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Public Meeting Regarding Fleet Financial Group, Inc., and BankBoston Corporation
Wednesday, July 7, 1999
Transcript

 0001
                                            Volume I     
                                            Pages 1 to 543
                                            
              
              
              
              
              
              
              
                            Public Meeting Regarding the Proposed 
                            Merger of Fleet Financial Group, Inc. 
                                and BankBoston Corporation
              
              
              
              
              
              PRESIDING:  Dolores Smith, Director, Division of 
                          Consumer and Community Affairs, 
                          Federal Reserve Board
                                        
                                        
                                        
                                        
                             Held at:  Federal Reserve Bank, 
                 600 Atlantic Avenue, Boston, Massachuetts, on 
                      Wednesday, July 7, 1999, at 9:00 a.m.
              
              
                             (Anne H. Bohan and 
                             Carol H. Kusinitz, 
                             Court Reporters)
              
              
              
                                     * * * *
                            
              
              
              
              
              
                            
                                        
              
              
  0002
                                    I N D E X
              
              SPEAKER                                        PAGE
              
              Dolores Smith                                    10
              
              Terrence Murray                                  15
              
              Chad Gifford                                     24
              
              Gail Snowden                                     30
              
              Agnes Bundy Scanlan                              38
              
              Terrence Murray                                  42
              
              Mayor Thomas Menino                              45
              
              Congressman Michael Capuano                      50
              
              Senator Dianne Wilkerson                         54
              
              Jeanette Boone (for Sen. John Kerry)             64
              
              Larry Ferguson (for Congressman 
                              Patrick Kennedy)                 72
              
              Attorney General Thomas Reilly                   79
              
              Attorney General Richard Blumenthal              84
              
              Denise L. Nappier                                90
              
              Joyce Campbell (for Maude Hurd)                 102
              
              Angie Wilkerson (for Matthew Christian)         107
              
              Lunita Mustafa (for Elnora Thompson)            108
              
              Jennifer Carter                                 110
              
              Gwendolyn Jacobs                                113
              
              Lori Brown                                      118
              
              Eddie Collazo (for Lucy Mateo)                  122
              
              Karen Miller (for Rose Blain)                   124
              
  0003
                                    I N D E X
              
              SPEAKER                                        PAGE
              
              Reverend Norvel Goff                            127
              
              Margo Strom                                     129
              
              Nancy Korman                                    131
              
              Tandeka Guilderson                              132
              
              Deborah Deceatis                                134
              
              Greg Williams                                   136
              
              Romney Resney                                   139
              
              Richard Lord                                    141
              
              Martha Jones                                    142
              
              William Gillison                                145
              
              Ruth Scott                                      147
              
              Peter Cuenca                                    149
              
              Lyndia Downie                                   151 
              
              Susan Rodgerson                                 152
              
              Robert Regan                                    153
              
              Rosa Minayo Durado                              155
              
              Lynn Swann                                      156
              
              Tripp Jones                                     158
              
              Michael Brown                                   160
              
              Manuel Mirabal                                  163
              
              Frank Moy                                       165
              
              Stephen Dickerman                               166
              
              Reverend Al Sharpton                            168
              
  0004
                                    I N D E X
              
              SPEAKER                                        PAGE
              
              Martha Yager (for Matthew Lee)                  172
              
              Abdul Jabbar Muhammad                           176
              
              Ellen Feingold                                  181
              
              Ken Guscott                                     186
              
              Ruhi Maker                                      190
              
              Ruhi Maker (for Rashmi Rangan)                  194
              
              Joan Wallace-Benjamin                           199
              
              Martha Yager                                    205
              
              Mr. Albert                                      207
              
              Bruce Marks                                     213
              
              John C. Anderson                                221
              
              Carol Aranjo                                    227
              
              Marc Draisen                                    230
              
              Jeanne DuBois                                   234
              
              Andrew Morehouse                                238
              
              Michael Westgate                                243
              
              Susan Worgaftik                                 246
              
              David Young                                     250
              
              Elizabeth Webster                               258
              
              Denise Flynn                                    259
              
              Linda Whitlock                                  260
              
              Jane Smith                                      262
              
              Paul Guzzi                                      263
              
  0005
                                    I N D E X
              
              SPEAKER                                        PAGE
              
              Peter Meade                                     264
              
              Alan Macdonald                                  265
              
              Robert Justis                                   266
              
              James Brett                                     268
              
              Ron Machtley                                    269
              
              Felix Soto                                      271
              
              Felix Torres                                    272
              
              Douglas Johnson                                 273
              
              Dennis Langley                                  274
              
              Cherylyn Satterwhite                            275
              
              Jeff Campbell                                   277
              
              Eric Schwartz                                   278
              
              Aaron Lieberman                                 279
                  
              Carl Axelrod                                    281
              
              Michael Widmer                                  282
              
              Edward Lane Reicker                             283
              
              David Brown                                     284
              
              William Farrell                                 285
              
              Congressman Barney Frank                        286
              
              Congressman William Delahunt                    295 
              
              Sonia Alleyne                                   305 
              
              Thomas Callahan                                 310
              
              John Lozada                                     311
              
  0006
                                    I N D E X
              
              SPEAKER                                        PAGE
              
              Rita Gonzales Levine                            317
              
              Mossik Hacobian                                 321
              
              Ozell Hudson, Jr.                               323
              
              Cathy Malmstrom                                 327
              
              Susan Pearson                                   332
              
              Susan Bodington                                 337
              
              Brenda Clement                                  342
              
              Reverend Joseph Washington                      345
              
              Ray Neirinckx                                   352
              
              Mayor Michael Albano                            357
              
              Representative Jarrett Thomas Barrios           360
              
              Vermelle Parks                                  365
              
              Councilor Gareth Saunders                       369
              
              John Wilson                                     377
              
              Samuel C. Hamilton                              378
              
              Henry Thomas                                    380
              
              Sol Soskin                                      382
              
              Peter A. Gagliardi                              385
              
              Richard Kumro                                   386
              
              Christopher Sikes                               388
              
              F. Carlisle Towery                              390
              
              Jim Morgo                                       392
              
              Karen Phillips                                  394
              
  0007
                                    I N D E X
              
              SPEAKER                                        PAGE
              
              Phillip Morrow                                  396
              
              Timothy Marshall                                397
              
              Keith W. Stokes                                 400
              
              Jeffrey Pollock                                 402 
              
              David Crowley                                   404
              
              Anne S. Habiby                                  405
              
              Jose Champagne                                  407
              
              Fernando Comulada                               408
              
              Peter Fellenz                                   409
              
              Hierberto Flores                                410
              
              Juan Cofield                                    411
              
              Reverend Frank Kelly                            417
              
              Drew Astolfi                                    421 
              
              James T. Haskell                                424
              
              Wayne M. Burton                                 428
              
              Marcia Peters                                   430
              
              Gail Pisacane                                   433
              
              Leo Sarkissian                                  440
              
              Robert Van Meter                                445
              
              Andrew Grainger                                 450
              
              John O'Connor                                   455
              
              Ned Brown                                       461
              
              Larry Raff                                      465
              
  0008
                                    I N D E X
              
              SPEAKER                                        PAGE
              
              James Campen                                    469
              
              Robert Davis                                    477
              
              Donald Glass                                    480
              
              Frank Carvalho                                  487
              
              Roger Colton                                    491
              
              Pat Cusick                                      496
              
              David Harris                                    500
              
              Reverend William Barnwell                       506
              
              Bruce Bolling                                   509
              
              Alvin Porter                                    513
              
              Luz Santana                                     515
              
              Greg Vickers                                    517
              
              Roger Garvin                                    522
              
              Vickie Hurewitz                                 524
              
              Greg Timilty                                    529
              
              R. K. Schwartz                                  533
              
              Dennis Flynn                                    538
              
              
              
              
              
              
              
