Home > Banking Information & Regulation > Public Meeting Transcripts > PMT - Agendas July 9-10, 1998
Public Meeting Transcripts
Public Meeting Regarding NationsBank and BankAmerica
Friday, July 10, 1998
Transcript of Panel Twenty-One
469 1 MS. SMITH: I think we're ready for Panel 20. 2 And my notes say that I should start with -- is it 3 Mr. Serpan? 4 MR. SERPAN: Yes. You want me to start? 5 MS. SMITH: Please. 6 MR. SERPAN: My name is Rhea Serpan and I'm the 7 President and CEO of the San Francisco Chamber of 8 Commerce. And I appreciate this opportunity to speak on 9 behalf of the Chamber regarding the merger of BankAmerica 10 and NationsBank. 11 Since its founding in 1904 in the city here, 12 BankAmerica has been integral to the development of the 13 business community in San Francisco. The Bank has been a 14 long-standing member of the San Francisco Chamber of 15 Commerce. In fact, A.P. Giannini was on its board and 16 that involvement continues to this day. BankAmerica has 17 generously supported the Chamber's many activities, 18 including providing resources to our business development 19 programs and contributing both expertise and funding. For 20 instance, BankAmerica has contributed $250,000 over three 21 years to SF Works, the welfare-to-work initiative created 22 by the Chamber and the Committee on Jobs and United Way 23 here in the city. 24 BankAmerica has been a generous contributor to 25 economic development projects, including a multi-year 26 commitment to investment in the San Francisco Partnership, . 470 1 a public-private partnership launched by the Chamber to 2 attract and retain business and jobs in San Francisco. 3 And BankAmerica has been a strong supporter and 4 contributor to the Bay Area Sports Hall of Fame Youth 5 Fund, Business Arts Council, Business Volenteers for the 6 Arts and Leadership San Francisco, all chamber programs. 7 And throughout its history, BankAmerica has been 8 involved and a responsible corporate participant in the 9 San Francisco community. BankAmerica recognizes that 10 small businesses are the job creation engine here in our 11 city and drive the economy and has made a substantial 12 investment in San Francisco area firms, and currently the 13 bank has small business loan commitments in the Bay Area 14 that total $708 million. And since 1990, the Bank has 15 loaned 235 and a half million dollars to support the 16 construction of 4,500 affordable housing units in the 17 region. And the bank has contributed 14 million in the 18 past three years to arts, education and health and human 19 services, including a $5 million commitment to the United 20 Way. 21 The Chamber fully expects BankAmerica to continue 22 to play an important leadership role in our community. We 23 believe that as their business grows, and it will, that 24 their corporate involvement will also expand. 25 BankAmerica's merger with NationsBank along with 26 the announced merger of Wells Fargo and Northwest Bank . 471 1 will reaffirm San Francisco as a national and global 2 banking center. BankAmerica is expected to take advantage 3 of and fully participate in our region's growth and to 4 benefit from the strategic advantages of doing business in 5 San Francisco. San Francisco is the center of a strong 6 and growing Bay Area economy, and is the gateway to the 7 Asian marketplace and the place where Silicon Valley does 8 its banking. 9 While there will undoubtedly be some job 10 dislocation, new job opportunities are going to be created 11 as a result of this merger. And, of course, it's too 12 early to tell and estimate with any accuracy exactly what 13 the net effect might be on jobs, but I'm convinced that 14 the combined strengths of the two institutions as they 15 come together creates the potential for job growth that 16 may not have otherwise been possible. It is significant, 17 I think, that the banks' combined corporate and investment 18 banking headquarters are going to be here in 19 San Francisco, that's an important part of the banking 20 institution. 21 The Chamber is proud of the strengths of our 22 community and we're confident in the continued growth of 23 our economy and we strongly believe that BankAmerica will 24 continue to be a major contributor to both. Thank you. 25 MS. SMITH: Thank you very much. We'll go to 26 Ms. Ferniza. . 472 1 MS. FERNIZA: Thank you. Good morning, my name 2 is Sandra Ferniza and I'm President and CEO of the Arizona 3 Hispanic Chamber of Commerce located in Phoenix, Arizona. 4 The Chamber of Commerce is pleased to have the 5 opportunity to testify on behalf of the proposed Bank of 6 America and NationsBank merger. In an era of decreasing 7 public assistance to individuals of low and moderate 8 income and small, women or minority-owned businesses, 9 banks, with the encouragment of the Community Reinvestment 10 Act and the conscious of its board members, are a major 11 source of hope to those who dream of home or small 12 business ownership. 13 Institutions such as Bank of America have been a 14 source, both directly and indirectly, of credit and 15 capital to those who lack access to conventional financial 16 services through innovative projects and community 17 partnerships. The current industry trend of bank 18 consolidation poses serious questions for those of us who 19 work with financial institutions in an effort to encourage 20 investment, leveraging, financing and creation or 21 preservation of jobs in less affluent communities. 22 However, our experience with Bank of America has led us to 23 include that the proposed merger will result in a 24 continuation and/or expansion of the bank's commitment to 25 serving poor and diverse communities. 26 Bank of America has been an active member and . 