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Public Meeting Transcripts

Public Meeting Regarding Banc One and First Chicago

Thursday, August 13, 1998

Transcript of Panel Five

          8       MR. BUSH:  Ms. Smith, other parties and
          9   concerned citizens, I'm speaking on behalf of the
         10   Woodstock institute, a non-profit that promotes
         11   reinvestment and economic development in lower
         12   income communities and as a member of the Chicago
         13   CRA Coalition.  I'm also a member of the National
         14   Community Reinvestment Coalition.
         15            The proposed merger of two large companies
         16   that would constitute the largest bank in the
         17   Midwest raises serious concerns for residents of
         18   low income communities and the organizations that
         19   work with them.
         20            The Community Reinvestment Act in its
         21   21-year history has been much more honored in the
         22   breach than in the observance, a fact that has
         23   contributed to the economic decline of huge areas
         24   of urban, small town and rural America.
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          1            In the last few years, however, because of
          2   a variety of pressures and opportunities, the Act
          3   has produced very important improvements in home
          4   lending to lower income and minority borrowers and
          5   communities.
          6            In Chicago, in many ways, the hometown of
          7   community reinvestment activity, one of those
          8   pressures and opportunities has been the practice
          9   dating from 1983 of community organizations
         10   requesting and persuading banks, small and large,
         11   to commit to significant community reinvestment
         12   goals for specific periods of time and then
         13   monitoring the bank's progress towards those goals
         14   on a regular basis.
         15            On the announcement of this proposed
         16   merger, the Chicago CRA Coalition which Woodstock
         17   convenes, entered a dialogue with First Chicago NBD
         18   to set new CRA commitments in the Chicago region
         19   for the new bank.  We believe that if implemented,
         20   the provisions of the CRA agreement will constitute
         21   a good CRA program for the new bank in the Chicago
         22   region by improving the bank's record in lending
         23   investments and services to the benefit of the
         24   regions's lower income communities.
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          1            My colleagues from the Chicago CRA
          2   Coalition on this panel will speak to some of the
          3   details of this agreement.
          4            In my view, the highlights of the
          5   agreement include the following items.
          6            The bank committed to small business and
          7   home loan goals based on a measure of its size and
          8   market presence, namely a specific ratio of its
          9   market share in lower income communities to its
         10   market share in other communities.  These ratios to
         11   be achieved at stated rates from 1999 are 1.10 for
         12   home loans and 1.15 for small business loans, and
         13   this will result in massively increased lending.
         14            The bank committed to open four full
         15   service branches in lower income neighborhoods.
         16   These neighborhoods are seriously underbranched on
         17   a per capita basis compared to other
         18   neighborhoods.
         19            The bank committed to a high level
         20   feasibility study of an affordable retail banking
         21   account for lower income households which currently
         22   do not have banking relationship with the goal of
         23   establishing such an account.
         24            The CEOs of both banks personally assured
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          1   the Coalition that the new bank will have a
          2   vigorous home mortgage operation in all its
          3   markets.  The agreement will be monitored like
          4   other Chicago CRA agreements in regular meetings.
          5            Unfortunately, Banc One has not negotiated
          6   similar agreements in its current markets which
          7   leaves it without a detailed and adequate CRA
          8   plan.  Absent such an agreement, we do not
          9   understand how the Federal Reserve Board can
         10   evaluate whether the merged institution will in
         11   fact meet the convenience and needs of its
         12   communities.
         13            We note that the recent spate of so-called
         14   mega commitments by such institutions as Nation's
         15   Bank, Bank America, Travelers and Citicorp raises
         16   precisely the same problem.
         17            In the case of both those mergers, more
         18   than half the dollar commitment so proudly
         19   announced were for products not targeted to lower
         20   income communities.  The commitments were not
         21   broken down by market area nor established with
         22   reference to such concrete objective measures as
         23   market share ratios.
         24            Detailed CRA plans and sound community
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          1   agreements should be a necessary part of an
          2   adequate bank merger application.  Agreements
          3   between citizens and their institutions is after
          4   all a hallmark of a Democratic society.
          5            The First Chicago NBD agreement for the
          6   Chicago region contains community reinvestment
          7   details that should be standard for all bank
          8   applications as Congressman Davis argued this
          9   morning.  The bank regulators should demand such
         10   details as a matter of course.
