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Public Meeting Transcripts

Public Meeting Regarding NationsBank and BankAmerica

Thursday, July 9, 1998

Transcript of Panel Ten


         4            MS. SMITH:  Okay.  We can start.  If you'll say

         5   your name.  I can't see from here so if you can tell us

         6   who you are.

         7            MS. JOHNSON:  Good afternoon, I'm Barbara Johnson

         8   and I'm the cofounder and the Executive Director of the

         9   Women's Initiative for Self-Employment here in

        10   San Francisco.

        11            We are a nonprofit 501C3 founded in 1988.  We

        12   provide micro-enterprise training, financing and support

        13   services to low-income English and Spanish speaking women

        14   who are residents of the Bay Area.  Women come to Women's

        15   Initiative because our training and financing is sensitive

        16   to who they are, their needs, their lives, and because we

        17   provide them training and support to grow and start

        18   successful small businesses.

        19            We serve an exclusively low-income female

        20   clientele.  70 percent of our clients are women of color,

        21   25 percent of our clients receive their training in

        22   Spanish.  We've provided self-employment training,

        23   assistance, financing to more than 3500 women.  More than

        24   800 small business start-ups and expansions have begun

        25   because of our assistance.  We've made more than 150 loans

        26   totaling more than a half a million dollars and leveraged


         1   in excess of 850,000 of commercial lending.  And we

         2   maintain historic default rate of five percent in our loan

         3   fund with poor women who don't know how to manage money;

         4   right?  Yep.  And who shouldn't really be able to borrow

         5   money to start a business, but they sure do.

         6            And we've been able to achieve this competency

         7   and develop our capacity in part because of the long-term

         8   support of Bank of America.  We've received generous and

         9   consistent in kind general operating loan fund capital and

        10   special event support from Bank of America since the

        11   planning stages in 1987.  The total of this support has

        12   been in excess of $620,000.  We definitely consider Bank

        13   of America a partner with us.

        14            Bank of America foundations early and continued

        15   support have attracted other corporate and philanthropic

        16   support which together have allowed Women's Initiative to

        17   help women change their lives and the lives of their

        18   families and the lives in their communities.

        19            I'm concerned that this kind of support will

        20   change with this merger.  I want assurances that it won't.

        21   I know that Bank of America has a concerned investment

        22   with us and we want to make sure that this return on this

        23   investment can continue.  There is a need and, indeed, the

        24   need is increasing.

        25            My comments today are not directed against this

        26   merger.  I'm here to ask this panel to seriously consider


         1   imposing some conditions before the merger is approved.

         2   Women's Initiative feels strongly that this new merged

         3   bank must promise an equal or larger commitment of

         4   philanthropic support over the next ten years and more to

         5   California nonprofit organizations which provide critical

         6   community, economic, social development assistance to

         7   low-income and disenfranchised communities.  We're

         8   requesting that the merged bank's foundation maintain

         9   staffing, grant making discretion in California and in

        10   San Francisco.  Without this kind of assurance, BofA's

        11   historic, informed, aware and what we consider sensitive

        12   community investment and corporate citizenship policies we

        13   feel are in danger of being eroded.

        14            I maintain, it's impossible to have your finger

        15   on the pulse of a state, let alone that of a specific

        16   urban or rural community from the far reaches of the east

        17   coast.  California, its communities, its economies, its

        18   challenges are nowhere else on earth like anywhere else on

        19   earth, that's unique, it can't be known from afar.  So

        20   without an assurance of continuing presence and a

        21   charitable funding commitment by the merged bank over the

        22   next ten plus years which is equal or greater, we're

        23   afraid of losing this very important support.

        24            And finally, I feel that the people and the

        25   corporate citizens of California will lose an important

        26   corporate role model and leader within California national


         1   banking industry and I don't think that the leader of a

         2   pack should be made lame.

         3            And so we really would like to have assurances

         4   and some kind of stipulations made that the important

         5   philanthropic work and history will be maintained.

