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Public Meeting Transcripts

Public Meeting Regarding Norwest Corporation and Wells Fargo & Company

Thursday, September 17, 1998






          8                         PROPOSED MERGER

          9                         PUBLIC MEETING

         10                       September 17, 1998



         13         The Norwest Corporation and Wells Fargo & Company 

         14    public meeting, taken before Holly J. Nordahl, a Notary 

         15    Public in and for the County of Rice, State of 

         16    Minnesota, on the 17th day of September, 1998, at the 

         17    Federal Reserve Bank of Minneapolis, 90 Hennepin Avenue, 

         18    in the City of Minneapolis, Minnesota, commencing at 

         19    approximately 9:00 a.m.



         22                            *   *   *






          1    APPEARANCES:


          3    Board of Governors:  Dolores Smith, presiding

          4                         Niel Willardson

          5                         Kenneth Binning

          6                         Deborah Awai



          9                            *   *   *

         10    WHEREUPON, the following proceedings were duly had:

         11                            *   *   *



         14                  CHAIRPERSON SMITH:  Well, I'm pleased to    08:59:58

         15        welcome you to this important public meeting on the   09:00:00

         16        application by Norwest Corporation to acquire Wells   09:00:04

         17        Fargo & Company.  I'll start by introducing myself.   09:00:08

         18        I'm Dolores Smith, Director of the Division of        09:00:10

         19        Consumer and Community Affairs at the Federal         09:00:14

         20        Reserve Board in Washington, D.C.  I'll be the        09:00:18

         21        presiding officer for this public meeting.  Our       09:00:20

         22        other panelists are, starting from my extreme right,  09:00:24

         23        Niel Willardson, vice president in charge of banking  09:00:28

         24        supervision from the Federal Reserve Bank of          09:00:32

         25        Minneapolis.  Next to him, Kenneth Binning, director  09:00:34



          1        of applications and financial analysis from the       09:00:38

          2        Federal Reserve Bank of San Francisco.  To my right,  09:00:40

          3        Deborah Awai, senior counsel legal division from the  09:00:46

          4        Federal Reserve Board.                                09:00:50

          5             We're here today because Norwest Corporation,    09:00:54

          6        Minneapolis, Minnesota, has applied for approval to   09:00:58

          7        acquire Wells Fargo & Company, San Francisco,         09:01:02

          8        California.  When the Federal Reserve system          09:01:06

          9        considers one of these applications, we look at a     09:01:10

         10        number of factors under the Bank Holding Company      09:01:12

         11        Act.  These include financial issues, managerial      09:01:16

         12        issues, competitive issues, and the convenience and   09:01:22

         13        needs of the communities affected.  In doing so, we   09:01:26

         14        particularly look at the record of performance of     09:01:30

         15        the parties under the Community Reinvestment Act.     09:01:34

         16        The CRA requires the Board to take into account an    09:01:38

         17        institution's record of meeting the credit needs of   09:01:42

         18        its entire community.                                 09:01:46

         19             The Norwest-Wells Fargo application also         09:01:50

         20        involves the proposed acquisition or retention of     09:01:54

         21        nonbanking companies engaged in activities            09:02:00

         22        permissible for bank holding companies.  The Board    09:02:02

         23        must therefore determine whether the proposed         09:02:06

         24        nonbanking activities can reasonably be expected to   09:02:10

         25        produce benefits to the public that outweigh          09:02:14



          1        possible adverse effects such as undue concentration  09:02:16

          2        of resources, decreased or unfair competition,        09:02:22

          3        conflicts of interest, or unsound banking practices.  09:02:28

          4             The purpose of the public meeting today is to    09:02:32

          5        receive information regarding these factors.  We      09:02:36

          6        will be seeking to elicit this information and to     09:02:40

          7        clarify factual issues related to the application.    09:02:44

          8             I'll make a few remarks about our procedures     09:02:50

          9        today.  This is what we call an informal public       09:02:54

         10        meeting.  Members of the panel may ask those who are  09:02:58

         11        testifying about their testimony.  This is not a      09:03:02

         12        formal administrative hearing, so we are not bound    09:03:08

         13        by the rules regarding evidence, cross examination,   09:03:12

         14        and some of the more formal trappings for that kind   09:03:16

         15        of proceeding.                                        09:03:20

         16             We will have about 70 groups and individuals     09:03:22

         17        represented today at this public meeting.  We are     09:03:26

         18        pleased that so many people have been willing to      09:03:30

         19        come and testify, but we do have a full schedule and  09:03:32

         20        we will be trying to stay to the timed agenda pretty  09:03:36

         21        closely so that everyone who has asked to offer oral  09:03:42

         22        testimony will have the opportunity to do so.  We     09:03:46

         23        will ask witnesses to be mindful of the needs of      09:03:48

         24        others and to stay within their allotted times.       09:03:52

         25        We're using a signal system with regard to timing.    09:03:58



          1        We have two timekeepers over here to the right, just  09:04:02

          2        right in front of the panels that will be             09:04:06

          3        testifying.  There will also be some individuals who  09:04:10

          4        were unable to sign up in advance to testify at this  09:04:16

          5        meeting, and so to the extent possible, we will give  09:04:18

          6        them a chance to speak.  At the end of the meeting    09:04:22

          7        today, we will make the microphone available to       09:04:26

          8        anyone who would like to make a presentation, time    09:04:28

          9        permitting.  Also, if witnesses have not yet turned   09:04:34

         10        in copies of your written testimony, or if you have   09:04:38

         11        any other written statements to put into the record,  09:04:42

         12        please leave them with the Federal Reserve staff at   09:04:44

         13        the registration table because it's important that    09:04:48

         14        we get all of this information for the record.        09:04:52

         15             A transcript of the meeting will be available    09:04:56

         16        by next Tuesday, September 22nd, through the Federal  09:04:58

         17        Reserve Bank of Minneapolis and also from the Board.  09:05:04

         18        In addition, the official transcript will be          09:05:06

         19        available by close of business on September 23rd on   09:05:10

         20        the Board's public web site, which is                 09:05:16


         22             One more comment about the testimony.            09:05:28

         23        Witnesses may submit a written supplement to their    09:05:30

         24        oral testimony, but they must do so by next           09:05:34

         25        Thursday, September the 24th.  Then the record will   09:05:38



          1        be closed.  Any written supplements should be         09:05:40

          2        directed to Jennifer J. Johnson, Secretary of the     09:05:44

          3        Board, Board of Governors of the Federal Reserve      09:05:48

          4        System, Washington, D.C. 20551.  They must be         09:05:52

          5        received by 5 p.m. eastern daylight time on           09:05:58

          6        September the 24th.  Submissions may be faxed to      09:06:02

          7        202-452-3462.  This is information that I believe as  09:06:08

          8        witnesses you have already been given in writing.     09:06:14

          9             So with that I think we're ready to begin the    09:06:18

         10        proceedings.  I will be calling on the witnesses,     09:06:20

         11        but please, and this goes not only for the first      09:06:24

         12        panel but also for succeeding panels, start by        09:06:28

         13        stating your name and the name of your organization   09:06:32

         14        for the record.  So with that, let's begin.  And I    09:06:34

         15        believe, Mr. Hazen, that you are first.               09:06:40




         19                  MR. HAZEN:  Thank you very much.  Good      09:06:44

         20        morning.  I'm Paul Hazen.  I'm the chairman of Wells  09:06:46

         21        Fargo.  Les Biller is here, and Les is the president  09:06:48

         22        of Norwest.  He and I have coordinated our remarks    09:06:54

         23        so that we believe that between us we will have       09:06:58

         24        covered everything that's relevant with regard to     09:07:02

         25        the proposed merger between our two companies.        09:07:04



          1             I'm going to divide my remarks this morning      09:07:06

          2        into two parts.  First, I'll describe what the        09:07:10

          3        Norwest-Wells Fargo merger will mean for the          09:07:12

          4        communities where we do business, specifically what   09:07:14

          5        values will guide the new company as we move          09:07:20

          6        forward.  And, secondly, I'll also describe Wells     09:07:22

          7        Fargo's record since 1852 of keeping its promises to  09:07:24

          8        the communities where it does business, and assure    09:07:30

          9        you that we'll continue to use best practices with    09:07:32

         10        respect to CRA lending, services, and investments.    09:07:36

         11             The new Wells Fargo & Company will have one of   09:07:40

         12        the most widely known brand names in the financial    09:07:42

         13        services industry, a name that has endured for 146    09:07:46

         14        years.  Since the gold rush, Westerners have relied   09:07:50

         15        on Wells Fargo for honest, reliable banking service.  09:07:54

         16        It may surprise you to know that Minnesotans, too,    09:07:58

         17        once counted on Wells Fargo for express delivery      09:08:02

         18        services.                                             09:08:04

         19             If I may, I'd like to give you a one-minute      09:08:04

         20        history of Wells Fargo.  In 1852, Henry Wells and     09:08:08

         21        William Fargo founded Wells Fargo & Company to        09:08:12

         22        provide reliable banking and express services to      09:08:16

         23        Western pioneers, and they opened their first office  09:08:18

         24        in San Francisco.                                     09:08:22

         25             By 1858, as Minnesota became a state, Wells      09:08:22



          1        Fargo had established 78 offices.  These offices and  09:08:28

          2        stage coaches linked mining camps and towns all over  09:08:32

          3        the West.  In May 1869, the completion of the         09:08:34

          4        transcontinental railroad allowed Wells Fargo         09:08:38

          5        express messengers to ride the rails.  By April 1,    09:08:42

          6        1897, Wells Fargo was operating in the upper Midwest  09:08:46

          7        aboard the trains of the Chicago Great Western        09:08:50

          8        Railroad, and had 31 offices in Minnesota.  The Twin  09:08:52

          9        Cities locations became part of Wells Fargo's ocean   09:08:56

         10        to ocean express network of offices around the        09:09:00

         11        country and around the world.  By 1910, Wells Fargo   09:09:02

         12        had offices in 194 Minnesota communities, from Adams  09:09:06

         13        to Zumbrota.                                          09:09:10

         14             In 1918, Wells Fargo changed abruptly when as a  09:09:12

         15        wartime measure due to the first world war, the       09:09:18

         16        federal government took over all of the 10,000 then   09:09:22

         17        Wells Fargo offices throughout the U.S. as our        09:09:24

         18        express operations, and the Wells Fargo name          09:09:28

         19        disappeared from depots and storefronts throughout    09:09:30

         20        Minnesota.  However, Wells Fargo's banking            09:09:34

         21        operations continued in the West, carrying on the     09:09:36

         22        most famous name in Western banking.                  09:09:40

         23             This year our history adds a new chapter with    09:09:42

         24        our merger with Norwest.  We want to build a strong   09:09:44

         25        foundation for the new Wells Fargo that will last a   09:09:48



          1        long time.  We pledge to make the transition as       09:09:52

          2        smooth as possible, and I can assure you that we      09:09:54

          3        will take the time to do it right.                    09:09:58

          4             In bringing Norwest and Wells Fargo together,    09:10:00

          5        we find that our cultures have much in common.        09:10:06

          6        These similarities include high performance           09:10:08

          7        orientation, commitments to customer service, high    09:10:12

          8        quality of team member talent, and strong records of  09:10:14

          9        community involvement.                                09:10:18

         10             One value that we find that Norwest and Wells    09:10:18

         11        Fargo share is our belief that people are the best    09:10:22

         12        competitive advantage we have.  At Wells Fargo, our   09:10:24

         13        employees do whatever it takes to come through for    09:10:28

         14        the customer.                                         09:10:30

         15             Both Wells Fargo and Norwest believe in the      09:10:32

         16        strong linkage between a diverse work force and       09:10:36

         17        business success in an increasingly competitive       09:10:38

         18        global economy.  For Wells Fargo, nowhere is this     09:10:44

         19        more evident than in California, a state that is a    09:10:48

         20        true mosaic of ethnicities.  The new Wells Fargo      09:10:50

         21        will continue in its effort to recruit, retain and    09:10:54

         22        promote women and minority employees in key           09:10:58

         23        positions throughout the company in all of our        09:11:02

         24        combined markets, just as we have since the           09:11:04

         25        company's founding in 1852.                           09:11:08



          1             It is true that our banks do have different      09:11:12

          2        business models, based on our geographic origins and  09:11:14

          3        the different types of businesses we are in.  For     09:11:18

          4        example, Norwest grew up here in the Midwest with     09:11:20

          5        more community banks than Wells Fargo's               09:11:24

          6        predominantly urban markets.  But that does not mean  09:11:26

          7        that the new Wells Fargo would adopt an urban model   09:11:30

          8        in areas where a community banking model would work   09:11:32

          9        better.  Both banks have been looking for a model to  09:11:36

         10        cultivate the other's marketplace.  We'll gain by     09:11:38

         11        sharing our different business models that fit each   09:11:42

         12        type of community in combining them into a common     09:11:44

         13        operating philosophy.                                 09:11:48

         14             Our commitment to all of the communities in      09:11:48

         15        which we do business is to take best practices,       09:11:50

         16        those things that work well in both organizations,    09:11:54

         17        and apply them to the new Wells Fargo.                09:11:56

         18             First, let me emphasize that the new Wells       09:12:02

         19        Fargo will honor all of Wells Fargo's and Norwest's   09:12:04

         20        previous CRA commitments.  Wells Fargo is a leader    09:12:06

         21        in outreach to women and minority-owned small         09:12:10

         22        businesses in the West, if not the nation.  These     09:12:14

         23        commitments include a $10 billion, ten-year goal for  09:12:16

         24        women-owned small businesses, a $1 billion, six-year  09:12:22

         25        goal for providing loans to Latino-owned small        09:12:26



          1        businesses, and a recently announced one billion,     09:12:28

          2        12-year goal for loans to African-American-owned      09:12:34

          3        small businesses.  The new Wells Fargo will continue  09:12:36

          4        to aggressively market its products to low income     09:12:38

          5        and minority communities to ensure equal access to    09:12:42

          6        credit and banking services to all citizens.          09:12:44

          7             It is worth noting that in 1990, Wells Fargo     09:12:48

          8        was the first major bank in the country to announce   09:12:50

          9        a multi-year CRA lending goal, and the first bank to  09:12:54

         10        exceed its goal.  Our CRA goals and lending results   09:12:58

         11        are shared with the communities we serve on an        09:13:02

         12        ongoing basis.  You can find state-by-state results   09:13:04

         13        of our lending, service, and investment programs at   09:13:08

         14        our web site, which is            09:13:12

         15             Some have asked, how can the new Wells Fargo     09:13:18

         16        set goals when no one knows what will happen ten      09:13:22

         17        years from now?  Well, we can't predict the future,   09:13:24

         18        but we do know that we'll be there to meet the        09:13:28

         19        credit needs of communities and consumers, however    09:13:30

         20        those needs change.  We know that from our past       09:13:34

         21        experience with our CRA program.  It is flexible and  09:13:36

         22        can accommodate new or special local programs as      09:13:40

         23        needed.                                               09:13:42

         24             Wells Fargo's most current CRA lending goal,     09:13:44

         25        which is $45 billion over ten years, was announced    09:13:48



          1        in December 1995, at the time of our merger with      09:13:50

          2        First Interstate.  This goal is a public commitment   09:13:52

          3        to provide community lending and investments through  09:13:58

          4        a comprehensive and focused CRA strategy that         09:14:00

          5        capitalizes on the bank's unique small business and   09:14:04

          6        community development lending strengths.  We will     09:14:08

          7        continue to honor this commitment.                    09:14:10

          8             To date, Wells Fargo has accomplished over 16    09:14:14

          9        billion of this goal, resulting in the creation of    09:14:16

         10        over 340,000 jobs and over 13,000 affordable living   09:14:18

         11        spaces.                                               09:14:26

         12             Wells Fargo and Norwest intend, through our      09:14:26

         13        current and future community reinvestment programs,   09:14:28

         14        to be the unrivaled banking leader in CRA lending     09:14:32

         15        throughout our new 21-state territory.  Wells Fargo   09:14:36

         16        has achieved outstanding CRA ratings from its         09:14:38

         17        primary regulator and will continue to do so.         09:14:42

         18             Let me give you examples from two areas, small   09:14:46

         19        business and community development lending, where     09:14:48

         20        Wells Fargo has exemplified community reinvestment    09:14:50

         21        best practices.                                       09:14:54

         22             Since 1996, Wells Fargo has lent over $11        09:14:56

         23        billion to small businesses and small farms.          09:15:00

         24        According to the most current public data available,  09:15:02

         25        Wells Fargo provided more small business loan         09:15:06



          1        dollars to low and moderate income communities in     09:15:08

          2        the U.S. than any other bank in both 1996 and 1997.   09:15:10

          3        With Norwest's expertise in small farm lending,       09:15:16

          4        Wells Fargo expects to outlocal the nationals and     09:15:20

          5        become the premier small business and small farm      09:15:22

          6        bank in the nation.                                   09:15:26

          7             Wells Fargo is already a national leader in      09:15:28

          8        community development financing for both the          09:15:32

          9        construction of multi-family housing units and        09:15:32

         10        financing to middle market businesses for job         09:15:36

         11        creation.  We believe that the creation of a          09:15:38

         12        community development corporation, CDC, will further  09:15:40

         13        enhance our community programs.  Through the          09:15:44

         14        creation of a new national CDC, Wells Fargo will      09:15:46

         15        lend to nonprofit organizations that develop          09:15:50

         16        affordable houses or provide technical assistance to  09:15:52

         17        micro and very small businesses in low income         09:15:56

         18        communities. 