         11            It also contains in our opinion
         12   commitments that reflect the size of the bank and
         13   that will promote significant, safe and sound
         14   community reinvestment in the Chicago regions's
         15   lower income communities.
         16            Thank you.
         17       MS. SMITH:  Thank you very much.
         18            Mr. Wysocki, are you next or have we
         19   changed the order.
         20       MR. WYSOCKI:  Good morning.
         21            In 1977, over 20 years ago, I introduced a
         22   community lending resolution at that year's
         23   shareholder's meeting of the First National Bank of
         24   Chicago.
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          1            The resolution was based on the bank's
          2   poor performance at that time that was documented
          3   by the first year of the Home Mortgage Disclosure
          4   Act data.  The resolution was defeated by 98
          5   percent of the shareholders in 1977.
          6            I start with this point because I think it
          7   exemplified the corporate arrogance of this time
          8   that required Congress to pass the Community
          9   Reinvestment Act that same year.
         10            Now over 20 years and three First Chicago
         11   mergers later, we are here to discuss this morning
         12   the need for continued regulatory vigilance and
         13   community advocacy on behalf of neighborhood
         14   reinvestment and in this era of financial
         15   modernization and merger mania.
         16            I'm also here today to share with you the
         17   strength of bank partnerships that have grown as a
         18   result of CRA and are now providing access to
         19   affordable credit and financial services to
         20   revitalize local communities.
         21            At the end of 1983 was when First Chicago
         22   applied to acquire American National Bank, itself
         23   proclaimed intent to be the premiere bank in the
         24   Midwest.  In staffing those CRA negotiations, they
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          1   led to become the largest CRA lending agreement at
          2   that time of 100 million over five years.  That's a
          3   million.  Now we're talking billions.
          4            We have progressed over the last 20
          5   years.  That commitment was renewed in 1989, and in
          6   1990 a five-year evaluation of the Chicago's
          7   lending program was conducted, and I wish to quote
          8   from a conclusion.
          9             "The fundmental test of the success of
         10   neighborhood lending programs and of investment in
         11   general is whether lenders, community groups and
         12   community based development organizations can
         13   develop and implement loan programs together in
         14   partnership."
         15            From my years of experience, the key
         16   element to fostering and furthering such
         17   partnerships is regular monitoring and reviewing of
         18   progress so that continued dialogue can lead to
         19   further product innovation and market penetration.
         20   The key for both sides is learning to deal.
         21            One example of product development through
         22   our work with First Chicago is the financing of
         23   mixed use real estate.
         24            Chicago's neighborhoods are built around
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          1   main streets with block after block of properties
          2   with apartments above store fronts.  Back in 1983,
          3   no conventional lender offered financing for such
          4   properties.
          5            At the urging of the Chicago Association
          6   of Neighborhood Development Organization,
          7   First Chicago was the first lender to offer 20-year
          8   fully amortized mortgages for the purchase and
          9   rehab of such mixed use real estate.
         10            In 1995, with the merger of First Chicago
         11   and NBD, this neighborhood lending program was
         12   renegotiated and it is part of the new commitment
         13   of two billion dollars in community lending.
         14   First Chicago agreed to do a pilot program of ten
         15   percent down for mixed use buildings.
         16            We all know that the affordable housing
         17   has developed a variety of low down payment
         18   programs for residential lending.  This was an
         19   effort to do this for mixed use real estate.
         20            Now as part of our recent agreement, the
         21   bank has found this to be good business and they're
         22   committed to doing this as an ongoing loan product
         23   in their portfolio and now they are willing to
         24   pilot a low down payment mortgage for commercial
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          1   real estate.
          2            This new commitment will provide a wide
          3   range of local ownerhsip, I want to emphasize local
          4   ownership, not absentee ownership, and will extend
          5   investment opportunities to to a whole generation
          6   of other businesses.
          7            My point is here this community credit
          8   need was being addressed now by the private market
          9   because the bank was willing to sit down and
         10   jointly hammer out the design of this product.
         11   It's good reinvestment, it's an example of the
         12   value of CRA agreements.
         13            Now, his testimony talked about the market
         14   share analysis that Woodstock had done that is now
         15   leading to aggressive goals for small business
         16   lending.  The purpose of these observations is to
         17   make this final point.
