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

Public Meeting Transcripts

Public Meeting Regarding NationsBank and BankAmerica

Friday, July 10, 1998

Transcript of Panel Twenty-Three


        18            MS. SMITH:  We'll first have David Noguera

        19   speaking for Mayor Elihu Harris, Mayor of Oakland.

        20            MR. NOGUERA:  Thank you.  On behalf of the Mayor

        21   of Oakland.  As the mayor of a city where the vast

        22   majority of the population consists of families of color

        23   and is in the shadow of the largest financial institution

        24   in California, I would like to express some of my concerns

        25   regarding the merger with an institution that will become

        26   an absentee landlord for all of Oakland.


         1            Community reinvestment and economic redevelopment

         2   must be more than a national pledge.  To be meaningful,

         3   there must be specifics for each affected community,

         4   particularly communities that have historically been

         5   underserved or redlined such as Oakland.

         6            In California today, many financial institutions

         7   have made specific pledges and set specific goals for

         8   minorities and women for lending, for contracts and for

         9   charitable contributions.  I am concerned that NationsBank

        10   is unwilling to do so.

        11            Historically, our city and minority communities,

        12   in particular, have been the object of general promises

        13   that have failed to produce results.  I'm also concerned

        14   that the prestigious local community groups as well as

        15   national minority organizations that know the work of

        16   NationsBank, such as the National Black Chamber of

        17   Commerce, the National Black Business Council and the

        18   Asian Business Association and the Latin Business

        19   Association, have all criticized this proposed measure due

        20   to lack of specificity for underserved communities.  I am

        21   also concerned that, while other institutions have

        22   committed to diversity goals that reflect our state's

        23   extraordinary diversity, NationsBank has stated that it

        24   will not set any goals or release any data on their

        25   achievements.

        26            Until the chairman of BofA and NationsBank put in


         1   writing the type of specifics that their competitors have

         2   produced regarding minorities and underserved communities,

         3   I believe that it would be best to either deny the merger

         4   or, in the alternative, impose such a condition of

         5   approval of the merger.  Thank you.

         6            MS. SMITH:  Thank you very much.  Mr. Mosher.

         7            MR. MOSHER:  Thank you.  Good morning, my name is

         8   Mark Mosher, I'm Executive Director of the Committee on

         9   Jobs, a coalition of 33 of San Francisco's largest private

        10   sector employers.

        11            Our organization focuses on public policy issues

        12   affecting the city's economic vitality and quality of

        13   life.  During its eight-year history, Jobs has organized

        14   corporate community involvement in a few key areas,

        15   including major youth hiring and welfare-to-work

        16   initiatives.  It is in this context that I would like to

        17   address the proposed merger and what we believe to be Bank

        18   of America's post-merger commitment to San Francisco.

        19            In every initiative Committee on Jobs has

        20   undertaken, whether it is our effort to replace cuts in

        21   the federal Summer Youth Employment Training Program or

        22   the organization of hundreds of business volunteers

        23   through Christmas in April, Bank of America has taken a

        24   leadership role.  The bank has demonstrated to us that

        25   this leadership role will not decline in the wake of a

        26   merger.


         1            When the local business community came together

         2   to address the challenge of welfare-to-work, Bank of

         3   America led the way.  Last year, the bank contributed

         4   $250,000 to found San Francisco Works, an effort to help

         5   transition 2,000 public assistance recipients into

         6   self-sufficiency over the next three years.  Bank of

         7   America's involvement in this effort transcends checkbook

         8   philanthropy.  Bank Chairman Dave Coulter has personally

         9   involved himself in the organization, participating in

        10   board meetings, loaning his staff to counsel San Francisco

        11   Works in current training methods and committing

        12   employment opportunities to program graduates.  The bank

        13   has communicated to us that its commitment in each of

        14   these areas will not decline after the merger.

        15            I value Bank of America's role in San Francisco,

        16   and I was surprised and disappointed when I heard the

        17   headquarters would be moved to Charlotte.  The move is

        18   definitely a blow to the city's prestige.  However, in

        19   practical terms, David Coulter and half of the merged

        20   bank's executive management team will remain in

        21   San Francisco, several key operations will remain

        22   headquartered in San Francisco, and the deep spirit of

        23   community involvement and fostered by the bank's current

        24   leadership will continue.

