skip to main navigation skip to secondary navigation skip to content
Board of Governors of the Federal Reserve System
skip to content

Public Meeting Transcripts

Public Meeting Regarding NationsBank and BankAmerica

Thursday, July 9, 1998

Transcript of Panel Twelve


       1              MS. SMITH:  All set, great.  I no longer know
       2   what order people are supposed to go in.  Let's see,
       3   this is Panel 11 or do you not know? 
       4              (Laughter.) 
       5              MS. SMITH:  We can start with Mr. Sissman. 
       6              MR. SISSMAN:  Sure.  My name is Mark Sissman. 
       7   I'm vice-chair of the Enterprise Foundation for
       8   Strategic Initiatives and I'm here to speak in support
       9   of the NationsBank/Bank of America proposed merger.  
      10              Enterprise is a foundation who was founded
      11   1982 by Jim and Patty Rous with the mission to provide
      12   the opportunity for decent, affordable housing for
      13   low-income Americans and the opportunity and path up
      14   out.  Today Enterprise works with 1940 nonprofits in 280
      15   jurisdiction.  Enterprise has helped produce more than
      16   86,000 units of housing. 
      17              We take pride in and will report to you on
      18   the remarkable partnerships that we have with
      19   NationsBank and Bank of America and the very significant
      20   economic commitments which have been made to our work
      21   and the work of nonprofits, nearly $1 billion in the
      22   aggregate.  
      23              As impressive as the dollars are, the
      24   personal commitments of the leaders and managers of
      25   these institutions to community development and the poor
      26   are clearly remarkable.  I want to talk about those


       1   first.  
       2              When we bring opportunities to our partners
       3   at NationsBank to change the lives of people by lending
       4   in investment.  There is an understanding of the
       5   consequence of the work and willingness to go many extra
       6   miles to get the transaction.  Once a model is crafted,
       7   their commitment to move it to an important skill is
       8   there, and skill is important in this business.  Doing
       9   one development is nice and fine and may be important in
      10   that community, but getting to scale, doing things with
      11   lots of dollars that are reputable is fundamental in
      12   changing communities and helping the poor. 
      13              There is a recognition of nations that
      14   significant problems require big commitments from
      15   financial institutions, and, in our work, those
      16   commitments have been there. 
      17              Finally, there are corporate and personal
      18   commitments to leadership in our field that are
      19   important by both institutions.  At NationsBank we have
      20   appointed officers of both institutions to our national
      21   board and local advisory boards, and they commit their
      22   time dutifully. 
      23              But, also, as we travel in communities, we
      24   get a sense and see that their service includes service
      25   with local CDC's as advisers and as board members and on
      26   other nonprofits.  Not only is investing and lending


       1   important, but human resources and commitment of time
       2   has been there as well. 
       3              Those individuals of the banks at senior
       4   management levels and in the middle of the organizations
       5   have changed how non-profits work and brought business
       6   discipline to their social commitments, and we think
       7   that's just as important as lending and investing. 
       8              At the same time, we see the very same thing
       9   at Bank of America from our partners there.  The
      10   commitment has meant, and that personal commitment, has
      11   meant significant results in both lending and investing. 
      12              NationsBank has committed more than $600
      13   million of tax credit equity through our organization. 
      14   $10 million of investment dollars have been committed to
      15   a unique endeavor to support businesses in federal power
      16   zones.  $50 million more has been invested in housing
      17   preservation in buying existing apartments around the
      18   country.  And $25 million has been committed in
      19   pre-development lending for nonprofits, so the hard-to-
      20   do projects can get from the starting line to the point
      21   where long-term financial commitments can be made. 
      22              Communities have seen the results of the
      23   dollars.  Let me give you just a few examples that we
      24   have been involved in.  In washington D.C.
      25   pre-development construction lending and equity
      26   investment enabled the development of a hundred-unit