         18            The Federal Reserve Board should exercise
         19   its regulatory authority to assure that Banc One
         20   adopts the First Chicago NBD approach to community
         21   reinvestment throughout its service area.
         22            As Mayor Goldsmith said this morning, this
         23   is an issue of attitude, and the corporate
         24   arrogance or refusing to negotiate CRA agreements
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          1   whether in Indian or Ohio in this case or in the
          2   case of the Nation's Bank's merger with Bank of
          3   America should be unacceptable as a matter of
          4   Federal Reserve Board policy.
          5            So while endorsing our agreement with
          6   First Chicago NBD and being pleased that Banc One
          7   is willing to honor it, I am disappointed that
          8   Banc One is unwilling to engage themselves in
          9   designing similar agreements in other markets.
         10            As Vice Chair of the Bank Regulation
         11   Committee of the Federal Reserve Board's Consumer
         12   Advisory Council I challenge the Federal Reserve
         13   Board to only grant conditional approval,
         14   conditioned on parity and market shares of specific
         15   geographical markets.  Let the market work.  Use
         16   your regulatory authority to make sure it works in
         17   every market.
         18            Thank you.
         19       MS. SMITH:  Thank you very much.
         20            Mr. Jackson.
         21       MR. JACKSON:  Good morning.  Good morning,
         22   Ms. Smith, Ms. Williams and Mr. Alvarez.
         23            My name is Kevin Jackson.  I'm Executive
         24   Director of the Chicago Rehab Network, a
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          1   20-year-old coalition of 43 non-profit housing
          2   development organizations in Chicago.  We are a
          3   member of the steering committee of the CRA
          4   Coalition here and the Chair of the Housing Task
          5   Force.
          6            Financial institution's responsiveness to
          7   individuals and families in local neighborhoods is
          8   at the heart of the importance of the Community
          9   Reinvestment Act.  Recognition of this is clear
         10   from the proceedings today.  Public involvement in
         11   the decisions that impact communities, regions in
         12   the country is fundmental to the Democratic process
         13   and and ultimately despite its difficulties at
         14   times, a good thing.
         15            We congratulate the Federal Reserve Board
         16   Bank for calling this hearing and acknowledging the
         17   importance of all the people gathered here today.
         18   We would also congratulate ACORN helping to create
         19   the momentum item that resulted in this hearing in
         20   the first place.
         21            And finally, we congratulate First Chicago
         22   NBD on demonstrating the utility and possibility of
         23   CRA agreements that mean good business for the
         24   institution and our communities.
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          1            The Chicago Rehab Network has a long
          2   history with the First National Bank of Chicago.
          3   In 1984 when First Chicago acquired American
          4   National Bank, we were a part of that coalition
          5   that negotiated the first neighborhood lending
          6   agreement.
          7            Since then, we have sat on the quarterly
          8   Review Board, packaged hundreds of multi-family
          9   loans and provided detailed input on community
         10   credit needs.
         11            When First Chicago merged with NBD three
         12   years ago, we were a part of that CRA Coalition
         13   that negotiated a detailed CRA agreement.
         14            As I stated in my opening, CRA is vital.
         15   The process that led to our present CRA agreement
         16   with First Chicago NBD and Banc One if it continues
         17   occurred because CRA strengthens our government's
         18   mediating role between the private sector and the
         19   common good.
         20            The CRA agreement reached by and the
         21   proposed merger of First Chicago NBD and Banc One
         22   is a model for CRA agreements in both its process
         23   and substance.
         24            After the merger was announced, the CRA
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          1   Coalition moved to hold a public meeting and had
          2   task force meetings to gather substantive input
          3   from community organizations throughout the
          4   region.
          5            The Housing Task Force met three times to
          6   develop the framework.  We then met many times with
          7   the First Chicago NBD and Banc One staff from the
          8   highest levels on down.
          9            For the first time in CRA negotiations, we
         10   were able to use a market share analysis to develop
         11   mortgage lending targets.  As a result, over the
         12   next six years, First Chicago NBD has committed to
         13   increasing their residential lending by more than
         14   8,200 loans over current levels.
         15            In 1995, First Chicago established a
         16   $100,000 downpayment pool for home buyers in
         17   Chicago's empowerment zones.  With this agreement,
         18   the pool has been increased to 900,000 and extended
         19   to more low and moderate income areas.
