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Public Meeting Transcripts

Public Meeting Regarding NationsBank and BankAmerica

Thursday, July 9, 1998

Transcript of Panel One


         1            MS. SMITH:  Thank you very much for your

         2   presentation and we will move on to the first panel.

         3            MS. ORR-SMITH:  Madam Chairman, I'd like to

         4   address this letter to Mr. McColl and Mr. Coulter

         5   requesting a meeting with some of the protestors to

         6   discuss the specific issues raised.  Thank you.

         7            MS. SMITH:  I think the first panel is mostly up

         8   but if there's anyone who hasn't made it up.  And if you

         9   will just introduce yourselves to the audience as you are

        10   seated and let's start with the person on the extreme

        11   right.

        12            MR. MARTIN:  Good morning, my name is DeWayne

        13   Martin, I'm Chief of Staff for the City of Atlanta,

        14   Georgia.

        15            MS. BROOKS:  Did you want us to introduce

        16   ourselves?

        17            MS. SMITH:  No, please, just continue to speak.

        18            MR. MARTIN:  Thank you.  Members of the panel,

        19   I'm DeWayne Martin, Chief of Staff to Mayor Bill Campbell.

        20            MS. SMITH:  Can you pull the mike closer?

        21            MR. MARTIN:  Mayor Campbell regrets that he's

        22   unable to be here today but I have come on behalf of the

        23   City of Atlanta because we believe that the issue before

        24   this panel is very important.

        25            Seven years ago Atlanta, Georgia was in the same

        26   place San Francisco is today, a major merger between


         1   Georgia's leading bank and North Carolina National Bank

         2   was before the country.  This merger was the formation of

         3   NationsBank.

         4            From the onset, NationsBank showed its commitment

         5   to corporate leadership.  And at that time our city was

         6   vying to attract the world's most watched event, the 1996

         7   centennial Olympic games.  NationsBank stepped to the

         8   table from the onset extending a $300 million line of

         9   credit to the Atlanta Organizing Committee at a critical

        10   juncture in that process.

        11            At that point in our nation's history when many

        12   corporations were accused of disinterest in the

        13   communities in which they lived and do business,

        14   NationsBank has shown and continues to show by example

        15   that good business still means community responsibility

        16   and commitment.  Certainly economic development,

        17   affordable housing and expanding employment opportunities

        18   are all important issues for any city.

        19            Through its broad array of financial services,

        20   NationsBank has served all levels of Atlanta's community,

        21   whether helping small businesses expand or supporting

        22   efforts to retain or attract large corporations to our

        23   area.  NationsBank plays a fundamental role in the

        24   economic vitality of our city and our region.  This has,

        25   in turn, helped create jobs which is extremely important

        26   to our city.


         1            The capacity and positive effect of economic

         2   development in Atlanta to develop affordable housing and

         3   create jobs can only be enhanced by the combination of

         4   resources of NationsBank and the Bank of America.

         5            The most visible, in fact, of the NationsBank

         6   community commitment in Atlanta is in the neighborhoods of

         7   Atlanta through neighborhood development initiatives.

         8            During the past five years, the City of Atlanta

         9   has worked in partnership with NationsBank to create the

        10   availability of affordable housing and reinvigorate

        11   Atlanta's once forgotten neighborhoods.  And for the first

        12   time in over 25 years, Atlanta, Georgia has experienced an

        13   increase in housing and in population in the inner city, a

        14   trend that reverses a trend in many major cities where

        15   populations have decreased over the past 25 years.

        16            I will simply touch on three projects which block

        17   by block are making a difference and are evidence of

        18   Nationsbank's commitment to cities and communities.

        19            First, the Historic Development -- Redevelopment

        20   Partnership is revitalizing the Martin Luther King

        21   District in Atlanta.  When completed next year, the

        22   district will have 67 new or historically re-habbed houses

        23   representing an investment of four and a half million

        24   dollars.  This project has increased property values in

        25   the area and is attracting more homeowners and businesses

        26   to the inner city.  Additional phases are being planned


         1   with the help of NationsBank.