         19             Additionally, Wells Fargo has developed a        09:16:00

         20        portfolio of diverse and innovative CRA investments   09:16:04

         21        to meet local community financing needs.  Currently   09:16:08

         22        Wells Fargo has a CRA investment portfolio of $213    09:16:10

         23        million towards its $500 million, ten-year CRA        09:16:16

         24        investment goal.                                      09:16:20

         25             A significant portion of Wells Fargo's           09:16:20



          1        investments are focused on rural markets.  Wells      09:16:22

          2        Fargo is the largest bank investor in the Rural       09:16:24

          3        Community Assistance Corporation, RCAC, a nonprofit   09:16:28

          4        agency dedicated to improving the lives of low        09:16:32

          5        income, rural Americans.  RCAC provides technical     09:16:36

          6        assistance, loans, grants, and operational support    09:16:40

          7        for organizations in rural communities.               09:16:44

          8             When it comes to CRA contributions, both Wells   09:16:46

          9        Fargo and Norwest have solid records of making        09:16:46

         10        grants throughout their markets.  In 1995, Wells      09:16:50

         11        Fargo pledged that 75 percent of our contributions    09:16:52

         12        would support credit counseling, affordable housing,  09:16:56

         13        job training programs, schools serving low to         09:17:00

         14        moderate income students, and programs that provide   09:17:04

         15        social services in low income and rural communities.  09:17:08

         16        Last year 78 percent of our contribution dollars      09:17:08

         17        funded such activities.                               09:17:10

         18             We intend to continue to be a leader in a wide   09:17:12

         19        range of cultural (sic) community reinvestment in     09:17:16

         20        contribution-related issues.                          09:17:18

         21             Now to the business aspects of the merger.  The  09:17:20

         22        new Wells Fargo will have nine of the ten fastest     09:17:24

         23        growing state economies in our markets.  To serve     09:17:28

         24        our customers, the new Wells Fargo will have a        09:17:30

         25        strong delivery system across the new 21-state        09:17:34



          1        territory, including traditional branches,            09:17:36

          2        supermarket branches, business centers, ATMs,         09:17:38

          3        24-hour telephone service, Internet banking, and PC   09:17:42

          4        banking.  These choices cover all income segments.    09:17:46

          5             In our major metropolitan areas approximately    09:17:50

          6        half of Wells Fargo's branches are located within a   09:17:54

          7        mile of low income communities.  In fact, to be       09:17:58

          8        where our customers want or need us, we expanded our  09:18:00

          9        network.  In the past two years, we added 506 new     09:18:02

         10        staffed offices, which include 353 supermarket        09:18:06

         11        branches.                                             09:18:10

         12             Just as Wells Fargo historically expanded its    09:18:10

         13        delivery system from the stagecoach to the railroad   09:18:14

         14        lines, we are embracing new banking technology and    09:18:16

         15        new formats for branch offices.  We will continue to  09:18:20

         16        be a leader in community banking.                     09:18:22

         17             So, in a sense, today we are where we started    09:18:24

         18        in 1852 - we are spanning the Western territories     09:18:26

         19        and back to serving Minnesota communities.            09:18:30

         20             Wells Fargo looks forward to merging with a      09:18:34

         21        strong partner, Norwest, and continuing our historic  09:18:36

         22        role as a leader under the Community Reinvestment     09:18:38

         23        Act.  We pledge to become the best financial          09:18:40

         24        institution in this marketplace and in every          09:18:44

         25        community we serve.  Thank you.                       09:18:46




          2                  CHAIRPERSON SMITH:  Thank you.  Mr.         09:18:50

          3        Biller.


          5                  MR. BILLER:  Thank you, and good morning.   09:18:52

          6        I'm Les Biller, president of Norwest Corporation,     09:18:54

          7        and I'm pleased to represent Norwest at this          09:18:58

          8        important meeting.  Our chairman, Dick Kavosovich,    09:19:00

          9        very much wanted to be here today.  Unfortunately,    09:19:02

         10        he had a commitment in Washington, D.C., that's been  09:19:04

         11        on his calendar for approximately a year, which he    09:19:06

         12        was unable to change.  But with me today is Jim       09:19:08

         13        Campbell, president of our Minnesota bank, and the    09:19:12

         14        person responsible for all of our Minnesota           09:19:14

         15        marketplace.                                          09:19:16

         16             The benefits to this merger for our team         09:19:18

         17        members, our shareholders, and importantly for our    09:19:20

         18        customers and our communities are clear and           09:19:24

         19        compelling.  We would not have entered into this      09:19:26

         20        merger with Wells Fargo if we did not believe it was  09:19:28

         21        in the best interests of all our stakeholders, our    09:19:32

         22        shareholders, our 60,000 team members, our almost     09:19:36

         23        ten million customers, and our communities.           09:19:38

         24             For our customers, it means more convenience,    09:19:40

         25        more products, and more service than ever before.     09:19:42



          1        For our team members, it means more opportunities     09:19:44

          2        for growth, both personally and professionally.  For  09:19:46

          3        our communities, it means a continued commitment to   09:19:50

          4        investing in every single one of them with our        09:19:52

          5        dollars, our resources, and our team members, not     09:19:56

          6        because we're a charity, but because it's good        09:19:58

          7        business.  When our communities succeed, we succeed,  09:20:00

          8        and it's impossible to have a healthy bank in a       09:20:04

          9        struggling community.  For our shareholders it means  09:20:06

         10        the prospects of creating an even greater value for   09:20:10

         11        their investment with a combined company.             09:20:12

         12             I'd like to respond point by point to the six    09:20:14

         13        primary concerns that I've heard about this merger.   09:20:18

         14        Those concerns are job losses, branch closings,       09:20:20

         15        fees, the conversion of our computer systems,         09:20:26

         16        community lending and contributions, and the move of  09:20:28

         17        corporate headquarters to San Francisco and its       09:20:30

         18        effect on local decision-making.  Let's take them     09:20:34

         19        one at a time.                                        09:20:38

         20             First, job losses.  Some are concerned this      09:20:38

         21        merger will result in significant job losses for the  09:20:40

         22        Twins Cities and Minnesota.  There will not be        09:20:42

         23        significant job losses.  I can pledge here, as I've   09:20:46

         24        pledged to our own team members on several            09:20:48

         25        occasions, the merger's effect on job losses here in  09:20:52



          1        the Twin Cities, and indeed across all of Norwest,    09:20:54

          2        will not be significant.  The largest group of        09:20:58

          3        Norwest people directly affected by this merger is    09:21:00

          4        our headquarters staff here in Minneapolis.  These    09:21:04

          5        830 team members are approximately 1.4 percent of     09:21:08

          6        our total work force of 60,000.  Yes, a number of     09:21:10

          7        these 830 jobs will go away, but that does not mean   09:21:14

          8        that all of the people go away.  We take seriously    09:21:18

          9        the loss of even one job.  However, we've already     09:21:22

         10        proven in the recent consolidation of our banking     09:21:24

         11        operation centers that we can eliminate jobs and      09:21:28

         12        become more efficient, but there's still a way to     09:21:30

         13        keep most of the people.  We call it retain and       09:21:34

         14        retrain.                                              09:21:36

         15             We're being faithful to our retain and retrain   09:21:36

         16        process in this transition.  Our goal is to offer as  09:21:40

         17        many opportunities as we can to our effective team    09:21:44

         18        members for comparable positions in the new company.  09:21:46

         19        Now thanks to technology, we'll keep some corporate   09:21:50

         20        functions right here in Minneapolis by using virtual  09:21:54

         21        offices.  We're going to take our time.  Our retain   09:21:56

         22        and retrain process allows us to overstaff            09:22:00

         23        temporarily in some areas so we can keep good         09:22:02

         24        people.  We're going to do it right.                  09:22:04

         25             Second, some have expressed concern that the     09:22:08



          1        merger will result in a disproportionate share of     09:22:10

          2        closing of banking stores in the low to moderate      09:22:14

          3        income neighborhoods.  That is not true.  We expect   09:22:16

          4        this merger will not result in any loss of services   09:22:20

          5        in any of our markets.  The only exception is a few   09:22:22

          6        communities in Arizona and Nevada where our banking   09:22:26

          7        stores overlap with Wells Fargo, and in those         09:22:28

          8        communities, government regulators will require us    09:22:32

          9        to sell certain assets to be consistent with federal  09:22:34

         10        anti-trust rules.  Even in those two states,          09:22:38

         11        however, we'll continue to serve the vast majority    09:22:40

         12        of those overlapping markets either through our       09:22:42

         13        stores or through Wells Fargo's stores.               09:22:46

         14             Third is fees.  We're in a competitive           09:22:50

         15        business.  Our fees are and will remain competitive   09:22:52

         16        in every market in which we do business.  If our      09:22:54

         17        customers don't believe they're getting value for     09:22:58

         18        our fees, they'll take their business elsewhere.      09:23:00

         19        They do have plenty of choices.  And if our fees      09:23:02

         20        aren't competitive, we'll lose customers.  Our goal   09:23:06

         21        is to grow and prosper with our communities.  We      09:23:08

         22        know that to do this, our fees must be competitive.   09:23:12

         23             Fourth, the conversion of our computer systems.  09:23:16

         24        Now here we're taking the time to do it right.        09:23:18

         25        We're beginning every discussion during this          09:23:20



          1        transition by asking, what's in the best interest of  09:23:22

          2        the customer?  We're committed to the goal of         09:23:24

          3        flawless execution, and if we do have some problems,  09:23:28

          4        we'll fix them.  Courteous service people will be     09:23:32

          5        available to help customers through this transition.  09:23:34

          6             Also, both companies are on schedule to meet     09:23:38

          7        their year 2000 plan, and the merger will not change  09:23:40

          8        this course.  We will not combine any systems until   09:23:44

          9        we believe we're year 2000 compliant.                 09:23:46

         10             Fifth, community lending and contributions.      09:23:50

         11        Norwest has been and will continue to be, as part of  09:23:52

         12        the combined company, a leader in community lending   09:23:56

         13        in each of the markets in which we serve.  We're      09:24:00

         14        proud of our performance.  Two years ago Norwest      09:24:02

         15        Banks, holding more than three quarters of our        09:24:04

         16        banking assets, were rated outstanding for their      09:24:08

         17        performance under the Community Reinvestment Act by   09:24:10

         18        the office of the controller of the currency, and     09:24:12

         19        the remaining office has received satisfactory        09:24:16

         20        ratings.  Last year we loaned and invested almost     09:24:18

         21        $12 billion in qualified community development loans  09:24:22

         22        and investments to low and moderate income families,  09:24:26

         23        to small businesses or small farms.  Our banks in     09:24:28

         24        North and South Dakota, Iowa, Colorado, the Twin      09:24:32

         25        Cities, greater Minnesota and Nebraska, are the       09:24:36



          1        number one S.B.A. lenders in their states.  Our       09:24:38

          2        Arizona bank, for example, is number one among all    09:24:40

          3        banks in that state in the percent of loans made to   09:24:44

          4        small businesses with gross annual revenues of less   09:24:46

          5        than one million dollars.  We're the number one ag    09:24:50

          6        lender in the Midwest, the Rocky Mountains, and the   09:24:52

          7        Southwest, and number three nationally, and will      09:24:56

          8        become the number one nationally when we do combine   09:24:58

          9        with Wells Fargo.  Thirteen and a half percent of     09:25:02

         10        Norwest's assets are invested in qualified community  09:25:06

         11        development loans and investments.  There are few     09:25:10

         12        other large financial services companies that can     09:25:12

         13        even come close to that performance.                  09:25:14

         14             Now, our goal is to continue to be a national    09:25:16

         15        leader in community lending and development.  We      09:25:20

         16        want to make sure these loans and investments for     09:25:22

         17        where they'll deliver the greatest value that is in   09:25:26

         18        the individual local communities.  One by one, we've  09:25:30

         19        been asked by some to make large, nationwide          09:25:32

         20        commitments.  Our total lending and investment in     09:25:34

         21        any state where we have banks already is large, but   09:25:38

         22        it is also local.  Our practice has been to set       09:25:40

         23        local goals rather than corporate-wide goals because  09:25:44

         24        we believe the best community investment decisions    09:25:46

         25        are made in local communities by community bankers    09:25:50



          1        working with local community groups.  We believe our  09:25:52

          2        philosophy of local community decision-making has     09:25:56

          3        served our communities and our customers very well.   09:26:00

          4        For example, over the past seven years our community  09:26:04

          5        home ownership program has provided more than $670    09:26:06

          6        million in mortgage loans to nearly 13,000 low to     09:26:10

          7        moderate income home buyers in 15 states.  Each of    09:26:14

          8        these programs is designed and managed locally.  Due  09:26:18

          9        to the Norwest Housing Foundation, Norwest Mortgage   09:26:22

         10        has pledged $16 1/2 million over the next five 

         11        years, one of the largest donations ever, to Habitat 

         12        for Humanity. 

         13             We've also reached out to underserved            09:26:34

         14        communities.  One example is the Navajo nation.       09:26:36

         15        Between 1994 and 1996, we invested $4 million to      09:26:40

         16        build four new banking stores in the Navajo nation,   09:26:42

         17        each designed by a Navajo architect.  Over 90         09:26:46

         18        percent of the staff of these banks are Navajo; so    09:26:50

         19        are the consumer managers of all of these stores.     09:26:54

         20        Our consumer loans on the Navajo nation tripled in    09:26:56

         21        four years to almost $6 million.  We created a $22    09:27:00

         22        million partnership with Norwest Mortgage and the     09:27:02

         23        federal government to build almost 300 homes in the   09:27:04

         24        Navajo nation.  We also created a program to loan up  09:27:08

         25        to $25 hundred each to Navajos with little or no      09:27:10



          1        credit history who take courses in personal money     09:27:14

          2        management.                                           09:27:18

          3             Another example is right here in the Midwest.    09:27:18

          4        Norwest Mortgage has launched a program in South      09:27:20

          5        Dakota, North Dakota, and Nebraska, to reduce loan    09:27:22

          6        approval time for American Indians living on          09:27:24

          7        allotted trust land.                                  09:27:28

          8             Six is local decision-making, the role of our    09:27:30

          9        corporate headquarters.  The decision to move our     09:27:34

         10        corporate headquarters was the most difficult         09:27:36

         11        decision we had to make.  This decision was driven    09:27:38

         12        by the need to locate our headquarters closest to     09:27:40

         13        the highest concentration of banking deposits, which  09:27:42

         14        is in California, by a factor of almost four times    09:27:46

         15        that of Minnesota.  But I can assure you, the         09:27:48

         16        decision to move our corporate headquarters will      09:27:52

         17        have absolutely no effect on our commitment to local  09:27:54

         18        decision-making in each of our communities.  Our      09:27:58

         19        business philosophy in the combined company will      09:28:00

         20        continue to be based on this principle.  Local        09:28:02

         21        decision-making is the key to serving our             09:28:06

         22        communities effectively because we believe the best   09:28:08

         23        decisions are local decisions.  Decisions at the      09:28:10

         24        local level at Norwest are made by people we trust,   09:28:12

         25        people who know our communities better than anyone    09:28:16



          1        else, the people who live and work in their           09:28:18

          2        communities and who have firsthand knowledge of what  09:28:20

          3        really matters there.  And to a centralized company   09:28:22

          4        such as Norwest, what matters is not where our        09:28:28

          5        corporate headquarters is but how we serve our        09:28:30

          6        customers locally one at a time when they walk into   09:28:32

          7        any one of our 4,000 stores, half of which, by the    09:28:36

          8        way, are located in smaller communities, many with    09:28:38

          9        less than 50,000 people in them.                      09:28:40

         10             Let me give you an example.  We bought United    09:28:44

         11        Banks of Colorado in 1991.  It was the state's        09:28:46

         12        largest bank.  We closed its corporate headquarters,  09:28:50

         13        but as we do in all of our banking states, we kept    09:28:50

         14        local decision-making in each of our Colorado         09:28:54

         15        markets.  Today we're the number one bank in          09:28:56

         16        Colorado, an outstanding corporate citizen, a leader  09:28:58

         17        in the community, and the generous supporter of       09:29:00

         18        hundreds of nonprofit organizations in that state.    09:29:04

         19        The president of Colorado Bank, John Nelson, is       09:29:06

         20        chairman of the board of the Denver United Way, and   09:29:08

         21        his bank has been named Colorado's best by the        09:29:12

         22        Colorado Business Journal.  It is only one of five    09:29:14

         23        businesses in the nation recognized by the U.S.       09:29:18

         24        Labor Department for hiring, training and promoting   09:29:20

         25        women and people of color.  Here in Minnesota, Jim    09:29:24



          1        Campbell, who's been with Norwest 34 years, who has   09:29:26

          2        run our Twin Cities market for over a decade, is      09:29:28

          3        staying here.  He and his team will continue to call  09:29:32

          4        the shots here.  Jim is the chairman of the United    09:29:34

          5        Way Campaign for the Minneapolis area this year.      09:29:38

          6        These are just two examples of what we see across     09:29:40

          7        Norwest.                                              09:29:42

          8             I want to thank you for the opportunity to       09:29:44

          9        speak on behalf of Norwest this morning.  I also      09:29:46

         10        want to thank all of the concerned citizens on both   09:29:48

         11        sides of this proposed merger who took the time to    09:29:52

         12        attend this meeting today.  Thank you.                09:29:54


         14                  CHAIRPERSON SMITH:  Questions from the      09:29:58

         15        panel?  