       1   mixed income developments, 30 of whose units were for
       2   homeless women. 
       3              In Baltimore, an equity investment has
       4   enabled the development of an office building and
       5   business center as part of the redevelopment of Murphy
       6   Homes, a public housing project under the Hope Six
       7   project. 
       8              Finally, in Dallas, as a joint venture lender
       9   and investor in the rebuilding of HUD-foreclosed
      10   properties, Nations has made a huge difference.
      11              These examples are multiplied hundreds of
      12   times over just in Enterprise's portfolio alone.  Bank
      13   of America has similar relationships with Enterprise in
      14   its market area. 
      15              In every case the funding commitments are
      16   able available to serve the very poor and make a
      17   significant impact in neighborhoods. 
      18              By previous actions we believe that a merger
      19   will multiply these activities substantially.  We
      20   support the merger.  Thank you. 
      21              MS. SMITH:  Mr. Gonzalez.  
      22              MR. GONZALEZ:  Good afternoon, my name is
      23   Gilbert Gonzalez, I am from San Antonio, Texas.  
      24              And like Jim was saying earlier, Jim Reed,
      25   this is comforting to come to weather that's
      26   substantially cooler than San Antonio's 105 degrees. 


       1              I am here on behalf of the San Antonio
       2   Business Development Fund in support of the
       3   NationsBanks/BofA merger.  Let me give you some history
       4   about the San Antonio Business Development Fund.  It is
       5   a targeted small-business fund started as a small bank
       6   CDC.  In 1997 we were certified as a CFI through
       7   Department of Treasury.  
       8              The program was initiated by the City of San
       9   Antonio and 21 banks in San Antonio, and, sharing with
      10   you, that's just about every bank in San Antonio.  
      11              In 1994, to address the underserved needs of
      12   small minority and women owned businesses throughout
      13   Bear County.  In a city where small business comprises
      14   about 80 percent of the marketplace and 90 percent of
      15   the work force, access to credit is vital to our
      16   economy. 
      17              According to a recent study conducted by the
      18   -- in San Antonio by the Woodstock Institute, the SBA
      19   low dot program was not addressing the underserved needs
      20   of minority borrowers or minority neighborhoods.  In a
      21   city, if we were to maximize its trade, economic and
      22   growth potential, it must be understood that small
      23   business is the engine that drives our economy. 
      24              Without adequate access to credit, however,
      25   that engine will not move.  The SABDF's mission is to 
      26   find a solution that these underserved markets by being


       1   a partner with the city and the banks and creating the
       2   synergy to create innovative enhancements to remove the
       3   credit barriers encountered in these markets.  
       4              For example, NationsBank and Bank of America
       5   have been strategic partners in ensuring the continued
       6   success of the San Antonio Business Development Fund. 
       7   Both institutions were involved in the initial
       8   capitalization of the SABDF.  Presently we have 2.75
       9   million of capital under management provided by our bank
      10   consortium.  Of that, NationsBank has provided 275,000
      11   in permanent or borrowed capital. 
      12              Since '94 our capital has nearly tripled
      13   thanks to the community bank partners.  It's through
      14   these innovative public and private partnerships they're
      15   able to bridge the credit needs of these markets.  
      16              Are we effectively impacting our community? 
      17   In 42 months of lending, the SABDF has made 45 loans for
      18   2. -- for 2 million to small minority-owned and
      19   women-owned businesses, leveraged to about 6.8 with bank
      20   financing, created and preserved over 600 jobs and, more
      21   importantly, provided an access to credit. 
      22              There are many other services that our bank
      23   partners continue to provide that are too numerous to
      24   mention.  
      25              In 1997 and 1998, Jamesville from NationsBank
      26   CDC office in Dallas facilitated our board retreat.  His


       1   staff in Sarasota, Florida continues to provide ongoing
       2   technical support to our office and to other emerging
       3   CDCs and CDFI's throughout the country. 
       4              On July 24th this year, San Antonio and --
       5   San Antonio/NationsBank, Texas will sponsor a statewide
       6   CDC/CDFI conference introducing the CDC/CDFI study
       7   commissioned by NationsBank and conducted by Shore Bank
       8   Advisory Services. 
       9              There is more that I could probably say about
      10   the public, private partnerships and how positive they
      11   have had impact.  I can see colleagues from San Antonio
      12   sitting in the audience, and three or four years ago
      13   none of these programs existed. 
      14              In a town where you have 80 percent of the
      15   marketplace being small business, it's essential that we
      16   have these resources to go to. 
      17              I want to close by just saying I support the
      18   merger, I can see Jamesville, I can see the staff of
      19   both BofA and NationsBank continuing to support our
      20   efforts.  Thank you. 
      21              MS. SMITH:  Ms. Kleiman. 
      22              MS. KLEIMAN:  Thank you.  I am glad to have
      23   the opportunity to be here today.  I am here to support
      24   the merger before NationsBank and AmericaBank Corp. --
      25              MS. SMITH:  Can you identify your
      26   organization, please?  