  0009
          1                   P R O C E E D I N G S
          2            MR. WALKER:  Good morning, ladies and 
          3   gentlemen.  If you'll be seated, we'll try to get 
          4   these proceedings started.  My name is Richard 
          5   Walker.  I'm the Vice President for Public and 
          6   Community Affairs here at the bank.  Just a few 
          7   announcements.  If you are a speaker, please 
          8   register at the speaker's desk if you want to give 
          9   remarks today.  
         10            Also if you're a member of the press, 
         11   please register at the press table.  Once you've 
         12   registered as speakers, please be in the speaker 
         13   assembly area at least 15 minutes before you are 
         14   about to come on.  
         15            Also, the use of cellular or portable 
         16   phones in the auditorium is prohibited.  We want to 
         17   have these proceedings move as quickly as possible 
         18   without the distractions of the cellular phones.  
         19   Thank you. 
         20            In terms of the restrooms, they're out the 
         21   door and to your left, and if you have any 
         22   questions, please see me or any of the staff with 
         23   the tags on them during the course of the day. 
         24            Now I will turn the proceedings over to the 
         25   Presiding Officer, Dolores Smith, who is the 
  0010
          1   Director of Consumer and Community Affairs at the 
          2   Federal Reserve Board of Governors.  Dolores. 
          3            PRESIDING OFFICER SMITH:  Thank you, 
          4   Richard.  I am pleased to welcome you to this 
          5   important public meeting on the application by Fleet 
          6   Financial Group to acquire BankBoston Corporation.  
          7   Richard has already done so, but for the record I'll 
          8   go ahead and introduce myself.  I am Dolores Smith, 
          9   Director of the Division of Consumer and Community 
         10   Affairs at the Federal Reserve Board in Washington, 
         11   D.C.  I'll be the Presiding Officer for this 
         12   meeting.  
         13            Other members of our panel include two from 
         14   the Federal Reserve Bank of Boston and two from the 
         15   Board.  First, Boston, we have Bill McDonough on my 
         16   extreme right, the bank's General Counsel.  Then at 
         17   my extreme left Lynn Browne, Senior Vice President, 
         18   Research and Statistics.  
         19            From the Board on my left, Myron Kwast, who 
         20   is the Associate Director for the Division of 
         21   Research and Statistics, and to my right Scott 
         22   Alvarez, who is the Associate General Counsel. 
         23            We are here today because Fleet Financial 
         24   Group, Boston, Massachusetts, has applied for 
         25   approval to acquire BankBoston Corporation, Boston, 
  0011
          1   Massachusetts.  When the Federal Reserve considers 
          2   one of these applications, we look at a number of 
          3   factors under the Bank Holding Company Act.  These 
          4   include financial issues, managerial issues, 
          5   competitive issues, and the convenience and needs of 
          6   the communities affected.  In doing so, we 
          7   particularly look at the record of performance of 
          8   the parties under the Community Reinvestment Act.  
          9            The Community Reinvestment Act requires the 
         10   Board to take into account an institution's record 
         11   of meeting the credit needs of its entire community.  
         12            The Fleet-BankBoston application also 
         13   involves the proposed acquisition or retention of 
         14   nonbanking companies engaged in activities 
         15   permissible for bank holding companies.  The Federal 
         16   Reserve Board must determine whether the proposed 
         17   nonbanking activities can reasonably be expected to 
         18   produce benefits to the public that outweigh 
         19   possible adverse effects such as undue concentration 
         20   of resources, decreased or unfair competition, 
         21   conflicts of interest or unsound banking practices.  
         22            The purpose of the public meeting today is 
         23   to receive information regarding these factors.  We 
         24   will be seeking to elicit this information and to 
         25   clarify factual issues related to the application.  
  0012
          1            We are very pleased that so many people 
          2   have been willing to come and testify at the public 
          3   meeting today.  We expect to have more than 160 
          4   groups and individuals represented during the course 
          5   of the meeting.  
          6            And I want to tell you a little bit about 
          7   the procedures.  This is what is called an informal 
          8   public meeting.  Members of this panel may ask those 
          9   who are testifying about their testimony.  This is 
         10   not a formal administrative hearing, so we are not 
         11   bound by rules regarding evidence, 
         12   cross-examination, and some of the formal trappings 
         13   of that kind of proceeding.  
         14            As you can see from the agenda, we have a 
         15   very long day ahead of us and we will need to stick 
         16   to the schedule closely so that everyone who has 
         17   asked to offer oral testimony will have a chance to 
         18   do so at the appointed time.  We ask the witnesses 
         19   to be mindful of the needs of others and to help us 
         20   stay on schedule.  
         21            The witnesses on each panel will be 
         22   expected to stay within their allotted times.  We 
         23   have a signal system that we will be using.  We have 
         24   two timers seated at -- two timekeepers seated at 
         25   the table, and we will also have panels that are of 
  0013
          1   varying sizes, so that for most of the panels the 
          2   witnesses will have between three and five minutes 
          3   to present their oral statements.  In a few 
          4   instances the witnesses have been allotted slightly 
          5   longer times.  The timekeeper will give you a signal 
          6   generally when there is one minute remaining to 
          7   speak and another -- do you want to hold that up in 
          8   both directions so that the people in back can see 
          9   you.  And then there is a second card that they will 
         10   hold up when the time is up.  
         11            And sometimes it's hard for the witnesses 
         12   to be looking at the panel, the Federal Reserve 
         13   panel, and also to be minding the timekeeper, so 
         14   there may be times when the witness doesn't notice 
         15   that the "Please Finish" sign has been held up, in 
         16   which case the timekeeper will give an audio signal, 
         17   and we'll try to call your attention to that. 
         18            You will also see from the schedule that we 
         19   in several cases do have a rather large number of 
         20   persons on a given panel, and they will each have 
         21   about one minute at the microphone.  This we have 
         22   done so that we can provide an opportunity for all 
         23   of these persons individually to have their say 
         24   before this public meeting.  
         25            Finally, there may be some persons who were 
  0014
          1   unable to sign up in advance, so to the extent 
          2   possible we want to give them a chance to speak as 
          3   well.  We have scheduled toward the end of today's 
          4   meeting an open-mike period when we will make the 
          5   microphone available to any member of the public who 
          6   wants to make an oral presentation, time permitting.  
          7            Witnesses at this public meeting also may 
          8   submit a written supplement to their oral testimony, 
          9   but they must do so by next Wednesday, July 14th, 
         10   and then the record will be closed.  Any written 
         11   supplements should be directed to Jennifer J. 
         12   Johnson, Secretary of the Board, Federal Reserve 
         13   Board, Washington, D.C. 20551.  They must be 
         14   received by 5:00 p.m. Eastern Daylight Time on the 
         15   14th.  Submissions also could be faxed to Area Code 
         16   202-452-3462.  
         17            Witnesses, if you have not turned in copies 
         18   of your written testimony or if you have any other 
         19   written statement to put into the record, please 
         20   leave it with the Federal Reserve staff at the 
         21   registration table.  It is important that we get 
         22   this information for the record.  A transcript of 
         23   the meeting will be available by probably Monday, 
         24   July the 12th, through the Federal Reserve Bank of 
         25   Boston and through the Federal Reserve Board.  
  0015
          1            In addition, the official transcript will 
          2   be available by the close of business July the 14th 
          3   on the Board's public Web site at 
          4   www.bog.frb.fed.us.  
          5            And with that, let's begin the proceedings 
          6   and have members of our first panel. 
          7            In the interest of time, what I'll ask is 
          8   that you each state your name, organization, and 
          9   then we'll start with that. 
         10            MR. MURRAY:  I'm Terry Murray, Chairman of 
         11   Fleet Bank Group. 
         12            MR. GIFFORD:  I'm Chad Gifford, Chairman, 
         13   BankBoston.
         14            MS. SNOWDEN:  Gail Snowden, Managing 
         15   Director, BankBoston.
         16            MS. SCANLAN:  Agnes Bundy Scanlan, Managing 
         17   Director of Fleet Financial Group.
         18            PRESIDING OFFICER SMITH:  Mr. Murray.
         19            MR. MURRAY:  Thank you.  I'd like to begin 
         20   by thanking the Federal Reserve Board for inviting 
         21   me to speak on behalf of Fleet on our proposed 
         22   merger.  Since the months since we announced our 
         23   proposal, it has been a very proud and challenging 
         24   time for all of us at Fleet and Bank of Boston.  I 
         25   would particularly like to thank our employees, many 
  0016
          1   of whom have been working very hard this summer to 
          2   ensure that our company gets off on the right foot.  
          3            I know there are many questions and 
          4   concerns about this merger and we hope to address 
          5   them today.  All of us, employees and citizens 
          6   alike, are on the verge of ensuring that New England 
          7   will enter the 21st century with a hometown bank, 
          8   headquartered in this city, committed to serving our 
          9   customers and our community.  
         10            Four years ago when I testified before this 
         11   Board about Fleet's merger with Shawmut, I spoke 
         12   about the banking industry's trend towards 
         13   consolidation and how it affected our relations with 
         14   our customers and our communities.  Chad talked 
         15   about the same issues when it came time to discuss 
         16   BankBoston's merger with BayBanks.  We took steps 
         17   then to keep our institutions strong and 
         18   independent.  Neither of us expected to be here 
         19   today talking about a merger between our banks, but 
         20   we recognize that this merger is another necessary 
         21   step to ensure that New England continues to have a 
         22   major locally-based banking presence.  
         23            In the past few years we've seen a number 
         24   of bank megamergers like NationsBank and Bank 
         25   America, First Chicago and Bank One.  The number of 
  0017
          1   commercial banks in the U.S. decreased by a third 
          2   between 1987 and 1997.  The number of bank branches 
          3   increased by a third over the same period, as fewer 
          4   banks worked to expand access to service.  
          5            We've seen consolidation spill across 
          6   national borders as Deutsche Bank acquired Bankers 
          7   Trust, and we've seen it in France with Banque 
          8   Nationale de Paris' attempt to take over Sogen 
          9   Paribas to create a bank with a trillion dollars in 
         10   assets.  
         11            Already in Europe there are far fewer banks 
         12   than in the U.S., possessing far greater assets and 
         13   ability with which to compete in the global 
         14   financial markets.  In the U.S. we've also seen 
         15   interindustry mergers between Citicorp and 
         16   Travelers, and E-trade and Telebank, as new 
         17   technologies help to break down archaic barriers 
         18   between banking and other financial service 
         19   providers.  
         20            By increasing in size, banks achieve 
         21   economies of scale that allow us to invest more in 
         22   technology and in people so that we can develop 
         23   superior products and services like banking, 
         24   brokerage and investment services.  With products 
         25   such as these, we can match the increasingly 
  0018
          1   sophisticated needs of both the businesses and 
          2   consumers we serve.  
          3            Our merger also addresses the challenges 
          4   offered by new kinds of competitors.  We no longer 
          5   compete with just other banks.  We now compete with 
          6   institutions such as Fidelity, Merrill Lynch and 
          7   more recently with on-line banks.  More importantly, 
          8   this is a merger that seeks to strengthen our 
          9   national and international competitiveness while 
         10   making a deep local commitment.  
         11            Fleet-Boston brings together two of 
         12   America's oldest and most prestigious banks to 
         13   create one of the world's premier financial 
         14   institutions and financial providers right here in 
         15   the City of Boston.  
         16            When we announced the merger in mid-March, 
         17   our slides used the tag line, "One Plus One Equals 
         18   Greater Than Two."  This slide illustrated the idea 
         19   that our combined institution could do more in total 
         20   for our customers, communities and stockholders than 
         21   what the two premerger banks have done separately.  
         22   This was not a statistical assertion, but rather a 
         23   broad statement about how the new bank's synergies 
         24   would make Fleet-Boston more competitive than either 
         25   bank would be by itself.  The merger would enhance 
  0019
          1   our geographic diversification and our role as the 
          2   premier financial service provider from Bangor to 
          3   Brazil and from Cape May to Cape Cod.  
          4            This diversification will help reduce our 
          5   vulnerability to economic downturns.  Those of us 
          6   who went through the regional banking crisis of the 
          7   early '90s understand how important both geographic 
          8   and operating diversity are, and we don't want to be 
          9   at risk in the event of another economic downturn in 
