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Public Meeting Transcripts

Public Meeting Regarding Norwest Corporation and Wells Fargo & Company

Thursday, September 17, 1998

Transcript of Panel Nine

          7                  MR. FINN:   Good afternoon.  It's a
          8        pleasure to be here.  I will not say that
          9        it's -- I appreciate being here or thank you for
         10        being here because, frankly, it's my right to be
         11        here.  And under the laws for citizens of this
         12        country and as a member of the community that is
         13        affected by these banks -- and the unfortunate
         14        piece is that there are not enough public
         15        hearings on the public good and public policy
         16        regarding these mega mergers that are going on
         17        of which we are going to talk about today.
         18             I'm going to keep my remarks more in the
         19        area of industry concentration and market
         20        concentration, which is part and parcel to what
         21        is going on with this bank merger.  In
         22        particular, I'd like to talk about vertical and
         23        horizontal integration or conglomeration, the
         24        first one being the vertical piece, which is a
         25        policy trend that's going on in the banking

          1        industry which is allowing, for example,
          2        insurance and stocks and market portfolios to be
          3        integrated with lending and deposits.  And while
          4        the -- it's been a cautious road for the last
          5        two years, it appears that we're going to be
          6        making some wholesale decisions regarding this
          7        in the next few years which will make a bank to
          8        all instances for a community a one-stop
          9        shopping center for financial products.  This --
         10        this vertical integration or conglomeration on
         11        policy seems to be going on as a course in the
         12        banking industry, which it's basically being
         13        ignored in terms of the concept of regional
         14        markets and community markets and how that
         15        affects it.
         16             I'm going to include with that, though, the
         17        common measure of integration, which is the HH
         18        index, which you are all familiar with.  And for
         19        this part of my testimony I would like included
         20        in my previous testimony on record with the
         21        First Bank Marquette merger.  So I would like
         22        that included, which speaks to this integration
         23        problem regarding the HH index and the problems
         24        with the index, which I won't talk about today.
         25             The HH index, for example, for Norwest and

          1        First Bank, which is now Bank One in the
          2        Minneapolis area, has been basically ignored.
          3        And we now have essentially two banks owning
          4        more than 70 percent of the market in deposits
          5        in the Minneapolis area.  We'd also note from
          6        testimony that's out there that in certain areas
          7        of Nevada and other places where Wells Fargo and
          8        Norwest are coming together, they are actually
          9        going to be at market percentages well above
         10        that, including one community where they are
         11        going to own virtually 100 percent of the
         12        market.
         13             I would like to speak more to this about
         14        this, but the bank at this time has agreed with
         15        the Norwest argument that they will not disclose
         16        divestiture information.  And, frankly, I think
         17        that's unconscionable.  I think -- I think it's
         18        illegal.  It's unprecedented.  And for that
         19        reason alone, this decision should be -- should
         20        be stopped until that divestiture information
         21        can be brought out into the public in a public
         22        debate and can happen on it.  So in that
         23        particular instance, I think -- I think this
         24        hearing is important that it raises those
         25        critical issues.  And that decision of -- a

          1        major public policy decision like this on
          2        divestiture cannot happen in the dark.
          3             But in terms of these indexes, we need to
          4        be very careful because the HH index has always
          5        been used to measure the concentration -- the
          6        market concentration of banks in one community.
          7        But what is happening with the trends, which I
          8        think Wells and Norwest are probably the best
          9        example in the country at this time, after the
         10        various mergers that they've already brought
         11        about is the fact that they are not -- we need
         12        to develop a new measure which looks at market
         13        concentration across regions.  Because, indeed,
         14        I don't think it's too hard -- I don't think I'm
         15        really overstating myself when I say that the
         16        new Wells Fargo will be a market almost
         17        monopolist in the midwest, western regions.  And
         18        particularly, that's true in some markets where
         19        I don't think you can quibble about a monopoly
         20        when they own 100 percent of the business in
         21        those communities.
         22             This -- this is disturbing.  I like to
         23        think about this -- this type of thing as --
         24        using a metaphor of -- in Africa, the elephants
         25        where they are protected, which all of us

