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Public Meeting Transcripts

Public Meeting Regarding NationsBank and BankAmerica

Thursday, July 9, 1998








         6                         PUBLIC MEETING


         8                           ---o0o---






        14                   SAN FRANCISCO, CALIFORNIA

        15                     THURSDAY, JULY 9, 1998













         1   July 9, 1998                                     8:00 a.m.


         3                     P_R_O_C_E_E_D_I_N_G_S
                               _ _ _ _ _ _ _ _ _ _ _

         4                           ---o0o---

         5            MS. SMITH:  Good morning.  I think we're ready to

         6   start.  So let me start by welcoming you to this important

         7   meeting on the application of NationsBank Corporation to

         8   acquire BankAmerica Corporation.  The meeting will last

         9   two days.  I'll start by introducing myself.  I'm Dolores

        10   Smith, Director of the Division of Consumer and Community

        11   Affairs at the Federal Reserve Board in Washington, D.C.

        12   I'll be the presiding officer for this meeting.  And our

        13   other panelists are, to my left, Bob Frierson who is the

        14   Associate Secretary of the board.  To my right -- to my

        15   immediate right, Ken Binning who is Director for

        16   Applications and Financial Analysis in the Division of

        17   Banking Supervision from the Federal Reserve Bank of

        18   San Francisco.  And to his right, Trish Nunley who is

        19   Assistant Counsel from the Federal Reserve Bank of

        20   Richmond.

        21            We are here today because NationsBank Corporation

        22   of Charlotte, North Carolina has applied for approval to

        23   acquire BankAmerica Corporation San Francisco, California.

        24   When the Federal Reserve System considers one of these

        25   applications, we look at a number of factors under the

        26   Bank Holding Company Act.  These include financial issues,


         1   managerial issues, competitive issues, and the convenience

         2   and needs of the communities affected.

         3            In doing so, we particularly look at the record

         4   of performance of the parties under the Community

         5   Reinvestment Act.  The Community Reinvestment Act requires

         6   the board to take into account an institution's record of

         7   meeting the credit needs of an entire community -- of its

         8   entire community.  The NationsBank application transaction

         9   also involves the proposed acquisition or retention of

        10   non-banking companies engaged in activities permissible

        11   for bank holding companies.

        12            The board must determine whether the proposed

        13   non-banking activities can reasonably be expected to

        14   produce benefits to the public that outweigh possible

        15   adverse effects such as undue concentration of resources,

        16   decreased or unfair competition, conflicts of interest, or

        17   unsound banking practices.

        18            The purpose of the public meeting today and

        19   tomorrow is to receive information regarding these

        20   factors.  We will be seeking to elicit this information

        21   and to clarify factual issues related to the application.

        22            We are very pleased that so many have been

        23   willing to come and testify at this public meeting.  We

        24   will have about 200 groups and individuals represented

        25   over the two days.

        26            I'd like to talk a little bit about the


         1   procedures.  First of all, this is what is called an

         2   informal public meeting.  Members of the panel may ask

         3   those who are testifying about their testimony.  This is

         4   not, and I'll repeat not, a formal administrative hearing

         5   so we are not bound by rules regarding evidence,

         6   cross-examinations and some of the formal trappings of

         7   that kind of proceeding.

         8            As you can see from the agenda, we need to stick

         9   to the schedule very carefully so that everyone who has

        10   asked to offer oral testimony will have a chance to say

        11   what they would like to say.  We are going to ask the

        12   witnesses today to be mindful of the needs of others and

        13   to help us stay on schedule.  The panels have been given a

        14   certain period of time and they will be expected to keep

        15   within their alloted times.  I'll tell you about the

        16   signal system.  We have two time keepers and they will be

        17   giving you signals as witnesses.  When you have -- is it

        18   two minutes or one minute?

        19            TIME KEEPER:  One minute.

        20            MS. SMITH:  When there is one minute remaining to

        21   speak and then another signal when the time is up.  They

        22   will start by holding up a card with that information on

        23   it.  Sometimes witnesses may not be paying -- or may be

        24   engrossed in their testimony and may not notice the card

        25   and so what we have is a second signal.  If the -- well,

        26   the time expired signal.  When the time expired signal is


         1   held up and if the witness doesn't notice it, then we have

         2   our second time keeper, Ariel, who is going to give you a

         3   musical nudge.  It will be very gentle.

         4            There may have been some individuals who were

         5   unable to sign up in advance, and to the extent possible,

         6   we will want to give them a chance to speak, as well.  At

         7   the end of the meeting today -- tomorrow, not today, at

         8   the end of the meeting tomorrow, we will make the mike

         9   available to anyone who would like to make a presentation,

        10   time permitting.

        11            I'll also mention that witnesses may submit a

        12   written supplement to their oral testimony by next Friday,

        13   July the 17th, and then the record will be closed.  Any

        14   written supplements should be directed to Jennifer J.

        15   Johnson, Secretary of the Board, Board of Governers of the

        16   Federal Reserve System, Washington, D.C. 20551.  This is

        17   information that I think you have already received.  But

        18   if you need to have it in writing, we will be glad to

        19   provide it.  The supplements, written supplements, must be

        20   received by 5:00 p.m. EDT on July 17th.  You may fax your

        21   submission to area code (202) 452-3462.  Also, if you

        22   haven't turned in copies of your written testimony or if

        23   you have any other written statements to put into the

        24   record, please leave them with the Federal Reserve staff

        25   at the registration desk.  It is important that we get

        26   this information for the record.


         1            A transcript of the meeting will be available by

         2   July the 14th through the Federal Reserve Bank of

         3   San Francisco and the board.  In addition, the official

         4   transcript will be available by close of business on July

         5   the 15th on the board's public web site on

         6, technology willing.  And with that,

         7   we'll begin our proceedings and we will start with a

         8   presentation from the applicant.

         9            MR. GNAIZDA:  Good morning, Ms. Smith.  On behalf

        10   of 36 of the protestors, we have one procedural matter

        11   which we think will help expedite matters and it's a

        12   letter that we sent to Chairman Greenspan and the members

        13   of the Board of Governers yesterday.  And what it relates

        14   to is your ability to evaluate who is testifying because,

        15   as you will note, the Federal Reserve often lists the

        16   number of people speaking for and against.  I'd like to

        17   present you with the letter.

        18            MS. SMITH:  I might note, for the record, that

        19   Mr. Bob Gnaizda from the Greenlining Institute has passed

        20   out a letter to all of us on the panel and to the

        21   presenting panel, as well.

        22            MR. GNAIZDA:  Let me just make one brief comment

        23   and then we can get a ruling on this.  This letter is

        24   entitled Big Bank Bucks Buy Votes.  What it relates to is

        25   this, that out-of-town people have been prejudiced if they

        26   wish to protest at this proceeding, that is, they must pay


         1   their own way no matter where they live, 3,000 miles away,

         2   to come here for three minutes in San Francisco.  The

         3   parties have raised the issue that the hearing should be

         4   across the country.  The banks have not supported that.

         5   What the banks have done is they have paid the way for

         6   those who will support their merger.

         7            MR. FRIERSON:  Mr. Gnaizda, thank you very much

         8   for the letter.  We're going to enter this into the

         9   record.  And we will request, based on the scheduling of

        10   the individual panels, you will be given time at the

        11   beginning of your panel to make your remarks, but we would

        12   like to move on with the schedule that we have.  And this

        13   letter is part of the record.

        14            MR. GNAIZDA:  Thank you very much.  We just have

        15   one procedural matter which you may wish to rule on and

        16   this is this.  We are not asking that people who the bank

        17   paid to testify ought not to testify, they're welcome and

        18   we wish to hear them, but they should identify themselves

        19   as having received expenses.

        20            MS. SMITH:  I think I can interrupt right now and

        21   say that we will not be asking the witnesses to give that

        22   indication.  So we will note your objection for the

        23   record.  And with that, I think we will proceed with our

        24   first panel this morning.

        25            MR. GNAIZDA:  Thank you very much.

        26            MS. SMITH:  Thank you very much and we'll see you


         1   later in the day.

         2            MR. COULTER:  Good morning, Madam Chairmen, my

         3   name is David Coulter, with me is Hugh McColl, the CEO of

         4   NationsBank.  I also want to introduce Don Mullane on my

         5   right, Executive Vice President of Corporate Community

         6   Development for Bank of America.  And Cathy Bessant, on my

         7   far left, President of the Community Investment Group at

         8   NationsBank.

         9            We want to thank the Federal Reserve Board for

        10   this opportunity to talk about the proposed creation of

        11   America's first coast-to-coast bank.

        12            The new BankAmerica will represent the triumph of

        13   an idea that began nearly a century ago right here in

        14   San Francisco when a local produce merchant named A.P.

        15   Giannini founded the Bank of Italy.

        16            The Bank of Italy later became the Bank of

        17   America and it became a catalyst for economic opportunity,

        18   moving capital between communities, funding the rise of

        19   major industries and helping to house, feed and move the

        20   population of a state that is now the world's seventh

        21   largest economy.

        22            The story of California is really Bank of

        23   America's story.  Here are just a few highlights.  Through

        24   the years and right up until today, Bank of America has

        25   purchased the bonds that have built universities, highways

        26   and, yes, even the Golden Gate Bridge.


         1            In 1929 when the City and County of San Francisco

         2   ran out of funds to complete the Hetch Hetchy water

         3   system, our bank stepped in and bought the bonds.  Today

         4   that water is in the drinking fountains in this building.

         5   We financed farmers and ranchers at a time when no other

         6   bank would entertain them.  And today California boasts

         7   the most fruitful agricultural industry in the world.

         8            We helped build Hollywood, too.  We lent money

         9   for thousands of films ranging from Snow White and the

        10   Seven Dwarfs to Gone With the Wind, from Lawrence of

        11   Arabia to It's a Wonderful Life.  In Hollywood we became

        12   known as The Movie Bank.

        13            The Dodgers came to Los Angeles with BofA's help.

        14   Mattel and Disneyland were built with BofA financing.  And

        15   we've been there for Silicon Valley, too.  From O'Malley

        16   to Disney to Jobs, the great visionaries have turned to us

        17   to finance their dreams.  As have millions of individuals

        18   who count on Bank of America when the time comes to

        19   purchase their home, educate their children or start their

        20   business.

        21            I can assure you that Bank of America has brought

        22   unparalleled commitment to the communities we serve.  The

        23   new Bank of America will continue in this manner but on a

        24   much larger scale than ever before.  In fact, it will be

        25   positioned to create economic opportunity nationwide.

        26            Long ago Bank of America sought to empower people


         1   by opening bank branches in hundreds of communities

         2   throughout California.  Today we're bringing a wide array

         3   of financial services even closer to home and making them

         4   available to customers 24 hours a day.  And we are not

         5   turning our backs on the communities that need financial

         6   services the most.

         7            In South Central Los Angeles, for example, we

         8   have more branches than all other banks combined.  We've

         9   played a principal role in capitalizing one of Los

        10   Angeles's three African American owned financial

        11   institutions, Founders National Bank.  And just last month

        12   the CEO of that bank, Carlton Jenkins, said this in a

        13   letter to the Federal Reserve Bank in Richmond.  Quote,

        14   "BankAmerica has been an extremely significant participant

        15   in the growth and maturation of Founders National Bank.

        16   This, in spite of the fact that several of our branch

        17   locations -- in several of our branch locations, we are

        18   clearly a competitive institution to them," unquote.

        19            The BankAmerica Board of Directors has

        20   established a goal that its major operating units receive

        21   outstanding ratings for their CRA activities.  We are

        22   living up to that standard.  BankAmerica Corporation has

        23   five bank subsidiaries and all five currently hold

        24   outstanding Community Reinvestment Act ratings.  Two of

        25   those have been earned under the new CRA regulations.

        26            Our flagship institution, Bank of America


         1   National Trust & Savings Association, has received four

         2   consecutive outstanding ratings.  Our Federal Savings Bank

         3   is rated outstanding by the Office of Thrift Supervision.

         4   Our Community Development Bank is rated outstanding by the

         5   FDIC.  Bank of America Texas and our Credit Card Bank in

         6   Phoenix are rated outstanding by the Office of the

         7   Comptroller of the Currency.

         8            We believe that allocating the resources and

         9   performing at a level to achieve these outstanding ratings

        10   is very, very important.  We believe it is equally

        11   important to reward outstanding banks by placing value on

        12   their outstanding ratings at times like this.

        13            I know that it's important to you to have

        14   financial institutions that are committed to community

        15   building.  I hope you come away from today's hearing with

        16   a better understanding of our commitment.  To help in that

        17   regard, let's take a brief look at Bank of America's

        18   record.

        19            We surpassed the ten year $12 billion community

        20   lending commitment that was announced by the bank in 1992

        21   in four and a half years.

        22            Last year, we voluntarily set a new, very well

        23   defined ten year goal of $140 billion in community

        24   lending.  It was an unprecedented move by a major bank,

        25   once again on a voluntary basis.  Mr. McColl will later

        26   speak to an even larger voluntary commitment by the


         1   BankAmerica.

         2            Since 1992, we have booked $2.5 billion in

         3   affordable consumer loans to low- and moderate-income

         4   borrowers.

         5            Underscoring our commitment to neighborhood

         6   revitalization is the success of Bank of America's

         7   Community Development Bank which has become the west's

         8   number one source of government guaranteed small business

         9   loans and multi-family affordable housing finance.  In the

        10   last five years, we have booked nearly $1.5 billion in

        11   community related small business loans and approximately

        12   $2 billion in credit for multi-family affordable housing,

        13   including more than $600 million in the first half of

        14   1998.

        15            Last year, Bank of America became the first major

        16   bank to launch an initiative tailored specifically around

        17   the banking needs of rural America.  Our rural 2,000

        18   Community Development Initiative includes a three year

        19   $500 million community development lending goal.  It also

        20   calls for $5 million in grants that will benefit rural

        21   communities and Indian country.  Helping us to carry out

        22   this initiative are four advisory committees that include

        23   42 rural community experts and practitioners.

        24            We were the founders of the California Community

        25   Reinvestment Corporation which provides permanent

        26   financing for multi-family affordable housing and serves


         1   as the model in the western United States for other bank

         2   consortiums.  We have invested in dozens of other similar

         3   multi-bank organizations.

         4            To help create jobs and stimulate economic growth

         5   in minority communities, we have invested more than $32

         6   million in minority venture capital funds.

         7            We continue to expand homeownership opportunities

         8   among low-income and minority borrowers through our

         9   Neighborhood Advantage program which has generated loans

        10   of more than $15 billion since its inception.  In 1997,

        11   nearly one-fourth of all our mortgage loans were made to

        12   minorities and low- and moderate-income borrowers.

        13            We've just introduced a new zero downpayment

        14   mortgage program for low- and moderate-income borrowers

        15   which has had stunning results in our demonstration

        16   markets.  In fact, we accepted nearly $300 million in

        17   applications in just three months.

        18            In 1992, we introduced Advantage Business Credit,

        19   a lending initiative that has taken much of the paperwork

        20   out of small business loan applications for $100,000 or

        21   less.  In fact, the application for this product is just

        22   one page.  During the last six years, our so-called ABC

        23   program has generated loans of $4.1 billion.

        24            And we've trained more than 15,000 of our

        25   associates in diversity programs so that they can better

        26   respect and cherish the differences that make our company


         1   and our communities unique.  We believe that changing

         2   demographics represent new markets and opportunities for

         3   us to serve people.  Or as my predecessor, Dick Rosenberg,

         4   said so often, quote, "Service to low-income communities

         5   is the right thing to do and the smart thing to do,"

         6   unquote.

         7            We're also helping to meet the financial needs of

         8   a changing population by delivering ATM service in three

         9   languages and staffing many branches with employees who

        10   speak Spanish, Japanese, Korean, Chinese or Tagalog.

        11            And since 1991, we have helped to strengthen

        12   local education, economic development and environmental

        13   quality with $206 million in contributions to nonprofit

        14   organizations across the western United States.

        15            We were the leading advocate for the revised CRA

        16   regulations, encouraging banks, regulators and politicians

        17   to give the regulations a chance.  We recently commented

        18   positively to the Federal Reserve on Regulation B which

        19   calls for the voluntary collection of race and gender data

        20   on small businesses.  We've spoken out and taken

        21   leadership positions on child care, Proposition 13, urban

        22   sprawl, water, Hispanic higher education and other issues

        23   important to all of our communities.

        24            We've established ourselves as good corporate

        25   citizens through an environmental program that has

        26   resulted, among other things, debt for nature swaps to


         1   preserve Latin American rain forests.  We were the first

         2   major financial institution to sign the CERES Principles,

         3   which hold signatories to a strict environmental code of

         4   conduct.

         5            Throughout the nation, Bank of America's record

         6   is one of commitment, commitments made and commitments

         7   kept.

         8            I think the point is best made in a letter that

         9   was forwarded to me a while back by then Comptroller of

        10   the Currency Gene Ludwig.  The letter was sent to

        11   Mr. Ludwig in October of 1997 by the Greenlining

        12   Institute's Executive Director and General Counsel who

        13   wrote him about our CRA performance.  Here's what they

        14   said, quote, "The so-called outstanding rating given to

        15   almost half of all very large financial institutions is

        16   inadequate regarding Bank of America.  As we previously

        17   discussed, Bank of America is the overall CRA leader.  We

        18   believe the rating for Bank of America should be

        19   outstanding plus," unquote.

        20            I hope this helps give you a better understanding

        21   of our community commitment.

        22            NationsBank has a similar commitment to its

        23   communities just as we are both committed to our

        24   associates.  Hugh McColl will elaborate on this for you

        25   during his testimony.  I'd like to turn it over to Hugh

        26   but first allow me to close with this thought.


         1            A.P. Giannini once said, "When nationwide branch

         2   banking is an accomplished fact, then America will have

         3   come of age financially."

         4            That's what our merger is all about, it will

         5   produce an awesome combination and its power will be

         6   unleashed for the benefit of this country.

         7            Mr. McColl and I are convinced of this, that is

         8   why we shook hand on this deal and that is why we'll

         9   become teammates.  And now I'd pleased to introduce my

        10   colleague at NationsBank, Hugh McColl.

        11            MR. McCOLL:  Thank you, David.  This meeting is

        12   about the effects bank mergers have on communities.  This

        13   subject is close to my heart, as all of you know, my

        14   company has been through many mergers over the past 20

        15   years.

        16            In each, our intention has been to employ more

        17   people, win more money, do more business with minority

        18   vendors, be more active in the community, and generally

        19   make a bigger difference than our predecessor

        20   institutions.

        21            In fact, in reviewing the effects of these

        22   mergers on our communities, we have found almost

        23   universally that employment, lending, community

        24   development efforts and charitable contributions actually

        25   increase.  That has been our vision and it will continue

        26   to be so with this merger.  In San Francisco and in


         1   Charlotte and throughout our coast-to-coast franchise.

         2            Our goal is for the new BankAmerica Corporation

         3   to be the best community development bank in this country.

         4   So I welcome the opportunity to share with you the values,

         5   efforts, and achievements that make NationsBank a positive

         6   force in all the communities where we do business.

         7            Now, as you know, NationsBank has a strong record

         8   of community investment.  We have achieved and maintained

         9   outstanding CRA ratings.  We have been a leader in our

        10   local market and we have consistently sought out local

        11   community based partners to help us achieve our community

        12   development goals.

        13            Let's consider some of the results.  In 1997

        14   alone, our mortgage lending to minority borrowers topped

        15   $2.7 billion and our mortgage lending in low-income

        16   neighborhoods topped $2.5 billion.  NationsBank is the

        17   number one bank lender to small businesses in this

        18   country.

        19            Our total production in 1997 was more than $11

        20   billion, $2.3 billion of which was loaned in low-income

        21   areas.  We're also the number one bank originator of SBA

        22   loans in the United States and we have preferred lender

        23   status in every state in our franchise.

        24            Our investment capabilities are significant and

        25   unique with more than $520 million in community

        26   development equity investments currently on our books.


         1            The NationsBank Community Development

         2   Corporation, with the help of many local partners, has

         3   involved a or re-habbed more than 14,000 units of

         4   affordable housing, investing more than $300 million.  Our

         5   Community Development Corporation is the only bank owned

         6   CDC that serves as both a developer of and investor in

         7   affordable housing.

         8            The NationsBank Small Business Investment

         9   Corporation makes equity investments in small and

        10   minority-owned companies.  Through it, we've invested more

        11   than $15 million in small businesses across the country.

        12   Finally, we have invested more than $50 million in

        13   minority-owned financial institutions and community

        14   development financial institutions.  These organizations

        15   extend our reach to low-income borrowers and provide

        16   capital to distressed neighborhoods in ways that no

        17   traditional bank can.

        18            Now, looking at what we've accomplished is

        19   important, but to understand how we'll continue to be

        20   successful in the future, we should look at how we've

        21   achieved these results.

        22            Our approach can be boiled down to three basic

        23   principles.  One, we build strategical alliances with

        24   community based organizations.  Two, we believe in a

        25   national commitment delivered and differentiated locally.

        26   And, three, we believe strongly in accountability.


         1            Our partners include national organizations as

         2   well as hundreds of local community based organizations in

         3   cities, towns, and neighborhoods where we do business.

         4   These alliances will represent a fundamental way -- the

         5   fundamental way that we do business.  We seek partnerships

         6   for the betterment of neighborhoods.

         7            Our purpose in these partnerships is not to

         8   compete against community based organizations but, rather,

         9   to work with them to improve neighborhoods.

        10            Our decentralized management philosophy means

        11   that we understand that one size does not fit all

        12   communities in need.  In other words, associates across

        13   the country do not get community development instructions

        14   from Charlotte, North Carolina, they get the resources

        15   they need and they get a corporate culture that backs them

        16   up when they decide what needs to be done.

        17            Our commitment to accountability is self-evident.

        18   Since 1992, we have provided detailed reporting at the

        19   local, state and national level on all of our results.

        20   This process ensures that we continue to meet the evolving

        21   needs of our communities.  Equally important, it provides

        22   further opportunities to gain feedback from community

        23   groups, civic leaders and the public.

        24            Now, let me be perfectly clear about one thing.

        25   Our goal has never been simply to meet the requirements of

        26   the Community Reinvestment Act.  We strive to lead in


         1   everything we do, and that includes building strong

         2   communities.  Our commitment to our communities extends

         3   throughout the company, to every business line and to

         4   every associate throughout our franchise.

         5            Beyond our core business activity, which fuels

         6   the economy, supports the tax base and provides

         7   employment, there are five areas in which NationsBank and

         8   its associates are active in supporting our communities.

         9   And they are, first, community leadership, an associate

        10   volunteerism; second, individual and corporate

        11   philanthropy; three, commitment to adversity; and, four,

        12   minority business development; and, five, progressive

        13   marketing programs and business policies.

        14            Now, I'd like to touch on each of these areas

        15   briefly.  Community leadership and associate volunteerism

        16   are important parts of the NationsBank culture.  At the

        17   corporate level we provide leadership to our communities

        18   by putting our financial muscle behind important community

        19   projects.  By advocating for a stronger CRA and a

        20   permanent low-income housing tax credit, and by working

        21   with local governments and community organizations to

        22   achieve shared goals.

        23            We also have a strong culture of associate

        24   volunteerism.  Associate volunteers receive two hours of

        25   paid time of every week to work in the schools.  Local

        26   councils within the bank identify volunteer opportunities


         1   for our associates, and our newest program, NationsBank

         2   Neighborhoods, offers cash grants in an associate's name

         3   to organizations at which the associates volunteer.

         4            Now, the next area I mentioned is philanthropy.

         5   Simply put, NationsBank is the most generous financial

         6   institution in the country and the new BankAmerica will be

         7   so by a long shot.  Our combined budget this year will

         8   exceed $100 million.  No one else even comes close.

         9            One of the most important aspects of our

        10   decision-making process is that we put the control over

        11   charitable dollars in the hands of local executives who

        12   know best how to serve their communities.  This policy has

        13   resulted in not just increased giving but more effective

        14   giving with dollars going where they are needed the most

        15   throughout the franchise.

        16            The third area in which we work very hard to

        17   strengthen communities is building diversity among our own

        18   associates.  Our company will stretch from coast to coast

        19   and will include the entire sunbelt, the Pacific

        20   Northwest, the Midwest and the Mid-Atlantic.  Now, while

        21   we are unalterably opposed to quotas of any type, we will

        22   continue to support affirmative action and we will have

        23   one of the most diverse work forces of any large

        24   corporation in this country.

        25            And it is our intention that our board of

        26   directors will be one of the most diverse corporate boards


         1   in the country.  Not at some time in the distant future,

         2   but on day one.

         3            One of the most important areas of focus in

         4   building strong communities is minority business

         5   development.

         6            NationsBank has been a pioneer and a national

         7   leader in creating and sustaining a strong minority

         8   business development program.  NationsBank was the first

         9   financial institution to be recognized by their Minority

        10   Supplier Development Council as the corporation of the

        11   year.  And the first to receive this recognition two years

        12   in a row.

        13            In 1990, NationsBank set a goal of ten percent

        14   for directing discretionary spending to women and

        15   minority-owned businesses.  Since then, we have averaged

        16   more than 15 percent, amounting to more than $470 million

        17   spent with women and minority-owned businesses.  Once

        18   again, our self-imposed goal turned out to be a floor, not

        19   a ceiling.  And in typical NationsBank fashion, we blew it

        20   away.

        21            Now, finally, we are supporting our communities

        22   through progressive marketing programs and business

        23   policies.

        24            For example, we have had a formal Hispanic

        25   Marketing Program for more than five years in an effort to

        26   reach out to this growing segment of our population.


         1            We've installed bilingual ATMs, hired bilingual

         2   tellers and telemarketers and formed partnerships with the

         3   National Council of La Raza, the Hispanic Association on

         4   Corporate Responsibility and SER-Jobs for Progress, Inc.,

         5   as well.

         6            Now, throughout these partnerships, we have begun

         7   to develop programs and products that will make banking

         8   with us easier and more accessible for all members of the

         9   Hispanic community.

        10            What we want to establish with our customers, all

        11   our customers, regardless of race, ethnicity or economic

        12   means are strong relationships and that's why we

        13   implemented a relationship approach to fees and pricing

        14   that minimizes fee increases for as many of our individual

        15   deposit account customers as possible.

        16            This spring NationsBank broke from the pack to

        17   offer pricing benefits to a vast number of customers.  We

        18   eliminated check card fees for all customers, and fees for

        19   a broad array of services associated with our two most

        20   popular accounts were eliminated or frozen through the

        21   year 2000.

        22            Now, we've heard Dave Coulter talk about his

        23   company's commitment to building strong communities across

        24   the western half of the United States.  And you've heard

        25   me talk about my company's commitment to doing the same

        26   across the NationsBank franchise.


         1            In fulfilling these commitments, both our

         2   companies have a strong record of accessibility and

         3   proactive partnerships with local community groups.  In

         4   fact, since our merger announcement, we've met with

         5   hundreds of community organizations to talk about ways we

         6   can best work together to improve our neighborhoods and

         7   communities.

         8            Bringing our companies together will only enhance

         9   our ability to deliver on all of our commitments.

        10            The company we will create will be the leading

        11   American bank of the 21st Century and we will be this

        12   country's premiere community development bank, as well.

        13   This will benefit all of our constituents.

        14            First, our customers will see a new standard for

        15   choice, convenience, value and market presence.  Second,

        16   our associates will realize more opportunities from

        17   working at a larger, stronger company.  And, third, by

        18   investing in our communities, by providing good jobs and

        19   creating new ones and by helping to improve the quality of

        20   life for customers and associates alike, we will be the

        21   model for corporate citizenship.

        22            We will build on the best initiatives from both

        23   banks, retaining the Bank of America Community Development

        24   Bank and NationsBank Community Development Corporation.

        25   These vehicles, as well as new initiatives to promote

        26   rural development and Indian country lending and


         1   investment, will be used to rebuild neighborhoods, create

         2   jobs and provide access to the financial system as never

         3   before.

         4            We will keep decision-making in the hands of

         5   local bankers and managers who know best how to serve

         6   their communities.

         7            We will continue to lead locally and nationally

         8   and we will deliver on our commitments whatever and

         9   wherever they may be.

        10            Now, recently we announced a ten year $350

        11   billion commitment to community development lending and

        12   investing.  The commitment targets $180 billion for small

        13   business lending.  115 billion for affordable housing, $25

        14   billion for economic development and $30 billion for

        15   consumer lending.  Now, let me underscore, this is a

        16   floor, not a ceiling.

        17            Furthermore, fulfilling this commitment will not

        18   be easy, it will be a stretch.  This commitment will push

        19   our new company and each of us individually to be even

        20   more proactive, more innovative and more creative than

        21   we've ever been.  We view this as a challenge, and as with

        22   all challenges, we are ready and eager to take it on.

        23            Both banks have a demonstrated record of working

        24   with community partners.  Yet, there are those who oppose

        25   this merger because we have not signed, quote, unquote,

        26   "CRA agreements" and because we have not itemized the


         1   commitment by market or by product.

         2            I understand the passion these organizations have

         3   for their specific communities.  As I've said, we share

         4   common goals.  However, their desire to receive the

         5   greatest financial support possible for their individual

         6   causes should not overshadow the fact that our pledge, the

         7   largest of its kind ever, is designed to benefit all of

         8   our communities.

         9            When we created this commitment, we decided not

        10   to itemize the commitment by market or by product.  And

        11   there's a good reason for this.

        12            Because community needs and circumstances are

        13   always changing, we believe the best approach is a

        14   flexible commitment that establishes goals on a nationwide

        15   basis and relies on capacity and demand within each market

        16   to determine how goals are met.

        17            Our outstanding record of achievement,

        18   accountability and public reporting of results

        19   demonstrates the CRA agreements and itemized commitments

        20   are unnecessary for our company, they are unwarranted,

        21   they are burdensome to manage, they divert resources from

        22   the areas most in needs and they prevent us and our

        23   partners from meeting the changing needs of our

        24   communities.  In short, they're not in the best interests

        25   of underserved neighborhoods.

        26            Now, for our part, NationsBank is, and the new


         1   BankAmerica will be, devoted to building strong, growing,

         2   vigorous communities everywhere that we do business.

         3            Community development has been a part of both of

         4   our cultures and it will be an integral part of our new

         5   culture.  It's a fundamental part of the way that we do

         6   business.  It's essential to the future health of our

         7   company and perhaps, most important, as Dave said, it's

         8   simply the right thing to do.

         9            This is what we have always believed, it's what I

        10   believe today and I assure you that it is not going to

        11   change.  Now, we'll be happy to take your questions.

        12            MS. SMITH:  Thank you.  Bob.

        13            MR. FRIERSON:  Thank you very much.  This is a

        14   question to the panel, so anyone feel free to respond.  I

        15   have several.  The board is required to consider the

        16   effects of this proposal and the convenience and needs of

        17   the communities served and this consideration takes into

        18   account the records of performance under the Community

        19   Reinvestment Act of NationsBank and BankAmerica.

        20            In assessing the effects of the proposal on

        21   communities, particularly communities in California,

        22   should the board rely on NationsBank's record or

        23   BankAmerica's record?  If the board should rely on

        24   NationsBank's record, how does NationsBank intend to

        25   ensure that all individuals in all communities will have

        26   access to a full range of products that assist in meeting


         1   credit needs that may differ substantially from community

         2   to community?  If the board is to rely on BankAmerica's

         3   records, which programs -- and I believe I understood you

         4   correctly to say you would be retaining BankAmerica's

         5   Community Development Bank -- which programs in addition

         6   to that would NationsBank expect to continue?

         7            MR. McCOLL:  Can I answer the last question

         8   first?  As to the last question, we intend to retain all

         9   of what the Bank of America has been doing, including

        10   their support through their foundation of local community

        11   efforts and Don Mullane can outline all of the aspects of

        12   what has been done.

        13            We ask that you measure us on both of our

        14   records.  And what we believe we would do is bring

        15   whatever we think is the best of NationsBank's efforts

        16   also to California and to the west coast to supplement

        17   whatever has been done by the Bank of America.  In other

        18   words, we think the sum will be greater than the parts.

        19   And that's where I am on that.

        20            I may have missed one of the questions.  Oh, you

        21   want to talk about making credit available to all

        22   individuals?

        23            MR. COULTER:  Sure.  I will be somewhat

        24   repetitive but I would indicate that we are trying to

        25   create a new company here.  In fact, we refer to it today

        26   as the new BankAmerica Corporation, and in that sense,


         1   we're trying to take the best of what we think are two

         2   fine organizations today.  We're blending this merger, as

         3   indicated, from the establishment of a policy committee

         4   with three senior individuals from Bank of America and

         5   three senior individuals from NationsBank and we are going

         6   to attempt to operate on a nationwide basis.  This is the

         7   first coast-to-coast franchise.

         8            And in that sense, I think we have a clear

         9   understanding that to be successful on a nationwide basis

        10   size is not the only important criteria.  To be successful

        11   on a nationwide basis and take advantage of size, you have

        12   to demonstrate local market or natural market leadership.

        13   And that involves community investment efforts as well as

        14   day-to-day business efforts in terms of relating the

        15   products and services you provide in a natural market, be

        16   it the Bay Area or be it St. Louis or be it Jacksonville,

        17   Florida in a way that the market clearly believes that you

        18   have the decision-making power to offer the products and

        19   services that makes sense in that natural market.

        20            MR. McCOLL:  I would just like to add one thing.

        21   As to the understanding of the difference in the markets,

        22   which I think is a fair question, it should be noted that

        23   NationsBank operates in 16 states now, four major regions,

        24   each of which is different.  For instance, the cattle are

        25   more important in Texas by some staggering margin than

        26   they are in South Carolina where cotton is more important.


         1   And we have different industries, from aerospace to the

         2   furniture industry, just illustratively.

         3            And we understand that the needs of the

         4   individuals in each market are quite different and we

         5   respond.  I made the point earlier and I'd like to

         6   underline it, that we have local market leadership that

         7   makes decisions in the best interests of each individual

         8   community.

         9            So our response in Southern California may well

        10   be quite different from South Carolina, albeit it will be

        11   to achieve the same goals, which is support small

        12   business, adequate housing at fair values and services

        13   available to everyone in the areas where we do business.

        14   So it's not something we're unfamiliar with.

        15            We have earned our CRA ratings over a broad

        16   number of states and broad regions and we have

        17   demonstrably performed in facing the differences that are

        18   existent in each of these markets and we will continue to

        19   do so.

        20            Let me say one last thing.  We are Americans, we

        21   understand what America is about, and it's about all of us

        22   here in the room, even the right to disagree with each

        23   other.  And I just might -- in response to the earlier

        24   statement, you need to understand that we support and, in

        25   fact, furnish money to a large number of the groups that

        26   are here protesting this merger.


         1            MR. FRIERSON:  Let me follow up on the

         2   characterization which has been used several times here

         3   which is the coast-to-coast banking franchise.  This

         4   proposal has been characterized as allowing customers that

         5   would have access to approximately 5,000 branches and I

         6   believe 15,000 automated teller machines.  In addition to

         7   what you've told us already, can you provide us with any

         8   more detail on how it's going to serve the convenience and

         9   needs of those residents in communities who may only use

        10   the branches and the ATMs that are located within their

        11   own communities?

        12            MR. McCOLL:  Well, we'll try.  The first and most

        13   important thing that I believe that banks should do is to

        14   provide the fuel for the economy, that is, provide credit.

        15   Now, that's the first thing we should do.

        16            We have a large deposit base, but in addition to

        17   that, because of our strong earnings and capital base,

        18   we're able to raise money across the world.  And we have

        19   demonstrated conclusively and can demonstrate empirically

        20   that we're net importers of capital into every market in

        21   which we operate.  And so it starts with that, being a net

        22   importer of capital and furnishing it to markets no matter

        23   how large they are or how small they are.  We start with

        24   that and that's because of our strong ability to access

        25   the world markets and to bring money into the market that

        26   is beyond our deposit base.


         1            Secondly, because of our company's success, both

         2   companies' success, we are able to develop software that

         3   drives down cost, not only to us but to the customer, that

         4   is it makes the products that are available to the

         5   customer work better for them and facilitates the ease in

         6   which they do their business.  And that isn't a lot

         7   different, candidly,  from Wal-Mart which is a

         8   coast-to-coast company which does the same thing.

         9            Dave, you may want to comment further about that.

        10            MR. COULTER:  I have just a few comments.  Even

        11   if you're confined to a pretty small local market, I

        12   didn't move very far out of the small town I grew up in

        13   Port City, Pennsylvania for the first 16 or 17 years of my

        14   life.  I'd still argue that value and convenience that we

        15   can provide are quite important.

        16            Maybe you go to your normal -- maybe you go to

        17   your branch on a weekly basis.  But perhaps as technology

        18   changes and the world continues to evolve and you don't

        19   have transportation, if you can access your bank via your

        20   interactive cable TV, that's of some value to you.  If you

        21   need information about sending a child to college in

        22   another part of the United States and need to be able to

        23   move money back and forth to that child, that's of value

        24   to you.

        25            So I think the basic benefits you laid out at the

        26   start of the question are quite important and very


         1   valuable.

         2            In addition to that, it's certainly my experience

         3   here in California that it does not take a very small

         4   business today to have international, if not global,

         5   aspirations to look at this broad pacific rim which we're

         6   fortunate to be on one edge of and desire to sell some of

         7   its product offshore.

         8            Now, we're in a little bit of a disruptive

         9   economic period but I think that's a long-term desire and

        10   a long-term need.  And that's a case where I think the new

        11   BankAmerica Corporation can bring a wide range of services

        12   in how to do business in offshore markets that appear very

        13   foreign and very distant to many small businesses today.

        14   And as I said, I think most small businesses have those

        15   kinds of aspirations and dreams.

        16            MR. McCOLL:  I'd like to add one thing.  We have

        17   about a hundred thousand teammates in our company and Bank

        18   of America has approximately the same number of people who

        19   are drawing a paycheck, in effect, from the company, so a

        20   couple hundred thousand people working.

        21            We live in these communities, large and small,

        22   and if for no other reason, we all like our communities

        23   that we live in and it's in our interests both personally

        24   and corporately to support those communities and we're

        25   going to do that.

        26            Secondly, we are interested in making money.  We


         1   cannot make money if we don't do the things that banks are

         2   supposed to do.  That is, if we don't lend money.  If we

         3   do not make service and products available at reasonable

         4   prices, they can go somewhere else and we will lose the

         5   business.  So we are incented to do the right thing and

         6   will do so.

         7            MR. FRIERSON:  I have one last question, I just

         8   want to clarify the record.  NationsBank has stated that

         9   it will -- it intends to expand all aspects of the

        10   BankAmerica rural 2000 Community Development Initiative.

        11   Will the rural 2000 initiative be extended to all rural

        12   communities that would be served by the combined

        13   organization if the merger is approved and how will the

        14   initiative be expanded?

        15            MR. McCOLL:  Well, we'll do that where it makes

        16   sense.  And it will be expanded under -- obviously, under

        17   the leadership of the people who thought it up inside our

        18   company.  But we'll obviously have to bring more people to

        19   the -- bring more people to it from our company, that is,

        20   added staffing.  Because of time zones, because of

        21   different types of rural needs.  As I said, a rural need

        22   in eastern North Carolina or South Georgia is quite

        23   different from what it is in Kansas or Iowa or in Southern

        24   California or in -- right here in the valley.  So it will

        25   have to be tailored to be responsive to each region.  But,

        26   yes, we intend to continue with the outreach.


         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.

        12            Mr. Gamboa.

        13            MR. GAMBOA:  Yes, thank you.  Before I start, I

        14   want to also express my appreciation for you for holding

        15   these hearings.  And I have a procedural matter I'd like

        16   to raise before my timed testimony takes place.  I know

        17   from reading up about you that you are attempting to do

        18   the best job you can in making a determination on this

        19   bank merger.  And to do that job, I know you want to get

        20   as much fair testimony balanced as possible.  So I'm going

        21   to make a procedural request.  I'm not an attorney, so

        22   bear with me, please.

        23            And the procedural request is, since you're only

        24   having one hearing, that limits grassroots community

        25   organizations who don't have the resources to come here

        26   today to give testimony.  I think you should weigh that in


         1   when you hear from other organizations that are supported

         2   by Bank of America who pay their travel.  That will give

         3   you good information, the kind of information to give a

         4   balanced approach to make a decision.

         5            The other thing that's critical is information

         6   that you should use in determining this merger is there

         7   are numerous, I understand, outstanding discrimination

         8   complaints against NationsBank.  That information and

         9   those should be resolved and you should have that

        10   information before you make a determination.  I think that

        11   would be critical information for you in coming to a

        12   conclusion.  Or a decision.

        13            And, also, there is a CRA review being made now.

        14   I think that also will provide you with critical

        15   information.  I don't think any decision should be made

        16   until you're able to assess that CRA review of these

        17   financial institutions.  That kind of information I think

        18   would be extremely helpful for you to coming to a fair

        19   decision that I know you will come to.

        20            MS. SMITH:  Thank you for your comments and

        21   observations.  And then if we may go to your presentation.

        22            MR. GAMBOA:  Certainly.  I agree with Mr. McColl

        23   in one statement he made, that this hearing is not about a

        24   bank merger.  I think it's a little bit more than what he

        25   said than community investment.  I think it's about what

        26   kind of a country we want to be.  It's about a fair chance


         1   for the underserved community, the poor minority, recent

         2   immigrants to achieve the dream that most of us here today

         3   enjoy, the ownership of a home, and a safe neighborhood

         4   with good schools for the children, a chance for

         5   employment that provides a fair wage and health insurance

         6   for the family.  I think that's what we're discussing

         7   today.

         8            This dream is not being realized for far too many

         9   people, far too many people today.  We're involved right

        10   now in probably the most unprecedented booming economy

        11   ever in this country, and yet that economy is not being

        12   equally shared across this country.

        13            For instance, every day you see in the newspaper,

        14   you read the rich are getting richer and the poor are

        15   getting poorer.  This economy is not being balanced out

        16   and spread out evenly.  For instance, the national child

        17   poverty rate grew BY 26 percent from 1970 to 1997.  Entry

        18   level wages for male high school graduates fell 28 percent

        19   from 1973 to 1998 in real dollars.  80 percent of white

        20   families in this country own their own homes.  40 percent

        21   of minorities do.  71 million low-income children have no

        22   health insurance, yet most of their parents are working.

        23   In the richest nation ever in the history of the world,

        24   over one million children will not have an adequate meal

        25   the day before their parents are made.  You may ask what

        26   does this have to do with a bank merger?  I think it has


         1   everything to do with a bank merger.  In the first place,

         2   it's not a merger, it's an acquisition.

         3            You heard today Hugh McColl make a commitment of

         4   $350 billion, a CRA commitment.  Well, I can state that

         5   that commitment is hollow.  It's hollow because CRA,

         6   itself, has -- is weak.  CRA does not -- will allow

         7   financial institutions to receive outstanding ratings, and

         8   have before in the past, that have made zero, and I mean

         9   zero, not one loan to an African American family, that's

        10   what CRA can do.  And the reason that we have requested

        11   definitive commitments in that CRA commitment is because

        12   the track record of the financial institution is not good.

        13            For instance, you heard Hugh McColl speak about

        14   the millions of dollars.  I was impressed when I sat in

        15   that chair right there and when I heard him talk about

        16   these millions of dollars.  What you did not hear him

        17   speak about is the percentage of the billions of dollars

        18   they have.  That is much more meaningful.  We can get

        19   swayed when people talk about a million dollars because

        20   that's a lot of money to me and to most people in this

        21   room.  But it's not a lot of money when you look at the

        22   amount of money they have.

        23            For instance, less than one percent of the total

        24   dollar amount of NationsBank loans went to African

        25   American owned businesses.  Less than two percent of the

        26   total dollar amount of the NationsBank business loan went


         1   to African American owned businesses.  Less than two

         2   percent of the dollar amount of BofA's home lending

         3   dollars went to African American households.  And adjusted

         4   for differences in population, BofA has a similar report

         5   lending record among Latinos and Asian Americans.  And

         6   neither bank has goals for minority business contracts.

         7   That's the kind of record that this financial institution

         8   has.

         9            What we are asking them to do is not to do any

        10   precedent setting but to match the CRA commitments that

        11   other good financial institutions have done.  Wells Fargo,

        12   NationsBank -- Wells Fargo and WaMu, Home Savings, Union

        13   Bank, CoAmerica and others have all made specific

        14   commitments because they're not afraid to make those kind

        15   of commitments because they know they will meet them.  But

        16   NationsBank is the only large bank and Bank of America who

        17   have refused to make these commitments to our community.

        18   Why?  If they're sincere about making them, they should

        19   put them down and put it into the record.  I can only

        20   guess that they're not sincere about doing it.

        21            We have met with CEO of NationsBank and BofA a

        22   couple of times and they have said, "We're against

        23   quotas."  Well, our community is against quotas, too,

        24   because quotas have always frozen us out.  But every

        25   single business organization sets goals.  The commitments

        26   we're asking are goals, not quotas.  It's not any


         1   different than any part of the working business.  You set

         2   goals in sales, you set goals in marketing, you set goals

         3   in service.  We're telling them to set goals in the CRA,

         4   it's no different.

         5            Lastly, I'll conclude, Dave Coulter said that

         6   BofA was The Movie Bank.  I guess it should be something

         7   to be proud of, I wouldn't be.  I think what we're asking

         8   for Bank of America and NationsBank to be is a moving

         9   bank, moving to reach out to our communities, to make

        10   money by providing new services and products and doing

        11   good in our community.  It will be a win-win solution, a

        12   win for them, they'll receive income and profits, and

        13   certainly a win for our community, but they cannot do that

        14   without creating a work force that matches the diversity

        15   of the marketplace they want to reach.  Both banks have

        16   refused to provide us with the data of their top

        17   management.

        18            And one other thing, too, is that they talked

        19   about their charitable contributions and how they should

        20   get lots of credit for their charitable contributions.

        21   But if you look at their charitable contributions, they're

        22   doing about one-half of what the banks I have previously

        23   mentioned in percentages.  And if you look at their

        24   charitable contributions, I think the total for one of the

        25   banks was $77 million, it looks real impressive.  But when

        26   you look at the income of just a few, a handful of those


         1   executives who make those decisions, it was $88 million.

         2   That's not much of a charitable contribution.  Thank you.

         3            MR. FISHER:  Good morning.  I'm Alan Fisher from

         4   the California Reinvestment Committee.  We're a statewide

         5   coalition of more than 190 nonprofits and public agencies

         6   that advocate for increased access to banking for

         7   low-income communities and communities of color.  We've

         8   negotiated CRA agreements with all the major California

         9   financial institutions over the last decade.

        10            I was interested in listening to Mr. McColl talk

        11   about some of the fine things that the bank has done.

        12   Many of those things has come out of discussions with CRC

        13   members and other community organizations, Greenlining, et

        14   cetera, that has really moved the bank on.  And I think

        15   that's one of the worrisome things that I'll get to about

        16   the press release that talks about $350 billion.  That's

        17   preemptive of community discussion.

        18            You'll hear CRC members speak on this panel and

        19   other panels today representing their community and

        20   community development organization because CRA is about

        21   local neighborhoods, it's not about 22 states all at one

        22   shot, it's about what happens in particular neighborhoods.

        23   We have concerns about this, and clearly as you've heard

        24   today, the majority of the California Congress people on

        25   the Banking Committee, the L.A. City Council, the

        26   San Francisco Board of Supervisors and other elected


         1   officials have, as well.

         2            It worries us, not only because it's the sale of

         3   a great California bank, because from our point of view

         4   it's not a merger, it's an acquisition of Bank of America.

         5   But the loss of that headquarters to a bank that's

         6   headquartered 3,000 miles away and to a bank that has

         7   refused to make a specific CRA commitment to California

         8   and its diverse communities, therefore, we oppose this

         9   acquisition.

        10            More than 300 of our members and other California

        11   organizations and individuals joined with us writing in to

        12   the Federal Reserve calling for hearings and we are

        13   pleased that you are holding hearings in at least this one

        14   location of the 22 states.  But, again, we call on you to

        15   hold hearings throughout California and in the other

        16   states affected because CRA is about what happens in local

        17   communities.

        18            Anyone can see by the amount of response to this

        19   hearing that one hearing alone is tokenism.  We all know

        20   that a hearing itself is not the same as the sort of

        21   regulatory oversight that you'll have to have over these

        22   22 states.  So we hope that this one hearing is not a

        23   portent of the level of oversight that there will be.

        24            I'm going to try and just hit on a few specific

        25   points today and our letter will go into more detail.  I

        26   mean, our concerns are such that I could probably talk all


         1   day.

         2            I'm not a lawyer, either, I didn't know that John

         3   and Bob were going to raise this issue about people

         4   traveling here, but I have a somewhat different suggestion

         5   in terms of speakers.  I know you're going to hear a great

         6   many people.  In the interest of a clear record, I would

         7   recommend the following.  That if grantees of either bank

         8   testify against the merger, their testimony should be

         9   given a plus 2.  If grantees of either bank have been paid

        10   expenses to testify, they're testimony should receive a

        11   minus 2 and so forth.

        12            So, again, community reinvestment is about access

        13   to banking for neighborhoods.  It's about a bank

        14   affirmatively meeting the local needs of low-income people

        15   and people of color.  So we worry when NationsBank

        16   preemptively sums up 22 states in a three-page big dollar

        17   press release with nice phrases and little substance.  It

        18   presumes that they know better than the communities about

        19   what the needs are.

        20            We've met several times with the bank and would

        21   sum up the last meeting and the ones before as saying that

        22   they say no very nicely.  This is particularly worrisome

        23   because, as far as we're concerned, California came into

        24   this takeover with, one, a 1992 commitment letter from

        25   Richard Rosenberg, CEO of Bank of America, that was a very

        26   good specific commitment which is still in effect, as far


         1   as we're concerned, it has no ending date.

         2            Secondly, last year Bank of America upped its

         3   1992 goal to 140 billion of which the bank has stated that

         4   70 billion is for California communities.

         5            Thirdly, the commitment for $40 billion -- $40

         6   million, all these big numbers, 40 million dollars in 1998

         7   charitable contributions of which, from our calculations,

         8   roughly 25 million was for California and 25 percent for

         9   community economic development and housing development.

        10            Bank of America also, as you've heard, has made

        11   commitments around the economic development and rural

        12   initiatives that were just beginning to be defined and are

        13   still being defined.  There needs to be a specific CRA

        14   commitment by NationsBank to California that addresses the

        15   diverse needs of California's communities, retains the

        16   Community Development Bank with its mission to build a

        17   nonprofit infrastructure and not compete with it, gives

        18   clear dollar amounts and objectives for the economic

        19   development and rural initiatives, honors the written

        20   commitments and practices of BofA and targets those most

        21   in need.

        22            Your own studies cast doubt on the real value for

        23   sharholders and customers in such mega-mergers.  From the

        24   altitude of $570 billion in assets, will such a monolithic

        25   bank even see local neighborhoods?  Without a specific

        26   measurable commitment, NationsBank can ignore all but the


         1   most profitable customers.  Bigger is not better, as far

         2   as we're concerned, and less neighborhoods are affected.

         3   We think that this merger will -- this merger, acquisition

         4   will decrease competition.

         5            After all, this is a bank, as was said before,

         6   that has a worse record in 1996 making home loans to

         7   African Americans in its home state than Bank of America

         8   did in North Carolina.

         9            Every major bank merger in California has

        10   included a specific commitment since Richard Rosenberg's

        11   1992 letter.  BofA set a standard that NationsBank is

        12   undercutting and obliterating.

        13            If the Federal Reserve wants to maintain

        14   progress, it must condition any approval on a specific and

        15   enforcible commitment.  In addition, this bank has a

        16   concentration that is extremely worrisome from our point

        17   of view.  It has almost nine percent of the national

        18   market share but it's only in 22 states.  In those 22

        19   states, it has a one percent market share in almost every

        20   state, and we think that's of grave concern in terms of

        21   competition and access for those who are, quote,

        22   "unprofitable."

        23            So, again, thank you for the opportunity to

        24   speak.

        25            MR. BIVINS:  Good morning, my name is George

        26   Bivins, I'm the Chairman of the Black Association of


         1   Los Angeles.  We have over 850 African American business

         2   owners.  Many of those business owners are customers of

         3   the Bank of America.

         4            Take any statistics compiled by local, state or

         5   federal government regarding banking, including the many

         6   statistical reports compiled by independent surveys, and

         7   you will find African American -- African Americans are

         8   consistently benefiting less from banks, S&Ls and thrifts.

