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Public Meeting Transcripts

Public Meeting Regarding Norwest Corporation and Wells Fargo & Company

Thursday, September 17, 1998

Transcript of Panel Eight

          2                  MS. CAPLAN:  Good afternoon.  My name
          3        is Karen Caplan.  I'm the President and CEO of
          4        Fried's, Incorporated.  We're the nation's
          5        premier marketer of specialty produce.  We're
          6        located in Los Angeles, California.  And we're
          7        the company that introduced the kiwi fruit to
          8        America 36 years ago.  Through our produce
          9        companies, we employ about 100 people.  We do
         10        about 25 million dollars in business and
         11        distribute our specialty produce all over the
         12        United States to supermarkets and restaurants.
         13        We've been in business for 37 years.  It's a
         14        family-owned business.  It was started by my
         15        mother in 1962.  And my sister and I purchased
         16        the company from our parents in 1990.
         17             For over 30 years, our banking relationship
         18        was with First Interstate Bank.  And, of course,
         19        about three years ago our bank merged with Wells
         20        Fargo.  Frankly, at that time I was absolutely
         21        disgusted with our relationship with First
         22        Interstate and was planning on shopping around
         23        for a new bank anyway.  Because I had become
         24        familiar with Wells Fargo through my association
         25        with the National Association of Women Business

          1        Owners -- NAWBO -- it seemed less trouble to go
          2        ahead and try Wells Fargo out.
          3             Well, I have to admit, Wells Fargo really
          4        impressed us.  First, contrary to what you heard
          5        today, their transition through the merger was
          6        relatively smooth.  The things that really stuck
          7        out in our office is that we are able to do all
          8        of our transactions electronically, wire
          9        transfers, all of our international business.
         10        We actually speak with our banking officers more
         11        frequently than we ever did with our officers at
         12        First Interstate.  And they've actually worked
         13        with us to customize our services and reduce our
         14        cost of doing business.  But most importantly,
         15        for the first time in the history of our company
         16        about a year and a half ago, we decided we
         17        needed a line of credit.  Many of our big
         18        supermarket suppliers have slowed down their
         19        payments to us, and we wanted to maintain our
         20        quick payment with our suppliers.
         21             So we worked with Wells Fargo.  We did shop
         22        other banks at that time.  And Wells Fargo was
         23        fabulous.  They walked us through the process.
         24        Two of the banking officers came to our
         25        facility, helped us fill out the paperwork, got

          1        it through very quickly.  And actually, their
          2        rates were very competitive.
          3             Well, the line came up for renewal earlier
          4        this year.  And sadly, my father had just passed
          5        away at the time the application was due.  And I
          6        was a bit nervous making that time schedule.
          7        Well, Sue, our contract rep in Phoenix, was
          8        great.  She extended our credit line for a
          9        couple months.  She worked with me on the
         10        paperwork, just hand walked everything through.
         11        We met the deadline and our credit line was
         12        continued.
         13             So as a customer and as a merger survivor,
         14        I want to compliment Wells Fargo as a bank.
         15        They've been extremely service-oriented.  And
         16        even though our main bank contact is in Phoenix
         17        quite a ways away, we've had a better working
         18        relationship than we ever had with First
         19        Interstate.
         20             Now, with my remaining time, I'd like to
         21        share with you how Wells Fargo is an excellent
         22        corporate citizen.  I'm a member of NAWBO, the
         23        National Association of Women Business Owners.
         24        We represent the over eight million women
         25        business owners in the United States.  I served

          1        as the president of the LA Chapter of NAWBO from
          2        1995 to 1997 with the largest chapter in the
          3        world.  And I currently serve on the Board of
          4        the National Foundation for Women Business
          5        Owners, which provides research and publishes
          6        statistics on women business owners in the
          7        United States and around the world.  Wells Fargo
          8        is a national corporate partner of NAWBO and
          9        also supports many local chapters across the
         10        United States, not only with their dollars, but
         11        with other resources.
         12             According to information from the
         13        foundation, there are nearly eight million
         14        women-owned businesses in the United States.
         15        The number of women business-owned firms has
         16        increased by 78 percent between 1987 and 1996,
         17        nearly twice the rate of all U.S. firms.
         18        Currently over one-third of the businesses in
         19        the United States are owned and operated by
         20        women.  The nearly eight million women-owned
         21        firms in the U.S. contribute nearly 2.3 trillion
         22        dollars in revenue to the economy, a three-fold
         23        increase over 1987 levels.  And women-owned
         24        businesses employ 18 and a half million people.
         25        One in four company workers in the U.S. can pay

