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Public Meeting Transcripts

Public Meeting Regarding Banc One and First Chicago

Thursday, August 13, 1998

Transcript of Panel Ten

         17       MS. RANGAN:  Good afternoon.  My name is Rashmi
         18   Rangan.  I'm the Executive Director of Delaware
         19   Community Reinvestment Action Council.  I am also a
         20   board member of the National Community Reinvestment
         21   Coalition, which is a great association of 650 plus
         22   organizations.  I am also a member of Inner City
         23   Press Community on the move.
         24            And I am here today to testify against
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          1   this merger.  And this is the second time I'm
          2   testifying against Banc One acquiring another
          3   bank.
          4            And the last time, we had brought selfish
          5   use before the Federal Reserve Board and many of
          6   them have been justified in today's testimony.
          7   Every concern that we raised earlier has been
          8   spoken today.
          9            The treatment of the consumers, the
         10   customers at Banc One's hands, the fair lending
         11   concerns that we have had, the predatory lending
         12   concerns that we have had about Banc One have been
         13   attested to today.
         14            Before I address my concerns with Banc
         15   One, let me address my concerns with this
         16   particular process today.
         17            It is probably appropriate that you have
         18   renamed public hearings by calling it public
         19   meetings.  Apparently you're no longer willing to
         20   hear what we have to say, but we do have a lot to
         21   say, particularly about Banc One's record.
         22            Based on the factors that the Board must
         23   consider in approving this application and the
         24   managerial issues, many, many concerns have already
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          1   been addressed, but I will refer you to a few.
          2            The first one, Dr. Kenneth Thomas has
          3   already commented on in his July 27th, 1998,
          4   communication to you regarding the management's
          5   apparent violation of confidentiality of individual
          6   examination ratings on Y2K.
          7            In Arizona, the Attorney General's case,
          8   and in Texas the HUD's apparent acceptance that
          9   there is discrimination, Banc One has been charged
         10   with discrimination, and this after the Fed's own
         11   conditional approval in recent application by Banc
         12   One where Banc One acquired First USA, a Delaware
         13   bank.
         14            Apparently, Banc One failed to meet the
         15   Fed's condition.  On these grounds alone, this
         16   application should be denied.
         17            Banc One, we charged previously -- we'll
         18   repeat this charge today -- is a predatory lender
         19   through its finance company.  And while we have
         20   raised this issue many times, we sense that the
         21   Feds really do not understand the full import of
         22   our accusations.  Therefore, attached as Exhibit A
         23   to my testimony today is a catalogue of predatory
         24   mortgage lending abusive practices prepared by
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          1   Mr. Bill Brenan of Atlanta Legal Aid Society.
          2   Please review that very carefully.
          3            We have asked the Feds previously to
          4   review the finance company's subsidiary of the bank
          5   holding company and its lending record.  We repeat
          6   again today, we and others have presented ample
          7   evidence of the existence of predatory and
          8   discriminatory lending practices practiced by Banc
          9   One finance companies.
         10            In 1995 through the finance company, it
         11   approved 7,805 loans.  1996, 32,712.  So it has
         12   actually grown in size, a 319 percent increase of
         13   lending through its finance company.
         14            You have seen many HMDA analyses all point
         15   to the very same concern that we have for the
         16   second time presented today.
         17            On convenience and needs issues, how can
         18   the convenience and needs of my community be served
         19   when the acquirer, Banc One, has shown a remarkable
         20   disdain for Delaware?
         21            May I remind the Board of concerns we
         22   raised when Banc One applied to acquire First USA?
         23   First USA, a limited purpose bank, cited its
         24   inability to meet its CRA obligations and, hence,
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          1   established First USA, FSB.
          2            When Banc One acquired First USA, the
          3   thrift was gone.  Relative to Banc One/First USA,
          4   after the merger, meeting the convenience and needs
          5   of my community, it is abysmal.
          6            In comparison, FCC and its CRA officer,
          7   Mr. Roland Ridgeway, have not let the standard
          8   excuse that.  The limited purpose bank status nor
          9   the Delaware Financial Center Development Act
         10   restrictions get in the way of meeting these
         11   obligations under the CRA.