         9   Government regulators must take action to protect us.

        10            My colleagues and I would not be here today if

        11   Bank of America and NationsBank were good corporate

        12   citizens.  The Black Business Association shares the lack

        13   of confidence of this merger along with the National Black

        14   Business Council and the National Black Chambers of

        15   Commerce.  These three organizations nationwide represent

        16   over 75,000 black businesses nationwide.  We are prepared

        17   to prove that less than one percent of the dollar value of

        18   all business loans lent by these two banks went to African

        19   American businesses.  What we have here is a clear case of

        20   white wealth built on minorities' labor.  We have a clear

        21   case of white wealth built on minority labor.  Regulators

        22   hear are plea.

        23            The black community demands inclusion, inclusion

        24   leads to growth, exclusion leads to poverty for all our

        25   communities.  Regulators, hear our plea.

        26            Less than two percent of the Bank of America and


         1   NationsBank vendor contracts are awarded to African

         2   Americans.  Unlike its competitors of Wells Fargo, Union

         3   Bank and Sanwa Bank.

         4            I will give you an example, a clear example of

         5   this.  I am in the insurance business and I am the

         6   insurance agent for Sanwa Bank which is the fourth largest

         7   bank in this state.  Bank of America will not even give me

         8   an appointment to come in and present my product to them.

         9   I have tried for five years.  This is a personal

        10   experience that I can tell you.  And I'm a very good

        11   insurance agent, I've been in the business 26 years, I

        12   compete with the same insurance agents for business of

        13   Bank of America as I did with Sanwa Bank and I beat the

        14   price.  So what does this tell you?  I am just as

        15   qualified or even more qualified than some of the vendors

        16   that call on Bank of America, but they choose not to even

        17   give me an appointment.

        18            Inclusion leads to growth, exclusion leads to

        19   poverty.  Regulators, please hear our plea.

        20            They are willing to set goals of any kind.  They

        21   throw out large numbers such as $350 billion CRA

        22   commitment.  How do we monitor this?  Regulators, hear our

        23   plea.

        24            There are many pending race discrimination cases

        25   which were brought out earlier before the Justice

        26   Department.  While these cases are waiting to be heard,


         1   the large number of cases filed would suggest there is a

         2   definite problem with the validity of these cases.  Some

         3   of these cases must be valid.  Regulators, hear our plea.

         4            Bank of America lost millions of dollars overseas

         5   but were bailed out by the IMF but minorities can't get a

         6   small business loan.  Regulators, please hear our plea.

         7            Is this the outline of a good corporate citizen?

         8   This is how Bank of America and NationsBank represent

         9   themselves to you, but they can't fool us.  We have had

        10   the opportunity to deal with them on a firsthand basis.

        11   This merger brings capitalism to our communities but

        12   without capital.

        13            During the civil rights movement, we won

        14   everything we fought for but we don't have what we need.

        15   Regulators, please hear our plea.  Thank you very much.

        16            MS. ORR-SMITH:  Good morning, my name is Gayle

        17   Orr-Smith and I'm here representing the San Francisco

        18   chapter of National Association of Negro Business and

        19   Professional Women.

        20            My focus today would be to introduce to Bank of

        21   America some data about minority women in business.  And I

        22   offer this testimony and this information because of the

        23   dismal record that NationsBank and Bank of America have

        24   with providing loans to minority women business owners.

        25       Also, there's a caution in my remarks that, when you

        26   target women, you're targeting majority women, white


         1   women, non-minority women in their outreach for small

         2   business loans.  When you target minorities, you target

         3   minority women, as well.  Very often, that segment of the

         4   target group is really underrepresented and underfocused

         5   on as a target group.

         6            Bank of America and Nations have said they don't

         7   need specific goals.  But I think after hearing some of

         8   this data you might agree with me that there should be

         9   some targets for this particular segment.

        10            One in eight or 13 percent of nearly eight

        11   million women owned businesses in the United States is

        12   owned by a woman of color.  These 1.2 million minority

        13   owned firms employ 1.2 million people and generate nearly

        14   $200 billion in sales annually.  Over one-third or 37

        15   percent of minority owned business firms are owned by

        16   blacks, roughly 400,000 firms.  35 percent are owned by

        17   Hispanic women, roughly 380,000.  And 28 percent are owned

        18   by women of Asian, American Indian or Alaskan native

        19   heritage, 300,000 firms.

        20            Between 1987 and 1996, the number of minority

        21   owned women firms has increased about 153 percent.  It has

        22   increased by 206 percent among Hispanic women owned firms,

        23   by 138 percent among Asian and other women owned firms,

        24   and by 135 percent by black or African American women

        25   owned firms.

        26            Between 1987 and 1996, employment, that is jobs,


         1   within these firms, among all minority firms, has

         2   increased nearly fourfold or roughly 300 percent.  It has

         3   grown by 487 percent among Hispanic women owned firms, by

         4   319 percent among Asian and other Native American firms

         5   and by 70 percent among black women owned firms.

         6            Between 1987 and 1986, sales, that is revenues

         7   generated, by all minority women owned firms has increased

         8   fourfold as well, up to 318 percent.  It has jumped by 534

         9   percent among Hispanic women owned firms and by 430

        10   percent among Asian and others, and 55 percent among black

        11   women owned firms.  And it will be interesting to know the

        12   top ten states for minority businesses, based on the

        13   average ranking of the number of firms, employment and

        14   sales, are number one, guess, California.  Number two,

        15   Texas, Florida, New York, Illinois, Virginia, Maryland,

        16   New Jersey, Hawaii, and Washington, D.C.

        17            Now, just think what the bank could accomplish if

        18   it were targeting small business loans to minority

        19   business women.  This data is provided by the National

        20   Foundation of Women Business Owners in Washington, D.C.

        21   who extrapolate such data, and this data has been used by

        22   many corporations to market and target women owned

        23   businesses as a market group because their revenues and

        24   their sales and their growth demonstrates that they need

        25   this kind of attention.  And I think this would be a key

        26   opportunity for Bank of America and Nations to look at an


         1   entirely new market segment and recognize these women as

         2   contributing to the national economy.

         3            They say that their programs of goal setting

         4   doesn't need specifics, they say that their minimum goals

         5   and commitments are a floor.  Well, I tell you without a

         6   clear plan and strategy, a floor can quickly become a

         7   ceiling.  And if you're looking at local versus national,

         8   at least here in California we've had the benefit of

         9   working closely with BofA.  They've been able to listen

        10   and we can work with them.  There's still room for growth,

        11   but I don't know how much more effective they will be and

        12   how effective we'll be talking to North Carolina, so we

        13   think local is better.

        14            And without clear goals, many things can affect

        15   your commitment or the corporate commitment over time,

        16   there's erosion as a result of personnel changes.  How do

        17   we know that McColl and Coulter are going to stay at the

        18   helm and, in fact, their legacy or their commitment to

        19   minority outreach, as they stated, will, in fact, stay in

        20   place when personnel changes occur.

        21            And then a leadership philosophy is more than

        22   just words, it means that it has to be communicated

        23   throughout the organization and enforced and incentives

        24   provided within the corporation to ensure that all of the

        25   local affiliates and associates of the branch and of the

        26   bank adhere to the goals and standards that are set at the


         1   highest level.

         2            Targets and measurable data help us to know where

         3   we've been, where we're going and can focus us to be

         4   effective in targeting where the greatest need is and the

         5   greatest opportunity for economic gain by the banks,

         6   themselves.  We're seeking a win-win relationship and we

         7   believe that targets, established goals with clear

         8   strategies where minorities and others can work with the

         9   bank to achieve these goals will be the maximum benefit

        10   for everybody concerned.  Thank you.

        11            MS. ADAMS:  Members of the Federal Reserve, my

        12   name is Stella Addams and I'm the Executive Director of

        13   the North Carolina Fair Housing Center and I bring you

        14   greetings today on behalf of the people from the woods and

        15   the hoods of North Carolina.  Our state motto is to be

        16   rather than to seem.

        17            The people of North Carolina want to be

        18   homeowners.  The people of North Carolina want to be

        19   entrepreneurs and business owners.  The people of North

        20   Carolina want to be residents in safe and healthy

        21   neighborhoods.  The people of North Carolina want to

        22   reside in communities that are economically and socially

        23   integrated.  The people of North Carolina want to be

        24   catalysts for positive change in their communities.

        25            By contrast, NationsBank seems to be a leader in

        26   lending to minorities.  NationsBank seems to be a leader


         1   in lending to small minority business people.  NationsBank

         2   seems to be a leader in community reinvestment.

         3            But I can honestly say to you that Nations

         4   expansion west has reduced its commitment at home.  When

         5   NationsBank first merged with C&S/Sovran, it was the

         6   number one bank in North Carolina.  Now, it is the number

         7   five bank in our state.  It used to be the best bank in

         8   the neighborhood.  You ask any native tarheel whose slogan

         9   that was and they will readily tell you it was NCNB.  But

        10   now that it has a focus on being the best bank in the

        11   world, our neighborhoods in North Carolina have become

        12   insignificant.  We are worried about our future with this

        13   bank.  How long will it be profitable to remain

        14   headquartered in a state in which you are not competitive?

        15            Nations certainly shows no interest in obtaining

        16   greater market share in our state.  When we shared our

        17   concerns with them about their sixth place placement in

        18   small business lending in North Carolina, they had a sort

        19   of "What do you expect?  We're not the biggest bank in the

        20   state" attitude.  Well, when I share with their

        21   competitors where they're missing the mark, they have a

        22   "What can we do together to improve" attitude.

        23            NationsBank's commitment to community

        24   reinvestment is all smoke and mirrors.  This is easy to do

        25   when one has no set targets, no set goals.  Who then can

        26   question whether or not you have done enough?  Who then


         1   can say that you've accomplished anything long standing?

         2   I enter into the record a community needs assessment for

         3   North Carolina.  I expect you to do your job and analyze

         4   whether a demand based solution is sufficient to meet this

         5   need.

         6            I understand that Mr. McColl is a great military

         7   straegist and he has certainly carried out his campaign to

         8   become the first coast-to-coast bank with a determination

         9   and brilliance of Patton, or maybe it's closer to

        10   Sherman's march to the sea.

        11            He has developed a clear vision and a strategy

        12   and a strategic plan of action for every stage of this

        13   merger except one and that is the community investment

        14   program.  Instead of precision planning and targeting to

        15   get the biggest bang for the buck, he has opted for a

        16   scattershot approach.  And I know you all don't know much

        17   about shotguns out here.  But you're sure to hit something

        18   but you are not necessarily going to make an impact.

        19            We want a strategic plan of action.  We want

        20   quantifiable goals and objectives to meet the credit needs

        21   of our communities.  Here's to the land of the long leaf

        22   pine, the summer land where the sun doeth shine, where the

        23   wheat grows strong and the strong grow great, here's to

        24   down home, the old North State.

        25            The people of North Carolina helped its financial

        26   institutions grow great through our deposits, our loyalty


         1   and our visionary banking laws.  NationsBank is honor

         2   bound to serve the people of North Carolina and the other

         3   underserved communities throughout the franchise.  We are

         4   not unprofitable customers.  We ask only for access to

         5   capital and the opportunity to prosper and to grow strong.

         6   Thank you.

         7            MR. LUI:  Madam Chair and members of the panel,

         8   my name is Earl Lui, I'm a staff attorney with the west

         9   coast office of Consumers Union.  Consumers Union is the

        10   nonprofit publisher of Consumer Reports Magazine and our

        11   magazine regularly writes on banking and other financial

        12   services issues.  Our office has also been involved in CRA

        13   activities for over ten year and was a founding member of

        14   the California Reinvestment Committee.

        15            Our basic concern or position is that the lack of

        16   specific commitments with this plan of acquisition and our

        17   belief that the Fed cannot accomplish its goal or mission

        18   of examining the convenience and needs of local

        19   communities without having those specific commitments in

        20   place.

        21            I disagree with what Mr. McColl said about the

        22   problems with creating goals.  As others have said

        23   already, having goals and targets is a part of any kind of

        24   business plan and it should be part of a CRA plan.  And

        25   without having those agreements and commitments in place,

        26   we don't see how the Fed can truly review the impact of


         1   this acquisition on the local communities in all these

         2   states in which you're looking at.

         3            And so because of the size of this merger and

         4   because of the mergers to come, your actions and decisions

         5   and any conditions you place on this acquisition will set

         6   a crucial precedent and will really help answer what I

         7   think is the critical question here, which is will the

         8   Federal Reserve take its role of protecting the public

         9   interests seriously or will it simply act as a rubber

        10   stamp for mergers, for this merger and all mergers to

        11   come?

        12            So as part of requiring specific commitments, I

        13   think that can be done in a number of ways.  And our

        14   written testimony has talked about them.  But one possible

        15   solution to that would be to hold up approval of any

        16   merger until this new bank reaches CRA commitments with

        17   the CRA groups and community groups in each state in which

        18   it does business.  We think, again, that more time will

        19   allow fruitful negotiations to take place and approval of

        20   this merger should not be rushed.

        21            I think another way to do that is to simply look

        22   at the existing CRA commitments that are out there.

        23   Particularly in Bank of America's case, as Alan Fisher of

        24   CRC has mentioned, Bank of America has a very specific and

        25   detailed CRA commitment.  And at the very least, the Fed

        26   and its staff should review every component of that


         1   commitment and question the bank's management about each

         2   and every part of it to see whether or not those parts are

         3   retained or not and should receive a definite commitment

         4   before deciding on approval of this acquisition.

         5            Other people have already focused a little bit on

         6   some of the lending and investment activities of these two

         7   banks.  I'm just going to focus briefly on some of the

         8   consumer issues that Consumers Union, in particular, are

         9   interested in.  Our interests has always been in

        10   increasing access to banking services for underserved, low

        11   and moderate and communities of color.  And again, in our

        12   observation, these acquisitions and mergers really haven't

        13   benefited those communities in which we're most concerned

        14   about.

        15            And again, there are several ways in which the

        16   Fed can put in some conditions and require some kind of

        17   commitments in all of these areas before any approval of

        18   this merger.  I think, at the very least, the board should

        19   require the new bank to make a commitment to serving

        20   low-income customers with affordable low cost banking

        21   services, savings accounts and checking accounts, for

        22   example, as well as access, of course,  to credit

        23   products.  But, as you know, with EFT99 and

        24   welfare-to-work initiatives, the access to banking

        25   services is even more important now than it has been

        26   before.


         1            And again, there should be some kind of

         2   commitment about the type of product, the type of account

         3   that EFT99 recipients will receive.  Obviously, that

         4   account should be a low cost account and should be

         5   administered through the bank and not through check

         6   cashier's or other expensive fringe banking institutions

         7   that are out there.  And again, no such commitments have

         8   yet been made by this new bank.

         9            With regard to mergers in general, again, we've

        10   seen that the supposed cost savings that the banks incur

        11   are not passed on to consumers.  And we ask that a portion

        12   of the cost savings in this acquisition be dedicated

        13   towards increasing access towards banking services for

        14   low- and moderate-income consumers.  We think a

        15   prohibition on new fees or increased fees on products

        16   should be instituted.  As the Fed's own study and other

        17   studies have indicated, fees tend to rise after these

        18   kinds of mergers and acquisitions.  And again, all those

        19   implications need to be looked at by the Fed.

        20            There's been no commitment towards branch

        21   closures, to retaining the Bank of America's branch

        22   closure policy, and no word at all about possibly opening

        23   more branches in underserved communities, and again, those

        24   are issues that need to be addressed before approval is

        25   granted.

        26            Finally, I'd like to raise another point which


         1   concerns the non-banking affiliates and subsidiaries of

         2   bank holding companies.  NationsBank, for example, has a

         3   finance company subsidiary, Nations Credit, as do a number

         4   of national banks, and Consumers Union is seriously

         5   concerned about some of the activities of these sub prime

         6   lenders and their involvement in lending activities that

         7   aren't beneficial to low-income people.

         8            We think it doesn't make sense for the Fed to

         9   regulate a bank that has a CRA commitment and then also

        10   ignore that same bank holding company's affiliates who

        11   basically engage in anti-CRA lending activities.  And that

        12   issue, I think, is an important one and needs to be

        13   addressed, again, because more and more banks are pursuing

        14   the sub prime market and are acquiring these types of

        15   predatory lenders.

        16            In closing, again, this acquisition sets a

        17   precedent, and I agree with the comments that were made

        18   before about the need to do it right and to have more

        19   hearings and to require specific commitments, and we urge

        20   you to seriously consider all our concerns.  Thank you.

        21            MS. SMITH:  Next.

        22            MR. SKILLERN:  I'm Peter Skillern, I'm Executive

        23   Director of the Durham Affordable Housing Coalition in

        24   Durham, North Carolina, and Chairman of the Community

        25   Reinvestment Association of North Carolina, and I

        26   appreciate being here today.


         1            Benjamin Franklin said, "Our critics are our

         2   friends because they point out our weaknesses so that we

         3   can improve ourselves."  And certainly NationsBank's

         4   friends have turned out in force today.  I also consider,

         5   actually, myself a friend of NationsBank.  I'm one of

         6   those organizations that Mr. McColl spoke of in helping to

         7   pay for some of our community service work.  But as

         8   friends, I still have a strong disagreement with

         9   NationsBank and have come here to express it to you and

        10   ask for a remedy.

        11            In 1993, NationsBank acquired First Chrysler and

        12   the Charlotte Observer ran an article, which I'll submit

        13   to the record, describing how NationsBank promised to

        14   clean up First Chrysler's lawsuits and also to make sure

        15   that NationsBank in the future would, quote, "follow sound

        16   lending policies and practices in full compliance with

        17   applicable laws and regulations."  The Federal Reserve in

        18   approving that acquisition agreed.

        19            And yet five years later, we still find instances

        20   of predatory lending practices.  We still find concerns

        21   about approving another merger which still does not

        22   address this important issue.

        23            I applaud the many good things that NationsBank

        24   has done in North Carolina from investments in CDFI's to

        25   their charitable contributions to the good loans that

        26   they've made.  And yet I cannot let go of the fact that


         1   while they're doing well, they're also doing harm.

         2            I submit to you a letter from Carlene McNolty,

         3   Attorney for the North Carolina Justice and Community

         4   Development Research Center who reviewed a 1996

         5   NationsCredit loan to Audrey and Kenneth Snipes.  And in

         6   it she finds that a number of law practices were violated.

         7   For example, Nationscredit failed to disclose loan terms,

         8   including that it was an adjustable rate mortgage.  It

         9   packed the loan with fees, including over $5,000 in

        10   settlement fees for a $110,000 loan, and thus charged

        11   usery rates under North Carolina law.  NationsCredit then

        12   flipped the loan by increasing the adjustable rate by two

        13   points in the first year and then explaining to them that

        14   they'd be glad to refinance at a fixed rate, but if they

        15   took their business elsewhere, there would be thousands of

        16   dollars in prepayment penalties.

        17            I introduce into the record the case of Beatrice

        18   M. Smith from Atlanta, Georgia who is currently in

        19   litigation with NationsBank over predatory lending

        20   practices.  In her case, the loan terms were not fully

        21   disclosed.  The loan was packed with high fees, including

        22   the sale of credit life insurance, and the loan was

        23   flipped six times in six years, once again starting with

        24   Chrysler First and the last two times with NationsCredit.

        25   The practices had not changed in the changing of the hands

        26   of who owned Chrysler first.  She's now fighting


         1   foreclosure by NationsCredit after rejecting an offer to

         2   stop a media story on the issue in exchange for having her

         3   loans forgiven.

         4            I enter into the record the case of Juanita Smith

         5   from Atlanta who was charged over $10,000 in credit

         6   insurance which was included in an $85,000 loan.

         7            I introduce into the record the concerns of a

         8   resident from Morrisville, North Carolina regarding the

         9   harassment of NationsCredit.  In his protest of this

        10   merger, Matthew Lee of Inner City Press does a good

        11   analysis of Equicredit's lending to minority households

        12   compared to NationsBank and Nations Mortgage.  Equicredit

        13   is now a subsidiary of NationsBank.  It, too, is a sub

        14   prime lender with high fees and high points.

        15            We question and ask how will NationsBank moving

        16   forward reach these two markets, the African American

        17   minority market and the majority white market fairly and

        18   how will it conduct the practices?  We request that the

        19   Federal Reserve investigate NationsCredit's lending

        20   practices and place conditions on the merger to ensure

        21   that these practices are ended and not expanded throughout

        22   the country.

        23            NationsCredit has grown large from it's

        24   acquisition of Chrysler First, it's now over $30 billion.

        25   And in addition, according to the Security Exchange

        26   Commission, NationsBank is a primary lender to Southland


         1   Associates, Commercial Credit Loans, Moreequity,

         2   Incorporated, and American General Finance among other sub

         3   prime lenders.

         4            The size of NationsBank before the merger makes

         5   it an important and dominant player in this parallel

         6   banking institutions and it cannot go unquestioned or

         7   unregulated by the Federal regulators.

         8            I am not yet impressed by Ken Louis' assurances

         9   to run NationsCredit right or not at all.  Certainly it

        10   hasn't taken five years to determine that changes need to

        11   be made.

        12            I'd like to highlight ten things that we

        13   recommend that NationsCredit can do.  And I'll submit them

        14   as part of the record.  But, in general, we want

        15   NationsCredit to offer A credit products as well as B and

        16   C credits, change the pay and incentive plan of

        17   NationsCredit's front line personnel, develop a standard

        18   pricing system for risk that provides a range of price

        19   over a continuum of risk, develop a loan review process to

        20   ensure loans are soundly, fairly and legally underwritten,

        21   contract for self-testing for fair housing and consumer

        22   protection violations, require the sub prime companies

        23   that are financed by NationsBank to meet similar industry

        24   standards, provide leadership in calling for legislative

        25   and regulatory reforms, have Hugh McColl demonstrate his

        26   commitment and leadership to cleaning up the practices and


         1   image of NationsCredit, provide HMDA data for

         2   NationsCredit as a separate lender for the public to

         3   better analyze its overall lending practices, and 10, make

         4   a good faith effort to review loans and make those whole

         5   who have been injured by these illegal loans.  Thank you.

         6            MS. SMITH:  Thank you.

         7            MR. WILLIAMS:  My name is Kevin Williams, I'm a

         8   member of the board of directors of the Greenlining

         9   Institute, also a professionally employed Human Rights

        10   Officer with the City and County of San Francisco Human

        11   Rights Commission.  And I am here to speak against the

        12   merger.

        13            This half trillion dollar merger is very

        14   reminiscent of the '50s and the '60s when the freedom

        15   fighters were getting off the bus, both black and white,

        16   and were being beat.  Those protestors had the right to

        17   assert the cause of freedom and justice for their people.

        18   And as the beatings were occurring, the F.B.I. were

        19   present standing back on the sidewalk taking notes.

        20            And that has been symbolically what the Federal

        21   Reserve Board has done, it has been federal, it has been

        22   reserved and we are bored with the diet of discrimination

        23   that we continue to endure year after year, hearing after

        24   hearing.  This is not a hearing, per se, it is a ceremony,

        25   we know that.  It's a ceremony because we know the merger

        26   is going to be approved.  The merger was approved, not


         1   here in this room, but on the golf course.  It was

         2   approved in some of the social halls where the elite meet,

         3   the deal was cut and we are here to say we know the gig is

         4   up.  We are watching because the diversity of the State of

         5   California is in the room, it's watching the decision that

         6   you're going to make.  We already know.  I don't proclaim

         7   to be a prophet, but I know the deal has already been cut.

         8   You've been cut in and we've been cut out.  We already

         9   know that.  We're here to say that time, our time, should

        10   be now.  At this time in history, we need some type of

        11   assurance that NationsBank and Bank of America will do

        12   what is right.

        13            You know, right after a meeting of the

        14   Greenlining Institute, I walked over to Hugh McColl and he

        15   shook my hand and he said, "You know, Mr. Williams, you

        16   have been critical of us but, you know, at 63 I can walk

        17   away from this a rich man."  I say to Hugh McColl, Kevin

        18   Williams is richer than both of you because I know the

        19   difference between right and wrong.

        20            MR. PEEK:  Good afternoon, my name is Ronald Peek

        21   and -- well, I'm hopefully going to speak loud enough for

        22   everybody.  I've come to you from Florida.

        23            MS. SMITH:  It is working.

        24            MR. PEEK:  I have come to you from Florida with

        25   the Concerned Citizens Political Action Committee and we

        26   advocate for the cause of black business development in


         1   the State of Florida.

         2            Before I start, I'd just like to ask you all to

         3   join us all in Florida in prayer, we're praying for rain.

         4   And so we'd appreciate your prayers in that regard.

         5            Thank you for the opportunity to testify

         6   regarding the concerns of Florida black businesses in

         7   terms of this merger application.  As NationsBank is the

         8   largest bank in the State of Florida, our experience with

         9   their lending policies to African American businesses in

        10   the State of Florida is important.  Florida is

        11   historically a state where CRA has yet to come into its

        12   own sovereignty.  It ranks in the last two percent of all

        13   states in terms of all CRA measurements.  No bank there is

        14   a clear leader in the shift that must occur to bring

        15   Florida into parody with at least the mode of the states

        16   of the union enjoy.

        17            This merger is significant as the largest to date

        18   in our country's history.  The recent purchase of Barnett

        19   Bank by NationsBank gave black businesses the opportunity

        20   to open dialogue with NationsBank.  This dialogue produced

        21   the issues which dictated a trip to San Francisco.

        22            The chairman of NationsBank has yet to take a

        23   leadership role in negotiations with us to develop a

        24   detailed lending commitment plan for the State of Florida

        25   concerning black business development.  His local manager

        26   for CRA in Florida said, "Take whatever they offer or


         1   leave it."  A classic monopolist's response.

         2            We would also beg the board to hold an additional

         3   hearing in the State of Florida and other states so

         4   affected -- those directly affected and unable to come

         5   here can voice their concerns to this audience without

         6   hardship.

         7            Chairman Greenspan has stated in his January,

         8   1998, Wall Street address along with President Clinton

         9   that access to capital for black businesses is important

        10   for overall growth and our general economy.  Chairman

        11   McColl has stated on many occasions in speeches that we

        12   all can find on the internet that access to capital is

        13   important to black business development.

        14            Our concern is that putting these statements into

        15   practice involve dedication of resources.  Without such

        16   dedication, there is no truth to commitment.  The

        17   infrastructure in place to deliver loans to African

        18   American businesses in Florida, the black business

        19   investment corporations has almost matched the total

        20   effort of all banks in that state in this regard.  It's a

        21   good model.  NationsBank has played some role in this

        22   delivery, though not the role of the vanguard or leader as

        23   it claims with intoxicating advertisement.

        24            We have evidentiary reports from the Small

        25   Business Administration that characterize loans made by

        26   all banks to black businesses in the State of Florida


         1   clearly indicating that NationsBank is a marginal

         2   participant in this market or clearly an institution

         3   following the status quo.

         4            For instance, in 1993, there were no loans SBA

         5   guaranteed to black small businesses.  In 1994, there were

         6   four loans.  In 1995, there were four loans.  In 1996, 18

         7   loans.  In 1997, seven loans.  In 1998, three loans.

         8   These are all fiscal years.  This information is all up to

         9   June 30th, 1998, from the Small Business Administration,

        10   which in the letter to Betsy Cross, the Assistant Director

        11   for the Division of Banking, Exhibit 3, Page 1,

        12   NationsBank claims that they are using the SBA criteria as

        13   a way to target minority businesses for loans.  So I

        14   thought that this was important.

        15            Out of a total of 470 loans since 1993, 36 loans

        16   were to black or African American businesses.  We don't

        17   know what NationsBank is doing anywhere else.  In Florida,

        18   it's very apparent that they have great strides to make to

        19   live up to promises in the claim of leadership efforts in

        20   truly understanding the African American business loan

        21   delivery service.  We would enjoy, as Chairman McColl

        22   says, net import capital coming into the black business

        23   economy.  Thank you.

        24            MS. MAR:  Good morning.  Can you hear me?  My

        25   name is Darlene Mar and I'm representing the Council of

        26   Asian American Business Association.  Today I ask about


         1   this merger and to look at who are the winners and who are

         2   the losers.  The winners are the shareholders because

         3   without -- and then we are -- the community are the

         4   losers.

         5            McColl says that we're passionate but, you know,

         6   you're passionate if it affects your livelihood, your

         7   associates, their livelihood and so on.

         8            Without a real commitment, without a plan,

         9   without targets of culpability, volunteering, then there

        10   is no real commitment at all, these are just numbers.

        11            The public should be entitled to the information,

        12   they're entitled, like shareholders stock reports and

        13   portfolios, why are not we entitled to data information?

        14   I believe that this is a bank for the people, am I not

        15   correct?

        16            To talk about CRA and they talk about lending

        17   things, like homes and loans to businesses and so on, but

        18   who benefits?  Who are the winner from that?  The banks.

        19   Don't they charge interest?

        20            You know, it's interesting some of the comments

        21   this morning.  Coulter said minority business development.

        22   How we're talking about vendor contracts.  And McColl said

        23   the same thing, how they were the leader in the national

        24   supplier of the Diversity Council.  So today I brought

        25   forward -- I had in my backpack the event sponsorship, and

        26   these are a big sponsorship, it's in alphabetical order


         1   starting from AT&T to the United States Postal Service and

         2   I cannot find NationsBank on here so I would like to

         3   submit that.  So if there's a doubt, then there should be

         4   some doubt in this merger and in some of the comments

         5   they're saying because they don't have documentation

         6   probably.

         7            Another thing about the contracts, okay, that's

         8   one way to get very small business loans.  Eugene

         9   (unintelligible) said that was a great part of CRA.  It

        10   wasn't until last year that the bank started to get

        11   involved, maybe because they knew there was going to be a

        12   merger and they wanted to look good, so to raise the

        13   market up and the shareholders are happy and again we're

        14   the loser.

        15            We'd like, as a community, to be also the winner,

        16   so they're talking about, like, the Hispanic community,

        17   the African American, but they did not mention the Asian

        18   community or, if they did, it was kind of like a

        19   (unintelligible).

        20            What they want from the Asian community is our

        21   market.  I like the statements and listened to the

        22   statements this morning.  We do not understand.  We don't

        23   understand what?  You know, about the merger or what's

        24   good for us?  They want flexibility.  Flexibility, what,

        25   to juggle their books around and the numbers?  They want

        26   this -- small business want to be global.  Excuse me?  I


         1   was a White House conference on small business delegate in

         2   1995 and they didn't contact us.  In fact, at that

         3   conference, the minority delegate caucus, they did not

         4   contact us or even sponsor the event in a big way.

         5            Then I address your question as you asked, they

         6   can't distinguish between a national nation bank and

         7   California.  They've already lumped it in their head it's

         8   going to be a national bank that takes care of people but

         9   these are not our (unintelligible) lords.  If there's a

        10   doubt in your mind at all, please stop the merger.

        11            To show good corporate responsibility -- in fact,

        12   corporate responsibility is interesting, that didn't come

        13   about until after the CRA.  We all know why the CRA

        14   assisted.  Maybe now we should have CRA Part II.  But like

        15   yesterday morning I was invited by WaMu to meet and greet

        16   the Asian business community.  Yet I got a phone call

        17   later that night and my name was submitted and there was

        18   a -- what do you call? -- focus group on how to market the

        19   community, and guess who that was paid for and sponsored

        20   by?  Bank of America.

        21            So it's not so much the testimony and these nice

        22   printed documents they're submitting but the action I wish

        23   you to look at and please listen to us.  Even though we

        24   are passionate, they're a reason why we're there, all

        25   right.  And as I sit on your side in areas, I've sat also

        26   on the Small Business Advisory Commission, the Small


         1   Business of Northern California, the Small Business

         2   Association, and I also listened to the speakers and I

         3   tried to look at the whole picture and tried to understand

         4   what's really going on.  Thank you very much.

         5            MR. THAO:  Toule Thao, I'm president of the

         6   (unintelligible) Association coming from Fresno,

         7   California.

         8            As I listened to the testimony this morning from

         9   Mr. Hugh Coulter and also David McColl, they decide a

        10   great achievement from both banks and unfortunately we

        11   still have major, major concerns.  The CRA commitment, for

        12   example, or the lending practice or the low-income housing

        13   for the poor and underserved community and inadequate

        14   services outreach to minority and the others served.

        15            Let me cite you a few example.  I travel

        16   throughout the nations serving as commissioner member

        17   appointed by U.S.D.A. Agricultural Secretary Dan Glickman

        18   (phonetic).  I listen to hundreds -- thousands --  not

        19   thousands -- several, several testimony from different

        20   groups, Asian, black, Hispanic, and in it some of the

        21   small farmers are dying and one of the reason is because

        22   they are not accessible to these banks.

        23            I also remember David mentioning great farming

        24   finance, et cetera, but let me share with you.  I live in

        25   the community and I don't believe that Mr. Hugh McColl and

        26   David Coulter serve the community because they surely


         1   don't see what we're struggling through.  We are just

         2   about to become the majority farmer of this country and

         3   yet zero, zero loan was made to a community like ours,

         4   Asian, Hispanic and black in our area.

         5            I'm here to say a couple more things.  I believe

         6   that Mr. McColl served as military officer during the war.

         7   99.9 percent of our people are war veterans.  If no one

         8   else understand our struggle, if you do not understand,

         9   you have good excuse.  But Mr. McColl should understand

        10   our struggle.  And that is the services provided is not

        11   sufficient, it will not be adequate for the minority and

        12   the underserved.

        13            I'm here to ask you that do not allow this merger

        14   to take place until clean, quantifiable plan is acceptable

        15   to this community and that this plan will benefit the poor

        16   and underserved community in this whole nation.  Thank you

        17   very much.

        18            MS. ABRAMS:  Good morning, my name is Leslie

        19   Abrams and I will be reading in a statement from Mr. Harry

        20   Alford, the President and CEO of the National Black

        21   Chamber of Commerce.

        22            Despite his objections to the Reserve's decision

        23   to hold hearings only in San Francisco, Mr. Alford would

        24   have liked to be here.  However, the 2,000 members of the

        25   National Black Chamber of Commerce are holding their

        26   annual convention in Maryland.  However, the convention


         1   will be submitting a resolution expressing its concerns

         2   about the merger to the Federal Reserve as early as

         3   Friday.  In fact, a large percentage of the organization's

         4   membership would have testified if hearings had been held

         5   in any of the other cities where NationsBank or Bank of

         6   America has branches.

         7            I will now read Mr. Alford's statement which is

         8   entitled National Black Chamber of Commerce Not Convinced

         9   About the NationsBank/Bank of America Merger.

        10            African Americans, as well as other minorities,

        11   have yet to obtain their fair share of the American

        12   economic enterprise.  One thing is quite certain, power

        13   will concede nothing without a demand and we cannot expect

        14   progress without certain standards and criteria being

        15   established.

        16            NationsBank wants to throw out a big number with

        17   no mechanisms in place to set the pace, to monitor

        18   compliance and ascertain what is good performance or fine

        19   corporate responsibility.  Thus, it is certain that the

        20   minority communities who are presently served by Bank of

        21   America will regress in community reinvestment.

        22            NationsBank should also answer for the serious

        23   amount of discrimination complaints from its work force.

        24   The lawsuit filed by NationsBank against the Office of

        25   Federal Contract Compliance (Department of Labor) to

        26   prevent an audit to investigate this mass of


         1   discrimination complaints is shocking.  Attorney General

         2   Janet Reno has also issued warnings to NationsBank about

         3   its performance and equal opportunity hiring.  Without

         4   proper checks and balances, there is no assurance that the

         5   performance previously displayed by Bank of America will

         6   endure and it will most likely not improve.  This is

         7   signed by Harry C. Alford, the President and CEO of the

         8   National Black Chamber of Commerce.

         9            MR. GAMBOA:  That concludes our panel one.  I

        10   want to express our thanks for your patience and

        11   tolerance.  We did go over a few minutes but you can

        12   understand many of these people have traveled thousands of

        13   miles on their own, and so I want to thank you for your

        14   tolerance.  There is one statement that needs to be made

        15   that should be part of the record.

        16            Hugh McColl and David Coulter should be part of

        17   the process required to hear from the community directly.

        18   This was so disrespectful for them to give their talk and

        19   then to walk out of the room and not be able to hear what

        20   the community feels about them.  And that should go on the

        21   record.  Thank you.

        22            MS. SMITH:  Again, I realize that there are a lot

        23   of witnesses who did not have a chance to present their

        24   oral remarks and I encourage you to submit your written

        25   statements for the record no later than next Friday but as

        26   soon as possible.  And we thank you for your participation


         1   today and look forward to receiving your comments.  Again,

         2   thank you and we'll move on to the next panel.

         3            We probably will cut into the break that we had

         4   scheduled for 10:35.  This next panel will go its alloted

         5   time and then we'll just compress the break a little so

         6   that we can -- we won't catch up but we will be closer to

         7   where we're supposed to be at this point.

         8            We have panel three ready to go.  If we can start

         9   on the right.

        10            MR. SANCHEZ:  Absolutely, thank you.

        11            MS. SMITH:  Say your name and organization,

        12   please.

        13            MR. SANCHEZ:  Good morning.  My name is Rafael

        14   Sanchez and I'm on the board of directors of the United

        15   States Hispanic Chamber of Commerce and I'm a small

        16   business owner.

        17            The United States Hispanic Chamber of Commerce is

        18   the leading Hispanic business association in the United

        19   States advocating the interest of over one million

        20   Hispanic owned businesses and over 250 Hispanic Chambers

        21   of Commerce.  We have very serious concerns with the

        22   proposed Bank of America and NationsBank merger and the

        23   impact they may have with your respective businesses and

        24   communities.

        25            It is our belief that access to capital is the

        26   life blood of businesses and that any changes to its


         1   availability must be closely scrutinized.  Past experience

         2   has demonstrated that mergers between large financial

         3   institutions have resulted in the following:  Fewer loans

         4   to minorities, the elimination of employment positions,

         5   vendor contract bungling, a decline in customer service, a

         6   reduction in financial support to community based

         7   organizations including local Hispanic Chambers of

         8   Commerce.

         9            It is distressing to learn from the Greenlining

        10   Institute the following statistics in regards to the

        11   BofA/Nations merger.  This is data that was estimated for

        12   1997.  That one percent of all contracts were awarded to

        13   African Americans, Latinos or Asian Americans.  One

        14   percent or less of total dollar volume of all business

        15   loans were made to African Americans, Latinos or Asian

        16   Americans.  Less than a quarter of one percent of pretax

        17   earnings was contributed to African American, Latino or

        18   Asian American nonprofits.  Less than three percent of the

        19   total dollar volume of conventional home loans were made

        20   to African Americans.  Less than two percent of the top

        21   100 management by salary are African American, Latino or

        22   Asian American.

        23            While NationsBank has announced a large community

        24   reinvestment pledge, they have refused, according to the

        25   Greenlining Institute, to establish specific goals making

        26   the pledge unmeasurable and unenforcible.  This is cause


         1   for grave concern given their mediocre record as evidenced

         2   by the above-mentioned statistics.

         3            We would urge careful deliberation given the

         4   extraordinary size of the merged banks which would now

         5   operate in 22 states, provide banking services to 29

         6   million households and would control eight percent of all

         7   the deposits in the nation.  We are concerned that this

         8   merger may be allowed to proceed while largely ignoring

         9   the rapidly growing number of minority  and women owned

        10   businesses.  Thank you.

        11                           (Recess.)
















         1            MS. HAWLEY:   Presiding officers, members of the 

         2   panel, concerned public, my name is Tammy Hawley, and I 

         3   am presenting on behalf of the National Association for 

         4   the Advancement of Color People, the NAACP, and our 

         5   national president and chief executive officer, the 

         6   Honorable Kweisi Mfume.

         7            The NAACP appreciates the opportunity to present 

         8   here today for the public record regarding the proposed 

         9   acquisition of Bank of America Corporation by NationsBank 

        10   Corporation.  Our testimony is primarily as it relates 

        11   to our existing relationship with NationsBank.

        12            Many of the communities the NAACP serves face 

        13   critical social and economic problems arising, in part, 

        14   from the lack of economic growth and lack of economic 

        15   employment opportunities and other opportunities.

        16            The NAACP has worked to level the economic 

        17   playing field and to bring about economic parody for 

        18   minority group citizens.  It has launched efforts like 

        19   the fair share program which reviews corporate 

        20   opportunity investment activity and economic reciprocity 

        21   initiative which leverages collective economic clout.

        22            The NAACP has also established community 

        23   development resource centers which target specific focal 

        24   areas and concerns in local communities.  The community 

        25   development resource center, or CDRC operation, seeks to 

        26   expand on building economic capacity, leveraging 

         1   resources, and pooling capital for affordable housing, 

         2   consumer lending, economic development, public and 

         3   private partnerships, and business development outreach.

         4            The CDRC centers were established in 1994 as a 

         5   pallet project through a partnership with NationsBank.  

         6   Since 1994, NationsBank has made a tremendous commitment 

         7   and advanced in promoting economic revitalization and 

         8   community development through investment in the CDRC 

         9   operation and its efforts.  The partnership has caused 

        10   more than $90 million in loans to be closed in 

        11   communities traditionally under-served by financial 

        12   institutions, and service is now being provided through 

        13   the existing six operating centers primarily focused on 

        14   consumer and business education, counseling, economic 

        15   development advocacy, and technical assistance, in the 

        16   areas of needs assessment, product development, 

        17   marketing, lending practices, strategic planning, product 

        18   and service delivery.      

        19            Regarding the proposed acquisition of Bank of 

        20   America Corporation by NationsBank, the NAACP is 

        21   positioning itself as a resource to ensure certain goals 

        22   are met and matters not overlooked.  We are very 

        23   concerned about consumer protection, competition, and 

        24   economic expansion.

        25            The proposed new bank's commitment to 350 

        26   billion dollars in community development lending and 

         1   investment over the next ten years is an indication of an 

         2   expected enhanced delivery of services resulting from the 

         3   merger.  Three hundred fifty billion represents the 

         4   largest community development commitment ever announced 

         5   by a financial institution.

         6            This is an opportunity for organizations like 

         7   the NAACP to challenge this bank to bank and an 

         8   opportunity for the new bank to live up to a bank's 

         9   charter role as an economic leader in communities.

        10            The restoration and maintenance of the economies 

        11   of under-served communities will require coordinated 

        12   development strategies, intensive supportive services, 

        13   and increased access to equity investments and loans for

        14   development activities.  The 350 billion dollar 

        15   commitment, with appropriate follow-through, promises to 

        16   address these matters.

        17            It is our understanding that the NAACP will 

        18   continue to be a viable partner in the efforts to be 

        19   undertaken by the new bank.  This will help to assure 

        20   representative benefit to the communities the NAACP 

        21   serves.

        22            If a merger is successful, the NAACP will 

        23   realize an opportunity for the CDRC operation to grow and 

        24   to expand into other markets as well.  The expansion of 

        25   the CDRC operation will allow for our one-stop approach 

        26   to technical assistance, real estate and business 

         1   development services, and consumer counseling to reach 

         2   additional communities across the country.

         3            Furthermore, the already existing delivery 

         4   system of NAACP units, more than 1,700 throughout the 

         5   country, provides a ready-made infrastructure to ensure   

         6    an ability for immediate region to communities for the 

         7   new back to perform on the community development lending 

         8   and investment commitment.

         9            I have one minute, so I'm going to cut through 

        10   here to say that we also -- we were pleased to see that 

        11   $180 billion of the 350 billion has been designated for 

        12   small business lending.  Of course, we support the notion 

        13   that small business development is crucial to the success 

        14   of state and local economic development programs, but we 

        15   are looking for assurances that benefit will accrue to 

        16   the minority business community, and one of the concepts 

        17   the NAACP is promoting is that of the small business 

        18   incubator, which we have launched successfully in smaller 

        19   markets and hoped to see that concept embraced by the new 

        20   bank if, in fact, it is approved.

        21            Finally, regarding the bank's internal 

        22   structure, we are keenly interested in diversity goals 

        23   regarding senior management and the governing board of 

        24   directors.  If the merger is approved and as the proposed 

        25   new bank solidifies its diversity goals, objectives, and 

        26   policies, the NAACP will continue to be a resource and to 

         1   monitor the financial institution's internal structure 

         2   involvement.

         3            We do believe that the proposed acquisition and 

         4   merging of resources can enhance access to credit and 

         5   capital.  Improved partnerships with organizations like 

         6   the NAACP more readily assure success.  NAACP will do its 

         7   part to assure resources are channeled appropriately and 

         8   to expand on our existing partnership to the benefit of 

         9   communities nationwide.  Thank you.

        10            MS. SMITH:    And please do feel free -- well, 

        11   not feel free.  Please give us your entire comment so it 

        12   can be entered into the record.  

        13            MS. HAWLEY:   Certainly.  

        14            MR. McCLURG:   Good morning.  I'm Duane McClurg.  

        15   I'm with Dallas City Homes.  And I first have to state 

        16   that NationsBank didn't pay -- didn't pay my way here, 

        17   but now, after filling the timber, I wish they had.  But 

        18   it came out of my organization.  And I'm here as a client 

        19   of NationsBank.

        20            Dallas City Homes is a community housing 

        21   development organization.  We serve 65 percent or less of 

        22   median income area residents in Dallas.  And over the 

        23   past eight years, NationsBank has met our capital needs 

        24   and really been a leader in community development in 

        25   Dallas.  I can appreciate and share the concerns that 

        26   I've heard here today, but over the years, NationsBank 

         1   has merged with several other organizations, and we have 

         2   not seen a continuation of their commitment in Dallas to

         3   the low-income neighborhoods.  We have been very 

         4   satisfied with their efforts.

         5            There are five other major banks in Dallas, and 

         6   NationsBank has consistently led the way and helped raise 

         7   the mark for community lending in Dallas.  And I think 

         8   there are some colleagues of mine here from Dallas, and 

         9   I'm sure you'll hear the same thing from them.  Maybe 

        10   we're just better in Dallas at getting what we want out 

        11   of banks.  I don't know.

        12            But we have been pretty satisfied with 

        13   NationsBank, and I would expect that a merger acquisition 

        14   with Bank of America to not lessen anything in Dallas.  

        15   And I encourage you to deal with NationsBank and work 

        16   with their CDC.  They have a CDC that is, to my 

        17   knowledge, unprecedented in the United States, providing 

        18   equity and low interest loans.  And I think that Bank of 

        19   America markets could welcome that kind of community 

        20   development corp.

        21            So I am in favor of the merger and would like to 

        22   see it proceed.  Thanks.  

        23            MS. SMITH:    Thank you.  

        24            MR. SMITH:   Good morning.  My name is Chris 

        25   Smith.  I'm CEO of William C. Smith & Company.  We're 

        26   located in Washington D.C.  We develop, own, and manage 

         1   affordable housing, multi-family housing units.

         2            I'm here today to express Smith Company's 

         3   support for the merger of NationsBank and Bank of America 

         4   and in that context would like to share our experience 

         5   with the former mergers and acquisitions of NationsBank 

         6   in our local community in Washington D.C.  

         7            We had the opportunity to be the largest 

         8   borrower of a local bank in Washington D.C. known as 

         9   American Security Bank.  You may be aware of the fact 

        10   that they were one of the first and foremost innovators 

        11   and leaders under the CRA Act.  And when it was announced 

        12   that NationsBank would acquire American Security, we were 

        13   naturally apprehensive and concerned.  And, as it turns 

        14   out, our concerns were unwarranted.

        15            NationsBank not only embraced what American 

        16   Security Bank had done, which was at that time I think 

        17   probably one of the first in the country, and that was to 

        18   develop a separate community development lending group 

        19   within the bank, not just having one loan officer but an 

        20   entire unit of the bank set out with a mission to lend in

        21   under-served areas.  And NationsBank not only embraced 

        22   that concept and maintained it but also enhanced it with 

        23   their own programs that they'd already developed.

        24            Today, as a practitioner, housing developer, I'd 

        25   like to just share our experience with NationsBank on one 

        26   particular development.  It's located in Washington 

         1   D.C.,in southeast Washington.  It's 1,280 apartment 

         2   units.  It's spread out over 54 acres.  It's 99 percent 

         3   African-American.  It also included 25,000 square feet of 

         4   retail space.  The property was over 60 percent vacant.

         5            There was no lender willing to come in and 

         6   participate in that large a development.  It was a 58 

         7   million dollar redevelopment.  And I think that's one of 

         8   the key aspects here and why we support the merger.  

         9   Because what we have found with NationsBank's previous 

        10   acquisition and mergers is it's given us, the housing 

        11   provider, the opportunity to participate in larger 

        12   redevelopments.

        13            As we know today, just redeveloping a 100 to 

        14   200-unit apartment complex unit is not enough.  We have 

        15   to redevelopment entire neighborhoods.  And NationsBank 

        16   did embrace that concept.

        17            This property came with three and a half million 

        18   dollars of city debt.  It really was something that no 

        19   other lender wanted to touch.  NationsBank embraced it.  

        20   They came in and provided the construction financing.  

        21   They provided the financing to demolish over 400 units.  

        22   They've provided the construction financing to build 210 

        23   for sale town homes.

        24            And probably the crown jewel of this entire 

        25   development is the community needed something to bring 

        26   and galvanize the community, and that is what we call our 

         1   community town hall education, arts, and recreation 

         2   center.  It's a 51,000 square foot facility.  It cost $7 

         3   million.  NationsBank was the first-end funder and they 

         4   donated over $300,000.  They, along with Fannie Mae and 

         5   the Smith Company, we raised a million dollars.  To date, 

         6   we have raised $5 million and we're two million short of 

         7   that seven million dollar goal.  

         8            At our affordable housing -- at our town house 

         9   development, we operate our own home buyers club.  

        10   NationsBank has been very innovative.  Part two, home 

        11   buyer counselors meeting with first-time home buyers, 

        12   many of who are existing residents.  Many of our 

        13   residents having lack of credit available to them have 23 

        14   percent interest rate loans on their cars.  NationsBank 

        15   has been willing to refinance those cars under their used 

        16   car program at ten and 11 percent.

        17            So we have found with NationsBank to be 

        18   extremely comprehensive and far reaching in their

        19   programs to touch.  And the area that we work in day in 

        20   and day out is in the inner city.

        21            And one last note and example is that our retail 

        22   center, which is primarily made up of fast food and 

        23   liquor stores, we wanted to reposition it.  And 

        24   repositioning it, we thought that we wanted to see a 

        25   national franchise come in.  NationsBank enabled two 

        26   local African-American entrepreneurs to purchase an 

         1   Athlete's Foot franchise and open up there.

         2            So I'll see my time is up and I'll conclude with 

         3   that.  Thank you very much.  

         4            MS. SMITH:    Thank you.  

         5            MR. MACK:   I'm Johnny Mack.  I'm the president 

         6   and chief executive officer of the National Institute for 

         7   community empowerment.  And I'd like to thank the panel 

         8   for the opportunity of being a witness this morning.

         9            The National Institute for Community Empowerment 

        10   is an organization that was launched by the Martin Luther 

        11   King, Jr. Center for    Nonviolent Social Change.  As 

        12   President of the National Institute for Community 

        13   Empowerment, I am pleased to testify today in favor of 

        14   the proposal by NationsBank Corporation in Charlotte, 

        15   North Carolina to merge with Bank of America Corporation, 

        16   San Francisco, California.

        17            For over seven years, I've had the pleasure to 

        18   work with NationsBank officials in connection with 

        19   community development activities.  My first occasion was 

        20   as a senior official of the Martin Luther King, Jr. 

        21   Center.  In 1990, the King Center established the 

        22   community empowerment initiative, a program to assist low 

        23   wealth communities in building social capital, assets, 

        24   jobs, and overall community wealth.

        25            Over a six-year period, this program assisted 

        26   communities across the country, using the philosophy and 

         1   principals of nonviolent social change, as espoused by 

         2   Dr. Martin Luther King, Jr.  Funding for the program was 

         3   provided in large measure from federal special purpose 

         4   grants and contracts administered by the U.S. Department 

         5   of Housing and Urban Development.  In addition, several 

         6   corporations provided funding in support of our programs, 

         7   most significant among them NationsBank.  

         8            Along with its financial support, NationsBank 

         9   was represented on our advisory committee composed of 

        10   leaders from the community, public, and private sectors, 

        11   further demonstrating their commitment.  The NationsBank 

        12   representative was a senior level official from its 

        13   community investment unit.  Working with other national 

        14   leaders, this representative gave valuable counsel and

        15   direction to the program.  From its very beginning 

        16   through the end of the program, NationsBank consistently 

        17   provided these resources, particularly during times when 

        18   the need was most critical.

        19            My second occasion to work with NationsBank 

        20   immediately followed the first.  In July 1997, the King 

        21   Center launched the Community Empowerment Initiative 

        22   Program as a separate independent nonprofit organization, 

        23   the National Institute for Community Empowerment.  During 

        24   this time, I served as the chief administrative officer 

        25   of the King Center and had the pleasure of working with 

        26   another NationsBank senior vice president.  This 

         1   representative gave considerable attention as an advisory 

         2   committee member and through financial support provided 

         3   by NationsBank in creating the new organization.