          1        their mortgage, purchase goods and services and
          2        send their kids to college thanks to a woman
          3        business owner.  They are located throughout the
          4        United States.  The fastest growing states for
          5        women-owned firms are the mountain states,
          6        southwest and southeastern regions.
          7             I realize I have one minute so I'm going to
          8        kind of zip through this.  The foundation
          9        published many of these statistics back in
         10        1994.  When they were published, they had a
         11        profound effect on banking.  I don't know if it
         12        was a Wells Fargo representative, but when they
         13        were published, a banking officer asked "Is it
         14        really true that women-owned businesses employ
         15        one out of every four workers in the United
         16        States?"  And actually, women-owned businesses
         17        employ 35 percent more people in the United
         18        States than all the Fortune 500 companies do
         19        worldwide.  She commented at that time it would
         20        change the way her bank does business.
         21             Well, Wells Fargo changed the way they do
         22        business in 19 -- I believe it was '95 they
         23        created a one billion dollar loan program for
         24        women business owners.  It was so successful
         25        that they increased it after one year to a ten

          1        billion dollar loan fund.  They made it
          2        incredibly easy for us -- many of us across the
          3        United States to get loans.  So my thanks to
          4        Wells Fargo.  They've been a fabulous bank and a
          5        very responsible corporate citizen.
          6                  CHAIRPERSON SMITH:  Thank you.  And
          7        then we'll go to Mr. Reagan.  We're not?
          8                  MR. REAGAN:   Let me refer to Mr.
          9        McGill.
         11                  MR. McGILL:  Good afternoon.  And
         12        thank you for inviting us to speak on behalf of
         13        this merger between our Norwest and Wells Fargo
         14        Company.  I am from a small nonprofit
         15        organization called The Black State Employees
         16        Association, which is an agency that is mainly
         17        involved in Civil Rights and development
         18        issues.  We have a long-established relationship
         19        with Wells dating back to its acquisition of
         20        First Interstate.  First Interstate had one of
         21        the finest bankers in this country, Lenet
         22        Dialy.  And we were very concerned when that
         23        acquisition was announced, what our relationship
         24        with Wells Fargo would become.
         25             I'm here to say that not only did Wells

          1        live up to its commitment to us during hearings
          2        similar to these, but they promised during those
          3        hearings to expand opportunities in areas that
          4        were quite important to us.  And one of those
          5        areas we are quite concerned and want to urge
          6        the consideration for the creation of a bank
          7        CDC.  We think that bank CDCs is one of the most
          8        effective tools that we've found to help with
          9        development projects in low and moderate-income
         10        areas, and particularly in the area of retail
         11        and commercial development.  We think that there
         12        is a huge, relatively speaking, amount of
         13        resources that have been devoted to housing.
         14        Two issues that have been of primary concern to
         15        us in the area of retail and commercial
         16        development is the ability to raise funds for
         17        predevelopment costs and equity needs.
         18             Quite frankly, we wouldn't be sitting here
         19        now saying that we are about to start
         20        construction on a retail strip center in
         21        southwest Dallas except that Wells, meaning
         22        Byron Reid, mainly, and Karen Wegman, had the
         23        faith in our leadership, mainly Mr. Reagan, to
         24        make a substantial commitment to predevelopment
         25        needs.  And we -- there just aren't many

          1        financial institutions or foundations that's
          2        willing to express their support at the level
          3        that Wells provided to this organization.  And
          4        because that happened, then we were able to meet
          5        other kinds of needs and, more importantly,
          6        develop the kind of presentations that really
          7        led to the interests and support of other
          8        financial institutions and other providers of
          9        resources that we needed.
         10             So we have been quite pleased to hear that
         11        a bank CDC is one of the considerations that the
         12        combined institutions is considering.  We would
         13        certainly urge them to take a close look at the
         14        equity and predevelopment needs of
         15        organizations, such as the Black State Employees
         16        Association's community development corporations
         17        and decide what the fair -- and perhaps take the
         18        leadership in establishing creative ways to help
         19        organizations such as ours meet those kind of
         20        needs.
         21             Just two other areas that I would like to
         22        briefly speak to.  And one of the -- one of the
         23        issues that we raised in public forums with
         24        smaller groups and senior administrators in both
         25        institutions is that as opportunities become