         17                  MS. AWAI:  Thank you.  As you know the      09:29:58

         18        Board is required to consider the effects of the      09:30:00

         19        proposal on the convenience and needs of the          09:30:02

         20        communities to be affected.  This consideration will  09:30:04

         21        take into effect both Wells' and Norwest's record of  09:30:08

         22        performance on the Community Reinvestment Act.        09:30:12

         23        You've alluded to a best practices approach in        09:30:14

         24        determining which types of program will be retained.  09:30:20

         25        At this point are you able to identify any of these   09:30:22



          1        programs?                                             09:30:24

          2             The other question that I had has been raised    09:30:26

          3        by many of the written commentors, which we have had  09:30:28

          4        an opportunity to review.  Those commentors are       09:30:32

          5        concerned that the proposed merger may result in a    09:30:34

          6        decrease in services in rural communities.  Could     09:30:38

          7        you address both of those?                            09:30:42


          9                  MR. HAZEN:  I'll start off with the first   09:30:46

         10        one.  In terms of best practices, we obviously have   09:30:46

         11        exchanged information and looked at the things that   09:30:50

         12        both of our companies have done in terms of programs  09:30:52

         13        that we can reach, and I, in my comments, spoke       09:30:58

         14        specifically, for example, in the fact that in small  09:31:02

         15        farming communities, Norwest has done a lot more      09:31:04

         16        than Wells Fargo, whereas still Wells Fargo does      09:31:08

         17        serve a lot of farming communities throughout its     09:31:12

         18        geographic territories.  So we will adopt a lot of    09:31:16

         19        things that Norwest has been able to do there.        09:31:18

         20             I think our small business programs for          09:31:22

         21        specific groups which I mentioned, for example women  09:31:26

         22        and Latinos and African-Americans, is something that  09:31:30

         23        Norwest has been less focused, and we can continue    09:31:36

         24        to combine that.  Those would be examples of best     09:31:40

         25        practices across both companies where we can share    09:31:42



          1        it in the combined company.                           09:31:48


          3                  MR. BILLER:  Regarding the question about   09:31:50

          4        rural communities, we don't see any reduction in      09:31:50

          5        services in rural communities.  It's been kind of a   09:31:54

          6        hallmark of Norwest to be operating in smaller        09:31:58

          7        communities.  We think we know how to do that well    09:32:00

          8        and profitably, and we would expect to continue to    09:32:02

          9        do that.                                              09:32:04


         11                  CHAIRPERSON SMITH:  Any other questions?    09:32:08

         12        If not, thank you very much for being here this       09:32:10

         13        morning.                                              09:32:12

         14             And we'll move on to Panel No. 1.  We're going   09:32:12

         15        to start with Mr. Jacobson.                           09:33:20


         17                  MR. JACOBSON:  Thank you, and good          09:33:36

         18        morning.  My name is Jim Jacobson, and I'm assistant  09:33:38

         19        attorney general appearing this morning on behalf of  09:33:42

         20        Attorney General Hubert Humphrey.  I'd like to begin  09:33:44

         21        today by thanking the Federal Reserve Board for       09:33:48

         22        holding this public meeting and for giving our        09:33:50

         23        office and other interested parties an opportunity    09:33:52

         24        to comment on the proposed merger between Norwest     09:33:54

         25        and Wells Fargo.  I would also like to thank Norwest  09:33:56



          1        for its letter to Attorney General Humphrey           09:34:00

          2        responding to some of the concerns addressed in our   09:34:04

          3        written comments to the Board.  Since time is         09:34:06

          4        limited, I will get right to the point.               09:34:08

          5             I'm here today because the Attorney General's    09:34:12

          6        concerned that this proposed merger has the           09:34:14

          7        potential to affect Minnesota consumers, small        09:34:16

          8        businesses and communities on all three factors       09:34:20

          9        considered under the Community Reinvestment Act:      09:34:22

         10        lending, investment, and service.  Our concerns on    09:34:26

         11        these three points are heightened in view of Wells    09:34:28

         12        Fargo's record following its recent merger with       09:34:32

         13        First Interstate.  For example, according to a study  09:34:38

         14        conducted by the steelworkers, Wells Fargo closed or  09:34:42

         15        sold all of its branches in 129 locations following   09:34:44

         16        its merger, thereby reducing services to low income   09:34:46

         17        and rural communities.                                09:34:52

         18             Specifically with regard to customer service,    09:34:52

         19        Wells Fargo's post-merger record is not encouraging.  09:34:56

         20        According to reports, Wells Fargo encountered         09:34:58

         21        extensive service problems following its merger and   09:35:02

         22        cut back on certain customer services.  For example,  09:35:04

         23        according to a recent report in the San Jose          09:35:08

         24        newspaper, Wells Fargo discontinued First             09:35:12

         25        Interstate's practice of providing free checking to   09:35:16



          1        seniors and now imposes a $9 per month charge unless  09:35:18

          2        seniors maintain a significant minimum balance.  For  09:35:24

          3        seniors on fixed incomes and limited budgets, $9 per  09:35:26

          4        month, or 108 per year, can be a significant burden.  09:35:30

          5             The Board indicated in its recent order          09:35:34

          6        approving another merger that "the CRA does not       09:35:38

          7        impose any limitation on the fees or other charges    09:35:42

          8        that banks may assess for their services."  We        09:35:46

          9        believe, however, that fees and charges for banking   09:35:50

         10        and deposit services are a highly important factor    09:35:52

         11        that the Board should be taking into account under    09:35:56

         12        its CRA analysis.                                     09:35:58

         13             In addition to our concerns about Wells Fargo's  09:36:02

         14        CRA record, I would like to acknowledge the concerns  09:36:04

         15        raised by ACORN in its submission regarding           09:36:08

         16        Norwest's lending practices in low and moderate       09:36:12

         17        income communities.  The statistics cited by ACORN    09:36:16

         18        create additional grounds for concern about the       09:36:20

         19        possible effects of a merger which would relocate     09:36:24

         20        the headquarters to California.  As Congressman       09:36:26

         21        Vento points out in his comments, there already is    09:36:30

         22        a "growing bi-coastal concentration of financial      09:36:32

         23        services companies in the United States."             09:36:36

         24             Relocation of Norwest's headquarters to          09:36:40

         25        California only exacerbates concerns about its        09:36:42



          1        lending policies and creates a real concern that low  09:36:46

          2        and moderate income communities in Minnesota could    09:36:50

          3        be overlooked following the merger.  In its           09:36:52

          4        application to the Board, Norwest recognizes the      09:36:56

          5        importance of its CRA responsibilities and states     09:37:00

          6        the merger will provide enhanced lending investment   09:37:02

          7        and service to low and moderate income communities.   09:37:06

          8        At this point, however, details as to how this will   09:37:08

          9        be accomplished are lacking.                          09:37:12

         10             We recognize and appreciate the fact that the    09:37:14

         11        Board already has requested and obtained from         09:37:16

         12        Norwest additional information regarding its CRA      09:37:20

         13        programs and future plans, and we know that the       09:37:24

         14        Board will carefully review this information.         09:37:26

         15        However, in light of the concerns set forth above,    09:37:28

         16        Attorney General Humphrey also requests that the      09:37:32

         17        Board, before it acts on the merger, require Norwest  09:37:34

         18        to submit a detailed commitment for reinvestment in   09:37:38

         19        small businesses and in low and moderate income       09:37:42

         20        communities in Minnesota along the lines of the       09:37:44

         21        recent Nations Bank/Bank America plan for $350        09:37:48

         22        billion in community lending over ten years.          09:37:52

         23             Moreover, Norwest should be required to make a   09:37:56

         24        commitment that it will prevent branch closings in    09:37:58

         25        low income and rural areas and prevent increases in   09:38:02



          1        banking fees and decreases in banking services.       09:38:06

          2             Finally, the Board should provide the            09:38:08

          3        opportunity for public comment on Norwest's           09:38:12

          4        commitments on these issues to ensure that the        09:38:14

          5        convenience and the needs of the community truly      09:38:18

          6        will be satisfied following the proposed merger.      09:38:20

          7             Thank you very much for your time this morning.  09:38:24


          9                  CHAIRPERSON SMITH:  Thank you.  Ms. Clark.  09:38:26


         11                  MS. CLARK:  Good morning.  And I'd also     09:38:32

         12        like to thank you for this opportunity to make some   09:38:34

         13        public comments.  My name is Karen Clark, and I am    09:38:36

         14        state representative for five inner city              09:38:40

         15        neighborhoods in south Minneapolis, and also the      09:38:42

         16        chair of the Housing -- Housing and Finance           09:38:44

         17        Committee of the Minnesota House of Representatives,  09:38:44

         18        and also a member of the House Financial              09:38:46

         19        Institutions and Insurance Committee.                 09:38:50

         20             I'm worried that the proposed merger between     09:38:52

         21        Norwest and Wells Fargo will negatively affect my     09:38:54

         22        constituents in their access to banking and to        09:38:56

         23        credit.  The Phillips neighborhood, in particular,    09:39:00

         24        where I both live and represent, has suffered from a  09:39:02

         25        history of neglect by banks.  With 17,000 residents,  09:39:04



          1        we are the largest neighborhood in Minneapolis, and   09:39:10

          2        I might add, more populous than 35 of Minnesota's     09:39:12

          3        counties, and yet we do not have a single major       09:39:16

          4        banking facility located there.  What does that tell  09:39:20

          5        you about the banking industry's relationship to the  09:39:22

          6        lowest income district in the state?                  09:39:24

          7             As you may know, the State of Minnesota is in    09:39:26

          8        the throes of a serious crisis in affordable          09:39:30

          9        housing.  It's extremely hard to find an affordable   09:39:32

         10        unit of housing to rent or even to buy in the many 

         11        areas throughout the state, but particularly in the   09:39:36

         12        inner city where the vacancy rate in rental housing   09:39:38

         13        is 1.3 to 1.8 percent.  That's critically below the   09:39:42

         14        7 percent that's considered a healthy rental market.  09:39:46

         15             It's estimated that we are lacking 38,000 units  09:39:50

         16        of affordable housing in the metropolitan area        09:39:52

         17        alone.  The problem is both one of not producing      09:39:56

         18        enough new affordable housing and of not preserving   09:39:58

         19        what affordable housing we already have.

         20             If you would walk with me around my              09:40:02

         21        neighborhood, as I recently have been doing a lot     09:40:04

         22        lately, you would count at least 200 units of         09:40:06

         23        boarded or vacant houses in need of repair.  Some of  09:40:10

         24        these are scheduled for demolition, but many of       09:40:12

         25        these homes could be repaired and purchased by our    09:40:14



          1        hard-working, low income families that often pay      09:40:16

          2        twice as much in rent as they would for a mortgage    09:40:18

          3        with renovation rolled in for the same house or       09:40:22

          4        similar house.                                        09:40:24

          5             We need Norwest's help to develop better home    09:40:26

          6        mortgage products that would be more responsive to    09:40:30

          7        the particular credit needs of many of our            09:40:32

          8        hard-working, low income families in order to allow   09:40:32

          9        that to happen.                                       09:40:36

         10             Last year in the state legislature, we had an    09:40:36

         11        opportunity to both help rehabilitate and construct   09:40:38

         12        more affordable housing and had an unprecedented      09:40:40

         13        alliance with the private sector to do so.  We        09:40:44

         14        proposed that the state invest $40 million in a       09:40:46

         15        combination of state housing and finance agency       09:40:48

         16        funds and tax credits, and the private sector, with   09:40:52

         17        strong leadership provided by the Minnesota Family    09:40:54

         18        Housing Funds, proposed to match that with $20        09:40:58

         19        million.  Together that would have leveraged another  09:41:00

         20        $180 million in private and federal funding for a     09:41:02

         21        total of $200 million in housing rehabilitation and   09:41:04

         22        new construction dollars for both home ownership and  09:41:08

         23        rental housing.  What you need to know is the result  09:41:10

         24        would have created about 3,000 affordable housing     09:41:14

         25        units. Unfortunately, Governor Carlson vetoed all     09:41:16



          1        but $5 million for construction and rehabilitation. 

          2             My understanding is that Wells Fargo recently    09:41:20

          3        pledged that if the merger is approved, they will     09:41:24

          4        lend $5 billion a year in California to minority and  09:41:26

          5        low income customers for home mortgages, small        09:41:30

          6        businesses, and community development.  Before        09:41:32

          7        Norwest moves its headquarters out of Minnesota to    09:41:36

          8        California, we need them to make a similar            09:41:40

          9        commitment to the people of the Phillips              09:41:44

         10        neighborhood, the people of Minneapolis and St.       09:41:44

         11        Paul, and to all Minnesotans.  With their new         09:41:46

         12        savings and combined wealth, they should become a     09:41:48

         13        major private sector leader to match the public       09:41:50

         14        commitment the legislature has already shown it       09:41:52

         15        could provide.