         12            At issue here is not -- I'll take only
         13   half a minute.  At issue is not who, where and how
         14   much each bank does or gives individually or
         15   collectively.  At issue here today is the who from,
         16   the where from and the how much does Banc One take
         17   away from the community through its predatory
         18   lending practices.  On these grounds alone, this
         19   application must be denied.
         20            Thank you.
         21       MS. SMITH:  Thank you very much.
         22            Mr. Reynolds.
         23       MR. REYNOLDS:  Thank you.  Greetings.  My name
         24   is Jerry Reynolds.  I will be delivering the
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          1   remarks of Rebecca Adamson, President of First
          2   Nations Development Institute, a Native American
          3   economic development organization of 18 years
          4   standing headquartered in Fredericksburg,
          5   Virginia.
          6            Ms. Adamson could not be here today, but
          7   from our Information Services Department, I monitor
          8   Community Reinvestment Act issues as they pertain
          9   to our country.  I'm a board member of the National
         10   Community Reinvestment Coalition.
         11            I spoke with a consultant to a tribal
         12   council some weeks ago.  In the midst of our
         13   conversation, he made the statement:  The tribe is
         14   isolated.  It's a 200-mile round trip for
         15   necessities like cash.
         16            More than three-quarters of one million
         17   Native Americans and tribes reside in the market
         18   area that would be created in the proposed
         19   acquisition of First Chicago NBD Corporation by
         20   Banc One.  Many of them are as remote to the
         21   nearest banking services, and some more so.
         22            Sadly, a First Nations Development
         23   Institute survey, which is attached to our written
         24   testimony, of Native American banking needs within
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          1   the merged entities' market area found that much
          2   less remote tribes, tribes within a 20 to 40-mile
          3   range of Banc One branches, have been regularly
          4   neglected by Banc One.
          5            My point is that geography is a major
          6   hurdle to the provision of banking and financial
          7   services to Native Americans.  The proposed merger,
          8   if approved, would provide the new entity with the
          9   resources to get over this geographic hurdle.  With
         10   these resources, the bank should be able to absorb
         11   the development cost of products and services that
         12   would enable it to surmount some of the geographic
         13   challenges to lending in Indian Country.
         14            Given that Banc One's record of services
         15   to Native American communities according to our
         16   survey findings is characterized by a concentration
         17   on a cream of the crop, on those native communities
         18   whose more evolved economies translate to lower
         19   risk for banking activities, the Board's approval
         20   of the merger should be contingent upon substantial
         21   improvements in Banc One's outreach and deliverable
         22   services to native communities, including urban
         23   native populations who starve for credit in cities
         24   with an abundance of Banc One branches.
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          1            Again, the augmented resources of the
          2   merged entities should provide the incentive for
          3   business initiatives.
          4            Further, the new Banc One should be
          5   required to develop plans for native specific loan
          6   products in coordination with the diversity of
          7   Native American groups, an approach recommended
          8   toward other community groups by First Chicago
          9   chairman Verne Istock.  This would contribute in
         10   future to sidetracking such avoidable debacles as
         11   Banc One's disaster and with mobile unit banks.
         12            When the initiative first began to bring
         13   credibility Banc One's way through newspaper
         14   articles and conference presentations, First
         15   Nations was reluctant to criticize a financial
         16   institution that was at least trying to make credit
         17   available in Indian Country.
         18            Still, we had strong doubts about an
         19   initiative that amounted to little more than
         20   rolling out 20th Century technology, the
         21   automobile, to serve 19th Century needs, personal
         22   and consumer loans.
         23            Now that Banc One having reaped a windfall
         24   of publicity but no profit has garaged this
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          1   antiquated road show and left Indian Country to
          2   overcome its failure, we can assert with certainty
          3   that sustained collaboration with the diversity of
          4   native groups has been the missing ingredient in
          5   Banc One's limited approaches to Indian Country.
          6            For starters, mobile units in the 21st
          7   century must be fully operational banks securitized
          8   through satellite communications technology.  No
          9   one will have to ride shotgun.