         2            Another public/private partnership is the $5.9

         3   million to replace at Summerhill which includes 70

         4   single-family homes constructed along the neighbor

         5   traditional designs.  In Summerhill, this development has

         6   been a catalyst for additional development, continuing

         7   development in the inner city.

         8            And the park at Lakewood, a $6.8 million project,

         9   represents complete overhaul of a multi-family complex.

        10   More than 200 units have been provided.  An additional $10

        11   million of indirect investment is furthering neighborhood

        12   and economic development efforts in Atlanta.

        13            NationsBank has established itself as a leader in

        14   the community because of its commitment to involvement and

        15   investment in the crucial parts of our city and across the

        16   country through effective public and private partnerships.

        17   We've seen that this commitment can make a difference and

        18   we believe that it will continue to.  Thank you very much.

        19            MS. BROOKS:  Good morning.  My name is Roberta

        20   Brooks and I'm Assistant District Director for

        21   Congresswoman Barbara Lee representing the 9th District,

        22   California.  Thank you for providing -- I'm quoting her.

        23   Thank you for providing this opportunity to me and my

        24   representative, Ms. Roberts Brooks to address the issue of

        25   the merger of Bank of America with NationsBank.  I very

        26   much regret not being here personally to talk with you but


         1   I only learned about this meeting accidentally and not in

         2   time to rearrange my schedule.

         3            The first issue I will raise is the regulatory

         4   role of the Federal Reserve Board relative to the ability

         5   of these two banks to merge.  Congress, through the 1956

         6   Bank Holding Company Act, gave the Federal Reserve System

         7   the responsibility to review such mergers and to

         8   specifically consider the likely affects of the

         9   acquisition on competition and the convenience and needs

        10   of the community to be served.  Due to the increasing

        11   number of mergers in the 1950s, Congress reinforced the

        12   1956 Act by passing the Bank Merger Act in 1960.

        13            The Bank Merger Act strengthened the language of

        14   the Federal Reserve Board's responsibility.  It stated

        15   that the Federal Reserve may not approve any merger that

        16   could substantially reduce competition.  It also was

        17   concerned that a merger not create a monopoly unless it

        18   finds that the anticompetitive effects of the transaction

        19   are outweighed by the transaction's probable beneficial

        20   effects regarding the convenience and needs of the

        21   community served.

        22            The second issue I wish to address is that of the

        23   scale of the banks that are merging.  The planned merger

        24   of BankAmerica with NationsBank would make it the second

        25   largest bank in the United States with assets of $580

        26   billion.  This merger must be placed in the context not of


         1   a single event but as the first of a series of announced,

         2   planned mergers, Citcorp's $72 billion merger with

         3   Travelers Corp., and First Chicago Corp's $30 billion deal

         4   with Bank One Corp.  Another merger with similar

         5   significance to California as BankAmerica is that of

         6   California Wells Fargo with Norwest Corp.  The

         7   consolidation of Wells Fargo with Norwest Corp will make

         8   it the seventh largest bank in the nation with assets of

         9   190 billion.

        10            This leads me to my third point.  Given the

        11   regulatory responsibilities of the Federal Reserve System

        12   and the size of the banks under consideration, I would

        13   expect, as many of my constituents and colleagues on the

        14   House Banking Committee do, that the Federal Reserve would

        15   consider this merger with appropriate gravity.  One

        16   measure of the seriousness of the Federal Reserve would be

        17   its willingness -- is its willingness to listen and the

        18   respect it will give to the testimony from people who

        19   would be affected by such a merger.

        20            It was, therefore, suprising to learn that only

        21   one session was to be held on a single day in all of

        22   California.  You have undoubtedly received a great volume

        23   of mail on the subject of your willingness to listen.  I

        24   understand that, as a consequence of the extent of the

        25   mail, we the public now have two days instead of the

        26   original single day.