         20            In discussing credit needs with
         21   organizations in Chicago, there was a sense that
         22   particularly in this time of mega mergers and
         23   predatory lending, simply establishing lending
         24   targets is barely adequate.
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          1            Without a thorough analysis of the credit
          2   needs of low and moderate income communities on
          3   which to base lending targets, there will continue
          4   to be unmet needs and borrowers who are forced to
          5   get inferior high cost credit products.
          6            First Chicago NBD has committed to
          7   participate in the design and development of an
          8   analysis of credit that serves needs in low and
          9   moderate income communities and to contribute to
         10   its implementation.
         11            They further agreed to work with the
         12   Chicago Rehab Network to expand the impact of the
         13   City of Chicago Department of Housing second
         14   Five-Year Affordable Housing Plan approved by the
         15   City Council this past July.
         16            We were particularly concerned to read in
         17   the merger application that Banc One had
         18   discontinued its mortgage lending business except
         19   for the convenience of its customers and its CRA
         20   division.
         21            We believe that mortgage lending at all
         22   income levels is the foundation of community
         23   development and a bank's investment in a
         24   community.
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          1            After discussion with both bank's CEOs and
          2   many of the senior staff, the bank announced that
          3   through their best practices evaluation of the
          4   bank's business, they would resume full mortgage
          5   lending throughout the Banc One system.
          6            This is one of two system-wide commitments
          7   we see from Banc One.  The second is that the bank
          8   will conduct a credit analysis on all am applicants
          9   to the subprime lending unit and refer them to
         10   appropriate loan products.
         11            The process I have described created a CRA
         12   agreement that is responsive to the service and
         13   credit needs of low to moderate income communities,
         14   businesses and households in Chicago and the
         15   region.
         16            With this agreement, we have a solid
         17   foundation to build on for the next six years.  The
         18   same type of commitment must be made to low or
         19   moderate income people in communities throughout
         20   the Banc One system.
         21            In the end, the communities in which the
         22   members of the Chicago Rehab Network operate are
         23   not unlike communities throughout this country
         24   starting to build better neighborhoods through
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          1   affordable housing and economic development and
          2   fighting the growing tide of an ever growing
          3   economic disparity.
          4            Our mission at the Chicago Rehab Network
          5   is to promote community development without
          6   displacement in our communities requires us to
          7   stand in solidarity with communities across this
          8   country in their relationship to financial
          9   institutions.
         10            We believe that First Chicago NBD's
         11   leadership here should be replicated throughout the
         12   country, and we call on the Federal Reserve Board
         13   to ensure that same type of commitments and process
         14   is made to all low and moderate income people and
         15   communities.
         16            Thank you.
         17       MS. SMITH:  Thank you very much.
         18       MS. RAND:  Dory Rand.  I'm a staff attorney
         19   with the National Clearinghouse for Legal Services,
         20   a non-profit organization based here in Chicago.
         21            We represent tens of thousands of low
         22   income people on welfare and housing policy issues
         23   through our poverty law project, and we also
         24   provide support to the poverty law community and
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          1   others through our Web site, our printed
          2   publications, our library and our training and
          3   information services.
          4            I'd like to focus my comments this morning
          5   on something that Congresswoman Carson mentioned
          6   earlier, and that is the advent of electronic
          7   benefit transfer of government benefits and what
          8   banks can and should do to serve the community
          9   needs of low income people who receive government
         10   benefits and who do not have bank accounts.
         11            As a staff attorney with the Poverty Law
         12   Project and editor of its Welfare News, I've been
         13   monitoring the development and implementation of
         14   electronic delivery systems both, EFT and EBT.
         15            Illinois Link is the Illinois electronic
         16   benefit transfer program for the delivery of cash
         17   and food benefits in Illinois.  EFT is the federal
         18   program that are for electronic fund transfer of
         19   government benefits such as Social Security,
         20   Supplemental Security Income or SSI, Veteran's
         21   benefits and Railroad Retirement benefits.
         22            These EBT and EFT programs produce
         23   tremendous cost savings for the federal and state
         24   governments, and they also help to reduce misuse of
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          1   benefits and they provide some security and
          2   convenience advantages for clients, but their
          3   advantages could be multiplied if people who
          4   receive government benefits had their benefits
          5   directly deposited into bank accounts.
          6            Some of the examples include funds
          7   deposited in bank accounts would be protected by
          8   the Federal Consumer Protection Regulation E.  EBT
          9   funds are not protected by Regulation E.