          1        available, particularly in areas of professional
          2        services, meaning the merger -- mergers happen.
          3        And they often create opportunities -- thank
          4        you -- create opportunities for employment for
          5        African Americans and others.  And certainly in
          6        the areas of legal needs, accounting needs and
          7        advertising and marketing needs.  And certainly
          8        as those opportunities become available, we have
          9        certainly urged the institutions to consider how
         10        they can divide and subdivide those
         11        opportunities so that law firms and accounting
         12        firms and advertisers, particularly African
         13        Americans, can take advantage of those
         14        opportunities.
         15             Thank you very much.
         17                  MR. REAGAN:  I'm Darren Reagan, the
         18        Chairman and CEO of the Black State Employees
         19        Association of Texas.  And I thank Mr. McGill
         20        for providing the groundwork.  And we also have
         21        submitted written comments as well.  So we would
         22        just simply like to surmise our support for this
         23        merger.
         24             Now, I, heading up and founding the Black
         25        State Employees Association of Texas as a Civil

          1        Rights organization with critical concerns.
          2        Many have been expressed here today.  And we are
          3        very, very sympathetic and empathetic with those
          4        concerns.  And we know that based on our
          5        experience with Wells Fargo in a recent -- very
          6        good and productive conversations, meetings with
          7        the presidents and senior officers of Norwest
          8        Corporation, that they will follow properly and
          9        rectify as many of those concerns as possible.
         10             I live in Dallas, Texas.  I've lived there
         11        for about 38 years now.  And I live in a section
         12        of town, Southern Dallas, Southeast Oak Cliff in
         13        particular, where we have 108,000.  If we were
         14        to have this conversation about seven years ago,
         15        this town of about 108,000 residents, 95 percent
         16        African American, we did not have a single bank
         17        branch in Southeast Oak Cliff.  I was down in
         18        Tyler, Texas.  And my town of -- hometown of
         19        Tyler, Texas is about 90,000 residents.  In
         20        Tyler, Texas, we have numerous banks.  We have
         21        the traditional retail shopping experience and
         22        dineries that most major cities have.  But in
         23        Southeast Oak Cliff, this city of 108,000
         24        residents, we did not have a single branch.
         25        However, nearly one billion dollars of the 2.5

          1        billion dollars of consumer spending power came
          2        out of Southeast Oak Cliff.  We took a personal
          3        challenge of revitalizing southern Dallas,
          4        Southeast Oak Cliff in particular.  Now we have
          5        about five branches there.
          6             First Interstate put up one of their most
          7        productive.  I believe it is now the top
          8        producer in the State of Texas, now Wells
          9        Fargo.  Nations Bank, one of their top
         10        producers, not only in the state, but in the
         11        country.  Bank of America and Chase.  We're not
         12        saying that -- and I'm not here to suggest that
         13        all is well in southern Dallas and many other
         14        urban cities across this United States.  But
         15        I've come to recognize as a leader in our
         16        communities that we have to forge
         17        relationships.  And much of what we've been able
         18        to accomplish by way of this organization has
         19        been because of establishing relationships.
         20             I don't make it a habit to support banks in
         21        these type of forums.  As a matter of fact, this
         22        is my first.  And I consider it an honor to be
         23        able to sit here and tell you guys the truth.
         24        If it had not been for Wells Fargo following up
         25        on their commitment made by First Interstate to

          1        become leaders in our state, and in our city in
          2        particular, much of what we've been able to
          3        accomplish would not have come to fruition as it
          4        has to date.
          5             We were able to acquire the first enclosed
          6        mall in the City of Dallas, built in 1963, West
          7        Cliff Shopping Center.  We acquired that center
          8        about a year ago and have already demolished the
          9        center to construct a power center, which will
         10        be anchored by an Abison's grocer and many other
         11        national and local regional credit tenants and
         12        some small business owners.  Wells Fargo was one
         13        of our key supporters on the front of this
         14        acquisition.  And a number of other projects
         15        that we have underway right now.  Housing
         16        development, a joint venture with Centex and
         17        Choice Homes.  Wells Fargo we know will be
         18        actively involved in this process.  The new
         19        Wells Fargo.  We've met, as I say, with the
         20        senior team of Norwest Corporation in
         21        conjunction with the Wells Fargo senior
         22        management.
         23             I must tell you that I've been among many
         24        merger meetings, president and senior officers,
         25        and I can just share with you that our meetings