         1            I run the risk of stating the obvious, that a

         2   two-day hearing in one part of California on the loss of

         3   the largest bank in California is totally inadequate.  And

         4   with the risk of being rude by being clear, it's

         5   unacceptable behavior from a government agency.

         6            My colleagues on the House Banking Committee,

         7   Congresswoman Lucille Roybal-Allard and Maxine Waters,

         8   representing constituents in Southern California share my

         9   concern with the negligible time that's being given by the

        10   Federal Reserve to the public and to elected

        11   representatives to hold the appropriate discourse on this

        12   merger.  Although, I am pleased that my representative did

        13   not have to travel to Los Angeles to voice our concerns, I

        14   am dismayed that so serious a matter should be given such

        15   short attention.

        16            This is a merger that affects the entire nation,

        17   just as Microsoft's practices affects the whole nation.  I

        18   strongly recommend that the Federal Reserve hold hearings

        19   in every state in which either BankAmerica or NationsBank

        20   has assets of $1 billion or more.

        21            I ask that a letter signed by myself,

        22   Representative Roybal-Allard and Waters to Hugh McColl,

        23   Chairman and CEO of NationsBank, and David Coulter,

        24   Chairman and CEO of Bank of America, be accepted as part

        25   of my testimony.  We will fax that at a later time.

        26            So I have one minute left.  I need to move on.


         1            The major concerns that we have are loss of

         2   service.  There is a great anxiety expressed by our

         3   constituents very directly over the steady decline in the

         4   last 20 years or so of banking services and the

         5   accompanying tariffs for even the smallest services, such

         6   as using the ATM.  The pattern of less service and more

         7   cost is so clear as to make this proposed merger a crisis

         8   point.  By delegation from Congress, the Federal Reserve

         9   System has the responsibility for responding to these

        10   concerns.  How are you executing this responsibility?

        11            Loss of jobs.  How many jobs will be lost when

        12   Bank of America moves from the Bay Area to North Carolina?

        13   Job holders, families and the public need to have an

        14   answer to this.

        15            Community development and reinvestment, we have

        16   heard a strong commitment from the bank with that but we

        17   are concerned about it.

        18            I don't have time to finish.  I'll submit the

        19   written testimony but I just want to indicate that we

        20   trust that the Federal Reserve does remember its birth in

        21   the republic and its true loyalties will be with the

        22   people and give time for people to really give their

        23   opinions throughout the country.  Thank you very much.

        24            MS. SMITH:  Thank you.  Mr. Brown.

        25            MR. BROWN:  Thank you, I'm Lee Brown, I'm the

        26   Mayor of Houston, Texas which is the fourth largest city


         1   in America and I want to express my appreciation for the

         2   opportunity to provide testimony here today.

         3            I've been a customer of NationsBank or one of its

         4   predecessor banks for several years.  Currently I hold

         5   several accounts with the bank plus a mortgage loan.  But

         6   today I want to talk about NationsBank as a corporate

         7   citizen in our city.  NationsBank has been an excellent

         8   corporate citizen, but most important, it has been a

         9   partner with our efforts to improve the quality of life

        10   for our citizens in Houston.

        11            There are staff in Houston led by Joe Mosellino

        12   (phonetic) who is the vice-chairman of NationsBank.  They

        13   have engaged in hundreds of hours of volunteer work.  They

        14   have supported many major philanthropic endeavors.  And

        15   often they've taken the lead in those efforts.  Joe has

        16   been very active in our Houston Chamber of Commerce which

        17   is known as the Greater Houston Partnership and, thus,

        18   worked very closely with the city on numerous economic

        19   development efforts.

        20            NationsBank has been a strong supporter of

        21   affirmative action for many years.  It was Hugh McColl,

        22   the CEO of NationsBank, who called the press conference in

        23   Washington, D.C. several years ago to champion affirmative

        24   action at a time when the issue is being debated on

        25   Capitol Hill.  I would like to point out that he did not

        26   have to do that, but he did it because he believed in what


         1   our country, America, stands for, equal opportunity for

         2   all.  And that philosophy is reflected in the culture of

         3   the organization.