        25            We urge approval of the merger.  Thank you.

        26            MS. SMITH:  Ms. Duncan.


         1            MS. DUNCAN:  Yes, I am Emily Duncan, the

         2   Executive Director of the Snohomish County Private

         3   Industry Council.  Snohomish County is located in

         4   Washington State and it is just north of King County where

         5   Seattle is.

         6            We are a private industry council and we are the

         7   managing partner for the Job Training Partnership Act

         8   which we administer in Snohomish County.  This law is

         9   enacted to provide training funds for low-income youth and

        10   adults and dislocated workers, but it's not the Job

        11   Training Partnership Act that I want to talk about today,

        12   it's Down Home Washington.  Because that's the other half

        13   of us.

        14            Down Home Washington started ten and a half years

        15   ago as what has now come to be known as Microenterprise

        16   Program.  In those days, we didn't know the name.  What we

        17   wanted to do was provide entrepreneurial training for

        18   low-income women, half of whom were welfare recipients.

        19   And we did do this.  What is remarkable about this

        20   particular experiment is that, although we had the

        21   operating funds through our own Job Training Partnership

        22   Act moneys, we didn't have a loan fund.  And in those

        23   days, no one, to speak of, had heard of Microenterprise

        24   and I don't even know if the word had been invented yet.

        25            But Sea-First, which is Bank of America in

        26   Washington State, stepped up to the plate and they


         1   provided the first dollars for that initial loan fund.  It

         2   wasn't a lot of money but it was incredibly important

         3   because they were out front and in the leadership position

         4   and it ended up leveraging many, many times, more than 15

         5   times the amount of money that they contributed.  So they

         6   have been very responsive.  And they are concerned about

         7   the -- their position in the community and they try to

         8   fill the gaps where those exist and where they understand

         9   them.

        10            One of the most incredible things about this

        11   first program is that (unintelligible) came to all three

        12   of the graduations over a three year period.  She didn't

        13   have to do that but I know that she enjoyed it as much as

        14   I did.

        15            We are very proud to be one of the grantees of

        16   Sea-First/Bank of America in Washington State.  Sea-First

        17   also recognized the need for funding in rural areas and,

        18   in fact, Bank of America now has a major rural area

        19   initiative.

        20            We support this merger.  We do believe in the

        21   commitment of the $350 billion over the period of time.

        22   We do believe that greater resources will be made

        23   available through it.  We also know that NationsBank is

        24   very supportive of the kinds of things that

        25   Microenterprise is involved in.  And without the support

        26   of organizations like Sea-First, we would not be in the


         1   position we are today where we have about $4 million

         2   available in loan funds that cover 16 counties in the

         3   State of Washington.  From an initial operating budget of

         4   $29,000, we now have an operating budget of $375,000, and

         5   that growth has been fueled by support from Sea-First/Bank

         6   of America.

         7            We do have a concern and that concern is in

         8   Washington State, there are no banks headquartered in

         9   Washington State of any size any longer.  And our concern

        10   is that we will be almost invisible, and so along with

        11   other groups from the Rural 2,000 Committee, we support a

        12   fair allocation of resources by region and also by rural

        13   and urban and other designations.  Thank you very much.

        14            MS. SMITH:  Thank you.  Ms. Singla.

        15            MS. SINGLA:   Good morning, and thank you for the

        16   opportunity to testify regarding the proposed merger

        17   between NationsBank and Bank of America.  My name is

        18   Indira Singla and I'm the President and CEO of Automation

        19   M.H, Incorporated of Dallas, Texas.

        20            We are a small woman-owned computer systems

        21   integration company based in Dallas.  I was also a

        22   delegate from North Texas to the White House conference on

        23   small business in 1995.  As a small business owner, I take

        24   deep interest in the affairs that affect all small

        25   businesses, including minority and women-owned businesses.

        26            Our relationship with NationsBank is a three-fold


         1   relationship.  First, as a business client, our banking

         2   relationship with NationsBank goes back to over ten years.

