses in the Albuquerque 10:04:00
52
1 area. The organization has written off less than 10:04:04
2 two percent of the slightly less than $1 million 10:04:06
3 that we've lent. Nearly two thirds of our client 10:04:10
4 base is minority, and the median yearly household 10:04:14
5 income of our borrowers is about $21,000, which is 10:04:18
6 substantially lower than the area median income for 10:04:24
7 Albuquerque, which is approximately $33,000. 10:04:28
8 By June of 1996, ACCION New Mexico had enough 10:04:32
9 multiple loan clients to analyze certain changes 10:04:36
10 entrepreneurs experienced over time. And in a 10:04:40
11 sample size of some of our clients who had received 10:04:44
12 at least three consecutive loans, we have found an 10:04:46
13 average increase of 71 percent in business assets, 10:04:50
14 61 percent in business revenues, 87 percent in 10:04:54
15 take-home income from the business, 21 percent in 10:05:00
16 overall household income, and 21 percent in 10:05:04
17 full-time jobs. 10:05:06
18 The reason I wanted to touch on some of these 10:05:08
19 statistics is because I do believe that we would not 10:05:12
20 have achieved some of these successes and already 10:05:16
21 seen some of these economic changes had it not been 10:05:20
22 from the tremendous support that both Norwest and 10:05:24
23 Wells Fargo have provided to ACCION New Mexico. 10:05:28
24 When ACCION New Mexico was first created, 10:05:32
25 Norwest was one of the few banks that stepped 10:05:36
53
1 forward in the Albuquerque area to support the 10:05:38
2 program, and Norwest supported us in a number of 10:05:42
3 different ways. One way was by providing office 10:05:46
4 space and furniture, leadership support, strategic 10:05:50
5 thinking, marketing support, and a line of credit to 10:05:54
6 enable us to launch the program. We used the line 10:05:58
7 of credit to turn around and make loans to our 10:06:02
8 borrowers. Norwest has provided considerable fund 10:06:06
9 raising support by offering challenge grants which 10:06:10
10 have enabled us to catalyze and challenge the 10:06:14
11 surrounding community and business community to 10:06:18
12 support the program as well. 10:06:20
13 Last year Wells Fargo made a $200,000 10:06:22
14 investment in ACCION New Mexico. Wells Fargo did 10:06:26
15 not have a very visible presence at the time in 10:06:30
16 Albuquerque, there were no branches in Albuquerque, 10:06:34
17 and yet Wells Fargo took a very proactive role in 10:06:38
18 supporting our program. And with a $200,000 10:06:42
19 investment, which was a loan, Wells Fargo also 10:06:44
20 helped change the playing field. 10:06:48
21 My time is up. I would like to say that I do 10:06:52
22 not think this program would exist without the 10:06:54
23 support of both banks. Thank you. 10:06:58
24
25 CHAIRPERSON SMITH: Thank you very much. 10:07:00
54
1 Mr. Rainey. 10:07:02
2
3 MR. RAINEY: Yes. Thank you. My name is 10:07:04
4 Clive Rainey, and I'm here to represent Willard 10:07:06
5 Fuller, the founder and president of Habitat for
6 Humanity. As Mr. Biller has already testified, 10:07:10
7 Norwest has a tremendous leadership commitment to 10:07:14
8 Habitat for Humanity, and I'm simply going to read 10:07:18
9 from Mr. Fuller's letter to Ms. Levert. 10:07:18
10 I'm pleased to write you regarding the 10:07:22
11 partnership between Norwest Mortgage and Habitat for 10:07:24
12 Humanity. This partnership reflects real leadership 10:07:26
13 I know as (inaudible), most significantly through 10:07:30
14 the partnership in the Rebuilding Our Communities 10:07:32
15 Campaign. The Rebuilding Our Communities Campaign 10:07:34
16 is an effort to raise 250 million of additional 10:07:36
17 money for Habitat's work by our 25th anniversary in 10:07:40
18 September of 2001. Norwest committed in October of 10:07:44
19 1996 to be the lead sponsor in this effort. This 10:07:48
20 commitment of 16.5 million over five years includes 10:07:52
21 seasonal construction loans of $2 million interest 10:07:56
22 free each year for materials. 10:07:58
23 Norwest's contribution here has encouraged 10:08:00
24 others. For example, Fannie Mae has matched this 10:08:02
25 two million seasonal construction loan for the past 10:08:06
55
1 two years, investments in home loan pools of a 10:08:08