         4            Consistent with the standard set under the 

         5   Community Empowerment Initiative Program, NationsBank is 

         6   giving senior level participation on our board of 

         7   trustees, as well as funding critical to our operations.  

         8   And, once again, NationsBank is taking the lead among

         9   corporate sponsors.  A NationsBank representative serves

        10   on our board.

        11            The importance of the relationship NICE and 

        12   NationsBank have established is articulated in the 

        13   following quote of Dr. Martin Luther King, Jr.:  "It 

        14   evokes happy memories to recall that our victories in the 

        15   past decades were won with a broad coalition of 

        16   organizations representing a wide variety of interests.  

        17   But we deceive ourselves if we envision the same 

        18   combination attacking structural changes in this 

        19   society.  It did not come together for such a program and 

        20   will not resemble it."

        21            This quote is taken from Dr. Kings' 1967 book 

        22   "Where Do We Go From Here?  Chaos or Community."  

        23            In contemplating a general plan for the future, 

        24   Dr. King realized that a different coalition of 

        25   organizations and new strategies to overcome the 

        26   seemingly and practical barriers of urban centers would 

         1   be necessary.  He saw that new coalitions and strategies 

         2   must augment the alliances of the civil rights movement.

         3            Since his assassination, new forms of community 

         4   based and community serving organizations are emerging.  

         5   Until recently, however, these organizations have dabbled 

         6   at the fringes or are completely unaware of the power 

         7   that the philosophy and principals of nonviolent social 

         8   change bring to the field of community empowerment, yet 

         9   the gravity of this -- the gravity of its importance has 

        10   not escaped the careful attention of NationsBank.

        11            As the organization established by Mrs. Cretta 

        12   Scott King and launched by the Martin Luther King, Jr. 

        13   Center for nonviolent social change to carry on the work 

        14   of community empowerment, the National Institute for 

        15   Community Empowerment is pleased to share in this 

        16   alliance with NationsBank.

        17            Commenting on the launch of NICE, Dexter Scott 

        18   King, the president of the King Center, said, 

        19   "Establishing NICE is the natural progression of a 

        20   program started more than six years ago under the 

        21   leadership of my mother."

        22            NationsBank has demonstrated by example their 

        23   commitment to the work of community empowerment through 

        24   public private partnerships and the cause of nonviolent 

        25   social change that Dr. King, Mrs. King, and now their son 

        26   support.

         1            I believe NationsBank Corporation and Bank of 

         2   America Corporation are the industry leaders in this 

         3   field.  Their complimentary geographic service areas     

         4   provide a national scope and services in a manner that, 

         5   as a whole, is greater than the sum of its parts.

         6            I conclude, therefore, that the two banks 

         7   combined would bring an exceptional commitment to lending 

         8   investment and service, and I urge that you support the 

         9   proposal.  Thank you.  

        10            MS. SMITH:    Thank you.  

        11            MS. DOMINGUEZ:   Good morning.  My name is 

        12   Augusto Dominguez.  I'm president of Greater Miami 

        13   Neighborhoods.  We are a nonprofit affordable housing 

        14   developer in Miami County, Florida.

        15            Our association with NationsBank and some of the 

        16   banks that it has merged with before, including Barnett 

        17   Bank, dates back to 1985 when we were established by the 

        18   enterprise foundation in Miami with a mission of 

        19   developing affordable housing for very low and low-income 

        20   persons.

        21            Since then, we have developed over 4,000 units 

        22   of affordable housing.  Our median income for home 

        23   ownership units, which are over a thousand of those, is 

        24   38 percent of the median income.  Our median income for 

        25   our rental units is about 42 percent.  

        26            We have enjoyed the support from the bank, both 

         1   Nations, Barnett before them, to the tune of over $20 

         2   million in financing, both in equity and loans.  Our 

         3   developments are mostly in very low-income areas.  We're 

         4   not suburban developers.  We're inner city developers.  

         5   And one of the things that it's typical of inner city 

         6   development is that you don't do big deals, that you do 

         7   small deals that usually banks and other financial 

         8   institutions or financial players are reluctant to enter 

         9   into.  

        10            And we have projects that are as low as 20 

        11   units, using low-income housing tax credits.  And those 

        12   of you who know what that takes in transaction costs can 

        13   imagine how difficult those small projects are to put 

        14   together.

        15            However, while we've been able to compete in the 

        16   state allocation of credits, mostly because banks like 

        17   Nations and Barnett have been able to turn around 

        18   commitment letters in as short a period of time as 48 

        19   hours with full underwriting.  The commitment of the 

        20   staff has just been outstanding on our behalf.  

        21            After the Barnett/Nations merger in Florida, 

        22   Nations has re-doubled their efforts in commitments to 

        23   our organization and other number of groups that we've 

        24   worked with.  And we're working on a number of 

        25   initiatives that I believe wouldn't have been possible if 

        26   the banks had remained separate and smaller.  Because 

         1   these are very large commitments, and they're very 

         2   innovative.  There are things like a small building 

         3   rentals, which nobody finances in this country.  I'm 

         4   talking about from duplexes to 15 or 20 units, which our 

         5   inner city neighborhoods are plagued with and nobody

         6   touches because there is not sufficient mechanism.  We're 

         7   working on a mechanism to be able to take care of those.

         8            We're also working on innovative mechanisms to 

         9   be able to acquire larger properties, especially with

        10   mark to market coming down the pike to be able to 

        11   preserve the affordability of those project based Section 

        12   8 units that are in danger of being lost.  And we're 

        13   talking about a very large equity commitment that the 

        14   bank is willing to hold until we can flip those projects 

        15   with 501C3 bonds.  

        16            Again, I don't believe that smaller banks can 

        17   afford to do those kinds of things, and I would urge you 

        18   to approve the merger.  In hearing some of the testimony 

        19   this morning, I think creating goals and on specific 

        20   targets is perfectly fine, but I think there are many 

        21   more advantages to the merger than disadvantages at this 

        22   point.  And I thank you.  

        23            MS. SMITH:    Thank you.

        24            Thank you very much for coming today and look 

        25   forward to having you submit any written comments that 

        26   you wish for the record.  And with that, we're going to 

         1   take a short break, I'd say about ten minutes, and then 

         2   we will -- let's make it as close to 10:50 as possible so 

         3   that we can get back on schedule.  

         4             (Whereupon a short recess was taken.) 

         5            MR. MOSLEY:   First of all, I'd like to thank 

         6   the Federal Reserve for allowing me to come and submit 

         7   testimony on behalf of Congresswoman Maxine Waters who 

         8   would have loved to be here.  However, other business has 

         9   taken her away.  I'd like to read her statement into the 

        10   record if I might.  Once again, my name is Kevin Mosley 

        11   and I represent Maxine Waters, chair of the Congressional 

        12   Black Caucus.

        13            "Good morning.  As a member of congress 

        14   representing the 35th Congressional District and as the 

        15   chair of the 39-member Congressional Black Caucus, I am 

        16   pleased to have the opportunity to submit testimony to 

        17   you today regarding the proposed merger between 

        18   NationsBank Corporation and Bank of America Corporation. 

        19   I believe this merger will have a significant effect on 

        20   the people I represent.

        21            "I testify today as one of many individuals who 

        22   will be raising questions about this merger.  Many 

        23   consumer groups, community activists, and business 

        24   persons are worried about the inevitable closure of bank 

        25   branches, layoffs, the proliferation of evermore costly 

        26   bank fees, and a basic inability to have direct contact 

         1   with local bankers.  

         2            "I have been struggling with these issues for 

         3   quite some time.  I am even considered to be an irritant 

         4   to many CEO's and top bank managers in this country.  I 

         5   believe, however, that my first responsibility is to 

         6   represent consumers who expect their elected officials to 

         7   protect them from public policies that create hardships 

         8   in their lives and have constantly challenged the banking 

         9   community to pay attention to inner cities and rural 

        10   communities.

        11            "In January of this year, I took the 

        12   extraordinary step of hosting Chairman Alan Greenspan, 

        13   former comptroller of the currency, Eugene Ludwig, and 

        14   director of the Office of Thrift Supervision, Ellen 

        15   Seidman, in my district to interact with members of 

        16   congress, senior bank officials, community bankers, 

        17   community-based organizations, and small business 

        18   owners.  This occasion afforded the captains of the 

        19   industry and the regulators the opportunity to interact 

        20   with people of my community who are desperate to 

        21   strengthen ties to the banks in order to grow and help 

        22   our communities.

        23            "I believe that those in attendance got the 

        24   message I constantly irritate them about.  We need 

        25   capital, we need investment that will eliminate blight, 

        26   create businesses, create ownership, create a new 

         1   generation of entrepreneurs, and create a better life for 

         2   those who have been denied access to comprehensive 

         3   banking services.

         4            "In 1995, the Federal Reserve paid the national 

         5   average of banking officers per 10,000 residents at 3.4.  

         6   The average in South Central was only 0.3 offices per 

         7   10,000 residents or one branch for every 41,700 

         8   residents.  In 1996, Federal Reserve data showed South 

         9   Central Los Angeles received only 1.6 percent of loan 

        10   dollars for small business lending but represented 2.5 

        11   percent of small businesses.  White-owned businesses 

        12   still received three times more loan dollars per dollar 

        13   of equity than do African-American businesses with

        14   identical borrowing characteristics.  In the construction 

        15   industry, this disparity increases from 3.1 to 15.1.

        16            "As we participate in the hearing today, the 

        17   federal government is implementing a new system of 

        18   payment for welfare and social security recipients.  

        19   These citizens will be receiving their grants and 

        20   payments via electronic transfer.  Many of these citizens 

        21   have never had a bank account or access to any banking 

        22   services.  In addition, we're discovering many banks do 

        23   not provide them with the services they need to receive 

        24   their electronic transfers.

        25            "There are banks that also have arrangements 

        26   with check cashers to keep citizens, many of whom are new 

         1   citizens to this country, out of their banks.  These 

         2   people who lack access to banking services must resort to 

         3   check cashers, who charge absorbent fees for cashing 

         4   checks and often do not provide other needed services.

         5            "Although branches have been closing down 

         6   everywhere as a result of other mergers, branch banking 

         7   has never adequately served urban and rural communities.  

         8   When we add to all these concerns the lack of capital to 

         9   deal with deteriorated and underdeveloped inner cities 

        10   and rural communities, you can then understand why we 

        11   question all mergers.

        12            "We do not oppose mergers for the sake of 

        13   opposing mergers.  We have real issues.  Although there 

        14   have been some improvements in home lending and the 

        15   provision of home mortgages -- in fact, total home 

        16   lending in South Central actually increased 28 percent 

        17   from 1995 to 1996 -- it has not been enough to allow many 

        18   families in low-income communities to achieve the dream 

        19   of home ownership.

        20            "Are we to expect this colossal merger is going 

        21   to correct any of the concerns I've delineated here 

        22   today?  The conventional wisdom in my community is as 

        23   banks become bigger, a greater distance is created 

        24   between the institutions and the communities they're 

        25   supposed to serve.  In other words, they'll truly be too 

        26   big to be bothered.

         1            "My question today is what will this merger do 

         2   to ensure the communities will not be worse off?  What 

         3   can we do to insure CRA will be honored, that capital 

         4   will be made available, and access to banking services 

         5   will be made more likely.

         6            "Perhaps these questions can be answered.  

         7   Perhaps mergers can be used to bridge the gap between 

         8   banks and communities.  But what plans are banks placing 

         9   before our communities that will inure to our benefit?  

        10   We're very much aware of so-called commitments that have 

        11   been made in the past.  We're aware of the 45 billion 

        12   dollar commitment from Wells Fargo, their 140 billion 

        13   dollar commitment originally committed by Bank of 

        14   America, and the $75 billion committed my Washington 

        15   Mutual.

        16            "I now understand this new merger between 

        17   NationsBank and Bank of America has created a 350 billion 

        18   dollar commitment.  We have not seen the results of 

        19   earlier commitments, which makes us suspicious of the 

        20   present commitments.  We don't see tracking systems in 

        21   place that will tell us where, when, how, and to whom 

        22   this money goes.

        23            "Perhaps there is a plan that's worthy of my 

        24   support and the support of others who will testify 

        25   today.  If there is, then it's time for the banks to roll 

        26   it out.  It is time for the banks to create and implement 

         1   a concrete, straightforward, verifiable plan with 

         2   specific commitments that will deal with all aspects of 

         3   the problems that I've repeatedly identified.

         4            "I'm not here today asking for a gift from the 

         5   banks.  We expect banks to get a reasonable return on 

         6   their loans and investments.  We believe that banks that 

         7   lend money in our communities can make a profit on those 

         8   loans and do it safely and soundly.

         9            "I testify as a public policy maker and support 

        10   federal deposit insurance for banks to have a continued 

        11   safety net.  I testify as a member of congress who has 

        12   witnessed the federal government bail out both savings    

        13   and loans and banks with taxpayer money, and I'm here to 

        14   insure that taxpayers receive the support and respect of 

        15   the banks that we insure and protect.

        16            "How can we work together to increase home loans 

        17   and introduce new products and investments that help the 

        18   average wage earner own a home?  I conclude my testimony 

        19   by making an appeal to the banks in this merger to 

        20   respond to all the issues that I and others have and will 

        21   discuss today and to work with elected officials, 

        22   community organizations, community lenders, and consumers 

        23   in ways that will help to develop well-rounded 

        24   communities with decent housing, commercial enterprises, 

        25   and entrepreneurial opportunities.  Thank you.  

        26            MS. SMITH:    Thank you very much.  

         1            MR. GNAIZDA:   Thank you very much for this 

         2   opportunity.  Before I begin and we take our time, I just 

         3   want to let you know we have approximately ten speakers 

         4   who will be taking about approximately three minutes each 

         5   and then we have approximately 12 others who will try to 

         6   keep their remarks to approximately a minute.  And we'll 

         7   try to be within the 50 minutes.

         8            And before I use my time, I just want to express 

         9   a sentiment that many panelists have expressed, and that 

        10   is where are the CEO's to hear us?  Where are they?  

        11            I'm only going to respond to the largest 

        12   absentee landlord statements, and I'll restrict myself to 

        13   that.  And these are concerns expressed by three 

        14   congresspersons today, Waters, Alford, and Lee.  And I 

        15   preface it with this:  There's no data.  There are no 

        16   goals.  The achievements are modest and particularly 

        17   modest in comparison to their competitors, Wells Fargo, 

        18   Union Bank, and WaMu.

        19            And one thing has been lost here by Mr. McColl 

        20   and Mr. Coulter.  They intend to be the largest bank in 

        21   the world.  They can't just be average.  They must be the 

        22   best, the best.  And they're not.  

        23            First, McColl says they're great on charity.  

        24   Why doesn't he tell you they have the lowest percentage 

        25   of pre-tax earnings directed to charity of any of the

        26   major banks, just under one percent?  Wells has two 

         1   percent.  Why don't they tell you that only ten to 20 

         2   percent is directed at the community?  Wells Fargo last 

         3   year directed 85 percent or more than eight times more as 

         4   a percentage.  And why don't they tell you that their 

         5   executive compensation every year for the top officers 

         6   exceeds their total charitable contributions?  And why 

         7   don't they tell you about their Golden Parachutes?  They 

         8   will exceed by five-fold the total amount of charitable 

         9   contributions that the B of A will make.  Compare that 

        10   with their competition.  

        11            On diversity, they're high on diversity, but 

        12   they won't release their data and they won't set any 

        13   goals.  Washington Mutual has set goals and is releasing 

        14   its data.  Their goals are to reflect this panel and this

        15   audience, not an all white male panel.  Minority 

        16   contracts, they won't release their data.  They can't 

        17   it's so low.

        18            The real statistic for NationsBank if you look 

        19   at all contracts just for minorities, not minorities and 

        20   white women, is just about four percent, meaning a little 

        21   over one and a half percent for each of the minorities.  

        22   B of A it's two percent for African-Americans.  Compare 

        23   this with Washington Mutual's goal of 40 percent for 

        24   minorities.  

        25            Minority business loans, this is what they fear 

        26   the most.  And they have every reason to.  The moment 

         1   Alan Greenspan says, "I want the Federal Reserve to 

         2   scrutinize the business loans," this merger cannot be 

         3   approved.

         4            Considerably less than one percent of the dollar 

         5   volume of all business loans made by NationsBank in any 

         6   year in its history or B of A in its history went to 

         7   African-American-owned businesses.  Similarly for Latino 

         8   and Asian-American businesses.  Why don't they produce 

         9   that data?  

        10            And they talked about two billion in lending in 

        11   low-income areas.  Why doesn't the Federal Reserve look 

        12   at that data and see that 90 percent want to white-owned 

        13   businesses, including a huge amount around the World 

        14   Trade Center.

        15            Lastly, they say they got the best goal in 

        16   America.  That's untrue.  Adjusted for size, Washington 

        17   Mutual has easily beaten them.  They've committed six 

        18   percent of their assets.  Washington Mutual has committed 

        19   eight and they're specific.  The OTS will be able to 

        20   effectively scrutinize them.  

        21            Lastly, one comment by CEO Coulter, whom we have 

        22   great respect for and we're very sad that he will be 

        23   departing.  Because that is the feeling, he will be 

        24   departing.  That's why Greenlining and other groups from 

        25   all other the country serenaded him yesterday with a 

        26   Mariachis band.  We're sorry he's going.

         1            But, Mr. Coulter, we have to tell you this:  

         2   That B of A has lent far more in South Korea than it lent 

         3   in South Central in the last 50 years.  And it's lost far 

         4   more in South Korea, 3.1 billion, than it ever lost in 

         5   the black community, the inner city, the Hispanic 

         6   community, and the Asian community.  

         7            Gail Smith from our coalition presented a letter 

         8   earlier to Mr. McColl and Coulter as they fleed the 

         9   scene.  It asked for a community meeting today so that 

        10   they can hear these concerns.  We invite all of you if 

        11   the B of A will respond.  Thank you.

        12            We now have our guest from the furthest away, 

        13   from Texas, if she'd begin.

        14            MS. CAMPBELL:   Thank you.  Thank you for the 

        15   opportunity to appear today.  I am Angelique Campbell, 

        16   and I'm from the Texas Office of Consumers Union and I 

        17   represent the Texas Community Reinvestment Coalition.  

        18   And I come today on behalf of TCRC to discuss our 

        19   concerns about the merger's impact on low-income 

        20   consumers and persons of color in Texas.  

        21            We believe our position in this merger is unique 

        22   since NationsBank and Bank of America are two of our 

        23   state's largest financial institutions, NationsBank being 

        24   the largest in Texas.  If the merger is approved, the new 

        25   bank will control an even larger share of the Texas 

        26   market.

         1            As the only statewide community reinvestment 

         2   group in Texas, TCRC's interest is ensuring that the 

         3   credit needs of our local communities in Texas are not 

         4   ignored.  But unfortunately, our most recent HMDA study, 

         5   which is "Access to the Dream, Home Mortgage Lending in 

         6   Texas," which you all have a copy of, shows that there 

         7   are problems with NationsBanks and Bank of America's 

         8   lending performance in low-income communities and 

         9   communities of color in Texas.

        10            If the merge bank is to lead the financial 

        11   industry in community lending as it asserts that it will, 

        12   then the board should delay this merger for two reasons, 

        13   to address unresolved questions about the bank's current 

        14   performance and to require conditions prior to approval 

        15   to assure that all communities credit needs are met.  

        16            Without a detailed plan, the 350 billion pledge 

        17   is hollow.  And based on the two banks' performance in 

        18   under-served communities in Texas, TCRC questions the new 

        19   bank's ability to meet this pledge.

        20            The bank needs to make firm, binding geographic 

        21   income and ethnic specific commitments, and the 

        22   regulators need to monitor and enforce those commitments 

        23   in the following areas:  We ask that no branch closings 

        24   occur in low-income communities and communities of 

        25   color.  In Texas, when we suffered from 40 percent of the 

        26   NationsBank failures in the 1980's, it was our low-income 

         1   neighborhoods that were affected most by the bank 

         2   closures.  As banks moved out of those neighborhoods, 

         3   higher cost non-bank institutions moved in.

         4            It concerns our coalition that of the total 

         5   number of NationsBank branch openings and closings that 

         6   occurred in 1996, upper and middle income areas received 

         7   40 new branches while low and moderate income communities 

         8   only received ten.

         9            We are also asking for improved lending 

        10   performance to persons of color.  In Texas, according to 

        11   our study, African-American and Latino borrowers are two 

        12   to three times as likely to be denied for a home loan by 

        13   NationsBank than a white borrower.  Data also shows 

        14   NationsBank disproportionately loaned 86 percent of their 

        15   dollars for home loans to white borrowers.

        16            In some Texas cities, the disparity is worse.  

        17   In the Beaumont-Port Arthur MSA, two majority 

        18   Africa-American cities, NationsBank made only four loans 

        19   to black families, and only one of them in a black tract 

        20   census area, yet NationsBank holds nine percent of the 

        21   deposits in that particular MSA.

        22            In San Antonio, NationsBank holds 14.5 percent 

        23   of all deposits in the city while Bank of America 

        24   controls another 5.5 percent, yet NationsBank made only 

        25   1.7 percent of San Antonio's home loans.

        26            And in the Fort Worth-Arlington MSA, another 

         1   majority African-American city, NationsBank made only two 

         2   loans in a black census tract area, yet its depository 

         3   share in that city is 15.1 percent.  

         4            We are also asking for the development of 

         5   desirable affordable housing products.  The most recent 

         6   HMDA data shows Bank of America disproportionately 

         7   targets Texas low-income consumers and persons of color 

         8   with manufactured housing loans.  The interest rates on 

         9   these home loans have ranged as high as 13.25 percent, 

        10   substantially higher than the average seven percent rate 

        11   for a 30-year conventional loan.

        12            Since Bank of America's recent decision to sell 

        13   its manufactured housing unit, Bank of America has not 

        14   offered an alternative affordable housing plan which 

        15   meets their community reinvestment obligation, 

        16   particularly in Texas.  

        17            We watch these changes in the banking industry 

        18   with deep anxiety for the effects the mergers will have 

        19   on our communities.  Loss of competition, higher fees, an 

        20   erosion of CRA come to mind.  The single most important 

        21   step that must be taken in the wake of these bank mergers 

        22   is to increase accountability of our lenders to our 

        23   communities' un-met banking and credit needs.  And it is 

        24   not only the right thing to do.  It is the law.  

        25            We trust that the board will do what is 

        26   necessary to ensure that our -- that the banks remain in 

         1   compliance with our fair housing and fair lending laws 

         2   and accountable to our credit needs.  Thank you.  

         3            MR. OBLEDO:   My name is Mario Obledo.  I'm the 

         4   president of the California Coalition of Hispanic 

         5   Organizations.  And I'm also representing the League of 

         6   United Latin American Citizens, otherwise known as 

         7   LULAC.

         8            We feel that the merger has been approved.  

         9   Without any disrespect whatever, if it had not been 

        10   approved, Alan Greenspan would have been here chairing 

        11   the meeting at the headquarter cities of Bank of 

        12   America.  Instead, they have sent a lower level 

        13   bureaucrat to conduct this very, very important meeting.  

        14            NationsBank is fully aware of the request of the 

        15   Greenlining Coalition.  Whether they will respond or not 

        16   is up to them.  Our quarrel is not with the Federal 

        17   Reserve Bank.  Our quarrel is with NationsBank and Bank 

        18   of America.  If they do not meet their commitment to the 

        19   people of color of the state of California -- and, by the 

        20   way, the Greenlining Coalition represents the majority of 

        21   the people of the state of California -- we are going to 

        22   demurrage the merger.  We will act as our own Federal 

        23   Reserve board.  We will close down the branches and we'll 

        24   ensure their failure in California.

        25            We're not going to stand for any disrespect by 

        26   corporate America.  The people of color are people of 

         1   pride and honor and courage, and we will teach them a 

         2   lesson.  This is going to be a street fight and we're 

         3   prepared to engage in it.  Thank you.  

         4            MR. NGUYEN:   Good morning.  My name is Philip 

         5   Nguyen.  I'm the executive director of the Southeast 

         6   Asian Community Center.

         7            Now, we all agree that the American has 

         8   experienced an unprecedented booming economy.  The good 

         9   thing is that the rich become richer and the poor -- the 

        10   bad thing is the poor become poorer.  The gap between the 

        11   rich and the poor is greater than ever.

        12            Now, as the greatest nation at work, as the 

        13   people, and we so suggested we cannot afford it.  Now, 

        14   that isn't why the congress enact the 1977 CIA.  

        15            Now, many people here believe that the deal has 

        16   been cut.  The merger will be approved regardless of what 

        17   we're going to say.  I tried not to believe so.  I tried 

        18   to believe that the merger will be approved with certain 

        19   condition.

        20            Now, one of the conditions is that the CIA.   

        21   The merger, the NationsBank, and the Bank of America 

        22   promise to have $350 billion for the CIA, but it don't 

        23   say anything.  As my colleagues point out, these are 

        24   hollow commitment.  When they don't have any specific on 

        25   how much they help the poor, how much they help the 

        26   minority, and how much they have the women and the 

         1   low-income, the low area.  We would love very much that 

         2   the NationsBank and the Bank of America spell out 

         3   specifically what they want to help, the poor, the 

         4   minority, the women, and how to improve the low-income 

         5   minority.  

         6            The second condition -- and I'd like to point 

         7   out is if there's a merger, it should be tried to have 

         8   the minimum branch go out, the minimum -- I mean, 

         9   employee be laid off.  The better is nobody would be laid 

        10   off, no branch be closed down.

        11            Now, these are the two minimum requirement and 

        12   we would like the NationsBank and Bank of America to 

        13   commit to this one.  They should follow the example of 

        14   the Western Mutual.  They may be even better, therefore, 

        15   because they're bigger bank.

        16            Now, if these minimum requirement has not been 

        17   met, they choose to ignore it, please convey our message 

        18   to Mr. Greenspan stop the merger.  Thank you.  

        19            MR. GLOVER:   Good morning.  My name is David 

        20   Glover.  I'm the executive director of the Oakland 

        21   Citizens Committee for Urban Renewal and board member of 

        22   the Greenlining Institute.

        23            Unlike many who may feel that this is an 

        24   absolute fait accompli, I would hope that the review 

        25   panel and others are receiving the appropriate education 

        26   and the appropriate facts this morning that may be 

         1   opening some eyes.  

         2            I stood alongside members of the Gionini family 

         3   just a couple months ago at a founders day at an East 

         4   Oakland outlet at Eastmont Mall celebrating the remaining 

         5   branch of 30 years in that community, and I only wonder 

         6   in light of this proposed merger what will happen to that 

         7   branch and certainly what that symbolizes in terms of the 

         8   original principals of the Bank of Italy and lending in 

         9   the alternative way and serving the under-served as the 

        10   institution believed.  

        11            We are clear on the fact that even though the 

        12   film "It's a Wonderful Life" may have been financed by 

        13   the bank, it is not a wonderful life in Oakland.  It is 

        14   not a wonderful life in San Francisco, LA, Richmond, and 

        15   a number of other communities in the California area.  

        16   Urban centers are suffering from the lack of lending, 

        17   credit, branches, access, et cetera.  We have to deal 

        18   with the critical issues that face California in light of 

        19   the loss of this partner, this community lender.  Feels a 

        20   little bit like the Cleveland Browns.  You know, even 

        21   they received compensation when Art Modell pulled out of 

        22   town.

        23            We are looking at the testimony from Florida, 

        24   from Texas, from North Carolina, and we see that we are 

        25   not inviting a good neighbor into this marriage.  And we 

        26   can't really call it a marriage.  It's really an 

         1   acquisition.  There are things about this 350 billion 

         2   dollar pledge that, as Stella said earlier, are scatter 

         3   gun and we like to call it hollow.  In many ways it's 

         4   regressive.

         5            The Greenlining Institute has set alongside many 

         6   CEO's and negotiated agreements that really 

         7   quantitatively speak to the goals for California and the 

         8   goals for the low-income community, the goals for 

         9   minority lenders, the goals for those who have to survive 

        10   at management level and at line staff level.  And we 

        11   don't see any of that disclosure here.  We see none of 

        12   that good faith.

        13            It is important to talk about California 

        14   compensation, it is important to talk about the 

        15   principals by which we have to survive in this community 

        16   and other inner cities around the country.

        17            I'm not encouraged by what I hear from Nations 

        18   as a partner.  I think it's important to look at welfare 

        19   reform and the impact it's having on this community.  

        20   It's important to look at 209 and the impact it's having 

        21   on this community and bring it back to lending and talk 

        22   about a partnership that has to be either approved or 

        23   disapproved based on its quantitative delivery for a 

        24   community that has no place to turn.

        25            And I appeal to not only the process being 

        26   broadened on a public hearing level but to you to not 

         1   just consider this to be, as Kevin said, a golf course 

         2   deal that's already sealed.  Let's look at this list.  

         3   Let's open it up and let's examine it for all that it has 

         4   to be in order for citizens to be adequately served in 

         5   this community.  Thank you very much.  

         6            MR. HEAD:   My name is James Head, and I'm the 

         7   president of the National Economic Development and Law 

         8   Center, which is based in Oakland, California.  

         9            The center is a national nonprofit public 

        10   interest community and economic development technical 

        11   assistance provider.  I'm also on the board of the 

        12   California Reinvestment Committee here in California and 

        13   a board member of the California Economic Development 

        14   Lending Initiative, as well as a former member and 

        15   chairman of California Advisory Council of the Federal 

        16   Reserve.  And it's good to see you, Dolores, again  after 

        17   so many years.  

        18            MS. SMITH:    Good to see you.  

        19            MR. HEAD:   This week I received a telephone 

        20   call from a reporter with the American Banker Newspaper 

        21   in Washington D.C., and he wanted to know why I was going 

        22   to testify at this hearing.  And I found this question a 

        23   little odd, so I asked him sort of what was the basis of 

        24   the question.  And he explained to me that in light of 

        25   the fact that opportunities to present written comments 

        26   were available and that many people had done so, what 

         1   would be accomplished by appearing in person and 

         2   testifying?  

         3            I responded to him that it is important for 

         4   those making decisions in matters like this to attach 

         5   faces and descriptive facts and antidotes to the issues 

         6   to be decided.  This gives context and hopefully some 

         7   grounding to the issues.  It's also important for those 

         8   who are making these unique decisions to understand that 

         9   there are a lot of issues related to unique states like 

        10   California and others who will be impacted by the 

        11   merger.  

        12            So my feeling is that a part of this process is 

        13   to help those who are deciding this matter shape the 

        14   information that they have, to look at it from the 

        15   standpoint of how this may impact the communities either 

        16   positively or negatively by the decisions that are made.

        17            My remarks are not going to focus on whether -- 

        18   whether this merger should or shouldn't be approved.  My 

        19   remarks will focus on a couple of key issues that I think 

        20   are critical to a decision about the merger.

        21            One of them is loans to minorities.  And you've 

        22   heard a lot about the facts and issues related to loans 

        23   to minorities.  I think there continues to be a continued 

        24   perception, if not reality, to the fact that, in general, 

        25   minorities are not getting loans in the same volume or at 

        26   the same levels as their white counterparts.  While these 

         1   perceptions are very difficult to either verify or 

         2   dismiss, there is information either antidotal or factual 

         3   that continue to support it.  

         4            I would point you back to a Wall Street Journal 

         5   poll that was done a number of years ago of several 

         6   hundred black business owners who found that 92 percent 

         7   of them said that they had been turned down by banks 

         8   while trying to finance their firms.  They stated that 

         9   lack of collateral, a paucity of black lenders and loan 

        10   officers, and a public perception that blacks lacked 

        11   business acumen was among the major reasons they felt 

        12   that they were not able to get this collateral.

        13            For all of those complaints, however, banks 

        14   are -- over 73 percent of these same firms indicated they 

        15   ultimately obtained their collateral.  When asked what 

        16   would be their preferred source or sources of capital, 63 

        17   percent responded that banks were their preferred 

        18   source.

        19            Does this mean that NationsBank and Bank of

        20   America are not lending equitably?  While I can't speak 

        21   to NationsBank's record of lending to minorities, my 

        22   experience with Bank of America is that they have made 

        23   great efforts and with a lot of success in expanding 

        24   their lending to minorities.  But if you hear from others 

        25   that this is an issue of concern and you accept the fact 

        26   that the generally perceptions continue to exist, you 

         1   should closely examine the records of these two 

         2   institutions regarding minority lending and should 

         3   determine whether the merger increases their capacity to 

         4   be responsive.  

         5            The next issue is equity capital for startup and 

         6   expansion businesses.  In an presentation at a community 

         7   investment and access to credit meeting in Los Angeles in 

         8   January of this year, Chairman Alan Greenspan suggested 

         9   that additional debt through loans might not be the most 

        10   effective solution to meeting the needs of communities 

        11   like South Central.  He suggested that equity investments 

        12   might prove to be more effective and key to immediate and 

        13   long-term economic revival.

        14            For a number of years now, California advocates 

        15   have been discussing and educating Bank of America staff 

        16   on the need for loan products that provide equity or 

        17   patient capital for new and expanding businesses.  This 

        18   need can serve the merging nonprofit sector that are 

        19   developing successful for-profit businesses to bring jobs 

        20   and goods to low-income communities, the emerging 

        21   entrepreneurs like, welfare recipients, youth, and 

        22   skilled, unemployed, and underemployed workers that are 

        23   identifying small business niches that can help them 

        24   become economically self-sufficient, and emerging and 

        25   expanding small businesses that are trying to continue 

        26   the creation of employment and economic stability in 

         1   low-income communities.  

         2            Our discussion with Bank of America has been 

         3   around strategies and mechanisms for developing loan 

         4   products that will address the credit needs of these 

         5   constituencies and also will allow the bank to make 

         6   money.

         7            We hope that you will question NationsBank and 

         8   Bank of America on their willingness and commitment to 

         9   continue to work towards addressing these critical 

        10   needs.  At the very least, we believe that the merged 

        11   bank should commit to being the leader in the development 

        12   of loan products that provide the kind of patient capital 

        13   that's needed.  This is cutting edge work, and it should 

        14   not be abandoned or delayed because of the application 

        15   for merger.  

        16            The last issue is one that is dear to me because 

        17   we put a lot of time in it.  During the first quarter of 

        18   '98, Community Economic Development leaders and Bank of 

        19   America staff collaborated to development an innovative 

        20   community economic development philanthropic initiative 

        21   called readiness for the 21st century to promote economic 

        22   readiness for individuals, communities, and 

        23   community-based organizations.

        24            We put a great deal of time into the development 

        25   of this initiative, which was tied to the bank's 140 

        26   billion dollar community lending commitment.  We would 

         1   hate to see this initiative either delayed or either 

         2   forgotten in the process of this merger.  We feel that 

         3   this is an appropriate approach to putting some meat to 

         4   the NationsBank 350 billion dollar commitment and hope 

         5   that you will consider it.  

         6            I've been told that my time is up, and I will 

         7   conclude with this by turning back to where I started.  

         8   Initially I'm convinced that it is important to 

         9   communicate these issues in person.  The various opinions 

        10   I've heard this morning only reconfirms to me that 

        11   opinion.  In business as in life, you gain more by direct 

        12   dialogue and debate than by indirect prose and 

        13   avoidance.  Also, words alone can sometimes lack impact 

        14   and emotion.  Imagine if we only had Dr. King's "I Have a 

        15   Dream Speech" in a written version rather than the 

        16   powerful presentation he delivered in Washington or 

        17   President Kennedy's promise of a man on the moon had been 

        18   only in an editorial in the Washington Post rather than 

        19   the inspired delivery we have all seen.  

        20            Lastly, even in the face of advancing technology 

        21   like the Internet, some of us are still more comfortable 

        22   making our point in a face-to-face discussion than 

        23   those -- with those responsible for making the final 

        24   decisions.  That is why I'm here to speak today and why I 

        25   hope you will create opportunities for us to have 

        26   continued face-to-face discussions with NationsBank and 

         1   Bank of America.  Thank you.  

         2           MR. WILLIAMS:   Good morning.  My name is 

         3   Clarence Williams, and I am here on behalf of the 

         4   Sacramento Black Chamber of Commerce and California 

         5   Capital Small Business Development Corporation and as 

         6   much as I serve in the capacity of president of both

         7   organizations.  In addition, I am a founding and current 

         8   member of the Bank of America Community Development Bank, 

         9   Community Development Bank Advisory Board.

        10            The Sacramento Black Chamber of Commerce is a 

        11   501C6 membership organization established more than 12 

        12   years ago for the purpose of mitigating and eliminating 

        13   arbitrary and discriminatory barriers which preclude 

        14   African-American-owned businesses from fully 

        15   participating in the marketplace.

        16            California Capital is a Northern California 

        17   based 501C3 corporation under contracts with the State of 

        18   California and the Sacramento Municipal Utility District 

        19   to provide loan guarantees on bank loans.  In addition, 

        20   we are contracted with the Solano County Organizing 

        21   Committee and with the Federal U.S. Department of 

        22   Agriculture and Rural Development Administration to 

        23   administer loans, several in rural areas of Northern 

        24   California.  

        25            The purpose of my testimony is to support the 

        26   cause of the Federal Reserve Bank and its continuing 

         1   obligations to the community development and 

         2   revitalization and to emphasize that as a condition of 

         3   the merger of these institutions, a specific negotiated 

         4   overall written commitment of dollars, products, and 

         5   services must be required for California and its 

         6   respective regions, with my concern focusing on the 

         7   Sacramento Valley.

         8            To date, these institutions have been unwilling 

         9   to make a specific written commitment to California.  

        10   Without such a commitment, under-served inner city and 

        11   rural communities must rely on a "trust us" commitment.  

        12            Consequently, we are being asked to acquiesce to 

        13   this merger on the basis of blind faith.  These 

        14   institutions are profit motivated, and their primary 

        15   concern is return on investment for shareholders.  

        16   Creating jobs, and community reinvestment is not 

        17   necessarily perceived as being in their primary economic 

        18   interest.

        19            However, our communities cannot remain silent 

        20   and inert as the number of financial institutions 

        21   continue to contract from as many as 25,000 to a 

        22   projected eight, six, or 4,000.  This contraction and a 

        23   debate thereof should not be restricted to an analysis 

        24   that only pursues the goals of increased efficiency and 

        25   global competitiveness if these goals are at the expense 

        26   of inner city and rural communities.

         1            We cannot accept costs such as increase in 

         2   unemployment and investment being shifted from the 

         3   balance sheets of banks to the banks of our communities.  

         4   If financial institutions and their shareholders are the 

         5   beneficiaries of consolidation, then our communities 

         6   should also realize substantive benefits and not only be 

         7   required to absorb the costs of this proposed 

         8   consolidation.

         9            Furthermore, it is obvious that these financial 

        10   institutions view negotiated written commitments as 

        11   mitigation to transfer negative cost impacts resulting 

        12   from consolidation.  If accepted as mitigation by the 

        13   community, we must assure that these scarce dollars and 

        14   resources are firmly committed in writing and reinvested 

        15   for the purpose of community growth and sustainability.  

        16            I am certain that my testimony at these hearings 

        17   will identify numerous -- I am certain that the testimony 

        18   at these hearings will identify numerous and specific 

        19   instances where the principals of this merger have been 

        20   unwilling to specify in writing the commitments necessary 

        21   for the approval of this application.  However, I shall 

        22   note for the record their failure to increase Bank of 

        23   America's 1997 70 billion dollar allocation to 

        24   California, to support nonprofit technical assistance 

        25   providers who assist small businesses, to make equity 

        26   investments and CDC's and SBIC's, to provide venture 

         1   capital to minority and women-owned businesses located in 

         2   distressed areas, to purchase at least 25 percent of its 

         3   goods and services from minority and disabled-owned 

         4   businesses, and to make a written commitment maintaining 

         5   Bank of America Community Development Bank, along with 

         6   its institutional expertise with regard to community 

         7   reinvestment.  

         8            In closing, I am aware of the Federal Reserve's 

         9   specified authority to enforce and negotiate a 

        10   commitment.  Nothing precludes this panel from verifying 

        11   whether agreements made by the participants of this 

        12   merger represent either billions of dollars, smoke and 

        13   mirrors, or a substantive written covenant of commitments 

        14   involving long-term partnerships and relationships to 

        15   revitalize and to sustain inner city and rural 

        16   communities.  Thank you.  

        17            MR. CORRALEJO:   My name is Jorge Corralejo.  

        18   I'm on the board of directors of the Latin Business 

        19   Association.  The Latin Business Association is one of 

        20   the largest chambers of commerce in the United States.  

        21   We represent part of the largest or the faster growing 

        22   entrepreneurial segments in America.

        23            We know that any financial institution should be 

        24   interested in conducting business with us.  I think we 

        25   all know that all of us that represent all of the 

        26   organizations that are here today.  But what we see 

         1   developing here is a battle brewing.  And being a 

         2   business person, it's not in my interest to see this kind 

         3   of development occur.  I think that it's important that 

         4   we take a look at who is here, the depth, the depth and 

         5   the breadth of the people that are here expressing these 

         6   strong, strong concerns regarding this acquisition.  

         7            I have just a copy of an article from American 

         8   Banker, NationsBank making overtures towards Hispanics.  

         9   In this article, it states that, "Hispanic groups have 

        10   not formally protested the merger but they do have 

        11   concerns."  Well, this is wrong.  We are formally 

        12   protesting the merger.  Not just the LBA, but we're 

        13   working in concert with several other organizations, 

        14   statewide and nationally, including -- I'll give some of 

        15   the names -- American G.I. Forum, California Coalition of 

        16   Hispanic Organizations, California Hispanic Chambers of 

        17   Commerce, Chicano Federation of San Diego, Mexicana 

        18   National, ourselves, Latino Issues Forum, 

        19   Mexican-American Growers Association, and Los Angeles 

        20   Community Union.  That's just a small sampling of some of 

        21   the people who are organized in protest of this merger, 

        22   this acquisition.

        23            So I want you to take to heart the level of the 

        24   concern that is expressed here.  We understand that we 

        25   represent the majority of people and will become the 

        26   majority of businesses in the State of California.  How 

         1   can you approve the acceptance of a monopoly situation 

         2   without any kind of working agreement?  We in California 

         3   have a history over the last several years of working 

         4   with a majority if not almost all of the financial 

         5   institutions and have developed successful and profitable 

         6   businesses at our end, as well as their end.

         7            And I think that's a critical impact here, is 

         8   that we're looking to develop wealth in all of our 

         9   communities over a period of time.  And I think without 

        10   the kind of working relationship that we're seeking, 

        11   we're certainly requesting that you take some time.  And 

        12   I hate this discussions -- the discussions about this 

        13   being a done deal.  I hope that's really not the 

        14   situation.  That you postpone a decision to enable other 

        15   organizations to continue to express their concerns with

        16   what is at hand here.

        17            And, also, to take a look at perhaps proposing 

        18   the idea that they do, in fact, continue to work with us 

        19   to work on some goals.  We're not talking about enormous 

        20   goals that don't make sense.  We're talking about goals 

        21   over time.  Especially in our situation where we're 

        22   dealing again with a majority of Californians.  So we ask 

        23   at least that much, if not much more.  But please take it 

        24   from us.

        25            And like I said earlier, we are in concert with 

        26   several other organizations in protesting this merger.  

         1   So contrary to other evidence, let it be on record that 

         2   this is, in fact, the case.  Thank you very much.  

         3            MS. SMITH:    Thank you.  

         4            MR. RICHARDSON:   My name is Carlos Richardson.  

         5   I'm with Neighborhoods First Alliance.  I'm from San

         6   Antonio, Texas.  I'd like to give special thanks to 

         7   Angelique Campbell and Consumers Reports.

         8            What I have to offer this morning are simple 

         9   facts.  Based on the most recent HMDA data, it is 

        10   reflected NationsBank has redlined eastern San Antonio 

        11   community.  There were three loans made in our 

        12   neighborhood.  One loan was made to one Hispanic for 

        13   $14,000, another to one African-American $21,000, and one 

        14   undisclosed ethnic group for $26,000.  

        15            NationsBank began negotiations with 

        16   Neighborhoods First Alliance with this statement:  "We do 

        17   not sign agreements with neighborhood groups."  This is a 

        18   clear demonstration of the lack of will in making a

        19   commitment.  NationsBank also refused to agree to any 

        20   measurable goal or timetable to rectify problems, thus 

        21   refusing to be held accountable for its performance due 

        22   to such institutional policies as redlining the eastern 

        23   sectors economically deprived.

        24            The neighborhood is populated by the elderly and 

        25   working poor and has not been a participant under the 

        26   economic growth of San Antonio.  The area is besieged by 

         1   warehouses, encroachment, tank farms, and hazardous 

         2   waste, and lack of mortgage and lending and is denying 

         3   the residents of the neighborhood, the type of investment 

         4   that -- this is the type of investment that destroys 

         5   living environment and ultimately the neighborhood 

         6   itself.

         7            After the Neighborhoods First Alliance requested  

         8   NationsBank incriminating HMDA data, an executive of the 

         9   bank discovered one of the members was employed by The 

        10   United Way.  The executive called United Way and the 

        11   leader involved was ultimately put on job probation.  

        12   This attempt to cripple our neighborhood leadership 

        13   demonstrates this corporation's arrogance and willingness 

        14   to use its power to step on the poor communities.  

        15            I'm also a member of the Housing Trust.  And 

        16   although I can't speak for them now, it is part of the 

        17   research I've done in that capacity that has shown that 

        18   this organization has been lying, nursing at the tip of 

        19   government while our elderly have burned to death in 

        20   their homes.  

        21            We're opposing this merger and we hope that we 

        22   can seek help from our federal government to see that it 

        23   doesn't happen.  That's all I have to say.  And thank 

        24   you.  

        25            MR. DILLARD:   Good morning.  First let me thank 

        26   you for the opportunity to address this vital and 

         1   important issue concerning the merger of Bank of America 

         2   and NationsBank.

         3            My name is Eddie Dillard, and I'm president of 

         4   the Oakland Black Board of Trade and Commerce, an 

         5   organization of small and midsize Oakland-based black 

         6   business owners.

         7            The Oakland Black Board of Trade and Commerce is 

         8   an advocate for small business growth and development.  

         9   We create employment opportunities in our communities and 

        10   contribute to a tax base of the city of Oakland.

        11            I'm also a member of the Economic Development 

        12   Advisory Commission for the City of Richmond and an 

        13   Oakland-based small business owner.

        14            With me today are four members of the Oakland 

        15   Black Board of Trade and Commerce, Mr. Bill Matthews, 

        16   owners of Uniform America, a clothing manufacturing 

        17   company, Mrs. TJ Robinson, owner of the Gingerbread House 

        18   and Restaurant, Mr. Garfield White, president of Select 

        19   Communications, a telecommunications company, and Mr. Ron 

        20   Carter, owner of FARC Construction Company and a member 

        21   of the board of directors of the Bay Area Black 

        22   Contractors Association.  

        23            Each of these Oakland-based black business 

        24   owners were denied financing by Bank of America.  Not 

        25   only have these worthy small black business owners been 

        26   denied access to capital, but the honorable mayor of the 

         1   city of San Francisco, Willie Brown, and the honorable 

         2   mayor of the city of Oakland, Mayor Elihu Harris, were 

         3   denied a loan from Bank of America in an attempt to 

         4   purchase a radio station in the city of Oakland.  

         5            Over the past ten years, we've witnessed a 

         6   dramatic decline in the availability of access to capital 

         7   in the city of Oakland and the San Francisco-Oakland Bay 

         8   Area in general.  There are approximately 554 banks in 

         9   the state of California.  Only two of these banks are 

        10   African-American banks.

        11            The recent mergers of large banks is threatening 

        12   to create less competition and more Monopoly control of 

        13   the availability of credit to the black community.  Bank 

        14   of America's recent public relations campaign slogan, 

        15   "let's be neighbors," flies in the face of reality.  The 

        16   lack of small business growth in the black community can 

        17   be directly attributed to the downsizing of Bank of 

        18   America in the black community.

        19            The black community contributes substantial 

        20   revenues to Bank of America's bottom line.  For example, 

        21   of the 340 black churches in Oakland, 40 percent bank 

        22   with Bank of America.  That means that every Monday, 

        23   approximately 136 black churches deposit $400,000 into 

        24   Bank of America's system.  This represents approximately 

        25   $20 million annually.  Yet we've seen Bank of America 

        26   abandon our community, forcing our church members, small 

         1   black business owners, nonprofit organizations, and 

         2   citizens to travel outside of our community for banking 

         3   services.

         4            Bank of America's market shares is approximately 

         5   40 percent of the 379 black individuals who reside in the 

         6   nine Bay Area counties.  Bank of America has been 

         7   unresponsive to the credit needs of the black community 

         8   while providing lip service to the black community 

         9   through sponsorships of high profile and special events.  

        10            We've seen Bank of America and other financial 

        11   institutions spend billions of dollars to reconstruct 

        12   countries like West Germany, Indonesia, Korea, and even

        13   Russia at the expense of American blacks.  Charity 

        14   begins at home.  

        15            For the past 50 years, we've seen a 

        16   deterioration of our communities to the point where today 

        17   many of our neighborhoods look like boarded out war zones 

        18   with boarded up commercial stores and severely 

        19   dilapidated housing.  In the past decade, we've watched 

        20   Bank of America expand in the suburbs and shopping malls 

        21   and grocery stores outside the inner city and provide a 

        22   wide range of financial services to the white communities 

        23   that remain unavailable to the inner city black 

        24   community.

        25            For example, in West Oakland, an area of 

        26   approximately 27,000 residents, Bank of America at one 

         1   time had four branches.  Today there are none.  As a 

         2   direct result of this wholesale denial of credit, this 

         3   community has no pharmacy, no grocery store, and no

         4   bank.  Has the wholesale withdrawal of Bank of America 

         5   affected this community?  

         6            Most assuredly.  Another example is East 

         7   Oakland, an consisting of 48,000 residents.  Bank of 

         8   America at one time had seven branches.  Today there are 

         9   three.  Not only has this abandonment of our community 

        10   forced blacks to travel on average four miles for banking 

        11   services, but the reduction in employment has caused 

        12   undue hardship to many black families and the community 

        13   at large.  

        14            One black church member told me that for 50 

        15   years, she had a checking account and a savings account 

        16   with Bank of America.  When she retired from two 

        17   full-time careers, she decided to remodel her home, which 

        18   was estimated to cost $23,000.  With annual retirement 

        19   income of over $3,000 a month, she was denied a 

        20   refinancing loan by Bank of America.  Three weeks later 

        21   she qualified for a larger loan from another institution 

        22   with a more favorable interest rate and a payment 

        23   schedule that fit within her budget.  

        24            This is but one example of how Bank of America 

        25   has consistently denied blacks access to capital.  Bank 

        26   of America has raped the black community of our resources 

         1   and transferred our savings and deposits to communities 

         2   that have no direct or indirect impact on the quality of 

         3   life in the black community in Oakland.

         4            For example, Bank of America provided the 

         5   financing for the Shorenstein Development Company to 

         6   purchase the city center project in downtown Oakland and 

         7   the amount estimated to be $23 million and reported this 

         8   financing under CRA as a loan to a minority.  Well, the 

         9   truth of the matter is the Shorenstein Company is one of 

        10   the largest white-owned office and shopping center 

        11   developers in the country, and how the financing can be 

        12   designated as fulfilling its CRA objectives is not only 

        13   misleading but boarders on fraud.  

        14            I'll close with saying that Bank of America has 

        15   not been loyal to the black community and it does not 

        16   advertise effectively or in any meaningful way.  The 

        17   withdrawal of bank services in our community has created 

        18   pockets of poverty, pockets which breed hopelessness, 

        19   anger, and despair.  Only when organizations such as Bank 

        20   of America and NationsBank fully realize and actively 

        21   partner with black institutions and organizations to 

        22   address these issues can we say we're building bridges to 

        23   the new millennium.  Thank you.  

        24            MR. HOBBS:   Good morning.  My name is Greg 

        25   Hobbs.  I'm the vice president of the National White 

        26   Business Council and I'd also like to recognize my 

         1   chairperson of the National Black Business Council 

         2   sitting at the end of the table to show her support.  We 

         3   have 75,000 businesses across the country which we're in 

         4   contact with electronically.  

         5            Today specifically I'm representing one of our 

         6   affiliates from the state of Florida, the Coalition of 

         7   Black Businesses.  The Coalition of Black Businesses from 

         8   the state of Florida have concluded that an approval of 

         9   this acquisition without specific commitments to build 

        10   capacity for black-owned businesses will retard or 

        11   reverse the gains and capital access by black-owned  

        12   businesses in every state the bank operates.