         4            Last year in Houston when this issue was being

         5   voted on in our city, NationsBank lenders were out front

         6   supporting this cause.  And although I wasn't mayor at the

         7   time, I'm told that NationsBank or its predecessors have

         8   supported community development programs launched by the

         9   City of Houston since 1980.

        10            The $350 billion commitment announced by

        11   NationsBank and BankAmerica is intended to address the

        12   major concerns that I, as mayor of my city, and many other

        13   mayors across the country have.  Concerns such as how can

        14   we get more affordable housing in our cities?  This

        15   commitment has $150 billion for affordable housing.

        16   Concerns such as how can we assist small businesses which

        17   provides jobs and economic opportunity to our cities?  The

        18   NationsBank/BankAmerica commitment will provide $180

        19   million for small businesses.

        20            This commitment, I'm told, and as we heard

        21   earlier from Mr. McColl, is a floor, not a ceiling.  So we

        22   can expect more to happen.

        23            During the past few years, the NationsBank has

        24   provided a report to communities which documented the

        25   progress they made on previous $10 billion commitments.

        26   In 1993, NationsBank committed to spending $10 billion


         1   within ten years to help build urban communities.  They

         2   exceeded that goal in four years.  We expect they will

         3   continue this practice with the $350 billion commitment.

         4            I've been pleased with what I've observed about

         5   NationsBank, pleased both on a personal basis and as a

         6   leader of our city.  Our cities throughout America need

         7   responsible corporate leaders and community development

         8   needs strong private sector commitments to make it a

         9   reality.

        10            And that's why I'm here today, to give support to

        11   the proposal by NationsBank Corporation of Charlotte,

        12   North Carolina to acquire BankAmerica Corporation of

        13   San Francisco, California.  And thank you for allowing me

        14   the opportunity to speak before you today.

        15            MS. SMITH:  Thank you.

        16            MS. TAVANLAR:  Hello, ladies and gentleman, my

        17   name is Katrina Tavanlar and I'm representing

        18   Congresswoman Lucille Roybal-Allard from the 33rd District

        19   of California.

        20            As a member of the Banking Committee and Chair of

        21   the California Democratic Congressional Delegation, I'm

        22   writing to express my concern ith the proposed merger of

        23   Bank of America and NationsBank.  I'm especially concerned

        24   about its impact on lending, investing, employment and

        25   other financial services for low-income and minority

        26   Californians.


         1            This merger will no doubt have a greater impact

         2   on California than any other state in the country.  The

         3   relocation of the headquarters of California's largest

         4   financial institution to North Carolina particularly

         5   concerns me, and the merger activity that has occurred in

         6   California to date reinforces this concern.

         7            In California alone, more than 80 banks and

         8   thrifts have been acquired by other institutions since

         9   1996.  In 1992, when Bank of America purchased Security

        10   Pacific Bank, they closed over 400 branches.  In 1996,

        11   Wells Fargo closed hundreds of branches throughout the

        12   state after purchasing First Interstate Bank.  While we

        13   cannot fully anticipate the long-term effects of these and

        14   future mergers, the obvious and the immediate impact has

        15   been fewer branches and escalating bank fees.

        16            I commend Bank of America for its prior and

        17   current community reinvestment commitments to our

        18   California communities.

        19            However, I would appreciate receiving details on

        20   how this pledge will benefit California's consumers and

        21   communities.  In requesting this information, I would

        22   respectfully point out that these specific requests are

        23   not unprecedented and reflect commitments that other

        24   California institutions have made in the past.  Therefore,

        25   I am confident that NationsBank and Bank of America will

        26   continue the good faith efforts to meet the needs of our


         1   California communities.

         2            Specifically, I would appreciate your response to

         3   the following questions.  One, does the bank intend to

         4   earmark a portion of the 350 billion to California?  Given

         5   Bank of America's dominance in California, it's critical

         6   that the community reinvestment commitment be California

         7   specific and commensurate with the proportion of the

         8   bank's deposits and activities originating in the state.