         3   This relationship is based on the commitment that

         4   NationsBank has for small business development.  I have

         5   found them very sensitive to the needs of small business

         6   community.  NationsBank has supported us in times of need

         7   through loans, lines of credit, and other services

         8   numerous times.  Over the years, we have come to depend

         9   upon NationsBank and their employees for exceptional

        10   quality service and commitment to assist small businesses.

        11            The second relationship we have with NationsBank

        12   is a vendor relationship.  NationsBank has been our

        13   customer for over three years.  During this period, we

        14   have supplied them with mid-range units, hardware,

        15   software, integration consulting and network services.  We

        16   have worked with their Asset Management Interest

        17   Department, Capital Markets Department and the Strategic

        18   Technologies Group.  Most recently, we provided service

        19   for their E-mail capabilities between NationsBank and Bank

        20   of America.

        21            Over the years, NationsBank -- as a small

        22   business owner knows, that all of this will not be

        23   possible if NationsBank did not have a commitment to give

        24   an opportunity to small business like ours to participate

        25   in such opportunities.  They have demonstrated this

        26   commitment by participating in many, many small business


         1   development activities in Dallas.

         2            Thirdly, as NationsBank, as it applies to the

         3   community relationship, as a citizen of Dallas, I have

         4   observed NationsBank to play a leading role being the

         5   community investment expert in the financial services

         6   industry through the delivery of special programs for low-

         7   and moderate-income individuals and communities.

         8   NationsBank is an active participate in the South Dallas

         9   Economic Development Program.  I see this merger bringing

        10   more opportunities to thousands of small businesses across

        11   the nation just like Automation Image.  So I support this

        12   merger.  Thank you.

        13            MS. SMITH:  Thank you very much for your

        14   testimony.  Next, we have Mr. Esquibel.

        15            MR. ESQUIBEL:  Good morning.  My name is Eduardo

        16   Esquibel, I am the Executive Director of United Housing

        17   and Educational Development Corporation.  United Housing

        18   is a nonprofit 501C3 organization formed in 1990 in the

        19   State of Arizona that provides affordable housing in the

        20   rural areas of Pima and Pinal Counties.  United Housing is

        21   currently under contract with the United States Department

        22   of Agriculture, Rural Housing Services, to operate and

        23   provide technical assistance under the 523 self-help

        24   program.  This program targets families in need of safe,

        25   decent and affordable homes.  Families qualify for a

        26   housing loan from Rural Development called a 502 direct


         1   loan program based on their income and need.  The families

         2   income cannot exceed 80 percent of the area's median

         3   income.  Subsidy is awarded to families based on family

         4   size and income.

         5            These families are considered low and very low

         6   based on income standards.  United Housing is pleased to

         7   be a partner with Bank of America's Community Development

         8   Bank.  Bank of America has already established an

         9   effective partnership which has enabled local self-help

        10   housing organizations like ours to expand the opportunity

        11   for self-help families to achieve homeownership.

        12            Bank of America in 1997 established its Rural

        13   2,000 Initiative which is addressing rural concerns of

        14   reaching out to markets that either no service is

        15   available and/or is underserved.  Bank of America's Rural

        16   2,000 Initiative will make available funds to provide

        17   mortgage loans by partnering with the Department of

        18   Agriculture as well as with Fannie Mae to start the 502

        19   direct blended loan program which is being piloted through

        20   the Rural 2,000 Initiative.  The 502 direct loan program

        21   current funding level is $1 billion this fiscal year.  The

        22   rural initiative is assisting nonprofit organizations with

        23   lines of credit for construction loans and infrastructure

        24   loans that will provide critical resources to facilitate

        25   development of building sites for low-income families who

        26   are willing to commit the time and energy to build their


         1   homes for themselves and their neighborhoods.

         2            United Housing has demonstrated success in the

         3   development of self-help housing.  In fact, since 1990,

         4   United Housing has assisted 102 families in the successful

         5   construction of their homes through the mutual self-help

         6   program.  The State of Arizona is currently ranked No. 2

         7   in the United States for providing self-help homeownership

         8   under the Department of Agriculture's national self-help

         9   program.  United Housing was nationally recognized in 1996

        10   by the Fannie Mae Foundation as a recipient of the Maxwell

        11   Award of Excellence for the production of low-income

        12   housing.  At the same time there are many families who are

        13   waiting for the opportunity to join with their neighbors

        14   to build better homes for themselves and their children.