        13            Florida, we think, presents the ideal case study 

        14   for accessing the impact of the economic well-being of a 

        15   state such as California which stands to lose a major 

        16   heritage bank to decision makers outside the state.  As 

        17   you know, Florida just lost its major headquarter bank,

        18   Barnett Bank, to NationsBank through an acquisition.  For 

        19   this reason, the coalition feels it is essential in 

        20   assessing the impact of this acquisition that the Federal 

        21   Reserve hold a hearing in the state of Florida.

        22            Upon information and belief, NationsBank has not 

        23   adequately provided capital for black-owned businesses in 

        24   the state of Florida.  Further, although reports -- 

        25   NationsBank reports not to track race data on business 

        26   loans, it is our belief that less than one percent of 

         1   NationsBank's Florida business loans are made to 

         2   black-owned businesses.

         3            We've requested the OCC do a random study of the 

         4   bank's loan portfolio as part of the CRA performance 

         5   evaluation to adequately determine what that number is.  

         6   However, there's a preponderance of evidence which 

         7   supports the coalition's claim.

         8            In 1985, Florida lawmakers created a unique 

         9   network to provide access to capital for black-owned 

        10   businesses in the state of Florida.  NationsBank, 

        11   previously NCNB, was one of the initial members of this 

        12   investor bank network.  The network via loan guarantees 

        13   and direct loans has been a primary source of capital for 

        14   black-owned businesses in the state of Florida, providing 

        15   more than 40 million in capital since inception.

        16            Prior to the acquisition of Barnett Bank, 

        17   NationsBank was the third largest member investor in this 

        18   network behind Barnett and First Union.  But over the 

        19   past 12 years, NationsBank has provided only ten loans 

        20   guaranteed by this network as compared to Barnett, which 

        21   has made 117 and Sun Trust, which has made 120, and First 

        22   Union, who's made 75.

        23            NationsBanks guaranteed loans amount to, over 

        24   the 12-year period, to $268,000 to black-owned businesses 

        25   as compared to Barnett Bank at 10.8 million, as compared 

        26   to Sun Trust of 9.3 million and First Union of 5.5 

         1   million.

         2            The network guaranteed loans by NationsBank 

         3   through the system represents seven-tenths or one percent 

         4   of the total funding provided through this network.  We 

         5   can go even further and take a look at SBA guaranteed 

         6   loans.  According to SBA guaranteed loan volume reported 

         7   by state and race, SBA guaranteed loans by NationsBank 

         8   for African-Americans in the state totaled zero in 1993 

         9   and 465,000 in 1994.  This number is important because 

        10   it's in our belief that 90 percent of the commercial bank 

        11   loans to black-owned businesses in the state of Florida 

        12   are provided with SBA guarantees.  Therefore, SBA 

        13   guarantees are a major reflection of the bank's loan 

        14   portfolio, particularly as it relates to black-owned 

        15   businesses.

        16            NationsBank SBA guaranteed loans for 

        17   African-Americans in 1994 would have represented 

        18   three-tenths of one percent of its small business loans 

        19   in the state of Florida as reported in its 1995 CRA 

        20   performance evaluation.  Total small business loans in 

        21   Florida for 1995, 1996, and 1997 were not available for 

        22   analysis.  However, it is our belief that this 

        23   insubstantial performance continued in these years as 

        24   well.  

        25            There's a significant group of black-owned 

        26   business owners, black business organizations, and black 

         1   professionals in the state of Florida which have 

         2   expressed concern in NationsBank delivery of credit.  

         3   Moreover, of the seven institutions that make up this 

         4   unique network in the state of Florida, after being 

         5   requested to submit letters of support by NationsBank, 

         6   only one submitted a letter of support.  And it's 

         7   interesting to note that the one submitting that letter 

         8   of support for this acquisition, the president of that 

         9   institution is a member of the board and the chairman is 

        10   an area president of NationsBank.

        11            The bank's insubstantial delivery of capital 

        12   black-owned businesses in the state of Florida is not due 

        13   to any lack of demand, just an extremely conservative 

        14   lending policy that lacks an understanding and innovation 

        15   in meeting the capital needs of black-owned businesses in 

        16   the state of Florida.

        17            A lot has been said and I'm going to cut my 

        18   comments short by concluding that we, like many people 

        19   who have spoken earlier, strongly would like to express 

        20   that the Federal Reserve hold more hearings, particularly 

        21   in the state of Florida, but also that the Federal 

        22   Reserve compel NationsBank to sit down with community 

        23   groups to work out specific commitments for their CRA 

        24   investment within the very states which it serves.  Thank 

        25   you.  

        26            MR. NEREE:   Good morning, members of the board 

         1   of governors and proactive community leaders.  My name is 

         2   Dufirstson Neree.  I'm here representing The Credit is 

         3   Due Project, a community development financial 

         4   institution in Miami, Florida, and the Little Haiti 

         5   Community Alliance, a coalition of 24 community-based 

         6   organizations and 1,028 residents united to fight 

         7   redlining in the city of Miami.

         8            I got here early this morning, 1:00 precisely.  

         9   The tickets was bought with the pooled savings of ten 

        10   local residents, each making solely $10,000 for the 

        11   entire year.  I'm sure if a public hearing was advertised 

        12   in the state of Florida, many other community groups 

        13   would have made the same type of effort.

        14            Not knowing the specifics of this public 

        15   hearing, I have prepared a 15-minute and a 30-minute 

        16   presentation, but out of respect for your time and 

        17   respect for local groups in San Francisco, I can 

        18   succinctly limit my presentation and just summarize 

        19   NationsBank record of poor lending, poor community 

        20   outreach, and failure to comply with the CRA and with the 

        21   following censuses.

        22            Two years ago, we had six different banks 

        23   operating in our community.  In the past, when our 

        24   residents faced local bank discrimination, we could take 

        25   our money elsewhere or we could use the CRA to protest 

        26   the poor services that we received.  Last year, with the 

         1   merger of NationsBank/Barnett Bank, our community went 

         2   from having six local bank branches to having just two.

         3            Now what choice do we have in terms of where we 

         4   decide to do our banking and what choice do we have -- 

         5   what voice do we have in using the CRA to fight for more 

         6   access to capital in an area when we know that it's 

         7   common banking protocol to renege on CRA commitments?  

         8            In our community, the CRA is virtually useless.  

         9   The two banks who operate there now, Washington Mutual 

        10   and NationsBank, are two of the largest institutions in 

        11   the United States of America.  We don't expect a merger 

        12   anytime soon.  If you as our public officials do not 

        13   force these mega-banks to make enforceable CRA 

        14   commitments, low-income communities and minority 

        15   communities like mine will have no option but to become 

        16   the punching bags for mega-banks like NationsBank, who 

        17   have in the past showed very poor records of community 

        18   reinvestment act lending.  

        19            MS. SMITH:    Thank you.  I encourage you to 

        20   submit your 30-minute presentation for the record.  

        21            MR. WONG:   Members of the Federal Reserve, my 

        22   name is Dennis Wong, and I'm the president of the Asian 

        23   Business Association, Northern California.  We're a 

        24   nonprofit and we focus on economic development through 

        25   education.  As part of that, we sent nine of our members 

        26   to the White House conference on small business in 1995 

         1   to address many of the issues that you hear before you 

         2   today.  We'd like to also lend our concerns to the 

         3   proposed merger by saying that without specific 

         4   commitments from the new NationsBank and without 

         5   identifiable measurable results, we are very concerned 

         6   that the effectiveness and the intent of CRA will be 

         7   greatly diminished.  Thank you.  

         8            MR. GNAIZDA:   Members of the panel, we now have 

         9   a series of one-minute speakers who will be using the 

        10   mic.

        11            MR. BETZ:   We promise to be extremely brief.  

        12   We're representing a number of organizations that wanted 

        13   to be here today but, because of the cost of getting to 

        14   San Francisco, were not able to.  So we'd like to make 

        15   brief statements on their behalf.

        16            I'm going to start with a statement from Leo 

        17   Avila, who's a member and former past chair of the 

        18   American G.I. Forum.  And he wants to go down on the 

        19   record the following statement:  "The American G.I. Forum 

        20   is our nations most prominent and largest Hispanic 

        21   veterans organization.  We oppose any merger that fails 

        22   to ensure that the Latino community, a community that put 

        23   America first in every war, fully and specifically 

        24   benefits from this merger.

        25            "We want home loans, we want business loans, and 

        26   we want the banks to move their charitable dollars from 

         1   the ballet to the barrio.  Until there are specific 

         2   commitments, we say to Chairman Coulter, McColl, and Alan 

         3   Greenspan no merger.  Remember, the Latino community is 

         4   the future for California and any bank that operates 

         5   here.  Thank you."  

         6            UNIDENTIFIED SPEAKER:   Good morning.  I'm 

         7   speaking here on behalf of George Dean, the CEO and

         8   president of Phoenix Urban League.  The Phoenix Urban 

         9   League has had a very good relationship with the B of A.  

        10   However, we must, no matter what the risk, set forth our 

        11   concerns.

        12            First, NationsBank may not be as sensitive to 

        13   the unique minority cultures in Arizona.

        14            Second, all the major banks in the west have 

        15   recognized a multi-billion dollar potential of minority 

        16   markets and set specific goals.  Nations refuses to do 

        17   so.  We ask why.

        18            Third, although community groups appreciate 

        19   grants, it should not be noted -- it should be noted that 

        20   as a percentage of profits, the record of the new banks 

        21   is only half of its competitors such as Wells Fargo.

        22            Forth, this merger should be modified to require 

        23   specific minority lending and contract goals and a 

        24   substantial charitable commitment to the under-served 

        25   communities.  Thank you.  

        26            MR. GNAIZDA:   Members of the board, if you 

         1   would allow us to make one little exception.  Maryann 

         2   Mitchell has just flown in from Washington.  She's the 

         3   national head of one of the largest black business 

         4   councils in the country, National Black Business 

         5   Council.  If she could make a brief observation, we'd 

         6   appreciate it.  

         7            MS. MITCHELL:   Good morning.  I think it's 

         8   still morning.  Again, I'm Maryann Mitchell.  I'm the 

         9   president of the National Black Business Council out of 

        10   Silver Springs, Maryland and a business owner.  And I 

        11   just want to say a couple of things.

        12            We absolutely positively as it stands today 

        13   oppose this merger for the following reasons:  The 

        14   lending practices and policies of Bank of America and 

        15   NationsBank, the contracting record.  I'm a business 

        16   owner and I get called to the White House all the time  

        17   for them to tell my success as being one of the most 

        18   successful African-American business owners in the 

        19   country.

        20            That is just -- it's outrageous that I prefer 

        21   doing business with the federal government rather than 

        22   Bank of America because it is absolutely impossible to 

        23   have access.  It is also impossible to do anything with 

        24   NationsBank as far as contracting because they have a 

        25   22-page survey on the Internet that requires a business 

        26   plan for you to do business with them.  This is

         1   outrageous.  It just cannot happen.  So you have Bank of 

         2   America and NationsBank doing business with other Fortune 

         3   500 companies and not the community businesses.

         4            I just want to also say to Bank of America and 

         5   NationsBank that we will advocate through our 75,000 

         6   members across the United States that they don't do 

         7   business with them, plain and simple.  We will also 

         8   advocate to our employees that they just don't have bank 

         9   accounts with Bank of America and Nations.  We will also 

        10   tell our employees to advocate to their families to just 

        11   close their accounts and go somewhere else because it 

        12   makes more sense.  We will do business with people who do 

        13   business with us.  

        14           MR. CALDERA:   Good morning.  I'll be reading a 

        15   statement from Steve Soto, who's the president and CEO of 

        16   the Mexican-American Growers Association, an organization 

        17   representing over 7,000 growers in California.  And my 

        18   name is Arquimides Caldera for the record.

        19            Our association's success is a harbinger of the 

        20   future of the state.  If we truly want California to be a 

        21   golden state again, banks must tap all of California's 

        22   minority resources, as much as Wells Fargo is attempting 

        23   to do.

        24            The B of A/Nations pledge fails to tap this 

        25   potential.  The result is likely to be a lack of lending 

        26   and economic development funds.  We urge NationsBank and 

         1   Bank of America to develop specific minority lending and 

         2   contract goals.  Until that is done, our support cannot 

         3   be secured and the new bank will not achieve its profit 

         4   goals.  

         5            Our association also protests the lack of 

         6   hearings in Southern California.  Thank you.  

         7            MS. VENERACIAN:   Good morning.  My name is 

         8   April Veneracian for the record, and I will be reading a 

         9   statement for Alex Esclamado, president of Filipino 

        10   Political Association.

        11            It seems almost incomprehensible, if not 

        12   ridiculous, for us to testify today on behalf of our 

        13   communities that Bank of America and NationsBank have 

        14   been less than forthcoming in their collective intent to 

        15   engage in a mutually beneficial partnership with our 

        16   communities.

        17            Minorities, including the Filipino-American 

        18   community, represent a significant potential consumer 

        19   base for B of A and NationsBank and yet we are here 

        20   before you to attest that they have not taken a 

        21   definitive and affirmative stance towards tapping our 

        22   communities.

        23            In studies of businesses discrimination 

        24   conducted across the country, institutional 

        25   discrimination has been pinpointed as the primary cause 

        26   of minority business failure and minority community

         1   underdevelopment.  Financial institutions in particular 

         2   are at the heart of those discriminatory practices.

         3            We ask and urge the regulators not to allow Bank 

         4   of America and NationsBank to actively or passively carry 

         5   on this tragic legacy by not offering specific courses of 

         6   action for lifting and alleviating such institutional 

         7   barriers.  Thank you.  

         8            MS. THRASH:   Tunua Thrash, for the record, is 

         9   my name, and I'm reading a statement on behalf of Mark 

        10   Whitlock, who is executive director of economic 

        11   development for First AME Church in Los Angeles.  It's 

        12   one of the largest Africa-American churches here in the 

        13   state.

        14            "As the executive director of a major inner city 

        15   African-American church operating economic development 

        16   programs with 16,000 family constituents, I have grave 

        17   misgivings about an absentee landlord.  Our community has 

        18   suffered from generations of an absentee landlord 

        19   neglect.

        20            "You want to think about the fact when all of 

        21   the banks competitors, including Washington Mutual and 

        22   Wells Fargo, have made specific minority pledges, one has 

        23   to wonder as to the motives of the one who refuses.

        24            "Third, many members of our church would like to 

        25   testify but cannot be here today because the hearings are 

        26   held in San Francisco.  Please hold a Los Angeles hearing 

         1   as we previously requested.

         2            "The African-American market nationwide is over 

         3   $600 billion.  Those who ignore us do so at their peril.  

         4   We come not to the table to beg but with the desire to 

         5   create civil and a prosperous society.  Thank you."  

         6            MS. DIAZ:   Good afternoon.  My name is Haydee 

         7   Diaz, and I am reading a statement from Willis White, 

         8   California Black Chamber of Commerce.

         9            "I join with the National Black Chamber, the 

        10   Black Business Association, and the National Black 

        11   Business Council in criticizing a merger that abandons 

        12   the African-American community.  We have never shared in 

        13   either bank's loan pool or contract program, nor in 

        14   Golden Parachutes for senior, white males worth over $200 

        15   million, nor have we equitably shared in their economic 

        16   development projects.

        17            "Consider this:  Bank of America alone lent more 

        18   to South Korea, $3.1 billion to be exact, than the total 

        19   it has lent African-American-owned businesses over the 

        20   last 50 years.  And remember, B of A has lost $3.1 

        21   billion in South Korea and nothing in the inner city.  

        22   Until they show us the money and walk the talk, we will 

        23   criticize this merger."

        24            MS. VILLANUEVA:   My name is Trina Villanueva, 

        25   and I will be reading a statement from Mateo Camarillo, 

        26   who is the vice chair of the Chicano Federation of San 

         1   Diego.  He could not fly up here today.

         2            "No bank mega-merger should occur without 

         3   specific minority and geographical pledges.  In San 

         4   Diego, over 40 percent of the county are minorities and 

         5   the majority of potential homeowners and small business 

         6   entrepreneurs are persons of color.

         7            "We in San Diego invite CEO McColl to visit us 

         8   and pledge that the new bank will set specific minority 

         9   lending and business goals just like Washington Mutual, 

        10   Wells Fargo, and the Union Bank of California.  Until 

        11   this is done, competition may decide the financial fate 

        12   of this merger.  Why should we do business with a bank 

        13   that ignores us when Wells and WaMu courts us?  Thank 

        14   you."

        15            MS. NGUYEN:   Hello.  My name is Vy Nguyen, and 

        16   I'm here to read a statement from Mai Cong, CEO of the 

        17   Vietnamese Community of Orange County, Incorporated.

        18             She writes, "The Vietnamese-American community 

        19   has been inadequately served by B of A's small business 

        20   lending and fears an absentee landlord with little 

        21   knowledge of our culture will do even worse.  Frankly, 

        22   only targeted minority marketing and goals as recently 

        23   set by B of A's competitors, such as Union Bank, can 

        24   correct this lack of capital to an emerging U.S. market 

        25   that is far greater than many overseas markets.  

        26            "On behalf of Orange County's 160,000 

         1   Vietnamese-Americans, I wish to deliver a personal 

         2   message to Chairman Greenspan with whom I recently met.  

         3   Don't forsake us.  Compel NationsBank to set specific 

         4   minority goals for small business lending and to promote 

         5   people of our community into senior management.  Thank 

         6   you." 

         7            MR. ROMERO:   Good morning.  I'll be reading a 

         8   statement on behalf of Reverend James H. Daniel, Jr., 

         9   chairman and CEO of 21st Century Partnership.

        10            "The 21st Century Partnership is a nonprofit 

        11   community development corporation concerned with many 

        12   issues pertaining to community development here on the 

        13   east coast.  Among them is the changing face of the 

        14   financial service industry.  As ministers and servants to 

        15   the community, we believe that mega-mergers must create 

        16   concrete results for the traditionally under-served.

        17            "The CRA record of NationsBank is a concern to 

        18   us.  Its lack of commitments to those who led the 

        19   struggle for economic justice as represented by Martin 

        20   Luther King, Jr. is appalling.  And we serving in the 

        21   interests and voicing the concerns of millions of 

        22   African-Americans decry the Federal Reserve's Board of 

        23   Governors refusal to grant us in a hearing in each state 

        24   in which NationsBank and B of A have failed to render 

        25   adequate financial services to the under-banked among 

        26   us.  Only a lack of funds has prevented us from 

         1   personally testifying.

         2            "Respectfully, Reverend James H. Daniel, Jr."

         3            MR. CALDERON:   Gene Calderon.  And I'll be 

         4   reading in a statement from Burt Corona, the executive 

         5   director of the Hermandad Mexicana Nacional.

         6            "I offer this testimony on behalf of the nations 

         7   largest immigrant service center and advocacy 

         8   institution.  We have offices in Washington D.C., New 

         9   York, Illinois, as well as in California.  This merger 

        10   could be harmful to all communities.  It's particularly 

        11   so for low-income, immigrant, and minority communities.

        12            "Over the last six decades, we have witnessed 

        13   the danger of absentee landlords and those that view the 

        14   poor from afar.  I refuse to testify so that my personal 

        15   absence is evidence against Chairman Greenspan's decision 

        16   to prevent low-income persons from voicing their 

        17   concerns.  Unless they live in the San Francisco area or 

        18   have a rich uncle bank to fund their trip.

        19            "I also question the safety and soundness of a 

        20   bank which lacks the confidence of persons of color.  We 

        21   constitute two-thirds of Los Angeles county's population, 

        22   a population greater than that of North Carolina.  Thank 

        23   you."  

        24            MR. FERRAH:   My name is Freddie Ferrah.  I'm a 

        25   special project manager with the Greenlining Institute  

        26   and I wanted to just say with all the respect I can that 

         1   I am amazed and appalled at the fact that the nations 

         2   largest two-bank merger -- I don't count Citi and 

         3   Travelers because Travelers isn't a bank.  Well, not yet 

         4   anyway.  It will be as soon as that's complete.  But 

         5   nonetheless, that the largest banking merger, $560 

         6   billion of capital, only allows -- and the Federal 

         7   Reserve and Mr. Greenspan should really consider this -- 

         8   is only having one meeting, one meeting in San Francisco 

         9   to allow city -- or community members and groups to voice 

        10   their concern over something of such monumental 

        11   importance.  This bank is going to cover a third of all 

        12   the states in the nation, yet only one city is going to 

        13   be the center point for community-based comments.  

        14            The banks have proven and the testimony here 

        15   just reinforces the fact that Nations has done about as 

        16   bad a job at serving the communities it works in as any 

        17   bank could possibly do.

        18            I am here to represent 49 million people with 

        19   disabilities, people who I hope can understand and 

        20   realize the negative impact of this kind of merger and 

        21   will quickly, as I have already done, move the account 

        22   from Bank of America to a bank that supports our needs.

        23             I don't want to take up any more time because 

        24   the real beef isn't here.  Coulter, McColl, and 

        25   Greenspan, I don't know where they're at, but they're 

        26   probably unpacking Golden Parachutes or doing what it 

         1   might be that people of high importance do.  I just wish 

         2   they'd show us more respect because there are a lot of 

         3   people that are very concerned with this merger.  And it 

         4   certainly isn't taking place in any way that makes me 

         5   feel any more respected at all.  I oppose this merger.  

         6   Thank you.  

         7            MR. FREEMAN:   My name is David Freeman.  I 

         8   represent the Commission on Disability in Berkeley, 

         9   California.

        10            And to be honest, I really have never heard such 

        11   a ridiculous statement about a bank such as nations in my 

        12   life.  I think it's pretty depressing pretty much when 

        13   you look at the future of banking in this country if this 

        14   merger is allowed to go through, especially with these 

        15   two banks.

        16            There needs to be definite specific arrangements 

        17   so that the community does get reinvestments back into 

        18   it.  As a disabled person, as an African-American, I know 

        19   that the system was not built with me in mind, but I 

        20   definitely intend to partake in it no matter what entity 

        21   may put itself up against me.

        22            NationsBank and Bank of Atrocities needs to be 

        23   notified that we're entering the year 2000 and the 

        24   disabled community in particular is not going to stand 

        25   for the garbage.  I think this is all garbage.  I don't 

        26   have any beautiful words to put it into.  I'm just going 

         1   to say it plain and simple.

         2            This is nonsense.  And if the Fed does not 

         3   enforce what's already on the books or if the Fed does 

         4   not make sure that these two banks invest in the 

         5   communities that they set up ATM's in and they withdraw 

         6   money from like an endless vacuum, what do you expect to

         7   happen?  

         8            I'm dead against this merger.  This merger 

         9   should not happen.  If it does happen, it's just another 

        10   sign of the times that the Federal Reserve is kind of 

        11   schizophrenic.  Okay?  It's not facing reality, and 

        12   that's just the bottom line.  I'm against the merger.  

        13   Thank you.  

        14            MR. GNAIZDA:   Members of the panel, we want to 

        15   thank you all very, very much from the approximately 70 

        16   speakers on the two panels that you arranged with Joy 

        17   Hoffman's assistance.  Although we obviously have 

        18   expressed displeasure at the lack of hearings, I think 

        19   all of us owe you a debt of gratitude for being as 

        20   flexible as you have been and as courteous as you have 

        21   been and as open.  So we thank you very much.  

        22            MS. SMITH:    I, in turn, want to thank everyone 

        23   who presented testimony this morning.  You have provided 

        24   us with important information, and I want to assure you 

        25   that as part of the record that the board will have when 

        26   it makes its decision on this application, the board will 

         1   review the materials that you have presented and will 

         2   take into account the concerns that you have expressed.

         3            So thank you very much.  

         4            MR. GNAIZDA:   Thank you.  

         5            MS. SMITH:   We will continue with -- we're 

         6   behind schedule, but we're going to continue with the 

         7   next panel before taking our lunch break, which may be 

         8   shorter than the half hour we had allocated.  But if the 

         9   next panel will come on up, then we will proceed 

        10   immediately.

















       1              MR. MARKS:  Hi.  My name is Bruce Marks.  I'm
       2   the Executive Director of the Neighborhood Assistance
       3   Corporation of America.  We are a nonprofit housing
       4   services, housing advocacy organization.  
       5              I am going to keep my remarks short and then
       6   have a few other people talk.  One thing with the Fed,
       7   let's be clear, ISB, I get my experience in two ways
       8   with the Federal Reserve.  One, I used to work for the
       9   Federal Reserve Bank of New York.  It dealt with CRA. 
      10   So it ain't real.  It's cosmetic.  Let's be clear on
      11   that.  From an insider's point of view, this is Ragtime.  
      12              Secondly, the only way that you can get their
      13   attention is if you take them on right between the eyes. 
      14   When we asked the Fed to look at Fleet Finance, which
      15   was one of the most predatory lenders in the country,
      16   the only way to get their attention was to blockade the
      17   Fed, meet with the Board of Governors in the board room
      18   and then make sure the switchboard couldn't operate,
      19   because thousands of people called the switchboard at
      20   one time and Alan Greenspan couldn't get an outside
      21   line.  
      22              So let's be clear where the Fed stands.
      23              Now, in terms of the NationsBank/Bank of
      24   America merger, we are absolutely in support of it.  We
      25   are absolutely in support, because it's unprecedented,
      26   when you have $350 billion.  


       1              So what we've heard here this morning is,
       2   well, is it real?  Is it just a nice big number that is
       3   too hard to requantify and does not -- whether it's
       4   real.
       5              So what we've asked is some of the thousands
       6   of homeowners who have benefited from what NationsBank
       7   has done to come here and talk about what's going to
       8   happen, not just in Charlotte and Jacksonville and
       9   Memphis and in Atlanta and Washington and Boston and
      10   around the country, but what's going to happen on the
      11   west coast as well.
      12              So, with that, let me introduce Mayo
      13   Thunderbird.  Mayo, he is from Atlanta and he is a
      14   person who has not only purchased a house but has
      15   renovated.  He can say it much better than I can.  
      16              MR. THUNDERBIRD:  Good morning.  You know,
      17   I've sat in here this morning and listened to a lot of
      18   people express a lot of different opinions.  And, you
      19   know, everybody has a right to an opinion, but I'm going
      20   to let you draw your opinion from my experience.  
      21              See, seven years ago, I was that homeless
      22   person on the street you might have passed on your way
      23   here.  I was that person sleeping in the stairwell of
      24   the gutter and wherever I could find a place.
      25              And then I decided to make a change in my
      26   life.  And, as a result of that, when I put my life back


       1   together, got married and had a small child, then I
       2   approached other lending institutions about, well, now I
       3   need a home to provide for my daughter.  
       4              The majority of them turned me away.  Some of
       5   them said, "We'll get back to you, you've got to do all
       6   this."  Well, they wanted all this money I didn't have.  
       7              So my wife and I heard about the NACA
       8   program.  We went to the NACA program.  And, even though
       9   I had a bad credit history, bad check history, because
      10   the bad checks and things I did to support my addiction,
      11   my wife had a bankruptcy due to some certain situations
      12   that occurred in her life, they helped us work through
      13   the application process to the point where, when we
      14   presented it to NationsBank, it was fine.
      15              And I have experience with the NationsBank
      16   process that tells me that what they say they're going
      17   to do, they're going to do.  I went to a rally when NACA
      18   came to Atlanta.  There was thousands of people.  I told
      19   my wife there is no way we're going to get into this
      20   process, there is just too many people.  God willing, we
      21   did.  
      22              I said, further on, there is no way we're
      23   going to get through this process, all the bad checks I
      24   wrote, your bankruptcy, but we did.
      25              And then when we got to the part where you
      26   presented the application to the bank, that's where the


       1   biggest surprise was.  The people in the NationsBank
       2   Mortgage Corporation office were more cooperative than I
       3   could have ever imagined.  They helped us through the
       4   difficulties, they helped us bring down the roadblocks
       5   that were in the way.
       6              See, they didn't have to do that.  We went to
       7   them asking them for help.  They turned around and they
       8   helped us.  So I say to you that's what you should be
       9   paying attention to.  What is the experience that people
      10   have had that have gone through the process that
      11   everybody is concerned might not be real?  Well, it's
      12   happened, I'm living proof of it today.
      13              So maybe that's where you should be focusing
      14   a little bit more of your attention, talk to the people
      15   you are talking to, listen to people in positions of
      16   authority in the charge of organizations that are
      17   designed to help the people get below that to the people
      18   that have benefited.  
      19              If they tell you it works, then I think your
      20   responsibility is to see that they live up to their
      21   word.  They said they were going to do it in Atlanta,
      22   they did.             
      23              Thank you.  
      24              MR. MARKS:  What Mayo didn't --  there is a
      25   lot to say, he purchased a house and he renovated it. 
      26   One of the important parts of what NationsBank does is


       1   you can purchase to stabilize your neighborhoods.
       2              Let me introduce Jenny McNabb.  Ms. McNabb
       3   had 12, she'll tell you, she had a predatory loan and
       4   it's a story that you've got to hear because she is just
       5   one of thousands of people who are going to be able to
       6   get out of a predatory loan into a mortgage that they
       7   can afford.  
       8              MS. McNABB:  My name is Jenny McNabb and I
       9   live in Atlanta, Georgia.  Several years ago I obtained
      10   a mortgage from Ford Consumer Finance.  This was a
      11   15-year mortgage at 12.4 percent interest with a balloon
      12   note at the end of 15 years of over $47,000.  
      13              I was told after a few months that this was
      14   indeed a very bad loan and they would be willing to
      15   refinance me at a cost of over $5,000.
      16              When I retired a little over a year ago, it
      17   became increasingly hard to make mortgage payments,
      18   utilities and other household bills.  I was at the point
      19   of almost losing my home when I was introduced to NACA.
      20              NACA not only refinanced my mortgage at 6.5
      21   percent through NationsBank, but also paid off some of
      22   my outstanding debts.  The insurance and taxes are
      23   included in my monthly payments, which was not the case
      24   with Ford.
      25              I feel that without the help that I received
      26   from NACA and NationsBank, I would have lost my home. 


       1   And I would recommend the refinancing at this time. 
       2              Thank you.             
       3              MR. MARKS:  So you keep hearing about
       4   NationsBank credit, but you don't know about the other
       5   side.  You don't hear Jenny McNabb.  You don't hear
       6   again about the thounsands of thousands of people that
       7   will get out of the loans by Ford, which is the largest
       8   predatory lender in the country.
       9              Let me introduce a first-time home buyer, let
      10   me see, Naomi Martin.  She's not only a first-time home
      11   buyer, but she knows about all the NACA deals in
      12   Washington            
      13              MS. MARTIN:  Good evening, everyone, my name
      14   is Naomi K. Martin and I'm from Washington D.C.  I'm a
      15   first-time home buyer.  Several years ago I decided that
      16   I wanted to get a loan and I went to several other
      17   institutions and I could not get it, not because I had
      18   bad credit, because I had no credit.  And all of you
      19   know, having no credit, is worse than having bad credit.
      20              So I went through the program, the NACA
      21   program.  The way I heard about it is because I dealt
      22   with the NACA loans, and I've seen people go in there
      23   and I've seen them get a rate at 6 percent, 7 percent
      24   and I said to myself, no, no, this is not, this is not
      25   true.  But by me working in that program and working
      26   with NationsBank, which NationsBank want you to have a


       1   home, I seen that this can be done.
       2              I wanted to get a home where I had did my
       3   roots, which is in Anacoco, and I got it there.  I did
       4   neighborhood community work there.  I was an ASC
       5   Commissioner, orange hat, and this is where I decided to
       6   buy my home, and I went through this program and I went
       7   with NationsBank, and I'm telling you today I am a
       8   first-time home owner.  
       9              And I am truly proud to stand up here and say
      10   that if you want to become a first-time home buyer, go
      11   through the NACA NationsBank program and I'm telling
      12   you, you will get your home.  It all depends on you
      13   yourself.  If you want a home, NationsBank says, "We'll
      14   supply you with a home."
      15              Thank you.  
      16              MR. MARKS:  Let me introduce the Hawkins, the
      17   Freddie Hawkins, which are again one of thousands of
      18   people who have benefited from what NationsBank has
      19   done.             
      20              MS. HAWKINS:  Our name is Freddie and
      21   Caroline Hawkins.  We are from Charlotte, North
      22   Carolina, and we got a home from NACA/NationsBank.  Our
      23   stories are short.  We are a one-job family.  I work. 
      24   My husband is disabled, he cannot hold a job, not for an
      25   hour.  
      26              And, when we decided to buy a home, we were


       1   introduced to this program by a friend who had went
       2   through the program, but she was just too lazy to do
       3   anything else.  So, when we went in, we gave them
       4   everything that we had.  They helped us out.  They are
       5   not like other companies who says, "Get yourself
       6   together then come back."
       7              They're not like one company, we had a friend
       8   worked for this loan company, he wanted to put us in a
       9   certain neighborhood.  You know, not where you want to
      10   be, where they want you to be.  When we heard about
      11   NACA, we went through it and they put us in a nice home.  
      12              My husband was in the hospital when it was
      13   time for us to have our meeting.  So he told the doctor
      14   he had to get out so we can go back and get our house.  
      15              We started April the 24th of last year and on
      16   Labor Day weekend we moved into our home.  And it's the
      17   home that we dreamed about and that we wanted.  I always
      18   told people that I wanted a three-bedroom, two-bathroom,
      19   double-car-garage house.  I didn't get exactly that, but
      20   I have enough land to put my double-car-garage on and my
      21   other bathroom.  
      22              And we have been adding to our house, which
      23   makes it so much better.  We have been living not quite
      24   a year.  We added on to our house, we built our own
      25   deck, our own back porch, we have a little garden in the
      26   back.  This all came possible through NACA.  


       1              As I said, we couldn't get a loan anywhere
       2   because we are a one-member working family, other
       3   creditors looked at that as being disqualification,
       4   because of just one person working.
       5              I highly recommend NACA.  As I was telling my
       6   people when I was getting ready to go, I was talking to
       7   them and they was, "Why are you going all the way to San
       8   Francisco to talk to people about NACA?  Talk to us."  I
       9   said, "As soon as I get back, I'll talk to you."
      10              We are proud of NACA and what they have done
      11   for us.  
      12              MR. HAWKINS:  My wife has said everything
      13   that needed to be said.  I'd like to say thank God,
      14   thank NACA and thank NationsBank because they gave us an
      15   $80,000 loan and my loan papers are still in the hands
      16   of some bank that's still saying, "We'll get in touch
      17   with you."  But we're staying in our home and thank you.  
      18              MS. SMITH:  Is this the last one?  
      19              MR. MARKS:  I am the last one.  
      20              MS. SMITH:  You are the last one, maybe --
      21              MR. MARKS:  It will be short.  Keep hearing
      22   of all the criticism from Consumer Union, look at the
      23   Consumer Reports, this one, the one institution they
      24   recommended to go to to get out of predatory loans is
      25   NACA, it's not NACA, it's NationsBank.
      26              We didn't hear one example of someone that


       1   was denied credit by NationsBank or Bank of America
       2   today.  We heard from the executives, the staff people. 
       3   So the issue is whether this merger is going to benefit
       4   the community or it's going to benefit the
       5   organizations.
       6              We're stating clearly it benefits the
       7   community and that's what the CRA is all about and
       8   that's why we're standing here to say it should go
       9   through because thousands and tens of thousands of
      10   people are going to benefit from what they're doing.  
      11              Thank you very much.
      12              MS. SMITH:  Why don't we start with you right
      13   here.  Name and organization, please.  
      14              MR. CARDONA:  Yes, sir -- yes, ma'am.  Good
      15   afternoon.  My name is Hugo Cardona.  I'm the President
      16   and Chief Executive Officer to SER, Jobs for Progress
      17   National.  We are a 501(C) organization.  
      18              We are the oldest and largest organization in
      19   the country taking people from welfare to work.  We were
      20   founded in 1964, therefore, we have been 34 years
      21   empowering people to leave the unemployment and welfare
      22   grants and find the skills that will permit them to have
      23   a productive life.             
      24              We have 38 affiliates in 18 states, District
      25   of Columbia and Puerto Rico.  We have more than 180
      26   different programs in more than 91 cities.  Our combined


       1   budgets are more than $62 million.  
       2              Directly and indirectly, we accept a year
       3   more than 400,000 individuals, 65 percent of which are
       4   Hispanic.  Our motto is very simple, We change minds to
       5   change lives.  We empower the individual to acquire the
       6   skills to be master's of their own destiny.  
       7              The problem that we are facing today is we
       8   empowering the individuals, but we are sending them back
       9   to the communities where they are failing in the first
      10   place and this is where NationsBank come into play in
      11   our organization.
      12              Our funding comes from two sources.  The
      13   government who permit us to take care of the present
      14   needs of the minorities, and corporate America that
      15   permit us the working capital to create programs and
      16   initiatives to address the future needs and the problems
      17   that we are facing with our minorities in technology,
      18   legislation and changes in immigration laws.
      19              We have more than 150 corporate organizations
      20   of the 500 Fortune supporting our efforts.  We call them
      21   the amigos de SER, and what they provide to us is
      22   funding, places of employment for minorities and they
      23   provide their own people to help in our organizations.
      24              In specifically, NationsBank has been an
      25   amigos de SER since 1991.  In this seven years they have
      26   contributed more than $350,000 to our organization.  In


       1   1994 they provided $200,000 to start what we call the
       2   housing program.
       3              The housing program has permitted us to place
       4   more than 270 individuals, like the ones that you saw
       5   here this afternoon, in homes.  These are first-time
       6   home buyers, persons that have 80 percent or less of the
       7   average income.  This is our pilot program.  It has
       8   proven very successful.             
       9              Now, in partnership with NationsBank and
      10   other financial institutions, we are moving forward.  We
      11   are creating now a house initiative that will permit us
      12   to rehabilitate apartments, to build apartments, to
      13   build homes where you will have 150 homes.  They have
      14   built in Texas, in Dallas at this moment, a secure place
      15   with 150 homes.  The vista is lemon scented and every
      16   home has a computer.  And you have the structures in
      17   place, you have everything that you need.  All of this
      18   is financed through these financial institutions and
      19   NationsBank.
      20              So SER organization is very grateful to
      21   NationsBank because it has permitted us to support and
      22   sell to minorities.  Thank you so much.  
      23              MR. WADDELL:  Thank you very much.  Good
      24   afternoon.  My name is Kermit Waddell.  I am an attorney
      25   in Charlotte, North Carolina.  I am the President and
      26   CEO of the Economic Center of the Carolinas.  


       1              Today I am very happy to be here to support
       2   the merger between the NationsBank and Bank of America.
       3              My affiliation with NationsBank began in 1992
       4   as a result of a partnership forged between the bank and
       5   the National Association for the Advancement of Colored
       6   People, the NAACP.  This was but one of the partnerships
       7   NationsBank entered into to help reach its goal of
       8   loaning over $1 billion over a ten-year period of time
       9   to low-to-moderate- income persons and small businesses. 
      10   The goal was actually achieved within three years.
      11              Under the partnership, I headed up the North
      12   Carolina NAACP Community Development Resource Center,
      13   which Tammy Hawley talked about earlier, which opened in
      14   Charlotte in 1992.
      15              During the life of my existence with the
      16   NAACP as State Vice President and Head Attorney, from
      17   1992 until October, the NAACP facilitated over $115
      18   million in loans.  and I told Ms. Hawley about that
      19   earlier, she had given you $80 million dollars, the
      20   number is $115 million.  I personally facilitated $65
      21   million of that through North Carolina Center with no
      22   defaults.
      23              I left the NAACP in October of 1997 to
      24   establish the Economic Development Center of the
      25   Carolinas known at the EDCC, a nonprofit NationsBank
      26   partner.


       1              Since October 1997, the EDCC has facilitated
       2   over 7 and one-half million dollars.  We currently have
       3   over $28 million pending currently.  We have over $15
       4   million pending in NationsBank with over $8 million in
       5   letters of commitment.  
       6              The purpose of the EDCC is a desire to
       7   promote economic development through community
       8   development lending in partnership with NationsBank to
       9   community-based organizations and other institutions.
      10              Our target populations and its major
      11   beneficiaries of our efforts are those persons at
      12   communities which traditionally have been underserved by
      13   major lending institutions.  We provide counseling,
      14   advocacy, home ownership, first-time buying of home
      15   programs and small business education classes.
      16              We believe and still believe that our one
      17   hundred percent lending record to this date is due to
      18   the strong education program.  We firmly believe that.
      19              Class receive assistance in credit
      20   counseling, budgeting, asset management, business plan
      21   preparation, technical assistance.  NationsBank provides
      22   the curriculum and classroom material for the education
      23   classes.
      24              I think this is critically important because,
      25   as an attorney for the NAACP for many, many years, I
      26   took part in a great many partnerships and fair share of


       1   agreements.  One was the Carolina Panthers when they
       2   were getting ready to create the Panthers.  
       3              Because of problems with Dennys, we created a
       4   $60 million fair-share agreement.  The resource center
       5   has facilitated over $20 million in loans through the
       6   Carolina Panthers through African Americans who
       7   participated in the building of the stadium as well as
       8   eight to nine jumbo loans for the players that buy homes
       9   within the 5- and $600,000 range.
      10              However, we just as equally satisfied with
      11   the 25- or $30,000 loan to someone in the Appalachian
      12   region who never had running water, never had windows or
      13   someone who lives along the coast of North Carolina and
      14   South Carolina in poverty-stricken communities.
      15              I also want to say that we have utilized the
      16   bank.  A great many of the programs that are in
      17   partnership with these agencies and these banks, their
      18   problems are they never take time to learn the bank.  We
      19   have utilized every sector of NationsBank.  We have used
      20   the SBIC for African American businessman that needed an
      21   equity partner to grow and expand their business so that
      22   he could participate in a military contract.
      23              We have used the consortium for an African
      24   American business family who has the contract with
      25   Nissan to produce all of the chimes for the Nissan
      26   automobiles.  So I can tell you from firsthand


       1   experience that this program is not racial placation,
       2   that the partnership with NationsBank works.  I think
       3   that people have to make it work, you have to stop
       4   looking for a gift and for a handout and you have to put
       5   yourself to work and the partnership works.
       6              To conclude, I'd like to leave with you the
       7   words of Frederick Douglas, which is the motto of my
       8   office.  "The history of civilization showed that no
       9   people can or will rise to the degree of mental or even
      10   moral excellence without wealth, a people uniformly poor
      11   and compelled to struggle for barely physical
      12   independence and be despised by their neighbors and will
      13   finally despise themselves."
      14              Thank you and God bless you.  
      15              MS. SMITH:  Thank you very much.  
      16              MR. LUJAN:  Thank you very much for allowing
      17   me to speak on behalf of NationsBank and BankAmerica. 
      18   My name is Edward Lujan.  I am from Albuquerque, New
      19   Mexico and have been quite active in community affairs
      20   for both Albuquerque and the state for number of years.  
      21              Presently I serve as the Chairman of the
      22   Economic Development Commission for the State of New
      23   Mexico and as chairman of the New Mexico Hispanic
      24   Cultural Center Board.
      25              I support the acquisition of BankAmerica by
      26   NationsBank.  The bank has been in existence for 70


       1   years, as the bank grew, it helped the city and the
       2   state grow both with employee activities and its
       3   resources.
       4              I am delighted to say that NationsBank has
       5   continued the tradition of what was originally
       6   Albuquerque National Bank.
       7              Time doesn't permit me to go over all of the
       8   employees of NationsBank who are active in the
       9   community, but two come to mind immediately.  David
      10   Baird is President of NationsBank New Mexico, belongs to
      11   the Albuquerque Economic Forum, Albuquerque Economic
      12   Development Board and Leadership New Mexico.
      13              Alex Romero is Executive Vice President and
      14   Consumer Banking Executive.  Alex belongs to the
      15   Hispanic Cultural Foundation and also presently serves
      16   as Chairman of the Board of Albuquerque Hispano Chamber
      17   of Congress.
      18              When it comes to economic development,
      19   NationsBank is right there helping with both their
      20   employees and their resources.
      21              I previously mentioned that I was chairman of
      22   the board of the New Mexico Hispanic Cultural Center.  A
      23   few of us started with a dream of building a national
      24   cultural center to share and preserve a unique culture
      25   for a nation.             
      26              Our goal was to reach $45 million for this


       1   endeavor.  We started working going to the state
       2   legislature and securing 16 million in funding and
       3   creating a division within the Office of Cultural
       4   Affairs for the State of New Mexico.  We went to the
       5   City of Albuquerque and to Middle Rio Grande Conservancy
       6   District.  The city gave us 16 acres in downtown
       7   Albuquerque, and the conservancy district gave us 14
       8   acres of bosque or Riverside land bordering the land
       9   from the city.
      10              We went to our two United State Senators and
      11   secured 18.9 million in federal funding for the
      12   Performing Arts Theater.  Having secured the cooperation
      13   and funding for the city, the conservancy district, the
      14   state and federal government, then we went to the
      15   private sector for an additional $10 million that was
      16   needed to complete the national center.
      17              Without asking, NationsBank gave the center
      18   the largest donation to get our private sector
      19   fundraising campaign underway.  
      20              I have always worked with Bank of America and
      21   have found them to be -- to also be good corporate
      22   members of the community.  Their history and their
      23   commitment to both the cultural aspects and economic
      24   vitality of our great state says to me that, as one
      25   bank, they will continue to be involved.  I wish to
      26   wholeheartedly endorse the acquisition of BankAmerica


       1   Corporation by NationsBank Corporation. 
       2              Thank you.  
       3              MR. COOPER:  Good afternoon.  I am the
       4   President and Chief Executive Officer of Choice
       5   Communications, Inc., a commercial printing operation
       6   located in Richmond, Virginia.  
       7              Since our inception in January 1993, we have
       8   grown from a customer base of one with sales of less
       9   than $2 million to a company that this year will exceed
      10   $5 million in sales to over 100 clients.  During this
      11   period, we have increased our employee role from 16 to
      12   more than 50.  Because I am a Black American and control
      13   85 percent of the company, we are one of the largest
      14   minority-owned printing operations in the United States.
      15              It is not my intention to offer these facts
      16   as a testimonial to my achievements as a business
      17   person, but, rather, I offer them as the positive effect
      18   of a decision made six years ago by NationsBank
      19   executives.  It was their vision that led to the
      20   creation of Choice Communications.
      21              During the process of deciding to eliminate
      22   company-owned operations that were not directly related
      23   to the business of banking, NationsBank identified their
      24   Richmond printing operation as a candidate for
      25   extinction.  However, instead of eliminating 16 jobs and
      26   selling assets for pennies on the dollar, the decision


       1   was made to use the print shop closing to create an
       2   opportunity for minority business development.
       3              In announcing their intentions, NationsBank
       4   promised help in securing financing and a one-year $2
       5   million contract to provide printing services.  It was
       6   my good fortune to be the candidate chosen to purchase
       7   the print shop.
       8              Since that time, I have benefited from this
       9   decision and Choice has remained a primary supply
      10   partner to NationsBank.  In fact, we have recently
      11   signed a contract that will keep us in this position
      12   through the year 2000.
      13              During the current five-year period, annual
      14   sales to NationsBank have grown annually and average
      15   more than $2.3 million.
      16              Finally, I would like to mention that for the
      17   past two years the National Minority Supply and
      18   Development Council selected NationsBank as its
      19   corporation of the year.  This award was given to
      20   NationsBank by minority business enterprise
      21   representatives from across the United States.  Receipt
      22   of the award is testimonial of a corporation's effort to
      23   create change.  To receive the award in consecutive
      24   years is an overwhelming acknowledgement of
      25   NationsBank's leadership in and commitment to the
      26   communities that it serves.


       1              I challenge the people of color on the west
       2   coast to learn a little bit more about the NationsBank. 
       3   And I thank you again for the opportunity to testify in
       4   support of the merger.
       5              MS. SMITH:  Thank you very much.  I don't
       6   think we have any questions, right?  We will take a
       7   ten-minute break, that will be our lunch break, and then
       8   we will start at 12:55 with the next panel.  
       9              (Recess taken.)


       1                 MS. SMITH:  I think our court reporter is
       2   ready to go, and someone is going to fill in for our
       3   timekeepers until our timekeepers return.  We'd like to
       4   go ahead.  Our panel is all here and we will start with
       5   Ms. Cincotta.  
       6                 MS. CINCOTTA:  My mike is on.  Thank you
       7   very much.  
       8                 It's nice to be in San Francisco, but I
       9   would like to really urge you that the Federal Reserve
      10   Board did not end it at a one-day hearing here.  People
      11   all over the country want to comment on this.  This is a
      12   very important issue for everybody and people can't all
      13   afford to get out here.  Three of us shared a room
      14   together to help cut down to cost last night. 
      15                 National Training Information Center,
      16   which I am Executive Director of, and National People's
      17   Action, who I am chairperson of, have worked on getting
      18   home mortgage disclosure passed, CRA, and then went into
      19   whatever else it takes to make the market work in our
      20   communities such as the Jessie Legislation, going after
      21   the MI companies, insurance partners, that bring
      22   together all the necessary pieces in lending. 
      23                 When we got CRA passed, we did not think
      24   the burden of making it work was going to go on all the
      25   neighborhood organizations.  We thought we got it
      26   passed, we have disclosure and this is what regulators


       1   all should take care of. 
       2                 To our dismay, most financial institutions
       3   in the United States get a passing grade.  I think most
       4   of them get -- about 95 percent of them or more get a
       5   passing grade.  If they all deserved it, we wouldn't be
       6   in this room today, we wouldn't be arguing about banking
       7   or loans, et cetera.  They don't deserve it.  Maybe four
       8   percent, and the other 95 don't deserve it. 
       9                 In Chicago we have monitored agreements
      10   with our large downtown lenders for 12, 14 years
      11   following through, following through, following through. 
      12   They said they would do more but the secondary market
      13   wouldn't buy their loans and we heard this from
      14   institutions around the country.  We took it to
      15   Washington to make sure that Fannie Mae and Freddie Mac
      16   would work for them. 
      17                 So we have dealt with pieces of pieces of
      18   pieces.  And, if we ever hear an excuse of why loans
      19   can't go in, be it the MI companies -- we went after the
      20   MI companies to get them as part of the lending
      21   community also. 
      22                 So I want to make sure you know we don't
      23   just pick on banks.  If they say they'd like to do it
      24   but they need help, we're willing to do that.  
      25                 What we're facing in Chicago, which was a
      26   major -- had major banks -- some of the major banks in


       1   the country, Chicago owned and operated.  After all
       2   these mergers and acquisitions take over, we're going to
       3   have one bank that's Chicago owned and operated only. 
       4                 One of the financial institutions we lost
       5   years ago was Continental Illinois Bank.  They wouldn't
       6   loan in the community, but they lost a ton of money
       7   speculating in Oklahoma in oil wells. 
       8                 They went under, Bank of America took it
       9   over.  That was our first experience with Bank of
      10   America.  So this large institution all of a sudden
      11   became a non-bank bank. 
      12                 So any programs, anything with BankAmerica
      13   had to be through NHS, through different groups doing
      14   development, et cetera.  But we're losing this big
      15   institution you could walk in to talk to, argue with
      16   about will they make loans, was lost. 
      17                 Part of that decision was that would be
      18   the non-bank bank, but the control would stay in
      19   Chicago.  As soon as the intra/interstate banking went
      20   through, the control was moved to California.  To
      21   appease the regulators at that time, Bank of America
      22   said they would open branches in all the Jewel Food
      23   Stores.  They did.  It lasted two months until they got
      24   approval to move the control to California. 
      25                 So that was -- that's our experience.  We
      26   can work with some of the folks who were left in the


       1   building.  Again, it's all putting special programs
       2   together, not walking in, making deposit, getting a
       3   loan. 
       4                 One minute remaining.  Thank you. 
       5                 All we have from Nations in Chicago is
       6   something called Nations Credit which receives a
       7   predatory lender, if you could find your way downtown
       8   and you are willing to pay maybe 15 percent for a loan. 
       9   They do not have a presence of regular lending, but just
      10   through a loan kind of company.  So that our experience
      11   with Nations and what we're hearing from the groups
      12   across the country that they're interested in
      13   communities or lending is pretty bad. 
      14                 We tried getting meetings with NationsBank
      15   when we were having our national conference in
      16   Washington this past year.  Sent letters, made calls,
      17   couldn't -- our style with NPA is we had a demonstration
      18   at the bank until we got to talk to somebody, because we
      19   will not take no for an answer for the community.  It
      20   ended up that they said they would meet with us in 30
      21   days in St. Louis. 
      22                 We pulled back on any protest, anything
      23   until we could have that meeting.  Talked to a gentleman
      24   on the phone who said he would be speaking for -- was it
      25   McCoy, who is head of Nations.  
      26                 When we got down there, and we had groups


       1   from 12 cities, Cathy Bessant was the person who was
       2   sent to represent the bank and we did not have the
       3   person who I talked to on the phone, and we had
       4   presented them with what we thought would be a good
       5   agreement that they could do for ten years. 
       6                 They laughed, they threw it away and
       7   Ms. Bessant said -- at some point said, "We do not deal
       8   with people like you," going like this (indicating). 
       9   "And, if you think we're ever going to deal with people
      10   like you, you are mistaken." 
      11                 And at the same time, they were touting
      12   their agreement.  I know I'm short of time, one more
      13   sentence.  
      14                 If you take their agreement and look at
      15   their housing lending, what they say they want to do in
      16   the next ten years is less than they've done in the last
      17   ten years. 
      18                 I would not believe one single word that
      19   NationsBank told you, one single word of what they said
      20   they're going to do.  And, when you hear the experiences
      21   of how they treat people in a lot of the local community
      22   organizations, you wouldn't want them as your lender and
      23   you wouldn't want them in your communities either. 
      24                 So, please, have more hearings, deny them,
      25   deny them, deny them until they learn how to deal with
      26   people instead of being as obnoxious as they are. 