         16             Norwest and Wells Fargo have announced that      09:41:54

         17        this merger will save them $630 million a year on     09:41:58

         18        top of the already large profits these banks make.    09:42:02

         19        We clearly need them to put more money back into our  09:42:04

         20        community in the way that I've mentioned.             09:42:08

         21             One other significant approach to increasing     09:42:10

         22        home ownership opportunities is that the merged       09:42:14

         23        Wells Fargo-Norwest Bank could provide would be to    09:42:14

         24        raise the wages of its front-line workers.  My        09:42:16

         25        information is that the average wages of the workers  09:42:20



          1        who work in the banking industry are such that they   09:42:22

          2        can't afford housing in today's market without        09:42:24

          3        public subsidy.  For example, a bank teller at        09:42:26

          4        Norwest-Wells Fargo would need to earn $12.38 an      09:42:30

          5        hour just to be able to afford the fair market rent   09:42:36

          6        for a two-bedroom home here, which is $644 a month,   09:42:38

          7        or would need to earn $18.98, almost $19 an hour, to  09:42:42

          8        rent a four-bedroom housing unit.  My understanding   09:42:46

          9        is that many of Norwest-Wells Fargo's bank employees  09:42:50

         10        don't earn that kind of wage.  Raising their wages    09:42:54

         11        would be one significant way to help with the         09:42:54

         12        housing crisis and community reinvestment.            09:42:58

         13             I am concerned that even though Norwest is the   09:43:00

         14        largest mortgage company in the country, they are     09:43:02

         15        behind other Twin Cities banks in their lending to    09:43:04

         16        people of color and in low income neighborhoods like  09:43:08

         17        those I represent, according to their 1997 records    09:43:10

         18        for conventional and FHA loans.  What is Norwest      09:43:16

         19        doing to address this?                                09:43:16

         20             On the House Financial Institutions Committee,   09:43:18

         21        I fought for fairer bank fees for low income          09:43:22

         22        consumers and senior citizens.  Many of my            09:43:24

         23        constituents have complained about exorbitant         09:43:26

         24        bounced check fees and how hard that is on a fixed    09:43:30

         25        income.  We've heard testimony in particular from     09:43:32



          1        many of our military veterans and pensioners.  Now    09:43:34

          2        Norwest just raised their bank check fee from $21 to  09:43:38

          3        $25.  Norwest is one of the biggest depositories of   09:43:44

          4        state funds.  In the 1998 legislature, I authored     09:43:46

          5        legislation that in order for a bank to have the      09:43:50

          6        privilege of being a state depository for Minnesota,  09:43:50

          7        they would have to offer a life-line checking         09:43:54

          8        account.  Norwest fought this legislation.            09:43:58

          9             I'm concerned in general that the Norwest-Wells  09:44:00

         10        Fargo merger will make banking even less affordable   09:44:04

         11        to low income people.  And I understand, as was       09:44:06

         12        mentioned earlier, that Wells Fargo stopped honoring  09:44:08

         13        the free checking for seniors, and that was           09:44:12

         14        described earlier.                                    09:44:14

         15             Since my time is up, I just wanted to say that   09:44:16

         16        I really would appreciate some assurances from the    09:44:18

         17        Board in addressing these questions.  My              09:44:20

         18        constituents need to know, and I hope that you need   09:44:24

         19        to know before you approve the merger.                09:44:24


         21                  CHAIRPERSON SMITH:  Thank you.              09:44:26

         22        Mr. Curley.                                           09:44:28


         24                  MR. CURLEY:  Thank you, Ms. Smith.  Thank   09:44:30

         25        you for this opportunity to testify before the Board  09:44:30



          1        this morning.  I bring greetings from the -- from a   09:44:34

          2        nation within a nation, and that is the Navajo        09:44:38

          3        nation.  My presentation will cover a few             09:44:40

          4        experiences the Navajos have had with Norwest Bank,   09:44:44

          5        Arizona, but before I move into these experiences,    09:44:50

          6        let me express the fact that the Navajo nation is     09:44:52

          7        pleased and honored to have four Norwest banks        09:44:54

          8        located within the boundaries of our reservation.     09:44:58

          9        Furthermore, we are proud to have gainfully employed  09:45:02

         10        qualified Navajos within these banks.                 09:45:06

         11             In late 1993, Norwest Bank of Arizona made       09:45:10

         12        commitments over a ten-year period, and there are     09:45:16

         13        four commitments that they made that I want to cover  09:45:20

         14        this morning.  The first one is to open two           09:45:22

         15        full-service banking facilities on the Navajo nation  09:45:26

         16        and improve the two existing banking locations.       09:45:30

         17        Second, to originate 60 million in loans over a       09:45:34

         18        ten-year period.  Third, an annual contribution of    09:45:38

         19        $5,000 to the Navajo Nation College Scholarship       09:45:44

         20        Fund.  Four, establish a community advisory board     09:45:48

         21        comprised of seven members representative of the      09:45:52

         22        Navajo nation, and I'm one of those community         09:45:54

         23        representatives.                                      09:45:58

         24             Norwest's record against this commitment so far  09:45:58

         25        has demonstrated the bank's sincerity and good faith  09:46:04



          1        concerning the people of the Navajo nation.           09:46:08

          2        Norwest's performance on each of the above            09:46:10

          3        commitments through June 1998 is as follows.  Number  09:46:14

          4        one, Norwest Bank-Arizona has invested 4 million, as  09:46:18

          5        Mr. Biller has said, to build its four full-service   09:46:24

          6        bank branches within the boundaries of the Navajo     09:46:28

          7        nation.  These offices make up the Norwest Northeast  09:46:30

          8        Bank.  These branches are located in small towns      09:46:36

          9        within the reservation.  One is in Window Rock -- I   09:46:40

         10        know you can't identify with this -- one is in Tubac  09:46:44

         11        City, one is in Kayenta, and one is in Chinle.  All   09:46:48

         12        four branch managers are of Navajo descent, and the   09:46:54

         13        remaining 35 employees all but two are of Navajo      09:46:56

         14        decent.                                               09:47:02

         15             Number two, over the first four and a half       09:47:02

         16        years of the ten-year lending commitment, Norwest     09:47:04

         17        has lent almost $35 million to the Navajo people.     09:47:10

         18        And there's another side to this.  Norwest has been   09:47:14

         19        working directly with the Navajo nation government,   09:47:16

         20        and they have lent to one of our enterprises out      09:47:20

         21        there called the Navajo Agricultural Products         09:47:24

         22        Corporation, a credit line -- or a loan of $7         09:47:28

         23        million, a line of credit of $3 million.  We also     09:47:34

         24        have a Navajo Arts and Crafts Guild up there, and     09:47:38

         25        they've loaned them $129,000,998.77.  And then to     09:47:42



          1        the Navajo nation itself, we have two term loans of   09:47:50

          2        $1,640,000, $7,500,000.  We also have a Navajo        09:48:00

          3        Housing Authority, and there is a credit line of      09:48:04

          4        $1,395,000.  As I mentioned earlier, there's a $60    09:48:10

          5        million commitment that Norwest made to the Navajo    09:48:14

          6        nation.  Part of this $60 million commitment was a    09:48:18

          7        commitment of approximately 28 million in mortgage    09:48:20

          8        loans on the reservation.                             09:48:24

          9             In order to help ensure that the mortgage        09:48:26

         10        lending goal is achieved, Norwest has obtained the    09:48:28

         11        approval offering the HUD 184 Loan Program to the     09:48:32

         12        Navajo nation; has already closed seven mortgage      09:48:36

         13        loans under the program.                              09:48:40

         14             Norwest has contributed to the Navajo Nation     09:48:42

         15        Scholarship Fund each year, in addition to other      09:48:46

         16        charitable contributions, to Navajo nation events     09:48:52

         17        and organizations $5,000 plus, each and every year.   09:48:54

         18             Number four, Norwest has had an active           09:49:00

         19        Community Advisory Board in place within the Navajo   09:49:02

         20        nation since 1994, and I've been on that board since  09:49:08

         21        1994, the members of which are Navajo business and    09:49:10

         22        community leaders.  The Community Advisory Board      09:49:14

         23        works with the local bank to provide input and to     09:49:16

         24        ensure that the bank stays in touch with the local    09:49:20

         25        needs and is able to be responsive to those needs.    09:49:24



          1             Now, in conclusion, and from our perspective of  09:49:28

          2        the Navajo nation, this is very critical.  Norwest    09:49:32

          3        has taken a bold step in banking with the Navajo      09:49:36

          4        nation in that it is a pioneer from the financial     09:49:40

          5        community which has truly invested in our nation and  09:49:44

          6        has respected our sovereignty along this journey of   09:49:48

          7        developing our economic basis.  Thank you.            09:49:56


          9                  CHAIRPERSON SMITH:  Thank you very much.    09:49:58

         10        Questions from the panel?  Thank you very much for    09:50:00

         11        coming this morning.  We appreciate hearing from      09:50:04

         12        you.  And I'll say both for your benefit and for the  09:50:06

         13        benefit of subsequent panels that five minutes is a   09:50:10

         14        very short time, and please, we do want to have your  09:50:14

         15        full statements in the record.  So if you have not    09:50:18

         16        already given them to us, please leave them with the  09:50:22

         17        Federal Reserve staff and we will make sure that      09:50:24

         18        they all get into the official transcript.            09:50:28

         19             I also will remind -- I don't know whether this  09:50:30

         20        is a reminder or I'm saying it for the first time --  09:50:34

         21        if the next panel could come on up -- but we -- our   09:50:38

         22        timekeepers will be holding up cards that let the     09:50:42

         23        witness know when there is one minute remaining and   09:50:46

         24        then another one when the time has expired.  As a     09:50:50

         25        last resort, if you happen not to be looking up at    09:50:56



          1        them to get the signals, we do have a little bell     09:51:00

          2        that we will ring -- or they will ring.               09:51:02

          3             We're going to start with Mr. Bryant.  We don't  09:51:24

          4        have Mr. Bryant.  Mr. Bansen -- Ms. Bansen.           09:51:30


          6                  MS. BANSEN:  Good morning, Ms. Smith and    09:51:44

          7        Members of the Board.  Thank you for the opportunity  09:51:46

          8        to be here this morning.  My name is Kirsten Bansen.  09:51:48

          9        I'm with the Minnesota Housing Partnership.  We're a  09:51:52

         10        state-wide nonprofit organization, and one of our     09:51:54

         11        major roles is to support the nonprofit housing       09:51:58

         12        sector in its work, particularly in greater           09:52:02

         13        Minnesota.  Before expressing our concerns related    09:52:04

         14        to the merger, we'd like to make note of the value    09:52:08

         15        of Norwest Corporation to Minnesota nonprofits        09:52:12

         16        working in the field of affordable housing.           09:52:14

         17             Norwest has been a generous and consistent       09:52:16

         18        supporter of nonprofit developers and housing         09:52:20

         19        agencies in many Minnesota communities.  For          09:52:22

         20        example, Norwest has committed five years of funding  09:52:24

         21        at an interest rate of one percent to 27 Minnesota    09:52:26

         22        based affiliates of Habitat for Humanity.  Norwest    09:52:30

         23        was an initial sponsor and has been a constant        09:52:34

         24        supporter of the Home Ownership Center, the 

         25        organization funding and assisting nonprofit housing 



          1        counseling programs in the Twin Cities.  Norwest has  09:52:42

          2        also been a major contributor to the Twin Cities and  09:52:44

          3        Duluth programs of the Local Initiatives Support      09:52:48

          4        Corporation (LISC).  This provides technical and      09:52:52

          5        financial support to community development            09:52:54

          6        corporations operating in these cities.  Through its  09:52:56

          7        affiliate, the National Equity Fund, Norwest has      09:53:02

          8        invested 8 million in nonprofit-sponsored low income  09:53:04

          9        housing tax credit projects.  Norwest was one of the  09:53:10

         10        founding members and is a continuing supporter of     09:53:10

         11        the Greater Minneapolis Housing Corporation, a        09:53:14

         12        nonprofit innovator of homeowner assistance           09:53:16

         13        programs.                                             09:53:20

         14             And, finally, Norwest has been a major           09:53:20

         15        contributor to nonprofit housing agencies in smaller  09:53:22

         16        metropolitan communities, such as Rochester, where    09:53:26

         17        it was the first significant funder of the Community  09:53:28

         18        Housing Partnership, a development agency serving     09:53:32

         19        two southeastern Minnesota counties.                  09:53:34

         20             In addition to the direct financial support      09:53:36

         21        provided to nonprofit housing agencies, Norwest       09:53:38

         22        indirectly supports the work of these agencies in     09:53:42

         23        two important ways.  First, it has been a major       09:53:44

         24        supplier of capital to the State Housing Finance      09:53:46

         25        Agency, whose programs are utilized by nonprofits     09:53:50



          1        across the state.                                     09:53:54

          2             Second, and most importantly, Norwest, through   09:53:54

          3        its many branches in Minnesota, particularly in       09:53:56

          4        smaller towns, provides a source of community         09:54:00

          5        leadership.  Frequently Norwest branch managers and   09:54:02

          6        loan officers contribute their financial expertise    09:54:06

          7        and advocate on behalf of community development       09:54:10

          8        projects, thereby enabling nonprofit agencies to      09:54:12

          9        make Minnesota communities more viable.               09:54:16

         10             It is because Norwest has been so significant    09:54:18

         11        to this industry in Minnesota that we ask for a       09:54:22

         12        concrete assurance that the merged corporation, once  09:54:24

         13        headquartered in California, will not forget its      09:54:26

         14        reinvestment obligations in this state.  We agree     09:54:30

         15        with Minnesota's U.S. Representative Bruce Vento      09:54:32

         16        that there's a risk that the bi-coastal               09:54:34

         17        concentrations of financial services may lead to      09:54:38

         18        diminished community involvement and investment in    09:54:42

         19        the nation's heartland.                               09:54:44

         20             In the September 10 letter to the Federal        09:54:44

         21        Reserve Bank of San Francisco, Stanley Stroup, the    09:54:50

         22        Executive Vice President and General Counsel of the   09:54:50

         23        Norwest Corporation, addressed many of our concerns.  09:54:52

         24        Mr. Stroup wrote that, post-merger, the strong ties   09:54:56

         25        to Minnesota will remain, branch locations will not   09:55:00



          1        be changed, and the bank will remain a member of the  09:55:02

          2        Des Moine Federal Home Loan Bank.  It is vital to     09:55:06

          3        Minnesota that the merged institution follow through  09:55:08

          4        on Mr. Stroup's assurances.                           09:55:10

          5             In addition to what he wrote, however, we        09:55:12

          6        believe that it is equally important that as a part   09:55:14

          7        of this merger, Wells-Norwest, the new Wells Fargo,   09:55:16

          8        make a commitment to an investment pledged to         09:55:20

          9        Minnesota and other states in its service region      09:55:22

         10        that is similar to the multi-billion dollar           09:55:26

         11        commitment that was made to California.  The new      09:55:28

         12        Norwest should make parallel pledges to these states  09:55:30

         13        proportionate to that one made in California based    09:55:34

         14        on the relative amounts of deposits obtained by the   09:55:36

         15        bank from the respective states.                      09:55:40

         16             In conclusion, we appreciate what has been done  09:55:42

         17        and what has been promised by Norwest Corporation     09:55:44

         18        and Wells Fargo & Company, but we also believe that   09:55:46

         19        the risks are very high for our state.  Minnesota is  09:55:50

         20        losing one of its most important corporate            09:55:52

         21        headquarters.  In addition to the general             09:55:56

         22        commitments made by these banks to Minnesota,         09:55:58

         23        Norwest-Wells should identify a dollar amount that    09:56:00

         24        they can commit that will enable Minnesota and like   09:56:04

         25        states to meet their needs for community              09:56:08



          1        reinvestment.                                         09:56:10

          2             Thank you for your time.                         09:56:10


          4                  CHAIRPERSON SMITH:  Thank you very much.    09:56:12

          5        We'll go next to Mr. Bryant.                          09:56:12


          7                  MR. BRYANT:  Good morning.                  09:56:14


          9                  CHAIRPERSON SMITH:  Good morning.


         11                  MR. BRYANT:  In an effort to keep my        09:56:16

         12        remarks within the lines of your time line, I'm       09:56:16

         13        going to abridge my remarks.  The full text of the    09:56:20

         14        testimony is available outside for anyone who wants   09:56:24

         15        a copy.                                               09:56:26

         16             Allow me to begin my prepared remarks by         09:56:26

         17        reminding us all that CRA is not a government         09:56:30

         18        mandated corporate give-away program or that          09:56:34

         19        minority thing that a company does, nor the           09:56:38

         20        loss-leader activity a financial institution engages  09:56:40

         21        in in order to simply continue to conduct its normal  09:56:44

         22        or traditional business practices.  In short, CRA     09:56:48

         23        simply means new markets.                             09:56:52

         24             Former U.S. Comptroller Ludwig often referred    09:56:56

         25        to the democratization of credit America as it        09:56:56



          1        relates to the historic evolution of credit           09:56:58

          2        availability and access to credit in this country.    09:57:02

          3        Bless you.  In fact, in the year 1901, most           09:57:04

          4        middle-aged, middle income Caucasians -- arguably     09:57:10

          5        the underwriting standard that modern day criteria    09:57:12

          6        has been fashioned around -- could not themselves     09:57:14

          7        obtain credit, precisely because the only credit      09:57:16

          8        available in 1901 was a commercial credit.            09:57:20

          9        Continuing along this line of thought, one of the     09:57:22

         10        safest and most acceptable forms of credit            09:57:26

         11        collateral during this time was in fact inventory,    09:57:28

         12        one of the least perceived safe forms of collateral   09:57:30

         13        today.  The point here is that CRA is not about some  09:57:32

         14        new form of social subsidy, but a serious new,        09:57:36

         15        substantial and permanent evolution in the            09:57:40

         16        democratization of credit process.  Low to moderate   09:57:42

         17        income communities are growing segments of our        09:57:44

         18        larger national economy and community, and, as such,  09:57:46

         19        should represent a substantial component of any       09:57:50

         20        bank's future business strategy.                      09:57:52

         21             Turning my attention to this new merger          09:57:54

         22        proposal, let me say that the company I know best     09:57:56

         23        here is Wells Fargo & Company, or as we say in        09:57:58

         24        California, Wells Fargo.  It is, of course, no        09:58:02

         25        secret that Wells Fargo has moved aggressively away   09:58:04



          1        from their traditional branch network that most of    09:58:08

          2        us grew up on, and they have likewise moved toward    09:58:10

          3        the technology and information based system on        09:58:12

          4        banking.  It is also fairly common within the bank    09:58:16

          5        that I have sparred with officials from Wells Fargo   09:58:18

          6        on occasion concerning their inner city strategy.     09:58:20

          7        This said, from a business perspective, I happen to   09:58:24

          8        believe that the bank's overall strategy is a smart   09:58:28

          9        one.  Branch banking as we know it is a memory of     09:58:32

         10        the past, but our communities are not.                09:58:36

         11             Wells Fargo's general success with this new 

         12        approach to banking over the past few years is        09:58:40

         13        precisely why Wells Fargo loves their stock.  The     09:58:40

         14        downside to this general strategy, unfortunately, is  09:58:44

         15        that relationship based communities were less than    09:58:46

         16        thrilled.  Wall Street is a left brain thinker, and   09:58:48

         17        communities tend to be more contextual in their       09:58:52

         18        understanding, or as I would call right brain         09:58:54

         19        thinkers.  In short, communities were saying we want  09:58:56

         20        high-touch, too, Wells Fargo.                         09:58:58

         21             To the bank's credit, in time they began to      09:59:00

         22        realize there was a true win-win business strategy    09:59:04

         23        here in marrying high tech and high touch.  Our       09:59:06

         24        recent $1.4 million partnership between Operation     09:59:10

         25        HOPE and Wells Fargo to build and operate an          09:59:12



          1        Operation HOPE banking center in the low income       09:59:16

          2        Watts/Willowbrook area of Los Angeles, is in our      09:59:18

          3        opinion one of the many examples of how the bank has  09:59:20

          4        successfully moved to bridge the gap.  This new       09:59:22

          5        banking center, like the two we currently operate in  09:59:26

          6        black and Latino communities, will focus on economic  09:59:28

          7        education, borrower readiness, and credit             09:59:32

          8        availability, in that order.  Our $32 million in      09:59:34

          9        performing loans and investments in over 20,000       09:59:36

         10        adults educated in economic education suggest it's a  09:59:38

         11        strategy that works.                                  09:59:42

         12             We are pleased that Wells Fargo was able to see  09:59:42

         13        the bigger picture, and then adapt their business     09:59:46

         14        model to include this make-sense strategy.            09:59:48

         15             I also want to note, for the record, we do       09:59:50

         16        business with people and not companies.  And without  09:59:52

         17        a doubt, I know that one of the reasons that the      09:59:54

         18        bank decided to ultimately move on this proposal and  09:59:56

         19        others like it was the organizational focus and       09:59:58

         20        leadership provided by the Wells Fargo Community      10:00:02

         21        Development Group and the Wells Fargo Foundation.     10:00:04

         22        Our communities know these people, and, more          10:00:06

         23        importantly, they know and understand our             10:00:10

         24        communities.  It's called mutual respect.             10:00:10

         25             Yes, Norwest is known for its successful high    10:00:14



          1        touch community banking approach to doing business,   10:00:18

          2        but with great respect, generalized strategies and    10:00:20

          3        approaches used successfully in the past in other     10:00:22

          4        regions of the country simply will not fly in         10:00:26

          5        California, which I might remind everyone is the      10:00:28

          6        largest banking market in the continental United      10:00:30

          7        States.  Just like the City of Minneapolis requires   10:00:34

          8        that all new buildings in downtown Minneapolis        10:00:34

          9        connect to neighboring businesses by way of a         10:00:38

         10        secondary walkway called a skyway, community          10:00:40

         11        development organizations in California and other     10:00:42

         12        cutting edge regions have a different type of         10:00:44

         13        relationship with their banks.                        10:00:48

         14             As an example, you have the $18 million Urban    10:00:48

         15        League in Los Angeles, or the 17,000 member First     10:00:52

         16        A.M.E. Church, with 180 full-time employees, or       10:00:56

         17        TELACU with $200 million in annual revenues, or the   10:01:00

         18        Church of God in Christ was building a $50 million    10:01:02

         19        cathedral in South Central, creating a hundred        10:01:08

         20        million dollars in spin-off economic activity, or     10:01:08

         21        take Operation HOPE, with three quarters of a         10:01:10

         22        million dollars on deposit at any time in a bank in   10:01:14

         23        Los Angeles.  These organizations will not respond    10:01:18

         24        well if their local decision-making capacity is       10:01:20

         25        taken away.                                           10:01:24



          1             I did hear the bell.  Thank you.                 10:01:24


          3                  CHAIRPERSON SMITH:  By all means, make      10:01:30

          4        sure that we have a copy of your full statement and   10:01:32

          5        we'll enter it into the record.                       10:01:34


          7                  MR. BRYANT:  Seventy-five copies are        10:01:44

          8        available in your lobby.  