          1        with Wells and with Norwest have been very, very
          2        cordial.  As a matter of fact, it's been the
          3        best and most productive meeting we've had in a
          4        long time with bankers.
          5             Again, we support this -- this merger.  And
          6        we encourage and we know that Norwest and Wells
          7        Fargo -- the new Wells Fargo will do all within
          8        its power to make sure that the concerns of all
          9        of its community needs are met.
         10             Thank you.
         11                  CHAIRPERSON SMITH:  Mr. Reid?
         13                  MR. REID:  Yes.  Good afternoon.  And
         14        thank you very much.  My name is Jim Reid.  I'm
         15        the President and Founder of the Southern Dallas
         16        Development Corporation.  We're what's known in
         17        the business as a community development
         18        financial institution.  We provide an
         19        alternative source for financing small
         20        business.  We're a 501C3 founded in 1989.  Our
         21        mission is to assist businesses, create jobs and
         22        promote investment in southern Dallas, which is
         23        a section of our city that has 45 percent of the
         24        population and only 13 percent of the commercial
         25        tax base.  That's a big imbalance in terms of

          1        jobs and services.  And to compare the northern
          2        sector of Dallas with the southern sector, the
          3        per capita income in the south is about 60
          4        percent in terms of the northern section of the
          5        city.  Southern Dallas is primarily a minority
          6        area.  It's 50 percent African American and 25
          7        percent Hispanic, 25 percent White or other.
          8             We started out with one loan program.  We
          9        now run five loan programs that are funded by
         10        the federal government to Treasury, HUD and SBA,
         11        by foundation, and by corporate donors.  In the
         12        last two years, we have loaned money that
         13        enabled a thousand people to go to work.  And I
         14        tell my 12 staff persons that each one of them
         15        in the last two years personally is responsible
         16        for 85 people being on the payroll.  That's the
         17        way we look at it.
         18             Our borrowers typically -- we've done about
         19        300 loans.  About 100 of them we've done in
         20        participation with banks where we're taken a
         21        subordinate debt position.  The other 200 we've
         22        done directly.  They were totally unbankable.
         23        We provide our loans in the form of subordinate
         24        debt, thereby bringing other dollars to the
         25        table.  And dealing with an issue in the

          1        minority community, which is a lack of equity.
          2        So this quite a bit of equity helps out.  70
          3        percent of our borrowers are minority business
          4        persons.
          5             We're in favor of this merger because our
          6        experience with Wells Fargo and our feeling that
          7        into -- in the future, this experience will be
          8        realized in a larger form through the merged
          9        institutions.
         10             We are -- and I want to use this
         11        opportunity to talk a little bit to the federal
         12        representatives about something -- a real sea of
         13        change that's happened in the small business
         14        lending the last couple years.  We -- now
         15        basically small business lending is done by
         16        credit scoring.  You get a computer score.  And
         17        the transactions are much faster, much cheaper
         18        on behalf of the bank.  So you -- it has that
         19        advantage.  For a number of customers that --
         20        that we serve, because of blips in their credit,
         21        because their deal doesn't fit the mold, they
         22        need special treatment.  And I would make a
         23        generic plea as you're dealing with compliance
         24        and those kind of issues to make sure that
         25        the -- all banks have second review processes

          1        for their loans if they're using credit scoring
          2        and that they all establish policies in
          3        referring loans that are denied to community
          4        development financial institutions, institutions
          5        like ours that can take the time with the
          6        borrowers and really set up, and as nonprofits,
          7        to bridge that gap.
          8             In terms of our specific experience with
          9        Wells, which has been very positive, they're a
         10        major investor in an entity we call the Southern
         11        Dallas Development Fund.  It's a bank -- a CDC
         12        in which 17 bank investors have created this
         13        fund.  And we manage it on behalf of these
         14        banks.  And again, we can do things with these
         15        funds that banks can't do.  We can provide
         16        subordinate debt.  We can provide equity, things
         17        that they can't do as lenders.  So that's been
         18        an instrument that Wells has invested in and
         19        been very useful.  They've participated with us
         20        in a number of deals.  When they take the
         21        primary position, we do subordinate debt.
         22        They've done innovative outreach with us.  One
         23        of our problems in that area is the media.  Not
         24        the particular media over here, but some media
         25        who all write about -- all they can write about

          1        is drug busts and drive-by shootings and that
          2        kind of thing.  They don't have a positive word
          3        about our area of the city.  We decided to write
          4        our own newspaper.  So every year we write an
          5        eight-page supplement to the "Dallas Morning
          6        News," send it to a million households.  And
          7        it's positive.  And we know it's true because we
          8        write it.  Anyway, and Wells Fargo has helped us
          9        do that.
         10             They also helped us -- one of the things
         11        facing small businesses is there is a maze in
         12        terms of who -- who's providing services.  They
         13        helped publish a guide that went to 12 -- 25,000
         14        businesses in terms of how to service.
         15             I'm saving the best for last.  Last year we
         16        got a -- in September we got a $600,000 grant
         17        from the Treasury Department.  And we had to
         18        match with it $600,000.  And Wells had made a
         19        four-year pledge of 400 -- a 100,000 a year.
         20        And Chase, three years, 100,000 a year.  Bank
         21        One, 300, 100,000 a year.  But I needed 600,000
         22        right away.  And I called Karen.  And I got 100
         23        each from Chase and Bank One.  And I called
         24        Karen Wegman's office and said, "Wells, we need
         25        you to accelerate your commitment and deliver us