       1                 I mean, I've met a lot of bankers and
       2   they're not all perfect, and neither am I.  This tops
       3   the cake, and you would agree if you'd been there. 
       4   Thank you.  
       5                 MS. SMITH:  Thank you very much.
       6                 MS. WEBB:  My name is Margaret Webb, and
       7   I'm from Wichita, Kansas.  I'm here today representing
       8   National People's Action and Sunflower Community Action
       9   from Wichita, Kansas. 
      10                 Before I begin, I would like to tell you a
      11   little bit about myself.  I'm a single parent working
      12   two jobs.  I am live in a low-income area, am very proud
      13   of my community.  I'm a volunteer at our local school
      14   and leader with Sunflower Community Action. 
      15                 I'm not getting paid to be here today.  In
      16   fact, I took the day off from work without pay because I
      17   feel in my heart that we need a national CRA agreement
      18   with NationsBank. 
      19                 I am new to this part of the banking
      20   process.  In May Sunflower Community Action asked me if
      21   I would be interested in looking into redlining at
      22   NationsBank.  I wanted to see if it was happening in
      23   Wichita.  Just getting to see a copy of the HMDA was
      24   hard work.  I went to NationsBank in downtown Wichita. 
      25   The bank alone covers two city blocks and is seven
      26   stories high.  To my understanding it was always a main


       1   bank in Kansas. 
       2                 Anyway, I asked Marilyn Polly, the bank
       3   president, if I could look at the HMDA.  After some
       4   stalling I found out our big beautiful downtown bank was
       5   just a branch bank. 
       6                 The only NationsBank that had the HMDA
       7   information, according to Ms. Polly, was in the home
       8   office in Charlotte, North Carolina.  For some reason,
       9   Ms. Polly had called Dallas, Texas, not Charlotte, for a
      10   copy of the HMDA.  
      11                 Now, remember, I just asked to look at a
      12   copy of the information.  To my understanding, CRA
      13   regulations state that anyone should be able to walk in
      14   the bank and look at the HMDA. 
      15                 After more stalling, they did give me a
      16   notebook with small business and farm loan data.  But
      17   the home loan section was empty.  At first I was told
      18   the bank had given us seven days to get the information. 
      19   Then, as I continued to press, Ms. Polly arranged to
      20   have it overnighted.  Imagine my surprise, when I
      21   received it a few days later, on just how bad the
      22   redlining is. 
      23                 You all have a copy of it that I turned in
      24   this morning, plus there is a bigger picture behind me
      25   with Bank Four and Boatmen's. 
      26                 NationsBank keeps saying that bigger is


       1   better, but we have small to medium sized banks that do
       2   a whole lot better job of home loans than NationsBank. 
       3   NationsBank just isn't giving home loans to low and
       4   moderate income people. 
       5                 NationsBank says that it makes pledges,
       6   but an executive of NationsBank also told me that those
       7   pledges aren't legally binding. 
       8                 On May 21st, I was with a group of people
       9   that sat down with NationsBank, Bank of America, in St.
      10   Louis.  This meeting opened my eyes to NationsBank. 
      11   First of all, I felt it was nothing but a stalling
      12   tactic on the part of NationsBank.  
      13                 Catherine Bessant told us at that meeting,
      14   and I quote, "We, NationsBank/Bank of America will never
      15   work with people like you," end of quote.  I feel that
      16   we people is what made NationsBank what it is today.  
      17                 NationsBank also says that they don't sign
      18   contracts, they make pledges, not contracts or
      19   agreements.  How can they be held accountable without a
      20   mutually signed agreement?  
      21                 There are serious problems with allowing
      22   this merger to take place without making the spirit of
      23   CRA -- without making sure that spirit of CRA is
      24   implemented at the level they plan to grow. 
      25                 The rebuilding of my low-income community
      26   is dependent on such an agreement.  National Bank,


       1   national agreement. 
       2                 NationsBank/Bank of America recently made
       3   a promise of -- a ten-year promise.  Part of that
       4   promise was that they would loan money to rural America. 
       5   But last year, in Kansas alone, they closed ten
       6   branches.  Again, their talk isn't following what they
       7   are doing.  
       8                 Even if they give money to America, what
       9   is it to stop them from redlining?  To me it sounds like
      10   they're dangling a carrot in front of us, look at the
      11   money, not the redlining. 
      12                 America wouldn't be what it is today
      13   without people taking risks.  The bank thinks it's a
      14   risk to work with us, but in reality it's not. 
      15                 I'm not asking for a handout.  I am asking
      16   to stop the redlining and give out home loans to low and
      17   moderate income people.  Our communities must be rebuilt
      18   and the only way to do this is with a written national
      19   CRA agreement 
      20                 MS. SMITH:  Thank you.  
      21                 MR. ORTEGA:  Buenos Tardes.  Mi nombra es
      22   Erneto Manuel [phonetic] Ortega.  I forgot I'm in
      23   California, English only.  Sorry. 
      24                 My name is Ernest E. Eugene Ortega.  I
      25   live in Albuquerque New Mexico.  I have been involved in
      26   low-income housing and community development work in


       1   rural and urban New Mexico for over 30 years.  I would
       2   support this merger if the bank made specific written
       3   and enforceable commitments that New Mexicans would be
       4   better served by this merger.  As Bank of America's last
       5   CRA evaluation shows, national commitments don't always
       6   translate into better lending for New Mexico. 
       7                 I am alarmed by the overall trend towards
       8   national -- nationwide institutions.  A national
       9   approach will not work in New Mexico.  New Mexico has
      10   what is known as the Lou Wallace effect; if it works
      11   somewhere else, it doesn't work in New Mexico. 
      12                 The Federal Reserve has a responsibility
      13   to ensure that a merger of this magnitude does not
      14   adversely affect the consumers in New Mexico.  
      15                 My support for the merger would be
      16   contingent on the banks:  
      17                 Presenting specific implementation plans
      18   for the 350 billion as it relates to New Mexico.  
      19                 Presenting a specific plan for monitoring
      20   the 350 billion commitment as it would impact New
      21   Mexico. 
      22                 Continuation and expansion of Bank of
      23   America's Rural 2000 initiative.  
      24                 Continuation of a Bank of America's CRA
      25   Advisory Committee Structure.  
      26                 Assurances that the divestiture does not


       1   dilute CRA activities in New Mexico's rural communities. 
       2                 Development of specific CRA initiative for
       3   New Mexico's native American Pueblos and reservations.  
       4                 Presentation of a plan which addresses
       5   closing of the branches due to the overlapping of the
       6   two banks.  New Mexico is one of the states where there
       7   is overlapping of the two banks. 
       8                 What happens to minority personnel this
       9   those branches?  What happens to the minority consumers
      10   in those communities?  The other thing is how will those
      11   consumers actually be served once those branches are
      12   closed and how they actually occur. 
      13                 Assurance the bank charges would not
      14   escalate for moderate and low and rural consumers.  
      15                 The CRA does not mean that New Mexicans
      16   can be neglected because Californians or North
      17   Carolinians are better served.  We need a CRA commitment
      18   for New Mexico based on New Mexico's needs, not its
      19   market share as the banks have proposed. 
      20                 The Federal Reserve and all other bank
      21   regulators must find a way to make sure that national
      22   banks serve small markets like New Mexico.  In 1997 Bank
      23   of America received an outstanding CRA rating, largely
      24   based on its efforts in California, Washington and
      25   Portland.  But, as the OCC says, "Bank of America
      26   historical commitment to the CRA has not been fully


       1   exported to the bank's other areas.  The OCC gave Bank
       2   of America's lending and investments in New Mexico a
       3   grade of low satisfactory.  Will this always be true in
       4   an era of nationwide banks? 
       5                 The question for all of us is how can we
       6   assure that we get the best of both banks from this
       7   merger. 
       8                 We don't know if Bank of America's
       9   eight-month-old Rural 2,000 community development
      10   initiative has produced much in New Mexico, but we
      11   should honor its goals.  Also, I am proud to serve on
      12   Bank of America's CRA Advisory Committee, which I think
      13   provides a better relationship between advocates,
      14   consumers and the bank than does NationsBank's annual
      15   CRA forums.  
      16                 This allows us, as consumers and
      17   advocates, on a periodic basis to come and kick their
      18   nuggats [phonetic].  For those of you, nuggats is
      19   glutius maximus.  
      20                 Both NationsBank and Bank of America need
      21   to create specific sub-goals for serving Native
      22   Americans in New Mexico.  
      23                 If we get a specific, enforceable
      24   commitment for New Mexico, as I previously stated, then
      25   I could support this merger. 
      26                 Sunwest, NationsBank predecessor in New


       1   Mexico, was a market leader in small business community
       2   development lending, but its level of service to our
       3   community appears to have declined recently.  We need to
       4   make sure that NationsBank, at a minimum, maintain
       5   Sunwest's level of lending and investment.  
       6                 In New Mexico, some divestiture of assets
       7   would be necessary to reduce the monopoly power if the
       8   merger were approved.  Let's set criteria for
       9   divestiture of those assets.  I propose that any
      10   institution assuming those assets must have a New Mexico
      11   CRA rating higher of either that of Sunwest or Bank of
      12   America in New Mexico. 
      13                 If the past is any guide, the proposed 350
      14   billion CRA commitment won't mean much to New Mexico.  I
      15   urge the Federal Reserve and other regulators reviewing
      16   this application to help us create a financial system
      17   that truly addresses New Mexico's credit and community
      18   development needs.  
      19                 I made some comments and my
      20   recommendations in my written statement is elaborated a
      21   little more.  
      22                 MS. SMITH:  We will be glad to have that
      23   statement.  
      24                 MR. ORTEGA:  (In Spanish unintelligible.) 
      25   Thank you.  
      26                 MR. TODEA:  Good afternoon.  Yati


       1   [phonetic] from Navajo country.  My name is Rockling
       2   Todea.  I was born and raised on the Navajo Reservation
       3   in northwest New Mexico.  Today I live in Albuquerque,
       4   New Mexico.  I have been working in community-based
       5   economic development since the early '70s, and I started
       6   in San Francisco then.  And now I'm working in New
       7   Mexico. 
       8                 I am representing the Community
       9   Reinvestment and Development Task Force, a consortium of
      10   community-based organizations concerned about low-income
      11   housing, community development and fair access to
      12   capital.  Members of our coalition have been working on
      13   CRA-related issues for decades now. 
      14                 The question before us is this:  How can
      15   we ensure that New Mexicans obtain the best outcome from
      16   this merger?  
      17                 First, the Federal Reserve and other CRA
      18   regulators must devise a way to ensure that nationwide
      19   banks serve better small markets like New Mexico. 
      20                 Consider the following:  According to the
      21   Office of Controller of the Currency's recent CRA
      22   evaluation of Bank of America, Bank of America made few
      23   community development investments during the period of
      24   study in New Mexico. 
      25                 Bank of America's overall housing lending
      26   to low income and other traditionally underserved groups


       1   in New Mexico was substandard when compared to that of
       2   other lenders.  
       3                 Between 1994 and 1996, Hispanos, American
       4   Indians and African Americans all experienced mortgage
       5   application denial rates significantly higher than did
       6   Anglo buyers, by all banks, even when controlling for
       7   income levels. 
       8                 Second, we strongly support a written,
       9   enforceable commitment that the banks are committed to
      10   changing the status quo in New Mexico.  We believe that
      11   approval of this merger and support from the public
      12   should be based on the following conditions: 
      13                 A written commitment to traditionally
      14   underserved people who live in rural areas, inner cities
      15   and who are members of groups neglected by lenders.  
      16                 The establishment of a sub-goal for Indian
      17   country that will spell out how the merged entity would
      18   better serve Indian country.  
      19                 And a divestiture plan that would assure
      20   that the assets are sold to lenders with a superior
      21   record and meeting the needs of traditionally
      22   underserved New Mexicans. 
      23                 Small business lending decisions are
      24   usually based on relationships between a lender and a
      25   small business or small farm owner.  Nationwide banks
      26   using national strategies cannot be depended on to focus


       1   on New Mexico's special business circumstances. 
       2                 In his inaugural address, President John
       3   F. Kennedy said, "If a free society cannot help the many
       4   who are poor, it cannot save the few who are rich."  In
       5   the last years since, America has undergone many
       6   changes, but poverty has remained unchanged and some
       7   would argue poverty has increased.  Change has been good
       8   for a few, but for the rest it has been the same old,
       9   same old. 
      10                 I work with individuals in groups from
      11   low-income communities throughout New Mexico to help
      12   them make changes in their lives.  The biggest problem
      13   facing these individuals is the deeply imbedded
      14   institutional resistance to change, both public and
      15   private.  
      16                 For your information, New Mexico has
      17   ranked 50th in the nation for the past three years in
      18   level of poverty.  
      19                 I want to share a story that demonstrates
      20   an institutional discrimination within New Mexico.  A
      21   group of Navajo ranchers formed a cooperative on what is
      22   referred as the Checkerboard area of the Navajo
      23   Reservation.  Their research was exceptional, the
      24   business plan brilliantly conceived, the financial
      25   forecast expertly supported by market research and
      26   management capacity beyond question.                


       1   This Bureau of Indian Affairs determined this venture
       2   was not on trust lands, therefore, the ranchers could
       3   not get a BIE loan guarantee. 
       4                 The banks, on the other hand, refused to
       5   make the loan because -- simply because the land
       6   property was on -- the project was on Indian country. 
       7                 Never mind that these families, ranchers,
       8   have been ranchers since the turn of the century and
       9   market conditions spelled opportunity in bold capital
      10   letters. 
      11                 Banks wouldn't come near this project as a
      12   matter of longstanding policy, not because it was a bad
      13   deal.  The government agency that is mandated to assist
      14   Indians refused assistance because of outdated policy. 
      15   The status quo was maintained. 
      16                 The one-size-fits-all approach to
      17   nationwide banks to small business lending and minority
      18   development is not the answer.  The banks in question
      19   have demonstrated, little, if any, capacity to serve New
      20   Mexico's native American communities.  They have refused
      21   to commit to maintaining the level of lending to our
      22   state. 
      23                 To add to our problem, the proposed merger
      24   will remove lending decisions from the local communities
      25   and place it outside the state.  How is the loan officer
      26   located somewhere in the east or west coast supposed to


       1   evaluate a proposal coming from New Mexico?  Would that
       2   loan officer understand that the value and needs of
       3   Native Americans are different than their surrounding
       4   neighbors?  We fear not. 
       5                 What would happen if the banks are to
       6   close their branches in rural New Mexico?  We are
       7   worried too about declining services for traditionally
       8   underserved areas and population groups, and we are
       9   alarmed by the trend toward hiring freeze that is being
      10   led by big banks.  We are especially alarmed by big
      11   banks anti-competitive practices.  
      12                 That concludes my remarks.
      13                 MS. SMITH:  Thank you very much, and, if
      14   you had anything further, then please submit it for the
      15   record.                
      16                 MR. TODEA:  I will, thank you.  
      17                 MS. SMITH:  Are you next?  
      18                 MR. WELLS:  Buenos dias.  My name is
      19   Robert Wells and I live in Chama, New Mexico, population
      20   less than 1,000.  I am an accountant and self-employed
      21   consultant to small businesses in that part of the
      22   state. 
      23                 I want to express to this body of my
      24   concern regarding the impact of this merger towards
      25   rural America of which I believe the America I am from
      26   is very typical of.  


       1                 I will admit that I am not well-versed on
       2   many of the issues of other communities on a national
       3   scale, but I will say that I find some very alarming
       4   trends in banking practices that are definitely
       5   affecting the way we have done business in the past. 
       6                 In Northern New Mexico, especially the
       7   Chama Valley, the lending policies, community
       8   involvement and benefits are not being addressed fairly. 
       9   This is of great concern. 
      10                 This geographic area of the state consists
      11   of a community bank and a NationsBank branch, which is
      12   rumored to be up for sale or subject to closure. 
      13                 The next competitive bank is 90 miles
      14   away.  This is rural America.  Northern New Mexico is
      15   also the home to Jicarilla Apache Tribe, one of the
      16   wealthiest Indian Nations in the country.  Several
      17   members of that tribe, not to mention many local
      18   businesses, are not being served by our local banks.  
      19                 I will correct myself on a prior statement
      20   I just made.  I will add a comment, and this is to say
      21   that Norwest Bank does have a branch on the reservation,
      22   but, to my knowledge, this branch was opened expressly
      23   to accommodate casino operation revenues in addition to
      24   some tribal transactions. 
      25                 Four years ago, the main bank in town was
      26   known to us as Sunwest Bank.  Approximately two years


       1   ago it was purchased by Boatmen's and today it is a
       2   NationsBank. 
       3                 Regarding some of the lending practices. 
       4   I know of a current transaction where a loan for
       5   $200,000 that was made with Sunwest Bank carried a
       6   15-year amortization with a three-year call and was
       7   collateralized by 500-plus thousand dollars of real
       8   estate.  That was the only way this loan could be
       9   transacted.  It was normal in the past to renew notes of
      10   this automatically, assuming that the payments were
      11   current and had never been in default. 
      12                 That is not the case today.  That is a
      13   loan that I'm involved with right now.  
      14                 Decisions regarding this loan were not
      15   only made at the branch level, but it was also made by
      16   another person in the Dallas, Texas area to renew it,
      17   but somebody above her out of St. Louis, North Carolina
      18   said no, despite the fact of spending collateral. 
      19                 Another example, we have very hard winters
      20   in this northern part of the state.  Some of the small
      21   businesses need 5- to $10,000 bridge loans to carry us
      22   for the next 90 to 180 days.  They require excessive
      23   real estate collateral.  This is not fair.  There are
      24   many other examples. 
      25                 It is my understanding that there has been
      26   no plan to address the above issues and I don't know if


       1   one is planned.  
       2                 NationsBank, according to a recent
       3   advertisement in the Albuquerque Journal, said that it
       4   has committed $350 billion to community reinvestment. 
       5   To citizens of my area, we have not seen a mere
       6   investment, much less reinvestment. 
       7                 I, therefore, ask this body to require a
       8   lending policy with  conditions and commitments that
       9   address the banking needs of rural America as a
      10   condition for this approval. 
      11                 Lastly, I pray that you not only listen
      12   but you also hear my comments.  Thank you, God bless
      13   America. 
      14                 MS. SMITH:  Thank you very much.  
      15                 MR. SANCHEZ:  (Unintelligible Navine
      16   American Language.) 
      17                 I am J. Gilbert Sanchez.  I come from the
      18   Pueblo San le Fanso, located in the State of New Mexico. 
      19   I am here representing myself, the Mexico Alliance and
      20   those that could not afford to come here today to give
      21   testimony. 
      22                 I open in my Tewa [phonetic] Language as
      23   my tradition mandates of me, that is to ask permission,
      24   that is by requesting permission from the Federal
      25   Reserve Board to address or speak to you.  
      26                 I spoke in Tewa to illustrate to you how


       1   foreign the bank's and Federal Reserve's language is to
       2   me and the common people of the State of New Mexico, and
       3   especially to Native Americans. 
       4                 In order to preserve time and not to be
       5   repetitious, I will state for the record that I too
       6   strongly support the recommendations from my fellow
       7   panelists from New Mexico.  Those that are present here
       8   with me at the moment. 
       9                 I also have as many stories of what has
      10   taken place since the mega-mergers have come to be and
      11   its impact on our state and the communities. 
      12                 The increase in the number of loan stores
      13   that loan on vehicle titles, the number of payday loan
      14   shops and the decrease in the number of bank loans in
      15   our communities complement each other's in many curious
      16   ways.  
      17                 The statistics are there which indicate
      18   that we, the minorities in our state, are not extended
      19   credit.  Credit that is deserving and desired by the
      20   community to support economic self-sufficiency.  
      21                 In the bank's offer of $350 billion CRA
      22   commitment, I would like to know, just like my fellow
      23   panelists, how much of this is going to be coming from
      24   New Mexico, especially how much of it will be committed
      25   to rural New Mexico and the Native American communities. 
      26                 Too, I will bring forth a couple words


       1   that fears -- that sense fear through any federal agency
       2   or agent.  I would like to know how the Federal Reserve
       3   Board is going to meet basic federal trust
       4   responsibility to me and my people, a basic obligation
       5   that the president is committed to at the White House
       6   Conference with Tribes.  
       7                 I would like to know how this Federal
       8   Reserve Board plans to address the negative impacts that
       9   mega-mergers will have and are having on Native American
      10   people and tribes when mega-mergers are being allowed to
      11   continue to happen. 
      12                 As stated, the State of New Mexico, for
      13   the last 50 years, enjoyed being 48th in the economic
      14   standing of this country.  Only recently did it drop to
      15   50.  When you speak of market-driven decisions, I fear
      16   that New Mexico will never be in the running for any of
      17   the benefits the Federal Reserve Board's decision might
      18   generate. 
      19                 I only have one additional request, and
      20   that comes from our communities in North Central New
      21   Mexico, the rural Native American communities, the
      22   Federal Reserve Board hold a public hearing in New
      23   Mexico so truly you can hear the many vast number of
      24   stories that are out there pertaining to what is going
      25   on in our communities. 
      26                 We being the -- I being part of the first


       1   Americans that came here are the least to benefit from
       2   any of the economic standings or any of the economic
       3   impacts from anything.  
       4                 I live next to a colony of Californians. 
       5   Yes, the State of California does have a colony in the
       6   State of New Mexico.  The benefits that I supposed to be
       7   reaping off of them, I do not see.  So, when the
       8   mega-mergers happen, I do not see any benefits to myself
       9   personally, I do not seek them, but I would hope and
      10   pray that our economic level will increase if these
      11   things are brought forth. 
      12                 Those are the only comments I have.  I
      13   thank you for your time.  Again, would like to hear from
      14   Mr. Greenspan as to how he is going to address trust
      15   responsibility.  
      16                 MS. SMITH:  Thank you very much.  Any
      17   questions from the panel?  
      18                 MR. FRIERSON:  I would just like to say,
      19   Mr. Sanchez, that the board will follow the procedure it
      20   does in all of these cases in that it will look at all
      21   the facts in the record, and the board will explain its
      22   decision to you.  Whether you agree with it or not, the
      23   board will state how it has applied the statutory
      24   factors to the particular facts and you will get a copy
      25   of that order 
      26                 MR. SANCHEZ:  Thank you.  


       1                 Just one more item for the record, I am
       2   here representing myself.  I do not represent any Native
       3   American government or governments at this point in
       4   time.  
       5                 MS. SMITH:  Thank you.  If there are no
       6   questions, I thank you again and we'll move on to the
       7   next panel. 
       8                 (Pause in proceedings.) 
       9                 MS. SMITH:  All right.  Thank you.  If we
      10   can start, please 
      11                 MR. BROWN:  Good afternoon.  My name is
      12   Keith Brown and I am from Kansas City, Missouri.  I am 
      13   a minister, a community activist, I am the Executive
      14   Director of an organization called Project 
      15   Neighborhood, and the focus of Project Neighborhood 
      16   is to work with service providers, community groups 
      17   and coalitions and neighborhoods to restore
      18   neighborhoods to safe, drug-free, economically-viable
      19   communities.  
      20                 One way that we feel if we're going to get
      21   a real hold and grip on the problem of substance abuse
      22   is really to develop the economic infrastructure and
      23   commercial infrastructure of the urban core in Kansas
      24   City. 
      25                 And NationsBank, without fear of
      26   successful contradiction, marvelous things have begun to


       1   take place in our community.  Because and as a result of
       2   the partnership with the NationsBank under the
       3   leadership of the regional president William, Bill,
       4   Nelson, a Rainbow Coalition has developed.  For the
       5   first time, people of color, clergy, community
       6   activists, city planners, civic leaders, have gathered
       7   themselves around the table to really -- not only to
       8   discuss but to strategically plan on how are we going to
       9   rebuild the infrastructure, the economic infrastructure
      10   of the urban core of Kansas City, Missouri. 
      11                 What has taken place is that we have had
      12   the opportunity to go on tours in the community to see
      13   what some of the problems and the concerns are relative
      14   to redevelopment and development.  For the record, I
      15   have a video that, you know, illustrates that as well as
      16   a pictorial presentation that illustrates that.  I'm
      17   going to turn that in.  
      18                 We feel that if NationsBank -- they have a
      19   marvelous track record, and if they have been able to do
      20   what they are embarking on in our community in terms of
      21   really enhancing the viability and the aspirations of
      22   that community, if they can do that by themselves, then
      23   we feel that a merge with them and BankAmerica will only
      24   increase and enhance what we are striving and what we
      25   have begun to do in the City of Kansas City, Missouri.  
      26                 So I and we, as grass root participants,


       1   members of the clergy, and neighborhood residents who
       2   historically are left behind, are not at the table when
       3   it comes to planning, when it comes to what's going to
       4   take place in a community, they are at the table and we
       5   are in support of this merge and we have a strong leader
       6   in William, Bill, Nelson, who is the president of the
       7   regional, you know, chapter, branch of NationsBank. 
       8                 So I wanted to share that with you.  The
       9   proof is in the pudding right here.  So we're going to
      10   turn this in. 
      11                 MS. SMITH:   Thank you. 
      12                 MS. CONEY:  Good afternoon.  Thank you for
      13   allowing me to come today.  My name is Chloe Coney, and
      14   I'm President and CEO of Corporation Development
      15   Communities of Tampa, Choice CDC of Tampa.      
      16                 CDC of Tampa is a community-based
      17   development corporation located the second highest
      18   poverty area, only second the Liberty City in Miami.  My
      19   neighborhood, East Tampa, which is College Hill, Bellman
      20   and Jackson Height has been known in the past for
      21   highest decay and disinvestment.                
      22                 Nine years ago, Alex Sinc, President of
      23   NationsBank, Florida, adopted our blighted, distressed
      24   neighborhood, East Tampa. NationsBank pledged their
      25   support by working with our Mayor's Challenge Fund
      26   Housing providing loans to low-income families.  


       1                 NationsBank branch office is located in
       2   our community and provides excellent service to the
       3   residents.  The six years of CDC Tampa, Inc. existence,
       4   NationsBank has been a strong partner. 
       5                 NationsBank has provided leadership to our
       6   community through their staff with countless hours of
       7   volunteering.  Joe Vickersian, Mary Ellen Camilla serves
       8   on my board, and, now, Mary Beth Stoltz, who is with
       9   NationsBank CDC.  
      10                 One of NationsBank employee won the
      11   community service award and donated our CDC as a
      12   nonprofit.  
      13                 Our community-building project, the NEMY
      14   [phonetic] community building brick by brick is located
      15   in the worst of the worst neighborhood, the drug
      16   affected neighborhood.  You all know what I'm talking
      17   about in the inner city.  
      18                 We are rehabing old laundromat, rehabing
      19   old bar, and we're going to do an indoor-outdoor food
      20   market.  NationsBank stepped to the plate and made a
      21   financial contribution. 
      22                 Many of the banks did not want to take
      23   that kind of risk.  So, again, I'm excited about
      24   partnering with NationsBank CDC to build the first, the
      25   very first, multi-family housing, a $2 million project,
      26   in East Tampa in over 30 years. 


       1                 We're also looking forward to building new
       2   single-family housing in our blighted, distressed area. 
       3                 Tampa, Florida, East Tampa neighborhoods
       4   is like Atlanta, Georgia, Summerhill and the black
       5   historic district.  We want to continue to work with
       6   NationsBank CDC to rebuild and create a strong, safe
       7   prosperous, wealth building community. 
       8                 As with the merge of Barnett Bank in
       9   Florida, I challenge nonprofit organizations located in
      10   blighted, distressed neighborhoods to sit at the table
      11   to represent your neighborhood. 
      12                 Again, NationsBank has been there for our
      13   poor inner city neighborhoods.  I do recommend the
      14   merger and I will be sitting at the table.  Thank you. 
      15                 MS. SMITH:  Thank you. 
      16                 MR. PRICE:  Thank you.  Good afternoon, my
      17   name is Hugh Price.  I am President of the National
      18   Urban League headquartered in New York City.  We were
      19   founded in the 1950s to assist African Americans who
      20   were making the transition to rural cities.  Today our
      21   goal is to help African Americans and other people with
      22   color to become self-reliant and equal citizens under
      23   the law. 
      24                 Through our economic self-sufficiency
      25   agenda, the Urban League developed partnerships with
      26   national institutions like NationsBank.  As a result of


       1   these relationships, the Urban League is in a key
       2   position to discuss recommendation of performance and
       3   commitment in serving color. 
       4                 We support the merger of NationsBank and
       5   Bank of America because we have a long history in
       6   partnership with NationsBank.  Through this partnership
       7   we have seen NationsBank commit to ensuring that African
       8   Americans and others of color have access to credit and
       9   communities that are highly available.  
      10                 I'd like to highlight the record of
      11   NationsBank's performance first.  President of Community
      12   Initiatives, Cathy Bessant, testified before Congress,
      13   Senator DeMoto, along with community groups on the
      14   strength in maintaining the Community Reinvestment Act.  
      15                 It was unique to find a lending
      16   institution willing to sit on the same panel with
      17   controversy groups and offer support and testimony on
      18   behalf of CRA.  This act is a commitment to extending
      19   credit to those who have been traditionally neglected. 
      20                 Second, NationsBank commitment to the
      21   prevention and eradication of differential treatment at
      22   the branch level.  Through its mystery-shopping
      23   initiative, NationsBank conducts self-testing at the
      24   branch level to detect patterns of differential
      25   treatment by its own employees.  We think that
      26   NationsBank's interest in policing itself demonstrates


       1   foresight, and that is another reason why we support its
       2   application to merge. 
       3                 Third, the bank has made a commitment to
       4   lend $10 billion over the next ten years to  underserved
       5   communities.  Within a four-year period NationsBank has
       6   not only met its commitment but exceeded it by providing
       7   $13 billion to communities.  We are confident the bank
       8   will exceed its $350 billion commitment to underserved
       9   communities.  
      10                 Fourth, NationsBank pledged to provide $25
      11   million to community development financial institutions,
      12   through its own CDFI fund.  Again, NationsBank showed
      13   courage and commitment when it announced the
      14   establishment of its CDFI fund on the same day that
      15   President Clinton signed the federal CDFI fund law.  It
      16   was NationsBank's view that their fund would complement
      17   the Federal Government's effort to finance CDFIs.  We
      18   view their announcement of $25 million CDFI fund as
      19   another sign of its commitment to increasing access to
      20   credit for traditionally underserved communities. 
      21                 Fifth, NationsBank held BluePrint 2000. 
      22   This was a convening of nearly 500 community leaders
      23   from 111 urban and rural communities across the country. 
      24   The event marked a -- served as a retreat and think tank
      25   for community groups to seriously ponder the viability
      26   of their neighborhoods. 


       1                 Finally, let me add that NationsBank has
       2   been very aggressive in advancing African American
       3   executives up the ladder into positions of
       4   profit-and-loss responsibility for major business units. 
       5   Its impressive track record could be and should be
       6   emulated by other financial institutions. 
       7                 We strongly support the continuation and
       8   extension of the Community Reinvestment Act.  We think
       9   there is much more work to be done in this country on
      10   rebuilding low-income neighborhoods and the commitments
      11   must be strong and firm and must be even bigger than
      12   ever before.  
      13                 We look forward to seeing the lightened
      14   philosophy of NationsBank extent throughout the entire
      15   footprint of the new bank.  We believe that the new bank
      16   offers the opportunity for unprecedented economic growth
      17   in communities that we serve and as a result the new
      18   bank will create new venues for venture capital, will
      19   enhance the level of mortgage credit to low-income
      20   communities and will help revitalize economically
      21   distressed neighborhoods. 
      22                 Again, we support the proposed merger. 
      23   Thank you. 
      24                 MS. SMITH:  Thank you.  
      25                 MR. PEDRON:  Good afternoon, and thank you
      26   for the opportunity to present testimony before you


       1   today.  My name is Eduardo Pedron.  I'm the president of
       2   Miami Dade Community College in Miami, Dade County,
       3   Florida, serving 127,000 students. 
       4                 I'm here today, though, to present my
       5   community perspective on this issue.  I most agree that
       6   when mergers of this magnitude take place none of
       7   society in concern develop in the various communities
       8   throughout the nation.  Such was the case when
       9   NationsBank acquired Barnett Bank, Florida's largest
      10   bank.  The level of inciting our community was very high
      11   and I have to confess that I myself had serious concerns
      12   about it. 
      13                 However, I think the record of NationsBank
      14   during this acquisition, this merger, is one that has
      15   encouraged me to support the merger with BankAmerica,
      16   because I really feel that their track record has been
      17   exemplary. 
      18                 I want to be very brief and mention three
      19   or four examples that I think are very indicative of the
      20   level of sensitivity that NationsBank has shown in this
      21   regard. 
      22                 First of all, I have seen during that
      23   merger for them to go through significant effort to fold
      24   the local management into the new organization, with a
      25   special attention to minority members.  Both Hispanic
      26   African Americans and others.  This has provided for a


       1   significant degree of continuity and something the
       2   community has applauded. 
       3                 The other aspect, which I think has been
       4   significant, is the involvement in civic and community
       5   affairs with a special reference to inner city issues
       6   and education issues. 
       7                 Not only has NationsBank respected
       8   previous programs that were supported by the -- by
       9   Barnett Bank, but, frankly, we have seen that
      10   participation heightened and efforts such as Take Stock
      11   in Children, which is a program throughout Florida to
      12   provide and guarantee poor children the opportunity for
      13   a college education, has been enhanced, and I could go
      14   on and on with many many initiatives that we have seen. 
      15                 Also something that is very indicative of
      16   that sensitivity is the fact that they have incorporated
      17   many of the former members of Barnett adviser, local
      18   advisory boards into their advisory boards, and
      19   especially minority members.  And I think if the Miami
      20   experience is indicative of what has happened in the
      21   rest of the country, we have seen most of the former
      22   members of the advisory board of Barnett Bank been
      23   applauding to the NationsBank advisory board.  And they
      24   have gone beyond that to seek and make sure that they
      25   have the support and the advice of members of the
      26   community which is something that you rarely see in


       1   terms of banking institutions. 
       2                 Finally, I'd like to mention that the --
       3   we have seen with great enthusiasm the fact that
       4   NationsBank has taken the necessary step to strengthen
       5   national strategic partnerships with national
       6   organizations like the NAACP and the council of La Raza,
       7   the Urban League and many others.  So I feel this is a
       8   good sign. 
       9                 For a state such as Florida, and there are
      10   other states, which Bank of America has not had a
      11   significant presence, this is something that our
      12   community is welcoming, in my opinion, because you take
      13   a state like Florida with a very strong and growing
      14   business activity in the whole area of international
      15   trade and finance and with Bank of America
      16   well-established presence throughout the world, we feel
      17   that this will be to the benefit of our economy and to
      18   the benefit of businesses that are involved in
      19   international trade and finance.  
      20                 So I'm here very gladly to support this
      21   merger and pleased to do so at this time.  Thank you.  
      22                 MS. ROBERTSON:  My name is Ellen Robertson
      23   and I'm from Richmond, Virginia.  and I'm the Executive
      24   Director of HP Wrap which is a nonprofit community
      25   development organization.  I'm also a partner with
      26   NationsBank in the development of a target neighborhood


       1   development program in the community by the name of
       2   Highland Park. 
       3                 I'm honored to be here and to participate
       4   in this public hearing on behalf of NationsBank and to
       5   also have this great opportunity to express our thanks
       6   for the services that NationsBank has provided in the
       7   development of that community. 
       8                 We especially want to recognize bank
       9   leaders Doug Crukshank, James Jackson, Marsha Woody and
      10   Cindy Mimms for their outstanding leadership and
      11   demonstration of their interest in community
      12   reinvestment.  It's because of the services that they
      13   have provided that I am confident that this merger is in
      14   the best interest for all parties at stake. 
      15                 I'd like to first give you a general
      16   overview of the community that I'm speaking of.  It's an
      17   urban community that is located in the heart of Richmond
      18   that is home for about 8,000 residents, which consists
      19   35 percent of very low income, 50 percent single family
      20   head of household and the remaining largely blue class
      21   homeowners and renters. 
      22                 In 1989 a group of residents in which I
      23   was one of formed this nonprofit HP Wrap for the purpose
      24   of revitalizing the community.  NationsBank at that
      25   time, a sovereign bank, was the first to come to our
      26   support.  They have served on our board since that time


       1   and supported us to be the first organization in the
       2   United States to influence HUD to provide first-time
       3   grants to qualified buyers to purchase their first home. 
       4   Today this is a national program.  
       5                 Since 1989 until today, nine years,
       6   NationsBank support in providing home purchase training
       7   has resorted in 342 new families having purchased their
       8   first home in Highland Park.  I'd like to thank
       9   NationsBank.                Highland Park has more than
      10   2,000 homes, most historic two-story Victorian homes
      11   with 2,000-plus square footage of space nested on large
      12   lots and accessible by tree-lined streets. 
      13                 Due to the block busting and redlining of
      14   the -- in 1960 transition resorted to flight and we are
      15   now living are blight.  More than 300 homes are
      16   abandoned in this community.  NationsBank supported HP
      17   Wrap purchasing and restoring one of these abandoned
      18   homes to serve as the neighborhood model Victorian sales
      19   center to market a historic restorated development plan. 
      20                 NationsBank provided the funds to restore
      21   the model, to serve as the center and completed the
      22   furnishing.  Due to this creative investment, we now
      23   sell an average of 15 restored abandoned homes to
      24   first-time buyers.                NationsBank invests 65
      25   to 75 percent of the total development cost using very
      26   workable flexible terms and lines of credit for


       1   construction, property acquisition and permanent
       2   mortgage financing.  In addition, two new products are
       3   being developed to provide existing owners equitable
       4   rehab loans as well as second mortgage. 
       5                 Again, we thank NationsBank. 
       6                 In nine years NationsBank investment in
       7   Highland Park has impacted property values increased by
       8   65 to 85 percent and 448 homes have been sold to new
       9   buyers and/or rehab work done on them. 
      10                 NationsBank makes direct leveraging
      11   contribution to support people, growth and development
      12   specifically to support volunteerism and youth
      13   development. 
      14                 Our children are operating in neighborhood
      15   school greenhouse to redesign the urban landscape for
      16   public safety. 
      17                 NationsBank has also supported directly
      18   the development of programs to deal with increase crime
      19   that we have in the community.  
      20                 Because of NationsBank investment over the
      21   last couple years, we have been successful in bringing
      22   an additional $1.5 million in the United States Americor
      23   National Volunteer Service to our community to deal with
      24   crime issues. 
      25                 Because of NationsBank leadership, we are
      26   now receiving large contributions from other public and


       1   private sources, corporations and foundations.  We
       2   assess NationsBank contribution directly to our
       3   community at a rate of 3.5 to 5 million annually. 
       4                 To maintain the community development
       5   orientation, five characteristics of NationsBank is
       6   encouraged to be continued as part of this merger. 
       7   Number one, we ask that we keep local branches in
       8   Highland Park community types.  Your bank serves as
       9   anchors to the neighborhood development successes. 
      10                 Number two, we ask that you maintain the
      11   sensitivity to hiring staff at all levels reflective of
      12   the cultural diversity of the neighborhood population
      13   served. 
      14                 Number three, we ask that you continue to
      15   be simple.  Don't get big, keeping -- don't let your big
      16   keep you from being small.  We love people that have
      17   smiling faces that are set across the table from us to
      18   help work out things to make things happen in our
      19   community. 
      20                 And, number four, we ask that you maintain
      21   your neighborhood target development strategy. 
      22                 And, finally, number five, we ask that you
      23   regulate bank relocation, that it does not influence or
      24   contribute to urban sprawl which is the leading cause
      25   for urban decline. 
      26                 I thank you for this opportunity to speak


       1   and we strongly support the application for the merger. 
       2                 BISHOP BATTLE:  I am Bishop George Battle. 
       3   One of 12 Bishops of Episcopal Zion Church consisting of
       4   3.5 million members worldwide. 
       5                 I wrote a speech, but I am going to give
       6   you this and speak from my heart.  
       7                 MS. SMITH:  Thank you very much.  
       8                 BISHOP BATTLE:  Number one, I've known
       9   NationsBank, NC&B Bank, before they became NationsBank,
      10   for 25 years.  I am privileged to say this bank has
      11   always been involved in the community. 
      12                 I can recall going to Mr. McColl's office
      13   as a young pastor store living in a parsonage where the
      14   members felt, you know, the minister should have a good
      15   house.  I went in there with no money, no credit, met
      16   with Mr. Mc Call and said, "I want a house."  Interest
      17   rate was 21 and a quarter percent.  I am pleased to tell
      18   you, I not only got the house at nine and a quarter
      19   percent, but since that time I moved into even a bigger
      20   house. 
      21                 NationsBank, that's not necessarily
      22   because of me, I know of a young man in St. Louis, just
      23   several months ago who had a terrible financial problem. 
      24   He needed help.  He called me, I called NationsBank, he
      25   received in three days $6,000. 
      26                 If you ever come to Charlotte and you hear


       1   talk of a Gethsemane Enrichment Program, a program that
       2   works with the Lord's underprivileged, a social
       3   development program in the community.  
       4                 Some 500 kids in 1974 received a national
       5   award from President Bush as one of the best programs of
       6   its kind in the nation.  You will find that NationsBank
       7   have supported that program with hundreds of thousands
       8   of dollars before any other corporate contributor put
       9   one dime in. 
      10                 I can recall one session with Mr. McColl
      11   brought the community in, these were the most low
      12   economic development persons in the community.  We told
      13   him that we needed housing and three of the communities
      14   where we work were the poorest kids in the neighborhood. 
      15                 Those communities have been completely
      16   redeveloped by NationsBank.  Oh, by the way, I'm a
      17   member of First Union Bank, so you ought to know that. 
      18   So I have no invested interest other than telling the
      19   truth. 
      20                 If all of the banks incorporated in
      21   America was successful to the culture and to the people
      22   that work in high management position at NationsBank,
      23   your job would be a lot easier.  I am pleased the tell
      24   you that just several months ago my school --
      25   (interruption.)
      26                 I hope you all aren't going to hold that


       1   against me.  Thank you, I have to start all over again. 
       2   Remove that. 
       3                 In 1994 Livingston College, a small
       4   historical black college 30 miles north of Charlotte,
       5   was facing very, very financial difficulties.  No other
       6   institution would make a loan.  I went to Mr. McColl, we
       7   received $7 million that not only put us in terms of
       8   ahead of where we were but now we are probably the only
       9   small black college in America that have internet
      10   capability for every student.  That's a plug for
      11   Livingston College. 
      12                 In addition to that, they also made a
      13   grant in helping that school in excess of -- over the
      14   period of five years in excess of $350,000.  
      15                 I can also attest to the fact that we have
      16   a small junior college in South Carolina that was
      17   struggling with accreditation.  NationsBank came to the
      18   plate and loaned the school $500,000 at the low interest
      19   market rate.  In addition to that, through in a hundred
      20   thousand dollars to hire the consultants to make sure
      21   that the school would be a credit for a minority student
      22   that could not go anywhere in America because of
      23   economic standards.  
      24                 In addition to that, we could talk about
      25   how they helped to completely transform Charlotte,
      26   that's where I have been, and how if you ever travel


       1   down Highway 49, that's southwest of Charlotte, you will
       2   see an AME Zion church that was built there on Highway
       3   49 that received all kinds of architect's award.  Thanks
       4   to NationsBank. 
       5                 NationsBank, along with Mr. McColl and all
       6   of the persons that work for him, you can call them on a
       7   moment's notice and say, "We need a meeting.  We have to
       8   talk about some issues we have in our community." 
       9   They're always at the forefront.  
      10                 Right here in California, right here in
      11   California, one of our largest churches was set on fire. 
      12   NationsBank, without knowing the church, without having
      13   any kind of investments, gave the church a substantial
      14   contribution to help it get on its feet. 
      15                 Birds of a feather flock together,
      16   NationsBank -- when I see this sign, "NationsBank go
      17   home."  This can be home for NationsBank and it would
      18   make this community a much, much better place, because
      19   anywhere NationsBank has been they have been fair, they
      20   have given minorities chances, opportunities to excel
      21   and exceed.  
      22                 And I'm here today at my own expense, I
      23   couldn't even catch Mr. McColl to catch a ride, I had to
      24   fly my own plane, to say that I think it would be a
      25   disaster not to cause these two great things to come
      26   together to provide the services for entire nation. 


       1   What a historical step we're taking today.  I believe
       2   with the smartness of this panel, I believe NationsBank
       3   is going to prevail with the Bank of America and this
       4   community is going to be better.                Thank
       5   you. 
       6                 MS. SMITH:  Any questions.  
       7                 BISHOP BATTLE:  Yes, I have my speech
       8   submitted already.  If you need me, just give me a
       9   moment's notice and I'll be back. 
      10                 MS. SMITH:  Thank you very much.  
      11                 We have no questions, so we thank you and
      12   we'll go on to the next panel. 
      13                 (Pause in proceedings.) 
      14                 MS. LeBLANC:  My name is Brenda LeBlanc. 
      15   I am here representing Citizens for Community
      16   Improvement of DeMoines, specifically their Reinvestment
      17   Task Force which was initiated in 1977 to work on the
      18   problem of getting home loans in areas that had been
      19   redlined. 
      20                 After 20 years we have developed working
      21   agreements for special CRA programs with ten financial
      22   institutions.  We work with each bank to help them
      23   improve their lending record, and we also provide
      24   services, such as a Home Buyers Club, which helps
      25   prepare people not ready to buy.  We also produce Credit
      26   & Home Buying seminars that provide a day-long session


       1   of information about the process of home buying and
       2   introduce the various bank programs. More than 300
       3   people attended our last seminar.  
       4                 But we've had some problems in the last
       5   several years with bank mergers.  Hawkeye Bank, a
       6   State-wide holding company was bought out by Mercantile. 
       7   Hawkeye had a branch in a low-mod neighborhood.  But,
       8   when Mercantile took over, they attempted to close
       9   it.  We fought this move and succeeded in keeping the
      10   branch open. 
      11                 But, while we had a good relationship with
      12   Hawkeye, we find we do not now have the same kind of
      13   relationship with Mercantile. 
      14                 First Interstate Bank was another we had
      15   an agreement with since 1978.  They were out after a few
      16   years by Boatmen's Bank.  A new president came to
      17   DeMoines from St. Louis and he told our task force that
      18   we didn't need an agreement with them, because Boatmen's
      19   had a great record of CRA lending, they had done great
      20   things in 
      21   St. Louis, he told us, therefore, they knew all about
      22   what was needed to be done.  
      23                 We pointed out that DeMoines is not St.
      24   Louis and what works there may not necessarily work
      25   here.  We pointed out we had developed expertise in our
      26   situation and our needs, therefore, they needed to work


       1   with us for a CRA program in DeMoines to be successful. 
       2   They eventually agreed and after that we had a signed
       3   agreement with Boatmen's
       4                 Then a year ago Boatmen's was bought out
       5   by NationsBank.  We started out through the whole
       6   familiar process again.  Since last December we have
       7   been debating back and forth about an agreement with no
       8   success. 
       9                 In dealing with the local banks after they
      10   are bought out we are for the most part dealing with the
      11   same people locally we have dealt with all along.  The
      12   problem is they are now getting directives from people
      13   above, from people far aware we can not talk to and
      14   people who seem not to care about whether CRA programs
      15   work or not in our neighborhoods. 
      16                 When we learned at our national NPA
      17   conference that other cities were having the same kinds
      18   of problems with mergers, we agreed that the time had
      19   come to develop a national agreement that would give
      20   official sanctions to our locally developed programs. 
      21                 It was with high hopes that I attended the
      22   meeting in St. Louis with NPA and executives from
      23   Nations and Bank of America.  If we could get an
      24   agreement at the national level, we could move forward
      25   at the local level then with assurance that we have
      26   support from the top.  And this would set a precedent. 


       1   With one such national agreement, we could move on to
       2   others and all of us in our local communities could then
       3   keep working with local branches to get loans moving
       4   into our neighborhoods. 
       5                 It was a big and important step for us,
       6   but it was disastrous.  That conversation reminded me of
       7   the very first conversation we had with local banks who
       8   back then had no idea what we were talking about,
       9   confused reinvestment with charity and thought that
      10   people in our neighborhoods couldn't afford to buy homes
      11   and were all poor risks. 
      12                 This morning I had this charitable thing
      13   brought up again.  The Mayor of Houston talked about
      14   their volunteerism and philanthropy.  That's commendable
      15   and very good, but it's not reinvestment.  We're talking
      16   about -- we not talking about giving money to folks in
      17   neighborhood, they're talking doing business with them. 
      18   We're talking about bringing us into the capitalist
      19   system so that we also can do what people in the suburbs
      20   can do, buy homes and start businesses. 
      21                 Our local bankers now understand that with
      22   smaller loans and relaxed guidelines our residents can
      23   buy homes they can afford.  These loans are improving
      24   our neighborhoods and it's providing banks with a whole
      25   new source of business, good business, but they cannot
      26   do it without working with local people. 