         10                  CHAIRPERSON SMITH:  Thank you very much.  

         11        We'll go to Ms. Haines.  


         13                  MS. HAINES:  Thank you.  I'd like to thank  10:01:46

         14        the Federal Reserve Board for this opportunity to     10:01:46

         15        speak.  My name is Anne Haines Yatskowitz, and I'm    10:01:48

         16        the president and CEO of ACCION New Mexico, which is  10:01:52

         17        an Albuquerque based micro-lending organization.  I   10:01:54

         18        wish to comment today on the positive impact that     10:01:58

         19        support from both Norwest Bank and Wells Fargo Bank   10:02:02

         20        has had on ACCION New Mexico's ability to serve       10:02:06

         21        disenfranchised and emerging entrepreneurs and also   10:02:12

         22        to strengthen the economies of Albuquerque's low and  10:02:16

         23        moderate income neighborhoods.                        10:02:20

         24             I'd like to first begin by giving you just a     10:02:20

         25        little background about ACCION New Mexico.  ACCION    10:02:24



          1        New Mexico was created four and a half years ago in   10:02:28

          2        response to the escalating poverty conditions in New  10:02:32

          3        Mexico.  And, unfortunately, New Mexico is the state  10:02:36

          4        now that has the highest poverty rate in the          10:02:38

          5        country.  An associate of ACCION International,       10:02:42

          6        ACCION New Mexico is a local private nonprofit        10:02:48

          7        organization that extends a life-line to very small   10:02:50

          8        or micro businesses in New Mexico by offering tools   10:02:52

          9        of economic self-reliance; namely, business credit    10:02:58

         10        and business training.  It is these hard-working      10:03:02

         11        entrepreneurs, home-based mechanics, seamstresses,    10:03:08

         12        artists, woodworkers and others, who make up a        10:03:12

         13        growing sector of self-employed families and          10:03:14

         14        individuals in New Mexico.                            10:03:18

         15             And because of a lack of collateral, credit      10:03:20

         16        history or the need for only a small loan amount,     10:03:24

         17        many emerging entrepreneurs do not have access to     10:03:28

         18        business credit from traditional sources.  Yet,       10:03:34

         19        capital is an essential ingredient in helping boost   10:03:36

         20        a small business from subsistence to                  10:03:42

         21        self-sufficiency and to success.                      10:03:44

         22             Today ACCION New Mexico, since we started        10:03:48

         23        lending about four and a half years ago, has made     10:03:52

         24        over 760 micro loans of an average size of $12        10:03:54

         25        hundred to over 400 businesses in the Albuquerque     10:04:00



          1        area.  The organization has written off less than     10:04:04

          2        two percent of the slightly less than $1 million      10:04:06

          3        that we've lent.  Nearly two thirds of our client     10:04:10

          4        base is minority, and the median yearly household     10:04:14

          5        income of our borrowers is about $21,000, which is    10:04:18

          6        substantially lower than the area median income for   10:04:24

          7        Albuquerque, which is approximately $33,000.          10:04:28

          8             By June of 1996, ACCION New Mexico had enough    10:04:32

          9        multiple loan clients to analyze certain changes      10:04:36

         10        entrepreneurs experienced over time.  And in a        10:04:40

         11        sample size of some of our clients who had received   10:04:44

         12        at least three consecutive loans, we have found an    10:04:46

         13        average increase of 71 percent in business assets,    10:04:50

         14        61 percent in business revenues, 87 percent in        10:04:54

         15        take-home income from the business, 21 percent in     10:05:00

         16        overall household income, and 21 percent in           10:05:04

         17        full-time jobs.                                       10:05:06

         18             The reason I wanted to touch on some of these    10:05:08

         19        statistics is because I do believe that we would not  10:05:12

         20        have achieved some of these successes and already     10:05:16

         21        seen some of these economic changes had it not been   10:05:20

         22        from the tremendous support that both Norwest and     10:05:24

         23        Wells Fargo have provided to ACCION New Mexico.       10:05:28

         24             When ACCION New Mexico was first created,        10:05:32

         25        Norwest was one of the few banks that stepped         10:05:36



          1        forward in the Albuquerque area to support the        10:05:38

          2        program, and Norwest supported us in a number of      10:05:42

          3        different ways.  One way was by providing office      10:05:46

          4        space and furniture, leadership support, strategic    10:05:50

          5        thinking, marketing support, and a line of credit to  10:05:54

          6        enable us to launch the program.  We used the line    10:05:58

          7        of credit to turn around and make loans to our        10:06:02

          8        borrowers.  Norwest has provided considerable fund    10:06:06

          9        raising support by offering challenge grants which    10:06:10

         10        have enabled us to catalyze and challenge the         10:06:14

         11        surrounding community and business community to       10:06:18

         12        support the program as well.                          10:06:20

         13             Last year Wells Fargo made a $200,000            10:06:22

         14        investment in ACCION New Mexico.  Wells Fargo did     10:06:26

         15        not have a very visible presence at the time in       10:06:30

         16        Albuquerque, there were no branches in Albuquerque,   10:06:34

         17        and yet Wells Fargo took a very proactive role in     10:06:38

         18        supporting our program.  And with a $200,000          10:06:42

         19        investment, which was a loan, Wells Fargo also        10:06:44

         20        helped change the playing field.                      10:06:48

         21             My time is up.  I would like to say that I do    10:06:52

         22        not think this program would exist without the        10:06:54

         23        support of both banks.  Thank you.                    10:06:58


         25                  CHAIRPERSON SMITH:  Thank you very much.    10:07:00



          1        Mr. Rainey.                                           10:07:02


          3                  MR. RAINEY:  Yes.  Thank you.  My name is   10:07:04

          4        Clive Rainey, and I'm here to represent Willard       10:07:06

          5        Fuller, the founder and president of Habitat for 

          6        Humanity.  As Mr. Biller has already testified,       10:07:10

          7        Norwest has a tremendous leadership commitment to     10:07:14

          8        Habitat for Humanity, and I'm simply going to read    10:07:18

          9        from Mr. Fuller's letter to Ms. Levert.               10:07:18

         10             I'm pleased to write you regarding the           10:07:22

         11        partnership between Norwest Mortgage and Habitat for  10:07:24

         12        Humanity.  This partnership reflects real leadership  10:07:26

         13        I know as (inaudible), most significantly through     10:07:30

         14        the partnership in the Rebuilding Our Communities     10:07:32

         15        Campaign.  The Rebuilding Our Communities Campaign    10:07:34

         16        is an effort to raise 250 million of additional       10:07:36

         17        money for Habitat's work by our 25th anniversary in   10:07:40

         18        September of 2001.  Norwest committed in October of   10:07:44

         19        1996 to be the lead sponsor in this effort.  This     10:07:48

         20        commitment of 16.5 million over five years includes   10:07:52

         21        seasonal construction loans of $2 million interest    10:07:56

         22        free each year for materials.                         10:07:58

         23             Norwest's contribution here has encouraged       10:08:00

         24        others.  For example, Fannie Mae has matched this     10:08:02

         25        two million seasonal construction loan for the past   10:08:06



          1        two years, investments in home loan pools of a        10:08:08

          2        million dollars annually at nominal or no interest    10:08:12

          3        to accelerate more construction.                      10:08:14

          4             Norwest is also recruiting other lenders to      10:08:16

          5        come in so that the total should exceed $1 million a  10:08:20

          6        year, matching Norwest employee contributions to      10:08:22

          7        Habitat with a guaranteed minimum of $100,000 a       10:08:26

          8        year.  Site participation grants to Habitat           10:08:28

          9        affiliates in cities where ten or more of Norwest     10:08:34

         10        corporation's 53,000 employees volunteer, these       10:08:36

         11        grants, a minimum of $100,000 a year, will fund       10:08:40

         12        volunteer Habitat projects.  Grants of up to $2,000   10:08:44

         13        to help Habitat homeowners with closing and related   10:08:48

         14        costs, the minimum is a hundred thousand dollars per  10:08:52

         15        year.                                                 10:08:54

         16             As you can see, leadership on the part of        10:08:54

         17        Norwest has not been limited to their own             10:08:56

         18        commitment.  They have encouraged and challenged      10:08:58

         19        other members of their industry to match their        10:09:00

         20        efforts.  Norwest Mortgage has demonstrated           10:09:02

         21        exemplary corporate citizenship and Habitat for       10:09:06

         22        Humanity is proud to call them our partners.          10:09:10

         23             Habitat for Humanity International is a          10:09:14

         24        nonprofit, ecumenical, Christian housing              10:09:14

         25        organization dedicated to the elimination of          10:09:16



          1        substandard housing.  Habitat works in partnership    10:09:18

          2        with people in need to build simple, decent houses    10:09:20

          3        that are sold at no profit through no interest        10:09:22

          4        mortgages.                                            10:09:26

          5             Founded in 1976 in Americus, Georgia, Habitat    10:09:26

          6        has more than 1,450 U.S. affiliates, and together     10:09:30

          7        with affiliates in 59 other countries, has built      10:09:32

          8        over 70,000 homes.  Thank you very much.              10:09:36


         10                  CHAIRPERSON SMITH:  Thank you.  We'll go    10:09:38

         11        to Ms. Saweuyer-Parks.                                10:09:40


         13                  MS. SAWEUYER-PARKS:  Distinguished members  10:09:46

         14        and staff of the Federal Reserve, good morning.  I'm  10:09:48

         15        Deborah Saweuyer-Parks, CEO of the Oregon             10:09:52

         16        Corporation for Affordable Housing in Portland,       10:09:56

         17        Oregon.  We are a nonprofit syndicator of federal     10:09:58

         18        low-income housing tax credits, and invest            10:10:02

         19        exclusively in affordable housing throughout the      10:10:08

         20        State of Oregon, and now in Washington State and      10:10:10

         21        soon to enter into Idaho.                             10:10:12

         22             I am here this morning to testify in support of  10:10:14

         23        the merger between Norwest Corporation and Wells      10:10:18

         24        Fargo & Company.  My remarks are designed to          10:10:22

         25        illustrate what can be done when a local nonprofit    10:10:26



          1        corporation partners with a large financial           10:10:30

          2        institution new to the Oregon market.  Specifically,  10:10:34

          3        I'm talking about Wells Fargo & Company.              10:10:38

          4             I founded OCAH five years ago.  Our aim was to   10:10:42

          5        raise capital from Oregon's corporate and financial   10:10:46

          6        community to reinvestment that capital in             10:10:50

          7        multi-family housing throughout the state, initially  10:10:52

          8        the State of Oregon.  It was our hope to demonstrate  10:10:54

          9        that it was realistic to merge social objectives      10:10:58

         10        with business goals and to create an opportunity      10:11:02

         11        that was worthwhile for both the public and private   10:11:06

         12        sectors.  Oregon's economy was quite robust, so we    10:11:08

         13        at OCAH planned to help eliminate a social need in    10:11:14

         14        our state, which was to finance a portion of the      10:11:18

         15        projected 50,000 affordable housing units needed to   10:11:22

         16        house over 125,000 working poor and their families.   10:11:26

         17             The vehicle we created was the Oregon Equity     10:11:34

         18        Fund, a limited partnership designed to provide       10:11:36

         19        equity to developers of affordable housing.  I        10:11:40

         20        raised $20 million in Fund I -- for Fund I.  The      10:11:46

         21        first -- no.  Because of time, I crossed so much of   10:11:52

         22        this out, so I'm having trouble following.            10:11:54

         23             Since Fund I was so successful, we proceeded     10:11:56

         24        with Fund II.  Raising equity this time was           10:12:02

         25        extremely difficult.  Former Fund I commercial banks  10:12:04



          1        created their own hundred million dollar plus funds   10:12:08

          2        and left OCAH, or either they merged with other       10:12:12

          3        financial institutions and retreated from their       10:12:16

          4        local community promises.                             10:12:20

          5             I had some trepidation approaching Wells Fargo,  10:12:26

          6        but at the urgence of a friend, I called Karen        10:12:30

          7        Wegman.  Karen, in turn, referred me to another       10:12:32

          8        Wells Fargo staffer, and much like John said a few    10:12:38

          9        minutes ago, it's about the people at Wells Fargo     10:12:42

         10        that makes the difference in our business.  Six       10:12:44

         11        weeks after that call, I had a $4 million commitment  10:12:48

         12        from Wells Fargo.  One year later I approached Wells  10:12:52

         13        Fargo again for Fund III, asked for $10 million.  It  10:12:58

         14        was not only granted -- or not granted, invested,     10:13:02

         15        but they also agreed to provide me with a $10         10:13:04

         16        million line of credit for the partnership.           10:13:08

         17             For my Board and those of us who manage the      10:13:12

         18        fund, this level of commitment that Wells Fargo       10:13:14

         19        demonstrated was unparalleled.                        10:13:18

         20             The following are a few examples of the results  10:13:24

         21        that were achieved because of Wells Fargo's           10:13:26

         22        investment in the Oregon Equity Fund.  In Medford,    10:13:30

         23        southern Oregon, in a rural community, we developed   10:13:34

         24        80 units of affordable housing for families, one,     10:13:38

         25        two, three and four-bedroom units, and four bedrooms  10:13:42



          1        are extremely difficult to locate.                    10:13:46

          2             In far eastern Oregon, Sierra Vista, largely an  10:13:48

          3        Hispanic community, we developed housing for farm     10:13:54

          4        workers.                                              10:13:56

          5             In Cannon Beach, Twelfth Avenue Terrace -- I'm   10:13:56

          6        speeding up because I saw that minute -- there were   10:14:02

          7        housing projects developed, in Bend, the Bill Healy   10:14:04

          8        Family Center for previously homeless families who    10:14:08

          9        are gainfully employed, in Eugene and other           10:14:12

         10        communities throughout our state.                     10:14:14

         11             Wells Fargo has done much in Oregon.  Through    10:14:18

         12        its foundation, countless grants were given, 600,000  10:14:22

         13        to Portland Public Schools, a hundred thousand        10:14:28

         14        dollars to Umpqua Community Development, over         10:14:30

         15        400,000 to United Way, and a hundred thousand         10:14:34

         16        dollars to Albina Community Bank.  It was the only    10:14:36

         17        bank in the state of Oregon that did not -- that      10:14:38

         18        received an investment from a large commercial bank,  10:14:42

         19        and it was established to serve a population          10:14:46

         20        formerly denied access to capital for homeowners or   10:14:48

         21        small businesses.                                     10:14:54

         22             My time's up.  Thank you very much.  I did       10:14:54

         23        prepare a record of my comments for the record.       10:14:56


         25                  CHAIRPERSON SMITH:  Thank you, and we'll    10:15:00



          1        go to Ms. Wheeler.                                    10:15:02


          3                  MS. WHEELER:  Thank you, and thank you for  10:15:04

          4        this opportunity to be here as well.  My name is      10:15:04

          5        Suzy Wheeler, and I work for an organization called 

          6        Consumer Credit Counseling Services of Minnesota.     10:15:10

          7        We're a private nonprofit agency.  We have about six  10:15:10

          8        offices around the metro area.  We provide four main  10:15:14

          9        programs: budget counseling, debt management,         10:15:18

         10        housing counseling, and community education.          10:15:20

         11             We've been very pleased with the relationship    10:15:22

         12        we've had with Norwest Bank over the last few years,  10:15:26

         13        especially in the area of community education.  We    10:15:28

         14        find that there's much a very big need for education  10:15:32

         15        regarding money management out in the community.      10:15:36

         16             I'm an education coordinator, and I spend all    10:15:38

         17        my time in the community talking to people about      10:15:40

         18        managing their money, how to manage it better, how    10:15:42

         19        to take care of credit problems.  I talk to high      10:15:46

         20        school kids about using credit wisely, and that's     10:15:48

         21        starting to become a very needed issue because high   10:15:52

         22        school kids are starting to get credit cards, and     10:15:54

         23        that's very scary.  So as part of our mission at the  10:15:56

         24        agency is we try to go out and provide education to   10:16:00

         25        the community about money management.                 10:16:02



          1             Our relationship with Norwest Bank has           10:16:04

          2        primarily been with community education focusing on   10:16:08

          3        bringing education into places where they have not    10:16:10

          4        had the opportunity to get education about money      10:16:14

          5        management.  One particular example is my work with   10:16:16

          6        the treatment centers in the cities, the Twin         10:16:18

          7        Cities.  One particular organization comes to mind    10:16:22

          8        is the Wayside House, and this is a treatment         10:16:24

          9        facility for women for drugs and alcohol.  And what   10:16:26

         10        we've developed is a four-part workshop on money      10:16:28

         11        management.  And I go out into the center, and the    10:16:32

         12        Norwest bankers join me as well, and we provide       10:16:36

         13        topics on money management so that these women can    10:16:38

         14        get their financial life under control before they    10:16:42

         15        actually leave the center.  So we discuss topics      10:16:44

         16        such as basic banking, credit, money management,      10:16:48

         17        housing issues, as well as student loan default.  So  10:16:50

         18        we spend a lot of time with the women, and we've had  10:16:54

         19        a lot of support with Norwest Bank to provide the     10:16:58

         20        information to these individuals so when they leave   10:17:00

         21        the center, at least they have a pretty good idea on  10:17:02

         22        how to tackle some of these issues that come up.  So  10:17:04

         23        we've been very pleased and we hope to see that       10:17:08

         24        relationship continue.                                10:17:10

         25             Other organizations that we're very involved     10:17:10



          1        with, we also do the same thing at a men's treatment  10:17:12

          2        center called the Eden Programs, and we do the same   10:17:16

          3        sort of thing: we go out and provide the education    10:17:18

          4        so that these folks at least have a better handle on  10:17:22

          5        how to start tackling some of the financial issues    10:17:24

          6        that they encounter prior to going into treatment,    10:17:26

          7        as well as trying to get things under control so      10:17:30

          8        that when they get out of treatment they can start    10:17:30

          9        rebuilding their life, find an apartment, try to      10:17:34

         10        deal with credit problems that come up, and start to  10:17:36

         11        get things under control.                             10:17:38

         12             So we have been very, very excited, and the      10:17:40

         13        people are very positive as far as how they have      10:17:42

         14        been responding to the program because this is        10:17:44

         15        information that they have not received other         10:17:46

         16        places.  So this is something we've been very, very   10:17:48

         17        pleased with.                                         10:17:50

         18             Other organizations that we go out to, we also   10:17:52

         19        go to visit a -- been to a program called the Step    10:17:54

         20        Program, which is a self-sufficiency program in St.   10:17:58

         21        Paul, and this is a program for people that are       10:18:00

         22        living in public housing that need to get things      10:18:02

         23        under control so they can become self-sufficient.     10:18:04

         24        We go out and talk to the folks about credit.         10:18:06

         25             The Norwest bankers have been very positive.     10:18:08



          1        We usually have a Norwest banker join us at these     10:18:12

          2        workshops, and it really helps for the participants   10:18:16

          3        to be able to talk to a banker and actually feel      10:18:18

          4        like they can connect a person at the bank.  They     10:18:22

          5        get the business card of the banker; then they know   10:18:24

          6        that they can go down and talk to that particular     10:18:28

          7        banker.  It takes a lot of the intimidation out, and  10:18:30

          8        we've found that that really works well.  So that     10:18:34

          9        way they can say okay, I'm going to go down and talk  10:18:36

         10        to this banker and deal with my issues that I've had  10:18:38

         11        with my checking account.  I've had checking account  10:18:42

         12        problems in the past, maybe I've bounced a few        10:18:44

         13        checks, but what happens is is sometimes there's a    10:18:46

         14        barrier that gets developed and people don't -- they  10:18:48

         15        don't feel comfortable actually calling the bank up   10:18:50

         16        because they're embarrassed.  So what we've done is   10:18:54

         17        developed information so that people -- take the --   10:18:56

         18        the intimidation is gone, they can feel like they     10:19:00

         19        can now go down and talk to the banker, and feel      10:19:02

         20        like okay, now I can address some problems because I  10:19:04

         21        feel a lot more comfortable: I've actually met the    10:19:08

         22        banker.  So we really found that that's been          10:19:10

         23        successful, and we hope to see that kind of           10:19:12

         24        relationship continue.  Thank you.                    10:19:16




          1                  CHAIRPERSON SMITH:  Thank you.  Any         10:19:16

          2        questions?  If not, we had tentatively scheduled a    10:19:18

          3        break, but if we have the witnesses for the next      10:19:20

          4        panel, then I'd like to go forward with Panel No. 3.  10:19:26

          5        We're going to start with Ms. Erickson.               10:20:48


          7                  MS. ERICKSON:  Thank you.  I appreciate     10:20:54

          8        the opportunity to speak with you today.  I think     10:20:54

          9        it's unfortunate that the meeting is only a daytime   10:20:58

         10        meeting.  We do have an awful lot of low income       10:21:02

         11        people who are affected by banking activities and     10:21:04

         12        mergers such as this.  It would have been nice if we  10:21:08

         13        could have had potentially more participation from    10:21:12

         14        them with later hours.                                10:21:14

         15             This merger will create the seventh largest      10:21:18

         16        bank in the country.  They will have banking          10:21:22

         17        operations in 21 states, and yet this is the only     10:21:24

         18        hearing.  I frankly wonder, where are the anti-trust  10:21:30

         19        forces in this?  I see a terrible, terrible trend in  10:21:34

         20        this country of mergers in the consolidation of       10:21:38

         21        power over all sorts of very basic needs for people,  10:21:42

         22        banking being only one of them.  Medicine, food,      10:21:46

         23        communications, everything is becoming very           10:21:48

         24        consolidated and it's to the detriment of the         10:21:52

         25        people.                                               10:21:54



          1             We have a number of members who are not able to  10:21:56

          2        be with us here today, representatives from Chicago,  10:21:58

          3        from Denver, Colorado, our national president Maude   10:22:02

          4        Hearn, from Boston.  The airline pilots' strike has   10:22:10

          5        prevented their making it here; however, I would      10:22:14

          6        like to say that we support the airline pilots'       10:22:16

          7        strike in their principles of having their            10:22:20

          8        concessions made back and compensated for now that    10:22:22

          9        the company is thriving.                              10:22:26

         10             Mega-mergers destroy competition and foster      10:22:28

         11        collusion and price fixing in an endless spiral       10:22:30

         12        upwards.  This is great for greedy shareholders       10:22:32

         13        salivating over stock market gains.  Their gains are  10:22:38

         14        consumers' losses.  Is this rewardable behavior?      10:22:40

         15             Someone mentioned earlier competitive fees.      10:22:46

         16        That's kind of an odd phrase, I think.  What is a     10:22:50

         17        competitive fee?  Now to me as a consumer, a person   10:22:52

         18        who has to pay fees, I think a competitive fee is a   10:22:56

         19        low fee, and when a bounced check costs $2.68 for     10:23:00

         20        the bank, I think a competitive fee for bounced       10:23:06

         21        checks would be five bucks -- that's a hundred        10:23:08

         22        percent almost profit -- but the bounced check fees   10:23:10

         23        keep going up and up.  What's this competitive        10:23:16

         24        market for, is it consumers or is it shareholders?    10:23:20

         25        Who profits from these activities?                    10:23:24



          1             The Federal Reserve has a responsibility to      10:23:26

          2        protect the American people, to stop the unchecked    10:23:30

          3        and unconditional urge to merge.  While HR-10 is      10:23:32

          4        giving banks the freedom to diversify and therefore   10:23:38

          5        control even more of our economic activities,         10:23:40

          6        mergers at the same time remove diversity of choice   10:23:44

          7        from consumers.  If that's not enough, they also      10:23:48

          8        have attacked credit unions, trying to regain what    10:23:52

          9        paltry six percent of the market they control.        10:23:56

         10             We demand that their performance improve in our  10:24:00

         11        neighborhoods.  Norwest is the largest mortgage       10:24:04

         12        company in the United States, and yet they are        10:24:06

         13        behind the national average in their loans to people  10:24:08

         14        of color.  To African-Americans, Asians, Latinos,     10:24:10

         15        and Native Americans, Norwest made a smaller          10:24:14

         16        percentage of its loans than the national averages.   10:24:18

         17        Almost 16 percent of all home loans made by all       10:24:22

         18        lenders in the country were made to people of color,  10:24:24

         19        but Norwest made only 10.5 percent of their loans to  10:24:26

         20        people of color, way below the national average.      10:24:32

         21        Even in the Twin Cities, where Norwest Corporation's  10:24:34

         22        headquartered and where they are by far the largest   10:24:36

         23        mortgage lender, they are below the average of all    10:24:40

         24        lenders.  Norwest made a similar percentage of loans  10:24:44

         25        to people of color than the average of all other      10:24:48



          1        lenders in the cities.                                10:24:50

          2             When we look at where Norwest made their loans,  10:24:52

          3        they are once again below the average of all Twin     10:24:54

          4        Cities lenders in the percentages of their loans      10:24:58

          5        made to low to moderate income neighborhoods, and     10:25:00

          6        the percentages of their loans made in integrated     10:25:02

          7        and minority neighborhoods.                           10:25:06

          8             A representative earlier said something to the   10:25:08

          9        effect that banks will not be healthy when            10:25:10

         10        communities are struggling.  Isn't this a little bit  10:25:12

         11        of a cart before the horse argument?  Is this why     10:25:14

         12        it's hard for us to get banks to be operating in      10:25:16

         13        neighborhoods like Phillips?  When it comes to        10:25:20

         14        rejecting minorities, Norwest is way above other      10:25:22

         15        lenders in the Twin Cities.  Norwest rejected         10:25:26

         16        African-Americans almost three and a half times as    10:25:30

         17        often as they rejected whites.                        10:25:32

         18             In the Twin Cities Norwest is especially bad     10:25:34

         19        compared to other major banks here.  US Bank,         10:25:36

         20        formerly First Bank, and Twin City Federal.  US Bank  10:25:40

         21        and TCF each made more 5.5 percent of their home      10:25:44

         22        purchase loans to African-Americans, while Norwest    10:25:48

         23        made only two percent of their loans to               10:25:50

         24        African-Americans.  US Bank and TCF each made more    10:25:54

         25        than 13 percent of their home purchase loans to       10:25:58



          1        people of color, but Norwest only made six percent    10:26:00

          2        of their loans to people of color.  US Bank and TCF   10:26:02

          3        each made more than -- each made more, about 18       10:26:06

          4        percent of their home purchase loans, to low and      10:26:12

          5        moderate income neighborhoods, but Norwest made only  10:26:14

          6        nine percent of its loans in these neighborhoods.     10:26:16

          7             Why reward this racist, classist performance?    10:26:20

          8        Is no one accountable?  What is exactly your          10:26:24

          9        responsibility toward the American people?  Have you  10:26:26

         10        any?                                                  10:26:36


         12                  CHAIRPERSON SMITH:  Thank you very much.    10:26:38

         13        We will go to Ms. Whitfield.                          10:26:38


         15                  MS. WHITFIELD:  My name is Marilyn          10:26:42

         16        Whitfield.  I'm a board member of Minnesota ACORN,    10:26:44

         17        and the co-chair for North Minneapolis Chapter of     10:26:46

         18        ACORN.                                                10:26:48

         19             In city after city we find the same pattern      10:26:48

         20        that Norwest, the largest mortgage company in the     10:26:52

         21        country, is below other lenders in their loans to     10:26:54

         22        minorities and in low income neighborhoods, but       10:26:58

         23        above other lenders in their denials of               10:27:00

         24        African-Americans, Latinos, and Asians, in Austin,    10:27:02

         25        Texas, Albuquerque, Atlanta, Chicago, Dallas,         10:27:08



          1        Denver, Des Moines, Duluth, Minnesota, Houston, Las   10:27:12

          2        Vegas, Los Angeles, Milwaukee, Newark, New Orleans,   10:27:18

          3        Oakland, Philadelphia, Phoenix, St. Louis, and in     10:27:22

          4        Washington, D.C.  What is Norwest going to do about   10:27:28

          5        this?                                                 10:27:30

          6             Wells Fargo just announced that if the merger    10:27:32

          7        is approved, it is going to lend $5 billion a year    10:27:34

          8        in California to minorities and low income customers  10:27:38

          9        for small businesses, mortgages and community         10:27:42

         10        development.  Why can't Norwest do the same thing in  10:27:44

         11        Minnesota and other states?  Other communities need   10:27:48

         12        to be developed just as in California.  People in     10:27:50

         13        Minnesota also need help with small businesses and    10:27:54

         14        community development.                                10:27:58

         15             In another recent merger, Nations Bank/Bank of   10:28:00

         16        America committed to lend $35 billion a year to       10:28:02

         17        minority and low income customers.  Why can't         10:28:06

         18        Norwest do the same thing?                            10:28:10

         19             After all these years of being here, Norwest is  10:28:10

         20        moving their headquarters to California.  They're     10:28:14

         21        going to lay off a lot of employees and pocket huge   10:28:16

         22        savings.  What do the people of Minnesota get out of  10:28:22

         23        it?  We want Norwest to put some money back into the  10:28:24

         24        community.                                            10:28:28




          1                  MR. ASH:  Thank you.  My name is Jordan 

          2        Ash, the loan counseling director for ACORN.  I       10:28:34

          3        apologize, my testimony is sitting on my kitchen      10:28:34

          4        table, so I frantically was trying to reconstruct     10:28:36

          5        it.  I apologize if I stumble a little bit.           10:28:40

          6             I'm the director of the loan counseling program  10:28:46

          7        for Minnesota ACORN.  The home buyer education        10:28:46

          8        counseling program, there's a couple components to    10:28:52

          9        it.  One is that we work with banks to help them      10:28:52

         10        improve their lending records by developing loan      10:28:56

         11        products that are more realistic to help low and      10:28:58

         12        moderate income people buy a house, such as lower     10:29:02

         13        down payment closing costs, more flexible credit      10:29:04

         14        guidelines, using alternative credit, counting --     10:29:08

         15        being more flexible in counting income.  We also      10:29:10

         16        promote home ownership by going out every day into    10:29:14

         17        low income neighborhoods and talking to renters       10:29:16

         18        about the benefits of home ownership, and that it is  10:29:18

         19        possible.  And, finally, that we have provided        10:29:20

         20        one-on-one counseling to people to help them qualify  10:29:24

         21        for loans, address credit problems, help them         10:29:26

         22        understand that -- the process, and also have some    10:29:30

         23        seminars and classes to help people understand the    10:29:32

         24        general process of buying a house.                    10:29:36

         25             Because it's known in the community that         10:29:36



          1        through ACORN and the programs that we work with and  10:29:38

          2        the banks that we work with, which is four of the     10:29:42

          3        five major banks in the Twin Cities, except for       10:29:44

          4        Norwest, because it's known that you can buy a house  10:29:46

          5        through ACORN with a thousand to $15 hundred total    10:29:50

          6        for your down payment and closing costs, people call  10:29:52

          7        us up a few times a week and say don't you help with  10:29:54

          8        down payment and closing costs?  I'm closing next     10:29:58

          9        week; I need $3,000 to buy a house.  I heard that     10:30:00

         10        you help with that.  We say no, we don't help with    10:30:04

         11        it.  We've negotiated with banks, developed programs  10:30:04

         12        where the banks provide the assistance.  And in       10:30:06

         13        talking and trying to figure out about their          10:30:08

         14        situation, you might ask, well, who are you going     10:30:10

         15        through?  And invariably they'll say, Norwest.        10:30:14

         16             As was said earlier, Norwest is the largest      10:30:16

         17        mortgage company in the country.  They're the         10:30:18

         18        largest in the Twin Cities with 20 percent of all     10:30:20

         19        loans.  So most people are going through Norwest,     10:30:24

         20        but they're calling us saying can you help with the   10:30:26

         21        down payment?  And why is that?  Because Norwest      10:30:28

         22        provides less assistance for down payment and         10:30:30

         23        closing costs than all the other major banks in the   10:30:34

         24        Twin Cities.  TCF, US Bank, Firstar, and Marquette    10:30:36

         25        all provide much more assistance than Norwest.        10:30:40



          1             There's some other problems with Norwest's       10:30:44

          2        underwriting guidelines, which are -- to the problem  10:30:46

          3        when they're, again, the biggest mortgage company in  10:30:48

          4        the country and in the Twin Cities.  Their debt       10:30:50

          5        ratio is only 34 percent when all the other programs  10:30:52

          6        are 41 percent.  If you have what they count as       10:30:56

          7        long-term debt, if you have a car payment, in order   10:31:00

          8        to look at it and you're qualifying, they count       10:31:02

          9        long-term debt as anything less than two months.      10:31:06

         10        All the other programs count long-term debt as        10:31:08

         11        anything less than ten months.  It's ironic that      10:31:12

         12        Norwest would penalize people that have large debts   10:31:14

         13        because one of the reasons that they have these       10:31:16

         14        large debts is because they've got car payments,      10:31:18

         15        very high interest car payments through Norwest       10:31:22

         16        subsidiaries.                                         10:31:24

         17             It was mentioned earlier about Norwest's         10:31:26

         18        helping -- working and helping people fix their       10:31:28

         19        credit.  Well, we believe that Norwest actually       10:31:30

         20        profits more from people's bad credit and does more   10:31:32

         21        damage to people's credit than any of the seminars    10:31:36

         22        that they can hold.  Norwest has contributed to the   10:31:38

         23        existence in the United States of two separate and    10:31:42

         24        very unequal financial systems: one for the rich and  10:31:46

         25        one for the poor.  As mainstream banks shut out low   10:31:48



          1        income blue collar and minority customers, a fringe   10:31:52

          2        economy has emerged of pawn shops, check cashing      10:31:54

          3        stores and finance companies to fill the credit       10:31:58

          4        void.  With their high interest rates and             10:32:00

          5        unnecessary credit insurance fees, these shadow       10:32:02

          6        banks have generated greater profit margins than      10:32:04

          7        even the largest banks.                               10:32:06

          8             In 1994, Norwest purchased a company called      10:32:10

          9        Community Credit, so don't confuse it with Consumer   10:32:14

         10        Credit Counseling, which is a very fine               10:32:16

         11        organization.  Community Credit is exactly the        10:32:18

         12        opposite.  It's a consumer loan company that targets  10:32:22

         13        people with low incomes or bad credit.  Community     10:32:24

         14        Credit has 79 offices in 15 states.  Soon after they  10:32:26

         15        bought Community Credit, Norwest acquired two other   10:32:30

         16        companies: City Side Savings, which doesn't help      10:32:32

         17        people save any money, and Fidelity Acceptance, 

         18        which is not at all loyal, doesn't have any fidelity 

         19        to its customers. 