473 1 strong corporate partner of the Arizona Hispanic Chamber 2 of Commerce since 1980. In addition, it was a founding 3 member of Los Amigos de AHCC, a corporate advisory group 4 that provides both financial and business value to the 5 chamber and its small business members. Bank of America's 6 recognition and understanding and commitment to the 7 growing Hispanic market is borne out in two key areas for 8 our chamber. One, in a publication known as DATOS, Focus 9 on Arizona's Hispanic Market, of which the bank is a 10 premier sponsor, and has reached an audience of 11 non-believers about the potential Hispanic market, we are 12 extremely grateful for that opportunity. And, two, 13 through our Minority Businesses Development Center which 14 the bank has provided both financial and technical 15 assistance to the mission of the greater Phoenix Minority 16 Business Development Center which the chamber operates. 17 Also, a member of the bank staff serves on our board of 18 directors and its bank officers and staff regularly 19 participate in chamber business seminars, host networking 20 mixers to highlight procurement opportunities and serve as 21 speakers and instructors in our business education series 22 known as NxLevel and Su Plan de Negocio. So they've put 23 their money where their mouth is, not only in terms of 24 dollars, but in terms of active participation with the 25 chamber and its memberships. 26 Bank of America has also demonstrated a . 474 1 commitment to diversity in the board room at all levels of 2 management and in a unique bilingual customer service that 3 has thrived in our valley called CuentaTel. Through 4 partnerships with organizations like others and ours, it 5 supports training to consumers, business owners and others 6 who play a promising and important role in developing the 7 social and economic fabric of America. 8 Most importantly to the chamber, the merger 9 presents new opportunities for the local business 10 community. A nationwide network that has greater access 11 to global financial markets is consistent with the growing 12 presence of mutual customers seeking to retain and expand 13 their business success and it is particularly important in 14 Arizona as a border state. It also presents greater ease 15 of service for individual consumers whose mobility is a 16 vital part of an expanding commodity and economy. 17 The chamber expects the activities previously 18 mentioned to continue after the merger of the two 19 institutions. I want to reiterate that, based on 20 experience, we feel confident that the bank will not only 21 continue its outstanding community service but also seek 22 new ways to efficiently and effectively serve the needs of 23 a diverse customer base, both large and small. That 24 commitment we feel has been assured through the pledge of 25 the $350 billion to serve communities most in need. 26 In addition, let me add that personally my . 475 1 husband and I have been Bank of America customers since it 2 assumed responsibility for the former Western Savings & 3 Loan Association and its Security Pacific institutions. 4 That transaction convinced me that it's possible to 5 survive and thrive from a change at Bank of America while 6 maintaining a high level of customer service. We are all 7 of us resistant to change but we must look for the new 8 opportunities that change brings us. Thank you for your 9 attention. 10 MS. SMITH: Thank you very much. Mr. Tierney. 11 MR. TIERNEY: Presiding Officer Smith and panel 12 members, thank you for this opportunity to provide 13 testimony at this hearing. My name is James Tierney and I 14 have asked for this time to describe my very positive 15 working experience with Bank of America staff in Portland, 16 Oregon. I'm the Deputy Director of Community Action Team 17 in charge of community development. We're a community 18 based nonprofit anti-poverty agency serving three rural 19 counties in northwest Oregon. Like many community action 20 agencies around the country, we provide a number of 21 coordinated anti-poverty programs such as Head Start, 22 child and family development programs, Low Income Energy 23 Assistance and homeless assistance. In the area of 24 community development, we also assist our communities with 25 the development and rehabilitation of affordable housing, 26 affordable homeownership programs, single-family . 476 1 rehabilitation and community facilities development. 2 My understanding of the Community Reinvestment 3 Act is that a lender is expected to actively seek ways to 4 meet the credit needs of its community. As a community 5 organizer working in a rural area, I find the communities 6 to find themselves usually at populations no larger than 7 10,000 persons. In our three county service area, two of 8 our communities are served by one bank based in the three 9 county area. All other commercial banking is done with 10 banks which serve all or most of the state, usually many 11 states. Given the realities of the commercial banking 12 industry in the 1990s, each of our communities must look 13 outside the community for some or all of its banking 14 needs. 15 While working in our communities have been 16 approached by local bankers representing several banks, 17 with one exception, these bank officials have understood 18 very little about community development. Rather than 19 offering useful partnerships, they have sought information 20 and offered referral services. Bank of America has been 21 different. In our community development work, no bank, 22 local or otherwise, has supported our community 23 development efforts like Bank of America. 24 In the last eight years, I've arranged three 25 loans with the help of Bank of America staff. I've also 26 arranged one with a statewide nonprofit bank consortium . 477 1 and one with a government agency. The difference in 2 support service is marked. For me, the irony of these 3 experiences is breathtaking. I feel that I have had to 4 fight tooth and nail with the nonprofit government agency 5 to simply get good loans underwritten. In these cases I 6 felt that my lending partner was seeking to underwtie the 7 transaction in a way that reduced my agency's development 8 and operating cushions to such low levels that it would 9 deny us sufficient capacity to continue our work. 10 Working with the Portland Bank of America staff 11 is an entirely different experience. They appear to be 12 actively planning for our future. The bank staff has 13 encouraged us to take on new roles increasing our 14 efficiency and effectiveness. During our campaign to 15 organize and develop the capacity of other nonprofits 16 working in our three county service area, we received bank 17 support in the form of time, expertise and money. The 18 bank staff has taken a personal interest in the 19 development and capacity of my agency and me personally. 