         10            In the event the merger is approved, we
         11   trust the Federal Reserve to urge the updated
         12   approach to mobile unit banking on Banc One's
         13   attention.
         14            I want to digress briefly from my prepared
         15   remarks to say that I was in a major meeting in
         16   banking in Indian Country, and already, some Native
         17   Americans are saying that they can't see mobile
         18   unit banking as a way to serve Indian Country. .
         19            I believe that Banc One's failure in this
         20   regard has a chance to make mobile unit banking a
         21   nonstarter in Indian Country.  That would be a
         22   great misfortune.
         23            First Nations also wishes to acknowledge
         24   some of the outstanding lending services that Banc
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          1   One does provide in some native communities.
          2            Some of these include a recent grant to a
          3   North American Native Bankers Association.  They
          4   recently went on a site visit to Wisconsin to visit
          5   some of the tribes there and their lending needs --
          6   of course this happened while the merger process
          7   was in full swing -- Gila and Camp Verde Yavapai
          8   Apache Nation in Arizona as well as an internal
          9   appointment of a team to familiarize Banc One
         10   Mortgage Corporation with HUD Section 184 loan
         11   guarantee programs show a flexibility and
         12   consideration worthy of the merged entity.
         13            Give me half a minute here.
         14            Such commitments are considerable in
         15   themselves, not to be minimized.  But on this
         16   momentous occasion, First Nations can affirm the
         17   proposed merger only on the understanding that all
         18   of Banc One's efforts in Indian Country to date
         19   amount to a modest beginning.
         20            We call upon bank regulators to ride herd
         21   on their post-merger follow-through and upon Banc
         22   One to establish a collaborative task force on
         23   Native American lending and services as merging --
         24   as other merging entities have done.
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          1            Thank you.
          2       MS. SMITH:  Thank you very much.
          3            Mr. VanTol.
          4       MR. VANTOL:  Good afternoon, Members of the
          5   Panel.  I am Hubert VanTol.  I am the Cochair of
          6   the Legislative Committee of the National Community
          7   Reinvestment Coalition.  I'm testifying this
          8   afternoon on behalf of John Taylor, our President
          9   and CEO, who is unavoidably unable to be here
         10   today.
         11            NCRC is the nation's CRA trade association
         12   of over 680 community reinvestment organizations
         13   from inner city neighborhoods and rural areas.
         14   NCRC's members are dedicated to revitalizing low
         15   income and minority communities.
         16            As a trade association, we do not
         17   regularly comment on applications to the Federal
         18   Reserve Bank.  We usually provide the research and
         19   other support to our members who do the commenting
         20   during the application process.
         21            However, we have recently decided that we
         22   do need to comment on the applications that present
         23   significant public policy issues.
         24            I am addressing two main issues this
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          1   afternoon:  Community reinvestment performance and
          2   fair lending.
          3            On the topic of community reinvestment
          4   performance, simply put, mega mergers are harmful
          5   for low income and minority communities if they
          6   result in massive branch closures and drastic
          7   decreases in lending and investing.  This is why
          8   NCRC has asked the Federal Reserve to require banks
          9   to submit community reinvestment plans to the Board
         10   and the reserve banks as part of their application
         11   process.
         12            These plans would outline how the merging
         13   banks plan to maintain and increase the number of
         14   loans, investments and services in lower income and
         15   minority communities after mergers.
         16            The community reinvestment plans would be
         17   developed for each urban and rural community the
         18   bank serves.  Moreover, they would not be
         19   unilateral like the mega pledges recently announced
         20   by other large banks.
         21            Instead, they would be responsive to
         22   specific credit needs in various communities
         23   because they would be developed with the input of
         24   community organizations.
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          1            The community reinvestment plans would
          2   explain how lenders would preserve their CRA
          3   performance in all of their major markets in the
          4   wake of post-merger institutional changes.
          5            For example, the CRA performance of Banc
          6   One and First Chicago could deteriorate
          7   substantially in the state of Indiana due to the
          8   branch closures and divestiture requirements.