          1        believe is important and in some communities are
          2        actually sacred.  But for the villagers in those
          3        protected areas where elephants cannot be
          4        controlled, an elephant can walk into the
          5        village and can eat it or decimate it.  And they
          6        can be without home or livelihood or whatever.
          7             In the same way, Wells Fargo is going to be
          8        able to move across the midwest protected by
          9        essentially the staking out in communities with
         10        ATMs, protected by the fact that their deep
         11        pockets make it almost impossible for other
         12        banks to compute -- or compete in terms of
         13        deposit wars or to cause a competition.  And
         14        this is -- this is going to be devastating.
         15             I'm going to continue because there are
         16        only two of us.
         17                  CHAIRPERSON SMITH:  Well, we do
         18        have --
         19                  MR. FINN:  Okay.  I'll be short,
         20        then.
         21                  CHAIRPERSON SMITH:  All right.
         23                  MR. FINN:  I'm very concerned that the
         24        Federal Reserve is abdicating its responsibility
         25        in this area and that it hasn't actually -- as a

          1        protector of the nation's banking as it's formed
          2        under our country's laws, has not been out there
          3        in the forefront wondering about these things.
          4        And the people from the community have to bring
          5        them up to them.  I think at the very least,
          6        given these trends that are now part of the
          7        public testimony, I think we have to look at
          8        this model and say, well, a safe course is
          9        something like what happened with Nations Bank.
         10        I think the people here that are talking about
         11        indexes being at a minimal level across and
         12        guidelines put into the Wells Fargo agreement
         13        that says that Wells Fargo will not essentially
         14        breach on the HH index in any of their
         15        communities above a certain minimal level is
         16        something important and prudent to put into this
         17        agreement.
         18             And last, I'd like to suggest that while
         19        everybody here that has been here today and
         20        testified on this has been well-intentioned and
         21        has told great stories.  I think you should take
         22        into account the people who have come here and
         23        told the other side, the dark side of banking
         24        business, the dark side of Norwest and in the
         25        histories, because there are courageous acts

          1        here.  And it's those type of things that you
          2        are charged to insure do not happen.  And union
          3        busting is something that is happening.  And I
          4        don't think we can turn our backs on them.
          5             Thank you.
          6                  CHAIRPERSON SMITH:  Thank you.
          7        Ms. Mendoza will be speaking on behalf of her
          8        own organization and then also of the Rapid City
          9        Housing Coalition.  I don't know what order.
         11                  MS. MENDOZA:  Thank you.  My name is
         12        Lilly Mendoza and I'm the CEO of of Earth
         13        Walker, which is a consulting business.  And
         14        what I'm doing today is representing them
         15        organizations from Rapid City, South Dakota.
         16        And one of the things I'd like to share with
         17        you, in listening today, you hear the good and
         18        the bad of both.  But what I can share with you
         19        is what -- what we're -- what's going on in
         20        Rapid City and the feelings that are there of
         21        the people that I'm representing.  Rapid City
         22        has a population of 54,000 people.  Of that
         23        54,000 people, 9,000 are American Indian
         24        people.  At any one time throughout the year,
         25        Rapid City deals with and serves 22,000 Native

          1        American people.  And those individuals are
          2        coming in from the surrounding reservations.
          3        There is an Indian Health Service there that
          4        serves American Indian people.  And so that's
          5        where we draw that number from.  So the American
          6        Indian people really do bring a lot of revenue
          7        into the Rapid City area.
          8             One of the concerns that the people have is
          9        their treatment when they walk into banks and
         10        the feelings that they get and not feeling
         11        comfortable being there, as well with the 60
         12        percent denial in loans within the Rapid City
         13        area and the surrounding reservations.  So
         14        that's an issue as well.
         15             The organizations that I'm working with are
         16        the Rapid City Housing Coalition and an
         17        organization that serves young women between the
         18        ages of 10 and 24.  What's interesting and
         19        exciting and what's going on in Rapid City is
         20        that this organization -- these two
         21        organizations -- the oldest person working
         22        within those organizations is 27 years old.  And
         23        it's real exciting to me to see these young
         24        people that are coming out.  And they are
         25        sharing their concerns about their community