       1              MS. KLEIMAN:  Yes.  I am Executive Director
       2   of Charleston Affordable Housing, Inc., a 501C3
       3   nonprofit development organization in Charleston, South
       4   Carolina.  As well, I am the CEO of American Street
       5   Foundation which strives to bring money from the rock
       6   and role world to redevelopment in housing. 
       7              I want to talk today about the role
       8   NationsBank has played in communities that are not big,
       9   big urban areas in big cities, those that don't have
      10   major corporate headquarters, that don't have the
      11   Xeroxes and the Kodaks and the major foundations and the
      12   major corporations. 
      13              NationsBank has come from an area which is
      14   the south, our major financial centers have been Miami,
      15   Atlanta and Charlotte. 
      16              Well, all of the other cities in the south
      17   don't have that regional support that those cities have,
      18   and it's been NationsBank that has helped the normal
      19   city build an infrastructure that has helped get credit
      20   to people who never really had access to credit before. 
      21              NationsBank has been a partner to not only
      22   myself but to many, many small programs, small
      23   nonprofits that have tried to start programs throughout
      24   the south and in Charleston. 
      25              Their personnel are totally committed to not
      26   only giving capital support, but they're very involved. 


       1   They do put their money where their mouth is.  They have
       2   absolutely been the institution that has built an
       3   infrastructure in the south that has allowed for
       4   programs to be bloomed and blossomed, that have given
       5   people opportunities to get into affordable housing,
       6   into economic development, into some labor opportunities
       7   that would have never been available before. 
       8              They have given grants, they have been good
       9   construction lenders, they have been equity partners. 
      10   They have stepped up to the plate, and, in every
      11   opportunity that has presented itself, they have been
      12   supporters for small nonprofits, for CDCs for other
      13   corporations to get going in an area where there wasn't
      14   a lot of movement and organization. 
      15              When I went back to Charleston in 1992, and I
      16   had been running the low-income housing program in New
      17   York City, and I went home to Charleston to start a
      18   nonprofit, I was the only nonprofit.  In 1992 there were
      19   no nonprofits in a city as big as Charleston, South
      20   Carolina. 
      21              So the CDC and the community development
      22   movement is very new to parts of the south, and
      23   NationsBank is a product of its history and
      24   circumstances.  It's been a southern bank that has taken
      25   every opportunity to be supportive of the movement to
      26   enhance credit opportunities, to enhance housing


       1   opportunities and to enhance participation opportunities
       2   in all walks of life for the citizens of the markets in
       3   which it does business. 
       4              I think that the merger should be supported
       5   and through personal commitments, financial commitments,
       6   I know and feel that NationsBank will continue to honor
       7   their commitments and participation in both the
       8   secondary and primary cities and communities throughout
       9   the nation.  
      10              Thank you. 
      11              MS. SMITH:  Thank you.  Ms. Landecker. 
      12              MS. LANDECKER:  Good afternoon.  Thank you
      13   for inviting me.  My name is Anita Landecker.  I am Vice
      14   President with the Local Initiative Support Corporation
      15   and Managing Director of its affiliate, the California
      16   Equity Fund. 
      17              LIST, for those of you who don't know, like
      18   Enterprise, provides grass roots neighborhood-based
      19   organizations financial and technical assistance
      20   throughout the country.  
      21              LIST was established 19 years ago and has
      22   helped about 1800 community development corporations in
      23   over a hundred cities, raised about $3.1 billion in
      24   grants, loans and equity investments and CDCs and
      25   leveraged an additional three-and-a-half billion dollars
      26   in public and private support. 