2 million dollars annually at nominal or no interest 10:08:12
3 to accelerate more construction. 10:08:14
4 Norwest is also recruiting other lenders to 10:08:16
5 come in so that the total should exceed $1 million a 10:08:20
6 year, matching Norwest employee contributions to 10:08:22
7 Habitat with a guaranteed minimum of $100,000 a 10:08:26
8 year. Site participation grants to Habitat 10:08:28
9 affiliates in cities where ten or more of Norwest 10:08:34
10 corporation's 53,000 employees volunteer, these 10:08:36
11 grants, a minimum of $100,000 a year, will fund 10:08:40
12 volunteer Habitat projects. Grants of up to $2,000 10:08:44
13 to help Habitat homeowners with closing and related 10:08:48
14 costs, the minimum is a hundred thousand dollars per 10:08:52
15 year. 10:08:54
16 As you can see, leadership on the part of 10:08:54
17 Norwest has not been limited to their own 10:08:56
18 commitment. They have encouraged and challenged 10:08:58
19 other members of their industry to match their 10:09:00
20 efforts. Norwest Mortgage has demonstrated 10:09:02
21 exemplary corporate citizenship and Habitat for 10:09:06
22 Humanity is proud to call them our partners. 10:09:10
23 Habitat for Humanity International is a 10:09:14
24 nonprofit, ecumenical, Christian housing 10:09:14
25 organization dedicated to the elimination of 10:09:16
56
1 substandard housing. Habitat works in partnership 10:09:18
2 with people in need to build simple, decent houses 10:09:20
3 that are sold at no profit through no interest 10:09:22
4 mortgages. 10:09:26
5 Founded in 1976 in Americus, Georgia, Habitat 10:09:26
6 has more than 1,450 U.S. affiliates, and together 10:09:30
7 with affiliates in 59 other countries, has built 10:09:32
8 over 70,000 homes. Thank you very much. 10:09:36
9
10 CHAIRPERSON SMITH: Thank you. We'll go 10:09:38
11 to Ms. Saweuyer-Parks. 10:09:40
12
13 MS. SAWEUYER-PARKS: Distinguished members 10:09:46
14 and staff of the Federal Reserve, good morning. I'm 10:09:48
15 Deborah Saweuyer-Parks, CEO of the Oregon 10:09:52
16 Corporation for Affordable Housing in Portland, 10:09:56
17 Oregon. We are a nonprofit syndicator of federal 10:09:58
18 low-income housing tax credits, and invest 10:10:02
19 exclusively in affordable housing throughout the 10:10:08
20 State of Oregon, and now in Washington State and 10:10:10
21 soon to enter into Idaho. 10:10:12
22 I am here this morning to testify in support of 10:10:14
23 the merger between Norwest Corporation and Wells 10:10:18
24 Fargo & Company. My remarks are designed to 10:10:22
25 illustrate what can be done when a local nonprofit 10:10:26
57
1 corporation partners with a large financial 10:10:30
2 institution new to the Oregon market. Specifically, 10:10:34
3 I'm talking about Wells Fargo & Company. 10:10:38
4 I founded OCAH five years ago. Our aim was to 10:10:42
5 raise capital from Oregon's corporate and financial 10:10:46
6 community to reinvestment that capital in 10:10:50
7 multi-family housing throughout the state, initially 10:10:52
8 the State of Oregon. It was our hope to demonstrate 10:10:54
9 that it was realistic to merge social objectives 10:10:58
10 with business goals and to create an opportunity 10:11:02
11 that was worthwhile for both the public and private 10:11:06
12 sectors. Oregon's economy was quite robust, so we 10:11:08
13 at OCAH planned to help eliminate a social need in 10:11:14
14 our state, which was to finance a portion of the 10:11:18
15 projected 50,000 affordable housing units needed to 10:11:22
16 house over 125,000 working poor and their families. 10:11:26
17 The vehicle we created was the Oregon Equity 10:11:34
18 Fund, a limited partnership designed to provide 10:11:36
19 equity to developers of affordable housing. I 10:11:40
20 raised $20 million in Fund I -- for Fund I. The 10:11:46
21 first -- no. Because of time, I crossed so much of 10:11:52
22 this out, so I'm having trouble following. 10:11:54
23 Since Fund I was so successful, we proceeded 10:11:56
24 with Fund II. Raising equity this time was 10:12:02
25 extremely difficult. Former Fund I commercial banks 10:12:04
58
1 created their own hundred million dollar plus funds 10:12:08
2 and left OCAH, or either they merged with other 10:12:12
3 financial institutions and retreated from their 10:12:16
4 local community promises. 10:12:20