       1                 The main problem is one of marketing,
       2   letting people know their options, and this is something
       3   we constantly work on.  
       4                 We were treated at that meeting in St.
       5   Louis with contempt.  Our decades of effort in our
       6   communities were dismissed as, quote, petty politics,
       7   unquote.  And this from a person who is a chief CRA
       8   officer for Nations. 
       9                 When the person who is in charge of CRA
      10   for a whole national bank's operation displays such
      11   appalling ignorance, how can we expect CRA to survive as
      12   mergers progress?  
      13                 After we had the meeting in St. Louis, we
      14   held a meeting in DeMoines with our local NationsBank
      15   president and our chief CRA officer.  The CRA officer is
      16   the same person we have been dealing with for ten years
      17   through three different ownerships of the bank.  We know
      18   the local personnel support our working agreement, and,
      19   when we challenged them the problem is with upper
      20   management, they did not deny it.  The explanation was
      21   the same it was in 
      22   St. Louis a lame, "We just don't do agreements." 
      23                 Mr. McColl this morning said, and I quote,
      24   I wrote this down verbatim, he said, "We will keep
      25   decisions in the hands of local bankers who know how to
      26   serve their communities.  But in DeMoines, since


       1   December, they have been trying to kill our local
       2   agreement and the relationship that we've had for a
       3   decade. 
       4                 They have a cookie cutter program that's
       5   national that they're trying to foist off on us.  The
       6   reason we can't accept it, the program is fine except
       7   for one aspect, this program is targeted to low-income
       8   people and not to low-income neighborhoods.  Ironically
       9   it was the same bank that ten years said to us, "We'd
      10   like to do it differently."  
      11                 We had other banks targeting to our
      12   neighborhoods because redlining was the problem and
      13   still is the problem.  They said, "We'd like to target
      14   instead to people below 80 percent of median income.  We
      15   said, "Okay.  Chances are most of those people live in
      16   our neighborhoods, so it would still have the same
      17   effect." 
      18                 But, after two years, we looked at the
      19   figures.  Not the same effect at all.  They were making
      20   lots of loans to people below 80 percent of median
      21   income, but none of them were going in our neighborhood. 
      22   We said this isn't working, and they said, no, it isn't. 
      23   They went to targeting.  
      24                 So now, eight years later, we've got
      25   NationsBank telling us this is our program and you have
      26   to accept this and ignoring our local people that have a


       1   different history.  Maybe it works other places, it
       2   doesn't work in DeMoines. 
       3                 We had no choice but to protest the
       4   merger.  It is our request that you disallow any bank
       5   merges without a national agreement that will assure
       6   that local banks be allowed to develop working
       7   relationships with the local organizations.  If this
       8   cannot be done, then CRA will surely die.  It is
       9   survived only through the determination of people like
      10   us in cities all over the country.  If these big mergers
      11   keep going on, it will eventually be beyond our ability
      12   to deal with our local problems. 
      13                 You, as regulators, can keep this from
      14   happening if you will require that bank mergers only be
      15   allowed with national CRA agreements that will allow and
      16   honor local agreements.  
      17                 MS. REICHER:  What she said.  
      18                 My name is Leslie Reicher, and I am the
      19   second representative of the Pittsburgh Community
      20   Reinvestment Group.  As I traveled here to San
      21   Francisco, I was wondering whether it was worth it given
      22   that these institutions have really a very minuscule
      23   presence in our city. 
      24                 Because it was clearly quite an expense
      25   for us to come here both for PCRG, the organization I'm
      26   representing, and my own community organization that I


       1   work for. 
       2                 But, based on our research, at PCRG and
       3   the very limited experience we've had with Nations and
       4   Bank of America and what I've heard here today, I'm glad
       5   I'm here, mostly to voice our opposition.  
       6                 I was trying to place myself in your
       7   position, because my head is kind of swimming, I'm
       8   hearing all these stories about what Nations isn't doing
       9   and I'm hearing stories about some of the wonderful
      10   things they are doing. 
      11                 But, as Brenda said, that's charity,
      12   that's relationship building and it's not lending.  I
      13   think what we're here to talk about today is lending. 
      14   We're talking about the regular course of doing
      15   business.  And I think we need more assurances than some
      16   individual relationship to have that assurance going
      17   forward in this age of mega mergers and acquisitions. 
      18   So I'm really concerned about it.                
      19                 I know today the impact on such an
      20   acquisition in a San Francisco, in cities, in Illinois,
      21   in Iowa and all the places we've heard of today, I have
      22   no doubt that tomorrow it's going to be Pittsburgh. 
      23   We've already experienced an acquisition with National
      24   Citibank buying one of our local Pittsburgh banks.  We
      25   were very worried about it because the -- we were not
      26   going to have the home office, the corporate office


       1   being in Pittsburgh. 
       2                 And they resisted an agreement and flew us
       3   up to Cleveland to talk us out of insisting on the
       4   agreement, but eventually understood, because we're
       5   going to be gone tomorrow, those bankers are going to be
       6   gone tomorrow and we'll have nothing left.  
       7                 We cannot go just on good will.  They say,
       8   "Trust us," and we say, "We don't know you, we can't
       9   trust you."  Who we trust are the people we have been
      10   working with and they may not be here tomorrow, so we
      11   need some way institutionalizing this. 
      12                 I have prepared remarks and I will give
      13   them to you.  I mean, this booklet here is our protest
      14   and it's probably bigger than the number of applications
      15   received in Pittsburgh from either Nations or
      16   BankAmerica.  
      17                 We have mortgage corporation subsidiaries
      18   in Pittsburgh for both banks.  They do very little
      19   lending, hardly any lending, like two loans to African
      20   Americans, two loans in the whole city of Pittsburgh in
      21   1996, none in 1997 for NationsBank. 
      22                 BankAmerica had a little bit more
      23   activity.  I'm not going to bore you with that.  It's in
      24   here, our letters of protest are in here from 13
      25   organizations in addition to Pittsburgh Community
      26   Reinvestment Group, which is a 29-member coalition in


       1   the city. 
       2                 So I would just would like to say that I
       3   really hope that you will postpone your decision until
       4   some specific agreements with the local -- with local
       5   cities can be worked out.  
       6                 I hope that you, as a regulator, can
       7   develop a system that kind of matches this age of
       8   national mergers.  We need a better system to have 
       9   these hearings be more accessible to people. 
      10                 It's really -- I mean, I can't get over
      11   how many people actually were able to come. 
      12                 So, thank you for having it and I hope 
      13   you have more and I hope you have them in more 
      14   places. 
      15                 MS. SMITH:  Thank you. 
      16                 MR. GOODWIN:  My name is Gordon Goodwin. 
      17   I am with Rural Development and Finance Corporation. 
      18   I'll read a short, prepared statement. 
      19                 Rural Development and Finance Corporation
      20   is a development finance intermediary headquartered in
      21   San Antonio, Texas.  We provide technical assistance and
      22   loans to entrepreneurs and community development
      23   corporations that are building enterprises, affordable
      24   housing and community facilities in our countries most
      25   severely poverty impacted areas. 
      26                 To date we have invested over $12 million


       1   in 21 states, created or retained 2500 jobs and financed
       2   the construction of over 500 units of affordable
       3   housing.  With more people working primarily along the
       4   Texas/Mexico border.  In the past we've worked in
       5   California as well as in North Carolina, Florida, New
       6   Mexico. 
       7                 Like other financial intermediaries, we
       8   rely on partnerships with financial institutions such as
       9   banks, corporations, religious orders and foundations to
      10   make the low market rate investments in our loan fund so
      11   that we can obtain flexible, affordable capital that we
      12   can re-lend. 
      13                 Because a large part of our work is
      14   providing problem-solving assistance to rural
      15   entrepreneurs and housers, we turn to these same sources
      16   to underwrite some portion of our cost to provide that
      17   help. 
      18                 Bank of America has been an important
      19   partner with us in doing our work and the work in the
      20   development field at large in general, and has been
      21   important as a grantor and as an investor.  It's the
      22   only large-scale bank that has institutionalized its
      23   community development lending mission by capitalizing a
      24   separate institution, the Bank of America Community
      25   Development Bank. 
      26                 Over the last five years, the development


       1   bank has financed some $2 billion of multi-family
       2   housing and small business development in low income
       3   communities.  It has also made well over $500 million in
       4   equity investments. 
       5                 In 1997, Bank of America committed to
       6   invest $500 million over the next two-and-a-half 
       7   years to rural communities.  This investment 
       8   commitment is backed with a pledge to make $5 million in
       9   grants to support innovative and meaningful
      10   partnerships.  This is the most significant commitment
      11   ever made to the credit needed of rural areas by a
      12   banking institution. 
      13                 This level of commitment is critical to
      14   our work, and we urge both Bank of America and
      15   NationsBank to uphold and even to expand this commitment
      16   to match the breadth and scope of the new market area
      17   the merger may encompass.  
      18                 Thank you. 
      19                 MS. SMITH:  Thank you.  Questions?  
      20                 MS. REICHER:  Ah, come on. 
      21                 MS. SMITH:  Thank you very much. 
      22                 MR. FRIERSON:  I would like to thank you
      23   all for the panelists, to thank you for coming the
      24   distances.  Your information has been very helpful 
      25   and useful, and we will consider it carefully.  
      26   We will also consider it carefully.  


       1                 Thank you very much.  
       2                 (Pause in proceedings.) 


         1            MS. SMITH:  All right.  Why don't we start with

         2   Mr. Shapiro.

         3            MR. SHAPIRO:  I don't think it's often that a

         4   small public agency such as ours can custom design our own

         5   community lending program.  That's exactly what we did

         6   with NationsBank's help.  I'm Harold Shapiro, the

         7   Executive Director of Catawba Regional Planning Council

         8   and it's affiliate Development Corporation.  We are the

         9   Council of Governments for four counties and 21 towns and

        10   cities of the north central section of South Carolina.

        11            One of our counties is within the Charlotte

        12   metropolitan area, the remaining three are rural and

        13   relatively poor.  To put our area in perspective, the

        14   approximate population of our largest county is about

        15   145,000 and our largest city is 50,000.

        16            As the Council of Governments, we provide a wide

        17   range of services and key among these is community and

        18   economic development in the form of project planning,

        19   grants management and lending.  Our lending is conducted

        20   primarily through our public nonprofit development

        21   corporation.  We use resources such as the SBA 504 program

        22   and the EDA's revolving loan fund.  Since 1982, our

        23   development corporation has made over 90 loans totaling

        24   $60 million, our borrowers have created in excess of a

        25   thousand jobs.

        26            My purpose today is to tell you about


         1   NationsBank's support of our lending activities.

         2   NationsBank involvement is varied.  NationsBank is

         3   represented on the Development Corporation's board of

         4   directors by Mr. Randy Imler, his bankers' experience and

         5   creative approach to community lending have been

         6   invaluable.

         7            In related activities, NationsBank has helped

         8   promote our lending services by providing funding for

         9   promotional materials.  It has helped sponsor the first of

        10   a planned series of business seminars such as the one

        11   recently held to promote child care facilities in

        12   low-income areas.

        13            NationsBank has also enabled us to start a

        14   community lending program which I first mentioned.  This

        15   program offers micro loans to low-income residents for

        16   small business development and for homeowner repairs.

        17            Our community lending program began one year ago

        18   with a $400,000 three percent interest loan from

        19   NationsBank.  In a truly collaborative effort, its bankers

        20   and our staff developed a region-wide lending strategy to

        21   serve the needs of low-income residents.  These loans

        22   funds are available for use throughout our region

        23   regardless of whether NationsBank has a presence or not.

        24            While other banks may eventually participate in

        25   this community lending program, NationsBank was the first

        26   to commit.  Of the other banks expressing interest, not


         1   one has come close to matching NationsBank's funding.

         2            Our community lending program is successful,

         3   loans ranging from $1,000 to $50,000 are made.  To date,

         4   over one-third has been lent to help low-income residents

         5   establish businesses and make essential home repairs.

         6   Although these loans are open to all applicants meeting

         7   low-income guidelines, all of our business loans to date

         8   have gone to minority or women owners.

         9            Is NationsBank's effort unique to our own area?

        10   We believe community participation is part of the bank's

        11   general corporate culture.  Locally, bankers from

        12   NationsBank are prominently involved in numerous community

        13   and cultural causes.  Also, in checking with some of our

        14   counterparts within South Carolina, we have found that

        15   NationsBank is active in community economic development

        16   lending in other areas of the state.

        17            Our experience in working with NationsBank may

        18   have some wider implications.  Although our agency is an

        19   independent entity with its own board and staff, we also

        20   are part of a nationwide network of similar organizations.

        21   Many of these have experience in operating revolving loan

        22   funds and the like.  These organizations generally have a

        23   practical understanding of local economic and community

        24   development needs.  Rural areas of our country, in

        25   particular, rely heavily on such agencies to provide

        26   needed assistance, including community and public sector


         1   lending.

         2            I believe this network represented through

         3   organizations such as the National Association of

         4   Development Organizations would welcome the opportunity to

         5   assist national banking institutions in partnering with

         6   their community lending program.

         7            In closing, I want to emphasize that our strong

         8   testament of support for NationsBank comes from the

         9   history of our working relationship.  We hope our example

        10   provides insight into NationsBank's community lending

        11   activity.  Thank you for this opportunity.

        12            MS. SMITH:  Thank you.  Mr. Reid.

        13            MR. REID:  Thank you, Madam Chairman.  My name is

        14   Donnell Reid, I'm the President of Gateway National Bank

        15   in St. Louis, Missouri, one of 33 African American banks

        16   throughout the United States.  Our bank is based in

        17   St. Louis, the gateway to the west and the home of Mark

        18   McGuire, the man that was destined to eclipse Babe Ruth's

        19   record in 1998.

        20            But I come today to lend my voice to those in

        21   support of the merger of NationsBank and Bank of America.

        22   Our company has been intimately involved with NationsBank

        23   and several predecessor banks.  The state of Missouri ten

        24   years ago had over some 700 different banks.  And we have

        25   witnessed throughout the state extensive mergers and

        26   acquisitions, so we are fully aware of what happens and


         1   the anxiety that comes with that.

         2            I can tell you, however, that our experience with

         3   NationsBank, its acquired Boatmen's National Bank and its

         4   acquired Sovran National Bank and its acquired First

         5   National Bank of St. Louis has been extraordinary.

         6            When our bank was formed 33 years ago, it was

         7   First National Bank that provided the management

         8   assistance and the financial assistance that we needed to

         9   get started.  It was First National Bank that provided

        10   managers to assist us in running our bank.

        11            When they were acquired by Boatmen's Bank, it was

        12   Boatmen's Bank that provided additional capital and

        13   continued the support provided by First National Bank some

        14   20 years ago.  When NationsBank acquired Boatmen's Bank,

        15   we were concerned as to whether or not this relationship

        16   would continue.  We were pleasantly surprised that not

        17   only has it continued but more has been done.

        18            NationsBank has played a very instrumental role

        19   in many aspects of economic activity in St. Louis.  Not

        20   only has it provided additional capital to our bank, it

        21   has provided financial and managerial support to our bank.

        22   But NationsBank has become an intimate part of the fabric

        23   of our entire community.  If you look at what's happening

        24   with our school systems, NationsBank is involved.  If you

        25   look at what is happening to development and redevelopment

        26   throughout the community, NationsBank is involved.  If you


         1   look at what is happening to the resurgence of our

         2   downtown which is vital to our community, NationsBank is

         3   involved.  If you look at what is happening to the

         4   suburban communities, the small towns, all of the

         5   different areas of St. Louis, which is a two and a half

         6   million dollar community, NationsBank is intimately

         7   involved.

         8            For those who have some concerns about the

         9   merger, I can assure you that if NationsBank comes aboard

        10   you will find many, many more benefits than you can

        11   possibly imagine.  Let me just cite a few of the benefits

        12   that NationsBank and its predecessor has provided our

        13   small $27 million bank.

        14            When we were formed three decades ago, they were

        15   there providing all sorts of assistance.  When we needed

        16   additional capital required by the regulators, it was

        17   NationsBank that pulled together local companies to make

        18   sure we had the capital we needed.  Any time there was

        19   assistance needed, whether operationally or managerially,

        20   NationsBank is always there for us.  Whenever we need

        21   assistance on our investments, it's NationsBank we turn

        22   to.  Whenever we need to make decisions on capital

        23   expenditures, it's NationsBank that advises us.  We are

        24   currently exploring the possibility of forming a CDFI in

        25   St. Louis and it is NationsBank that is leading the way.

        26            NationsBank was also very, very instrumental two


         1   years ago when we, like so many other African American

         2   banks, needed to broaden our loan involvement.

         3   NationsBank came forward and sold us loans at a very

         4   attractive rate to enable us to double our outstanding

         5   loans, and it began a program with us, as well as other

         6   minority banks across the country, in providing loans.

         7            This company has been vital to our success every

         8   step of the way.  And I can assure those of you who may

         9   have some concerns, that with NationsBank involved in your

        10   community, you will find benefits more than disadvantages.

        11   Thank you very much.

        12            MS. SMITH:  Thank you.  Mr. King.

        13            MR. KING:  Good afternoon.  My names is Charles

        14   King from Little Rock, Arkansas.  Donnell, while we don't

        15   have a Mark McGuire or even have a major league team in

        16   Arkansas, we do have a guy by the name of Bill Clinton

        17   that we're real proud of, too, so I'll get in my local

        18   plug.

        19            Good afternoon.  I do bring you greetings this

        20   afternoon from Arkansas.  My name is Charles King and I'm

        21   the Executive Director of the Arkansas Regional Minority

        22   Supplier Development Council, Incorporated.  The Minority

        23   Supplier Development Council is the oldest and largest

        24   minority business advocacy group in Arkansas and I'm here

        25   today on behalf of those minority businesses and the

        26   minority community across the great state of Arkansas to


         1   unequivocally give our support and endorsement of

         2   NationsBank's merger efforts.

         3            Arkansas is a very small state with many needs in

         4   the arena of minority economic development.  While we

         5   share with the rest of the country, our number one need

         6   being access to capital, our needs are much deeper.

         7            In Arkansas, prior to the arrival of NationsBank

         8   in the fourth quarter of 1997, minority businesses had

         9   little opportunity to do business with the financial and

        10   banking entities.  In fact, the procurement of goods and

        11   services by banks from minority businesses was limited to

        12   janitorial services in the bank lobby only.  No

        13   contractors served as primes to build or to add on to

        14   existing structures, no technology firms provided

        15   technical support or technical service or equipment to

        16   banks.

        17            NationsBank has changed the outlook of minority

        18   businesses and the minority community in Arkansas.  After

        19   years of little to no respect, minority businesses are

        20   finally achieving access to opportunities for capital and

        21   access to opportunities to do business with the bank.

        22            In the first nine months of its presence in

        23   Arkansas, NationsBank has achieved a 39 percent

        24   participation rate with minorities in purchasing goods and

        25   services.  Minority businesses are no longer just cleaning

        26   lobbies.  We actually have with us today someone who


         1   traveled with me who has a contract with NationsBank to do

         2   vault and safe deposit boxes, places we never thought we

         3   would get into.  Minority architects are serving as primes

         4   to retrofit buildings across the state.  Minority

         5   contractors are primes on mid to large bank construction

         6   projects.  Technology firms, technology firms are entering

         7   the doors and the list goes on and on.

         8            NationsBank within one year has become the

         9   example for other banks in Arkansas to emulate.  The bank,

        10   in fact, received the Minority Business Community's Impact

        11   Award for its efforts in 1997 and '98.  NationsBank is

        12   moving forward with educational programs and access to

        13   capital through innovative approaches using community

        14   support groups such as ours.

        15            Earlier this year, when the Arkansas state

        16   branches of the NAACP hosted its regional conference,

        17   NationsBank stepped forward, as no financial institution

        18   has in the past, to support the conference financially and

        19   in kind.  Through NationsBank's support, the conference

        20   was one of our most successful events since the Little

        21   Rock Central High School crisis in 1957.

        22            And finally, one critical area that NationsBank

        23   participates in in Arkansas is communications.  Cost and

        24   communications in the community generating ideas because

        25   we in Arkansas believe that ideas generate hope and hope

        26   generates opportunity and opportunity generates economic


         1   development, economic development generates a healthy

         2   community, communities based on good commerce.  Was it not

         3   the great philosopher Socrates that asked what is the

         4   purpose of commerce if not to build communities?  The

         5   minority community and the business community at whole

         6   believe that the relationship, actions and activities that

         7   we share with NationsBank is building our community.

         8            Also, that any growth or expansion that the bank

         9   acquires will become a new opportunity for growth in our

        10   strong relationship with NationsBank.  Individuals like

        11   Dorothy Brothers at their corporate office, Diane Quail at

        12   their regional office, Virgil Miller and Sam Hidden

        13   (phonetic) at their local office, as well as the President

        14   of NationsBank Arkansas Brian Foster make it possible with

        15   my and other organizations to have such a relationship.

        16            I thank you for this opportunity to come and just

        17   talk about a very good friend to our community,

        18   NationsBank.  Thank you.

        19            MS. SMITH:  Thank you.  Mr. Jenkins.

        20            MR. JENKINS:  Thank you, Madam Chair, and thanks

        21   for the opportunity to address the Reserve Board this

        22   morning on such a very important topic.  My name, of

        23   course, is Carlton Jenkins and I am here today in my

        24   capacity as president and CEO of Founders National Bank of

        25   Los Angeles.

        26            Our institution is one of only three African


         1   American owned institutions in Los Angeles and one of only

         2   three headquarted in South Central Los Angeles.  Since our

         3   opening in 1991, our institution has grown to become over

         4   a hundred million dollars in assets serving 17,000 account

         5   holders in a five branch system.  I'm here today at the

         6   invitation and in support of our newest institutional ally

         7   NationsBank and also secondarily in support of our

         8   historical ally and strategic partner Bank of America.  We

         9   are blessed to count Bank of America as a historical ally

        10   and NationsBank as a potentially new ally.

        11            It is important, however, as we are a minority

        12   bank, to also note, however, that I am here also as a

        13   member of the Western Independent Bankers Association, the

        14   California Bankers Association, the IBAA and the ABA.  I

        15   cite that because, notwithstanding my positive feelings

        16   about this particular transaction, I don't want my

        17   testimony to appear to be de minimus relative to our

        18   institutional concerns about the kind of this advantageous

        19   impact that mergers of this can have on small community

        20   banks such as ours.

        21            Having said that, however, it is important enough

        22   for us to come today to set the record straight relative

        23   to some of the positive experiences that we have had in

        24   our historical dealings with Bank of America as well as

        25   our most recent dealings with NationsBank, and I might add

        26   pre-merger announcement.  I feel this historical


         1   perspective is important because I believe it to be

         2   demonstrative of the kind of positive impact that a major

         3   bank CRA commitment when focused on minority banks can

         4   have and their ability to serve inner city communities.

         5            Additionally, I believe the commentary herein on

         6   our prospective relationship relative to NationsBank

         7   evidences the kind of relationship that can and will

         8   undoubtedly occur as a result of the newest CRA commitment

         9   made by the Bank of America/NationsBank organization.

        10            Bank of America has been an extremely significant

        11   participant in the growth and maturation of our

        12   institution since our opening in 1991.  This in spite of

        13   the fact that in several of our branch locations we are

        14   clearly a competitive institution to them for both

        15   deposits and loans.

        16            In spite of that, though, Bank of America through

        17   our long-term relationship with their EVP Don Mullane and

        18   as a direct consequence of their CRA commitment here in

        19   Los Angeles, they have assisted our institution Founders

        20   National Bank since 1991 in the following ways:  They have

        21   provided us $1.8 million to the bank's shareholders to

        22   refinance initial debt incurred in starting the

        23   institution.  They provided $300,000 in new Tier 1 equity

        24   capital through their purchase of preferred stock in

        25   Founders Capital.  I might add that it's still resident in

        26   our institution.  They've also provided $700,000 in Tier 2


         1   equity capital through the issuance of subordinated debt.

         2   Tier 2 capital, I might add again, it is still resident in

         3   our institution and is counted very important as part of

         4   our capital base.

         5            They provided assistance to us in the acquisition

         6   of two branch banking offices that had planned to close as

         7   a result of the merger years ago with SecPac.  One of

         8   those offices is now our largest and our most significant

         9   office.  They provided over the years assistance in the

        10   analysis of our asset/liability policies, investment

        11   practices, et cetera, et cetera.  All of the things that

        12   have been designed to enhance the viability of our

        13   institution.

        14            NationsBank recently through the efforts of

        15   Senior Vice President Darryl Basham and again before the

        16   merger was announced, I might add, has over the last

        17   several months become seriously involved in our

        18   institution and has agreed in principle to look at

        19   seriously providing us with approximately $10 million in

        20   NationsBank consumer loans.  They've agreed to provide

        21   infrastructural support in areas such as training,

        22   marketing, computer automation systems and process

        23   analysis, loan participation relationships, private

        24   banking services, cash management services, credit card

        25   services, ATM services, et cetera, et cetera.

        26            The point I try to make is that these


         1   institutions, when focused, can be and have demonstrated

         2   their capacity to be sensitive and understanding of the

         3   need to ensure competitiveness in communities that they

         4   serve by enhancing and providing the support necessary to

         5   indigenous institutions such as ours who exist to,

         6   frankly, become and provide a more intimate level of

         7   service, even against themselves.  And Bank of America

         8   historically, even in the face of branch competition side

         9   by side has never waivered from their support of our

        10   institution.  And I can only hope and I can only believe

        11   that, by virtue of the new relationship we've established

        12   with NationsBank, that this kind of practice has been

        13   internalized and will ultimately prevail as the way of

        14   doing business in this new combined institution.

        15            Accordingly, we have nothing but support for this

        16   kind of merger.  Again, recognizing the impact it can have

        17   on our industry.  We believe, however, they've been able

        18   to see the forest from the trees relative to ensuring that

        19   institutions like ours continue to exist.

        20            MS. SMITH:  Thank you.  Ms. Dodd.

        21            MS. DODD:  Thank you for allowing me to address

        22   the board today.  My name is Cathie Dodd, I am a Woodbine

        23   community organization.

        24            MS. SMITH:  Can you move the mike a little

        25   closer?

        26            MS. DODD:  Is this better?  We're a 501C3


         1   nonprofit out of Nashville, Tennesse.  And I guess we have

         2   the Oilers.  We don't have any home-run hitters but we

         3   have got the Oilers, I don't know what that means.

         4            Our mission as a nonprofit is to serve the folks

         5   in middle Tennesse and to improve their life-styles,

         6   including their education and their housing and the whole

         7   gambit of what we do.  We are a small CDC in Davidson

         8   County and we've been around since 1985.  We are

         9   definitely a grassroots organization.

        10            And NationsBank came to us probably around eight

        11   years ago to help us with something that we were kind of

        12   struggling with and that was capacity.  And once we have

        13   been able to do that, we have not --we're not the small

        14   kid on the block anymore.

        15            Tennesse was one of the first states in the

        16   United States to start welfare reform.  We did this two

        17   years before it became mandated by the federal government.

        18   One of the things that in our program that these folks

        19   have to do in our Families First Program, which is what

        20   our welfare reform program is called, is they either have

        21   to work 40 hours a week or they have to go to school 40

        22   hours a week or they have to do a combination of both, and

        23   they are only on this program for 18 months.

        24            It became real obvious that we can't sit around

        25   and talk about it very long because the 18 months time

        26   period is not a very long time and it was something the


         1   state had committed to.  And Nations came and said, "What

         2   can we do to start working on this?"  Before the program

         3   was instituted, we started a welfare-to-work program

         4   within our community, we brought people in to get them job

         5   ready.  NationsBank came in with computers that were

         6   outdated within their bank to put up a computer lab, we

         7   updated the computer lab.  The most important thing that

         8   they came in with with this program was volunteers.  Their

         9   staff, their employees, come to my center once a day and

        10   teach this class.

        11            We come to the table with computer teachers, we

        12   facilitate getting the people to the table and, to date,

        13   we've put 22 people out of the welfare roles.  That may

        14   not seem a lot to you, but for a program that just started

        15   a year ago, we're really pretty proud of it.

        16            One of the things that we have done in Woodbine

        17   is we have a thing called Peer Lending and it's a model

        18   from the Green Bank out of Bangledesh and it was real

        19   scary in Nashville, Tennesse to talk about loaning people

        20   who have no money money.  As a matter of fact, the people

        21   from SCORE came to me and said, "What do you use for

        22   collateral?"  And I said, "Well, nothing."  And they said,

        23   "Well, it doesn't work."  And I said, "Well, okay."  And

        24   so somebody said, "No, really, it doesn't work."  And I

        25   said, "Well, it keeps working."

        26            NationsBank came with a line of credit for these


         1   folks to use.  It was a pretty scary thing to do and it's

         2   five years now down the road.  We have had many, many

         3   successful small businesses coming out of this program.

         4   We have a new growing Hispanic community in Nashville that

         5   NationsBank is going to provide the funding for their Peer

         6   Lending group.

         7            On the social side of things, what NationsBank

         8   has done has been right there for my folks and my clients.

         9   They were very instrumental in doing some big stuff in

        10   Nashville which we were all part of and that was bringing

        11   everybody together and starting the Housing Trust Fund.

        12   The Housing Trust Fund now helps people have access to

        13   downpayment and closing cost money.  They brought 11

        14   lending institutions together and their money and, to

        15   date, have done over 300 loans to these folks.  So they

        16   took the lead.  They didn't have to carry the banner, they

        17   just took the lead and made it happen.

        18            One of the things that I would really like to

        19   talk about is -- again, I'm from Nashville, Tennesse and

        20   with music, Music Row is what we do.  There's a section

        21   next to Music Row that contains probably the worst housing

        22   and probably the most blighted area that is part of our

        23   city.  And HUD had let the properties decay and there was

        24   quite not an answer for this.

        25            The NationsBank CDC came in and purchased the

        26   property and, of course, we had community reaction to it


         1   and the community was screaming that this is going to

         2   happen and that's going to happen.  And what has actually

         3   happened is in next month they are going to open and rent

         4   up their first units of these and there's going to be 394

         5   units.  There will be, hopefully, all of the drugs and the

         6   things that were brought in by all this stuff, will be

         7   gone.  Hopefully, we'll follow and emulate the first CDC

         8   project they did in Nashville that has a Make A Difference

         9   Center.  Woodbine is involved with our Make A Difference

        10   Center in the fact that we hold Homebuyers' Clubs there.

        11            Our nonprofit holds 20 Homebuyers' Clubs a month

        12   and we have about 400 folks doing this and we get folks'

        13   mortgage ratings and we're proud of doing that and all the

        14   banks participate with us and life is great.

        15            Well, I went to the Homebuyers' Club at the

        16   NationsBank apartment CDC and was pleasantly surprised at

        17   the tenants that they have put into their properties.

        18   Their tenants are the kind of folks that you want to live

        19   next door to, but let me share with you these are

        20   low-income folks, these are folks who have been living in

        21   substandard housing, they've made available the best case

        22   scenario for them and these people that have rented in

        23   their properties will be homeowners very, very soon.

        24   Thank you for allowing me come here today and I do support

        25   this measure.

        26            MS. SMITH:  Thank you.  Mr. Wright, sorry I


         1   missed you.

         2            MR. WRIGHT:  My name is Leroy Wright and I'm the

         3   President and CEO of TLC Next Generation International

         4   Holdings Company based in St. Louis, Missouri.  I'm going

         5   to, in interest of brevity, be very specific.

         6            Basically, NationsBank, since it's entered into

         7   the St. Louis market in 1997 with the acquisition of

         8   Boatmen's Bank, has done some very good things for the

         9   African American community in St. Louis and the community

        10   at large.  They've created community partnerships between

        11   a major banking institution and the African American

        12   community in St. Louis, renewed realistic support for

        13   African American businesses through community investment,

        14   provided loans and equity investments in the St. Louis

        15   community which is causing a ripple effect in the St.

        16   Louis region from an economic standpoint especially in our

        17   downtown St. Louis area.

        18            And African American employment within

        19   NationsBank seems to be increasing since its inception in

        20   1997 in the St. Louis market.  Basically, we in St. Louis

        21   have seen an overall improvement in the business

        22   environment of the community for African Americans.

        23            With regards to my company, TLC Next Generation,

        24   it's a 15 store chain of cellular retail outfits.

        25   NationsBank had a tremendous impact on working with me

        26   diligently to complete my financing package for the


         1   acquisition of this company.

         2            When I bought Next Generation in 1997, it marked

         3   the largest acquisition in the history of St. Louis by an

         4   African American.  The acquisition created the fifth

         5   largest minority-owned company in the St. Louis area

         6   employing over 80 people.  One of the major impediments of

         7   minority businesses involves around having sufficient

         8   equity capital to obtain bank loans.  I, as well as other

         9   minority-owned companies, have been able to utilize and

        10   capitalize on the fact that NationsBank, in addition to

        11   the commercial side, has a small business investment

        12   company that's also located in St. Louis.  In addition to

        13   that, they're the largest investor and the only other

        14   small business investment company in St. Louis, Missouri

        15   Civic Ventures Investment Fund.

        16            In short, in closing, I would just like to say

        17   that because of the NationsBank commitment to the

        18   community, investment and relationships building in

        19   St. Louis, Missouri and the communities that it serves

        20   nationwide, I'm here to testify on behalf of the merger

        21   between NationsBank and Bank of America.  Thank you very

        22   much.

        23            MS. SMITH:  Thank you.  Any questions from the

        24   panel?  If not, thank you very much for coming and we will

        25   move on to the next one.

        26            I think we're ready to start, if you are.  This


         1   is a combination of -- a combination panel.  And have they

         2   been assigned an order?

         3            UNIDENTIFIED SPEAKER:  Yes.  They all know.

         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.

        17            MS. SMITH:  Thank you.  Any questions from the

        18   panel?  Thank you all very much for being here.

        19            MR. REID:  Good afternoon, my name is Jim Reid

        20   from Dallas, Texas and I'm the President and founder of

        21   the Southern Dallas Development Corporation, we're a

        22   community development financial institution that focuses

        23   on economic development.  And I'm delighted to be here

        24   today.  It's 102 degrees in Dallas and I'm glad to be in

        25   San Francisco, nice cool weather, besides the opportunity

        26   to talk to you all.


         1            In terms of our organization, our mission is to

         2   finance and develop small business, create jobs and

         3   promote investment in the southern part of Dallas.  Dallas

         4   is kind of a city that's divided in terms of its income.

         5   The northern sector of the city is very strong, the

         6   southern sector which includes about 45 percent of the

         7   population only has 60 percent of the median income of the

         8   northern sector.  There's a big difference.  Four to

         9   50,000 people live there.  Primarily 75 percent minority

        10   population.  It has 45 percent of the population and 13

        11   percent of the commercial tax base, so our focus is on

        12   southern Dallas.

        13            We're here today in support of the merger because

        14   we are excited by the commitment of $350 billion.  We're

        15   used to dealing with one bank, Bank of America being on

        16   the west coast, and the other bank, NationsBank being on

        17   the east coast.  In fact, Texas is blowing and going with

        18   bank's money from other parts of the country so you can

        19   deal with that and we can deal with that.

        20            And I think that you'll find, based on our

        21   experience, that these banks will deliver for you.

        22            What is our experience with these banks?  First,

        23   and in terms of the population we serve, the type of deals

        24   we do, we've done about 300 loans.  All of the loans are

        25   either non-bankable loans or partially bankables, so

        26   nobody could walk in the door of a bank and get the


         1   financing that we provide to them.

         2            About 70 percent of our clients are minority

         3   businesses.  We have managed to loan them over the past

         4   eight years $21 million and leveraged $36 million in

         5   participating with banks and create about 2,500 jobs in

         6   your community.  And when we started out, we were doing

         7   about 100 jobs a year, and in the last two years, we've

         8   help create 1,000 jobs as a 12 person community

         9   development financial institution.

        10            We do this through things like joint financing

        11   with the banks.  In the case of these two institutions, we

        12   financed 17 deals and ten with NationsBank, two in tandem

        13   with Bank of America totaling three and a half million

        14   dollars.  When we come in, we provide subordinate debt and

        15   that gives the bank a level of comfort in terms of coming

        16   in with their financing, leveraging resources to benefit

        17   our community.

        18            We've created, with the help of these banks, a

        19   multi-bank development corporation that's possible under

        20   your regulations and under the regulations of the OCC

        21   where a bank can take up to two percent of its capital

        22   assets and put it in a corporation that is allowed to

        23   behave differently than a bank.

        24            Our corporation that we've set up can do equity

        25   investments in businesses.  And in the minority community

        26   we serve, we find that equity is a very important portion


         1   of what has to be done.  Debts sometimes is zero, the

         2   equity in relationship to the debt is not always

         3   available, and in the multi-bank development corporation

         4   that we have established, Bank of America has an $800,000

         5   investment, NationsBank has a $600,000 investment, so

         6   that's equity we can bring to the table in tandem with

         7   bank deals.

         8            Both banks have helped us with corporate

         9   donations.  You'll say, "Well, what does that do?  Help

        10   you to have staff?"  It's true, these banks -- our

        11   corporate donations provide ten percent of our operating

        12   budget.  And in the process of lending things that we do,

        13   we spend more time on the front end with borrowers.  Once

        14   the money is lent, we're out there in terms of monitoring

        15   and technical assistance.  It's these donations that

        16   Nations been donating 10,000 a year for the last seven

        17   years and Bank of America 5,000.  They helped us publish a

        18   newspaper that talks about the benefits of our community.

        19   Nations is financing a $600,000 building that we will own

        20   where 150 jobs will be created and Bank of America helped

        21   underwrite our micro-loan program where they provide us an

        22   $80,000 grant and we generated 500,000 from micro-loans.

        23            So we support this merger and are delighted to

        24   have the opportunity to work in an expanded way with both

        25   partners.

        26            MS. ARMENTA:  Good afternoon.  My name is Loretta


         1   Armenta and I am the President/CEO for the Albuquerque

         2   Hispano Chamber of Commerce in Albuquerque, New Mexico,

         3   and I want to thank you for the opportunity to be able to

         4   express some of our thoughts here today.  I'm here

         5   representing the Albuquerque Hispano Chamber of Commerce

         6   who is in support of the merger of NationsBank and Bank of

         7   America.

         8            The Albuquerque Hispano Chamber of Commerce has

         9   enjoyed a strong partnership with NationsBank and its

        10   predecessors for over 25 years.  In addition, we've

        11   developed a successful partnership with Bank of America

        12   since they entered our market in 1990.  The Albuquerque

        13   Hispano Chamber is the oldest Hispanic Chamber of Commerce

        14   in the United States and the second largest of 250

        15   Hispanic Chambers of Commerce in the United States.

        16            As strong advocates, NationsBank and Bank of

        17   America continue to contribute significant resources for

        18   the education of our Hispanic youth and the education and

        19   development of programs for our Hispanic business owners

        20   in New Mexico.  We have some wonderful leadership in

        21   Albuquerque, part of that leadership is through Alex

        22   Romero, Executive Vice President, who we're very proud who

        23   has also worked very hard with us to open up those other

        24   doors of opportunity.

        25            In sitting here this morning and listening to

        26   much of the testimony, one can't help but think how


         1   sometimes not everything appears the same on both sides of

         2   the street.  And I heard some very interesting things this

         3   morning and it is apparent that one of the things that

         4   does need to happen is that, for instance, those other

         5   groups that spoke up on the State of New Mexico in areas

         6   that they think need much attention, the chamber hopes to

         7   be able to work with them and them work with us and us

         8   work with this new merger and acquisition to make sure

         9   that their needs are addressed.

        10            We do have some recommendations.  We would like

        11   to see the implementation and process to maintain and

        12   expand procurement contracts for our local small business

        13   vendors.  That is critical, that when a bank goes in in an

        14   acquisition this large, that those local vendors are not

        15   displaced with their contracts with those institutions.

        16            We supported the increase and to simplify the

        17   business loans for our small business minority owners for

        18   their start-up and the expansion of their business.  We

        19   often see this, we are bombarded weekly by those small

        20   business owners who still have tremendous needs.  And it's

        21   not necessarily with NationsBank, with Bank of America,

        22   it's with banking institutions.  Although, we will say

        23   that NationsBank and Bank of America have initiated some

        24   procurement programs with us to make sure that at least

        25   our business owners have an opportunity to access the

        26   information and to be able to get the loans that they


         1   need.

         2            We support the increase and making available of

         3   loans to minorities who have a right for decent housing.

         4   It is criminal today that that is still an issue and that

         5   is an issue all across the country.  CRA loans and

         6   investors -- CRA loans and investments are profitable and

         7   continue to meet the credit needs of our underserved

         8   communities.

         9            We believe that NationsBank and Bank of America

        10   will continue to generate resources that will support the

        11   education and the advancement of our Hispanic community in

        12   New Mexico.  And New Mexico, by the way, is a

        13   minority/majority state, with Hispanic and Native American

        14   being the largest population base in this state.  And I

        15   think you heard some of that this morning.  One of the

        16   statements that I will also support very strongly was the

        17   need for what has happened in the rural areas, because

        18   they are always definitely never paid any attention to.

        19            Through our partnership with NationsBank and Bank

        20   of America, we hope to be able to maximize the financial

        21   benefits for our community and for our state that will

        22   improve the quality of life for all.  Thank you.

        23            MR. JOHNSON:  Good afternoon, my name is Calvin

        24   Johnson, I'm the president and CEO of Do The Right Thing

        25   which we trade the Athlete's Foot which is a national

        26   franchise.  I'm here this evening in support of the bank


         1   merger.  I am a franchisee and entrepreneur and I'm just

         2   speaking on behalf of us out of Washington, D.C.

         3            About two years go, we were trying to open up a

         4   national franchise in the metropolitan area which is also

         5   an inner city of Washington, D.C. and we were told by

         6   several of the banks that there's no money going to be

         7   available to lend to us to open up this type of store in

         8   the inner city of Washington.

         9            We went to NationsBank about two years ago with

        10   their SBIC program, and they were willing and able to loan

        11   us money to open up this store and take the chance for us

        12   to open this store up in the community.  From that, we

        13   were able to also employ about ten young people within

        14   that community to bring some viable jobs and some economic

        15   wealth back into the community.

        16            Within five months later, we were able to open up

        17   a second store and employ another ten -- eight to ten

        18   people to work and be managers and learn entrepreneurship.

        19   So just in real brief, I wanted to come here and I thought

        20   it was very important for a franchisee and entrepreneur to

        21   express the interest that we're very interested and we do

        22   support the merger of Bank of America and NationsBank

        23   because we feel that, hopefully, they can duplicate the

        24   programs that we go through in the SBIC on the east coast

        25   also on the west coast.  So I would like to say thank you.

        26            MS. HUGHES-JONES:  Good afternoon, panel, my name


         1   is Deborah Jones, I'm here representing LEDK Management

         2   Group of Atlanta, Georgia.  LEDK provides many facets of

         3   property management services in the southeast.

         4   NationsBank is one of our clients.  I am in support of the

         5   merger.

         6            NationsBank operates one of the first bank owned

         7   community development corporations in the southeastern

         8   United States.  Since opening an Atlanta office in 1993,

         9   NationsBank has invested more than $75 million in the

        10   acquisition and redevelopment of affordable housing in

        11   Atlanta's urban communities.

        12            In 1993, NationsBank engaged LEDK to manage more

        13   than 4200 apartment units in Georgia.  NationsBank takes

        14   an active role in community revitalization.  In addition

        15   to providing safe, affordable housing, NationsBank is also

        16   very concerned about family needs.  The Make A Difference

        17   Center concept was created in 1993 in the hopes of

        18   providing meaningful services to residents of large

        19   multi-family rental properties developed by NationsBank's

        20   CDC.

        21            NationsBank provides start-up and operating funds

        22   for the centers as a way to provide a safe place for

        23   children to go after school and enhance the living

        24   environment of our residents.  The first Make A Difference

        25   Center opened in Atlanta in 1995.  Our eighth center in

        26   Atlanta opened Monday of this week.  Since '95, we have


         1   opened 16 centers.  We have centers in North Carolina,

         2   Texas, Tennesse, District of Columbia, and Maryland.

         3            With the acquisition of Bank of America, we can

         4   envision centers from coast to coast and many more

         5   families impacted with the merger, children will benefit

         6   the most.

         7            In just three years, we have grown from one

         8   center to 16.  NationsBank has made a commitment to open a

         9   total of 25 centers by the year 2000.  NationsBank had the

        10   unprecedented foresight to make a different center.

        11   Imagine the obligation now to share this successful

        12   quality product.  NationsBank has demonstrated its

        13   responsiveness to the needs of our resident families.  Its

        14   corporate philosophy has set NationsBank apart from its

        15   competitors.

        16            Our goals for the Make A Difference Center are

        17   very simple, to strengthen the parent-child relationship

        18   through interactive educational activities.  To provide a

        19   diverse range of learning opportunities for all residents,

        20   to empower our youth through academic assistance,

        21   educational programs and other resources, to provide a

        22   nurturing and safe environment where children can learn

        23   and grow, to further self-esteem, self-identity, respect

        24   and responsibility in youth.

        25            Some of the programs we offer are structured

        26   after school programs from 3:00 to 6:00 daily, homework


         1   assistance for tutoring our youth, computer skilled

         2   training for youth and also our adults, money management

         3   courses for our youth and our adults, neighborhood watch

         4   meetings, health fairs, fire safety classes, bike safety

         5   programs, senior adult meetings, stress management for

         6   youth as well as adults, urban gardening, just to make a

         7   few.  Each Make A Difference Center is equipped with a

         8   computer lab and we're connected to the internet, a

         9   library with age appropriate books, reference materials,

        10   literature and games, a tutorial room and a large

        11   multipurpose room.  We always focus at all our centers on

        12   reading because it's very important to us.

        13            Many communities have already been revitalized

        14   with investments from NationsBank.  Thousands of families

        15   have been impacted.  We can touch the lives of many more

        16   through the various programs delivered by the Make A

        17   Difference Centers.  We strongly support the acquisition

        18   of Bank of America by NationsBank.  NationsBank has very

        19   high standards.  We have seen a significant measure of

        20   success as a result of NationsBank's caring, commitment

        21   and diverse investments.  I am grateful for the

        22   opportunity to be associated with NationsBank in making a

        23   difference in our children's lives.  I thank you.

        24            MS. SMITH:  Thank you.

        25            MR. ANESI:  Good afternoon, my name is Greg

        26   Anesi, I'm the President of Independent Mobility Systems


         1   in Farmington, New Mexico.  We manufacture lowered floor

         2   mini vans for America's 3 million plus disabled people.

         3   We sell them all over the country.  We're in a little

         4   town, 40,000 people, predominantly Native American.

         5            When I started to sell these vans, the most

         6   common question that always came back to us was, "That's

         7   great, I want it, but how much are the payments?"  We

         8   could never offer that answer.  When the disabled people

         9   go -- when a disabled person goes into a bank, many times

        10   they find that the loan officer in the bank is frightened.

        11   They look at him and they say, "How can he drive?  How can

        12   she work?  What does she do?  More importantly, how are we

        13   going to be paid back?"  Then when they think about

        14   financing a $42,000 adapted van, they say, "What's the

        15   collateral value?  What's the residual value?  How are we

        16   going to make this loan?"  A lot of times, most of the

        17   time, the answer was, "We can't do that."  Or they would

        18   look at it and say, "Okay, it's a $42,000 loan, there's no

        19   value for the added conversion, the lowered floor or the

        20   lift," they'd say, "We'll lend you 90 percent of the value

        21   of the chassis and you put up 100 percent of the

        22   conversion."  That places a disabled person having to come

        23   up with 40 percent of the downpayment.  I don't know about

        24   you but I wouldn't own a car if I had to come up with 40

        25   percent of the downpayment, who would?

        26            It was an unnecessary burden on disabled people,


         1   it lessened their lives.  Because transportation, it's

         2   more than just getting from one place to another, it's

         3   freedom, it's independence, it's a job.  I looked for a

         4   bank to try and solve this problem for over five years.  I

         5   had gone to Boatmen's, I'd gone to local New Mexico banks,

         6   I had gone to other banks which I won't mention, both

         7   national, regional and local, and they didn't want to

         8   touch that.

         9            So when NationsBank acquired Boatmen's back in

        10   1997, I wasn't a customer of that bank, I thought big

        11   national bank coming in, the chances of them being

        12   receptive to a little branch in a town of 40,000 people

        13   was pretty small.  I've got to tell you, I was shocked.

        14            Within a month of me asking the bank president, a

        15   special CRA team came out from Dallas, they listened, they

        16   were interested, they wanted to help.  Two months later, a

        17   team from NationsBank Dealer Financial Services came out

        18   of Greensborough or Jacksonville or someplace and they

        19   came out and they listened.  Within nine months,

        20   NationsBank offered a national program for all 48 states

        21   that would lend up to 90 percent of the total value of an

        22   adapted van for ten years.  That was unheard of.

        23            That changed, in my opinion, the banking

        24   industry.  Because now pretty soon other banks, Union

        25   Bank, Barnett Bank before it was acquired, those banks

        26   started to be competitive with NationsBank.  They made a


         1   difference in disabled people's lives.  I wish I could

         2   point and say it was one Nations banker that had a vision

         3   and was a strong leader, but I can't, it was a collage of

         4   NationsBank people.  And they really made a difference in

         5   this community.  I would urge you to approve this merger.

         6   Thank you.

         7            MS. SMITH:  Thank you very much.  Any questions

         8   for this panel?  I think we're ready for a break.

         9                         (Short break.)


















       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. 
      12              (Pause in proceedings.) 
      13              MS. SMITH:  If we could start with
      14   Mr. Devine. 
      15              MR. DEVINE:  That's me.  
      16              Good afternoon.  My name is Richard Devine
      17   and I'm here on behalf of the Center of Community
      18   Change.  The Center for Community Change is a national
      19   nonprofit organization headquartered in Washington D.C.
      20   that provides technical assistance and research on
      21   behalf of local community-based organizations serving
      22   low-income and predominantly minority constituencies. 
      23              For almost 30 years the center has been
      24   especially active in advising communities groups on
      25   their efforts to develop and implement community
      26   reinvestment strategies designed to stimulate the flow


       1   of private lending and investment to underserved urban
       2   and rural communities. 
       3              The merger of NationsBank and Bank of
       4   America, two of the nations largest banks, promises to
       5   have important and profound implications for the
       6   residence and businesses located in the many markets
       7   currently served by these institutions.  
       8              CDC is mindful of the fact that many
       9   community groups and different markets served by one or
      10   both of these banks have complained about various
      11   inadequacies in their CRA performance records. 
      12              Further, some of these local citizens groups
      13   have also raised questions about whether the proposed
      14   consolidation will result in reductions in lending or
      15   deterioration in the quality of the essential banking
      16   services for their areas. 
      17              In an effort to address some of these
      18   concerns that have been expressed, the two banks
      19   announced on May 20th they would make a ten-year, $350
      20   billion community development commitment.  
      21              While substantial and impressive on its face,
      22   the commitment lacks two important details.  Lacks
      23   important details about how this ambitious effort will
      24   be undertaken, not just for the 22 states now served by
      25   these two institutions, but for two -- new market areas
      26   as well. 


       1              A detailed implementation plan should be
       2   required by the Federal Reserve Board should the
       3   proposed merger be approved. 
       4              Additionally, we believe the merged
       5   institution should be required as a condition for
       6   approval to establish and capitalize a new nonprofit
       7   corporation that would have two principal purposes. 
       8              First, to improve access to and the terms of
       9   credit for low and very low income households and market
      10   areas affected by the proposed merger.  
      11              And, second, to preserve the affordable
      12   housing inventory that is either rapidly being converted
      13   to market-rate properties in places like the greater San
      14   Francisco Bay Area or being left to deteriorate at an
      15   accelerated place in communities where the conditions
      16   for conversion to market-rate housing have yet to
      17   evolve. 
      18              We advance this proposal because past
      19   experience with mergers of lesser scope and magnitude
      20   has demonstrated conclusively that multimillion or
      21   billion dollar loan commitments, however
      22   well-intentioned or implemented, do not address
      23   fundamental issues of income and asset and equality that
      24   permeate our society. 
      25              Also, we believe very strongly that
      26   communities and populations now credit-scored below the


       1   minimum established for participation in regulated
       2   credit and banking markets should be accorded the same
       3   benefits as the senior executives of NationsBank and
       4   BankAmerica who realize great personal gain from the
       5   favorable regulatory ruling.  
       6              With funds equal to those earmarked for the
       7   care and comfortable retirement of senior executives, it
       8   will be possible to acquire, rehabilitate and preserve
       9   for at least an additional 35 years approximately 75,000
      10   affordable housing units. 
      11              It is our understanding that as part of the
      12   proposed merger senior executives of NationsBank and
      13   Bank of America shall receive at no cost to them options
      14   to purchase stock of a new holding company that price is
      15   not available to the general public. 
      16              In addition to this benefit, senior
      17   executives of each institution shall receive lump sum
      18   cash payments and other compensation typically referred
      19   to as golden parachutes.  
      20              A recent 8K filing by NationsBank has stated
      21   that the company expects to incur pre-tax merger and
      22   restructuring items of approximately $1.3 billion.  What
      23   fraction of this total amount will be devoted to exit
      24   cost related to contract terminations and other
      25   reorganization costs has yet to be disclosed. 
      26              But a recent article in the San Francisco


       1   Chronicle stated that the five highest paid BankAmerica
       2   corporate officers would collect a total of $65 million
       3   in severance pay and windfall stock profits if they lose
       4   their jobs, and, and I quote, "A thousand of the senior
       5   managers are also covered by San Francisco banking
       6   giant's generous golden parachute program.  If they all
       7   get dumped, they collectively would be entitled to
       8   severance benefits estimated at well into hundreds of
       9   millions of dollars." 
      10              Our proposed nonprofit organization will be
      11   capitalized from two sources, a cash contribution from
      12   NationsBank and Bank of America and other institutions
      13   in similar circumstances such as Wells Fargo, Citicorp
      14   or Western Travelers, equal to the sum of all exit costs
      15   related to the employment of senior executives and stock
      16   options equal in number and in all other respects to
      17   those granted senior executives of the affected
      18   institutions as part of actions requiring your
      19   regulatory approval. 
      20              The initial cash contribution will match on a
      21   dollar-for-dollar basis the sum of all golden parachute
      22   payments, will allow the new corporation to commence
      23   immediately and the stock options, assuming the
      24   prosperity of the new holding company will provide
      25   funding for future years. 
      26              If these measures are implemented, there


       1   should be no need for additional funding. 
       2              I see that my time has expired.  We have
       3   submitted a written statement for the record here. 
       4   Essentially the position that we are espousing is that
       5   the citizens of the communities affected by this merger
       6   should be treated equally as senior executives of each
       7   of these institutions, and the great personal benefits
       8   they should be received should be shared and distributed
       9   in the communities that they are supposed to serve. 
      10              MS. SMITH:  Thank you very much.  Mr. Lewis. 
      11              MR. LEWIS:  Good afternoon, Madam Chairman,
      12   members of the board, ladies and gentlemen from the
      13   audience.  My name is Al Lewis.  I came here to share my
      14   community's concerns and to ask the board for remedies. 
      15              I am the coordinator for the Save the Bank of
      16   America Ocean Avenue Faxon Branch.  A branch that
      17   represents three neighborhoods and a community of about
      18   50,000 people.  
      19              A year-and-a-half ago this bank closed, after
      20   75 years of profitable operations.  The bank was the
      21   only one that we have in the immediate community.  The
      22   closest Bank of America is about a mile away or two
      23   miles. 
      24              Bank of America told us at a community forum
      25   that they would be happy to work with us to try to get
      26   another bank for the community.  The board of


       1   supervisors in San Francisco had a hearing and they
       2   adopted the resolution in which Supervisor Medina was
       3   the writer, endorser of it, and it was sponsored -- it
       4   was co-sponsored by Supervisor Tang, Behrman{}, Yaki,
       5   Brown and others. 
       6              And essentially what it says was, whereas the
       7   Bank of America, as a good corporate citizen, should do
       8   whatever it can to keep the Ocean Faxon Branch open or
       9   find a substitute financial institution to serve the
      10   neighborhood, now, therefore, be it resolved that the
      11   Board of Supervisors urges the Bank of America to keep
      12   open its Ocean Faxon Branch or find a substitute
      13   financial institution to serve the neighborhood before
      14   they close the branch. 
      15              Well, needless to say, that Bank of America
      16   ignored the community, it ignored the Board of
      17   Supervisors and ignored its valued customers and decided
      18   to close the branch on March 21st, 1997. 
      19              Since that time, we've had downsizing of the
      20   community.  Since the major portion of over 5 million --
      21   I am sorry, over $50 million in deposits were removed
      22   from the community into -- split up into three other
      23   communities where they had existing banks. 
      24              We have no bank.  The merchants on the strip
      25   are stranded for their immediate cash.  Seniors are
      26   affected and impacted because they have direct deposits


       1   of Social Security.  We have no lending, there are no
       2   wire services for the Latino citizens or for the Chinese
       3   citizens who use the wire services. 
       4              I'm also the Committee Chairperson for the
       5   alternative banking, Committee for Alternative Banking. 
       6   When I wrote to Nancy Pelosi, our congress women, she
       7   told me that, "In response to the Supreme Court ruling,
       8   I am co-sponsoring House of Representative Bill 1151
       9   which would codify the national longstanding policy of
      10   the National Union Administrative Board regarding the
      11   field of membership of the federal credit union." 
      12              In other words -- in other words, we tried,
      13   the Committee for Alternative Banking, tried to find a
      14   credit union in our community to ask them to expand
      15   their services so that they could serve the credit
      16   needs, the lending needs of all of the community
      17   citizens.  
      18              However, the initiation of the American
      19   Banking Association in which Bank of America is a major
      20   contributor and a major member of sued the National
      21   Credit Union Association to prevent them from expanding
      22   into the community and expanding so that citizens in the
      23   community might find financial services and products
      24   that the bank had left them without those services. 
      25              So I have a letter here that I say that the
      26   Bank of America is not in compliance with the Federal


       1   Community Reinvestment Guidelines, and, since it has
       2   reinvested little or no monies into the OMI community,
       3   its agency as a nonprofit organization or its schools
       4   and it violates the CRA Act. 
       5              In addition to that, the State of California,
       6   the Attorney General's Office has sued the Bank of
       7   America for fraud and about ten other complaints the
       8   Attorney General has in case No. 968484 in the San
       9   Francisco Superior Court. 
      10              In addition to that, the State of Texas, the
      11   banking regulators are suing the NationBank for
      12   circumventing the Texas banking laws of $5.8 billion
      13   which they took out of the State of Texas and moved to
      14   the headquarters of NationsBank. 
      15              So what really counts here?  What counts is
      16   the public and the Federal Reserve Board and what Allen
      17   Greenspan will do about this merger.  This process was
      18   designed to regulate and supervise national banks to
      19   assure a safe and sound competitive National Banking
      20   system that supports the citizens' communities and
      21   economies of the United States.  It is a process to
      22   bring the banks into compliance with the Community
      23   Reinvestment Act and the expansions of access to credit
      24   capital and the development of affordable housing and
      25   supporting small businesses by providing startup and
      26   expansion finance and working capital. 