          9            And you know, the State of Indiana is the
         10   market where the bank's operations substantially
         11   overlap, yet despite the looming changes
         12   confronting Indiana's traditionally underserved
         13   communities, Banc One has neither negotiated a CRA
         14   agreement with the community organizations in
         15   Indiana, nor has it submitted a community
         16   reinvestment plan to the Federal Reserve explaining
         17   how CRA performance will be maintained in the
         18   state.
         19            NCRC is pleased that First Chicago and NBD
         20   have worked out CRA agreements with NCRC members in
         21   Chicago and Detroit, however, these agreements
         22   address CRA performances in two of Banc One's
         23   markets.
         24            In order for community reinvestment
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          1   performance to be preserved in all of the bank's
          2   markets, NCRC believes it is the responsibility of
          3   the Federal Reserve Board to require the bank to
          4   offer in detail the community reinvestment plan
          5   explaining how it will maintain and improve its
          6   post-merger CRA performance.
          7            These plans would also be a starting point
          8   for negotiations leading to CRA agreements with
          9   community organizations.
         10            In addition, the Federal Reserve Board
         11   should issue conditional approvals in instances
         12   where the applying banks do not satisfactorily
         13   outline how CRA performance will be maintained in
         14   places like Indiana and many others that are likely
         15   to be affected by the merger.
         16            On the topic of fair lending, over a year
         17   ago, the Federal Reserve Board approved Banc One's
         18   acquisition of First USA, a credit card lender,
         19   despite unresolved fair lending issues.
         20            In its approval order, the Federal Reserve
         21   stated that it would impose conditions at a later
         22   date if its investigation revealed fair lending
         23   violations.  NCRC and its members strongly believe
         24   that this was an indication -- that this was an
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          1   abdication of the Federal Reserve's responsibility
          2   to enforce the nation's fair lending laws.
          3            Fair lending problems will intensify if
          4   the Federal Reserve does not complete fair lending
          5   investigations and issue the necessary conditions
          6   before acting on these latest Banc One
          7   applications -- this latest Banc One application.
          8            We ask the Federal Reserve to follow the
          9   lead of its regulatory counterparts in seriously
         10   investigating and issuing fair lending and CRA
         11   conditional approvals when necessary.  The Federal
         12   Reserve should be leading its counterparts, but it
         13   should at least follow them.
         14            The OTS approval order of the Travelers
         15   application is an example, likewise, the Office of
         16   the Comptroller of The Currency's recent
         17   conditional approval of First Union/Money Store
         18   merger, which would require access for all
         19   applicants to both prime and subprime lending
         20   products.
         21            We appreciate this opportunity to express
         22   these significant reinvestment issues before you
         23   that are associated with this merger.
         24            We hope that the Federal Reserve Board
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          1   does everything in its power to ensure fair lending
          2   and continued progress in community reinvestment.
          3       MS. SMITH:  Thank you very much.
          4            Ms. Wilkins.  Wilmington good evening.
          5            Can you hear?  Is the mic on?
          6       MS. SMITH:  Yes, that's good.  Wilmington can
          7   you hear me?
          8       MS. SMITH:  Bring it a little closer.
          9   Wilmington okay.  I know I'm the short one in the
         10   bunch.
         11            My name is Betty Wilkins, and I would
         12   like, first of all, to thank you for the
         13   opportunity to testify on Banc One's unfair and
         14   ugly lending record in Colorado, and I am the board
         15   member of Colorado ACORN.  It's an organization of
         16   over 1,300 low and moderate income families in my
         17   community who is working and trying to make a
         18   decent place to live and to increase hope --
         19   hopefully that we can increase the community
         20   reinvestment and increase jobs and city services in
         21   our community.
         22            And the members of the Colorado ACORN
         23   urges the Federal Reserve Board not to allow this
         24   merger because of Banc One is not making loans to
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          1   low and moderate income and minority people in the
          2   City of Denver.
          3            You have heard some of the statistics, and
          4   when I heard that, I -- it was unbelievable.
          5            First of all, when Banc One opened up in
          6   my community, it was a beautiful and a welcome
          7   sight because we really did need a bank that was
          8   close where we don't have to hop on a bus every
          9   time we want to go to the bank.
