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Public Meeting Transcripts

Public Meeting Regarding Banc One and First Chicago

Thursday, August 13, 1998

Transcript of Panel Seven

          1       MR. HAGAMAN:  Good morning.  My name is Frank
          2   Hagaman, and I'm the President of Partners in
          3   Housing Development of Indianapolis.
          4            Partners in Housiing was founded in 1993
          5   to create housing opportunities for special needs
          6   populations.  These include individuals with
          7   chronic mental illness, AIDS/HIV, substance and
          8   alcohol abuse and the frail elderly.
          9            Today, our focus is on supportive housing
         10   which links directly affordable housing
         11   opportunities with social services.
         12            In 1993, as we assembled the financing for
         13   our first project, we possessed a net worth.  As I
         14   often explain to people, it consisted of a folder
         15   chair and a Princess phone.  Regardless, we
         16   approached NBD First Chicago which made a one-year
         17   non-interest bearing loan to us for working
         18   capital.  The purpose of the loan was to provide us
         19   with predevelopment funds.
         20            We repaid that loan ahead of schedule and
         21   have subsequently borrowed on numerous occasions
         22   from time to time for various predevelopment needs
         23   on our projects.
         24            I think the two points that are very
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   important about this particular loan program, and
          2   they are, one, working capital was made available
          3   at a critical time for a very small company with
          4   obviously little financial strength, and the second
          5   was that the bank demonstrated a flexibility to
          6   lend on character.
          7            I am a reform banker, and character loans
          8   used to be very interesting, but in point of fact,
          9   this loan was made based on character and on the
         10   mission of our organization.
         11            Additionally, NBD and First Chicago have
         12   now made corporate contributions to Partners in
         13   Housing Development and is currently an investor in
         14   our current project, a five and a half million
         15   dollar, 96-unit, single-room occupancy residence.
         16   This represents the first housing of its kind in
         17   Indianapolis to meet the housing needs for homeless
         18   men and women.
         19            By the same token, Banc One has been an
         20   equally strong and long-standing partner of ours.
         21   It has been a major investor in all of our projects
         22   and has stood beside us on many occasions offering
         23   its support and help.
         24            Our station in life has increased and has
                         McCORKLE COURT REPORTERS, INC.
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          1   improved, and I must say it's a tip of the hat
          2   again to Banc One.
          3            All of our office furniture has been
          4   contributed by Banc One, and quite honestly, we are
          5   very happy to have one of our Board members who is
          6   a Banc One employee, the former CRA director for
          7   Indiana.  She represents one of our most thoughtful
          8   and helpful Board members.
          9            In conclusion, I guess that I would like
         10   to say that I can't speculate on the future of what
         11   this merger means.  Frankly, I don't have the time
         12   to worry about it.
         13            My purpose in coming here today is to
         14   recognize publicly two good corporate partners of
         15   ours and to encourage that their unification
         16   continues to make important investment and
         17   contributions to our community of low income
         18   individuals and families.
         19            Thank you.
         20       MS. SMITH:  Thank you very much.
         21            Ms. Morris.
         22       MS. MORRIS:  I'm Cora Morris, owner of Greek
         23   Grandeur in Champaign, Illinois.
         24            Greek Grandeur was established in December
                         McCORKLE COURT REPORTERS, INC.
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          1   of 1991.  It is a retail and embroidery business
          2   that specializes in fraternal organization and
          3   company logos.
          4            I am here today on behalf of African
          5   American small businesses, a small business owner
          6   for which Banc One has assisted for a business
          7   loan.
          8            I am only one of many African American
          9   business owners who have experienced a great deal
         10   of difficulty in financial assistance in starting a
         11   business and staying in business.
         12            I went to four different financial
         13   institutions within my community in order to obtain
         14   a small business loan and was denied.  Finally, I
         15   went to Banc One, who received my business plan,
         16   reviewed my business plan and began to give me a
         17   criteria and qualification for how to obtain a
         18   small business loan.  Through this, I gained
         19   valuable information.  Banc One helped me when no
         20   one else would.
         21            When I ran into trouble, they were
         22   flexible and understanding with payment
         23   arrangements.  Due to their willingness to give me
         24   a chance, we not only stayed in business but were
                         McCORKLE COURT REPORTERS, INC.