         10            Funds deposited in bank accounts have the
         11   protection and insurance of the FDIC.  EBT funds do
         12   not.
         13            People who deposit their government
         14   benefits or employee checks can pay their bills.
         15   People who don't have bank accounts have to pay
         16   very high fees for check cashiers.  They can be
         17   used as references with landlords, utility
         18   companies.  People without bang accounts cannot use
         19   banks as references.
         20            People who deposit their money in bank
         21   accounts that earn interest, can increase their
         22   assets.  And also people who establish a good
         23   relationship with a bank can possibly build on that
         24   relationship later as their income increases when
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          1   they go to establish a home mortgage, a car loan.
          2   They can save money in savings accounts to buy a
          3   car, to get further education to help them escape
          4   poverty.
          5            But despite these many advantages of
          6   having bank accounts, many low income individuals
          7   do not have bank accounts, and there are a lot of
          8   reasons for that.
          9            Some of those reasons are that there are
         10   not enough branches in low income communities,
         11   there is not sufficient financial literacy among
         12   many communities, there are not enough low cost and
         13   free bank accounts.  And also, bank practices of
         14   screening applicants' credit histories further
         15   limit access.
         16            I think that banks can and should play a
         17   major role in helping to address these problems by
         18   ing more full service bank accounts and ATMs in
         19   underserved communities, low income communities, by
         20   conducting and funding financial literacy and
         21   credit counseling programs and by developing and
         22   marketing low cost and free checking accounts that
         23   do not have credit screening.
         24            To that end, I did participate as a member
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          1   of the Chicago CRA Coalition Steering Committee in
          2   the negotiations that led to the recent agreement
          3   with First Chicago and Banc One, and I'm
          4   particularly pleased that the banks agreed to open
          5   at least four new full service bank branches in low
          6   and moderate income communities, that they have
          7   agreed to allocate $50,000 a year towards financial
          8   literacy programs and that they're conducting a
          9   high level feasibility study to develop low cost
         10   bank accounts to serve the needs of individuals
         11   with limited or poor credit histories or limited
         12   experience in dealing with banks.
         13            Financial chairman and CEO Verne Istock
         14   sent a letter to the CRA Coalition expressing his
         15   personal recognition of the need for these
         16   financial services, his commitment to working on
         17   developing an account that will serve those needs
         18   and his willingness to continue to work with the
         19   CRA Coalition on this.
         20            I look forward to that, however, I have to
         21   add that I am very troubled by Banc One's failure
         22   to enter into similar agreements through all its
         23   markets.  If they really want to serve the needs of
         24   the community, they must do that, and they could
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          1   use our agreement here as an example.
          2            Thank you.
          3       MS. SMITH:  Thank you very much.
          4            Ms. Durban.
          5       MS. DURBAN:  Good morning.  My name is Kate
          6   Monter Durban.  I am the Assistant Director of the
          7   Cleveland Housing Network.
          8            The Cleveland Housing Network is a
          9   coalition of 17 CDCs spread across the city of
         10   Cleveland, and our primary focus is affordable
         11   housing development in those communities.
         12            I am here to let you know that Banc One
         13   and Banc One CDC have been a strong and consistent
         14   partner in our work.
         15            The Cleveland Housing Network to date has
         16   rehabilitated about 2,000 houses across the city,
         17   and we believe that that investment has absolutely
         18   made a difference in turning the -- stemming the
         19   tide of disinvestment in many of those
         20   communities.
         21            To date, Banc One has invested over four
         22   million dollars in equity investments in the lease
         23   purchase program which is the program that I'm here
         24   to speak about today in part.
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          1            The average income of lease to purchase
          2   residents is about $12,000.  The majority are
          3   minority single moms with two to three kids, so
          4   what we know as developers is the equity investment
          5   in those partnerships are absolutely critical to
          6   our ability to produce an affordable monthly
          7   payment.  So, you know, that kind of investment has
          8   made our work possible.
          9            And the other way that Banc One has
         10   partnered with us is they have lent us technical
         11   assistance in areas when we have asked for their
         12   help.