         10   a particular region or industry sector.  
         11            This is indeed a very important time for 
         12   all of us who live in New England.  It is the time 
         13   for us to secure our economic future by responding 
         14   to the competitive challenge raised by world-wide 
         15   banking financial services, consolidation and 
         16   mergers.  
         17            While there are many opportunities and 
         18   benefits to this merger, at the same time there are 
         19   many concerns being voiced, and I'd like to address 
         20   them right now. 
         21            One of the compelling reasons for this 
         22   merger and why we know it will work is that each 
         23   company brings certain strengths to the table.  
         24   Right from the beginning Chad and I understood that 
         25   we must leverage the advantages of each company.  In 
  0020
          1   that spirit we will have BankBoston lead the way in 
          2   the area of community development.  They've done a 
          3   great job in this area for which they have been 
          4   rightly recognized.  
          5            Maintaining our outstanding CRA ratings 
          6   will continue to be a corporate goal for 
          7   Fleet-Boston.  We will use the BankBoston community 
          8   development approach, including First Community Bank 
          9   and the BankBoston Development Corporation.  
         10   Together we look forward to setting a new standard 
         11   of community development.  
         12            We have an outstanding CRA rating in 
         13   Massachusetts.  We have enormous successes and 
         14   successful partnerships that have worked to create 
         15   thousands of new homeowners that have invigorated 
         16   communities.  Moving forward, we plan to continue 
         17   these efforts.  
         18            We will also sustain our support of 
         19   neighborhood-oriented banking services, community 
         20   development programs and the charitable giving that 
         21   makes this commitment a reality.  
         22            Gail will speak about these initiatives in 
         23   detail, but I wanted to state that we strongly 
         24   believe that our recently announced commitment of 
         25   14.6 billion dollars is a realistic and achievable 
  0021
          1   plan and one that will increase affordable housing, 
          2   strengthen small business, and stabilize 
          3   neighborhoods in our footprint.  
          4            Moving forward with the new commitment, 
          5   we'll have an oversight board that will measure our 
          6   progress in serving community needs, a board with 
          7   representatives from many of the 125 community 
          8   groups we consulted when developing this plan.  
          9            Addressing antitrust concerns, it is 
         10   important to realize that the proposed merger is 
         11   more about combining the complementary businesses of 
         12   Fleet and BankBoston and not about combining 
         13   competing businesses.  In this regard Fleet's retail 
         14   branch operations extend to many Northeastern states 
         15   in which BankBoston has no branches, whereas, 
         16   BankBoston's large corporate banking business 
         17   extends across the nation, in 23 foreign countries 
         18   where Fleet has no presence.  
         19            The merger will also bring together 
         20   complementary nonbanking lines of businesses such as 
         21   Fleet's Quick & Reilly retail brokerage franchise 
         22   and BankBoston's Robertson Stephens, an investment 
         23   banking business.  Where the two banks do overlap, 
         24   we have proposed a divestiture plan that was 
         25   intended to preempt any conceivable competitive 
  0022
          1   concerns.  With more than 290 branches and 
          2   approximately 12-1/2 billion dollars in deposits, 
          3   the proposed divestitures are far and away the 
          4   largest ever made in the history of U.S. bank 
          5   mergers.  As a stand-alone entity, the divestiture 
          6   would rank among the top 50 bank holding companies 
          7   in the nation in terms of small business loans and 
          8   total assets. 
          9            Chad and I both grew up with banks 
         10   headquartered here in our home region, banks managed 
         11   by people who cared about New England and its 
         12   people.  I don't want my children or my 
         13   grandchildren living in a New England whose economic 
         14   fate is dictated from outside the region.  I want 
         15   them to have local institutions that are strong and 
         16   sophisticated, but that make decisions locally with 
         17   New Englanders in mind.  So many American cities 
         18   have lost that.  There's no longer a major 
         19   indigenous bank in Los Angeles, none in Miami, 
         20   Denver, Dallas, Philadelphia or Houston. 
         21            Panelists, I mentioned at the outset how 
         22   excited all of us at Fleet and BankBoston are about 
         23   this merger.  I'd like to finish by telling you how 
         24   much this merger means to me personally.  I grew up 
         25   in New England, went to school here, and I've worked 
  0023
          1   in banking here for almost four decades.  This is my 
          2   home and this is home to Fleet and BankBoston and 
          3   our tens of thousands of dedicated employees.  Our 
          4   legacy will be a large global institution domiciled 
          5   in New England with deep community commitments.  
          6            The financial system that is now taking 
          7   shape in which the Federal Reserve Board has done so 
          8   much to make possible is one that reflects the 
          9   vision and innovation that has made our nation the 
         10   world's financial leader.  
         11            I'm also pleased that the House of 
         12   Representatives last week passed the Financial 
         13   Services Act of 1999.  With the House and Senate 
         14   both voting to appeal the outdated Glass-Steagal 
         15   Act, we're a step closer to ensuring that this 
         16   nation's financial institutions can thrive and 
         17   compete in the next century.  
         18            Thank you for the opportunity to speak, and 
         19   let me also thank the concerned citizens of all 
         20   viewpoints who cared enough to join us today and 
         21   share their thoughts.  
         22            PRESIDING OFFICER SMITH:  Thank you.  I'd 
         23   like to remind witnesses that they can submit their 
         24   full written statement for the record, so that to 
         25   the extent you can abbreviate your comments, that 
  0024
          1   would be helpful and help us stay within the 
          2   allotted time for the panel. 
          3            Mr. Gifford?
          4            MR. GIFFORD:  That's one heck of an 
          5   introduction.  Thank you.  I'll move quickly in my 
          6   mind.  But thank you, Terry.  Thanks all for 
          7   participating with us.  I, too, welcome this 
          8   opportunity to discuss some of the reasons behind 
          9   and benefits of BankBoston's proposed merger with 
         10   Fleet.  I feel strongly, strongly that this merger 
         11   is in the best interests of all our stakeholders, 
         12   our employees, our customers, our communities, not 
         13   just shareholders.  I do not want to pick out any 
         14   one of those as being more important than any other, 
         15   but it's no secret -- and we said this in March when 
         16   we announced it -- the opportunity to preserve a 
         17   financial service powerhouse in New England was 
         18   important, and you heard Terry comment on that.  I 
         19   clearly share his passion for preserving the 
         20   hometown banks in the region, serving the individual 
         21   cities and communities that make up this great 
         22   fabric.  
         23            I, too, am a New Englander.  I'm a son of a 
         24   former New England bank chairman, so the importance 
         25   of a strong, locally-based banking organization has 
  0025
          1   been with me for a long, long time, and surely, as 
          2   Terry also referenced, all of us learned a very 
          3   painful lesson about the importance of a strong 
          4   banking organization about a decade ago.  
          5            As Terry has described, the consolidation 
          6   and convergence are the hallmarks, the realities of 
          7   financial services today.  BankBoston is no stranger 
          8   to that tradition, having participated in the 
          9   purchase of BayBanks in '95, Robertson Stephens, an 
         10   investment bank, in 1998 as part of a continued 
         11   consolidation in convergence of financial services.  
         12            I'm moving faster now, Madam Chairwoman.  
         13   But our proposed merger is not just about size and 
         14   strength, of course, but quality and commitment.  
         15   Our first principle from our first conversation has 
         16   been to preserve the best of Fleet and the best of 
         17   BankBoston, to build a new company that leverages on 
         18   respective strengths as well as honors and reaffirms 
         19   our shared commitments.  
         20            We will take the best talent and best 
         21   practices and make them one of everyday standards 
         22   and go on to build one of the premier financial 
         23   service organizations in the world and surely one 
         24   this region will be proud of.  
         25            The new Fleet-Boston will be one of the top 
  0026
          1   two employers in the region.  After the merger, 
          2   divestitures and consolidations, we will employ some 
          3   25,000 New Englanders and infuse into this company 
          4   no less than a billion-five in purchasing power and 
          5   tax dollars.  
          6            Acknowledging the painful impact of job 
          7   loss on some employees, we have pledged to treat 
          8   affected employees fairly and compassionately.  We 
          9   will provide a generous severance program and a 
         10   cutting-edge transition assistance program of 
         11   support for career retraining, starting a business, 
         12   or doing bank-subsidized community work.  At the 
         13   same time, and I think very importantly, we envision 
         14   career opportunities for tens of thousands of local 
         15   residents in a dynamic growth company.  
         16            The new Fleet-Boston will be a leader in 
         17   many markets around the world, able to meet the full 
         18   financial service needs of consumers, businesses of 
         19   all sizes, large and small, public sector entities 
         20   and nonprofit organizations.  We will be the premier 
         21   banking franchise in the Northeast, serving eight 
         22   million households through nearly 6,000 branches and 
         23   ATMs.  Nationwide the new company will serve more 
         24   than 20 million consumers and will have 450,000 
         25   small business customers and more than 100 billion 
  0027
          1   dollars in assets under management.  
          2            When our wholesale banking capabilities are 
          3   combined, the results will be equally valuable for 
          4   commercial customers.  We're talking about a bank in 
          5   CNI lending in the top three, the number one bank in 
          6   commercial field, premier investment bank, top five 
          7   in cash management provider, the top tier leader in 
          8   private equity, a strong company based here in 
          9   Boston.  
         10            BankBoston's unique Latin America 
         11   franchise, formed more than 80 years ago, of the 
         12   commercial needs of New England merchants will 
         13   continue to put Boston on the world map, helping to 
         14   forge links between businesses and nations in our 
         15   hemisphere.  The new Fleet-Boston will be able to 
         16   leverage this connection even further.  
         17            Finally, Fleet-Boston will have the 
         18   resources that Terry also referenced to be a major 
         19   player in E-banking, leveraging, for example, 
         20   BankBoston's base of a half million on-line banking 
         21   customers and Fleet's quarter million electronic 
         22   sure trade customers, again assuring that Boston 
         23   will participate in this very important growth 
         24   industry. 
         25            In short, a local financial service 
  0028
          1   company, competitive across the country and around 
          2   the world, will be a valuable asset to individuals 
          3   and communities and an invaluable partner to New 
          4   England businesses seeking to operate in today's and 
          5   tomorrow's global economy.  
          6            But again, this is not about size alone.  
          7   It's ironic, just as we're on the verge of an 
          8   industry that will conduct more and more of its 
          9   business electronically, without walls and without 
         10   boundaries, without bricks and mortar, without paper 
         11   or passbooks.  Our determination also to be grounded 
         12   in our local communities is greater than ever.  
         13            For me, this merger would not be effective, 
         14   would not be right if we were only able to build a 
         15   powerful regional, national, global business, if we 
         16   were only a large and strong employer, and if we 
         17   left behind the communities that have nurtured both 
         18   companies for a few centuries.  As we are poised to 
         19   become one of the leading financial institutions, we 
         20   have also pledged to remain a local partner and one 
         21   that will -- he took all the time.  (Laughter)  I'm 
         22   not sure how the system works.   
         23            I want to emphasize we remain a local 
         24   partner, continuing the development of our 
         25   communities.  We look at community development very 
  0029
          1   broadly as a strategic -- as a business opportunity.  
          2   We see as part of it the access by minority and 
          3   women-owned businesses, to the purchasing power of 
          4   Fleet-Boston.  We intend to continue and strengthen 
          5   our minority vendor programs.  
          6            We see as part of community development the 
          7   support we offer employee volunteers.  Between Team 
          8   Fleet and Eagle Core almost 20,000 of our employees 
          9   devote 150,000 hours making our community stronger 
         10   and healthier.  We see as part of community 
         11   development the embracing of individuals of all 
         12   races, genders, sexual orientations, customers and 
         13   employees.  
         14            Diversity will be an integral part of the 
         15   management of Fleet-Boston reporting directly to me.  
         16   We will continue to add to the very strong record we 
         17   are trying to achieve.  
         18            Terry has been explicit about the intention 