         20             According to a St. Paul Pioneer Press article    10:32:40

         21        last year, Norwest is no stranger to the boom in big  10:32:42

         22        risk, big reward consumer lending.  It's Norwest's    10:32:46

         23        financial unit, of which Fidelity will soon be a 

         24        part, was doing sub-prime net lending long before 

         25        Wall Street and several big banks bet on it in        10:32:54



          1        recent years.  So Norwest saw it, they saw the money  10:32:56

          2        that could be made from taking advantage of people's  10:32:58

          3        bad credit, and they jumped on it.  They're smart.    10:33:02

          4        That's why they make over a billion dollars' profit   10:33:04

          5        a year.                                               10:33:04

          6             According to -- again to quote the article,      10:33:06

          7        they discovered what Norwest has known for years:     10:33:10

          8        lending money to riskier borrowers can yield big      10:33:10

          9        profits.  Norwest Financial is consistently           10:33:14

         10        Norwest's most profitable unit without suffering      10:33:16

         11        ugly buildup of bad loans.  It's a myth that there's  10:33:20

         12        a higher risk in lending to -- that they are losing   10:33:22

         13        money.  They routinely, these consumer finance        10:33:26

         14        companies that Norwest owns, routinely make more      10:33:28

         15        profits and have a larger return on their assets      10:33:32

         16        than the banks do.  The average rate on Norwest       10:33:34

         17        Financial's consumer loans was 21.22 percent in       10:33:38

         18        1996.  Compare this to what it would cost you if you  10:33:40

         19        had a loan from Norwest Bank, which is right now      10:33:44

         20        around 8 percent, can be more than double from just   10:33:46

         21        another Norwest subsidiary.                           10:33:50

         22             And when Norwest turns someone down for a car    10:33:50

         23        loan, they don't refer them to Consumer Credit        10:33:54

         24        Counseling, they don't tell them about a seminar on   10:33:56

         25        debt management or on money management.  What they    10:34:00



          1        do is refer them to Community Credit, and they've     10:34:02

          2        acknowledged that they do this.  They give customers  10:34:04

          3        the number for Community Credit to get a car loan at  10:34:06

          4        21 percent.  We've even had instances where somebody  10:34:08

          5        got a call at home, unsolicited, from Community       10:34:12

          6        Credit, saying I heard you need a loan.  Do you have  10:34:16

          7        any collateral that you could use for it?             10:34:18

          8             While Norwest has acknowledged this is a common  10:34:22

          9        practice, they have failed to reply to our requests   10:34:26

         10        about if there is a reciprocal relation; that is,     10:34:28

         11        why can't customers be referred from Community        10:34:30

         12        Credit to Norwest?  They're the same company.  If it  10:34:32

         13        works one way, why can't it work the other?           10:34:36

         14        Especially if they pay their car loan on time, why    10:34:38

         15        can't it be refinanced through Norwest?  Why can't    10:34:40

         16        there be a program set up like that?                  10:34:42

         17             Well, Norwest actually keeps people trapped in   10:34:44

         18        the fringe economy by thwarting customers' efforts    10:34:48

         19        to re-establish their credit.  As a general policy,   10:34:50

         20        Community Credit does not report its loans to a       10:34:52

         21        credit bureau.  So even if a customer is making       10:34:54

         22        their payments on time on that car, thinking well, I  10:34:58

         23        need a car to get to work, I'll take the 21 percent   10:35:00

         24        interest, I'll pay it on time, and eventually I will  10:35:02

         25        be able to build up my credit better, they're not     10:35:04



          1        building the new credit that they think they are,     10:35:06

          2        which would allow them to eventually refinance or     10:35:08

          3        receive a more favorable interest rate from a bank.   10:35:12

          4        And Community Credit is, however -- it's not that     10:35:14

          5        they don't work with the credit bureaus ever,         10:35:16

          6        because they're very quick to report it to the        10:35:18

          7        credit bureau if you default on a loan.  The only     10:35:20

          8        explanation for this that we can think of is that     10:35:22

          9        the companies, Community Credit and other companies   10:35:24

         10        in Norwest Financial, want to keep a captive          10:35:28

         11        customer base.  They don't want people to be able to  10:35:30

         12        get lower interest rates, they don't want people to   10:35:32

         13        be able to pay off their balance early, and they      10:35:34

         14        want them to have to return to them again and again   10:35:38

         15        for financing, repeat customers.  And, in fact, when  10:35:38

         16        Norwest acquired City Side Savings just last year,    10:35:42

         17        which did report customers' on-time payments to the   10:35:44

         18        credit bureau, they merged it into Community Credit,  10:35:48

         19        and all of a sudden, the reporting of City Side's     10:35:50

         20        customers' on-time payments abruptly stopped.         10:35:52

         21             When we are doing our loan counseling and we     10:35:54

         22        meet with somebody and we do their credit report,     10:35:56

         23        we'll see they have a loan from City Side Savings,    10:35:58

         24        and all of a sudden it says 10-97, and that's just a  10:36:02

         25        date of last activity -- what are we now, 8-98 --     10:36:06



          1        just ends.  All of a sudden on the credit report it   10:36:08

          2        just ends.  Thank you very much.                      10:36:10


          4                   CHAIRPERSON SMITH:  Mr. Bennett.           10:36:16


          6                  MR. ASH:  We have a transparency, first of  10:36:22

          7        all, to this.  


          9                  CHAIRPERSON SMITH:  Thank you.


         11                  MR. ASH:  Where do we do that?              10:36:24


         13                  CHAIRPERSON SMITH:  If you'll hand it to    10:36:26

         14        Cassandra, and we'll put it into the record.          10:36:28

         15        Mr. Bennett, if you'll start.                         10:36:36


         17                  MR. BENNETT:  My name is Alton Bennett,     10:36:38

         18        and I'm the chair of the Banking and Housing Chapter  10:36:40

         19        of Minnesota ACORN.  I'm also a member of Minnesota   10:36:42

         20        ACORN Board, I'm association board member, and I'm    10:36:44

         21        the national treasurer.                               10:36:50

         22             A couple occasions Congress has expressed its    10:36:52

         23        concern about the credit needs of low and moderate    10:36:56

         24        income people in low and moderate income              10:36:58

         25        neighborhoods.  As a matter of fact, they've even     10:37:02



          1        gone as far as to say that banking services are       10:37:04

          2        essential for these types of neighborhoods to         10:37:06

          3        survive.  That is generally what leads the spirit of  10:37:06

          4        CRA, the Community Reinvestment Act, that says that   10:37:12

          5        banks must meet the credit needs of their entire      10:37:14

          6        service area, specifically low and moderate income    10:37:18

          7        people, not just the wealthy.                         10:37:20

          8             I wonder about products that take advantage of   10:37:22

          9        low and moderate income people, and one of those      10:37:24

         10        things is the checking accounts.  I think everybody   10:37:26

         11        can understand the importance of having a checking    10:37:30

         12        account in your day-to-day activities, but we have    10:37:32

         13        an example here that really truly brings the          10:37:34

         14        experience of most of the people that we have dealt   10:37:38

         15        with when it comes to Norwest.  Norwest has raised    10:37:40

         16        its bounced check fees twice -- at twice the rate of  10:37:46

         17        inflation.  In 1996, Norwest charged $12 for a        10:37:50

         18        bounced check.  In 1995, it had gone up to $21, and   10:37:52

         19        this summer Norwest increased the fee again up to     10:37:58

         20        $25, making it the highest bounced check fee in the   10:38:00

         21        Twin Cities.                                          10:38:04

         22             We have figures from the banking industry that   10:38:04

         23        show that the real cost of a bounced check is about   10:38:06

         24        $2.68.  Norwest has denied this figure.  They say     10:38:10

         25        they have no idea how much it costs, but I wonder,    10:38:12



          1        since they've raised it from 21 to 25 and they have   10:38:16

          2        no idea how much it costs, how do they make the       10:38:20

          3        decision to determine whether it should go up from    10:38:22

          4        21 to 25?  That's just always been curious.  But,     10:38:24

          5        anyway, they don't know how much it costs.            10:38:28

          6             With us they can make so much money from         10:38:30

          7        bounced checks, Norwest does things to get people to  10:38:34

          8        bounce even more checks.  They're the only major      10:38:36

          9        bank in the Twin Cities that clears customers'        10:38:40

         10        largest checks first.  We have an article here that   10:38:42

         11        shows that this is a practice among banks designed    10:38:44

         12        solely to increase profit.  Norwest says that they    10:38:48

         13        do it because the customers' preference in a survey.  10:38:52

         14        But Norwest refused to show us the survey.  How was   10:38:54

         15        the questions asked?  Who were the customers that     10:38:58

         16        they surveyed?  I find it very difficult that they    10:39:00

         17        would -- to believe that they would ask a customer    10:39:04

         18        would you rather us charge you much more money to     10:39:06

         19        process your largest check so that we can make a lot  10:39:10

         20        more money off of it in order -- than do it the       10:39:14

         21        other way in processing things as they come in?  I    10:39:18

         22        just can't believe that that would be the case.  I'd  10:39:22

         23        like to see a real-life example of a Norwest          10:39:26

         24        customer who was affected by the policy clearing the  10:39:28

         25        largest check first.                                  10:39:30



          1             In this case, on April 30th -- and that          10:39:32

          2        transparency is up there -- there were four checks    10:39:36

          3        that come through.  By putting the biggest check      10:39:38

          4        through first, the one for $20.72, Norwest caused     10:39:40

          5        three smaller checks to bounce.  The customer was     10:39:44

          6        then charged $63 for the overdraft -- for             10:39:48

          7        overdrafts, each of which was under $10.  If Norwest  10:39:50

          8        had cleared them by check number or from smallest to  10:39:54

          9        largest, the three smaller checks which totaled       10:39:58

         10        $19.73, would have been paid instead, and only the 

         11        largest check would have bounced.                     10:40:02

         12             It is also worth noting that on May 1st, the     10:40:04

         13        same day that she was charged $63, the customer had   10:40:08

         14        two SSI checks directly deposited in her accounts     10:40:12

         15        that regularly happened at the first of the month.    10:40:14

         16             Now, Norwest says that people can avoid those    10:40:18

         17        charges simply by getting overdraft protection.       10:40:22

         18        Well, there's two problems with that.  Number one,    10:40:26

         19        people don't know about the overdraft protection      10:40:28

         20        because Norwest doesn't advertise it, and when they   10:40:30

         21        do apply for it, if they know about it, they get      10:40:32

         22        turned down.  The woman in this example had just 

         23        been turned down for overdraft protection the same    10:40:36

         24        month that she was approved by our housing            10:40:38

         25        counseling program for a loan.  I think that's        10:40:44



          1        pretty particularly interesting.                      10:40:48

          2             Two years ago we met with Norwest about this     10:40:50

          3        problem.  We proposed a program that would make it    10:40:52

          4        easier for low income people to qualify for           10:40:54

          5        overdraft protection.  Norwest refused to do          10:40:58

          6        anything about it.  We have found that when people    10:41:00

          7        bounce a check, it is not something that they did     10:41:02

          8        deliberately.  Most of the time it is an honest       10:41:04

          9        mistake or it happened in a narrow period of time     10:41:06

         10        between when the person's -- when people deposit a    10:41:10

         11        check and when they credit that deposit to that       10:41:12

         12        account.  So there is no real overdraft protection.   10:41:16

         13             Norwest has said that the customers shouldn't    10:41:20

         14        be surprised when they have bounced checks because    10:41:22

         15        customers are told about these fees and policies.     10:41:26

         16        In fact, the federal law requires the bank to give    10:41:28

         17        new customers information about bank fees and funds   10:41:30

         18        available policy, but that is not the case in         10:41:32

         19        Norwest.  Last summer we did a testing program.  We   10:41:36

         20        sent in 28 people to open checking accounts at        10:41:38

         21        Norwest.  Of those 28 people, six people were given   10:41:42

         22        the information required by law, six were given some  10:41:44

         23        but not all the information, and a larger majority,   10:41:48

         24        16, were given nothing at all.  We currently have a   10:41:52

         25        lawsuit against Norwest over these violations.        10:41:54



          1             There are other bank fees that are of concern    10:41:58

          2        to us.  One thing -- one of these things we want to   10:42:00

          3        know is what happens to Norwest's checking account    10:42:04

          4        and savings account, what will happen to them this    10:42:06

          5        summer?  Wells Fargo stopped honoring checks, free    10:42:10

          6        checking accounts for senior citizens who have been   10:42:14

          7        customers at First Interstate, Wells Fargo's last     10:42:16

          8        merger.  Now these seniors must either use Wells      10:42:22

          9        Fargo basic ATM checking account, which has a         10:42:24

         10        five-fifty a month fee and requires customers to do   10:42:28

         11        all their banking at ATM, or Wells Fargo's            10:42:30

         12        Stagecoach checking account, which costs $9 a         10:42:34

         13        monthly fee.  What protection will there be for       10:42:36

         14        senior citizens in the future?                        10:42:40


         16                  CHAIRPERSON SMITH:  Thank you very much.    10:42:42

         17        Are there any questions from the panel?  If not,      10:42:44

         18        thank you very much for coming this morning.  We are  10:42:48

         19        scheduled for a ten-minute break, and I would remind  10:42:52

         20        attendees that if you happen to go outside the        10:42:58

         21        building, you will need your badge to get back        10:43:02

         22        inside and will need to go through the security       10:43:06

         23        check-in once more.  So we'll see you in about ten    10:43:08

         24        minutes.                                              10:43:14




          1                           (Recess taken.)