         9            How will the institution fulfill regional

        10   commitments within California given the geographical,

        11   social and ethnic diversity of our communities?  What

        12   culturally appropriate products and services will be

        13   available to consumers considering the various credit,

        14   investment and economic development needs of our state's

        15   communities?

        16            Second, how will the new bank maintain and expand

        17   Bank of America's present programs and commitments in

        18   California such as the Community Development Bank, Rural

        19   2000 Initiative, Economic Development Initiative, the

        20   BankAmerica Foundation and affordable housing activities?

        21   It is vital that these programs be distinct entities

        22   within the merged bank and continue to be based in

        23   California, given the tremendous need in our state and the

        24   collective expertise Bank of America has acquired in

        25   serving our communities.

        26            Third, what will be the bank's specific goals on


         1   the type and amounts of loan for minority or women-owned

         2   businesses -- small businesses and home loans?

         3            Fourth, how will the new bank minimize branch

         4   closings and increase branch openings in regions and

         5   communities that are presently underserved by traditional

         6   banking institutions.

         7            And finally, does the new bank intend to lower or

         8   stabilize ATM and bank fees?  I am very concerned about

         9   rising bank fees and their adverse impact on financially

        10   underserved and low-income communities.

        11            A dedicated commitment to California is an

        12   exciting and challenging opportunity for banks.  This

        13   merger has the potential to create mutually beneficial

        14   outcomes for both consumers and banks, given ever growing

        15   entrepreneurial immigrant communities, expanding small

        16   business markets and the booming economy.

        17            I look forward to working with you to meet these

        18   above-mentioned goals and anticipate your prompt reply.

        19   Sincerely, Lucille Roybal-Allard, Member of Congress.

        20            MS. SMITH:  Thank you.

        21            MR. LENO:  Good morning and thank you very much

        22   for your warm welcome.  My name is Mark Leno and I'm a

        23   member of the Board of Supervisors for the City and County

        24   of San Francisco.

        25            Since NationsBank announced in April that it

        26   would acquire Bank of America, the San Francisco Board of


         1   Supervisors has been very concerned about the potential

         2   decline and community reinvestment that could result from

         3   the proposed merger.  We, the undersigned, believe that

         4   the proposed Bank of America/NationsBank $350 billion

         5   community reinvestment commitment should be included in

         6   the bank's intermerger application to make it binding on

         7   the new bank.

         8            Also, we have asked NationsBank/Bank of America

         9   to provide specific commitments to California and the

        10   San Francisco Bay Area and its small businesses, minority

        11   businesses, minority and low-income neighborhoods and

        12   nonprofit organizations.  We have concern that consumer

        13   services, small business lending, low-income housing and

        14   charitable giving may all be negatively affected by the

        15   NationsBank acquisition.

        16            There is cause for concern that the new bank may

        17   not be as responsive to the needs of San Francisco and the

        18   Bay Area.  In general, larger banks mean higher fees,

        19   fewer bank branches, fewer product options and fewer

        20   banking options for consumers.  A Federal Reserve survey

        21   of bank fees and interest rates reveals that, on average,

        22   large banks charge higher fees than small banks with an

        23   average monthly fee on interest-bearing checking accounts

        24   of $10.12 at large banks and $6.13 at small banks.  By

        25   contrast, the average yield on interest-bearing accounts

        26   is 1.1 percent at large banks and 1.58 percent at small


         1   ones.

         2            With bank mergers comes the possibility of bank

         3   closures.  The National Community Reinvestment Coalition

         4   has noted that mergers lead to fewer branches in

         5   underserved communities.  A 1997 Federal Reserve study

         6   found that from 1980 through 1995 branches in middle and

         7   moderate income neighborhoods increased eight percent

         8   while branches in low- and moderate-income neighborhoods

         9   decreased 14 percent.  The closure of a branch in a

        10   low-income neighborhood could reduce lending in the area,

        11   and in turn, spur the decline of the neighborhood.  In

        12   addition, when bank branches close, teller and other bank

        13   jobs disappear.