5 I had some trepidation approaching Wells Fargo, 10:12:26
6 but at the urgence of a friend, I called Karen 10:12:30
7 Wegman. Karen, in turn, referred me to another 10:12:32
8 Wells Fargo staffer, and much like John said a few 10:12:38
9 minutes ago, it's about the people at Wells Fargo 10:12:42
10 that makes the difference in our business. Six 10:12:44
11 weeks after that call, I had a $4 million commitment 10:12:48
12 from Wells Fargo. One year later I approached Wells 10:12:52
13 Fargo again for Fund III, asked for $10 million. It 10:12:58
14 was not only granted -- or not granted, invested, 10:13:02
15 but they also agreed to provide me with a $10 10:13:04
16 million line of credit for the partnership. 10:13:08
17 For my Board and those of us who manage the 10:13:12
18 fund, this level of commitment that Wells Fargo 10:13:14
19 demonstrated was unparalleled. 10:13:18
20 The following are a few examples of the results 10:13:24
21 that were achieved because of Wells Fargo's 10:13:26
22 investment in the Oregon Equity Fund. In Medford, 10:13:30
23 southern Oregon, in a rural community, we developed 10:13:34
24 80 units of affordable housing for families, one, 10:13:38
25 two, three and four-bedroom units, and four bedrooms 10:13:42
59
1 are extremely difficult to locate. 10:13:46
2 In far eastern Oregon, Sierra Vista, largely an 10:13:48
3 Hispanic community, we developed housing for farm 10:13:54
4 workers. 10:13:56
5 In Cannon Beach, Twelfth Avenue Terrace -- I'm 10:13:56
6 speeding up because I saw that minute -- there were 10:14:02
7 housing projects developed, in Bend, the Bill Healy 10:14:04
8 Family Center for previously homeless families who 10:14:08
9 are gainfully employed, in Eugene and other 10:14:12
10 communities throughout our state. 10:14:14
11 Wells Fargo has done much in Oregon. Through 10:14:18
12 its foundation, countless grants were given, 600,000 10:14:22
13 to Portland Public Schools, a hundred thousand 10:14:28
14 dollars to Umpqua Community Development, over 10:14:30
15 400,000 to United Way, and a hundred thousand 10:14:34
16 dollars to Albina Community Bank. It was the only 10:14:36
17 bank in the state of Oregon that did not -- that 10:14:38
18 received an investment from a large commercial bank, 10:14:42
19 and it was established to serve a population 10:14:46
20 formerly denied access to capital for homeowners or 10:14:48
21 small businesses. 10:14:54
22 My time's up. Thank you very much. I did 10:14:54
23 prepare a record of my comments for the record. 10:14:56
24
25 CHAIRPERSON SMITH: Thank you, and we'll 10:15:00
60
1 go to Ms. Wheeler. 10:15:02
2
3 MS. WHEELER: Thank you, and thank you for 10:15:04
4 this opportunity to be here as well. My name is 10:15:04
5 Suzy Wheeler, and I work for an organization called
6 Consumer Credit Counseling Services of Minnesota. 10:15:10
7 We're a private nonprofit agency. We have about six 10:15:10
8 offices around the metro area. We provide four main 10:15:14
9 programs: budget counseling, debt management, 10:15:18
10 housing counseling, and community education. 10:15:20
11 We've been very pleased with the relationship 10:15:22
12 we've had with Norwest Bank over the last few years, 10:15:26
13 especially in the area of community education. We 10:15:28
14 find that there's much a very big need for education 10:15:32
15 regarding money management out in the community. 10:15:36
16 I'm an education coordinator, and I spend all 10:15:38
17 my time in the community talking to people about 10:15:40
18 managing their money, how to manage it better, how 10:15:42
19 to take care of credit problems. I talk to high 10:15:46
20 school kids about using credit wisely, and that's 10:15:48
21 starting to become a very needed issue because high 10:15:52
22 school kids are starting to get credit cards, and 10:15:54
23 that's very scary. So as part of our mission at the 10:15:56
24 agency is we try to go out and provide education to 10:16:00
25 the community about money management. 10:16:02
61
1 Our relationship with Norwest Bank has 10:16:04
2 primarily been with community education focusing on 10:16:08
3 bringing education into places where they have not 10:16:10
4 had the opportunity to get education about money 10:16:14
5 management. One particular example is my work with 10:16:16
6 the treatment centers in the cities, the T