          3                  CHAIRPERSON SMITH:  We have both the        11:01:32

          4        witness panel and the Federal Reserve panel, so I     11:01:32

          5        think we'll go ahead and start, and our first         11:01:36

          6        speaker is Mr. Gnaizda.                               11:01:38


          8                  MR. GNAIZDA:  Good morning.  I'm the        11:01:42

          9        policy director with the Greenlining Institute.  To   11:01:44

         10        put background on the Greenlining Institute, in the   11:01:46

         11        last year we have been involved in opposing six       11:01:50

         12        major mergers, including the City Corp merger, which  11:01:52

         13        we believe is illegal, and the Bank of                11:01:58

         14        America/Nations Bank merger, and opposition to State  11:02:00

         15        Farm becoming a thrift institution.                   11:02:06

         16             Historically Greenlining is also opposed to      11:02:06

         17        many Wells Fargo mergers, including one as early as   11:02:10

         18        1971, before there was a CRA, and we were             11:02:14

         19        successful, and we opposed a Wells Fargo merger in    11:02:16

         20        1989 as well.                                         11:02:22

         21             I'd like to offer five preliminary observations  11:02:24

         22        that will put our remarks in context.  First, we      11:02:26

         23        strongly support hearings by the Federal Reserve.     11:02:32

         24        We believe, however, there should be many more        11:02:34

         25        hearings, and we believe that the Federal Reserve     11:02:38



          1        should change its policy and permit community groups  11:02:40

          2        to cross examine banks when there are mergers, and    11:02:44

          3        to secure information in advance.  This will help     11:02:46

          4        your task as well.                                    11:02:52

          5             Secondly, this merger that's before you          11:02:52

          6        probably would not have occurred were it not for      11:02:56

          7        Federal Reserve policies that we consider quite       11:02:58

          8        reckless; that is, the green light to the City        11:03:02

          9        Corp/Travelers merger and the B of A/Nations Bank     11:03:06

         10        merger.  You have forced other banks into an unfair   11:03:10

         11        competitive position into which they, too, must       11:03:14

         12        merge.                                                11:03:18

         13             Third, we oppose the trend of high risk          11:03:20

         14        investments in foreign nations at the cost of         11:03:24

         15        investing in the inner city.  Our motto is invest in  11:03:26

         16        Minnesota, not Moscow, invest in Los Angeles, not     11:03:30

         17        Leningrad.  And we're pleased to observe that         11:03:34

         18        neither Wells Fargo nor Norwest has invested in       11:03:38

         19        Russia, unlike some of their competitors such as      11:03:40

         20        City Corp, Chase Manhattan, and Bank of America.      11:03:44

         21             Fourth, we believe when you have a mega-merger,  11:03:48

         22        there have to be unique circumstances to permit the   11:03:54

         23        merger.  There must be a very strong CRA commitment,  11:03:56

         24        as we believe you have here with Wells Fargo.  This   11:04:00

         25        is especially important because the Federal Reserve   11:04:04



          1        and the office of the controller of the currency      11:04:08

          2        have engaged in an epidemic of great inflation where  11:04:10

          3        every bank that's large gets an outstanding.  So      11:04:14

          4        when a bank is outstanding, such as Wells Fargo, it   11:04:18

          5        cannot be distinguished from any of its competitors   11:04:20

          6        that are not outstanding but receive the same grade.  11:04:26

          7             The last preliminary point, Wells has made       11:04:28

          8        pledges in '90, '93 and '95 to the community.  In     11:04:32

          9        each case it has met its pledge, in each case it has  11:04:36

         10        exceeded its pledge, and it has exceeded it in less   11:04:40

         11        than half the time in many cases.                     11:04:44

         12             These are the brief facts I want to wish -- I    11:04:46

         13        wish to provide to you.  They are provided in our     11:04:48

         14        August 27th letter to Chairman Greenspan, and we      11:04:52

         15        have provided you with a copy.  I make these eight    11:04:56

         16        points to contrast this merger from our point of      11:05:00

         17        view from some of the other mergers that you have     11:05:04

         18        routinely approved, such as the Nations Bank/B of A   11:05:06

         19        one.                                                  11:05:10

         20             One, unlike Nations Bank's hollow pledge, this   11:05:10

         21        is an enforceable pledge by Wells Fargo.  The key     11:05:16

         22        community groups involved in developing the pledge    11:05:18

         23        will meet with the CEO on a semi-annual basis and     11:05:20

         24        will be given all necessary data in advance, as we    11:05:24

         25        have been for many years.                             11:05:26



          1             Two, unlike Nations Bank, this pledge is         11:05:28

          2        geographically specific to California.  We know       11:05:34

          3        exactly what it is.                                   11:05:36

          4             Third, unlike Nations Bank, this pledge had      11:05:38

          5        very substantial and widespread community input       11:05:40

          6        before being finalized.  240 groups were represented  11:05:46

          7        in developing the pledge.                             11:05:50

          8             Four, unlike Nations Bank, this pledge is        11:05:50

          9        specific as to assisting the most underserved; for    11:05:56

         10        example, specific minority and low income goals for   11:05:58

         11        business and home lending.  You will learn more       11:06:02

         12        about it from other panelists.                        11:06:04

         13             Five, unlike Nations Bank, the philanthropic     11:06:06

         14        investment commitments of Wells Fargo are toward the  11:06:10

         15        underserved and represent a substantial percent of    11:06:14

         16        pre-tax income.  Wells' motto is to the barrio, not   11:06:18

         17        the ballet, and we hope that will be the standard     11:06:22

         18        for all banks.                                        11:06:26

         19             Unlike Nations Banks, CRA-related commitments    11:06:30

         20        have been made for women and minority contracts for   11:06:34

         21        small inner city businesses.  And unlike Nations      11:06:38

         22        Bank, Wells Fargo has committed itself to an          11:06:42

         23        important principle Chairman Greenspan has spoken so  11:06:46

         24        eloquently on in his Wall Street address in January   11:06:50

         25        of '98.  It is committed to diversity, and            11:06:54



          1        specifically so.                                      11:06:58

          2             Unlike Nations Bank, Wells has had a policy of   11:07:00

          3        not investing abroad, instead investing in the inner  11:07:04

          4        city, contrast that with B of A's 600 million at      11:07:08

          5        risk in Russia.                                       11:07:12

          6             And, lastly, unlike Nations Bank, Wells has had  11:07:14

          7        a long history of securing community input and        11:07:18

          8        meeting long-term CRA commitments.                    11:07:20

          9             There's one other point that is not so tangible  11:07:24

         10        but is perhaps more important, and that's the         11:07:30

         11        leadership.  We in California have been able to       11:07:32

         12        count on Paul Hazen, Karen Wegman, and Wells Fargo    11:07:34

         13        to be a leader.  The Hmong community's going to tell  11:07:38

         14        you about one of the greatest experiments in moving   11:07:42

         15        70,000 people from welfare to work, something the     11:07:46

         16        United States government has been under -- to do.     11:07:48

         17        Wells took the leadership and in effect convinced     11:07:52

         18        nine other major institutions to join it.             11:07:56

         19             And lastly, Wells is a founder of an exciting    11:07:58

         20        new partnership that I believe Chairman Greenspan     11:08:02

         21        will be very excited about; we hope to have him       11:08:06

         22        address.  Twelve major corporations will be joining   11:08:10

         23        community groups in developing a diversity business   11:08:14

         24        partnership to discuss how investing in the merging   11:08:18

         25        markets at home can be highly profitable and produce  11:08:24



          1        safety and soundness everywhere.                      11:08:26

          2             I thank you very much.  We do hope you will      11:08:28

          3        closely question us when we are all finished.  Thank  11:08:32

          4        you.                                                  11:08:36


          6                  CHAIRPERSON SMITH:  Thank you.  Mr. Dean.   11:08:38


          8                  MR. DEAN:  Thank you very much, Governor    11:08:40

          9        Smith and the rest of the members of the panel.       11:08:44

         10        Good morning.  My name is George Dean, and for the    11:08:44

         11        past six years I have been president and CEO of the   11:08:46

         12        greater Phoenix, Arizona Urban League, a leading      11:08:50

         13        provider of human services in the valley of the sun.  11:08:54

         14        Prior to relocating to Arizona, for 13 years I was    11:08:56

         15        president and CEO of the Sacramento, California       11:08:58

         16        Urban League, and president of the California         11:09:02

         17        Council of Urban Leagues, which include Urban League  11:09:06

         18        affiliates in Los Angeles, San Diego, Riverside, San  11:09:10

         19        Francisco, Oakland, and, of course, Sacramento.       11:09:12

         20             Our mission in the Urban League is to assist     11:09:16

         21        African-Americans, other minorities and the           11:09:18

         22        disadvantaged in achieving economic and social        11:09:20

         23        equality.  While serving as president of the Urban    11:09:24

         24        League, I have also been a founding member and        11:09:26

         25        co-chair of the Greenlining Institute.                11:09:30



          1             Let me begin by saying that the Urban League,    11:09:32

          2        as well as the Greenlining Institute, has been        11:09:36

          3        generally opposed to mega-mergers, as we believe it   11:09:40

          4        decreases the number of institutions that can         11:09:44

          5        provide substantial commitments through CRA to our    11:09:46

          6        communities.  I hasten to add that we have been       11:09:50

          7        active in CRA protests for a number of years,         11:09:52

          8        including the Wells Fargo and First Interstate Bank   11:09:56

          9        merger, as well as Bank One and another bank, and     11:10:00

         10        others, as well as the Norwest acquisition of both    11:10:04

         11        Citibank and Caliber Bank in Arizona.                 11:10:08

         12             I am pleased to state that Norwest Bank-Arizona  11:10:10

         13        has been an excellent corporate citizen and has       11:10:12

         14        performed well in its CRA commitments.  Wells         11:10:16

         15        Fargo's primary entree into the Arizona market came   11:10:20

         16        about with its acquisition of First Interstate, and   11:10:24

         17        I am pleased to say that the Wells Fargo people hit   11:10:26

         18        the ground running and has been second to none in     11:10:30

         19        fulfilling the CRA commitments they made at the time  11:10:34

         20        of the acquisition.                                   11:10:36

         21             Wells' position on affirmative action awarded    11:10:38

         22        to vendor contracts to minority and females           11:10:42

         23        businesses, lending goals, both generally and         11:10:44

         24        specifically for minorities and women, and its        11:10:48

         25        commitment to focus the majority of their charitable  11:10:50



          1        contributions to underserved communities are all      11:10:54

          2        reasons why they are held in such high esteem and     11:10:56

          3        why we don't see this particular merger as being a    11:11:00

          4        hindrance or a detriment to the progress being made   11:11:04

          5        in our communities.                                   11:11:04

          6             In the case of Norwest-Arizona, much of the      11:11:06

          7        same can be said.  In 1994, shortly after they        11:11:10

          8        became the fourth largest bank in Arizona, they       11:11:14

          9        established a five-year, $50 million community        11:11:18

         10        lending initiative for a community home buyers        11:11:20

         11        program.  This program was designed specifically to   11:11:24

         12        help increase home ownership opportunities for        11:11:26

         13        creditworthy families earning 80 percent or less of   11:11:30

         14        the areas's median family income, and who did not     11:11:34

         15        typically qualify for mortgages under the             11:11:38

         16        conventional financing terms, with lower down         11:11:40

         17        payment requirements, higher loan-to-value ratio,     11:11:44

         18        higher debt-to-income ratios, and a requirement for   11:11:46

         19        prepurchase housing counseling.                       11:11:50

         20             This program has, through July of this year,     11:11:52

         21        reached 90 percent of its five-year goals, and of     11:11:54

         22        those -- and 70 percent of those loans have been      11:12:00

         23        made to people of color.                              11:12:02

         24             It has been especially meaningful to have        11:12:04

         25        direct access to similar management with both banks.  11:12:06



          1        Karen Wegman, the executive vice president with       11:12:10

          2        Wells Fargo, and John Campbell, the president and     11:12:14

          3        CEO of Norwest-Arizona, can both be accessed          11:12:16

          4        directly.  And, in addition, there has been           11:12:20

          5        semi-annual meetings with Paul Hazen, the chairman    11:12:22

          6        and CEO of Wells, since the First Interstate          11:12:26

          7        acquisition.                                          11:12:28

          8             Based on the follow-through of the CRA           11:12:30

          9        commitments of the two merging institutions in        11:12:32

         10        California and Arizona, and the commitments of the    11:12:34

         11        new institution once the merger is complete, it is    11:12:38

         12        without hesitation that I support the merger of       11:12:40

         13        Norwest-Wells Fargo.  I am pleased that the proposed  11:12:44

         14        new bank has made many commitments to California's    11:12:48

         15        low income communities and communities of color, and  11:12:50

         16        I look forward to working with the new bank to have   11:12:54

         17        similar type commitments in Arizona.  Thank you.      11:12:56


         19                  CHAIRPERSON SMITH:  Thank you.  We'll go    11:13:00

         20        to Mr. Correlejo.                                     11:13:02


         22                  MR. CORRELEJO:  Hello.  My name is Jorge    11:13:04

         23        Correlejo.  I'm the owner of Mecunda Leasing          11:13:06

         24        Company, and for 15 years I'm on the board of         11:13:08

         25        directors, with the Latin Business Association for    11:13:12



          1        14 years, and I've been a strong advocate on behalf   11:13:14

          2        of business advocacy with all of the financial        11:13:20

          3        institutions over the last several years.  I've had   11:13:24

          4        the responsibility, along with the individuals up     11:13:26

          5        here, of monitoring Wells Fargo and the agreements    11:13:28

          6        that they have made, and I do want to state that I'm  11:13:32

          7        very proud of the fact that they have committed and   11:13:36

          8        kept to their commitments far and above what any      11:13:40

          9        other financial institution has achieved to date.     11:13:42

         10             What has been their experience in the Latino     11:13:44

         11        community?  Well, they have recently opened a         11:13:48

         12        billion dollar Latino loan line, as they have done    11:13:54

         13        with other minority groups as well.  They have made   11:13:56

         14        commitments in terms of accessibility with the        11:14:02

         15        members of the Latino community.  I can tell you      11:14:04

         16        this: we've met with several institutions about the   11:14:08

         17        -- what does it take to make more members of our      11:14:10

         18        community bankable?  And they seem to be -- have      11:14:14

         19        been to date the only ones that have listened.        11:14:18

         20             We've spoken about the need for some technical   11:14:22

         21        assistance.  You can go with any group -- many years  11:14:26

         22        ago I used to provide business training technical     11:14:30

         23        assistance -- any group you're going to do all right  11:14:34

         24        by approaching them and get a -- small numbers that   11:14:36

         25        are eligible for loans that can be approved today.    11:14:38



          1             Most institutions aren't interested in any       11:14:42

          2        longer term commitments to business people to see     11:14:44

          3        about their longer term needs.  I think it's a great  11:14:48

          4        opportunity certainly, but this is something that     11:14:50

          5        we've discussed, and Wells Fargo has been the only    11:14:54

          6        one who's had an interest in funding an institute     11:14:56

          7        that would provide business training technical        11:15:00

          8        assistance to business owners that, one, either have  11:15:02

          9        no credit, or have blemishes on their credit, or      11:15:04

         10        some other problems that would not enable them to be  11:15:08

         11        eligible for a loan.  They have taken this step       11:15:10

         12        forward and made a long-term commitment to providing  11:15:14

         13        business training technical assistance to minority    11:15:18

         14        members and are seeing, I think, some good success.   11:15:20

         15             I think over the past six months that that       11:15:26

         16        program, in particular, has been able to fund to      11:15:30

         17        well over $2 million to Wells Fargo, but other banks  11:15:32

         18        as well, providing one-on-one technical assistance.   11:15:36

         19        I don't recall the exact numbers, but it's up and     11:15:40

         20        running since about the beginning of the year.  So    11:15:44

         21        this is the kind of initiative that Wells Fargo has   11:15:46

         22        certainly demonstrated to our community.  We're       11:15:50

         23        working very closely, they meet regularly with the    11:15:52

         24        leaders of the community, and it seems like they      11:15:56

         25        have a sincere commitment, and I'm here to offer my   11:15:58



          1        respects to their commitment to date and let you      11:16:02

          2        know that certainly in California, Wells Fargo has    11:16:04

          3        been achieving its goals.                             11:16:08


          5                  CHAIRPERSON SMITH:  Thank you very much.    11:16:12

          6        Ms. Borromeo.                                         11:16:12


          8                  MS. BORROMEO:  Good morning.  My name is    11:16:16

          9        Gelly Borromeo.  I'm the publisher of Asian           11:16:16

         10        Enterprise Magazine, the largest circulated Asian     11:16:18

         11        American business focus magazine in the United        11:16:22

         12        States.  Thank you for giving us the opportunity to   11:16:24

         13        testify.                                              11:16:26

         14             I'm here today because I am going to stress and  11:16:28

         15        underscore the fact that the specific goal for        11:16:32

         16        utilization of minority and women business            11:16:36

         17        enterprises by Wells Fargo, 40 percent, I think is    11:16:38

         18        very significant.  As we all know, small business     11:16:42

         19        enterprise is largely responsible for the economic    11:16:44

         20        renaissance of the United States, which we have been  11:16:48

         21        enjoying in the last five years.  A large percentage  11:16:50

         22        of small businesses consist of women and              11:16:52

         23        minority-owned businesses, yet industries across the  11:16:56

         24        United States -- across the United States still       11:16:58

         25        utilize and spend very marginally within the          11:17:02



          1        minority and women business enterprise sector.        11:17:04

          2             Of 21 banks surveyed nationwide, which was       11:17:08

          3        conducted in December of '97, the average percentage  11:17:12

          4        of minority business utilization was 2.9 percent and  11:17:16

          5        2.5 percent for women business enterprises, which is  11:17:20

          6        lower than the average of all industries across the   11:17:24

          7        nation.                                               11:17:26

          8             A total of 485 companies in a cross-industry     11:17:28

          9        comparison of standard benchmarks -- a copy of which  11:17:32

         10        I will be leaving for the record -- indicates that    11:17:34

         11        the average percentage of MBE utilization across the  11:17:38

         12        United States was only 3.4 percent for MBEs, and 2.8  11:17:42

         13        percent for WBEs.  Municipal government's rated       11:17:48

         14        highest at 8 percent average for MBEs and 6.3         11:17:52

         15        percent for WBEs.  So, again, I'd like to underscore  11:17:54

         16        the fact that the 40 percent minority and women       11:17:56

         17        business enterprise goals that Wells Fargo has        11:17:58

         18        committed to our community is very, very              11:18:02

         19        significant.                                          11:18:04

         20             Two years ago during the First Interstate Bank   11:18:06

         21        and Wells Fargo merger, the combined banks were       11:18:08

         22        under five percent of their MBE/WBE utilization;      11:18:12

         23        however, today, after two years, they're a little     11:18:16

         24        over or slightly over 15 percent.  I think that's a   11:18:18

         25        significant change, and I think this is really the    11:18:22



          1        spirit of the commitment that they have done.  Many   11:18:26

          2        would say it's far from the 40 percent, but you must  11:18:26

          3        remember the 40 percent was to be achieved over ten   11:18:30

          4        years.  If they go with the acceleration of what      11:18:32

          5        they've done with the utilization of minority and     11:18:34

          6        women business enterprises, I think they're going to  11:18:38

          7        achieve well beyond the 40 percent they have done.    11:18:40

          8             How have we accomplished this in California?     11:18:42

          9        Well, first of all, we have not only held them        11:18:44

         10        accountable by meeting and dialoguing with -- at      11:18:46

         11        least twice other year with Paul Hazen and all of     11:18:50

         12        the senior management of Wells Fargo, but I think it  11:18:54

         13        truly has to do with the personal engagement and      11:18:56

         14        commitment that Paul and Karen Wegman and their       11:18:58

         15        staff within Wells Fargo have.                        11:19:02

         16             We have a developed a personal relationship      11:19:04

         17        with them, and we have the personal access to them.   11:19:06

         18        As a matter of fact, I think what all of you should   11:19:10

         19        do here, trying to do today is talk to them after     11:19:12

         20        this or, you know, when you have a chance to, ask     11:19:14

         21        them for their telephone numbers, and I'm sure        11:19:16

         22        they're going to provide that for you so you can      11:19:20

         23        have the same access -- personal access that you      11:19:22

         24        have.  And I understand that Leslie would also do     11:19:24

         25        the same for all of us.  Thank you.                   11:19:26




          2                  CHAIRPERSON SMITH:  Mr. Bivins.             11:19:28


          4                  MR. BIVINS:  Yes, good morning.  I want to  11:19:30

          5        thank the Board of Governors for this opportunity     11:19:32

          6        that they have afforded with this public hearing.     11:19:34

          7        My name is George Bivins.  I'm the chairman of the    11:19:38

          8        Black Business Association in Los Angeles.  I'm also  11:19:40

          9        a businessman; I'm an insurance agent.  I've been in  11:19:44

         10        the business 25 years.  I advised the State of        11:19:46

         11        California on insurance when Juanita                  11:19:50

         12        Millener-McDonald was the chair of the state          11:19:56

         13        assembly.  I'm also a board member of the             11:19:58

         14        Greenlining Institute.                                11:20:00

         15             And basically I want to make just a couple       11:20:02

         16        observations about this proposed merger because my    11:20:04

         17        colleagues have made some finer points, but I'm       11:20:10

         18        going to give you some personal observations that I   11:20:14

         19        have with regards to Wells Fargo.                     11:20:16

         20             The Black Business Association supports the      11:20:20

         21        merger.  Wells has went out of their way to serve     11:20:22

         22        our community.  Wells has targeted the inner cities   11:20:28

         23        with a $2.5 billion mortgage commitment for low       11:20:32

         24        income and minority home buyer.  Wells-Norwest has    11:20:34

         25        committed $1 billion over 12 years specifically for   11:20:40



          1        African-American loan program.                        11:20:44

          2             Bank of America moved to North Carolina with no  11:20:48

          3        regard for California, the state that made it what    11:20:50

          4        it was.  And most of the base in that merger, most    11:20:54

          5        of the income, comes from California, yet still,      11:20:58

          6        they moved to North Carolina and they became          11:21:04

          7        absentee owners -- absentee landlords.  Bank of       11:21:06

          8        America has reluctantly announced, due to the global  11:21:14

          9        market conditions and the swings, their third         11:21:16

         10        quarter, which was just reported yesterday, they      11:21:22

         11        lost $33 million in red ink in their third quarter.   11:21:24

         12        If the red ink keeps coming each quarter, and it      11:21:30

         13        will, can you spell bailout?                          11:21:32

         14             Wells loans no monies outside of the borders of  11:21:36

         15        the United States.  $600 million at risk in Russia,   11:21:40

         16        $3.1 billion at risk in South Korea.                  11:21:42

         17             The BBA has had a long, positive relationship    11:21:48

         18        with Wells Fargo, and so have many of our members     11:21:52

         19        have their accounts at Wells Fargo.                   11:21:56

         20             The other point I want to make, because I am in  11:21:58

         21        the insurance business I do represent the National    11:22:00

         22        Equity Fund, which purchases tax credits in the       11:22:04

         23        State of California.  Wells Fargo is a customer or    11:22:06

         24        has relationships with many of these community        11:22:12

         25        development agencies, one of which is the Tenderloin  11:22:14



          1        neighborhood agency is one of my newest clients,      11:22:18

          2        spoke very highly of Wells Fargo two weeks ago when   11:22:22

          3        I was in San Francisco.  This is the type of          11:22:26

          4        outreach that this organization provides.             11:22:28

          5             They do have access -- you do have access to     11:22:30

          6        their management, but I would like to say there's     11:22:32

          7        been some gracious words.  Mr. Hazen is always        11:22:36

          8        available, so is Karen Wegman, but her staff under    11:22:40

          9        her, Brenda Ross-Dulin some of the staff, Gladys      11:22:42

         10        Ross in Los Angeles, is always available, so I urge   11:22:48

         11        you, no matter what you've heard, this organization   11:22:52

         12        is accessible, and I do recommend the merger.  Thank  11:22:56

         13        you very much.                                        11:23:00


         15                  CHAIRPERSON SMITH:  Mr. Lee.                11:23:02


         17                  MR. LEE:  Thank you for the Federal         11:23:06

         18        Reserve by allowing me to take this opportunity to    11:23:10

         19        speak.  My name is Pheng Lee.  I'm the Secretary of   11:23:12

         20        the Hmong American Political Organization.  I'm here  11:23:18

         21        to speak on behalf of our president, Mr. Toulu Thao,  11:23:20

         22        who has other prior commitment and cannot be here     11:23:22

         23        today.                                                11:23:26

         24             May I tell you a little bit of what Wells Fargo 

         25        has helped create, something that inspired many       11:23:30



          1        other leaders to follow, something that no one, no    11:23:32

          2        corporation, has done in American history, something  11:23:38

          3        that will make major economic impact on the life of   11:23:40

          4        many thousands of Hmong residents throughout the      11:23:46

          5        United States.                                        11:23:48

          6             In America, the Hmong, who have little or no     11:23:48

          7        marketable skill, receive no more than a minimum      11:23:52

          8        wage and cannot support a large family.               11:23:54

          9             While searching for opportunity, Hmong found     11:23:58

         10        Fresno one of the richest agricultural land in        11:24:04

         11        California, and began moving there since 1980.  For   11:24:04

         12        almost 20 years, Hmong in Fresno work very hard and   11:24:08

         13        farm almost every vacant lot or land they can find    11:24:12

         14        in and around the outskirt of Fresno.  Despite their  11:24:16

         15        great effort, Hmong have not been able to support     11:24:20

         16        themself.                                             11:24:22

         17             By recognizing Hmong's struggle, hardship and    11:24:24

         18        their strong desire to become economically            11:24:30

         19        independent, Wells Fargo, under the leadership of     11:24:32

         20        Karen Wegman, Executive Vice President, and Sharon    11:24:34

         21        Gerber, Vice President of Community Development,      11:24:42

         22        began looking for way to invest in the Hmong          11:24:44

         23        community and to help them become economically        11:24:48

         24        self-sufficient.  While Wells Fargo was doing that,   11:24:52

         25        many other corporate leaders view Hmong as risky      11:24:56



          1        investment and would have no consideration at all     11:25:00

          2        due to many reasons, such as the Hmong community is   11:25:02

          3        not well-known to average American and corporation,   11:25:06

          4        and we have no credit history, and many do not read   11:25:10

          5        and write and speak English, and also they do not     11:25:18

          6        have business plan, and a number of reasons.  But     11:25:22

          7        Karen Wegman, Sharon Gerber, and the leaders of       11:25:26

          8        Wells Fargo are not afraid to be involved with the    11:25:30

          9        Hmong.  They see something beyond ordinary leaders    11:25:34

         10        can see; that is, Hmong who once was very loyal to    11:25:38

         11        our ally U.S. will once again, when they are ready,   11:25:42

         12        be loyal customers.  Therefore, investing in the      11:25:46

         13        Hmong is not a one-way street, but rather, it will    11:25:52

         14        be a two-way street and a great opportunity that      11:25:54

         15        will mutually be beneficial. 