         13            For example, in 1990, the Federal Low
         14   Income House Tax Credit was changed in such a way
         15   that jeopardized our ability to transfer title to
         16   our low income residents at the end of the 15-year
         17   lease purchase period.  Needless to say, we were
         18   very concerned about the change in the federal law
         19   and immediately began to mobilize trying to change
         20   the law.  We were unsuccessful and ultimately
         21   turned to Banc One and Banc One CDC, specifically
         22   Joe Hagen, and asked him if he couldn't help us
         23   based on the relationships that he had built at the
         24   IRS.
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          1            So Joe, being the absolutely great guy
          2   that he is, jumped into the fight with us,
          3   established dialogue with the IRS, and in the
          4   Summer of 1995, the IRS published a ruling
          5   clarifying the law and once again clarifying our
          6   ability to transfer title and home ownership to
          7   families at the end of 15 years.
          8            So for us, that was just an example of the
          9   willingness of Banc One CDC to step in and use
         10   their time and expertise to help us in a way that's
         11   very critical to our organization's goals.
         12            You know, undoubtedly, the work that we do
         13   in Cleveland and our partnership with Banc One has
         14   benefitted from the CRA agreement that has been
         15   negotiated with the City of Cleveland.
         16            The Mayor of the City of Cleveland through
         17   these agreements has established a platform for
         18   investment, and our work has absolutely benefitted
         19   from that platform.
         20            So for us, the bottom line is as
         21   non-profit developers with the goal of affordable
         22   housing development, we can't do it without
         23   significant equity investment in our work, and
         24   we've seen that from Banc One and Banc One CDC.
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          1            Thank you.
          2       MS. SMITH:  Thank you.
          3            Mr. McDaniel.
          4       MR. McDANIEL:  Thank you.
          5            Good morning.  I'm Mark McDaniel, and I'm
          6   the President of the Michigan Capital Fund for
          7   Housing.
          8            The Capital Fund is a non-profit housing
          9   corporation that was founded in 1993 for the
         10   purpose of raising and providing investment equity
         11   to create affordable housing in Michigan.
         12            The fund's mission in providing equity is
         13   to invest in projects that meet at least one of the
         14   follow criteria:  The development is located in a
         15   distressed community, smaller-sized projects,
         16   non-profit involvement as sponsors and serving
         17   special needs populations.
         18            With that mission, the fund has raised and
         19   invested over $80 dollars in equity since 1993
         20   creating over 2,000 units of affordable housing.
         21   79 percent of those funds have gone into distressed
         22   communities.
         23            Through our relationship with the
         24   Enterprise Social Investment Corporation, the
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          1   Enterprise Foundation, and our financial
          2   institution investors, the fund now offers a
          3   multitude of financial resources to the development
          4   community in Michigan.  This includes permanent
          5   debt financing, construction lending, technical
          6   assistance, predevelopment loans and grants and
          7   charitable activities contributions.  As a result
          8   of our growth and structure, we have come to
          9   understand the banking industry much clearer.
         10            I'm here today to tell you very simply
         11   that the merger between Banc One and First Chicago
         12   NBD is the best news that we've had in a long time
         13   as an organization.
         14            I know this is good news because this is
         15   the first time that a merger has got the bankers on
         16   our board grumbling.  This is indicative that
         17   Banc One will be very competitive and push other
         18   banks to become more aggressive and more innovative
         19   than they're used to being.  That is in my view
         20   what Banc One is bringing to Michigan, and that's
         21   good.
         22            Based on my 21 years of experience in
         23   planning, housing development and community
         24   development, I'm convinced that Banc One has a
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   social and financial commitment to revitalizing and
          2   supporting community investment and development
          3   through its market area.  This is true in our case
          4   even when they weren't in the Michigan market.
          5            In the formative stages of the fund, Joe
          6   Hagan, the President of Banc One CDC, advised us on
          7   how to structure the fund and selecting our board
          8   members and working with developers as we started.
          9   They have provided me with input whenever I've
         10   faced -- have been faced with complex issues, which
         11   I've found very unusual when compared to other
         12   banks.
         13            Banc One has invested $125 million in
         14   several national equity funds managed by
         15   Enterprise.  They have invested $20 million in
         16   funds managed by the Ohio Capital Corporation for
         17   Housing.  In addition, Banc One is providing bridge
         18   financing to Ohio Capital.  Their commitment to
         19   Illinois, to Chicago, Cleveland, Delaware, Texas
         20   and Milwaukee equity funds has been similar.