         19   to proceed with the BankBoston model for community 
         20   investment and very complimentary about our record.  
         21   To say that I am proud of First Community Bank and 
         22   BankBoston Development Company is an understatement, 
         23   but it is very important that we will continue to 
         24   play a leadership role in our new company.  
         25            Therefore, I ask you all to look at these 
  0030
          1   pledges in light of the very strong community 
          2   leadership records of Fleet and BankBoston, and 
          3   driven by our shared New England values, operating 
          4   in a global economy, grounded in the local 
          5   community, Terry and I will be supported and aided 
          6   by the 25,000 employees who, like us and our 
          7   company, call this region home.  We will preserve 
          8   and enhance the best of our two approaches and 
          9   records.  We will commit our honor and we will honor 
         10   our commitments.  
         11            Two months ago I was privileged to 
         12   represent BankBoston at a White House ceremony where 
         13   we were given the Ron Brown award for corporate 
         14   leadership.  BankBoston was cited for its community 
         15   banking group which has successfully served the 
         16   urban population as an emerging market.  I was 
         17   joined on that day, as I have been joined throughout 
         18   this effort, by the woman who is most singly  
         19   responsible for the success of our community banking 
         20   efforts at BankBoston and who will become the leader 
         21   of Fleet-Boston's community banking investment 
         22   initiatives, a daughter of a community activist, a 
         23   product of the community, a 30-year veteran of 
         24   BankBoston and by friend, Gail Snowden. 
         25            MS. SNOWDEN:  Thank you, Chad, and thank 
  0031
          1   you to the Board for the opportunity to present our 
          2   viewpoints and vision for the new bank now taking 
          3   shape.  It's extremely gratifying to me to have 
          4   heard from both Terry and Chad on the strong 
          5   position that community investment and in particular 
          6   BankBoston's model of development will take in the 
          7   new entity.  
          8            Nine years ago BankBoston began to redefine 
          9   the mission and objectives of its retail business in 
         10   the inner city.  By taking a more holistic approach 
         11   to economic development, we acknowledged that 
         12   economic growth must evolve from job creation to 
         13   wealth creation if sustainable growth was to happen.  
         14   We knew we had to prove we were willing to take 
         15   risks and to truly invest in community growth in a 
         16   more direct way.  
         17            We have learned much along the way, 
         18   receiving national recognition for our efforts in 
         19   urban banking through First Community Bank and the 
         20   BankBoston Development Company, both of which will 
         21   become part of the new company.  
         22            Like BankBoston, Fleet has been a leader in 
         23   small business and mortgage lending, helping to 
         24   revitalize entire neighborhoods and create new 
         25   enterprises, particularly those owned by minorities 
  0032
          1   and women.  Continuing these records going forward, 
          2   Fleet-Boston Corp. intends to be the number one 
          3   small business bank in New England, maintaining its 
          4   strong ties to keep partnerships with organizations 
          5   such as the SBA.  
          6            We believe the key to our success has been 
          7   our commitment to strong partnerships in the 
          8   community, whether with individuals, community 
          9   groups, governments or private organizations.  They 
         10   provide us with essential ties to the fabric of the 
         11   community.  These relationships have helped Fleet 
         12   and BankBoston to be more responsive to the unique 
         13   needs of our diverse communities by providing the 
         14   customer focus that did not exist before.  
         15            Over these last few months I have joined 
         16   with my colleagues at both banks in listening to the 
         17   frank discussions that took place with 
         18   representatives from over 125 community 
         19   organizations throughout New England.  Our goal was 
         20   to gain maximum insight into the needs of emerging 
         21   low to moderate income markets and to develop a 
         22   comprehensive investment plan that was both business 
         23   minded and community minded.  These discussions have 
         24   underscored the tremendous gains that our banks have 
         25   made in helping to revitalize entire neighborhoods 
  0033
          1   within our New England communities such as Codman 
          2   Square and Egleston Square.  
          3            The key themes that surfaced provided the 
          4   framework for our community investment commitment.  
          5   The result is a 14.6 billion dollar commitment over 
          6   five years which incorporates the best of our banks' 
          7   programs while establishing a leadership role of 
          8   continuing to earn an outstanding CRA rating.  This 
          9   dollar commitment represents a continuation and in 
         10   most cases an enhancement of LMI lending activities 
         11   by Fleet and BankBoston when adjusted for divested 
         12   branches and deposits.  We view the plan as 
         13   responsive and affirmative and continuing to enhance 
         14   those programs that support wealth creation and 
         15   economic development.  
         16            In the past, particularly during merger 
         17   discussions, various banks have reached agreements 
         18   with community organizations that may have been too 
         19   narrowly focused with regard to issues or geography.  
         20   Fleet-Boston has chosen to create a broad-based plan 
         21   for its entire marketplace that effectively responds 
         22   to critical community issues and will offer 
         23   significant opportunities for multi-state 
         24   partnerships with organizations as committed as we 
         25   are to the revitalization of urban and rural areas.  
  0034
          1            I would now like to spend some time 
          2   outlining the five-year 14.6 billion dollar 
          3   strategy.  Because we believe entrepreneurs are the 
          4   engine for growth creation and job creation that 
          5   transform entire communities, over half of this 
          6   entire commitment, 17.5 billion, is earmarked for 
          7   the support of small business lending.  We will 
          8   continue our strong support of small business 
          9   development in LMI communities, with special 
         10   consideration given to minority and women-owned 
         11   businesses.  
         12            In addition, we will go beyond the 
         13   traditional role of lending to small businesses by 
         14   providing 100 million in equity investment over five 
         15   years to help new business development.  We also 
         16   foresee an enhanced SDA partnership in addition to 
         17   our conventional loan activity.  With affordable 
         18   housing in the forefront of community concerns, we 
         19   are committing four billion over the next five years 
         20   to provide additional options for low and moderate 
         21   income homebuyers in need of home purchase mortgages 
         22   and refinancing.  
         23            Additionally, it provides sufficient 
         24   product flexibility to continue our existing 
         25   mortgage program partnerships such as the soft 
  0035
          1   second mortgage program to first-time home buyers in 
          2   Massachusetts.  
          3            The bank will continue its leadership in 
          4   community development lending, including at a 
          5   minimum 1.5 billion in CRA-eligible loans in LMI 
          6   areas.  In addition, the bank will invest 500 
          7   million in low-income housing tax credit investments 
          8   in support of the development of much needed 
          9   affordable housing.  
         10            We will continue to meet basic consumer 
         11   borrowing needs with the commitment of one billion 
         12   for consumer lending in LMI areas.  
         13            Finally, the bank will expand its technical 
         14   assistance and support with the commitment of 15 
         15   million.  Interwoven throughout this commitment is 
         16   what I view as a precedent-setting partnership that 
         17   we are announcing between Fleet-Boston and Fannie 
         18   Mae over the next five years.  The 
         19   Fleet-Boston/Fannie Mae communities initiative will 
         20   commit much needed resources to home ownership and 
         21   affordable housing and is projected to create 
         22   affordable housing options for tens of thousands of 
         23   families in the communities we serve.  
         24            Affordable home ownership, loans to LMI 
         25   home borrowers through a variety of innovative and 
  0036
          1   flexible programs such as a new women head of 
          2   household mortgage initiative, affordable 
          3   multifamily rental housing, a comprehensive plan to 
          4   preserve and accelerate the production of affordable 
          5   rented housing units.  We heard this so many times 
          6   from community groups.  
          7            And finally, neighborhood revitalization.  
          8   Fleet-Boston and Fannie Mae will stimulate new 
          9   housing and community development activity through 
         10   an innovative, comprehensive, strategic neighborhood 
         11   investment initiative. 
         12            What I have presented is a framework of the 
         13   partnership with Fannie Mae, and we will be 
         14   announcing more details in the next month or so. 
         15            Accountability.  We see community 
         16   organizations as critical partners in implementing 
         17   our commitment for capital access, outreach and 
         18   education.  Key to this approach is the issue of 
         19   accountability, and we are prepared to be held 
         20   publicly accountable for meeting all the commitments 
         21   laid out today.  An oversight board comprised of 
         22   community leaders will be formed and will meet twice 
         23   a year to receive information and to give us 
         24   feedback.  A community investment subcommittee of 
         25   the Fleet-Boston board will meet regularly during 
  0037
          1   the year to monitor the corporation's accountability 
          2   for community initiatives.  And in addition, a 
          3   business line steering committee will meet regularly 
          4   to monitor business line performance against our 
          5   commitments and our goals.  
          6            In conclusion, I look upon this new 
          7   organization, Fleet-Boston, with the same enthusiasm 
          8   and excitement as when we undertook the challenge of 
          9   building a profitable business in New England's 
         10   underserved urban markets nine years ago.  We enter 
         11   our alliance with Fleet Financial Group with a 
         12   blueprint for success in this emerging market in 
         13   which everyone benefits:  Our shareholders, our 
         14   customers and the communities we serve.  
         15            My colleagues at BankBoston and I are 
         16   gratified by this opportunity that Terry and Chad 
         17   are giving us to continue our work within a larger, 
         18   stronger community.  I believe in their commitment 
         19   to community investment and neighborhood 
         20   revitalization and that's why I'm sitting here today 
         21   committed to realizing upon this initiative.  
         22            At this point I would like to pass the 
         23   microphone to my colleague, Agnes Bundy Scanlan, who 
         24   has been instrumental in developing and managing 
         25   Fleet's community development program since 1994 and 
  0038
          1   who has worked tirelessly over the past few months 
          2   in meeting with community groups to help develop 
          3   this community investment commitment. 
          4            MS. SCANLAN:  Thank you, Gail.  Good 
          5   morning.  I'm pleased to be here today speaking on 
          6   behalf of the Fleet-BankBoston merger.  Fleet and 
          7   BankBoston are committed to working toward improving 
          8   the quality of life and the overall vitality of our 
          9   communities.  I would like to reiterate the pledge 
         10   expressed  by Terry, Chad and Gail.  We stand 
         11   committed to continue to meet the needs of 
         12   communities we serve through a wide range of 
         13   financial services and products.  
         14            We enthusiastically embrace our role in 
         15   fostering job creation, promoting home ownership, 
         16   enhancing economic growth and providing education 
         17   and support to individuals and businesses in urban, 
         18   rural and suburban communities.  This is without 
         19   question the most rewarding part of my job.   
         20            Understandably there have been concerns 
         21   expressed about this merger in terms of its effect 
         22   upon communities, businesses, and consumers.  Terry, 
         23   Chad, Gail and I have addressed some of them here 
         24   and in other meetings with concerned parties.  
         25   Nonetheless, apprehension and misapprehensions 
  0039
          1   remain, fueled in part by incomplete and in some 
          2   instances incorrect information.  
          3            In fact, we have some very good stories to 
          4   tell which have not been noted to date.  Affordable 
          5   housing.  In our 125 community meetings, and indeed 
          6   in everyday conversations, it becomes clear that 
          7   affordable housing is of great importance to all of 
          8   us.  When Professor James Campen released his study 
          9   on mortgage lending, it garnered a great deal of 
         10   attention.  He noted that Fleet cut back on its 
         11   lending following the Shawmut merger and concluded 
         12   that bank mergers mean less mortgage lending for LMI 
         13   and minority borrowers.  
         14            Fleet did experience a decline in mortgage 
         15   lending overall.  It is important to note that Fleet 
         16   did not intentionally cut back on its loan volume or 
         17   cede market share willingly.  Rather, several 
         18   factors contributed to reductions in overall 
         19   mortgage lending, including increased competition 
         20   within the marketplaces, particularly from 
         21   non-banks, merger-related branch divestitures and 
         22   significant management turnover and operational 
         23   changes at Fleet Mortgage.  
         24            Despite these developments, Fleet has 