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          1   able to expand including a Web page on the World
          2   Wide Web.
          3            I would also like to add that there are
          4   other Afro-Americans within our community that was
          5   able to go to Banc One for assistance.  One
          6   included my mother.  In 1996, she wanted to
          7   relocate to the Champaign-Urbana area to live with
          8   my sister.  We wanted to buy a house for her and
          9   she did not want to live in a high-rise, so we
         10   started house hunting, my sister and I and my mom.
         11            We went to another financial institution
         12   to obtain a home mortgage loan, and we were
         13   denied.  We went to Banc One and were accepted.
         14            In closing, Banc One has been an asset in
         15   our community through their relationship with
         16   Afro-Americans.  My experience with this
         17   organization has been beneficial, valuable and a
         18   great pleasure.
         19            Thank you.
         20       MS. SMITH:  Thank you very much.
         21            Mr. Odem.
         22       MR. ODEM:  First of all, I want to say good
         23   morning and thank you for the opportunity to
         24   testify.
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          1            Again, my name is Jerome Odem, and I am a
          2   member of the Organization of the Northeast, better
          3   known as ONE.  I am also the President of the
          4   Lakeview Towers Residents Association and currently
          5   working to purchase our 500-unit HUD subsidized
          6   unit in the uptown area.
          7            Now, the Organization of the Northeast was
          8   founded in 1974, and it's an organization of 60
          9   dues-paying member institutions in the Uptown and
         10   Edgewater communities here in Chicago.
         11            Now, the mission of ONE is to sustain and
         12   build a successful multi-ethnic mixed income
         13   community in the Uptown and Edgewater community.
         14   To this end, ONE has enjoyed a close working
         15   relationship with First Chicago NBD.
         16            Now, First Chicago has been a member of
         17   the organization for the past nine years.
         18   Currently First Chicago invests greatly in these
         19   two communities financially and by close working
         20   relationships with many organizations to support
         21   housing development, small business development and
         22   industrial retention.
         23            Now, several years ago, First Chicago NBD
         24   and three other banks created a commercial loan
                         McCORKLE COURT REPORTERS, INC.
                       CHICAGO, ILLINOIS - (312) 263-0052
          1   program to provide below market financing to
          2   commercial credit borrowers as a way to enhance
          3   small business development and job creation in the
          4   area.
          5            First Chicago NBD and Banc One recently
          6   committed to a new CRA agreement with ONE and six
          7   other community organizations through the National
          8   Training and Information Center.
          9            Now, the agreement which constitutes a
         10   nearly four billion, ten-year investment for all of
         11   Chicago with targets for investment in specific
         12   communities, this commitment is for single-family
         13   housing, multi-family housing, small business
         14   development, marketing and services.  It provides
         15   for a bank representative to work closely with each
         16   of the six areas to target this agreement to
         17   neighborhood needs.  This agreement builds on
         18   First Chicago's history of being a strong presence
         19   in this community.
         20            Now, the Organization of the Northeast has
         21   no prior experience working with Banc One but view
         22   their commitment to the CRA agreement and their
         23   willingness to continue the great work that
         24   First Chicago has done here in Chicago as a
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          1   positive sign.
          2            We look forward to working with Banc One
          3   and First Chicago to fully utilize the
          4   opportunities created by the agreement.  We support
          5   this merger with the confidence that there is a
          6   genuine commitment to this agreement in the hope
          7   that similar commitments will be made for the rest
          8   of Banc One and First Chicago's market.
          9            Thank you.
         10       MS. SMITH:  Thank you.  Ms. Ryan.
         11       MS. RYAN:  Good morning.  I'd also like to
         12   thank you for the opportunity to be here.
         13            My name is Liz Ryan.  I'm the lead Housing
         14   and Banking Staff for the National Training and
         15   Information Center.  Gayle Stuccato regrets she was
         16   out of town and unable to be here today.
         17            The NTIC is a resource center that has
         18   been working with grassroots, community-based
         19   organizations for over 25 years.  Throughout our
         20   history, we have assisted literally hundreds of
         21   community groups enter into partnerships with banks
         22   to better their neighborhoods.  Billions of dollars
         23   have gone for single-family housing, small business
         24   and multi-family lending through these agreements.
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          1            NTIC itself has been directly involved in
          2   several community reinvestment partnerships in the
          3   City of Chicago, and one of the most successful has
          4   been with First Chicago NBD.
          5            Throughout three renewals and 14 years,
          6   NTIC with other non-profits in the city has forged
          7   innovative programs and lending products to better
          8   serve the credit needs of the city.