       1              Thank you for the opportunity to speak in
       2   behalf of those low-income and disadvantaged and at-risk
       3   citizens in my community, and I hope that the board not
       4   only listens but they will act.  Thank you.  
       5              MS. SMITH:  Thank you very much.  Mr. Omoto. 
       6              MR. OMOTO:  Thank you.  My name is Martin
       7   Omoto.  I am the Executive Director of the California
       8   Nevada Community Action Association representing
       9   community action agencies in both states to provide
      10   direct services to over 4 million low-income people in
      11   both states. 
      12              Currently our association has no position on
      13   the proposed merger, but I am here simply to state and
      14   raise concerns of the proposed merger's impact on low-
      15   income Californians and Nevadans, particularly those in
      16   rural areas. 
      17              First, many of our agencies in California and
      18   Nevada, and they are both public and private nonprofit
      19   agencies, have already and effective partnership with
      20   Bank of America on local community programs.  Our
      21   concern is we don't want to lose that. 
      22              Second, we are also concerned the proposed
      23   merger could mean or could result in bank branches,
      24   especially those in rural areas, and also low-income
      25   areas being closed.  We are concerned that the proposed
      26   merger could result in the reduction or elimination of


       1   services impacting low-income people in Nevada and also
       2   in California.  We are concerned that the proposed
       3   merger could mean the increased -- a result in increased
       4   fees that would make necessary banking services for the
       5   elderly, for the low-income people in the state less
       6   accessible. 
       7              Concern that the proposed merger could impact
       8   the upcoming mandated electronic fund transfer of
       9   benefits for retirees and SSI recipients, millions in
      10   the state who are unbanked and might find it difficult
      11   to get an electronic transfer account. 
      12              Recently in the San Francisco Chronicle, I
      13   believe, the CEOs of both NationsBank and Bank of
      14   America recently wrote their commitment, their pledge
      15   for $350 billion in local community lending is a floor,
      16   not a ceiling. 
      17              Our association is here to make sure or to at
      18   least raise a concern that floor is not a trap door for
      19   low-income people. 
      20              Finally, we want to applaud the Federal
      21   Reserve Board members here that -- of holding these
      22   hearings in the first place and we urge you to hold
      23   additional hearings in California.  I also personally
      24   applaud your stamina.  So thank you.
      25              MR. LEWIS:  I want to extend my thank you
      26   also for the board's patience and stamina.  


       1              MS. SMITH:  Ms. Gibson. 
       2              MS. GIBSON:  Good evening.  My name is Rose
       3   Gibson.  I am a city council woman in the city of East
       4   Palo Alto.  I've also chaired a coalition to bring a
       5   bank to East Palo Palo Alto and most recently chaired
       6   the Special Banking Task Force which represented
       7   community organizations which included the Community Law
       8   Project, which I've listed as representing today. 
       9              I appreciate the opportunity to express the
      10   community's concerns regarding the merger of Bank of
      11   America and NationsBank.  And this clearly here just to
      12   be sure we express the reasons why we have some
      13   concerns. 
      14              Over the past years Bank of America has
      15   endorsed the notion of addressing the banking needs of
      16   low and moderate income customers.  This can be seen in
      17   their community reinvestment projects such as the Jam
      18   and Hoops Basketball Program and the East Oakland Youth
      19   Development Center.  However, East Palo Alto is one
      20   community that Bank of America did not include. 
      21              East Palo Alto is a city with a population of
      22   approximately 25,000, which is predominantly African
      23   American and Latino.  Throughout its history, East Palo
      24   Alto has been greatly underserved by banking
      25   institutions. 
      26              Fifteen years ago many of the bank branches


       1   that once existed in East Palo Alto closed.  Bank of
       2   America was one of the first to leave.  As a result,
       3   residents must travel long distances to deposit their
       4   paychecks, to withdraw cash and to get change for their
       5   businesses. 
       6              Local merchants report that they are unable
       7   to develop the kinds of relationships with lenders that
       8   could result in access to credit.  In addition, the city
       9   reports having difficulty securing loans as well as
      10   other discriminatory lending practices despite federal
      11   Fair Lending Laws.  The Home Mortgage Disclosure Act
      12   data for 1996 suggests that only 68.42 percent of home
      13   loan applications from East Palo Alto were ultimately
      14   approved. 
      15              In addition, local businesses reports having
      16   difficulty securing loans and receiving good rates of
      17   interest on their loans. 
      18              Seventy-two percent of the small businesses
      19   responding to an EPA Can Do, which is a local CDC,
      20   survey reported that financial institutions for small
      21   businesses in the community, they reported that they
      22   were -- they rated them either very poor or poorly. 
      23   Very poorly at 48 percent and poorly at approximately 24
      24   percent. 
      25              Only eight percent of the small businesses
      26   responding to the East Palo Alto Can Do survey reported


       1   that financial institutions met their credit needs. 
       2              Because of this, East Palo Alto developed a
       3   program called the financial services incentive program. 
       4   This program was developed to make it easier and more of
       5   an incentive for banks to locate in East Palo Alto.  As
       6   a result, Bank of America began to provide some grants
       7   to East Palo Alto organizations.  However, this is not
       8   enough.  
       9              Whenever we talked to bank executives about
      10   opening a branch in East Palo Alto, the reasons for not
      11   doing so always boiled down to money and profits.  The
      12   absence of a bank in East Palo Alto is a constant
      13   reminder to residents that they are being deprived of
      14   something that every community deserves. 
      15              Bank of America's merger application states
      16   that low and moderate income markets have proven to be
      17   profitable and valued business segments for both banks. 
      18   However, this has not been our experience.  Bank of
      19   America has refused to open a branch, despite their
      20   knowledge of economic development progress within our
      21   city. 
      22              On June 27th we had our first groundbreaking
      23   ceremony on Phase I of a major retail center with Home
      24   Depot, Office Depot, Comp U.S.A. and Good Guys as our
      25   major anchors. 
      26              It took nearly ten years to get the BofA ATM. 


       1   So we wonder how long it will take to bring a branch to
       2   our bank. 
       3              The merger would facilitate more branch
       4   closures and will also create the job losses.  And East
       5   Palo Alto is a living example of some experiences.  
       6              Since I only have a few minutes left, I'm
       7   going to close by saying that the Community Reinvestment
       8   Act was enacted to encourage banks to meet the credit
       9   and banking service needs of the entire community, which
      10   includes low and moderate income neighborhoods.  And
      11   East Palo Alto is still underserved, and, although Bank
      12   of America/NationsBank have a great plan for community
      13   reinvestment, East Palo Alto does not seem to be
      14   included in that plan and other communities such as
      15   ours. 
      16              So I want to thank the Federal Reserve Bank
      17   for this opportunity and hope they would take into
      18   consideration the banking needs of East Palo Alto and
      19   other communities of low and moderate income within the
      20   State of California. 
      21              MS. SMITH:  If you haven't already done so,
      22   please do submit your full statement for the record. 
      23              MS. GIBSON:  All right.  I have another one
      24   I'll submit to you, not this one. 
      25              MS. SMITH:  Mr. Randolph. 
      26              MR. RANDOLPH:  Good afternoon, Madam


       1   Chairman, members of the committee, the East Palo Alto
       2   Community Alliance and Neighborhood Development
       3   Organization, EPA Can Do for short, wishes to thank you
       4   for the opportunity to present testimony regarding
       5   proposed merger of NationsBank and Bank of America to
       6   the City East Palo Alto. 
       7              My name is Leonard Randolph and I'm the
       8   Executive Director of EPA Can Do, a nonprofit community
       9   development organization whose mission is to enhance the
      10   quality of life for all residents of East Palo Alto by
      11   empowering our members to engage in housing, economic
      12   and community development.  
      13              EPA Can Do was founded in 1989 as a direct
      14   result of community residents organizing to attract a
      15   financial institution to East Palo Alto.  We serve a
      16   low-income population in San Mateo County, one of the
      17   wealthiest counties in the country.  The median income
      18   for our city, approximately 34,000 for a household of
      19   four, so approximately half of the county, $68,600 a
      20   year income.  And 18.6 percent of our population lives
      21   below the poverty -- U.S. poverty level, according to
      22   the 1990 census.  
      23              The private sector and the surrounding
      24   jurisdictions contributed to these conditions through
      25   pillaging of our resources and disinvestment. 
      26              I would like to raise three concerns with


       1   respect to the merger of NationsBank with Bank of
       2   America and the moving of the corporate headquarters to
       3   Charlotte, North Carolina. 
       4              First, as a community development
       5   organization, CDC, that is engaged in affordable housing
       6   development, we are extremely concerned about the
       7   financial potential impact this merger will have on
       8   lending for multi-family housing developments.  
       9              I applaud the ten-year $350 billion
      10   commitment in community development lending and
      11   investment that, as Mr. Hugh McColl described as a
      12   floor, not a ceiling.  
      13              I also commend them on their commitment to
      14   acquire, build or rehabilitate 50,000 affordable housing
      15   units over the same time period and a $115 billion
      16   commitment toward this endeavor.  
      17              To date, however, there has been no
      18   commitment from NationsBank to prioritize loans or lines
      19   of credit for affordable housing development serving
      20   very low-income households, those that are at 50 percent
      21   of median income. 
      22              As the median income of East Palo Alto is at
      23   50 percent of the county, our ability, meaning EPA Can
      24   Do, the ability to provide affordable housing
      25   opportunities for our residents, will be severly
      26   hampered should Nations not support these developments.  


       1              We are equally concerned with this merger the
       2   new CDC went into the California market to develop
       3   housing.  I am well aware that NationsBank CDC has been
       4   extremely successful in developing over 14,000 units,
       5   but having them enter this heavily saturated market
       6   makes me uncomfortable. 
       7              Community-based and grass root development
       8   organizations are uniquely qualified to represent,
       9   develop products and provide services that truly benefit
      10   our communities.  Removing this local connection will
      11   mean that the concerns of the community will give way to
      12   the bottom line of the disconnected outside agency.  
      13              In my opinion, this would lead to the demise
      14   of community-based groups, the displacement of low-
      15   income households and ultimately the destruction of
      16   community.  
      17              Second, Mr. McColl indicated that it was
      18   their intention to, quote, "Employ more people, lend
      19   more money, do more business with minority vendors, be
      20   more active in the community and generally make a bigger
      21   difference in our predecessor institutions," unquote. 
      22              These are noble intentions indeed, and I
      23   admire his commitment to community development.  But I
      24   do have a concern about past performance and future
      25   accountability.  
      26              To make the best difference in our community,


       1   we needs the presence of a neighborhood-based financial
       2   institution with local employees and advisory board. 
       3   The City of East Palo Alto, as my previous speaker just
       4   mentioned, has been without a financial institution
       5   since 1984. 
       6              The former Bank of America site closed in the
       7   1970s is now home for a MacDonalds.  A Wells Fargo site
       8   also closed in the '70s is now home for a number of
       9   nonprofit organizations.  The last bank left the city in
      10   1984 and their building now houses the city's community
      11   development department. 
      12              While East Palo Alto does not have a single
      13   bank branch, we have over 12 locations, including
      14   convenience and liquor stores, where our residents cash
      15   cash checks and get money orders at exorbitant prices. 
      16              Disinvestment by bank's over the past 14
      17   years has dealt a severe blow to our community eroding
      18   the city's economic base, forcing money out of the
      19   community and creating hardship for our residents. 
      20              In June of this year, Bank of America opened
      21   the first ATM connected to a major financial institution
      22   in our community.  And while I applaud this step, I am
      23   ashamed that it took two-and-a-half years to develop it
      24   from whence first discussion occurred with the Bank of
      25   America.  
      26              Regardless of how much banking pattern is,


       1   the surveys will tell you that in-store banking and
       2   electronic banking are what people find convenient, this
       3   does not tell you why check-cashing outlets and pawn
       4   shops flourich in low-income communities.  
       5              In the last ten years, as banks have
       6   abandoned low-income communities, the number of pawn
       7   shops have doubled.  There is plenty of financial
       8   activity going on in our communities, but at exorbitant
       9   prices and in an unregulated environment. 
      10              Since I am short on time, I will skip ahead. 
      11              If NationsBank and Bank of America are going
      12   to reach lending roles in low-income communities, it
      13   needs to be a full participating creating conditions
      14   that make lending possible.  This includes not direction
      15   -- job creation to consumer and business lending, it
      16   also means direct job creation.  
      17              The disproportion of closing of branches in
      18   low-income communities and the refusal to open new ones
      19   impacts the joblessness and spending rates in these
      20   communities and results in stagnant local economies.  We
      21   honor bank's need for best economies in order to invest,
      22   they must then participate fully in the process. 
      23              In conclusion, we do not support the proposed
      24   merger of NationsBank with Bank of America unless the
      25   Federal Reserve requires them to clearly define their
      26   strategy in low-income communities whose deposits they


       1   hold.  
       2              We believe this is the only way the
       3   unscrupulous, unregulated financial system that is
       4   currently the reality in low-income communities will
       5   disappear.  
       6              Additionally, we want NationsBank and Bank of
       7   America to commit specifically to opening fully-staffed
       8   branches in East Palo Alto and other low-income
       9   communities. 
      10              Thank you.  
      11              MS. SMITH:  I don't have our last speakers
      12   name.  
      13              MR. BLIESNER:  On behalf of the City and
      14   County of San Diego, I'd like to express my appreciation
      15   for your perseverance and your willingness to listen to
      16   public input in this merger.  
      17              The Reinvestment Task Force is a quasi --
      18              MS. SMITH:  Could you say your name for the
      19   record?  
      20              MR. BLIESNER:  My name is Jim Bliesner.  I'm
      21   the Reinvestment Director of the San Diego City and
      22   County Reinvestment Task Force. 
      23              The task force is a quasi-public agency
      24   established by the San Diego City Council and the County
      25   Board of Supervisors in 1977.  We have served
      26   continuously since then to monitor lending practices and


       1   to develop strategies for reinvestment. 
       2              The task force is charged by city and county
       3   policy to develop localized reinvestment plans with all
       4   lenders under CRA doing business in San Diego. 
       5              We received that charge as a result of a
       6   long-term analysis which showed significant patterns of
       7   disinvestment by major lenders. 
       8              The task force has had a productive
       9   partnership with the Bank of America defined by San
      10   Diego reinvestment plan developed in 1992.  The
      11   reinvestment activities of the bank have been recorded
      12   annually and reported to the city council and the county
      13   board of supervisors. 
      14              The performance of the Bank of America under
      15   that agreement has been stellar, and in many ways has
      16   set the standard for reinvestment in the San Diego
      17   region.  The activities of the Community Development
      18   Bank in doing affordable housing throughout the region
      19   has been aggressive and innovative in many ways. 
      20              We take issue with some potential dangers
      21   represented by this merger.  Inasmuch as this merger
      22   represents a threat to the use of the Community
      23   Development Bank as a method for doing CRA, we are
      24   opposed.  
      25              Inasmuch as this merger represents some
      26   movement by the merged bank away from recognizing and


       1   validating the crucial benefits of forming specific
       2   local partnerships to eradicate disinvestment, we are
       3   opposed. 
       4              Inasmuch as this merger represents the
       5   potential for higher fees for home loans, higher fees
       6   for checking accounts, for check cashing services, for
       7   small business loans and for other basic banking
       8   services, we are opposed. 
       9              Inasmuch as this merger represents increased
      10   costs, limitations and services, increased interest and
      11   fee rates for micro and small business borrowers, we are
      12   opposed. 
      13              In addition to these concerns and objections,
      14   I'd like to highlight some specific issues with the
      15   performance of the Bank of America in the San Diego
      16   region and seek redress in this merger process. 
      17              As we stated, the Community Development Bank
      18   with the Bank of America has exhibited stellar
      19   performance in its stated goal of doing community
      20   reinvestment. 
      21              What has been missing with the bank has been
      22   the recognition in the mainstream bank that it too has
      23   responsibility for implementing CRA reinvestment
      24   activities.  
      25              For example, of the top ten home mortgage
      26   lenders in the San Diego market, there is an annual


       1   rejection rate over a period of five years for African
       2   American borrowers of about 22 percent.  That's the
       3   average rejection rate for the major lenders. 
       4              Overall, this rate is higher than rejection
       5   rates for other ethnic groups and for Caucasions, but
       6   this rate, high rate, is exceeded by the Bank of America
       7   consistently.  On average over five years the Bank of
       8   America shows a rejection rate of 40 percent for this
       9   population. 
      10              This is almost twice the rate of other
      11   lenders.  It's a striking statistic.  We ask, what
      12   lending policies of NationsBank will mitigate this
      13   problem?  
      14              The Bank of America has shown a consistent
      15   decline in its level of home mortgage lending in
      16   minority communities under 120 percent of median income
      17   between the years of 1992 and 1996. 
      18              Though the Bank of America is always one of
      19   the top ten lenders in this market, if they are compared
      20   with their peers, their market share has shown regular
      21   decline or sporadic behavior at best.  I am not sure if
      22   this is a marketing problem or loan approval policies. 
      23              On small business lending, of course we don't
      24   have a full statistical accounting as yet, our
      25   experience in small business lending is defined by a
      26   series of community-based small business credit needs


       1   assessment.  In those small business credit needs
       2   assessment, what we find consistently, and particularly
       3   in communities served by the Bank of America, is that
       4   the rejection rate for small business loan applications
       5   is higher than regional or national averages in low-
       6   income communities. 
       7              We have been dismayed by the absence of the
       8   Bank of America from key reinvestment initiatives in San
       9   Diego.  They are the only major bank in California not
      10   to invest in San Diego's community development financial
      11   institution.  They have ignored our local banker's
      12   lending consortium. 
      13              In conclusion, the task force has eight
      14   reinvestment plans which has been endorsed and supported
      15   by the City of San Diego and board of supervisors,
      16   endorsed conceptually and financially with the
      17   commitment of public funds to the development or the
      18   enhancement of those plans.  Last year these plans
      19   generated $601 million into San Diego's low income
      20   communities. 
      21              CRA investment in San Diego is saving our
      22   neighborhoods from significant decline.  That represents
      23   a ten-to-one leverage of public funds.  We strongly
      24   endorse the benefit of localized reinvestment planning
      25   by national banks.  
      26              As a famous member of congress once said


       1   about the electoral and democratic process, he said, Tip
       2   O'Neil said, "All politics are local."  We think that
       3   that axiom should apply to the emergence of the national
       4   bank as well.  
       5              Thank you very much.  
       6              MR. FRIESON:  Mr. Devine?  
       7              MR. DEVINE:  Yes?  
       8              MR. FRIESON:  May I ask you a question,
       9   please?  
      10              MR. DEVINE:  Yes.  
      11              MR. FRIESON:  Is it your view that the board
      12   would have the authority, under the Community
      13   Reinvestment Act, to require the type of funding for
      14   your nonprofit organization that you described?  
      15              MR. DEVINE:  It is my view that the board can
      16   impose any conditions it wants in this merger and get
      17   approval from the applicants.  That's simply, those are
      18   the facts of the matter.  
      19              Whether the specific legality of the
      20   Community Reinvestment Act either mandates or requires
      21   or allows you to do that, I am not an attorney, I don't
      22   know.  
      23              I think that if the Board of Governers impose
      24   as a condition of merger that the golden parachute
      25   payments be matched by a contribution to a nonprofit
      26   organization chartered under the purposes that we've


       1   established and similar stock options, that those
       2   conditions would be agreed to.  
       3              MR. FRIESON:  And I have a request from
       4   Mr. Lewis.  Could you provide us with a little more
       5   information about this litigation in Texas over the
       6   deposit?  
       7              MR. LEWIS:  Yes, sir. 
       8              MR. FRIESON:  Do you have a cite to the
       9   litigation?  
      10              MR. LEWIS:  I can provide it for you.  It was
      11   a -- it's a clipping I have in the newspaper. 
      12              MR. FRIESON:  That's fine, if you can provide
      13   it to us. 
      14              MR. LEWIS:  I will.  The Texas regulators are
      15   currently looking into it.  The State Attorney General,
      16   Dan Lundgren, a case that is pending, settlement in the
      17   Superior Court of San Francisco, attacks the issues of
      18   fraud and mispayment, overpayment and the fees -- and
      19   fees. 
      20              MR. FRIESON:  Thank you very much. 
      21              MR. LEWIS:  You are welcome.  Thank you. 
      22              (Pause in proceedings.) 
      23              MS. SMITH:  We are ready to start with
      24   Mr. Butts. 
      25              MR. BUTTS:  Good afternoon.  My name is
      26   George Butts and I serve as president of ACORN Housing


       1   Corporation.  ACORN, for those of you who may not know,
       2   stands for The Association of Community Organizations
       3   for Reform Now.  And the ACORN Housing Corporation we
       4   like to call the service arm of the organization, and we
       5   provide loan counseling and some development.  We are 24
       6   states now, 24 cities now, with two hopefully opening by
       7   the end of the year. 
       8              It's not the usual role for ACORN Housing
       9   Corporation to testify to the Federal Reserve Bank in
      10   favor of the merger of banks.  This is a different role
      11   for us. 
      12              We're living in a country where the home
      13   ownership rate for white households is 72 percent, but
      14   the home ownership rate for black households is 45
      15   percent and Hispanic households of only 42 percent. 
      16   Redlining and unfair barriers to credit have profoundly
      17   impacted our communities as we will continue to speak
      18   out and we will continue to speak out on these issues. 
      19              But we're here today because NationsBank
      20   stands out as a leader in the community reinvestment
      21   field.  They're leaders for some very specific reasons. 
      22   First, NationsBank has recognized that community
      23   organizations are the vehicles for real success to the
      24   community.  
      25              We have too many banks which believe that an
      26   occasional loan to a community development corporation,


       1   a small grant means a partnership.  
       2              NationsBank has invested in building the
       3   infrastructure for the nonprofit community organizations
       4   to grow and produce.  For us that means our housing
       5   counseling program has grown with Nations from five
       6   cities to, now, 11 cities across the country.  We have
       7   expanded the housing staff working in Nation's cities
       8   from 10 to 32. 
       9              Second, NationsBank has produced, the ACORN
      10   Housing Corporation NationsBank partnership alone has
      11   produced over $236 million in mortgages.  Virtually all
      12   of these loans were to lower income households with
      13   small down payments, with non-traditional credit, with
      14   cash-on-hand, with older urban housing stock, and these
      15   loans performed well and with low delinquencies. 
      16              Third, NationsBank has been flexible.  They
      17   were the first multi-state lender to negotiate their
      18   mortgage underwriting standards with us, and their
      19   having stepped forward did a lot to bring our kind of
      20   underwriting standards for low-income people into the
      21   mainstream of the mortgage market. 
      22              At the time, these things were pretty
      23   radical, but today no one thinks twice about the
      24   appropriate use of low down payments, non-traditional
      25   credit, foods stamps as income, voluntary child support,
      26   cash on hand or steady income rather than the same job


       1   for two years. 
       2              In the early days plenty of lenders talked
       3   the talked but Nations rewrote the mortgage program. 
       4   Within the year, we were doing three to four hundred
       5   mortgages a year in cities like Houston and Dallas,
       6   Texas where other lenders told us low-income people told
       7   us couldn't even own a house. 
       8              Fourth, NationsBank is innovative.  We are
       9   now talking with them about providing significant
      10   pre-development and interim financing.  Nonprofits lose
      11   out on the bidding for affordable multi-family housing
      12   project to wealthier for-profit speculators, unless we
      13   can move quickly to evaluate and acquire
      14              Nations is hammering a 30-day fast track
      15   development fund so that more multi-family properties
      16   around the country can be purchased, upgraded and
      17   maintained as affordable housing by nonprofits. 
      18   NationsBank views their commitment to our communities as
      19   part of their business. 
      20              Many lenders view the community reinvestment
      21   as a legal obligation rather than a core market. 
      22              With their new $350 billion commitment and
      23   their aggressive 50,000-unit target, we are seeing them
      24   view our community as a market of its own. 
      25              For me, the single event that best
      26   illustrates the NationsBank commitment to our


       1   communities occurred a few years ago when the Community
       2   Reinvestment Act was under attack in congress by radical
       3   right-wing republican.  NationsBank was the only
       4   national bank that took a stand ino support CRA. 
       5              When I say public, I am not just talking
       6   about writing letters.  Cathy Bessant sat next to me in
       7   front of a hostile banking chair who wanted to hand our
       8   heads to us on a plate and told the congressmen exactly
       9   what they didn't want to hear.  
      10              She testified that NationsBank was against
      11   any effort to weaken the CRA.  NationsBank was bucking
      12   the industry mainstream, but the message was clear,
      13   NationsBank saw the underserved covered by the Community
      14   Reinvestment Act as their market.  In that first
      15   negotiation, that's exactly what we asked them to do for
      16   us. 
      17              NationsBank 350 billion ten-year community
      18   investment commitment is different from the commitments
      19   we see from other lenders. 
      20              Nations senior management sat down for a day
      21   with us and the product of those discussions shows up in
      22   a single-family, multi-family and economic development
      23   commitments.  
      24              (Bell)
      25              MR. BUTTS:  I'm not done. 
      26              But to sum up quickly, when the rubber meets


       1   the road, they're not just talking the talk, they're
       2   actually doing what they say they're going to do. 
       3   They'll make credit work for low and moderate income
       4   people and they'll work with community institutions. 
       5   The fight for affordable housing and fair access to
       6   credit is not over, not by a long shot.  
       7              NationsBank has been an ally among leaders
       8   and the leader in these struggles, and we believe
       9   they'll bring to Bank of America markets the same
      10   attitude of innovation, flexibility and production. 
      11              Thank you.  
      12              MS. SMITH:  Yes, please do submit your full
      13   statement for the record. 
      14              Ms. Galvin. 
      15              MS. GALVIN:  Yes.  My name is Karen Galvin,
      16   and I am a board member with the Summerhill Neighborhood
      17   Development Corporation.  SNDC is a nonprofit community
      18   development corporation in downtown Atlanta that is
      19   dedicated to revitalizing a community that is full of
      20   assets that have been overshadowed by crime, poverty,
      21   and drugs.  My statements today are in strong favor of
      22   the NationsBank acquisition of Bank of America. 
      23              Two years ago my husband and I began the
      24   process of finding and purchasing a new home.  We
      25   weren't just looking for a house, we were looking for a
      26   true community.  One in which you could sit on the front


       1   porch and wave to people, one in which neighbors knew
       2   each other and looked after each other.  
       3              We were looking for a diverse, mixed-income
       4   community in which residents felt empowered against
       5   crime and urban decay. 
       6              Some friends of ours told us about the
       7   Summerhill neighborhood.  That was historically very
       8   prosperous, had been overrun by highways, model cities,
       9   crime, and was now in the midst of revitalization
      10   efforts. 
      11              Our very first meeting was with a staff
      12   person with SNDC and a representative of NationsBank
      13   CDC.  It was at that meeting I first heard of the
      14   partnership between NationsBank and SNDC.  It was at
      15   that time I realized that both entities were committed
      16   to rebuilding a community by uplifting its residents and
      17   not just building houses. 
      18              My husband and I that day bought a house, but
      19   we also bought into a vision.  After moving into the
      20   Summerhill community, the dedication of SNDC and its
      21   partner, NationsBank, expired me to join the board of
      22   directors.  Since that time, SNDC has had numerous
      23   partners, but none has risen to the level of commitment
      24   that NationsBank has exhibited.  
      25              Other corporate sponsors have come into our
      26   community, built a few homes, co-sponsored a few events


       1   and moved on to the next media-focused area in the city. 
       2              NationsBank has proved time after time that
       3   they are committed to being with us for the long hall. 
       4              The CDC always strikes the balance of
       5   empowering the community to revitalize itself as opposed
       6   to merely pouring money into various situations for
       7   short-term solutions. 
       8              They have referred us to various resources to
       9   assist with more development, introduced and advocated
      10   for us with various foundations that assist us with
      11   providing programs and services to our children and
      12   elderly residents, and they have also provided technical
      13   support for community mobilization against crime and
      14   housing code violations. 
      15              Currently, they are in the process of
      16   partnering with us to complete the Terry Place Housing
      17   Development in which I reside, which is 40 houses which
      18   are mixed income.  They also just signed an agreement to
      19   partner with us to complete another area in the
      20   community called the Orchard. 
      21              The Orchard was started five years ago by
      22   another bank institution that was partnering with us,
      23   and it was left far from completion.  Once again,
      24   NationsBank saw a void and volunteered to assist us in
      25   filling it. 
      26              I cannot begin to relate to you the


       1   excitement and the appreciation of the residents in this
       2   community. 
       3              In closing, I see the acquisition of
       4   BankAmerica by NationsBank as an opportunity for
       5   NationsBank to continue its positive work in even more
       6   communities. 
       7              As a former antitrust attorney, I realize
       8   that has businesses grow as quickly as NationsBank has
       9   grown over the past few years, people start to get
      10   nervous, but NationsBank has proven that they are a
      11   responsible and committed citizen partner -- citizen
      12   partner with us.  As they continue to grow, I truly
      13   believe that their efforts to empower people and build
      14   communities will become even more far reaching parks. 
      15              I thank you for this opportunity to speak
      16   today and again I fully support the merger. 
      17              MS. SMITH:  Thank you very much.  Ms. Ford. 
      18              MS. FORD:  My name is Carolyn Ford.  I'm the
      19   Executive Director from North Florida Education
      20   Development Corporation, and I come out of North
      21   Florida.  
      22              I'm here to support the merger for
      23   BankAmerica and NationsBank.  As I listen to a lot of
      24   the testomonies and I kept thinking what I had to say
      25   about it from a personal basis, coming from a community
      26   that's kind of void completely of banks altogether. 


       1              I'd like to talk a little about BankAmerica,
       2   which is more or less a west coast bank, and how I
       3   became involved with them. 
       4              I'm a recent graduate of DTI.    That's
       5   Development Training Institute.  And BankAmerica
       6   financed that fellowship partly.  While I was there in
       7   training, in training with other 35 nonprofits
       8   throughout the nation, and I was trained in many things,
       9   someone from a very rural community such as Gasden
      10   County where you have 38 percent poverty level.  This
      11   kind of commitment from a bank is kind of unheard of in
      12   our area. 
      13              Since that time, NationsBank has acquired
      14   Barnett Bank which is in our area.  So they have been in
      15   our area about approximately six months.  Since that
      16   time they have reached out to our very impoverished
      17   community.  
      18              I have had many meetings with the local
      19   NationsBank community development person there, and we
      20   are in the process of developing a partnership where we
      21   can -- we'll be able to, really, to bring affordable
      22   homes into the area.  
      23              The last home that was built in my county was
      24   like in 1994.  So you see some of the problems that --
      25   we have some local banks there, some home, rural banks
      26   there, but home ownership and business development is


       1   kind of unheard of. 
       2              So, with the merger of Bank of America, which
       3   I know a lot about, and their commitment to low-income
       4   communities and with the merger of NationsBank, it has
       5   to be a win/win situation for us in North Florida. 
       6              Also, I am also involved with the Stand Up
       7   for Rural American campaign where BankAmerica and
       8   NationsBank are also members of their campaign.  So
       9   their commitment to rural America is -- to rural America
      10   is just exciting at this moment, because, you know,
      11   rural America has just kind of been overlooked pretty
      12   much by everybody. 
      13              So, but their commitment in terms of the $10
      14   billion in lending and investment to foster economic
      15   development in our area is just exciting at the moment. 
      16   I think that with this merger there has to be the kind
      17   of vision that all people especially in these -- in poor
      18   communities throughout this nation to benefit from --
      19   it's just not how you benefit from.  
      20              A lot of the things that have been said here,
      21   I have to agree, I really don't understand, so I rely on
      22   you all to really tie down the numbers and really I
      23   guess put their feet to the fire in terms of specific
      24   kind of things, but, when it comes to partnerships, this
      25   is unheard of in our area.  
      26              I just want to thank you for allowing me to


       1   come here and speak to you and the fact that we support
       2   the merger in North Florida.  Thank you. 
       3              MS. SMITH:  Thank you.  Mr. VanbBrunt. 
       4              MR. VANBRUNT:  Thank you, Madam Chairman and
       5   members of the committee.  
       6              My name is Mark VanBrunt, I am a Deputy Vice
       7   President for community development with the National
       8   Council of LaRaza.  NCLR is the nation's principal
       9   national Hispanic organization representing more than
      10   200 affiliated organizations in 32 states, District of
      11   Columbia and Puerto Rico.  
      12              I personally serve this affiliate base with a
      13   range of urban and rural housing community development
      14   programs for 22 years.  
      15              As an organization, we're committed to
      16   reducing poverty and discrimination and improving life
      17   opportunities for the more than 30 million American of
      18   Spanish descent.  
      19              NCR approaches these issues from two
      20   positions, two roles and perspectives.  As an advocate
      21   we're very much interested in the larger policy
      22   implications of legislation, it's implementation and the
      23   rule making that's associated with that that may produce
      24   disparate impacts on Latinos in all income and ethnic
      25   communities. 
      26              To this end, we would submit to the board


       1   formal comments which are attached for the record. 
       2              But NCR is also very concerned about helping
       3   affiliates achieve a meaningful local impact for our
       4   common customer, which is the Latino family. 
       5              Briefly, I'd like to inform the board of some
       6   concrete ways in which the current bank relationships
       7   have had this kind of impact.  I should say I'm not
       8   familiar with the whole national, the totality of it and
       9   the national scope of their activities, but I would
      10   speak to ours with our affiliates. 
      11              I can only echo previously, what's previously
      12   been said about a long relationship with Bank of
      13   America, being our office serving predominantly the
      14   southwest.  The support of the community development
      15   staff, the capital of particularly the community
      16   development bank and more recently we have great
      17   expectations for the Rural 2000 initiative and its
      18   resources. 
      19              Our relationship with Nations is a lot more
      20   recent, the last -- just over the last two years.  They
      21   have made some significant commitments that have
      22   enhanced our capacity and effectiveness to particularly
      23   have some local impact with our affiliates, three ways. 
      24   First, we've really received some direct staff support,
      25   support that has allowed us to reach new markets and
      26   more affiliates with transactions that are both


       1   traditional and non-traditional. 
       2              So, in addition to housing development and
       3   home ownership network which we've pursued for sometime,
       4   we have been able to assist affiliates with other
       5   priorities such as essential community facilities,
       6   charter schools and economic development projects. 
       7              Secondly, pre-development and capacity
       8   investments to these projects by Nations has proved very
       9   critical in helping them become operational in starting
      10   them up. 
      11              Third, I'd say, especially over the past
      12   year, the Nations community development staff has played
      13   a key role in helping us evaluate and define investment
      14   strategies and products to serve more of our affiliate
      15   base in some unique ways.  
      16              This same kind of commitment has been
      17   extended to a number of affiliates and their boards
      18   themselves, which we have appreciated. 
      19              To this end, NCR expects to soon consummate
      20   an agreement with the bank as a major capital
      21   contributor to our expanding affiliate partnerships,
      22   which we call the Initiative to our Partnerships of
      23   Hope. 
      24              In conclusion, I would characterize our
      25   relationship as very positive and fruitful and we would
      26   say that we have every expectation that the merged bank


       1   would be able to address both the policy concerns raised
       2   in our comments as submitted and continue to expand the
       3   investments which I have described above, which are so
       4   critical to expanding and reaching Latino market.
       5              Thank you.  
       6              (Pause in proceedings to change Court
       7        Reporters.)


         1            MR. McNULTY:   My name is Robert McNulty.  I'm 

         2   president of Partners for Livable Communities.  My 

         3   statements today are to emphasize the key involvement of 

         4   NationsBank and the leadership of community investment

         5   over the last decade in this country.  Partners is a 

         6   25-year-old nonprofit organization that grew out of a 

         7   national conference on neighborhoods.

         8            Our board is made up of governors.  Paris 

         9   Glendenning serves on our hoard, commentators, Neil 

        10   Pierce, the writer, the publisher of Governing Magazine, 

        11   Peter Harkness, Mayor Webb of Denver, Monsignor Linder of 

        12   the New Community Corporation is vice chair of our board,

        13   and the chair is Linda Good.  Past trustees have included 

        14   Michael Wu of Los Angeles City Council, Wanda Vinski, and 

        15   currently serving on our board is Katherine Vinson of 

        16   NationsBank.

        17             Partners believes livability is an equal 

        18   opportunity goal.  We use community mobilization 

        19   asset-based conference.  Community development strategies 

        20   and social equity are the concept of fairness as 

        21   strategies to effect change and create more livable 

        22   communities for all citizens.

        23            Partners has served as a bridge to create 

        24   first-time racial partnerships in Richmond, Savannah, 

        25   Memphis, Chattanooga, and recently we put together a 

        26   white leadership pledge of $200 million investment in 

         1   downtown Kansas City in the historic African-American 

         2   18th and Vine neighborhood.  

         3            Thus I do not come lightly to the statement that 

         4   NationsBank, through its Chair Hugh McColl, through it's 

         5   president Ken Lewis, and for the president of the 

         6   community investment, Kathy Bessant, have put in place in 

         7   the last decade a culture of community reinvestment 

         8   leadership for the corporation, for their market 

         9   communities, and for a national policy on this agenda 

        10   that is the exemplar in the country, bar none.  

        11            As examples, we are pleased to be associated 

        12   with NationsBank in 1992, '93, and '94 with a republican 

        13   secretary of HUD, a democratic secretary of HUD, a 

        14   republican secretary of HHS, and a democratic secretary 

        15   of HHS to research with Johns Hopkins a way of 

        16   restructuring the categorical programs to try to give 

        17   more independent ability of supporting families and

        18   community across America.  This result was published and 

        19   distributed, was sponsored by NationsBank, some six years 

        20   ahead of the restructure of welfare entitlements.  

        21            We were a cosponsor of Blueprint 2000, a program 

        22   undertaken by NationsBank with the National Community 

        23   Reinvestment Coalition, the National Council of LaRaza, 

        24   the National Urban League in 1994, '95, and '96, which 

        25   brought together 500 citizens throughout NationsBank's 

        26   community of trying to create a team work to meet 

         1   community reinvestment goals and set priorities for 

         2   furthering.

         3            We were also part of a planning team for 

         4   community capitalism, rediscovery of the market of 

         5   America's urban neighborhoods hosted by Columbia 

         6   University in 1997, chaired by Hugh McColl.  All 65 

         7   business leaders, government, and community practitioners 

         8   called for a self-interest redefinition of investing in 

         9   the economics of our inner city.  Again, a leadership 

        10   initiative continuing today done by NationsBank.  

        11            For these acts and many more, I urge that the 

        12   merger of NationsBank and Bank of America proceed and 

        13   that we look forward to continuing leadership on the 

        14   field of community reinvestment, continuing redefinition 

        15   of both profit and opportunity and community value as 

        16   NationsBank has done for the last ten years.  Thank you. 

        17            MS. SMITH:    Thank you.  I don't have our last 

        18   speaker's name.  

        19            MS. GARRETT:   My name is Pat Garrett.  I'm the 

        20   president of the Charlotte-Mecklenburg Housing 

        21   Partnership in Charlotte, North Carolina.  First I'd like 

        22   to thank all of you for letting us have an opportunity to 

        23   tell you about NationsBank commitment to our housing 

        24   partnership and to our local community.

        25            Charlotte-Mecklenburg Housing Partnership is a 

        26   nonprofit housing developer providing affordable rental 

         1   and home ownership in the Charlotte area.  Since 1990, we 

         2   have produced 300 single family homes and 700 rental 

         3   units.  Many of those homes would not have been developed 

         4   without the assistance of NationsBank.  The average of 

         5   all our families served is 60 percent or less of median 

         6   income.

         7            NationsBank has been one of our major partners 

         8   of our organizations as we have developed and implemented 

         9   our strategies for housing development.  In fact, 

        10   NationsBank was instrumental in setting up the 

        11   partnership.  The corporation provided initial operating 

        12   support and senior executives that committed many hours 

        13   of work as we developed our programs for single-family 

        14   and multi-family housing.  

        15            In the area of home ownership, NationsBank has 

        16   made a major commitment to our single family loan 

        17   consortium, which has now made over 270 loans to low and 

        18   moderate income buyers, utilizing relaxed credit 

        19   standards and at a reduced interest rate.  This 

        20   commitment of over $5 million is more than 75 percent 

        21   encumbered, and the bank has indicated its willingness to 

        22   commit additional funds, as well as to assist in the 

        23   establishment of a second mortgage pool so that we can 

        24   sell these mortgages to neighborhood reinvestment.  

        25            Nations was selected by the other five bank 

        26   members to act as the lead bank.  We can count on 

         1   NationsBank to be out in front in the development of new 

         2   mortgage products such as the most recent acquisition 

         3   rehab product, as well as some issues such as the 

         4   recognition of the need for lenders to reimburse for the 

         5   cost of home ownership counseling.  

         6            A major part of our organization's focus has 

         7   been on reclaiming deteriorating high crime areas.  As a 

         8   part of that focus, NationsBank employees, including 

         9   executives, volunteered numerous hours in rehabilitation 

        10   projects.  Although the houses have been sold, we still 

        11   refer to several of those houses as NationsBank houses  

        12   because of the extensive work undertaken by the bank 

        13   employees as well as the support that they provided to 

        14   the new homeowner.  

        15            NationsBank has also provided financial support 

        16   for our multi-family developments.  The bank provided an 

        17   equity investment for our second tax credit development.  

        18   Most importantly, the bank provided both construction and 

        19   permanent financing for the renovation of four former 

        20   housing authority complexes that we were able to 

        21   acquire.  This produced 171 affordable rental homes and 

        22   also provided a cash flow stream to our organization that 

        23   enables us to carry out other affordable housing 

        24   efforts.  

        25            Not only has nations been a good partner as 

        26   Charlotte-Mecklenburg Housing Partnership carries out its 

         1   mission of providing affordable housing, but the bank has 

         2   been instrumental in several other areas that improve 

         3   housing in our community.

         4            NationsBank has been involved in a Hope 6 

         5   project to revitalize a very distressed public housing 

         6   complex and to remake it into an economically integrated 

         7   community.  This project was done in cooperation with the 

         8   Housing Authority, the city, and our organization.  The 

         9   same team is now uniting to revitalize another extremely 

        10   distressed public housing community, and we are waiting 

        11   word on our Hope 6 application for this project.  

        12            NationsBank is innovative in their investments,  

        13   with the impact of the project typically taking precedent 

        14   over the return of the project, and thus many of the 

        15   investments are structured to help to build the capacity 

        16   of the nonprofit developers and to have a significant 

        17   impact on the neighborhood.  

        18            Perhaps the most valuable service NationsBank 

        19   has provided to our organization is the dedication of 

        20   senior level executives at the board level to serve on 

        21   the board of directors, board committees, and as 

        22   consultants on specific issues.  

        23            Whether it's a video to promote our organization 

        24   or an analysis of a complicated loan, we know that we can 

        25   count on NationsBank to help us out.  

        26            In summary, NationsBank has truly been a partner 

         1   in our housing and community redevelopment efforts, and 

         2   we look forward to a continued relationship with them.  I 

         3   believe that they care about the communities that they 

         4   serve and that they will develop strong partnerships in 

         5   new communities.  

         6            MS. SMITH:    Thank you very much.  One 

         7   question.  

         8            MR. FRIERSON:   Mr. Butts, I wanted to follow up 

         9   on your observation that this is an unusual position for 

        10   your organization to be in.

        11            We've heard a lot of criticism today about the 

        12   NationsBank CRA pledges lacking in specifics, and I 

        13   believe you were -- just when you ran out of time, you 

        14   were getting ready to discuss the -- your views of the 

        15   pledge.  And I'd like to give you the opportunity, if you 

        16   would like, to expound on how you view the pledge.

        17            MR. BUTTS:   Thank you.  What happened was we 

        18   sat down that day with them and talked in real terms 

        19   about what this $350 billion would really mean, that we 

        20   didn't want it to be a hollow -- just a number that 

        21   looked good.

        22            I think one of the examples that somebody 

        23   commented was we viewed this in contrast with the 

        24   Citibank/Travelers commitment.  They haven't even met

        25   with us to talk about their commitment yet.  The 

        26   NationsBank commitment and mortgage production loan 

         1   equals the Citibank/Travelers total commitment.

         2            And I think the difference -- the difference is 

         3   that there's something backing up this commitment.  It's 

         4   not the commitment in terms of public relations.  It's 

         5   commitment in terms of what they really think they can 

         6   do, what real programs are going to come out there, and

         7   that the real commitment comes from the top down.  I 

         8   mean, I've seen them grow into these commitments.

         9            So our history with them is long enough and 

        10   we've done enough agreements with enough banks that I can 

        11   see the difference between what a NationsBank commitment 

        12   means and what some other bank commitment means, and 

        13   that's really why I'm up here talking about them as

        14   opposed to talking about other people who have merged. 

        15   This is the first time we've done this.

        16            And to me, I put a lot on the line to come out 

        17   and say this, but I believe it to be true.  If I didn't 

        18   believe that they were the kind of people that they were 

        19   doing this and that these commitments are real 

        20   commitments and not public relation commitments or stuff 

        21   to make it look good but they really want to change these 

        22   communities -- I mean, our first bunch of meetings were 

        23   not pleasant experiences for either one of us, you know, 

        24   and to see that movement from those meetings to the 

        25   meetings we have now has shown me that this is real.  So 

        26   I can stay here and say with conviction that this is 

         1   real.  

         2            MR. FRIERSON:   Thank you.  

         3            MS. SMITH:    Thank you very much for your 

         4   testimony this afternoon.  And with that, we'll move on

         5   to Panel 14.  We'll go ahead and start.  And if there are 

         6   other members of the panel, they can join us as we go 

         7   along.  Mr. Espinosa.  

         8            MR. ESPINOSA:   Thank you.  

         9            MS. SMITH:    You'll be our first speaker.  

        10            MR. ESPINOSA:   Thank you for allowing me to 

        11   testify today.  I'm going to address the small business 

        12   lending aspects of B of A Community Development Bank and 

        13   what I feel would be the tremendous harm the community 

        14   would suffer if the Community Development Bank did not 

        15   continue to exist as a separate entity.  

        16            I should say something about my background very 

        17   quickly.  I run a certified -- my name is Alex Espinosa.  

        18   I run a Certified Development Corporation.  We do SBA 

        19   loans, and through our nonprofit subsidiaries, we also 

        20   help with micro-lending and lending to small businesses 

        21   in distressed areas.  

        22            I've worked in traditional banking.  I worked in 

        23   state guarantee and local guarantee loan programs, as 

        24   well as loan consortiums.  I have some regulatory 

        25   experience in that.  I serve on the supervisory committee 

        26   of a quarter billion dollar credit union.  I'm also on 

         1   the CRA advisory committee for another large I think it's 

         2   12 billion dollar bank here in California.  And I'm also 

         3   on the board of an organization called Cameo, the 

         4   California Association for Micro-enterprise Opportunity.  

         5            I have been working in the field of small 

         6   business lending for a long time, and I've seen the 

         7   tremendous difference Bank of America Community 

         8   Development Bank has made.  This difference really has to 

         9   do with their willingness, their commitment to try to 

        10   lend to under-represented groups, as well as their 

        11   underwriting skill, their ability to understand.  And I 

        12   feel that that ability to understand has a lot to do with 

        13   their local presence in the community.  

        14            I don't really have much of an opinion about 

        15   branch closures or anything like that.  I deal 

        16   specifically with the small business lending side of it, 

        17   which has to do with lending to unrepresented groups like 

        18   women and minorities.  

        19            I have gone through many agonies trying to get a 

        20   loan placed that I thought had merit, but because it was 

        21   too small, because it was too complex, because it was a 

        22   new business or there was a lack of collateral, I had 

        23   been turned down by several lenders and 

        24   (unintelligible).  B of A has always gone the extra 

        25   mile.  They don't automatically approve any loan I would 

        26   give them, but you knew for damn sure that they 

         1   understood the loan.  They really took the trouble to see 

         2   if there was any way possible to do something like that, 

         3   that kind of loan.  

         4            One of the major problems in lending to these 

         5   under-representative groups has to do with its 

         6   historical -- what would be the word? -- the damages 

         7   that's been done to the group because of historical 

         8   reasons, that is to say, a lack of collateral.

         9            I'm Hispanic.  We represent about a tenth of the 

        10   US population.  African-Americans are roughly about a 

        11   tenth.  Each group controls less than one percent of the 

        12   assets of the United States.  So if you're a bank and 

        13   you're making a small business loan, what are you looking 

        14   to?  You're looking to collateral.

        15            Well, B of A has specifically bought the SBA's, 

        16   the Small Business Administration's, requirement to have 

        17   collateral considered for small business loans, for 

        18   micro-loans especially.  That allows them to speak with 

        19   some authority as far as addressing the needs of that 

        20   community.  

        21            Now, no bank is perfect.  Banks have trouble 

        22   lending when there's not sufficient collateral.  But part 

        23   of that has to do with what the SBA, the Small Business 

        24   Administration's function is, which is to guarantee 

        25   loans, sometimes as high as 90 percent to the bank, in 

        26   essence, making up for a lack of historical problems that 

         1   that community may have.  

         2            Let me throw out a couple statistics.  And I 

         3   hope I don't put anybody to sleep when I do this.  But 

         4   they're very relevant here.  Nationwide Bank of America 

         5   has done something like 1,400 SBA loans.  In California 

         6   alone, in terms of what's called a 7A loan program, which 

         7   is a straight guarantee, they've done 465 approximately 

         8   loans, SBA 7A loans, in the state last year.  Of those, 

         9   35, or eight percent, were to African-Americans.