         25   remained the leader in affordable housing.  For the 
  0040
          1   six-state region cited in the study, Fleet held the 
          2   number one market share for home purchase loans to 
          3   LMI borrowers in 1995 and 1996, and held the number 
          4   two market share to these borrowers in 1997, 
          5   exceeding industry averages.  
          6            In Massachusetts, a primary area 
          7   highlighted in the Campen study, Fleet held the 
          8   number one market share for LMI black and Hispanic 
          9   borrowers for the period 1995 through 1997.  In this 
         10   regard, even though our combined bank will only be 
         11   65 percent of its predivestiture size in 
         12   Massachusetts, today we have announced a commitment 
         13   commensurate with 100 percent of our predivestiture 
         14   size for affordable housing lending in this state.  
         15            In the City of Boston Fleet also held the 
         16   number one market share for LMI and minority 
         17   borrowers for the three-year period 1995 through 
         18   1997.  I believe these statistics confirm our 
         19   commitment to LMI minority borrowers.  Fleet and 
         20   BankBoston are doing the heavy lifting here.  
         21            Perhaps we should consider the point that 
         22   as other lenders increase market share, they have an 
         23   obligation to increase their share of lending to 
         24   these traditionally underserved markets.  Even if 
         25   they do not have CRA requirements as the banks do, 
  0041
          1   the combined voices of community groups, opinion 
          2   leaders and the public generally can raise this 
          3   imperative.  
          4            Small business lending.  In the course of 
          5   our meetings we heard concerns about the 
          6   availability of credit to small business.  But I 
          7   think one should consider the fine record of both 
          8   companies in working with small businesses as an 
          9   indication of our commitment moving forward.  In 
         10   fact, the largest component of our commitment to 
         11   small businesses at 7.5 billion over five years, 
         12   coupled with technical assistance support, is large.  
         13   At Fleet we serve more than 320,000 small business 
         14   customers in eight states.  
         15            Today Fleet is the largest provider of 
         16   financial services to small businesses in New 
         17   England.  According to the latest industry data, as 
         18   of June 1998, Fleet is ranked 10th among bank 
         19   holding companies for small businesses.  We are a 
         20   leading SBA lender.  In 1997 Fleet was the top SBA 
         21   lender in New England with more than 70 million in 
         22   total SBA volume.  
         23            I have some more remarks that I would like 
         24   to submit for the record, but in deference to time 
         25   I'd like to submit my time and yield to Terry Murray 
  0042
          1   to close. 
          2            MR. MURRAY:  Thank you, Agnes.  And that 
          3   concludes our remarks.  We'll be happy to respond to 
          4   the panel. 
          5            PRESIDING OFFICER SMITH:  Thank you.  
          6   Questions from the panel? 
          7            MR. ALVAREZ:  I have a question.  There are 
          8   a number of commenters who have referred to the 
          9   study that Ms. Scanlan discussed, suggesting that 
         10   Fleet's lending in LMI areas in particular, in home 
         11   mortgage lending in particular, has declined after 
         12   each of the last two major mergers Fleet has been 
         13   involved in, and that has caused some folks to be 
         14   concerned that one plus one does not equal greater 
         15   than two in low and moderate income neighborhoods.  
         16            I understand that the program that you have 
         17   discussed, the CRA plan, is going forward.  I was 
         18   interested in how the 14.6 billion dollar plan 
         19   compares to the amount of lending that the two 
         20   organizations are doing now and whether there are 
         21   any special steps that Fleet proposes to take to 
         22   ensure that lending will not decline after this 
         23   merger if this is approved. 
         24            MS. SNOWDEN:  I'll take that one.  In terms 
         25   of how we got to the number, particularly on 
  0043
          1   affordable mortgage lending, we took a look at the 
          2   past three years, and the projected combined annual 
          3   average amount was 820 million dollars a year.  We 
          4   then took an 80 percent divestiture factor, which 
          5   would give you a number of 736 million.  
          6            However, our plan commits on an average 
          7   annual amount of 800 million.  So we feel that we 
          8   are maintaining the same level, and in fact this one 
          9   is an enhanced level.  How you make sure you meet 
         10   your goals, you have goals, you have tracking at the 
         11   line of business level.  You have the oversight 
         12   committee, you have the CRA Council that reports to 
         13   Chad.  And so we'll be monitoring this initiative, 
         14   as we do most business initiatives, to make sure 
         15   that we stay on track.
         16            PRESIDING OFFICER SMITH:  Other questions? 
         17            MR. KWAST:  I have a question regarding 
         18   proposed divestitures.  As I think Mr. Murray 
         19   pointed out, you are proposing to divest a large 
         20   amount of offices and dollars of deposits.  My 
         21   question is, when considering who to divest your 
         22   offices to, what are the major factors that you 
         23   consider in deciding who the winning bidders are.   
         24            MR. MURRAY:  Well, to a large degree 
         25   Justice has certain ground rules.  They are 
  0044
          1   obviously looking for a major new competitor in this 
          2   marketplace.  Subject to that, however, we've been 
          3   fortunate in that there's been a great deal of 
          4   interest in the pieces as well as the whole of the 
          5   divested package.  And we have received enormous 
          6   amounts of interest.  And I guess from an ideal 
          7   point of view we can address Justice's concerns in 
          8   terms of viable competitors as well as some of the 
          9   local concerns, and that is something the community 
         10   banks and local banks participated in these 
         11   purchases.  
         12            Over the next two or three weeks we 
         13   collectively will be looking at the various bids.  
         14   Obviously it is an auction, and price is a 
         15   consideration, but not the sole consideration.  And 
         16   I think it's a balance.  It's balancing factors 
         17   between community bank expansion possibilities as 
         18   well as satisfying Justice's issues of viable 
         19   competition.  
         20            The major divestiture is in the State of 
         21   Massachusetts, which is 8 to $9 billion of the 12 
         22   billion dollar package; the others being in Rhode 
         23   Island and Connecticut.  But there have been dozens 
         24   of bids on the packages. 
         25            PRESIDING OFFICER SMITH:  Other questions?  
  0045
          1   If not, thank you very much for coming this morning.  
          2   And we'll go on to panel number two.  
          3            Thank you very much.  
          4            (At this point there was a chant from some 
          5   members of the audience, saying "Shame on you")
          6            PRESIDING OFFICER SMITH:  We're going to 
          7   call on the panelists in the order in which they are 
          8   listed.  So we'll start with Mayor Menino. 
          9            MAYOR MENINO:  Thank you very much and 
         10   thank you for allowing me to testify this morning.  
         11   In my remarks I want to focus on the impact that the 
         12   proposed merger would have on my city and ask you to 
         13   consider that impact in your deliberations.  
         14            This merger comes at a time when the local 
         15   and national economies are on a roll.  The 
         16   consolidation of firms into larger institutions is 
         17   happening in many industries.  This evolution is not 
         18   only fueling the stock market, it's also changing 
         19   the way we do business and the way companies can 
         20   grow within a region and even across international 
         21   borders.  
         22            Boston's banks can't hide from this trend.  
         23   They must go out and compete in these expanding 
         24   markets like any others.  But the consolidation of 
         25   capital in this merger will take Fleet to a position 
  0046
          1   where the banking needs of ordinary citizens will 
          2   seem insignificant compared to the attraction of 
          3   foreign markets and bigger deals, including 
          4   additional mergers.  
          5            As fewer banks survive and grow into bigger 
          6   players on the national and international stage, the 
          7   fundamental question we face is this:  Who will care 
          8   whether a community grows or dies?  The number of 
          9   banks whose fates are tied to the fate of Boston is 
         10   shrinking.  The Bank of New England is gone.  
         11   Shawmut Bank is gone.  BayBank is gone.  With this 
         12   merger BankBoston will also be gone.  Gone, too, 
         13   will be more local jobs and BankBoston's spirit of 
         14   dedication to every segment of our community.  
         15            In banking, the idea of fair service to all 
         16   is a result of the Community Investment Act.  It was 
         17   written into law because Americans saw what happened 
         18   when banks ignored some of our neighborhoods and 
         19   wrote off credit-worthy neighborhoods.  The 
         20   Community Reinvestment Act has brought people on the 
         21   margins into the mainstream of American life.  
         22   Without it, Boston would not be a city of come-back 
         23   neighborhoods.  It would see fewer first-time home 
         24   buyers, more abandoned houses, and whole 
         25   neighborhoods rotting from disinvestment.  
  0047
          1            Take Blue Hill Avenue, for example.  For 
          2   years it was little more than a depressing 
          3   collection of vacant lots and boarded-up buildings.  
          4   Since I became mayor we've invested over $65 million 
          5   up and down the avenue.  By building new homes and 
          6   businesses, we're rebuilding a whole community.  And 
          7   soon we'll start construction on the Grove Hall 
          8   Mall.  And some people said that would never happen.  
          9   A new shopping center with a supermarket, a 
         10   drugstore, a Dunkin' Donuts and other shops.  
         11            Our partner on this deal is BankBoston.  We 
         12   ended up with BankBoston because they could handle 
         13   the financing.  The bank wants to do this deal.  
         14   Chad Gifford knew this was important to the city, so 
         15   he put a good team on it, and today we have a deal.  
         16            Some banks are better than others.  In 
         17   spite of generous ratings from regulators, Fleet has 
         18   a troubled lending history in our community and 
         19   Fleet's approach to this merger leads me to believe 
         20   it will adopt a take-it-or-leave-it approach to 
         21   lending in our neighborhoods.  That troubles me, and 
         22   it should trouble every business leader in Greater 
         23   Boston, because the health of a city sets the tone 
         24   for investing throughout the wider region.  
         25            Some big banks believe the Community 
  0048
          1   Reinvestment Act gets in the way of their growth 
          2   strategy.  They see it as a nuisance.  They have 
          3   enlisted the help of their friends in Congress to do 
          4   away with it, people like Senator Phil Gramm of 
          5   Texas, who is no friend of the people in America's 
          6   cities.  For years Phil Gramm has been telling 
          7   government to get out of the business of rebuilding 
          8   communities.  Now he's telling business to get out 
          9   of that business, too.  
         10            Here in Boston the two banks have told us 
         11   their merger would mean a 20 percent reduction in 
         12   combined lending to our community.  If you want to 
         13   know what happens to a community when lending 
         14   disappears, try to remember the conditions of our 
         15   neighborhoods in the early 1970s.  Or follow 
         16   President Clinton's trip across the country with 
         17   business leaders this week.  Whether in Boston or 
         18   East St. Louis or Los Angeles, one stubborn fact 
         19   remains the same:  Capitalism does not work in a 
         20   community when that community is denied access to 
         21   capital.  
         22            As the mayor of this city I am concerned by 
         23   any merger that would deny my capital city in favor 
         24   of expanding markets somewhere else.  I am concerned 
         25   about a reduction in home mortgage loans, a 
  0049
          1   reduction in community development loans and small 
          2   business loans, and I'm concerned that the new bank 
          3   will not act as if it's life depended on the health 
          4   of our neighborhoods.  
          5            I ask you, how can any bank call itself a 
          6   local bank with pride if the bank is less than fully 
          7   committed to the local economy?  
          8            I am sorry to say that I have yet to hear 
          9   why this merger is a forward step for my community.  
         10   So until the Federal Reserve Board can convince me 
         11   otherwise, I cannot offer the City of Boston's 
         12   support for this merger.  
         13            You as regulators hold great power over the 
         14   future of banking in America.  You hold great power 
         15   over the economy of our communities and you have a 
         16   responsibility to protect the public interest.  So I 
         17   respectfully request that you remember the interests 
         18   of my constituents whose banking needs rest upon 
         19   your shoulders while you deliberate and decide the 
         20   merits of this merger. 
         21            In closing, let me say, my office would be 
         22   happy to supply you with some of the facts of my 
         23   detailed statement.  Also -- let me just finish up.  
         24   This might be a good deal for the stockholders, but 
         25   I don't believe this is a good deal for the 
  0050
          1   stakeholders.  Thank you very much. 
          2            (Applause)
          3            PRESIDING OFFICER SMITH:  And we will not 
          4   exactly follow the order.  We'll go next to 
          5   Congressman Capuano. 
          6            CONGRESSMAN CAPUANO:  Thank you.  First of 
          7   all, I'd like to thank the Federal Reserve for 
          8   having this hearing because it wasn't on the 