          1        500,000 -- 400,000 immediately so we can match
          2        this federal money and in the process create
          3        about 500 jobs."  In one week, those funds were
          4        wire transferred to a new branch bank serving
          5        our area.  And that's what I call service.
          6             Thank you.
          7                  CHAIRPERSON SMITH:  Mr. Grovender?
          9                  MR. GROVENDER:  Well, my name is Kelby
         10        Grovender.  And I'm from the American Indian
         11        Housing Corporation.  And I'm here to talk a
         12        little bit about our relationship that we've had
         13        with Norwest Bank.
         14             First, I'd like to tell you a little bit
         15        about who we are.  American Indian Housing
         16        Corporation started as a task force back in
         17        1991, partially in response to the lack of
         18        counting of homeless Indian people during that
         19        statewide homeless survey of 1990.  In that
         20        survey, it said that there were 87 homeless
         21        Native American people who had been counted.  We
         22        knew that anybody who walked down Franklin
         23        Avenue in South Minneapolis would realize that
         24        that was a ludicrous number to use.  And so the
         25        task force was formed to look into that, as well

          1        as looking into what really are the housing
          2        needs for Indian people primarily in South
          3        Minneapolis.  Eventually that evolved into the
          4        American Indian Housing Corporation.
          5             The biggest project that we have completed
          6        to date is a project called Anishinabe Wakiagun,
          7        which I am the Director of Anishinabe Wakiagun.
          8        It is a permanent supportive housing program
          9        serving late-stage -- excuse me -- serving
         10        late-stage chronic inebriates who have been
         11        homeless the majority of the past five years.
         12        Oftentimes have been homeless the majority of
         13        the past 10 or 15 years.  So it is a project
         14        that is housing people who are the most
         15        difficult to serve, but also who had the
         16        greatest need in terms of housing.
         17             Norwest applied for us to the Federal Home
         18        Loan Bank for $210,000, which helped in the
         19        construction of that project.  We've finished
         20        construction in 1996, opened up our doors
         21        September 3rd of that year.  Now we have been in
         22        operation for two years and have been housing a
         23        lot of people who otherwise would have been on
         24        the streets.  And I think that we have probably
         25        saved a lot of lives in the process, especially

          1        considering our cold winter months and that a
          2        lot of these folks do live outside during the
          3        wintertime.
          4             In -- in addition to the assistance that
          5        Norwest gave us in construction of that project,
          6        the American Indian Housing Corporation also
          7        started a capital campaign two years ago.  This
          8        has -- up to fairly recently has been a real
          9        shoestring budget kind of an organization.  It
         10        started out officing in the basement of -- of
         11        the Native American Educational Services
         12        Building, which we didn't pay any rent for.
         13        Some of the early staff people were sleeping in
         14        those offices.  This is just to give you an idea
         15        of where we were starting from, a very grass
         16        roots kind of an organization.
         17             Two years ago, we started a capital
         18        campaign to purchase a building that is the
         19        offices for the American Indian Housing
         20        Corporation.  And Norwest was able to give us
         21        $40,000 towards that capital campaign.  They've
         22        supported us in a variety of ways beyond just
         23        money.  And I think the most important thing
         24        that I personally have seen through the
         25        involvement of Norwest is having one of their

          1        staff people, Muffy Gabler, who served on the
          2        Board of the American Indian Housing Corporation
          3        for the past three years.  She has been a
          4        dynamic force on our board.
          5             Any of you who have sat on the boards of
          6        nonprofit organizations know that there are some
          7        people who just show up.  There are some people
          8        who, even though they are on the board, they
          9        don't even show up.  And then there are those
         10        people who are on the board and they are there
         11        and they are doing things.  And Muffy was always
         12        the person who was doing things, who was helping
         13        to move the organization forward and who was
         14        keeping us fiscally responsible as the Chair of
         15        our Finance Committee.  I think that we were
         16        able to build our capacity at a much faster rate
         17        through the assistance of Muffy as a member of
         18        our board and as a good driving force.
         19                  CHAIRPERSON SMITH:  Thank you.
         20                  MR. GROVENDER:  You're welcome. 

Last update: December 3, 2010