          9            A critical component to this agreement
         10   have been a quarterly review board meetings, a
         11   process engaged in by the banks and participating
         12   non-profits.  The open lines of communication have
         13   enabled the members to establish a real level of
         14   accountability and has paved the way for true
         15   problem solving.  The firm commitment of
         16   First Chicago and Banc One to continue on with the
         17   review board process after the proposed merger is a
         18   major reason for NTIC's support.
         19            Recently, in the context of the merger,
         20   NTIC and six neighborhood organizations which
         21   Jerome just told you about also entered into a
         22   ten-year reinvestment agreement with both of the
         23   banks.  As he said, this nearly $4 billion
         24   agreement covers a range of lending products.
                         McCORKLE COURT REPORTERS, INC.
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          1            The bank itself a committed to working
          2   very closely with the individual groups.  It is a
          3   way to get loans actually out the door working side
          4   by side with the community groups, having lending
          5   officers that with interpreters and bi or
          6   multi-lingual people in the community, and we're
          7   very encouraged by it.
          8            As a basis for comparison, the recent
          9   nationwide pledge of $350 billion made by Nations
         10   Bank and Bank of America in addition to falling
         11   short of their current lending levels would
         12   compromise only about 23 percent of their
         13   residential lending.
         14            Conversely, the Chicago commitment made by
         15   Banc One and First Chicago would compromise a full
         16   46 percent of their residential lending.  Instead
         17   of an empty promise and sound bytes, First Chicago
         18   and Banc One have made a commitment of substance.
         19            We will of course keep the Board apprised
         20   of the progress on this commitment and will lodge a
         21   protest if the commitments made by First Chicago
         22   and Banc One are not fulfilled.
         23            With the assumption that the banks will be
         24   faithful in fulfilling the commitments they have
                         McCORKLE COURT REPORTERS, INC.
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          1   made, NTIC would support the merger of these
          2   institutions.  We are hopeful that the good
          3   experiences we have had with First Chicago in the
          4   past and renewed commitments to serve Chicago will
          5   extend to the entire Banc One and First Chicago
          6   market.
          7            It would seem that if Banc One and
          8   First Chicago see the value of well-thought-out and
          9   comprehensive CRA agreements in Chicago it would
         10   see the benefit of these agreements in the rest of
         11   the country.  We expect the Federal Reserve to
         12   fulfill its responsibility and assure that this
         13   will be the case.
         14            Thank you.
         15       MS. SCHMIDT: Thank you very much.
         16            Mr. Schmidt.
         17       MR. SCHMIDT:  Thank you.  Good morning.
         18            My name is Raymond Schmidt, and I'm an
         19   Executive Director of a non-profit corporation in
         20   Milwaukee, Wisconsin called Select Milwaukee.
         21            Select Milwaukee was formed in 1991 and is
         22   dedicated to promoting supporting and facilitating
         23   affordable home ownership in Milwaukee
         24   neighborhoods through collaboration with private
                         McCORKLE COURT REPORTERS, INC.
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          1   and public sectors and non-profit organizations as
          2   well.
          3            We do a number of different things to
          4   fulfill our mission, including providing direct
          5   services to potential home buyers, first time buyer
          6   urban market training for mortgage lenders and real
          7   estate professionals, produce neighborhood
          8   marketing events, and we have developed and
          9   administer for several Milwaukee employers their a
         10   employer assisted home ownership and walk to work
         11   programs.
         12            My comments today really are designed to
         13   reflect our organization's valued and long-standing
         14   relationship with Banc One Wisconsin, and it's
         15   based on that relationship that I extend
         16   Milwaukee's support of Banc One's proposed
         17   acquisition of First Chicago NBD.
         18            As noted, collaboration is a major piece
         19   of everything we do at Select Milwaukee.  All of us
         20   in this line of work have had the opportunity over
         21   the years to meet with and try to enlist the
         22   support of many different businesses and
         23   institutions and organizations.
         24            For the past several years, Select
                         McCORKLE COURT REPORTERS, INC.