          9   original schedule when this merger was announced, 
         10   and I know that the Federal Reserve listened to the 
         11   requests of many people in this community to have 
         12   this.  I also know you have a very long day ahead of 
         13   you and I respectfully send my regrets for that, but 
         14   my thanks for having me here nonetheless. 
         15            As each of you know, the Congressional 
         16   delegation of Massachusetts has sent several letters 
         17   on this matter to the Federal Reserve and to others.  
         18   We have another one in the record today that 
         19   basically reiterates what we have said in the past, 
         20   naming four points that we've tried to focus on.  
         21   The fact that we want our community banks to have a 
         22   fair opportunity to bid and then purchase a fair 
         23   portion of the divested parts of this merger if and 
         24   when it happens; that we want both the remaining 
         25   bank of this particular item and whoever wins the 
  0051
          1   divestitures to continue and to expand their 
          2   neighborhood investment.  
          3            We want the Federal Reserve to make sure 
          4   that all employees are fairly treated and honestly 
          5   treated, and, of course, we want local charities to 
          6   continue the relationship they've had with the banks 
          7   in the past.  That's what the delegation has said. 
          8            For myself, for the last four months as a 
          9   member of the banking community and a new member of 
         10   Congress I've actually worked a little harder on 
         11   this than most because I've had a lot of catching up 
         12   to do on these kinds of matters.  And when this 
         13   merger was announced, right from the beginning I 
         14   asked for several pieces of information -- I think 
         15   pretty easy pieces of information -- such as the 
         16   details of charitable giving, some statistics on low 
         17   and moderate income loans, things like that.  
         18            Since then we've had a study done by a 
         19   professor at UMass-Boston that's come out that's 
         20   raised some serious questions on the lending 
         21   practices of these institutions.  We've had comments 
         22   from a group called Inner City which has raised 
         23   serious questions.  We've had the bank itself come 
         24   out with a 14.6 billion dollar community investment 
         25   proposal that has virtually no detail to it.  
  0052
          1            Those are serious issues and I believe they 
          2   have been seriously presented.  However, not until 
          3   yesterday at three o'clock in the afternoon did any 
          4   representative from the bank have anything to say 
          5   about any of those matters.  
          6            Now, I'll tell you that I do think that 
          7   both Fleet and the Bank of Boston have done a good 
          8   job going out and listening and I do think it's 
          9   important to maintain a strong regional bank in 
         10   Boston.  I think that's fine.  And I congratulate 
         11   the banks for going out to listen.  But listening is 
         12   only one half of the equation.  The second half of 
         13   the equation is then responding to what you have 
         14   heard.  Not necessarily agreeing with it, not 
         15   necessarily disagreeing with it, but simply 
         16   responding.  Do you agree?  Don't you agree?  Let's 
         17   work this out.  There has been none of that until 
         18   three o'clock yesterday.  
         19            Today has been an extended period of time 
         20   for public comment.  I don't think that less than 24 
         21   hours for people to respond or to react to the 
         22   response is a fair amount of time.  I think it's an 
         23   inappropriate amount of time.  (Applause)  And I 
         24   think it could raise any number of questions.  I 
         25   know that this is a difficult merger.  I understand 
  0053
          1   that and I respect the fact that the bank has been 
          2   busy.  If that's the case, okay; great.  It also 
          3   raises potential questions that the bank is being 
          4   insensitive to community input.  If that's the case, 
          5   that's the worst possible scenario.  
          6            The whole reason we're doing this is to 
          7   make sure that the successful bidders and the merged 
          8   entity are responsive to community needs.  If there 
          9   wasn't a community component to that, we wouldn't be 
         10   here.  If it was simply banking, bottom-line 
         11   banking, you wouldn't do this, you wouldn't need our 
         12   input, we wouldn't have a whole lot to offer.  
         13            We're not bankers.  We're here representing 
         14   the community, and if the community is not listened 
         15   to, not necessarily agree with them on every point, 
         16   what have we done?  You're wasting your entire day.  
         17   I'm wasting an awful lot of time and most of the 
         18   people in this audience have wasted an awful lot of 
         19   time.  (Applause)  
         20            To my way of thinking, I want this merger 
         21   to end up in one plus one is greater than two.  I 
         22   really do.  Not just for the shareholders; also for 
         23   the communities and, as the mayor put it, for the 
         24   stakeholders.  That's why today the written 
         25   testimony that I've given, which is a little bit 
  0054
          1   more detailed than the verbal comments, I'm asking 
          2   for a couple of things:  
          3            If the Federal Reserve finds it in the 
          4   interest of the community, which I think it is 
          5   obviously, I ask that the Federal Reserve delay any 
          6   decision-making and extend the public comment period 
          7   of time to at least 30 days after these responses 
          8   have been given by the bank, because we need a fair 
          9   amount of time to see whether their responses are 
         10   fair or not fair, reasonable or not reasonable.  
         11   Absent that extension of time, then I have to 
         12   strongly oppose this merger at this time.  
         13   (Applause)  And I have to oppose it not because I 
         14   have made a final decision in my own mind as to 
         15   whether this merger serves the needs of the 
         16   community, but because I haven't been allowed the 
         17   time to do that.  So I respectfully ask the Federal 
         18   Reserve to extend the period of time to 30 days 
         19   after receipt of responses by the banks, and if they 
         20   can't do that, then I have to oppose this merger.  
         21   Thank you.  
         22            (Applause)
         23            PRESIDING OFFICER SMITH:  Senator 
         24   Wilkerson.
         25            SENATOR WILKERSON:  Good morning to you, 
  0055
          1   Presiding Officer, members of the Board.  For the 
          2   record, my name is Dianne Wilkerson and I currently 
          3   serve as State Senator in Massachusetts and I have 
          4   done so for seven years.  Prior to that I practiced 
          5   law in Massachusetts and was a member of the 
          6   Community Investment Coalition which negotiated with 
          7   Fleet Bank in 1990 when it took over the Bank of New 
          8   England.  The CIC also negotiated again in 1994 the 
          9   Shawmut-Fleet merger, and I represented as a lawyer 
         10   over 600 individuals who were victims of the 
         11   infamous second mortgage scam, one of the most 
         12   devastating financial scandals that destabilized 
         13   both the Boston and Springfield Afro-American home 
         14   ownership communities.  
         15            I also was a member of the team that 
         16   negotiated the second mortgage scam settlement with 
         17   BayBank, the former BayBank and the former Shawmut 
         18   Bank.  And I have previously testified before this 
         19   Board where I have raised serious issues and 
         20   concerns to this body.  
         21            However, I have never testified in 
         22   opposition to a merger until now, and I do so with 
         23   sadness and disappointment.  (Applause)  Since April 
         24   of this year I have served as the convener of what 
         25   is called the Community Advisory Committee for the 
  0056
          1   Fleet Bank-BankBoston merger.  The committee is a 
          2   40-plus member group comprised of racial, gender and 
          3   professional, university, government and religious 
          4   areas from across the Commonwealth who came together 
          5   to solicit comments and concerns from interested and 
          6   impacted parties across the state.  The committee 
          7   hosted a statewide town meeting in May.  Over 200 
          8   persons turned out to offer testimony, and we have 
          9   provided the videotape of that meeting to the banks 
         10   and to this Board.  
         11            The committee met with members of our 
         12   Congressional delegation.  We met with officials 
         13   from the Department of Justice Antitrust Division, 
         14   the Federal Reserve Bank of Boston, the Attorney 
         15   General of the Commonwealth of Massachusetts, and 
         16   the Massachusetts Division of Banks.  We've had the 
         17   unprecedented support and collegiality from our 
         18   entire Congressional delegation from the mayor of 
         19   our City of Boston and it's never happened before, 
         20   and I think that that unified position ought to tell 
         21   you something, because this is different. 
         22            We also met with the bank principals early 
         23   in June and at that meeting we transmitted to them a 
         24   lengthy written document in addition to other 
         25   information that the committee had gathered.  It was 
  0057
          1   our hope and expectation that those concerns would 
          2   be taken into account as the proposal was developed.  
          3   The committee waited for some time to offer public 
          4   comment because we were optimistic that the 
          5   committee would be able to engage in a productive 
          6   dialogue with bank principals to ensure that the 
          7   banking needs and the needs of the Massachusetts 
          8   communities, in particular women and people of color 
          9   in low and moderate income communities would be met.  
         10   I'm sorry to say that that June 4th communication 
         11   and the detailed concerns and issues that have been 
         12   raised have never had the courtesy of a response.  
         13            On June 24th we received the bank's 
         14   proposal and have spent a considerable amount of 
         15   energy reviewing this plan.  In sum, the proposal 
         16   does not meet the regulatory standards that the 
         17   Federal Reserve Bank must have satisfied in order to 
         18   approve this merger application.  There is much that 
         19   I could offer, but I will focus my testimony on two 
         20   pieces of the criteria of review for this Board 
         21   under the Bank Holding Company Act.  That is, 
         22   competition and convenience and needs of the 
         23   community.  
         24            As to competition, among other things, this 
         25   application would involve the largest branch 
  0058
          1   divestiture in the history of the United States.  
          2   However, even if a large bank were to purchase all 
          3   the branches, the most it could represent would be 
          4   six percent of the Massachusetts market share.  The 
          5   merged institution would be at least 30 percent, 
          6   leaving its next closest competitor about five times 
          7   smaller, hardly an encouraging picture for 
          8   competition.  
          9            The divestment discussion to date has 
         10   ignored an important and serious issue for the 
         11   communities which I represent, and that is that many 
         12   of the branches on the divestment list were cited 
         13   specifically to fill a void in urban and rural 
         14   markets which until the last five years were 
         15   woefully underserved by banks and saturated with 
         16   check-cashing stores.  The citing of many of the 
         17   branches on the sale list were negotiated in the 
         18   aftermath of the last two mergers.  Several of the 
         19   branches were cited based on an acknowledgment and a 
         20   determination that the convenience and needs of a 
         21   certain segment of our community were not being met.  
         22            Special care must be taken by this Board to 
         23   ensure that we don't go backwards.  It would be our 
         24   position that no grant cited in an urban market to 
         25   fill a void should be sold to anyone who does not 
  0059
          1   intend at least to keep the branch open.  Who gets 
          2   these branches is also of critical importance to us.  
          3   We have been fortunate in the Greater Boston 
          4   community of color to have a bank that is certified 
          5   with the United States Treasury as the only bank 
          6   community development finance institution in the 
          7   state and whose focus market is urban, the urban and 
          8   LMI communities, and especially people of color, 
          9   African-American, Latino.  
         10            Local and community banks should be 
         11   strengthened by this merger, not weakened.  You must 
         12   pay special attention to the Boston Bank of Commerce 
         13   and the market that they serve.  
         14            Lastly, much has been made about the 
         15   expectation of the applicant banks that there would 
         16   be competition in the market to pick up market share 
         17   in areas where the applicant will decrease lending 
         18   and spending; for example, in mortgage lending.  It 
         19   is our contention that there is simply no basis for 
         20   such an assumption, and in fact history tells us 
         21   different.  With the slim pickings to be left in the 
         22   bank market for mortgage seekers, there is no 
         23   rational expectation that the purchasing bank or the 
         24   remaining Massachusetts banks soon to be but one, if 
         25   the next merger is approved, could pick up the slack 
  0060
          1   with the merged bank to continue the double-digit 
          2   decreases in mortgages that have been made to 
          3   African-Americans and Latinos that we have been 
          4   sustaining every year for the past four years.  
          5            Oddly enough, the biggest hits have come 
          6   post merger of BankBoston and BayBank and even 
          7   bigger decreases in the post Fleet-Shawmut Bank 
          8   merger, and unless the Federal Reserve takes special 
          9   consideration of the need to ensure contingent 
         10   competition for the low and moderate income market, 
         11   there will be little or none available.  