20 This has taken the form of scholarships, supportive 21 information and advice. 22 I cannot speak about any of the Bank of America 23 CRA work except that which I've seen in Portland nor do I 24 have any experience with NationsBank. However, I can say 25 the Bank of America and its Portland's staff has made a 26 huge difference in our ability for us to do our work. . 478 1 Thank you. 2 MS. SMITH: Thank you. I don't know how to 3 pronounce your name. 4 MS. HAUGER: It's Hauger. 5 MS. SMITH: Ms. Hauger. 6 MS. HAUGER: Thank you. Thank you for the 7 opportunity to allow me testify for the Community Housing 8 Resources of Arizona located in Phoenix on behalf of our 9 experience with Bank of America, Arizona. I'm Executive 10 Director of Community Housing Resources of Arizona. We're 11 a small HUD approved housing counseling agency established 12 in 1987 to promote fair housing and equal housing 13 opportunity for residents of Phoenix. 14 In 1990, we expanded our services to include 15 pre-purchase counseling and affordable homeownership 16 programs. In the eight years since then, over 2100 low 17 and moderate income families have completed our one-on-one 18 counseling program and become homeowners. And over 600 19 have received downpayment closing cost grants. On 20 average, 27 families per month become homeowners taking 21 part in our services. 22 In order to make the dream of homeownership a 23 reality for lower income and minority households, 24 Community Housing Resources relies heavily on the support 25 of financial institutions. Over the last six years, Bank 26 of America Arizona has been instrumental in our success by . 479 1 providing significant funding and management support. We 2 sincerely hope that the mutually beneficial partnership 3 with the bank will continue after the merger is completed. 4 Bank of America has recognized the value of pre-purchase 5 counseling in preparing lower income households for 6 homeownership by contracting with our agency to provide 7 pre-purchase counseling for low income first-time home 8 buyers. 9 BofA has provided first mortgages for our 10 clients, have given us generous grants to support our 11 counseling program. These grants not only have provided 12 operating funds for us but they've also provided the very 13 necessary matching funds needed to secure government 14 grants for downpayment assistance programs and 15 homeownership counseling. 16 In addition to this generous financial support, 17 BofA Arizona employees James Rayburn, Juan Salgado and 18 Darryl Tenenbaum has unselfishly helped and guided our 19 small agency by providing hundreds of hours of management 20 service. They have also served on our board of directors 21 and provided technical assistance which has ensured that 22 we have been able to meet our goals and missions. 23 In addition, as a director since 1990, James 24 Rayburn has saved our organization thousands of dollars by 25 providing countless hours of pro bono legal advice. 26 Community Housing Resources strives to provide . 480 1 homeownership opportunities for underserved populations, 2 including persons with disabilities and ethnic minority 3 households. Over 60 percent of the clients that we serve 4 are Hispanic and more than one-third of all of our 5 one-on-one counseling sessions are conducted in Spanish. 6 Our main concern with the proposed merger is that 7 our low-income and minority clients will be underserved by 8 the creation of such a large bank. We are, however, 9 encouraged by recent articles describing Nationsbank's 10 increased efforts to serve the growing Hispanic community 11 and we trust that those efforts will extend to all 12 traditionally underserved communities in Arizona. 13 We support the merger with the expectation that 14 the current level of support for our organization, 15 including the employee involvement from the bank, will 16 continue and that the new bank will provide increased 17 homeownership opportunities for the low-income and 18 minority communities we serve. Thank you. 19 MS. SMITH: Thank you very much. I have a 20 question for you on the homeownership counseling. Does 21 your organization participate in the application process 22 or is that handled by bank personnel? 23 MS. HAUGER: That is handled by bank personnel. 24 MS. SMITH: So how does your operation work, 25 then, on the counseling side? 26 MS. HAUGER: What we do is act as though we are a . 481 1 lender as far as looking at all the information on the 2 income, debt, credit and cash resources of our clients. 3 We look at that, we advise them on their ability to 4 qualify for a mortgage, whether we think that they can 5 meet minimum lender requirements. We give them 6 information on a number of types of loans that are 7 available showing them what it would cost them, what they 8 can afford getting that type of loan. And also, you know, 9 what the benefits might be from one type of loan to 10 another. Based on that, then our clients make their 11 decision on the type of loan they would like. And we 12 prepare all the information for them to take to the 13 lender. 14 MS. SMITH: And you direct them to several 15 lenders or -- 16 MS. HAUGER: Yes. So they, basically, make the 17 choice on what type of product they want and what lender 18 they would like to go to. 19 MS. SMITH: Thank you. Question? Any other 20 questions? Well, thank you very much for coming this 21 morning. And it looks as if we're ready for the next 22 panel.
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