        15   One of the continuing obstacles we face is the difficulty

        16   of acquiring affordable building sites.  Bank of America

        17   funds through the Community Development Bank has assisted

        18   United Housing in the development of suitable building

        19   sites.

        20            The opportunity of this merger can provide

        21   greater resources to nonprofits like ourselves in

        22   partnering with the federal resource dollars that have

        23   been available in the past to operate programs such as the

        24   self-help program.  The Bank of America/NationsBank $350

        25   billion commitment to provide funding resources, as I have

        26   discussed earlier, will have an impact on rural area


         1   markets that have been underserved and misunderstood for

         2   years.

         3            Bank of America has a proven track record in

         4   effectively managing the Community Development Bank by

         5   providing funds which has created homeownership

         6   opportunities for hard working low-income families within

         7   our service area and throughout rural America.  United

         8   Housing supports the merger between Bank of America and

         9   NationsBank.

        10            Thank you for the opportunity to speak on behalf

        11   of the families that we served and United Housing.  Thank

        12   you.

        13            MS. SMITH:  Thank you very much.  Mr. Price

        14            MR. PRICE:  Thank you very much.  Good morning.

        15   My name is Al Price, I'm from Beaumont, Texas, I'm a

        16   retired captain for American Airlines, and for the past 21

        17   and a half years, I've been a member of the Texas House of

        18   Representatives.  Today I represent the Southeast Texas

        19   Community Development Corporation, Incorporated, SETCDC

        20   which I serve as president.

        21            SETCDC is certified as a CHDO by the Texas

        22   Department of Housing and Community Affairs to serve rural

        23   Texas and certified as a CHDO by the Cities of Beaumont,

        24   Port Arthur and Orange.

        25            In the past five years, SETCDC has completed new

        26   construction and rehab in excess of $2.2 million.  We


         1   anticipate construction of 250 new homes and the rehab of

         2   over 100 in the next three years.  As we expect to also

         3   expand into rural Texas.

         4            Some eight years ago, when we were reviewing the

         5   lending practices of banks in our community, I met Ms.

         6   Cathy Bessant of NationsBank, she came to Beaumont to work

         7   with us to talk about achieving the aims of the Community

         8   Reinvestment Act.  She was very cooperative and I'm very

         9   pleased to know that she will be involved in this great

        10   effort.

        11            Our organization has developed a business

        12   relationship with NationsBank which includes the

        13   arrangement of permanent financing of loans for our

        14   homeowners.  In this manner, we've been successful in

        15   addressing the housing and banking needs of a clientele

        16   that is traditionally below the regular commercial banking

        17   floor.  Through our Homebuyer Education Program, we work

        18   with persons who are currently renters.  We inform them,

        19   encourage them, cajole them, if necessary, spurring them

        20   to dare achieve the dream of homeownership.

        21            Virtually every one of our clients utter in

        22   disbelief at closing, "I never thought I'd ever own my own

        23   home."  These are new homeowners.  These are first-time

        24   home buyers, these are new mortgages in our community,

        25   this is new money being generated, this is private

        26   enterprise doing what it can do best and much better than


         1   the government.  This is removing people from the public

         2   dole.  This is putting housing and economic development in

         3   the private sector without dependency on public funds.

         4            Upon learning of the proposal of NationsBank to

         5   make $350 billion available to address the needs of

         6   low-income and rural areas, I contacted NationsBank to

         7   discuss ways that we and they could partner with local

         8   officials and community leaders to plan and execute

         9   locally conceived programs that would benefit the

        10   community while concurrently achieving the goals of

        11   NationsBank and SETCDC.  This $350 billion infusion

        12   represents a pool of resources that will allow communities

        13   to do housing and economic development on a scale that

        14   will be both trendsetting and transforming.  And if done

        15   correctly, it will allow a level of efficiency that can

        16   significantly stretch those dollars.