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          1   Milwaukee has developed a number of relationships
          2   on various levels with many mortgage lenders in
          3   Milwaukee.  During that time, we've had many
          4   opportunities to to work directly with Banc One
          5   Wisconsin and to observe its affordable lending and
          6   other community development efforts.  It's those
          7   experiences with Banc One that lead me to suggest
          8   that Banc One is among one of Milwaukee's most
          9   savvy, thoughtful and more committed affordable
         10   housing financial institutions and also a very
         11   valued corporate partner in many other ways in the
         12   City of Milwaukee.
         13            In our view, Banc One Wisconsin is clearly
         14   distinguished from most Milwaukee lenders by its
         15   thoughtful, serious approach to collaboration with
         16   our organization and with our colleagues in
         17   Milwaukee and a variety of ventures, and I'm being
         18   quite candid -- and Liz eluded to this just a
         19   second ago -- when I suggested that unlike some
         20   other institutions, Banc One doesn't embarrass
         21   itself or organizations like ours merely by talking
         22   a good game, by glad handing or with product or
         23   service gimmickry.
         24            For us, Banc One is the respected and
                         McCORKLE COURT REPORTERS, INC.
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          1   valued corporate citizen it is because of a
          2   corporate philosophy, and it's that philosophy that
          3   I believe is also responsible for the highly
          4   competent and diverse staff with which we've had
          5   the pleasure to work within the past several
          6   years.
          7            Through my vantage point, there's probably
          8   no more significant example of Banc One's
          9   commitment to affordable lending here than the
         10   leadership, dedication and support extended to the
         11   launch of the coalition in Milwaukee called New
         12   Opportunities for Home Ownership in Milwaukee or
         13   NOHIM.
         14            NOHIM is nationally recognized, and it's
         15   comprised of 55 members including most banks,
         16   thrifts and credit unions in the Milwaukee area,
         17   several community-based counseling organizations,
         18   MI firms, City of Milwaukee and the Wisconsin
         19   Housing and Economic Development Authority.  NOHIM
         20   has had dramatic impact on housing opportunities
         21   for Milwaukee.
         22            Since its inception in 1991, NOHIM is
         23   directly responsible for nearly 2,000 new modest
         24   income homeowners and over $85 million in mortgage
                         McCORKLE COURT REPORTERS, INC.
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          1   investment in our neighborhoods, and I'm convinced
          2   that it has been Banc One's leadership and
          3   significant financial and staff support that
          4   nurtured NOHIM, and it's really these that it's
          5   largely responsibile for Milwaukee's reknown and
          6   successes in affordable lending.
          7            Organizations like Select Milwaukee has
          8   had the garnered the support of Banc One for our
          9   marketing activities, and these are home ownership
         10   expositions and neighborhood tours that we believe
         11   are valuable to introduce first-time home buyers to
         12   the buying process and also to their housing
         13   opportunities in the city as well as to expand
         14   their range of options in terms of neighborhoods
         15   and housings.
         16            And of course there's the next component
         17   of support for these types of activities, but in
         18   the case of Banc One, its involvement and support
         19   has always gone beyond just dollars, and I know
         20   this may sound funny, but it's really easy to write
         21   a check in my view, but reflecting the seriousness
         22   with which the bank takes its community involvement
         23   and our experience of its trademark professionalism
         24   in these endeavors, significant dedication of staff
                         McCORKLE COURT REPORTERS, INC.
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          1   has always been a part of the bank's support of our
          2   activities.
          3            Corporate community affairs and marketing
          4   staff lend their time and their expertise to ensure
          5   that these city events are as successful and
          6   well-produced as any new suburban subdivision
          7   promotion.
          8            I would like to say Select Milwaukee has
          9   benefitted a great deal from the professional
         10   comradery developed and obtained with Banc One and
         11   government relations staff persons.  On many
         12   occasions, covering a variety of issues covering
         13   regulatory matters, legislative issues, Banc One
         14   served as a sounding board, provided us advice and
         15   very valuable insight.
         16            It doesn't mean we've always agreed, but
         17   we've consistently gained from the impressive level
         18   of interest their accessibility to us and their
         19   thoughtfulness.
         20            In conclusion, I wish to reiterate Select
         21   Milwaukee's support.  Our organization hopes the
         22   merger can only enhance the bank's commitment and
         23   capacity to invest in affordable homeownership for
         24   modest income families and other community
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          1   development initiatives in Milwaukee and
          2   elsewhere.  Thank you.
          3       MS. SMITH:  Thank you very much.  Any questions
          4   from the Panel?
          5            All right.  Be sure if you haven't already
          6   done so to give your written statements to the
          7   people at the registration desk so that we can have
          8   them for the record.  And thank you very much for
          9   coming this morning.
         10            We're moving on to Panel 8.  We're going
         11   to start with Reverend Buzza.
Last update: December 3, 2010