         6            There's all sorts of talk and commitment about

         7   lending to housing to businesses and I understand that

         8   because that's a bank's business.  There has been nothing

         9   that I know of about the continuation of corporate

        10   philanthropic support and I'd like it considered, please.

        11            MS. SMITH:  Thank you.  Next.

        12            MS. JUNG-LEE:  Good afternoon, I'm Lynette

        13   Jung-Lee with the East Bay Asian Local Development

        14   Corporation.  I also want to express my concerns regarding

        15   the merger of Bank of America with NationsBank.

        16            EBALD, which is the acronym for our organization,

        17   is a 23 year old community development corporation which

        18   develops affordable housing and community facilities

        19   including child-care centers, nonprofit offices and

        20   storefronts for small businesses.  We also do planning and

        21   organizing work in targeted neighborhoods and we provide

        22   assistance and micro-loans to small businesses.  Our

        23   target population is low-income residents of the East Bay

        24   and with a special focus to the Asian and Pacific Islander

        25   community.

        26            We have worked with Bank of America for many


         1   years.  BofA has assisted EBALD by making construction

         2   loans for multi-family housing projects and being a

         3   permanent lender for our Asian Resource Center building

         4   which houses many nonprofit organizations and small

         5   businesses.

         6            BofA has also assisted by providing grants for

         7   programs such as a pilot Bay Area wide collaborative for

         8   individual development accounts for low-income households

         9   to build up individual assets.  And we have many partners

        10   in this process, including the Women's Initiative.  BofA

        11   has also supported programs which develope capacity for

        12   community development practitioners and organizations,

        13   such as the Leadership Academy with the Development

        14   Training Institute.

        15            A really important element for BofA's work in the

        16   community is that many of their community development

        17   staff live in or work in the neighborhoods in which the

        18   revitalization efforts are taking place so that they have

        19   an understanding of and experience with the community

        20   needs and dynamics and the organizations who are involved

        21   with that transformation process.

        22            If the merger results and bank community

        23   development staff being headquartered in North Carolina,

        24   reviewing loans and grant proposals for projects and

        25   programs in California, there will not be that same kind

        26   of understanding.  It is critical, therefore, that there


         1   continue to be bank community development staff

         2   headquartered here in California.  It is also important

         3   that the structure of the BofA Community Development Bank

         4   be maintained, recognizing the greater flexibility and the

         5   various strategies that such an entity can have and can

         6   play in terms of revitalization efforts.

         7            It is also important that NationsBank, who I

         8   understand has a CDC, not compete with the nonprofit CDCs

         9   and HDCs that are here in California, but that the banks

        10   instead provide a nurturing and supportive role to the

        11   CDCs and HDCs who are based here.

        12            The BofA and NationsBank merger must make a clear

        13   commitment to California.  We believe that we must -- we

        14   want to see some specific commitments around specific

        15   programs and I ask that you record the continuance of the

        16   Community Development Bank, the commitment to affordable

        17   housing, the economic development and rural initiatives,

        18   the continuance of the Bank of America foundation, and an

        19   increase in the level of charitable contributions above

        20   what BofA has already offered in past years.  Thank you.

        21            MS. SMITH:  Thank you.

        22            MR. ISHI:  It is very nice to follow Lynette

        23   Jung-Lee of the East Bay Asian local corporation.  Our

        24   organizations house her building and thank you for your

        25   long-time support.

        26            Good afternoon, my name is Tomoji Ishi, I'm a


         1   sociologist with a Ph.D. from the University of California

         2   Berkeley.  And while I'm teaching sociology and Asian

         3   American studies at the City of San Francisco, I also

         4   serve as a senior researcher and a senior project manager

         5   of the Japan Pacific Resource Network which is called

         6   JPRN.  JPRN is an Oakland based community organization

         7   which has been in 13 years in the forefront of social

         8   corporate responsibility advocacy for the last 13 years by

         9   educating banks and corporations in both in America and

        10   Japan.  JPRN is currently conducting CRA research project

        11   through which we examine the bank -- California based

        12   banks small business lending practice as well as branch

        13   activities.