         12            And please note that we do not consider 
         13   second-mortgage companies charging 20-plus percent 
         14   interest competition for the LMI and minority income 
         15   market.  
         16            I know that Professor Campen is going to be 
         17   testifying later, but I think that the analysis that 
         18   he has done is uncontroverted and would hope that 
         19   this Board would take some special note to look at 
         20   those numbers, and not only the numbers for Boston, 
         21   but for the Commonwealth of Massachusetts as a 
         22   whole.  The loans to black borrowers decreased 52 
         23   percent.  From 1997, 1998, the loan to 
         24   Latin-American, Latino borrowers decreased 49 
         25   percent and the loan to LMI borrowers decreased by 
  0061
          1   fifty percent as a result of both the BayBank- 
          2   BankBoston merger and the Fleet-Shawmut merger.  And 
          3   we accept this concept that there would be some 
          4   decrease, but the double-digit decreases that we 
          5   have sustained in these two particular communities 
          6   are irrational, inexplicable, and can only be 
          7   explained by racial factors.  And even the 
          8   Massachusetts Banking Council has supported that 
          9   position.  
         10            This Federal Reserve did a study which set 
         11   off a whole litany of similar studies across this 
         12   country, and I think that it's important to note 
         13   that the Federal Reserve Bank of Boston led the way 
         14   nationally on what became a higher standard and 
         15   reported for tons of data.  
         16            Given what we understand to be the standard 
         17   of review for the Federal Reserve in assessing 
         18   merger applications, we believe in order for the 
         19   Federal Reserve to recommend approval of this 
         20   merger, the bank would have to find that the bank's 
         21   proposal of June 24th which provides for a 14.6 
         22   billion dollar commitment for six states over five 
         23   years meets the convenience and needs of the 
         24   community, although the figure represents less 
         25   resources from the combined bank than the two banks 
  0062
          1   provided separately in 1998.  
          2            For the record, I never expected one plus 
          3   one to equal greater than two.  I was prepared to 
          4   declare victory of one plus one equal to one and a 
          5   half.  It doesn't.  Apparently the comments from 
          6   Fleet-BankBoston suggest even they acknowledge that 
          7   the formula has changed.  On July 1st there were two 
          8   statements issued that said, one, it was never our 
          9   intention when we made that statement in March to 
         10   suggest that between us we would be greater than the 
         11   two.  What we really meant was that the divestiture 
         12   bank would be responsible with us and we would hold 
         13   them accountable to the community.  
         14            Also, this proposal represents 80 percent 
         15   of what we have been doing because we are divesting 
         16   20 percent of our branches, so we're going to be 
         17   smaller.  In some categories it's more than 80 
         18   percent.  We haven't found them yet.  
         19            Various members of the committee have run 
         20   the numbers in different variations and we all keep 
         21   getting the same results.  The numbers simply don't 
         22   support the bank's representation of this equaling 
         23   even 80 percent, the current activity, let alone 
         24   100.  
         25            Meeting the needs of the convenience and 
  0063
          1   needs of the community is not just about CRA.  One 
          2   of the best indicators of future performance is past 
          3   history.  That being the measure, the Federal 
          4   Reserve Bank must look very carefully not only at 
          5   the recent data it studied on the bank's 
          6   performance, but also on the compliance or lack 
          7   thereof to prior commitments and agreements.  The 
          8   history is substantial.  I have included some 
          9   information that attests to this history, which we 
         10   will submit to you for the record, including the 
         11   committee's June 4th letter to the bank, which never 
         12   received the courtesy of a response.  
         13            We believe there's at least a segment of 
         14   the community; namely, the LMI urban and rural 
         15   communities and women whose needs are not being 
         16   adequately served.  There is a fear that with 
         17   another merger history suggests these communities 
         18   will sustain yet another decrease. 
         19            PRESIDING OFFICER SMITH:  Thank you very 
         20   much, and we'll be glad to have your full statement 
         21   for the record.
         22            SENATOR WILKERSON:  If I could end by 
         23   making a request to you, as the Congressman and the 
         24   Mayor have done, and that would be that you would 
         25   use your regulatory powers to do the right thing by 
  0064
          1   the communities who depend on the regulatory 
          2   authority for protection.  Whatever this proposal 
          3   is, it's not complete.  Even the bank principals 
          4   referred to it yesterday afternoon as a work in 
          5   progress.  You can say no.  You can say go back to 
          6   the drawing board.  You can say you need more 
          7   information.  You can say to the banks, respond to 
          8   the questions that have been asked.  But whatever 
          9   you say, don't say that this is enough to meet the 
         10   standard, because it's not, and the community has 
         11   nowhere else to go but to you. 
         12            PRESIDING OFFICER SMITH:  Thank you very 
         13   much.  (Applause)   Now we have Ms. Boone on behalf 
         14   of Senator Kerry.  
         15            MS. BOONE:  My name is Jeanette Boone, and 
         16   I currently serve as senior issues manager in the 
         17   Boston office of Senator John Kerry.  On behalf of 
         18   Senator John Kerry I want to thank you for the 
         19   opportunity to express the Senator's views on the 
         20   Fleet-BankBoston merger.  While Senator Kerry is 
         21   unable to give this testimony in person, I want to 
         22   thank you for the opportunity to place his full 
         23   testimony in the record today.  
         24            As a member of the Senate Banking 
         25   Committee, I have witnessed an unprecedented amount 
  0065
          1   of consolidation in the banking and financial 
          2   services industry.  The Fleet-BankBoston merger is 
          3   further proof that the continued consolidation of 
          4   financial services markets is one of the 
          5   inevitabilities of the new global economy.  
          6            Today there are 30 percent fewer banks in 
          7   the United States than there were just 10 years ago.  
          8   Our banks are competing beyond city limits and 
          9   neighborhood borders, competing against banks across 
         10   the country and literally across the world.  To do 
         11   so effectively they must have the strength, the 
         12   market share and the ability to deliver high-quality 
         13   service.  
         14            This proposed merger will make the planned 
         15   Fleet-Boston Corporation the eighth largest bank in 
         16   the country and one of the most significant 
         17   financial presence in New England.  I believe it is 
         18   imperative to maintain a strong and robust financial 
         19   services industry based in New England.  To this 
         20   end, it is critical that we take the appropriate 
         21   steps to ensure that Boston remains a hub of 
         22   financial services in the new century and that New 
         23   England-based banks will continue to be available to 
         24   depositors in New England.  
         25            We must move forward in that process in a 
  0066
          1   careful and measured way with government, business, 
          2   and community leaders working together to ensure 
          3   that high standards of customer service and 
          4   corporate community engagement are maintained.  
          5            Corporate citizenship should be a part of a 
          6   redefined bottom line in banking.  Everyone 
          7   understands the importance of capital in developing 
          8   our low-income neighborhoods.  Access to credit, 
          9   along with education, healthcare and decent housing, 
         10   is one of the most important tools working Americans 
         11   need to compete successfully in this country.  
         12            Massachusetts banks, large and small, have 
         13   the responsibility, the very real responsibility of 
         14   providing access to capital to our underserved 
         15   communities.  They are integral partners in our 
         16   effort to lead the transition to a new economy where 
         17   no one is left behind.  Through the Community 
         18   Reinvestment Act, Congress set standards for the 
         19   private sector in building an economy in which we 
         20   can all participate.  CRA has been extremely 
         21   successful in Massachusetts where financial 
         22   institutions have made more than 1.6 billion in 
         23   commitments to assist low-income neighborhoods.  
         24   It's making a difference in Boston's inner city 
         25   neighborhoods from Roxbury and Jamaica Plain to the 
  0067
          1   South End and has increased home ownership, 
          2   affordable housing development and minority small- 
          3   business lending across Massachusetts.  
          4            However, even at this time of record 
          5   economic growth, there is much work left to be done.  
          6   The Boston Federal Reserve showed conclusively that 
          7   African-Americans get turned down on mortgage 
          8   applications 1.6 times more often than whites, even 
          9   after taking into account many economic, income and 
         10   creditworthiness differences.  
         11            More than 35 million Americans still live 
         12   in poverty.  Almost one in five children lives in 
         13   poverty.  We must continue to expand the winner's 
         14   circle to empower every community to participate in 
         15   this economic expansion.  We must not allow any 
         16   community to be denied access to credit or new 
         17   banking facilities and services.  It is with these 
         18   principles in mind that together with the entire 
         19   Mass. Congressional delegation I signed a letter to 
         20   the new Fleet-Boston Corporation to stress the 
         21   importance of maintaining a vigorous community 
         22   reinvestment effort.  
         23            I am pleased that the new Fleet-Boston 
         24   Corporation has begun a dialogue with the major 
         25   organizations in Massachusetts that are dedicated to 
  0068
          1   housing and community reinvestment.  I am hopeful 
          2   that this dialogue will continue and that this 
          3   merger will result in progress toward the goals of 
          4   the Community Reinvestment Act and not an 
          5   opportunity to pass this responsibility to others.  
          6            I have also sent a letter with Senator 
          7   Kennedy to Assistant Attorney General Joel Klein 
          8   requesting that the Justice Department consider 
          9   allowing a small portion of the new Fleet-Boston 
         10   Corporation's assets to be sold to a Massachusetts 
         11   minority-owned community development financial 
         12   institution that has been providing access to 
         13   capital to many of our low-income neighborhoods and 
         14   working families.  With your approval I would like 
         15   to make both letters part of the record.  
         16            We have other responsibilities as well, 
         17   particularly the responsibility of meeting the 
         18   immediate challenges of work force dislocations 
         19   caused by this merger.  Any time two large firms are 
         20   combined, restructuring can be expected.  Layoffs 
         21   seem to be an inevitability in the reshuffling to 
         22   maximize cost efficiencies.  The Boston Globe has 
         23   estimated we expect to see the loss of 4,000 to 
         24   5,000 jobs as a result of this latest decision.  
         25   Every effort must be taken to minimize job loss and 
  0069
          1   provide sufficient retraining and job placement 
          2   assistance to workers displaced by this decision.  
          3            I believe the best way to minimize the 
          4   anticipated job loss resulting from this merger is 
          5   to see that the required divested deposits, branches 
          6   and ATMs of the Fleet-Boston Corporation are sold to 
          7   banks based in New England.  Back in April I wrote 
          8   to Assistant Attorney General Joel Klein to express 
          9   my opposition to any decision to sell all divested 
         10   funds to a single financial institution based 
         11   outside of Massachusetts.  Any divestiture related 
         12   to this merger must encourage local competition and 
         13   expand consumer choice.  
         14            In that letter I also asked that every bank 
         15   in Massachusetts be given the opportunity to bid on 
         16   the assets that the merged banks will be required to 
         17   divest.  I am pleased that the Justice Department 
         18   has taken my advice and will not insist that all 
         19   assets be acquired by a single buyer, so long as 
         20   there is a buyer in the mix that will preserve 
         21   competitive conditions in middle-market lending.  
         22            I am hopeful that the new Fleet-Boston 
         23   Corporation will seriously consider any competitive 
         24   bids from all New England-based banks.  Small, 
         25   medium sized and independent banks have been an 
  0070
          1   important source for financial services to small 
          2   businesses and low-income communities in 
          3   Massachusetts.  This will also help ensure that 
          4   Boston remains a hub of financial services in the 
          5   next century and that Boston-based banks will 
          6   continue to be available to depositors in New 
          7   England.  
          8            Finally, it is the best way to minimize the 
          9   job loss related to the merger.  Over the last years 
         10   in the Senate Banking Committee I have come to 
         11   realize that economic change, particularly in the 
         12   financial service industry, is an inevitability that 
         13   must be wisely managed.  We cannot lull ourselves 
         14   into believing that we are powerless to shape the 
         15   contours of this new economy.  We know the New 
         16   England banking industry can provide economic 
         17   leadership, but we also expect and demand that our 
         18   banks demonstrate leadership in customer service and 