       1              These dollars have produced over 80,000
       2   affordable homes and nearly 12 million square feet of
       3   community facilities in commercial and industrial space,
       4   all in the effort to transform distressed neighborhoods. 
       5              Bank of America and NationsBank are widely
       6   considered key leaders, industry leaders in the field of
       7   community development and together have invested
       8   hundreds of millions of dollars in poor communities
       9   across this country. 
      10              Since LIST's beginning, Bank of America has
      11   invested $336 million in the form of grants, loans and
      12   equity in LIST and our affiliate.  This total includes
      13   226 million invested in our affiliate called the
      14   National Equity Fund making Bank of America our largest
      15   equity investor by far. 
      16              Additionally, Bank of America has provided
      17   bridge financing to our fund, which gets complicated,
      18   but that's totalled another $200 million.  
      19              NationsBank has supported list since 1982
      20   providing $12 million in grants and loans and equity to
      21   support our local programs as well as an emerging
      22   national rural program.  
      23              Between the two banks, LIST received support
      24   for programs in Chicago, Houston, Kansas City, Little
      25   Rock, Los Angles, Miami, New York City, Palm Beach
      26   County, Phoenix, Richmond, San Diego, San Francisco, Bay


       1   Area, Seattle and Washington D.C.  
       2              But, most of all, I want to address something
       3   that Mark mentioned, which was the importance of the
       4   people and the leadership of the people we deal with at
       5   Bank of America. 
       6              It starts at the top.  Dave Coulter is on
       7   LIST's board and has provided enormous leadership and
       8   has led the way for his institutions. 
       9              Don Milane has been an absolutely key leader
      10   in Los Angeles where I come from, and throughout the
      11   country.  I just want to mention that that kind of civic
      12   leadership, he has been the civic leader in Los Angeles
      13   representing Bank of America, and he has served on major
      14   committees, most recently, a blue ribbon committee on
      15   slum housing that has really transformed how the City of
      16   Los Angeles deals with slum housing. 
      17              Mike Mantle is on LIST's National Equity Fund
      18   board and plays a major role.  He's with the Bank of
      19   America Community Development Bank.  Numerous names,
      20   Glenn Sonata, Mitch Thompson, Carla Dartas.  Jim Wagley,
      21   I especially want to say, he's kind of what I consider
      22   this wonderful conscience, he also plays the chair of
      23   the rural -- our rural program. 
      24              These are people that are just absolutely so
      25   critical to community development altogether.  Maybe
      26   what I want to say, finally, is that the Bank of America


       1   Community Development Bank, especially, is so critical
       2   to community development in California that I hope in
       3   this merger it is maintained and enhanced and its staff
       4   is maintained.  
       5              Especially, and the reason why it and other
       6   institutions at Bank of America have been successful is
       7   that they've often taken on the culture of the community
       8   development field and hired people from the field.  That
       9   has made it extremely successful. 
      10              I just want to give you a couple other
      11   examples of work.  NationsBank has loaned LIST 1 million
      12   to capitalize an acquisition and construction loan fund
      13   in Richmond that has absolutely been critical to the
      14   Richmond LIST program and has provided a significant
      15   grant to the LIST's national rural program, again, under
      16   the leadership of Jim Wagley.  
      17              In conclusion, our relationship with Bank of
      18   America Corporation and NationsBank over the years has
      19   been extraordinary both in terms of financial support
      20   and exceptional leadership from their executives.  
      21              We support the merger and expect anticipate
      22   that the new entity will do even more to support the
      23   development of affordable housing and the creation of
      24   economic opportunities in distressed communities. 
      25              Thank you. 
      26              MS. SMITH:  Thank you.  Mr. Smith. 