        14            Also, next Monday, July 13th, we are sponsoring

        15   an Oakland based community economic (unintelligible) forum

        16   with an Oakland based community organization and the City

        17   of Oakland.  This Oakland forum will focus on the impact

        18   of the cities of major mergers by banks, including the

        19   BofA and NationsBank and how it affect communities of

        20   color and the poor.

        21            I am very troubled by the proposed acquisition of

        22   Bank of America by NationsBank.  It is my belief that this

        23   acquisition will have many adverse effects particularly on

        24   the low-income and the minority communities.  However,

        25   today out of many adverse effects, I will focus on my

        26   comments on the issue of the branch closures.


         1            It has been recognized that the larger the banks

         2   become, the more branch closures and consolidation take

         3   place.  This phenomena will be accelerated by bank

         4   mergers.  The Bank of America acquisition proposal

         5   (unintelligible) our concerns.  For example, from January,

         6   1995, to June, 1997, Bank of America closed 63 branches in

         7   California and 11 offices in the San Francisco Bay Area,

         8   including our neighborhood in Oakland.  Although Bank of

         9   America has a policy of notifying communities that will be

        10   affected by bank closures, their practice has been to

        11   notify such communities only after the decision has been

        12   made to close the banks.

        13            Under the proposed acquisition of Bank of

        14   America, its headquarters in San Francisco will cease to

        15   exist.  Instead, the fate of California, the state who has

        16   the largest economy and most diverse population in the

        17   nation, will be determined by the NationsBank headquarters

        18   in North Carolina over 3,000 miles away.

        19            JPRN, our organization, also seriously is

        20   disturbed by the practice of NationsBank's disregard.  Our

        21   investigation indicated -- identified the closing of 35 or

        22   14 percent of bank closure -- branch closure during the

        23   time in the last two years, thereby the number of branches

        24   have been reduced to 213 today in North Carolina,

        25   Nationsbank's home state.

        26            According to a CRA advocacy group in North


         1   Carolina, NationsBank has been closing bank branches while

         2   opening it's subcity (unintelligible) offices which

         3   charges higher interest rate loans to a disproportionately

         4   large number of African American and low-income persons.

         5            Additionally, Mr. Hugh McColl, Jr., CEO of

         6   NationsBank, explicitly stated at one of the meetings with

         7   CRA advocacy groups in San Francisco that the decision to

         8   close branches is up to  NationsBank and then not to local

         9   committees.  How many branches will be closed or

        10   consolidated due to the acquisition of Barnett Bank in

        11   Florida by Nationsbank?  The total number will be 204.

        12   Therefore, we believe that numerous closure and

        13   consolidations also would occur in the state of New Mexico

        14   and Texas where about 234 NationsBank and 201 Bank of

        15   America exist.

        16            Branch closing activities are not made at random

        17   but selectively.  A conspicuous example is seen in

        18   NationsBank's activities in its home state.  We were able

        19   to identify zip code numbers of these 30 closed branches

        20   out of the 35 and then it was found that 56.3 percent of

        21   the communities where branch closure occurred were

        22   predominantly either African Americans or the poor

        23   according to zip code census data.

        24            Given this history of the NationsBank, we are

        25   compelled to believe once the merger takes place that this

        26   pattern of branch closure will continue.  And the branch


         1   closure create serious adverse impact which include

         2   layoffs, loss of capital access, erosion of a community

         3   economic development and also personal services.  It is

         4   the consumers resident and small business of color and the

         5   poor which would face these harmful impacts.

         6            And this unless NationsBank discloses their

         7   potential branch closing, I urge the Federal Reserve Board

         8   not to approve this merger.  Such information is necessary

         9   to give the public adequate information with which to

        10   comment about the merits of this proposal.