        14            Small business lending is also affected by

        15   mergers.  A study by Federal Reserve economists predict

        16   that small business lending will continue to decline in

        17   the next three to five years at the rate of 33 percent.

        18   This is the same rate of decline as that of the last five

        19   years.  A February '98 study of the Federal Reserve Bank

        20   of San Francisco found subtle discrimination in lending

        21   against minority businesses in the Bay Area.  If community

        22   reinvestment is diminished in the Bay Area, minority

        23   businesses will be the first to suffer.

        24            A decline in lending to small and minority-owned

        25   businesses would also affect the city's ability to meet

        26   our welfare-to-work mandate.  The city is counting on


         1   small businesses to play a significant role in providing

         2   jobs for those moving from welfare to work.  Small

         3   businesses are creating more jobs than larger businesses

         4   in the Bay Area and, therefore, more opportunities for

         5   welfare recipients.  King Security, a local small

         6   business, was the first to hire welfare-to-work recipients

         7   in San Francisco.

         8            NationsBank's record of community reinvestment

         9   raises additional concerns.  For example, Bank of

        10   America's level of lending for low-income households in

        11   California is 21.3 percent, but NationsBank's level of

        12   lending for low-income households in North Carolina is

        13   only 6.3 percent compared to an average for all lenders of

        14   8.4 percent.

        15            There is a litany of additional questions

        16   regarding the activities of NationsBank.  As of March

        17   1998, NationsBank offered one of the most expensive

        18   checking accounts in the country.  NationsBank was

        19   recently fined $7 million by Wall Street regulators for

        20   illegally selling high risk mutual funds to unwary, and

        21   mostly elderly, investors.  NationsBank is in the process

        22   of closing 205 branches in Florida since its purchase of

        23   Barnett Bank in 1997.  State regulators in Texas are

        24   examining NationsBank's transfer of almost half of the

        25   bank's Dallas deposits to its corporate headquarters in

        26   Charlotte, North Carolina in April to determine if the


         1   transfer was an attempt to circumvent the state's merger

         2   rules.

         3            Given that California will suffer the most with

         4   the acquisition and loss of Bank of America, we believe a

         5   major proportion of the $350 billion community

         6   reinvestment pledge should be committed to California.  To

         7   date, we have not received any commitments, and we

         8   understand that the bank will not establish specific goals

         9   until after the completion of the merger.  The bank merger

        10   should be -- the bank should be directed to outline

        11   specific community reinvestments in their intermerger

        12   application.  Our communities deserve a stronger show of

        13   commitments to the specific needs of the San Francisco Bay

        14   Area.  The possible loss of Bank of America, a bank with a

        15   proven record of community reinvestment would be

        16   devastating and specific commitments are necessary.

        17            This is cosigned by my colleagues on the board

        18   Michael Yaki, Tom Ammiano, Sue Bierman, Amos Brown, Leslie

        19   Katz and Jose Medina.  I thank you very much.

        20            MS. SMITH:  Thank you very much.  Are there any

        21   questions?

        22            MR. FRIERSON:  I'd like to thank all of the

        23   panelists for coming and sharing your views with us this

        24   morning.

        25            Mr. Leno, I just have one question from you.

        26   Could you provide us with a little more detail on this


         1   February 1998 study showing the subtle discrimination?

         2   And you can just provide that to us.  We can proceed to

         3   track down that stuff.

         4            MR. LENO:  I certainly will.

         5            MR. FRIERSON:  Thank you very much.

         6            MS. SMITH:  Any other questions?  Fine.  Thank

         7   you very much for coming today and we will go on to the

         8   next panel.  I might mention that this is a very large

         9   panel as you will see on the agenda, however, the time

        10   allocations have all been made to fit within a 50 minute

        11   period.

Last update: December 3, 2010