       1              MR. SMITH:  Good afternoon, Madam
       2   Chairperson, members.  My name is Lloyd D. Smith and I
       3   am the President and CEO of the Marshall Heights
       4   Community Development Organization located in Washington
       5   D.C.  We serve Ward 7, which is -- has a population of
       6   over 50,000, 96 percent African American. 
       7              Marshall Heights is a 19-year-old community
       8   development corporation providing business development,
       9   light industrial business incubators, commercial,
      10   retail, we have developed 165,000-square-foot shopping
      11   center with two banks and various other retail
      12   commercial facilities. 
      13              We have over -- done over a hundred single-
      14   family houses, nearly 500 multi-family units.  Social
      15   services, child welfare programs, SRO, community schools
      16   and many, many other things that we do with the support
      17   of NationsBank. 
      18              On behalf of the board of directors, I'm
      19   pleased to lend our support of the NationsBank
      20   acquisition and of the Bank of America Corporation. 
      21              We have enjoyed a strong and rewarding
      22   partnership with NationsBank and its predecessor,
      23   American Security Trust, for more than 11 years.  
      24              We started with a 250,000 line of credit for
      25   our housing program for in-fill development that has
      26   grown to a $750,000 line of credit, based on our


       1   demonstration of increased production and our credit
       2   capacity. 
       3              We have jointly developed a creative
       4   partnership with NationsBank CDC.  Chris LoPiano
       5   [phonetic], who heads that in our Kennelworth light
       6   industrial park as a result of a 1994 CDC tax credit
       7   that we received from HUD and as a component of the
       8   empowerment program. 
       9              This is one of the first and largest deals in
      10   the country since only 20 CDC's nationwide were given
      11   the two million CDC tax credit award. 
      12              In addition, NationsBank has invested an
      13   additional one million in equity in this project at our
      14   Kennelworth light industrial park. 
      15              We are about to commence a multi-use for sale
      16   new housing development area program in the Deanwood
      17   Burwell area in our area.  NationsBank will provide much
      18   of the needed equity and we will provide the
      19   construction managing, marketing, sales and
      20   compreshensive housing counseling services. 
      21              This partnership will enable us to increase
      22   the scale of our activities and improve our ability to
      23   target our efforts. 
      24              They have also -- Nations has also provided
      25   several years of grant support, in particular a
      26   three-year commitment of 15,000 per year for the


       1   transitional housing program that we run. 
       2              They have been innovative, creative and have
       3   tried to find ways to say this can be done.  One of
       4   their key staff persons, Chris LoPiano, came from the
       5   Marshall Heights Community Organization.  He worked with
       6   us for eight years.  So he knows the CDCs, he knows what
       7   they need, he knows what can be done. 
       8              We expect to expand this effort.  I'm also
       9   wearing another hat today.  I'm chairman of the new and
      10   the first CDFI community development bank to be
      11   organized in the district of Columbia, Washington D.C. 
      12   We hope to open the bank this fall in August or
      13   September.  NationsBank has participated with South
      14   Shore Advisory Services in helping us set up this new
      15   bank. 
      16              What have they done this?  They, through
      17   NCIAIF, they are investing a million dollars in equity. 
      18   We are going to share an ATM servicing agreement.  They
      19   are assisting us with furniture and assistance and we
      20   are going to talk about holding deposits. 
      21              So they are assisting a fledgling startup
      22   CDFI in the district, which will be the first one in the
      23   country -- in our city, rather, to start up.  They have
      24   been very, very supportive of this effort. 
      25              So we are totally in support of this merger. 
      26              MS. SMITH:  Thank you.  Ms. Nakata. 


       1              MS. NAKATA:  Thank you and good afternoon. 
       2   My name is Suse Nakata.  I am CEO of Keystone Community
       3   Ventures.  Keystone assists nonprofit businesses whose
       4   primary mission is to provide jobs for the low income,
       5   disconnected, disabled and at-risk folks.  We provide
       6   unsecured debt and long-term vested management
       7   assistance and guidance.  It's a venture capital
       8   approach for nonprofit run enterprises. 
       9              For the sake of disclosure, I also need to
      10   say I've worked at Bank of America Community Development
      11   Bank and Keystone receives operating support from BofA
      12   Foundation. 
      13              Bank of America has proven itself a leader in
      14   supporting community economic development and in
      15   building communities.  But this meeting is not about
      16   identifying who is more relevant to California or to
      17   low-income markets.  This meeting is to discuss how to
      18   ensure benefits to our low-income communities. 
      19              As I review the management chart for the new
      20   bank, there is a disturbing message about the importance
      21   of community development.  I have been a trainer in this
      22   room and at a dozen other Fed-sponsored locations. 
      23              When bankers have asked me, what makes the
      24   difference between a good and great community
      25   development banking program?  My answer, without a
      26   doubt, is the importance of corporate commitment and it