        11            I am requesting the NationsBank to disclose any

        12   intent of branch closure, not only in the San Francisco

        13   Bay Area, but also in other parts of the country where the

        14   two banks currently offer service.  Thank you for giving

        15   me my opportunity to speak.

        16            MS. SMITH:  Thank you.

        17            MR. STERN:  Honorable committee, my name is John

        18   Stern.  And the President and CEO of Wesley Housing

        19   Development Corporation of Alexandria, Virginia, and I'm

        20   here to testify in favor of the merger of NationsBank and

        21   Bank of America.

        22            Wesley Housing has developed over a thousand

        23   units of housing affordable to those with low and moderate

        24   incomes in northern Virginia just across the Patomac from

        25   our nation's capitol.  One of our larger communities

        26   containing 162 apartments reputed to be one of the first


         1   garden apartments in the United States remains as

         2   affordable housing because NationsBank lent us over $5.6

         3   million to acquire it.  But more significant was the help

         4   that was provided by their Community Development

         5   Corporation which assisted my predecessor in negotiations

         6   with Mobil Oil to buy back a $2 million note for 45 cents

         7   on the dollar.

         8            NationsBank's CDC provided the required $909,000

         9   as an equity investment into a partnership that was

        10   created to facilitate the purchase of the note.  Today we

        11   are subsidizing 17 very low-income households at this

        12   community costing $32,000 per year out of the rents that

        13   we collect there.

        14            The supported residents are typically elderly,

        15   living on social security, and have lived at this property

        16   for over 20 years.  With no federal Section 8 subsidy

        17   available, these long-time stabilizers of the community

        18   could not continue to live at our property without our

        19   support.

        20            Because NationsBank CDC enabled the preservation

        21   of this property and agreed to our internal subsidy

        22   program, these 17 households, along with their 145

        23   neighbors, who mostly earn very low to moderate incomes

        24   were not displaced when Mobil sold the property and are

        25   able to live in decent, safe and sanitary housing in one

        26   of the highest income areas in the United States.


         1            Having run two nonprofit housing development

         2   companies here in the Bay Area and having administered the

         3   Affordable Housing Program for the Federal Housing Finance

         4   Board in Washington, I know firsthand the good work of

         5   both Bank of America and NationsBank and their CDCs in the

         6   affordable housing arena.

         7            While some might say that more could be done by

         8   both of these institutions or that this consolidation is

         9   anticompetitive or will decrease services to communities

        10   of color and low incomes, I believe that each has tried in

        11   their own part of the country to serve those with special

        12   needs.

        13            I trust that this combined company will be

        14   stronger than the parts and will live up to its commitment

        15   to serve the country better with its greater resources and

        16   coast-to-coast reach.

        17            From my experience, there's little overlap in

        18   their present service areas.  And unlike the marriage of

        19   Citibank and Travelers Insurance, both entities being

        20   reviewed today, have weathered the storms of community

        21   dissent to emerge stronger and better corporate citizens.

        22            These strengths are spotlighted by the new

        23   entity's $350 billion lending commitment to the

        24   communities most needy groups, 115 billion of which is for

        25   affordable housing, and 25 billion for nonprofit CDCs such

        26   as Wesley Housing.  I applaud that commitment and humbly


         1   ask your favorable resolution of these two banks'

         2   requests.  Thank you.

         3            MR. LAWSON:  Good afternoon.  I'm Hank Lawson,

         4   the Executive Director of Software Community Development

         5   Corporation, a neighborhood based nonprofit housing

         6   development corporation located in Dallas, Texas.  I'm

         7   here to speak in support of the proposed merger.

         8            Our neighborhood in south Dallas is classified by

         9   the city as a level five neighborhood.  On a scale of one

        10   to five, with five being the worst, and indicators over 50

        11   percent of the residential housing units are in need of

        12   substantial rehab, over 50 percent of the residents live

        13   below the poverty level and over 50 percent of the

        14   households being female head of households.  In our

        15   neighborhood, those residencies are well over 90 percent.