        10            Well, that doesn't sound like a lot except that 

        11   that represents the combination of the next 13 banks 

        12   combined in terms of lending to that community.  Number 

        13   two had 11.  Going on from there, one, two's, adding up.  

        14   So they've made a tremendous effort.

        15            In the Los Angeles district alone, they've had 

        16   something like 260 loans that they've made to minorities 

        17   in that district.  Excuse me, of two 260 loans they made 

        18   in that district, 200 were to minorities.  So they've 

        19   made a tremendous effort to try to push forward the 

        20   lending to the under-represented groups.  

        21            I think in summing up, what I really want to see 

        22   happen here today is some sort of guarantee that the 

        23   SBA -- that the Bank of America Community Development 

        24   Bank will continue to exist as a separate entity.  I 

        25   think it's vital because many times the things that they 

        26   push forward can't be duplicated by any other lender, 

         1   large or small.  And I think you'll see a gaping hole if 

         2   they leave.  Thank you.  

         3            MS. SMITH:    Mr. Littrel.  

         4            MR. LITTREL:   I'm John Littrel.  I'm a housing 

         5   law counselor in Hayward, California.  And I don't have a 

         6   whole lot to do with finance.  Where I come -- the point 

         7   of view I bring to this discussion is from someone who 

         8   spends most of their time preventing evictions and doing 

         9   eviction mediation counseling.  

        10            As anyone in this room who lives in San 

        11   Francisco knows, we have a critical shortage of housing 

        12   in the Bay Area right now, with vacancy rates less than 

        13   one percent most of the time.  So pretty much any 

        14   financial institution which wants to do business in San 

        15   Francisco I think should make a specific commitment to

        16   addressing our shortage of affordable housing.  In this 

        17   instance, it's going to mean specific written commitment 

        18   to multi-family affordable housing development.

        19            And I just finished hearing testimony from a 

        20   whole panel full of people on the east coast and North 

        21   Carolina with good experiences with NationsBank, but 

        22   since they have no track record in California, all we 

        23   have to rely on here is specific written commitments.  

        24            Over the course of the last month, I've met with 

        25   representatives from both banks as part of the Community 

        26   Reinvestment Committee.  We've discussed the 350 billion 

         1   dollar commitment that was issued, and what we've been 

         2   trying to do is hammer out specific numbers, specific 

         3   goals, and specific targeting for that money in 

         4   California for low-income people and for very low-income 

         5   people.

         6            And time and time again we've come up with vague 

         7   responses.  We haven't got a whole lot of specific 

         8   commitment to, in particular, very low-income families, 

         9   and that's 50 percent of the median income.  These are 

        10   specifically the families that are being displaced by our 

        11   current housing crisis.  

        12            So pretty much while I value the testimony of 

        13   the panel that came before me, and it looks like 

        14   NationsBank has done a lot of good things in that area, 

        15   we have no guarantee that they'll be able to produce a 

        16   product that can really compete with what we already have 

        17   with Bank of America's Community Development Bank.

        18            And related to that, Bank of America's Community 

        19   Development Bank, for instance, had a strict policy of 

        20   non-competition with a nonprofit housing developers in 

        21   the area.  We've asked the NationsBank staff to guarantee 

        22   that that will continue to be a policy, and that's been 

        23   denied as well.  

        24            These are just a few of the concerns that we've 

        25   had as far as the merger is concerned.  So given the 

        26   vagueness, the lack of specificity, and in some cases the 

         1   outright refusal to address the specific needs of 

         2   California, we have to -- I have to not be in favor of 

         3   this merger and oppose it.  

         4            MS. SMITH:    Thank you.  Ms. Burks.  

         5            MS. BURKS:   Madam Chairman, members of the 

         6   committee, my name is Gail Burks.  I'm president of the 

         7   Nevada for Housing Center in Las Vegas, Nevada.  We 

         8   provide for enforcement under Title 8.  We provide 

         9   educational classes, as well as technical assistance to 

        10   local governments and nonprofits.  

        11            I should also say I am chair of the Southern 

        12   Nevada Reinvestment and Accountable Banking Committee, a 

        13   group that has been in existence since Bank of America 

        14   came to our market in 1992.  

        15            I'd like to focus my comments today on three 

        16   areas.  And I know it's late in the day and it's 

        17   difficult to have a discussion about HHI and competitive 

        18   concerns, but I'd like to make a couple of points about 

        19   it before everybody falls asleep.  

        20            There are three basic issues that we have with 

        21   the application submitted.  One is we believe that it 

        22   does pose a problem with competitiveness.  We do believe 

        23   that there are problems with respect to assurances, 

        24   specifically as it relates to the Nevada market, and we 

        25   also would like to address the record of Bank of America 

        26   in Nevada as compared to that with NationsBank.  

         1            In the application submitted by NationsBank, the 

         2   bank admits that currently the index for determining 

         3   whether or not there is a problem with competition is at 

         4   1,800 and that that will increase by 29 points after this

         5   deal is completed.  However, they rely heavily on other 

         6   competitors in the market.  And two of those competitors 

         7   are Norwest and Wells Fargo.  However, with the 

         8   announcement of those two mergers, I believe it can be 

         9   estimated if the HHI is recalculated that, indeed, it 

        10   will rise above 29 points and perhaps exceed 100.  

        11            The merger guidelines are clear in terms of if a 

        12   merger goes above 50 points, it does, indeed, raise 

        13   competitive concerns.  And we can look at the guidelines 

        14   not only of the FDC but of justice to take a look at 

        15   that.  And our written submission sort of details that 

        16   and sets it out a little bit more.  And you can read it 

        17   earlier in the day.  

        18            The second area of concern that we have is with 

        19   respect to adequate assurances.  You have been told and 

        20   given a lot of information this morning about the great 

        21   things and partnerships that Nations has done in other 

        22   markets.  And, indeed, in the application, there are lots

        23   of examples of community reinvestment initiatives.   

        24   However, in making a broad announcement, there are no 

        25   details to that initiative.

        26            The question was asked by one of the members 

         1   earlier what does a detailed commitment look like?  This 

         2   is an example of a detailed commitment (indicating).  It 

         3   is over 30 pages.  It sets forth everything that the 

         4   community will look at in terms of considering the needs 

         5   of the community.  This is an agreement with Bank of 

         6   America that has been in effect in Nevada since 1992.  I 

         7   would be misleading this committee if I indicated to you 

         8   that we do not and have not had concerns with Bank of 

         9   America.  

        10            It would also be misleading to state that there 

        11   are not good partnerships with Bank of America.  

        12   Currently, as of September 1997, when the OCC issued that 

        13   portion of the exam for the Las Vegas MSA, Bank of 

        14   America received a low satisfactory in lending, a low

        15   satisfactory in investment.  However, despite that, we 

        16   believe that record is better than what Nations has done 

        17   in other communities, especially with respect to 

        18   low-income people.  

        19            Finally, with respect to the proceedings, we, 

        20   too, commend you for setting these hearings and allowing 

        21   people to come and testify.  However, there are a couple 

        22   of points that I think we need to point out.  The 

        23   proceedings are not about prorating people that have 

        24   gotten a loan.  The sole question under the regulations 

        25   is whether or not the applicant meets the test as defined 

        26   by the regs.  And if you find that they don't meet the 

         1   test, the application should be denied.  

         2            Taking into account all of the different things 

         3   that people have said with respect to receiving grants or 

         4   special programs would be equivalent to dismissing all of 

         5   the evidence before you regarding key concerns about 

         6   competitiveness, as well as how the record of Bank of 

         7   America will be affected in a specific market.

         8            Thank you for your opportunity to testify.  

         9            MS. SMITH:    Thank you.  Ms. Marshall.  

        10            MS. MARSHALL:   Thank you.  I represent the 

        11   California Association for Micro-enterprise Opportunity.  

        12   This is a trade association of public agencies, 

        13   nonprofits, and interested individuals who are working 

        14   with low-income individuals who are starting businesses.  

        15            Micro-enterprises are those businesses that have 

        16   five or fewer employees and can be capitalized for under 

        17   $25,000.  They're usually the small businesses like the 

        18   landscape business, a janitorial business, a lot of our 

        19   service businesses, seamstresses, businesses that have 

        20   started from the skills the individuals have so that they 

        21   can create a job for themselves.  

        22            Micro-enterprise development is that process of 

        23   jump-starting those businesses, jump-starting them and 

        24   reducing their risk through technical assistance such as 

        25   consulting, business planning, training, and workshops, 

        26   as well as micro-loan funds and ongoing services such as 

         1   networks and even business incubators.  

         2            Most of these resources are provided by 

         3   nonprofit organizations, sometimes community-based or 

         4   faith-based organizations, sometimes in partnership with 

         5   government organizations.  

         6            Now, for micro-enterprise development, the 

         7   community benefits from this, as well as individuals.  

         8   What happens in the community is there's reduction in 

         9   welfare, unemployment, and other public assistance costs 

        10   and increase in jobs and goods and services in the 

        11   community.  

        12            Bank of America has done a good job, generally 

        13   speaking, in providing a significant investment for small 

        14   business development for California in the form of a 

        15   support for nonprofits and technical assistance to the 

        16   emerging business owners, as well as loans to small 

        17   businesses.  And a written -- what we're asking for is a 

        18   written commitment of community investment in small 

        19   business development as an essential element of any 

        20   merger agreement.

        21            We recommend the following:  We recommend an 

        22   investment in the nonprofit technical assistance 

        23   providers who assist the small business as they reach the 

        24   level of expertise that permits them to qualify for the 

        25   bank credit, otherwise creating customers for the banks.  

        26            We're looking for recommendation -- we are 

         1   recommending a target of 75 percent of the loans based on 

         2   the dollar amount to small businesses and loans of lines 

         3   of credit of under $50,000.  That's what our 

         4   micro-enterprises need.  

         5            We're also looking for a target of 30 percent of 

         6   small business lending to minority and disabled-owned

         7   businesses and, finally, a secondary review process for 

         8   declining of small business loan applications.  Thank 

         9   you.  

        10            MR. FRIERSON:    Ms. Burks, I'm sure this view 

        11   isn't shared by my fellow panelists, but it's never too 

        12   late to talk about HHI's in my opinion.  And we'll read 

        13   your competitive analysis very carefully, particularly in 

        14   terms of the guidelines.  We will be applying, as you 

        15   indicated, the Department of Justice guidelines, which 

        16   does set the threshold change at 50 points.  However, we 

        17   have received advice from the Department of Justice back 

        18   in the early '80's saying that in light of financial and 

        19   non-financial competitors of banks that the threshold is 

        20   actually 200 points.  Nevertheless -- for the change, for 

        21   the delta.  Nevertheless, we will be considering your 

        22   competitive arguments, and we appreciate you bringing the 

        23   information to us.  

        24            MS. SMITH:    Thank you very much.  I think 

        25   unless the other -- no other questions.  Thank you very 

        26   much for coming and presenting your views this

         1   afternoon.  We are at Panel 15.  We'll start with 

         2   Mr. Gordon.  

         3            MR. GORDON:   Thank you.  My name is Andrew 

         4   Gordon.  I'm president of Arizona Multibank Community 

         5   Development Corporation.  I appreciate the Federal 

         6   Reserve Bank of San Francisco making this public meeting 

         7   possible, and I want to take this opportunity to bring to 

         8   the Fed's attention and all other interested parties Bank 

         9   of America's tremendous leadership and support in 

        10   creating and supporting Arizona Multibank.  

        11            Arizona Multibank does not take exception to the 

        12   proposed merger and, as you will hear, we have benefited 

        13   over the years from B of A's strong commitment to 

        14   addressing credit needs in the community that are 

        15   legitimate but under-met by traditional banks.

        16            Bank of America's commitment to Arizona 

        17   Multibank's efforts in the enterprise of community 

        18   development finance is above and beyond its substantial 

        19   $3 million share of Arizona Multibank's total 

        20   capitalization of 10.2 million.  

        21            By way of background, Arizona Multibank is a 

        22   501C3 corporation and recently certified by the US 

        23   Department of Treasury as a community development 

        24   financial institution.  Arizona Multibank provides 

        25   financing, technical assistance to small businesses, 

        26   affordable housing, projects -- affordable housing 

         1   projects, nonprofit organizations, and economic 

         2   development initiatives.  

         3            Since our first loan in December '92, Arizona 

         4   Multibank has provided $11 million to 170 projects 

         5   throughout the state of Arizona.  Combined with senior 

         6   debt provided by banks and equity funded by borrowers, 

         7   these projects represent total costs of 49 million.

         8            For Arizona Multibank, loans range from $500 to 

         9   a half a million dollars and 70 percent of our small 

        10   business loans are to minority and women-owned 

        11   operations.  Over 60 percent of the small business loans 

        12   are $25,000 and less.  

        13            Arizona Multibank also makes larger loans to 

        14   nonprofit corporations, including those serving 

        15   affordable housing needs, youth, special education 

        16   programs, and American Indians.  We are very proud of our 

        17   accomplishment.  B of A through its guidance and 

        18   commitment has played a central role in our successes.  

        19            Current chairperson of Arizona Multibank's 

        20   15-person board is a director from the community and not 

        21   from an investing bank.  This is a first for us.  And not 

        22   only is it a huge statement about our investing bank's 

        23   confidence in Arizona Multibank, it is testament to the 

        24   effectiveness of the immediate preceding chairperson of 

        25   three years, B of A's Arizona president and regional 

        26   executive for the southwest region.  

         1            The board was led with exuberance and the 

         2   standard was set for balancing fiscal responsibility to 

         3   all the investing banks with the responsibility of 

         4   proactively responding to community credit needs.  

         5   Although B of A is one of the corporations largest 

         6   investors, its leadership really comes from its 

         7   intelligent, sensitive, and informed approach to guiding 

         8   and assisting Arizona Multibank.  This approach has 

         9   proven to provide the Arizona Multibank with the solid 

        10   foundation for serving the community for years to come.  

        11            It is the executive management officers and 

        12   staff of B of A that help Arizona Multibank build its 

        13   capacity to respond to important and legitimate credit 

        14   needs in the community that would not be financed as 

        15   undertaken by a traditional lender alone.  The 

        16   chairperson of Arizona Multibank's investment committee, 

        17   the senior vice president, and senior credit officer at B 

        18   of A has been instrumental over the past seven years in 

        19   creating an underwriting culture that integrates a 

        20   disciplined credit assessment process with decision 

        21   making flexibility.

        22            In addition to volunteering for leadership 

        23   positions on the board and investment committee, many 

        24   areas of expertise and corporate resources at B of A have 

        25   provided Arizona Multibank with important assistance, 

        26   including senior staff in the offices of corporate 

         1   communications, appraisals, special assets, and human 

         2   resources.  

         3            The qualitative contribution by B of A to 

         4   Arizona Multibank has and will continue to be 

         5   significant.  But B of A's more easily measured support 

         6   has also been very meaningful to our operations, from 

         7   providing office space, to computer and photocopy 

         8   support, to setting Arizona Multibank up as a separate 

         9   bank on their commercial loan system for our loan 

        10   collections and servicing.  B of A stands out as our 

        11   largest in kind contributor.  It's in the neighborhood of 

        12   $125,000 a year.  

        13            Overall, B of A has focused a lot of corporate 

        14   muscle on its investment in Arizona Multibank and, as a 

        15   result, many small businesses, low and moderate income 

        16   families, community and economic projects have received 

        17   financing that would not have been available otherwise.  

        18            Regarding NationsBank, although my direct 

        19   contact with them has been limited, I have had the 

        20   privilege over the past couple years to work with Shore 

        21   Bank Advisory Services, which was commissioned by 

        22   NationsBank to draft guidelines for establishing 

        23   Multibank Community Development Corporations.  We are 

        24   pleased to be highlighted in that study which identifies 

        25   eight core characteristics of successful Multibank

        26   CDC's.  This is the report (indicating).  

         1            It is my understanding that NationsBank's 

         2   strategy is to invest in organizations that deliver 

         3   results and create a climate for sustained investments.

         4   Arizona Multibank is one of those organizations.  And I 

         5   anticipate a strong and serious working relationship with 

         6   Bank of America and NationsBank now and as a merged 

         7   corporation.  Together we can continue to provide 

         8   financing projects that are responsive and dynamic, as 

         9   dynamic as the every changing needs and vibrant dreams in 

        10   our community.  Thank you.  

        11            MS. SMITH:    Thank you.  Mr. Sweet.  

        12            MS. KEENER:   Ken Sweet wasn't able to be here.  

        13   I'm Margaret Keener.  I missed getting the little tag.  

        14   Ken is in the Bull Head City where it's 115, so I got the 

        15   treat to come.  

        16            Northern Arizona Council of Governments is a 

        17   voluntary association of local and county governments in 

        18   Northern Arizona.  There are 25 governments, four of 

        19   which are counties.  The other are small cities and towns 

        20   ranging from 540 persons to 52,000 people.  The average

        21   is about 2,500 persons to 5,000 persons.  We're a 

        22   nonprofit and our board of directors is made up of the 

        23   elected officials of those cities, towns, and counties.

        24            Since our inception in 1965, we have initiated 

        25   and developed a variety of programs with human services, 

        26   education, planning, community development, housing, 

         1   economic development, and small business development.  

         2            Our four counties are very rural and they're 

         3   economically distressed by federal definition.  Our 

         4   service area covers about 48,000 square miles and it's 

         5   mostly off reservation, but we do provide some programs 

         6   on Navajo Nation, Hobie, and White Mountain Apache.  

         7            Our service area has not benefited from the 

         8   booms that have occurred in Southern Arizona and Phoenix 

         9   and Tucson.  Our county unemployment rate still range 

        10   from 8.4 percent to 19 percent.  Our poverty rates are 

        11   generally twice the state's rate of 20 percent.  Our 

        12   average 1990 family income in the region was 29,490 per

        13   year compared to 40,110 for the state average.  The 

        14   average income of our client families was about $10,070. 

        15            Bank of America has been a very important 

        16   partner in our economic and housing development efforts.  

        17   They've generously given of their time and money, whether 

        18   it's been the branch manager assisting with setting up 

        19   interim revolving loan program for small business 

        20   development, serving on a small business loan committee, 

        21   or the community development division giving us funds to 

        22   initiate a first-time home buyers program so that we can 

        23   get some of our lower income clients into housing.  

        24            They are also very quick to respond to requests 

        25   to begin an innovative program where we're taking out 

        26   crummy mobile homes and replacing them with new modular 

         1   housing.  They developed a special consumer loan package 

         2   with reduced rate and underwriting criteria so that we 

         3   could do loans with rural development.  

         4            Their special willingness to try different 

         5   approaches and to create new solutions to old problems 

         6   needs to survive the merger.  The new bank must continue 

         7   the vision that Bank of America and it's Rural 2000 

         8   initiative has brought to Northern Arizona.

         9            We realize that 350 billion has been pledged for 

        10   the continuing support of the community development 

        11   lending and investment and that this is a large and 

        12   comprehensive effort launched by a bank.  However, our 

        13   concern does center around the resulting delivery system 

        14   and how it will function for our rural distressed 

        15   communities of Northern Arizona.  

        16            We feel that our solutions in these small 

        17   communities are often beyond the capacity of a national 

        18   cookie-cutter approach.  Our small rural community and 

        19   customers need continued attention and creative 

        20   approaches that meet local conditions.

        21            Our experience has been that Bank of America has 

        22   stepped up and joined us in efforts to work with the 

        23   communities.  We like the Bank of America's community 

        24   development division's past approach in our region.  

        25   They've listened to our needs and respect our ideas.  

        26   Bank of America has truly been a good partner with us and 

         1   a good corporate citizen in our communities.  The spirit 

         2   and methodology of the Rural 2000 initiative must be 

         3   preserved.  Thank you.  

         4            MS. SMITH:    Thank you.  Ms. Rogers.  

         5            MS. ROGERS:   Good evening.  I'm Sheila Rogers 

         6   from West Company, which is an economic development 

         7   corporation.  I've traveled today from Mendocino County, 

         8   which is located about 100 miles north of San Francisco.  

         9   It's a rural California county with a population of 

        10   86,000 and a traditionally high unemployment and poverty 

        11   rate.  

        12            Ten years ago, the organization which I direct 

        13   was founded to address economic self-sufficiency among 

        14   low-income people.  The West Company promotes 

        15   micro-enterprise as a strategy to increase economic 

        16   self-sufficiency for people with limited access to 

        17   economic resources.  

        18            One of the first community partners to join this 

        19   endeavor was Bank of America.  Originally the foundation 

        20   capitalized the micro-loan fund with $10,000.  Two years 

        21   later, in 1993, the foundation provided a 99,000-dollar 

        22   grant.  Sixty thousand went into the micro-loan fund and

        23   39,000 went for technical assistance.  Subsequently, the 

        24   bank came back with another $25,000 to keep us going.  

        25            During the same era, the local commercial Bank 

        26   of America branches provided human capital to West 

         1   Company, board of directors, and micro-loan fund 

         2   committee.  As well, Bank of America paid the salary and 

         3   placed a former Bank of America employee at West Company 

         4   for a period of six months to help us develop our loan

         5   program.  We were also able to obtain no-cost loans -- 

         6   excuse me, accounts for low-income customers.  

         7            The impact of Bank of America's investments on 

         8   one rural California county has been immense.  Among the 

         9   outcomes from those investments, Bank of America helped 

        10   to build the capacity of a community-based organization 

        11   to bring low-income entrepreneurs into the mainstream.  

        12   It enabled us to make $198,000 in micro-loans to 61 

        13   non-bankable customers.  That assisted with the startup 

        14   of 40 businesses and the expansion of 39 businesses.  All 

        15   in all, 83 jobs were created.  

        16            I am here today to commend these contributions 

        17   and the commitment that they demonstrate to rural 

        18   California communities and to micro-enterprise as an 

        19   economic engine.  I am here today to ask for renewed 

        20   commitment to the Rural 2000 initiative as developed 

        21   during the last year by Bank of America and its community 

        22   partners.

        23            I am here today to ask that the Bank of America 

        24   Foundation and the Bank of America Community Development 

        25   Bank, as they currently exist, be retained in 

        26   California.  Thank you very much for this opportunity to 

         1   testify.  

         2            MS. SMITH:    Thank you.  Mr. Vigil.  

         3            MR. VIGIL:   My name is Thomas Vigil from 

         4   Northern New Mexico.  I'm a member of the Jicarilla 

         5   Apache Tribe in Northern Mexico.  And there I operate 

         6   several businesses, one resort hotel and a guest ranch 

         7   for high-income guests and 32,000 acres, which I invite 

         8   you to come and you enjoy yourself.  Fish are this big 

         9   (indicating).  I know the time is limited.  

        10            Today I'm here as -- I come before you as 

        11   chairman of the board for First Nations Development 

        12   Institute, which is headquartered in Virginia.  As an 

        13   organization, First Nations Development Institute has 

        14   been assisting the culturally directed economic 

        15   developments of Native American tribes and organizations 

        16   for almost 20 years.  During this time, banks have been a 

        17   study focus of our efforts to bring about economic 

        18   relationships in the remote rural communities that 

        19   characterize Indian country.

        20            While First Nations does not specifically focus 

        21   on metropolitan native population, we know that they, 

        22   too, have often lacked access to credit.  For most native 

        23   individuals in any location, banking relationships have 

        24   not existed in the past.

        25            As a function of our normal effort to keep 

        26   Indian communities informed of their rights under the 

         1   Community Reinvestment Act and since the announcement of 

         2   the NationsBank/Bank of America merger, First Nations has 

         3   conducted a survey of banking needs in Indian 

         4   communities, the findings of which we have attached to 

         5   the document that we've provided to your staff.  

         6            Our survey of 177 tribal and nonprofit 

         7   organization in 22 states affected by the proposed merger 

         8   reveals a willfully inadequate collective encounter with 

         9   mainstream financial channels.  The vast majority of 

        10   tribes in native organization had not had any experience 

        11   with either NationsBank or Bank of America, nor did they 

        12   know of any NationsBank or Bank of America activities in 

        13   native communities.  

        14            The prevailing view among tribes and native 

        15   organizational representatives that big banks in 

        16   particular don't do business in Indian country.  And 

        17   notwithstanding the accelerated banking activity in the 

        18   past five years, only 91 percent -- only 91 home 

        19   mortgages have been closed on tribal land during the 

        20   past -- during this, the same period, ninety-one homes in 

        21   the market with an estimated need of 200,000.

        22            Despite the shortcomings revealed in our survey, 

        23   we remain optimistic that a critical mass problem 

        24   solvers, responsible borrowers, and business interest 

        25   will eventually bring full-fledged banking and financial 

        26   services to Indian communities.  We're pleased that 

         1   NationsBank/Bank of America has agreed to be a part of 

         2   this progress following the proposed merger.  

         3            Not only have they included a specific mention 

         4   of Indian country in their pledge of $10 billion in 

         5   lending and investment for community and economic 

         6   development in rural areas over the next ten years, but 

         7   in a meeting of June 16 with First Nations, other Native 

         8   American groups, they also agreed to work with First 

         9   Nations and the task force on an analysis of loan 

        10   products and financial services that would inform a 

        11   Native American specific lending goal.

        12            The stated commitment of the two banks will 

        13   greatly mitigate our original concerns regarding 

        14   competitive factors and the convenience and needs of 

        15   Indian communities under the merged entity.  Our concerns 

        16   were based on NationsBank lack of experience with Native 

        17   Americans due to the small number of reservations, native 

        18   urban population centers in the south and southeastern 

        19   states.  

        20            But NationsBank has provided assurances that the 

        21   merged bank would take positive approach in providing 

        22   banking and financial services to any community in the 

        23   newly acquired service areas.  And, for that reason, I 

        24   have other -- we support the merger.  

        25            In conclusion, I'd just like to say that we have 

        26   reached this decision based on considerable thought and 

         1   serious thought because, as you know, we have probably, 

         2   as a group, been promised more than any other group.  As 

         3   you remember, as long as the wind shall blow, the rivers 

         4   shall flow, and we're going to hold NationsBank and, if 

         5   this merger is approved, and Bank of America to their 

         6   promises, and hope that you will, too.  

         7            I'd just like to say that we appear here today 

         8   bearing letters of support from 29 tribes and nonprofit 

         9   organizations within service areas that would be affected 

        10   by the proposed merger and in cooperation of the 

        11   400-member National Indian Housing Council, the 

        12   200-member plus National Congress of American Indians, 

        13   and the American Rights Funds, and the Council of Energy 

        14   Resource Tribes.  Thank you.  

        15            MS. SMITH:    Thank you.  Mr. Beane.

        16            MR. BEANE:   Yes, my name is Sid Beane, and I'm 

        17   here today representing United Indian Nations Community 

        18   Development Corporation, which is the first American 

        19   Indian community development corporation established here 

        20   in the Bay Area.  I would also support much of which the 

        21   previous speaker said in that I'm also a Native 

        22   American.  I'm a Dakota, originally from South Dakota but 

        23   living here in the Bay Area for a number of years.  

        24            As we all know, Native Americans are among the 

        25   most invisible population and least understood in terms 

        26   of particularly financing since much of our land is 

         1   federal land in trust and difficult to approach in terms 

         2   of financing vehicles.  And that's why it's important 

         3   that we be understood by banks and special consideration 

         4   be given for special financing packages that also involve 

         5   Native Americans within the banks and within the 

         6   programming strategies for any banking services that 

         7   might be delivered.

         8            As a representative of an off-reservation 

         9   organization, I think it's important to keep in mind that 

        10   we are probably the most invisible of the Native American 

        11   population, because when you think of Native Americans, 

        12   you automatically think of Indians on the reservations.  

        13   Yet a majority of Indian people live and have been 

        14   relocated to the off-reservation areas.

        15            Our involvement in affordable housing and 

        16   community economic development has been rather new and so 

        17   our groups have not been well-represented within the 

        18   community development circles, nor within the financing 

        19   institutional strategies of any of the financial 

        20   institutions.  

        21            Our experience recently with the development of 

        22   the CDC and with Bank of America I would say has been 

        23   positive in that we have not had any difficulty in 

        24   approaching the bank and receiving assistance in planning 

        25   and with some planning dollars and further assistance in 

        26   looking at our affordable housing and community economic 

         1   development strategies.  

         2            We are concerned that as we've been developing a 

         3   relationship with this bank that the merger sustain the 

         4   Community Development Bank and the Community Foundation 

         5   that have been very forthcoming in outreach and looking 

         6   at strategies that might affect this most invisible 

         7   population.

         8            You may not be aware that our unemployment rates 

         9   are as high, if not higher, than any groups.  Our 

        10   drop-out rates are generally higher than any groups.  Our 

        11   poverty rates are as high, if not higher, than any 

        12   groups.  So we are probably amongst the least served and 

        13   the least understood.

        14            So the off-reservation population that I 

        15   represent is clearly one that needs to be looked at in 

        16   any merger and served and with a specific strategy that 

        17   includes within any particular initiative for surveying 

        18   rural, as well as Indian country, that the urban 

        19   community be clearly served.

        20            And I just want to say that, in summary, that we 

        21   are not taking opposition to any merger.  Thank you.  

        22            MS. SMITH:    Thank you.  Mr. King.  

        23            MR. KING:   Thank you.  My name is Johnny King.  

        24   I'm president and chief operating officer of the King 

        25   Group of Dallas, Texas.

        26            The King Group is one of the largest 

         1   African-American female-owned marketing firms in the 

         2   southwest and specializes in advertising, sales 

         3   promotions, and community relations that target the 

         4   African-American segment of the population.

         5            The King Group has worked with Bank of America 

         6   since its first year of operation as a retail bank in the 

         7   state of Texas.  Our primary function with the bank has 

         8   been to work with the bank in all of the above areas in 

         9   African-American communities across the state of Texas.

        10             I would like to address three areas.  First I 

        11   would like to address some of the unique banking needs of 

        12   African-Americans that our research and experience have 

        13   pointed out to us, along with some of the historical 

        14   basis for those needs.

        15            Next I would like to present some of the 

        16   programs and activities that Bank of America, with the 

        17   assistance of the King Group, has implemented to address 

        18   these needs in the African-American segment over the past 

        19   six years.

        20            And finally I would -- I believe that I would 

        21   like to address some of the concerns that must be, and I 

        22   think will be, addressed with the combined NationsBank 

        23   and Bank of America entity.  

        24            The King Group conducted extensive research on 

        25   banking as it relates to African-Americans on behalf of 

        26   Bank of America.  This research was conducted by 

         1   Dr. Delva King, our CEO, who is also recognized as one of 

         2   the top ethnic researchers in the country.  Our research 

         3   revealed some unique banking needs of African-Americans 

         4   and, more importantly, identified the historical basis 

         5   that contributed to those special needs.  

         6            In general, the belief is that banks are not 

         7   sensitive to the needs of African-Americans and the 

         8   barriers that African-American have historically faced in 

         9   attempting to do business with banks.

        10            The historical basis for this includes limited 

        11   success in accessing bank products and services, the fact 

        12   that few banks were located in African-American 

        13   communities, and a perception that banks did not value or 

        14   want to do business with African-Americans.  The term 

        15   "redlining" is what appeared in our research over and 

        16   over again.

        17            Finally, our research revealed that 

        18   African-Americans felt that banks have ignored our 

        19   history and some of the reasons that we have difficulty  

        20   in meeting the general criteria of banks.  

        21            Based on this research -- and I might add was 

        22   quite extensive -- we, together with Bank of America, 

        23   developed a comprehensive five-year plan that we used to 

        24   build market share for Bank of America and increase 

        25   accessibility to African-Americans and ensuring Bank of 

        26   America had the products, programs, and services to do 

         1   business with African-Americans.  

         2            First of all, and perhaps our greatest 

         3   challenge, was to deal with the image that has 

         4   historically -- African-Americans have historically had 

         5   about banks.  To this end, we created several programs,  

         6   the marquis one of which was the Black History 

         7   Chronicles.  The Chronicles was not only programmed to 

         8   celebrate the lifetime achievement of African-Americans 

         9   in local communities; it was our belief that by creating 

        10   such a program based on the rich heritage of 

        11   African-Americans that Bank of America could best and 

        12   rightfully so learn about this heritage and, at the same 

        13   time, assure African-Americans that we're concerned and 

        14   knowledgeable about the history of African-Americans.

        15            Today this program is the highest, most visible 

        16   program, and most intrusive program in the 

        17   African-American community in the state of Texas.  It has 

        18   been lauded by black clergy, elected officials, community 

        19   leaders, and others of all races and nationalities 

        20   throughout the state.

        21            The Chronicle program is an example of how we 

        22   used our research and knowledge of the segment to create 

        23   business for the bank and, at the same time, give back to 

        24   the community while attempting to overcome some of the 

        25   historical perceptions that banks have in the eyes of 

        26   African-Americans.  

         1            As for the accessibility, while we were working 

         2   on the perception problems with banks, Bank of America 

         3   was simultaneously planning two DeNovo's, one in Dallas 

         4   and one in Houston.  Three-fourths of the 

         5   African-American population in the state of Texas reside 

         6   in these two markets.

         7            We work with Bank of America on site selection, 

         8   grand openings, patronage programs, and others to make 

         9   sure that the state-of-the-art banks were successful in 

        10   the heart of the African-American community.

        11            With the share-building, branding, and access 

        12   initiative underway, Bank of America was creating the 

        13   products that we believed were appropriate to address 

        14   some of the needs in the African-American marketplace.  

        15   Products such as the ABC loan which was designed to 

        16   assist small businesses and with a line of credit product 

        17   that addressed the number one needs that we identified in 

        18   our research of our African-American businesses and that 

        19   was cash flow.

        20            The product simplified the loan process and 

        21   provided quick turnaround time and service.  The King 

        22   Group created advertising programs for these products but 

        23   at the same time created outreach programs such as the 

        24   Minority Opportunities Success Program, or M.O.S.T. as we 

        25   affectionately call it, to assist small businesses in 

        26   accessing these new products.  

         1            The M.O.S.T. Program is a training program that 

         2   assists African-American businesses in how to apply for 

         3   loans such as ABC, SBA, and other traditional banking 

         4   products.  The Neighborhood Advantage product at the same 

         5   time was rolling out and was designed to have a similar 

         6   impact in mortgages.  We took this product, which targets 

         7   LMI census tracts, and created a neighborhood advantage 

         8   club.  The club provided training and benefits beyond 

         9   what the products's initial intent was, again, another 

        10   part of our intent.  Thank you.  

        11            MS. SMITH:   Thank you very much.

        12            MR. KING:   We fully support the merger by the 

        13   way.  

        14            MS. BARRERA:   Thank you.  Good evening.  My 

        15   name is Janie Barrera, and I'm president and CEO of 

        16   Lexion Texas based in San Antonio.  We are a nonprofit 

        17   micro-lending organization that lends money to small 

        18   businesses who cannot access loans from banks.  

        19            We have disbursed since June of 1994 over 800 

        20   loans, which equals about close to $3 million to about 

        21   400 businesses, and we have lost $22,000.  That's less 

        22   than one percent of the portfolio, which means that doing 

        23   loans to small businesses really does work.  

        24            The commitment has been there from both Bank of 

        25   America and NationsBank from the very beginning.  We are 

        26   taking this model, then, and replicating it to the entire 

         1   state of -- well, the major cities in Texas.

         2            We opened up an office in the Rio Grand Valley, 

         3   which is one of the poorest sections in the United 

         4   States, in March of this year.  We will be opening a 

         5   second office in the area of McAllen, Texas.  We'll be 

         6   opening a second office in the Rio Grand Valley in 

         7   Harlingen, Texas in about four weeks, which will be 

         8   housed inside a NationsBank building.  Then we will be 

         9   also offering the same products and services in Houston 

        10   in August and, by the first quarter of next year, be in 

        11   Austin and Dallas, Texas, where we will also be officing 

        12   in a NationsBank property.

        13            What we are saying here is that the partnership, 

        14   not only from NationsBank and Bank of America but from 

        15   all banks, has allowed us to become the intermediary.  

        16   They lend us the money or they provide us the investment, 

        17   which NationsBank has committed 1.1 million for the 

        18   entire state network to be able to provide the working 

        19   capital to the small businesses.  

        20            Now, these small businesses are cab drivers, 

        21   beauticians, plumbers, painters, people that have 

        22   absolutely no way of providing or getting this, this 

        23   capital.  They're the -- the competitors are pawn shops 

        24   and they are money lenders who they go out and take maybe 

        25   25 to 35 percent in interest for these loans.  And these 

        26   loans are averaging -- our average loan size is $3,000.  

         1   We send from $25,000 -- from anything from $500 to 

         2   $25,000.  

         3            And, as we stated, too -- as I stated, also, the 

         4   repayment rate is definitely there.  Our stats show, too, 

         5   that after two loans from -- to our customers, their 

         6   take-home income increases by 38 percent, which is 

         7   substantial when you think about that 90 percent of our 

         8   customer base is in low and moderate income families, 

         9   neighborhoods.  It's also substantial when you think 

        10   about that close to about 43 percent are women and 81 

        11   percent are minority-based.

        12            So we are truly serving the populations that the 

        13   banks cannot or will not, and I encourage the 

        14   continuation of the community reinvestment act to pursue 

        15   this and also that the merger of these two major 

        16   institutions will also continue their commitment to 

        17   serving this population.  Thank you very much.  

        18            MS. SMITH:    Thank you very much.  We'll start 

        19   with Ms. Kitchen.  

        20            MS. KITCHEN:   I'm Heather Kitchen.  I'm 

        21   managing director of American Conservatory Theater here

        22   in San Francisco.  American Conservatory Theater's 

        23   mission is to nurture the art of live theater through 

        24   dramatic dynamic productions, intensive actor training in 

        25   our conservatory, and an ongoing dialogue with our 

        26   audience and our community.  ACT is a not-for-profit 

         1   corporation.  It has an operating budget of more than $13 

         2   million annually.  

         3            We believe that our work as artists is 

         4   fundamental to a complete and healthy community.  Bank of 

         5   America has been a partner with ACT in producing our 

         6   work, not only philanthropically but as a business 

         7   partner.  NationsBank has played a similar role with our 

         8   colleagues in Charlotte, North Carolina.  ACT supports 

         9   the merger of Bank of America and NationsBank.  

        10            In a very fiscally difficult time following the 

        11   Loma Prieta earthquake, while the rebuilding of our 

        12   theater was underway, Bank of America stepped forward and 

        13   provided American Conservatory Theater with the operating 

        14   capital to allow us to mount our first season back in the

        15   Geary Theater.  They've continued to work with us since. 

        16   They provided us with a favorable term loan for our 

        17   capital campaign, which covers our expenses until our 

        18   pledges are fully realized in the year 2002.

        19            During the past two years, our relationship with 

        20   Bank of America has continued to grow.  Since the 

        21   announcement of the impending merger, our banking 

        22   relationship has deepened.  In our most recent year-end 

        23   review last month, the bank's representative offered ACT 

        24   further improvements in the business terms of the loan.  

        25   Our relationship and that of our colleagues in Charlotte, 

        26   North Carolina will continue to prosper with the merger 

         1   of Bank of America and NationsBank as we continue to 

         2   partner with the bank to present our cities with 

         3   outstanding live theater.  Thank you.  

         4            MS. SMITH:    Ms. Peck.  

         5            MS. PECK:   Good evening.  I'm Susan Peck, 

         6   western director of the Housing Assistance Council, which 

         7   is a national nonprofit organization that was created to 

         8   improve the housing conditions of the rural poor.  

         9            One of the things that we do nationwide is 

        10   operate a pre-development loan fund for nonprofits and 

        11   public agencies to allow them to get to the point where 

        12   they can develop housing and receive long-term 

        13   financing.  And as part of that program, we have a 13 and 

        14   a half million dollar federally-funded program for 

        15   self-help housing developments.

        16            And I just wanted to mention that Bank of

        17   America has provided us funding to help in the 

        18   implementation of that program.  The federal funding 

        19   unfortunately came with no administrative money.  And 

        20   most of that money will be turned back to the local 

        21   nonprofits once they've developed the 1,600 units of 

        22   housing, home ownership housing, and 75 percent of that 

        23   money will go back into their communities.  

        24            It's also my pleasure this evening to represent 

        25   the California Coalition for Rural Housing, which is a 

        26   statewide rural housing advocacy and education 

         1   organization.  And I also serve on the California 

         2   advisory committee of the Rural 2000 initiative.  

         3            My brief remarks will focus exclusively on rural 

         4   matters.  I'd like to point out that rural parts of our 

         5   nation suffer a higher rate of poverty than our urban 

         6   counterparts, 17 percent versus 14 percent.  And within 

         7   rural America, there are persistent pockets of poverty.  

         8   These are primarily in the Mississippi delta area, along 

         9   the US and Mexico boarder, in Indian country, and in 

        10   Appalachia.  These are the areas that Housing Assistance 

        11   Council focus most of its attention since poverty, as you 

        12   all know, has such a considerable impact on housing 

        13   conditions.  

        14            Much of our work also targets areas where farm 

        15   workers live and work, all too many in the most 

        16   deplorable of housing conditions.  About one-third of the 

        17   nation's farm workers have incomes of less than $5,000.  

        18   With incomes like these throughout rural America, it's 

        19   clear that no bank alone, nor a merged bank, can 

        20   adequately address the housing needs of the poor without 

        21   not only combining their resources but being very 

        22   flexible in the way that they provide those resources and 

        23   also with partnering, to the extent that they can, with 

        24   subsidies from federal, state, and local government.  

        25            I'd like to quickly tell you of one relationship 

        26   between the Bank of America Community Development Bank, 

         1   the Bank of America Foundation, the United States 

         2   Department of Agriculture, the Ford Foundation, and 

         3   Housing Assistance Council that exemplifies the 

         4   commitment of Bank of America to rural housing 

         5   improvement.  This -- and particularly rural housing 

         6   improvement that involves a particularly difficult

         7   population to serve.  These are largely very low-income 

         8   Hispanic families who are purchasing lots that lack basic 

         9   infrastructure and they're doing so through land 

        10   contracts.

        11            This collaborative effort to enable local groups 

        12   surveying communities known as colonies to assess their 

        13   own needs and to help develop strategies for improvement, 

        14   including innovative bank products, must in our opinion

        15   be continued should this merger be approved.  This 

        16   particular collaborative is promoting local capacity 

        17   building and a flexible approach to lending within the 

        18   banking community.  

        19            The groups that I represent have many 

        20   expectations for this intended merger, including a 

        21   commitment specifically targeted to very low and 

        22   low-income rural households, people of color, and special 

        23   populations such as Native Americans and farm workers.  

        24   Part of this targeting should emphasize the role of 

        25   self-help housing development, where families build their 

        26   own housing, and loan products for seasonal workers.  

         1            The commitment should also have a priority for 

         2   nonprofit housing developers who are critical to the 

         3   improvement of rural housing.  There should be an 

         4   elimination of any minimum loan sizes for rental 

         5   housing.  You would be seeking the preservation and 

         6   expansion of the Bank of America Community Development 

         7   Bank that is such a major player in rural housing 

         8   improvement, also the preservation of the Bank of America 

         9   Foundation's rural priorities that were recommended by 

        10   the Rural 2000 initiative, and preservation and expansion 

        11   of the Rural 2000 initiative with the addition of 

        12   regional advisory groups for NationsBank's geographic 

        13   areas.

        14            We'd also like careful consideration of any 

        15   further bank closings in rural communities.  There are 

        16   over 500 rural counties in this nation that have no bank 

        17   branch at all, and in many rural counties, though you 

        18   have a bank branch, they're not doing any real estate 

        19   lending.

        20            Thank you for this opportunity to participate.  

        21            MS. SMITH:    Thank you.  Ms. Washington.  

        22            MS. WASHINGTON:   My name is Sheila Washington, 

        23   president of the California Business Incubation Network.  

        24   We were founded about seven years ago to raise a level of 

        25   awareness of the incubation period for creating and 

        26   growing and launching new businesses that incubate new 

         1   ideas into the marketplace.  

         2            We thank the Federal Reserve for holding this 

         3   forum.  And secondly, we'd like to say we support the 

         4   merger/acquisition -- I put a slash acquisition because 

         5   I'm never sure what's the correct terminology -- of Bank 

         6   of America and NationsBank.  

         7            Next I'd like to take this opportunity to thank 

         8   the Bank of America for its role in incubating businesses 

         9   and economic development initiatives in the state of 

        10   California.  They were the first in line to support 

        11   facility-based business incubators in the state.  This 

        12   was back when no one else was talking about it.  Now 

        13   everybody is talking about it.

        14            They have always been at the table involving 

        15   business and economic development initiatives.  We'd like 

        16   to offer our kudos to the management and staff of the 

        17   bank's community development department, and we would 

        18   also like to support the retention of the Community 

        19   Development Bank, especially the retention of the 

        20   Community Development Bank as a separate entity and the 

        21   Community Foundation here in California.  

        22            I cannot imagine a California without the name 

        23   Bank of America.  However, moving on, we welcome the 

        24   entrance of NationsBank, and we're looking forward to the 

        25   resources they will bring to continue and build upon the 

        26   work that the Bank of America has initiated.  

         1            Now, we'd like to focus the future as far as 

         2   economic development is concerned on a couple of things.  

         3   One, we would like to have a priority given to 

         4   development of sustainable -- to the development of a 

         5   sustainable infrastructure for small business development 

         6   to meet the diversity of community needs.  

         7            And, two, we would like to put on the top 

         8   priority list linking of lending and technical 

         9   assistance, meaning pre-loan and post-loan assistance.

        10            And, three, we would like to emphasize or ask 

        11   that community economic development investment fund to 

        12   support these efforts be one of the agenda items.  

        13            Now, we appreciate and like the big monies of 

        14   $350 billion and what have you, but we can tell you that 

        15   in order for that to reach the level of business 

        16   development that we see necessary, you need to also 

        17   combine the technical assistance arm of lending.  And 

        18   we've done a lot of work on initiating some of these kind 

        19   of structures.  Nonprofit organization has been at the 

        20   forefront of helping, as you've heard many times today, 

        21   making this possible.  

        22            Now, where we are right now is to raise the 

        23   level of how we do that.  The delivery system as it has 

        24   so far evolved needs to be structured now and raised in 

        25   its importance relative to the commitment of -- for 

        26   lending and economic development.  

         1            We would encourage the Federal Reserve Agency to 

         2   continue its efforts along these lines.  You have done 

         3   yourself -- the agency has participated in some workshops 

         4   and some initial gathering of evidence relative to 

         5   technical assistance.  So I'd also like to raise that 

         6   level of awareness, that we would like to see that 

         7   continued and accelerated, actually, so that we can 

         8   continue -- so that we can have sustainable businesses.  

         9            As we move forward, it is time that there be a 

        10   focus on the system of nonprofit organizations.  They 

        11   have been primary vehicles these past ten years, and it's 

        12   time that they get their chance just like the housing -- 

        13   the housing segment did ten years ago.  If you'll 

        14   remember, ten years ago housing was just starting out to 

        15   build its own infrastructure for affordable housing.  Now 

        16   we have some system of nonprofit developers within the 

        17   housing community.  Now, that's the same kind of thing 

        18   that the business side needs today to be accelerated.  

        19            CBIN is a statewide organization for the 

        20   incubation of ideas, that is, the creation and launching 

        21   and growing of business enterprises.  Again, we thank you 

        22   for this opportunity, and we're looking forward to 

        23   working with the combined banks to achieve sustainable 

        24   economic development in California.  Thank you.  

        25            MS. SMITH:    Thank you.  Mr. Kaimowitz.  

        26            MR. KAIMOWITZ:   My name is Gabe Kaimowitz.  I'm 

         1   Florida representative for an organization formed in 1995 

         2   known as Attorneys Against American Apartheid.  The 

         3   concept is taken from a book by Professor Douglas Massey 

         4   of the University of Pennsylvania and Nancy Denton, now 

         5   in Albany in New York.

         6            The intent of the group was in 1995 to monitor 

         7   how federal funding, how local funding, and how private 

         8   funding are used to re-segregate parts of the United 

         9   States, and that inevitably resulted in scrutiny of 

        10   mergers such as that of Bank of America and NationsBank.  

        11            Let me state at the outset that I know virtually 

        12   nothing about Bank of America.  I feel -- and I should 

        13   add this -- that I'm here much as somebody at a wedding 

        14   who is asked, "Speak now if you're ever going to speak if 

        15   you have an objection."  

        16            I do think the merger is going forward.  I think 

        17   it should perhaps go forward.  But based on precedent 

        18   that I will cite specifically, I think, for Mr. Frierson 

        19   and in response to his question to Mr. Devine earlier.  

        20   Based on precedence, I urge the Federal Board to look at 

        21   this merger as closely as it ever has looked before.

        22            You've heard much testimony here today, and I 

        23   would say I learned a lot today.  And one of the things I 

        24   learned supports the basic thesis that I'm here to 

        25   deliver, which is that NationsBank has moved on from its 

        26   origins in North Carolina and especially, from my 

         1   knowledge, in Florida and in Central Florida, deserting 

         2   areas where it has previously made promises and 

         3   commitments and moved on to bigger promises and bigger

         4   commitments.  What has it left in its wake?  

         5            I and NationsBank and, for reasons that I will 

         6   explain shortly, First Union arrived in Florida at the 

         7   same time in 1985.  Apparently you've learned today that 

         8   something called the Black Business Investment Fund 

         9   created by the state arrived about the same time.  That 

        10   confluence was not unexpected.  Most of it is attributed 

        11   to one single attorney, and it's important that he be 

        12   understood as an attorney, who's the general counsel of 

        13   the Florida Banking Association.  He's also an attorney 

        14   and partner in one of the most prominent and the fastest 

        15   growing law firms in the United States, according to the 

        16   National Law Journal in November of 1997.

        17            I want to discuss it in two phases.  One, that 

        18   in 1985 to 1991, NCND and CNS entered the Florida market 

        19   and were immediately challenged, as you've heard today, 

        20   by numerous groups.  And lo and behold the challenges 

        21   were immediately solved.  And many of the groups today 

        22   will go home -- as well I think happened with ACORN.  We 

        23   had a meeting.  They gave us something.  They promised us 

        24   something.  That was enough.  My God, they sat down at

        25   the table with us, bankers.  What that resulted was a 

        26   shallow group of promises that resulted in no commitment 

         1   of any sort.

         2            I then proceeded to challenge First Union.  The 

         3   cite is -- because it's the same model I intend to use at 

         4   this point -- 940F 2nd at 610 -- yeah, at 610 -- 11th 

         5   Circuit, 1991.

         6            The premise, then, which is amplified at this 

         7   point is that locally many of these banks can't and won't 

         8   do the commitments because of a history of racial 

         9   segregation that exists in certain areas of this country 

        10   tied to land and land use.  Nowhere is that more evident 

        11   than in the state of Florida and particularly in Central 

        12   Florida.  

        13            I would have prevailed against First Union.  I 

        14   did prevail in persuading both the board and the office 

        15   and the controller of currency that First Union had been 

        16   tremendously remiss in its promises.

        17            I've already submitted my written documentation, 

        18   and I won't go into it at great length.  It consists of 

        19   the history of NationsBank in Central Florida, 

        20   particularly in Orlando, and its tie-in to the political 

        21   structure from 1985 to the present and a supplement that 

        22   I put together relatively rapidly.  

        23            I just want to end on a point that I think will 

        24   personify it.  The story keeps moving on rapidly.  And 

        25   that is that when you're dealing in a place like Orlando, 

        26   Florida, you have a situation where the merger was given 

         1   one paragraph because the $350 billion is taken with a 

         2   grain of salt after the history in Orlando.

         3            NationsBank, however, has chosen -- and this ad 

         4   I think says it all, along with the story.  On July 8th, 

         5   notice -- I'm sorry, that's the first -- no, I'm sorry.  

         6   I raised the wrong one.  In there notice the headline  

         7   and the story that accompanies, "Blacks May Absorb More 

         8   Nicotine."  There's your money to the end power.

         9            What you've got is the bank advertising heavily, 

        10   often with an elderly white couple in the center in the 

        11   main dailies in the area tied to this particular merger.  

        12   What you have in three black weeklies, weeklies targeted 

        13   to African-Americans, are very small ads that concentrate 

        14   on the African-American audience.  

        15            You were asked this morning to consider, and I 

        16   ask you again to consider the racial aspect of this 

        17   merger and how much it is influenced by a southern bank 

        18   moving in a direction with values that it has inculcated 

        19   certainly since 1985.  Thank you for your time.  

        20            MS. SMITH:    Thank you very much.

        21            With that, we will adjourn the meeting.  But I 

        22   want to observe it has been a very long day.  However, we 

        23   have received important testimony from all of the panels.  

        24   And we know the considerable effort that it took for some 

        25   organizations to come and be represented here today, and 

        26   we thank all of them, whether from California or from the 

         1   east coast.  And we are adjourned, then, until tomorrow 

         2   morning at 8:30 a.m. 

         3                           ---oOo---























Last update: December 3, 2010