       1   manifests itself in the organizational structure. 
       2              At Bank of America, the person with primary
       3   responsibility for community development reports
       4   directly to the CEO.  The new bank will have at least
       5   one more management layer. 
       6              This dilution is compounded by the fact that
       7   the person with primary responsibility for community
       8   development in the new bank has not been identified and
       9   will not be identified evidently, during this comment
      10   period. 
      11              So, in the absence of having the CEO's ear or
      12   of knowing who is making recommendations or decisions on
      13   community development, as a member of the California
      14   Reinvestment Committee, we asked about specific numbers
      15   or programs.  The response, "No specifics, because the
      16   bank needs to evaluate best practices." 
      17              May I be so bold as to propose six best
      18   practices?  
      19              One, a commitment to develop and train
      20   leaders of community-based organizations so that they
      21   become the rightful and successful owners of economic
      22   and housing developments. 
      23              Two, a focus to do the small, the inner city,
      24   the rural deals, not just the showcase deals. 
      25              Three, to value inclusive in hiring seasoned,
      26   nonprofit and public sector staff.  Then listening as


       1   the staff engages with the community. 
       2              Four, to set aside a portion of the
       3   foundation budget for strategic community economic
       4   development and not tie every allocation to regional
       5   profits. 
       6              Five, to value community-based organization
       7   input in program development as evidenced by advisory
       8   boards and specific initiatives. 
       9              And, six, to fill the credit needs with the
      10   right product, not the only product. 
      11              These components are integral to helping
      12   build communities and need to be adopted by the new
      13   bank. 
      14              The new bank has promised to retain the
      15   structure of Bank of America Community Development Bank,
      16   which is a request that I've heard repeatedly in the
      17   last few panels. 
      18              But it is silent on the critical issues of
      19   decision-making for that entity, on what happens to the
      20   community development division of the Federal Savings
      21   Bank, which is, frankly, the legal entity providing the
      22   affordable housing credits outside of California.  But
      23   it's an integral part of Community Development Bank. 
      24              And, thirdly, about the huge differences in
      25   corporate cultures or strategies.  The promise to keep
      26   community development bank simply as a legal structure,


       1   in my book, is a hollow response at this time. 
       2              To get back to the question at hand of how to
       3   best serve the credit needs of low income communities,
       4   my response is for NationsBank to put into action
       5   Mr. McColl's earlier statement to CRC, and I
       6   quote, "Bank of America Community Development Lending
       7   Group is best," unquote.  And to put that statement into
       8   action by retaining the mission, the strategies, the
       9   current decision-makers and have them report to the CEO. 
      10              Anything less is a loss for our communities. 
      11   And, if that's the case, frankly, the communities might
      12   be better served if the Federal Reserve would encourage
      13   NationsBank to sell the Bank of America Community
      14   Development Lending Group to an interested outside
      15   lender such as Washington Mutual. 
      16              My comments are based on observations and
      17   learnings.  Supporting the proposed new bank at this
      18   time is extremely difficult without a more detailed plan
      19   on community development lending and investments. 
      20              I applaud the Federal Reserve for extending
      21   the comment period to give the new bank more time --
      22   just wrapping up -- to share their implementation plan,
      23   so that we may then provide meaningful input to the
      24   board of governors.  
      25              Thank you. 
      26              MS. SMITH:  Thank you.  


       1              MR. FRIERSON:  Just to clarify one point. 
       2   The comment period was extended by the board.  It
       3   expires today. 
       4              Last week there was a submission sent to
       5   current commenters, and the comment period for the
       6   commenters who received that submission was extended to
       7   July 17th, which is the same day that people appearing
       8   at the meeting today can supplement their comments.  
       9              MS. SMITH:  Thank you for the correction.  
      10              If there are no questions from the panel,
      11   then we'll go on to the next one.  Thank you very much. 
Last update: December 3, 2010