         19   corporate citizenship as well.  
         20            I know that from our efforts on the Banking 
         21   Committee to your work here, we will be watching to 
         22   ensure that those goals are merged into one unifying 
         23   vision of banking in New England.  
         24            Over the past several months I have worked 
         25   with the Community Advisory Committee and a large 
  0071
          1   number of groups involved with housing and economic 
          2   development from across Massachusetts.  It is my 
          3   strong hope that you will listen carefully to the 
          4   testimony that representatives from these groups 
          5   will be making today and give serious consideration 
          6   to the level of need in the community.  This merger 
          7   cannot deal a devastating blow to underserved 
          8   communities by undercutting the current programs by 
          9   BankBoston and Fleet, especially those in the areas 
         10   of small business lending, affordable housing and 
         11   mortgage lending to low and moderate income 
         12   homeowners, community development and consumer 
         13   lending and equity investment and technical 
         14   assistance and support.  
         15            I urge you to weigh and evaluate this 
         16   testimony as you reach decisions regarding this 
         17   proposed merger.  Ultimately it will be our 
         18   responsibility to ensure that this process moves 
         19   forward with a fair and competitive merger and 
         20   divestiture process that encourages local 
         21   competition and investment while expanding consumer 
         22   choice. 
         23            PRESIDING OFFICER SMITH:  Thank you very 
         24   much, Ms. Boone.  We'll take it all and put it all 
         25   into the record. 
  0072
          1            Mr. Ferguson on behalf of Congressman 
          2   Kennedy.
          3            MR. FERGUSON:  Thank you, Madam Presiding 
          4   Officer and members of the Board.  For the record my 
          5   name is Larry Ferguson.  I'm the District Director 
          6   for Congressman Patrick Kennedy of Rhode Island, and 
          7   I'm here today on his behalf.
          8            Congressman Kennedy has a strong interest 
          9   in the financial industry of New England and most 
         10   notably his concern that integrity and competition 
         11   is upheld in the everchanging marketplace.  He feels 
         12   strongly that the upcoming merger of Fleet Bank and 
         13   BankBoston will uphold the goals of integrity and 
         14   consumer choice through competition.  
         15            What I would like to do now is to read into 
         16   the record a letter that he sent to the Board dated 
         17   June 29th.  "Dear Mr. Johnson:  I write in support 
         18   of the proposed merger between Fleet Financial Group 
         19   and BankBoston and urge that the Board move 
         20   expeditiously to approve the merger.  To comply with 
         21   the requisite regulatory and antitrust aspect of 
         22   this transaction, the two institutions have done an 
         23   excellent job in reaching out to a large number of 
         24   community-based organizations throughout its market 
         25   area.  They have also reached out to elected 
  0073
          1   officials on the state and local level and those of 
          2   us in Congress.  As a consequence I believe that an 
          3   effective job has been done in explaining the 
          4   rational behind the merger, the plans for 
          5   restructuring the combined organizations in a most 
          6   efficient and effective way possible and in 
          7   anticipating and dealing with the impact of the 
          8   merger on customers of the institutions and the 
          9   communities impacted.  
         10            I am very pleased to learn that an issue of 
         11   major concern to me that local and regional 
         12   institutions be allowed to bid on some or all of the 
         13   assets being divested was clarified recently by the 
         14   Department of Justice.  Furthermore, it is 
         15   reassuring to learn Fleet and BankBoston will soon 
         16   announce a major community reinvestment program 
         17   valued at more than fourteen million dollars over 
         18   the next five years.  This plan will be designed to 
         19   deal with affordable housing, small business 
         20   lending, urban renewal and consumer education 
         21   programming.  
         22            I believe that the successful bidders on 
         23   the Fleet and BankBoston branches to be divested 
         24   will provide effective competition and enhanced 
         25   choices for consumers.  I therefore urge the Board 
  0074
          1   to approve this merger which should produce both 
          2   substantial short- and long-term public benefits.  
          3   Sincerely, Patrick Kennedy, member of Congress." 
          4            Again, I want to thank you for allowing me 
          5   the opportunity to submit this letter for the record 
          6   and allowing me to testify here today.
          7            PRESIDING OFFICER SMITH:  Thank you very 
          8   much.  Questions from the panel? 
          9            MS. BROWNE:  I have a question for Mayor 
         10   Menino.  You expressed some deep concern about the 
         11   loss of BankBoston.  Perhaps you might elaborate a 
         12   little bit more about what makes BankBoston special 
         13   from your perspective, what distinguishes it perhaps 
         14   from other institutions.  
         15            MAYOR MENINO:  Well, my dealings in the 
         16   last six years with BankBoston have been on a 
         17   continual basis. We had an issue in the 
         18   neighborhoods that we developed a neighborhood or 
         19   needed money for housing, they were there.  They 
         20   were the first ones out willing to work with us to 
         21   fashion different programs to our needs, and they 
         22   were very helpful to what we did on the 
         23   revitalization of a lot of the neighborhoods of the 
         24   City of Boston. 
         25            MR. KWAST:  I have a question for Mayor 
  0075
          1   Menino and Senator Wilkerson.  Could you explain a 
          2   little bit more whether you think a bank 
          3   headquartered out of Boston could or could not enter 
          4   the Boston market and become an effective competitor 
          5   for the banks that are already in Boston? 
          6            SENATOR WILKERSON:  I don't believe I ever 
          7   said I didn't believe that they could.  I suggested 
          8   that if a large bank bought all the branches, the 
          9   best they could do is 6 percent of the market and 
         10   that I don't consider that competition in the 
         11   literal sense of the word because this resulting 
         12   merged bank would be 30 percent, and they're going 
         13   to be the eighth largest in the country, not just in 
         14   Massachusetts.  So it depends on what your 
         15   definition of "competition" is.  
         16            Our concern is that there will be no one 
         17   competing for the business of my constituents unless 
         18   this Board takes a special look at that and looks at 
         19   banks who have had track records in doing business 
         20   and believe that our communities are about business.  
         21   It's not about charity, and that's a very -- it's an 
         22   offensive discussion.  We always get to that.  We're 
         23   not asking for people to give us money, you know.  
         24   This is about mortgages.  This is about if I present 
         25   the same kind of indicators as everyone else, that I 
  0076
          1   shouldn't be denied.  And the records are just 
          2   overwhelmingly supportive of the notion that that's 
          3   what's happening, and we don't think there's any 
          4   other competition outside of large banks like this 
          5   that are going to be picking up that market unless 
          6   you take that into consideration and are looking at 
          7   our small and local banks who see us as business and 
          8   are making money in ways.  
          9            So if you just talk about selling to a big 
         10   bank, we don't think that that particular sector and 
         11   segment of our community's banking needs are going 
         12   to be met.  But I have no opposition to an outside 
         13   bank.  I actually for the record also want to say, I 
         14   think we'd be better off having a bank that -- you 
         15   know, I want to keep Fleet-BankBoston here.  We're 
         16   not opposed to that.  Given the choice, I'd rather 
         17   have a Massachusetts headquartered bank.  But that 
         18   doesn't mean I don't then get to raise questions 
         19   about this proposal and the plan that they put on 
         20   the table, because I don't think it's going to 
         21   satisfy what I understand to be your regulatory 
         22   standards in its present form.  We could get there 
         23   with your help, but we're not there. 
         24            MAYOR MENINO:  I agree with the Senator on 
         25   the fact that Fleet-BankBoston merged.  No big 
  0077
          1   problem.  But what's the commitment?  What's the 
          2   future?  We can't talk about the past.  I think 
          3   we're talking about the past.  I'm talking about the 
          4   future.  When this merger happens, what does the 
          5   future look like for the community that I represent 
          6   as Mayor of Boston, Senator Wilkerson, Congressman 
          7   Capuano.  And sometimes, I'll tell you, having a 
          8   homegrown institution headquarters doesn't mean a 
          9   lot to you, but sometimes a foreign bank who might 
         10   have an office or an operation in the city will do 
         11   more for you.  I have several world headquarters in 
         12   our city, and I get more out of some other 
         13   corporations that aren't home based.  
         14            So it's the attitude, and it's the attitude 
         15   of the folks.  Do they really want to get involved 
         16   in the community or are they saying we're Boston 
         17   based.  You have to love us.  We don't have to love 
         18   you.  We have to tolerate you, but you have to love 
         19   us.
         20            CONGRESSMAN CAPUANO:  I want to make it 
         21   clear that the delegation as a whole has opposed 
         22   bringing in someone from the outside.  We feel that 
         23   bank competition is good.  We understand what the 
         24   general goal is, but bank competition doesn't have 
         25   to be from the outside.  There has been nothing that 
  0078
          1   has stopped an outside bank from coming in for 
          2   several years now.  You know as well as I do -- in 
          3   fact, better than I do -- Citicorp already had 
          4   several hundred people in Boston for years, for 
          5   years.  It's not new.  Most of the large banks do 
          6   business in Boston right now.  Right now.  It's not 
          7   new.  Nothing could stop them at all -- well, not 
          8   nothing.  You could.  But theoretically you wouldn't 
          9   stop them from buying small branches today over the 
         10   last several years.  
         11            That's not the issue.  The issue is what do 
         12   you want to do with the divested branches if this 
         13   merger is allowed now, and our argument has been, 
         14   build from the inside.  Help your own family to get 
         15   stronger as opposed to giving it away to the 
         16   outside.  The outside is going to come in.  There's 
         17   nobody here trying to create a Chinese wall along 
         18   the borders of New England.  They're here now.  They 
         19   will continue to grow.  When they grow, where's the 
         20   competition going to be?  
         21            And I just want to go back historically.  
         22   It strikes me that many of you were probably around 
         23   the last time, well before Tom Menino was mayor, 
         24   when Boston was in serious trouble back in the late 
         25   '70s.  No bank in the world should have loaned them 
  0079
          1   a nickel, but the Bank of Boston did because they 
          2   understood the benefits of having a strong City of 
          3   Boston instead of having the City of Boston go 
          4   bankrupt.  That is the benefit of a regional -- 
          5   strong, locally based regional bank.  And that's 
          6   what we're trying to keep and that's what we're 
          7   trying to grow.  (Applause)
          8            PRESIDING OFFICER SMITH:  Thank you very 
          9   much.  We'll go on to Panel Three.  We will start 
         10   with Mr. Reilly. 
         11            MR. REILLY:  Good morning.  My name is Tom 
         12   Reilly.  I'm the Attorney General for Massachusetts.  
         13   I want to thank you for the opportunity to offer 
         14   comments to this panel today on the proposed merger.  
         15   I know you have a long day ahead of you and I will 
         16   certainly do my best to not make that day any 
         17   longer.  
         18            There are a number of important issues that 
         19   you have to consider.  We've heard a lot about CRA 
         20   issues.  They certainly are important.  I have 
         21   submitted a letter, and I would ask with your 
         22   permission on those issues to have that letter be 
         23   made part of the record.  
         24            I would like to focus my attention and my 
         25   comments on competition, the need to replace the 
  0080
          1   competition that will be caused by this merger.  
          2            By way of background, my office has done an 
          3   extensive investigation that is not yet complete on 
          4   this proposed merger.  We've done it along with the 
          5   Department of Justice.  We've administered several 
          6   investigative demands, market surveys, retained the 
          7   services of a respected economist, Dr. Kalamaris, 
          8   from Columbia University.  We've conducted scores of 
          9   interviews with all the affected communities and 
         10   businesses and people that are involved in this 
         11   process.  Now, that investigation, as I said, is 
         12   still ongoing, but we have identified certain 
         13   problems and certain major concerns that I would 
         14   like to share with you today.  
         15            First, as you well know, this is 
         16   unprecedented in terms of this merger.  The one and 
         17   two major players for key sectors of our economy are 
         18   merging, and the key sector I want to focus on today 
         19   is the middle market.  And that creates problems 
         20   whenever that competition is lost.  
         21            Secondly, this merger has national 
         22   implications, because there are other markets 
         23   throughout this country that are looking at this in 
         24   order to determine and foresee what the rules are 
         25   going to be.  So I think this is important that we 
  0081