        16            The 1990 median income for the -- strike that --

        17   that comprise our target neighborhood are $9,000 and

        18   $13,000.  This is a neighborhood that until very recently

        19   was the domain of the Park Row Posse, a drug gang.

        20            In 1993, NationsBank made a long-term commitment

        21   to south Dallas.  In 1994, our nonprofit corporation South

        22   Fair joined with NationsBank to form a joint venture to

        23   seek the revitalization of this neighborhood.  This is a

        24   neighborhood that has been noted for the disinvestment by

        25   both the public and private sector.  Noted for its poor

        26   educational performances and it's wide open drug


         1   trafficking.

         2            Since 1994, our partnership has gotten a

         3   long-term revitalization concept plan for this

         4   neighborhood approved and adopted by the Dallas City

         5   Council.  We have began the revitalization process within

         6   the acquisition rehabilitation of several hundred more

         7   family rental units.  Most importantly, though, this

         8   partnership and our efforts has allowed the integrated

         9   community building initiatives in the area of public

        10   safety, economic development, and human services.

        11            NationsBank's step up to the plate has allowed

        12   other players to come to the table.  Most notably the

        13   Enterprise Foundation and the City of Dallas.  Three and a

        14   half years later, the neighborhood is more safer, our

        15   educational scores for elementary kids are up, our tenant

        16   profile is improving, the median income is on the way up

        17   and the investment resources are coming into the

        18   community.  Because NationsBank dared to go where others

        19   said "No," because NationsBank committed to a long-term

        20   commitment, because NationsBank saw and understood the

        21   need for impact investment, our neighborhood is on the

        22   rebound.

        23            Other lenders are now coming to the table, more

        24   public and private resources are now targeted for our

        25   neighborhood.  This is due in large part to the initial

        26   efforts of NationsBank's CDC.  We can now see the


         1   beginning of the stabilization of needed neighborhood

         2   institutions and assets, our schools, our nonprofit

         3   groups.

         4            We, the residents and the business leaders, have

         5   a growing confidence that we can and will save our

         6   neighborhood.  We can have quality and affordable housing,

         7   we can have better schools, we can have diminished the

         8   high crime presence and have meaningful leisure outlets

         9   for our families.

        10            Other nonprofits with the capacity to make it

        11   happen have benefited also by Nationsbank's Intercity

        12   commitments.  We have worked hard to make our neighborhood

        13   a good place to live, work and play and we believe we're

        14   well on our way to doing just that.

        15            Based on our experience with NationsBank we

        16   wholeheartedly support this merger realizing that more

        17   resources should flow for similar neighborhoods.

        18            MS. SMITH:  Thank you.  Mr. Gonzales.

        19            MR. GONZALES:  Thank you.  My name is J.R.

        20   Gonzales, I'm the immediate past Chairman of the Hispanic

        21   Chamber of Commerce in Austin and currently vice-chair of

        22   finance for TAMACC, the Texas Association of Mexican

        23   American Chambers of Commerce which is about 29 chambers

        24   strong.  But I'm here this afternoon not to testify on

        25   their behalf but me personally.  I'm the President and CEO

        26   of JRG Communications, and according to my CPA, I qualify


         1   as a nonprofit organization, I made no money last year.

         2            We employ about five people.  And I'm a customer

         3   of NationsBank.  It wasn't my choice.  My bank got gobbled

         4   up by Nations many, many years ago, about ten years now,

         5   but I've been with Nations and been with them ever since.

         6   As a customer, I believe I have the right to choose who I

         7   bank with and Nations has been my bank of choice.  I don't

         8   always agree, I always don't get along.  There's sometimes

         9   we have a problem.  But as far as customer service, as far

        10   as resolving some of the issues that I bring forward,

        11   NationsBank has been excellent.

        12            As I hear a lot of testimony today, I can't help

        13   but wonder, back home or in Austin -- or back in Texas

        14   where we can still use bilingual education for our

        15   children, I'm the first one to jump in when there's a

        16   fight to be fought.  And if there is an inequity, if

        17   there's an injustice if there's something that deals with

        18   something of imparity for minorities, I'm the first one

        19   there, I really am.  But with the same respect when I look

        20   at this banking thing and this merger, this is based on

        21   business and the future of our economy in our country.