          1        because they care about their community.  And
          2        these individuals that work within these
          3        organizations come from low-income families and
          4        know the barriers and struggles that they need
          5        to get through.  And so they are willing to take
          6        the lead and work hard to make a difference.
          7             We have met with Norwest Bank.  We had an
          8        initial meeting August 14th at which time we
          9        began to discuss some possible solutions.  We
         10        requested some information -- some information
         11        from the individual and actually didn't get back
         12        to those organizations for about a month.  And
         13        we had to call the meeting again.  At that time
         14        then, the organizations met with the president
         15        of the bank.  And I was the mediator.  What's
         16        interesting is that when I said the word
         17        "mediator," he became very angry because he
         18        said, "We are both on the same side."  And I
         19        said, "That may be, but we both live on
         20        different sides of the tracks."  And that's the
         21        whole issue is that we are -- Rapid City is a
         22        city that is divided.  There is a west side and
         23        there is a north side.  And if you travel
         24        through our town, you can really tell the
         25        difference.  You can see where the low-income

          1        people live.  And you can tell the difference in
          2        parks.  So what we are saying is -- to Norwest
          3        is that we would like a commitment from
          4        Norwest.  And the merger with Wells Fargo, you
          5        know, if it's going to happen, it's going to
          6        happen and we'll be in support of that.  But
          7        what we're saying is that we need a commitment
          8        from the bank that individuals in the bank
          9        serving American Indian people need to really
         10        walk their talk and help people as far as going
         11        in and getting loans, because there is different
         12        circumstances and people deal with different
         13        issues coming from different walks of life.  So
         14        what it's really -- what it's really coming down
         15        to is the broken promises and making sure that
         16        there is follow-through.
         17             We have already discussed putting together
         18        a steering committee to work with Norwest Bank.
         19        Norwest Bank has stated to the organizations
         20        that they will take the lead in this.  We've yet
         21        to hear from them within the last couple weeks.
         22        They were supposed to call a news conference and
         23        they haven't done that.  So what we need is a
         24        commitment to our community.  Right now in the
         25        community they're doing, you know, a big press

          1        release and public relations kinds of things and
          2        there are billboards and there are TV ads.  And
          3        it's a really huge show.  Okay.  And -- but what
          4        we really want is commitment.  So those are the
          5        concerns that the organizations have from Rapid
          6        City.
          7             Thank you very much.
          8                  CHAIRPERSON SMITH:  Okay.  Thank you.
          9        And we're going -- we have other members of the
         10        panel who have just arrived so we will stay put
         11        for a while.  We have Ms. Seals from the
         12        Minneapolis NAACP.
         14                  MS. SEALS:  Good afternoon.  Leola
         15        Seals, Minneapolis Branch, NAACP President.  And
         16        I would just like to briefly address that in the
         17        bank end with Norwest Bank, we have not been
         18        getting the loans from Northwest to the African
         19        American communities as we should.  Northwest
         20        Bank, we are asking that you support this status
         21        quo and not the people in poverty.  We are not
         22        asking for you to continue to do this.  We
         23        challenged this institution to step up to the
         24        plate and meet its community development goals
         25        by financially supporting the NAACP and

          1        endorsing a self-sufficient initiative where we
          2        take the lead in solving our own issues.  We are
          3        fed up with responses that we get that affect
          4        our communities.  No one knows the struggle,
          5        plight and solutions for our community better
          6        than we do.  No one deserves an opportunity to
          7        serve our community more than we do, since we
          8        live here.  We need solid commitment from the
          9        bank to work with us.  Remember, in most
         10        instances it is not the cash that we are
         11        speaking but mortgage commitments.  Our office
         12        has a large overflow of people in poverty being
         13        turned down for loans.  We would like for the
         14        bank to engage and become a partner with us and
         15        the NAACP.
         16             Thank you.
         17                  MS. SMITH:  Thank you very much.  If
         18        there are no questions, then we are going to
         19        take a 15-minute break.  And so we will see you
         20        at a little after 2:45.
         22                  (Whereupon a break was taken.)

Last update: December 3, 2010