         10            But within the past two and a half years
         11   since I have been banking and trying to help my
         12   community bank with Banc One, we have received
         13   absolutely nothing as far as a community
         14   reinvestment by -- put back into our community, and
         15   I think this is very unfair and it's a very ugly
         16   thing.
         17            I took it on myself to do some
         18   investigating on Banc One.  I went by the bank last
         19   Saturday morning about 9:00 o'clock.  That's what
         20   time the banks open.  And there was a line there of
         21   Afro and Latinos waiting to get in the bank to
         22   deposit their money.
         23            My thought was then -- I didn't say that
         24   to the clients, but I thought to myself, where is
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          1   this money going to go today, it definitely is not
          2   going to my community because Banc One is not that
          3   kind of bank to low and moderate income
          4   neighborhoods.
          5            And I can say it truthfully today because
          6   I live it.  And then I asked myself, I said, well,
          7   now, how can this be?  I'm not going to give you
          8   any statistics at this point.  I'm going to give
          9   you some stories as to how this happened.
         10            It seemed impossible, but it is not.  And
         11   I got permission from the community to do this to
         12   give you some stories of what really happens.
         13            One of our members, Betty Fortenberry, who
         14   is African American, heard an advertisement on the
         15   radio and said that she could get approved over the
         16   phone for a mortgage loan.
         17            She proceeded to call the number and was
         18   switched over to three different people and holding
         19   for a very long time.  And that never did come --
         20   there never did come an answer.  And then after she
         21   called back, she went through the same procedure,
         22   except she was transferred to a fourth person and
         23   then she was disconnected.
         24            And she called back.  And she was
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          1   transferred to two different people.  And finally,
          2   one -- she spoke with the person who acted like she
          3   knew what she was talking about.  The woman asked
          4   her a few questions which included name, address,
          5   zip code and her annual monthly income.
          6            The woman proceeded to tell her.  And then
          7   she said, well, I'll tell you now, you will not be
          8   approved because you will have to have $10,000 of
          9   your own money saved to proceed with just getting
         10   the application.
         11            It seemed to me that Banc One basically
         12   told her she need to not apply.  Mrs. Fortenberry
         13   certainly could pay because she pays $800 a month
         14   in rent.
         15            A second story, Sandra Neville, who is
         16   African American, another one of our members, saw
         17   an ad on TV.  And being able to be approved in 24
         18   hours over the phone for a home improvement loan?
         19   She called and gave them the information they asked
         20   for.  It took 72 hours for her to hear back, and
         21   she was told that she was being denied because of a
         22   problem of her credit report.  And about a month
         23   later, Ms. Neville was approved for the same loan
         24   from her credit union.
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          1            Another Latino member which did not want
          2   me to use her name, but she is a member of our
          3   organization who at this time wants to disclose
          4   recently what happened to her.  Okay.
          5            What she did and -- she went to the ACORN
          6   Housing Corporation where she had them to pull up
          7   her savings and checking account number to check on
          8   what had gone wrong with her credit.  Come to find
          9   out, it was Banc One that has caused this problem
         10   and caused this flaw on her credit.  They said that
         11   she owed Banc One the whole amount of $5.  And just
         12   because of this, they did not take her
         13   application.
         14            Now, will you tell me, is this bank worthy
         15   of a merger with -- to get any bigger and able to
         16   treat more people as they've been doing in the
         17   past?
         18            I would urge you today, please, that you
         19   can do this.  Please take a closer look at what
         20   we're telling you.  It is true.  Please don't have
         21   this merger take place until they have their CRA
         22   practices in place where me, my community, Latino
         23   community or any other community can receive
         24   services just like anyone else.  Even though we
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          1   live in a certain zone, we do work, and we do pay
          2   our bills, and we're worthy of credit.
          3            Thank you.
          4       MS. SMITH:  Thank you very much.
          5            Any questions?
          6            Okay.  Thank you very much for coming this
          7   afternoon.
          8            And we'll move on to Panel 11.  All
          9   right.  We'll start with Reverend Anthony.
         10       MR. ANTHONY:  We're together.  Mr. Parker's
         11   going to go first.
         12       MS. SMITH:  All right.
Last update: December 3, 2010