        22            As you hear all the statistics of the  Imparities

        23   or inequities from the different minority communities, I

        24   can't help but wonder how many -- in what arena is there

        25   not inequity.  We're going to see it in banking and we're

        26   going to see it in hiring practices, we're going to see it


         1   in social settings, we're going to see it in any number of

         2   places, so being a minority and not getting a fair shake

         3   isn't something new.  So to point to the banking industry

         4   I think is a little unfair.  But in the same respect when

         5   I look at NationsBank and some of the outreach that

         6   they're doing, I'm very, very encouraged and I'm

         7   encouraged by this merger because I see two basically

         8   sound banks merging together to do a little more outreach.

         9   Does discrimination or should I say disparity exist?  Yes.

        10   Are we happy about it?  No.  Will it change?  I believe

        11   so.

        12            Now, speaking -- and I'm going to use Texas

        13   because I really can't attest to the rest of the country.

        14   But within the next ten to 50 years, 51 percent of the

        15   State of Texas will be Hispanic.  You add the African

        16   American and the Asian component to that and that's going

        17   to be quite a few folks.  And any business cannot afford

        18   not to do outreach and service its customers.  So as the

        19   minority population grows, it's going to be inevitable

        20   that if any business is going to survive it's going to

        21   have to start targeting those markets and make more

        22   inroads into the community.

        23            Has NationsBank and Bank of America been perfect

        24   so far?  By no means.  But a lot of it is not, I believe,

        25   done intentionally, a lot of it is of ignorance.  We need

        26   to see more minorities, more people of color on the board


         1   of directors, in higher positions with these banks and

         2   institutions in every institution across the country.  And

         3   then will we start seeing change.

         4            But I'm very proud to be a customer of

         5   NationsBank because, as a customer, as a small business, I

         6   have the right to choose, and I've chose NationsBank to be

         7   my bank.  One of the reasons is because they send me the

         8   canceled checks so I can kind of reconcile my own

         9   accounting every now and then.  I'm not very good at that.

        10            When I started the business 14 years ago, I

        11   learned a lot of things.  I never took a business course.

        12   Minority owned business upstart, I was young, I was

        13   foolish, for all intents and purposes.  I should have

        14   thrown in the towel several times but I didn't.  And I

        15   think that says something for the culture, if you will.

        16            My parents never got a bank loan, my grandparents

        17   never got a bank loan.  Heck, I've never had a bank loan.

        18   I'm educated, I'm in business, I've been in business for a

        19   number of years but a lot of that stuff is very

        20   intimidating.  So I'm proud to see that NationsBank, at

        21   least in Austin, Texas, they're working with the Hispanic

        22   Chamber of Commerce and other organizations to do the

        23   necessary outreach to better train and better prepare

        24   minority businesses to fill out the paperwork properly.

        25   Because even though you see very few loans, I can't help

        26   but wonder how many of those loan applications were


         1   prepared properly and not rejected on the basis of a

         2   person's ethnic background but on the basis that it wasn't

         3   filled out properly?

         4            So taking ethnicity out of it and let's just

         5   strictly look at business, it's good business for these

         6   two banks to merge.  It's good business to start doing

         7   outreach in the minority communities.  And the minority

         8   communities -- and it's frustrating because every time you

         9   talk to minority business, some people want to equivocate

        10   minority business with inferior product and that's not so

        11   and that needs to change.  But to make it change, minority

        12   businesses all across the country need to step up to the

        13   plate and work just a little bit harder and make sure we

        14   fully understand what's necessary.  And for these reasons,

        15   I encourage the merger of these two institutions.  Thank

        16   you very much.

Last update: December 3, 2010