        17            I've submitted a proposal to NationsBank to

        18   establish a pilot program in a small county in southeast

        19   Texas.  This proposal, which could be quickly implemented,

        20   calls for our convening the county commissioners plus the

        21   mayors and council members of each city with a population

        22   of 10,000 family -- population in that county, along with

        23   the officials of HUD, the State of Texas, local nonprofit

        24   groups and the private sector for the purpose of assisting

        25   local communities in the creation of a plan for housing

        26   and economic development.


         1            Such a procedure could be replicated anywhere and

         2   at will.  Through SETCDC and other nonprofits, NationsBank

         3   will then be able to extend its financial tentacles into

         4   hamlets that are presently inaccessible, thereby

         5   transforming old communities.

         6            Homeownership is the cornerstone of safe,

         7   desirable neighborhoods and, therefore, is essential to

         8   any plan to revitalize communities.  People who own their

         9   own homes care about their streets, their property values

        10   and their schools.  They generate business, they pay

        11   taxes, and more often than not, they vote.  By providing

        12   safe, sanitary desirable homes to low- to moderate-income

        13   families, CHDO will work to fend off the renters'

        14   mentality with this emphasis on dependency, consumership

        15   and apathy and replace this renters' mentality with a

        16   homeowners' mentality with this emphasis on independence,

        17   productivity and involvement.

        18            Ladies and gentlemen, because I'm so pleased to

        19   see this expression of corporate responsibility and

        20   goodwill and because I view this as a definitive measure

        21   to put affordable housing and community development firmly

        22   into the private sector and away from dependency on

        23   government handouts.  I'm very pleased to support this

        24   merger.  Thank you.

        25            MS. SMITH:  Thank you very much.  Ken, you have a

        26   question?


         1            MR. BINNING:  I would like to ask Mr. Mosher a

         2   question, please.  We heard a number of speakers express

         3   concern that support and understanding for California

         4   needs would fall off when the headquarters is moved to

         5   North Carolina.  And I believe you stated that you and

         6   your organization have been convinced by BofA that that

         7   won't happen and I was just curious if you could elaborate

         8   a little on what types of information or assurances from

         9   them have given you that confidence?

        10            MR. MOSHER:  I have to admit that my experience

        11   is very parochial in that my organization's jurisdiction

        12   is that of San Francisco.  I happen to know the chairman

        13   of Bank of America through my organization and through a

        14   lot of the community initiatives that we sponsor.  And, if

        15   anything, in the wake of the merger announcement, I think

        16   we've seen really expanded commitment to some of the

        17   programs that we've started, such as San Francisco Works,

        18   the welfare-to-work initiative, and we've seen that in the

        19   form of really a commitment that has gone from at the

        20   outset a financial commitment to the program, what has

        21   turned into, in some cases, senior executives of the bank

        22   coming out and expressing an interest in helping local

        23   nonprofit organizations do a better job of training people

        24   coming off of public assistance to what I would

        25   characterize as really up-to-the-minute specifications for

        26   jobs that are available in the banking industry.


         1            So what we've seen is -- I mean, first of all, a

         2   commitment to see this program through to whatever

         3   conclusion, you know, its board of directors decides it

         4   wants to reach.  But also the bank giving more than

         5   dollars sending senior executives to, in effect, go out

         6   and serve as consultants to some nonprofits that are doing

         7   job training in an effort to try and get public assistance

         8   recipients trained for jobs in this particular bank.  And

         9   the commitment that has been made is that they not only

        10   want to make a financial commitment and a commitment of

        11   expertise, that they want to integrate former public

        12   assistance recipients into the bank post-merger.

        13            MR. MENDELL:  Thank you.

        14            MS. SMITH:  Mr. Price, you used the term that

        15   sounded like CHDO and you may have explained what it was

        16   earlier but I missed it.

        17            MR. PRICE:  I'm sorry, that's an acronym for

        18   Community Housing Development Organization.

        19            MS. SMITH:  So CHDO.

        20            MR. PRICE:  CHDO.  Some bureaucrat thought that

        21   up.

        22            MS. SMITH:  Do you have any questions?  Well,

        23   thank you very much, we appreciate your coming this

        24   morning to talk to us.  And if you have any additional

        25   comments that you want to submit for the record, you have

        26   until next Friday but not later than 5:00 o'clock eastern


         1   daylight time.

Last update: December 3, 2010