         21            There are some who will say so what.  Tell
         22   that to the single mother living in a transitional
         23   housing development who without Banc One's and
         24   others' investments would still be suffering the
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   beatings of an abusive boyfriend or be on the
          2   street with nowhere to go.  The same mother who has
          3   got her life together because of this housing
          4   opportunity is ready to move into a Habitat for
          5   Humanity Home.
          6            Tell that to the senior citizen in
          7   Cleveland who was living as a hostage in her home
          8   in a crime ridden neighborhood who as a result of a
          9   Banc One investment was able to move into a new,
         10   safe, secure senior community.  She now has quality
         11   of life in her golden years she never thought she
         12   would have.
         13            And finally, tell that to the young couple
         14   with little ones who are forced to live in a
         15   slumlord-owned house with no security, broken
         16   plumbing and windows and lack of adequate heat who
         17   with the help of Banc One's investment in a
         18   national fund was able to find safe and decent
         19   housing to raise their family in.
         20            There are thousands of stories like this,
         21   and I don't think those tens of thousands of people
         22   who have benefited who say so what.
         23            NBD is represented on our Board of
         24   Directors and has as compared to other financial
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          1   institutions been a significant but not as major of
          2   a player as they could be.
          3            We appreciate the support and effort that
          4   they have put into the fund, and we especially
          5   appreciate the personal efforts of people like ^
          6   Jack Love whose works in the Detroit bank for what
          7   he's been able to do and the rest of the staff in
          8   promoting what NBD is able to do in Michigan.
          9            There has never been a single bank merger
         10   in Michigan where the lead bank has taken the time
         11   or made the effort to discuss with the fund or
         12   others how they can best get involved in the
         13   community development in the state.  Banc One is
         14   the first one to do that with us, and we appreciate
         15   that and believe it is indicative of how Banc One
         16   will be committed to working in Michigan.
         17            In closing, the Michigan Capital Fund is
         18   exited and supportive of the proposed merger
         19   between Banc One, First Chicago NBD.  We are
         20   looking forward to Banc One being one of our major
         21   investors and supporters.  This merger will not
         22   only be good for the fund but most probably for the
         23   less fortunate residents in Michigan who need
         24   affordable housing.
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          1            Thank you for your time, and I look
          2   forward to the significant marriage between these
          3   two entities.
          4       MS. SMITH:  Thank you very much.
          5            Any questions from the Panel?
          6       MR. ALVAREZ:  I have one question.
          7            A couple of speakers spoke about the
          8   agreement in terms of market share, Banc One
          9   bringing up its lending to certain market share in
         10   various communities.  I was curious what data was
         11   used to compute market share and what the benchmark
         12   is that you're asking them to bring their level up
         13   to.
         14       MR. BUSH:  We're happy to see that some of your
         15   regulators are now using this market share, so you
         16   can perhaps talk to them too.  It's a very simple
         17   notion, and the notion is that if a bank is making
         18   equal effort in low income neighborhoods, its
         19   market share in low or middle income neighborhoods
         20   will approach its market share and indeed exceed
         21   its market share in middle and upper income
         22   neighborhoods so that ratio will be 1.0 or
         23   greater.
         24            And we use Mortgage Act Disclosure data in
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                       CHICAGO, ILLINOIS - (312) 263-0052
          1   this case for the six-county region in Metropolitan
          2   Chicago to calculate market share for
          3   First Chicago.
          4       MR. ALVAREZ:  So it's a comparison of lending
          5   in low and moderate income areas to middle and
          6   upper income areas or --
          7       MR. BUSH:  It's a comparison of a bank's market
          8   share in moderate and low neighborhoods to low.
          9   Using small business data, same analysis.
         10       MS. SMITH:  Thank you very much for coming this
         11   morning.
         12            We are going to take a short break, maybe
         13   of the order of five minutes.
         14            And unless Panel 6 has appeared in the
         15   meantime, we plan to move to Panel 7, but it just
         16   depends.  My managers will tell me what to do.
         17                      (Whereupon, a short recess
         18                      was taken.)
         19       MS. SMITH:  I think we're ready to reconvene.
         20   Could we have Panel 7, please?  Six we're skipping
         21   because they weren't here.  Well, we're ready to
         22   start, so why don't we?  We'll go to Mr. Hagaman,
         23   and the others will join us as they can.
         24   Mr. Hagaman, we can start.
Last update: December 3, 2010