         16             In finding ways to help Hmong, Wells Fargo       11:25:58

         17        funded an in-depth study of Hmong community and paid 

         18        for an agribusiness expert design of the business     11:26:06

         19        plan with step-by-step layout to take the Hmong from  11:26:08

         20        poverty to economic self-sufficiency.                 11:26:14

         21             It takes a very special leadership; it takes a   11:26:16

         22        strong commitment; it takes a lot of caring; and it   11:26:20

         23        takes a lot of courage as a leader, as a corporation  11:26:22

         24        to do what Wells have done.                           11:26:26

         25             The leadership taken by Wells Fargo in the       11:26:30



          1        Hmong community inspired many other corporations.     11:26:32

          2        Soon after Wells Fargo made its first step, nine      11:26:36

          3        other corporations follow and give their support to   11:26:38

          4        the Hmong project.                                    11:26:42

          5             I proudly testify on behalf of Mr. Toulu Thao    11:26:42

          6        and the Hmong American community, who proudly show    11:26:48

          7        our full support to Wells Fargo.                      11:26:50

          8             Special thanks to Karen Wegman, Sharon Gerber,   11:26:52

          9        and the other leaders of Wells Fargo who have made    11:26:56

         10        this difference in our life.  I'd like to thank you.  11:26:58


         12                  CHAIRPERSON SMITH:  Thank you.  Mr. Thao.   11:27:04


         14                  MR. THAO:  Thank you.  My name is Cheng     11:27:06

         15        Thao.  I am a cooperative marketing assistant of      11:27:10

         16        Hmong American community of Fresno, California.  I    11:27:12

         17        am so happy to be here, part of Hmong farmer in       11:27:16

         18        Fresno. 

         19             I would like you to know that because of Wells   11:27:20

         20        Fargo, we were able to start a Hmong Farmers          11:27:26

         21        Cooperative.  Wells Fargo helped us plant the seeds   11:27:28

         22        to help hundred of Hmong farmer and their family      11:27:32

         23        achieve their dream as Americans.  Because of Wells   11:27:38

         24        Fargo, we will be able to some day buy our own cold   11:27:40

         25        storage/packing house to help Hmong farmers in the    11:27:44



          1        Central Valley.  Wells Fargo has made a tremendous    11:27:48

          2        impact on the life of the Hmong, and they help give   11:27:50

          3        back to the communities and invest in not only money  11:27:56

          4        but care and love to the Hmong people of Fresno.      11:28:00

          5             As a Hmong farmer, I know how much of a          11:28:02

          6        difference Wells Fargo has make in my life and their  11:28:06

          7        life.  I visit every day.  They thank me for helping  11:28:10

          8        them, but I want you to know that Wells Fargo         11:28:18

          9        helping and supporting Hmong farmer.                  11:28:22

         10             I am very proud to say that Hmong farmer and     11:28:26

         11        their family, Hmong American Community, Inc., and     11:28:28

         12        Toulu Thao are very proud of Wells Fargo to help us   11:28:34

         13        understand what it means to be an American.           11:28:38

         14             We are honored to come today to support Wells    11:28:40

         15        Fargo.  Thank you.                                    11:28:44


         17                  CHAIRPERSON SMITH:  Thank you very much.    11:28:48

         18        Any questions from the panel?  We thank you for       11:28:48

         19        coming.  You came a long way and we appreciate your   11:28:54

         20        being here to present your testimony.                 11:28:58

         21             With that, we'll go on to the next panel, Panel  11:29:02

         22        5.  We'll start with Ms. Kalant.                      11:30:30


         24                  MS. KALANT:  My name is Amelia Kalant, and  11:30:40

         25        I'm a member of the New Mexico Community              11:30:42



          1        Reinvestment and Development Task Force or Credit.    11:30:44

          2        Credit is a coalition of nonprofit housing and        11:30:48

          3        community development organizations.                  11:30:50

          4             Today I want to briefly address two issues.      11:30:52

          5        The first is a recently announced community lending   11:30:56

          6        initiative by Norwest and Wells Fargo Banks, and the  11:31:00

          7        second is an increasingly serious failure in the      11:31:02

          8        CRA.                                                  11:31:08

          9             First, Credit is pleased that Wells Fargo and    11:31:10

         10        Norwest have just made a $1.3 billion community       11:31:12

         11        lending commitment in New Mexico.  This resulted      11:31:18

         12        from a series of meetings between our organizations   11:31:22

         13        and the following bank officers: Norwest-New          11:31:24

         14        Mexico's president, Larry Willard, and CRA officer    11:31:28

         15        Patricia Nye, Karen Wegman, and Sharon Gerber of      11:31:32

         16        Wells Fargo, and Karen Olnus of Norwest Corporation,  11:31:36

         17        as well as several others.                            11:31:40

         18             The $1.3 billion commitment includes             11:31:42

         19        $90 million for mortgage lending for low or moderate  11:31:44

         20        income or minority borrowers, and $850 million for    11:31:50

         21        loans to small businesses and small farms.  In        11:31:54

         22        addition, the banks made other specific commitments.  11:31:58

         23        They will make a $10 million investment in a special  11:32:02

         24        mortgage program designed to meet the needs of low    11:32:04

         25        and moderate income first-time home buyers.           11:32:08



          1             The bank's foundations will continue their       11:32:12

          2        commitments to funding home buyer training and        11:32:14

          3        counseling programs sponsored by not-for-profit       11:32:18

          4        community development organizations.  And, they       11:32:20

          5        promise that there will be no changes in the bank's   11:32:24

          6        New Mexico branch network as a result of the merger,  11:32:28

          7        except in the City of Santa Fe.                       11:32:32

          8             President Willard of Norwest-New Mexico          11:32:34

          9        affirmed the bank's continued commitment to serving   11:32:38

         10        rural communities and to relationship banking.        11:32:40

         11        These are extremely important to New Mexico, which    11:32:44

         12        is largely rural and majority minority population.    11:32:46

         13        Credit looks forward to working out with the banks a  11:32:52

         14        detailed plan for accomplishing the CRA objectives    11:32:58

         15        and to helping the banks improve their capacity to    11:33:00

         16        meet the needs of Native Americans in Native          11:33:04

         17        American communities.                                 11:33:06

         18             Credit specifically commends the work of Larry   11:33:10

         19        Willard and Patricia Nye.  Both from New Mexico,      11:33:14

         20        they have shown sensitivity to and awareness of the   11:33:16

         21        unique needs of the New Mexico communities, and have  11:33:20

         22        demonstrated respect for community leaders.           11:33:22

         23             We urge the banks to continue to entrust         11:33:26

         24        decision-making to local officials who are best       11:33:30

         25        suited to identify and respond to local needs.        11:33:32



          1        Credit also very strongly urges the banks to make     11:33:36

          2        similar specific appropriate CRA commitments in all   11:33:40

          3        other states where the banks do business.             11:33:44

          4             Now a word about the CRA.  With the increasing   11:33:48

          5        number of bank mergers, nationwide banking has        11:33:52

          6        become the norm.  The policy of assigning to each     11:33:56

          7        bank a single CRA rating when the bank's CRA          11:33:58

          8        performance can vary widely from state to state is    11:34:02

          9        thoroughly untenable.  It renders the rating          11:34:06

         10        meaningless.  In cases where a bank receives a high   11:34:08

         11        rating in California, for example, but a low rating   11:34:12

         12        in New Mexico, it is awarded an overall high rating.  11:34:16

         13        For New Mexico and other rural, less populated        11:34:20

         14        states, this is unacceptable.                         11:34:24

         15             In conclusion, we thank the Federal Reserve for  11:34:26

         16        holding these hearings, but feel that the federal     11:34:28

         17        banking regulators must address this serious flaw in  11:34:30

         18        the CRA.  And to reiterate, we urge the banks to      11:34:34

         19        negotiate appropriate community lending initiatives   11:34:36

         20        in every state where they do business.  Thank you.    11:34:40


         22                  CHAIRPERSON SMITH:  Thank you.  Mr. Kamp.   11:34:44


         24                  MR. KAMP:  My name is Marv Kamp.  On        11:34:46

         25        behalf of the Wisconsin Rural Development Center,     11:34:48



          1        the following comments are submitted in opposition    11:34:50

          2        to the application of Norwest Bank to acquire Wells   11:34:54

          3        Fargo Bank.                                           11:34:58

          4             On August 3, 1998, our organization submitted    11:35:00

          5        comments on this proposed application.  Specific      11:35:02

          6        concerns cited in those comments included Norwest's   11:35:08

          7        low level of originations to low to moderate income   11:35:10

          8        conventional home buyers, its lack of participation   11:35:14

          9        in state and federal guarantee programs designed to   11:35:18

         10        assist LMI first-time home buyers, small businesses   11:35:20

         11        and small farms, and its inadequate reinvestment of   11:35:26

         12        deposit dollars back into low income communities in   11:35:30

         13        underserved rural areas.                              11:35:32

         14             Based on asset share, Norwest is the fifth       11:35:34

         15        largest commercial institution in Wisconsin with      11:35:40

         16        over two billion in assets.  Clearly, how it          11:35:42

         17        conducts business and meets its reinvestment          11:35:46

         18        obligations has a substantial impact on our state's   11:35:48

         19        economy and, in particular, the communities it        11:35:52

         20        serves.  Changes in lending policies and practices    11:35:54

         21        can often have devastating consequences, especially   11:35:58

         22        for our state's poor.                                 11:36:02

         23             In our initial comments we raised concerns       11:36:04

         24        about Norwest's low level of reinvestment dollars     11:36:08

         25        back into the community, not only in Wisconsin but    11:36:10



          1        nationally.  Norwest has -- currently has a 56.6      11:36:12

          2        percent loan to deposit ratio in Wisconsin, the       11:36:18

          3        lowest loan to deposit ratio of any of the largest    11:36:22

          4        financial institutions serving the state, or any      11:36:24

          5        state bank, for that matter.  The average loan to     11:36:28

          6        deposit ratio of similar institutions of similar      11:36:30

          7        size and resources is over 97 percent in Wisconsin.   11:36:34

          8             In 22 of the 28 markets served by Norwest        11:36:40

          9        nationally, the bank is below average in their        11:36:44

         10        reinvestment of deposit dollars back into these       11:36:46

         11        markets, let's face it, when a number of our state's  11:36:48

         12        community credit needs are going unmet and over 40    11:36:52

         13        percent investments and securities is clearly         11:36:54

         14        unacceptable.  These are dollars which are            11:36:58

         15        desperately needed to revitalize low income inner     11:37:02

         16        city neighborhoods and rural communities.             11:37:04

         17             Also in our comments we attempted to raise       11:37:08

         18        concerns about Norwest's lack of participation in     11:37:10

         19        state and federal credit enhancement programs which   11:37:12

         20        are designed to meet the needs of low to moderate     11:37:16

         21        income borrowers.  We find their participation in     11:37:18

         22        these programs substantially lacking.  Of the 236     11:37:20

         23        million in conventional home mortgages originated by  11:37:24

         24        Norwest in 1996, less than one percent were under     11:37:28

         25        Wisconsin Housing Economic Development Home           11:37:32



          1        Guarantee, a highly successful state program which    11:37:34

          2        is designed to assist first-time LMI conventional     11:37:38

          3        home buyers.                                          11:37:44

          4             This morning Mr. Hazen talked about Wells        11:37:44

          5        Fargo' commitment to rural lending.  However, we      11:37:50

          6        find Norwest investment in rural areas of our state   11:37:52

          7        abysmal.  Despite the fact that rural branch          11:37:56

          8        deposits represent over ten percent of the system's   11:38:00

          9        total deposit base, few loans are being originated    11:38:02

         10        to LMI borrowers.                                     11:38:06

         11             In rural Wisconsin, the percentage of low        11:38:08

         12        income families often exceeds rates found in central  11:38:10

         13        cities.  The bank's lack of participation in          11:38:16

         14        programs which serve this population excludes large   11:38:18

         15        numbers of LMI and limited resource borrowers.        11:38:20

         16             Regarding rural credit enhancement programs,     11:38:24

         17        Norwest originated no farm service agency guarantees  11:38:28

         18        in 1995, 1996 or 1997.  Also, for the Credit Relief   11:38:32

         19        Outreach Program, which is a highly successful state  11:38:40

         20        program for farm production loans, they originated    11:38:44

         21        no loans in 1995, 1996 or 1997.  No S.B.A. loans      11:38:48

         22        were originated in 1996 or 1997.                      11:38:56

         23             This morning Mr. Biller talked about Norwest     11:39:00

         24        development programs in the Navajo nation.  In        11:39:02

         25        Wisconsin, Norwest has drawn a big red line around    11:39:06



          1        the Ojibwe tribal lands of Menomonie County.          11:39:08

          2             Given both banks' market presence in rural       11:39:14

          3        areas, the merger will make Norwest the nation's      11:39:18

          4        number one agricultural lender.  The lack of any      11:39:20

          5        specific mention by the bank relating to              11:39:24

          6        reinvestment plans for rural areas is especially      11:39:28

          7        troubling.  To date no disclosure of CRA or           11:39:30

          8        community development plans has been made.  The only  11:39:34

          9        commitment we are currently aware of is the           11:39:36

         10        mega-pledge for mostly urban areas of California.     11:39:38

         11        Although we have met several times with Norwest in    11:39:40

         12        Wisconsin to discuss reinvestment plans, there has    11:39:44

         13        been no specific disclosure of how this merger will   11:39:46

         14        affect our state or a willingness to pledge any       11:39:50

         15        similar commitments to Wisconsin.                     11:39:54

         16             We believe that the lack of any CRA community    11:39:56

         17        development plans, any application, is not only a     11:40:00

         18        violation of the Federal Reserve rules and grounds    11:40:02

         19        for denial of the application by itself, but an       11:40:06

         20        insult to the citizens of Wisconsin and our nation.   11:40:08

         21        Thank you.                                            11:40:12


         23                  CHAIRPERSON SMITH:  Thank you.  Ms.         11:40:14

         24        LaBlanc will be wearing two hats today.  She's        11:40:16

         25        speaking on her own behalf, and then will be          11:40:18



          1        speaking on behalf of the Washington Reinvestment     11:40:20

          2        Alliance.


          4                  MS. LA BLANC:  Right.  Iowa Citizens for    11:40:24

          5        Community Improvement is a state-wide grassroots      11:40:26

          6        community organization, including both rural and      11:40:30

          7        urban chapters, that has been working on lending      11:40:32

          8        since 1977 and on rural lending since 1981 during     11:40:34

          9        the farm crisis.  These efforts have focused on the   11:40:38

         10        policies and practices of the Farmers Home            11:40:42

         11        Administration, Farm Credit Services, commercial      11:40:46

         12        banks, and bank regulatory agencies.                  11:40:46

         13             We got our first family farm lending program     11:40:48

         14        with Norwest in January 1989.  By 1991, we had        11:40:50

         15        agreements with Firstar and Brenton Banks.            11:40:56

         16             Currently our three farm loan programs cover 27  11:40:58

         17        banks in 26 communities across Iowa, and we estimate  11:41:04

         18        that these programs have helped over 12 hundred       11:41:06

         19        small and mid-sized farmers obtain nearly $27         11:41:08

         20        million in credit for annual operating and crop       11:41:12

         21        input expenses, machinery, and real estate            11:41:14

         22        purchases, and other agricultural needs.              11:41:18

         23             We have also used the CRA to help farmers set    11:41:20

         24        up debt restructuring agreements which -- and during  11:41:24

         25        the farm crisis kept a lot of farmers on the farm     11:41:26



          1        and kept them from losing everything they had.        11:41:30

          2             Our concerns about this merger include customer  11:41:32

          3        service, commitment to communities, and rural         11:41:36

          4        service.  On customer service.  Wells Fargo has a     11:41:38

          5        poor customer service reputation.  A web site was     11:41:42

          6        set up by and for unhappy customers that has been so  11:41:46

          7        well visited that several magazine articles have      11:41:52

          8        been written about it.                                11:41:54

          9             According to a study done by United              11:41:56

         10        Steelworkers of America, between June 1996 and March  11:41:58

         11        1998, there was a disproportionate decline in the     11:42:02

         12        relative share of branches in nonmetropolitan areas.  11:42:02

         13        For example, in Nevada, Wells Fargo increased its     11:42:06

         14        metropolitan branches by 29 percent while its         11:42:08

         15        nonmetropolitan branches declined by five percent.    11:42:12

         16        And in California, the decline was 34 percent in      11:42:16

         17        nonmetropolitan areas and only nine percent in        11:42:18

         18        metropolitan areas.                                   11:42:22

         19             On rural service.  In response to Question 4 of  11:42:22

         20        the Federal Reserve Board's August 21st letter,       11:42:26

         21        Wells Fargo's rural programs and initiative were all  11:42:30

         22        contributions in investments in other people's        11:42:34

         23        programs.  Wells Fargo showed no initiative on their  11:42:38

         24        own.  While the states that they are in include       11:42:40

         25        rural areas, they could show nothing that they were   11:42:42



          1        doing to serve the needs in those areas except        11:42:44

          2        giving money to other people to do something for      11:42:48

          3        them.  Rural people should be able to expect to use   11:42:50

          4        banks like everyone else, not nonprofits and special  11:42:54

          5        programs.  Remember, CRA is about lending and doing   11:42:58

          6        business with people.  It's not about charity and     11:43:00

          7        philanthropy. 

          8             We're also concerned about a statement made by   11:43:04

          9        Tom Unger in a newspaper report announcing Wells      11:43:06

         10        Fargo's closure of 14 branches in Washington, 26 in   11:43:10

         11        Oregon, 10 in Idaho, and 12 in other western rural    11:43:12

         12        areas that "urban areas provide better growth         11:43:16

         13        prospects.  We want to offer a complete network of    11:43:20

         14        services in our locations, but that was not possible  11:43:24

         15        in rural communities where there is simply not        11:43:26

         16        enough people."  We have no reason to believe that    11:43:30

         17        this philosophy will not carry over into the new      11:43:32

         18        company.                                              11:43:36

         19             On mortgage lending.  In our urban chapters      11:43:36

         20        mortgage lending has been a key issue, and Wells      11:43:40

         21        Fargo has not been doing mortgage lending.  In the    11:43:42

         22        documents sent by Norwest and Wells Fargo in          11:43:44

         23        response to Question 2 in the August 21st letter      11:43:46

         24        from the Board of Governors, Norwest and Wells Fargo  11:43:50

         25        did not adequately explain their plans for mortgage   11:43:52



          1        lending products post-merger.  Mortgage lending is    11:43:56

          2        the backbone of CRA.  It was the driving force        11:43:58

          3        behind the CRA legislation and is vital to community  11:44:02

          4        development.  Wells Fargo's lack of mortgage lending  11:44:04

          5        in low-mod income areas, originating only 253 loans   11:44:10

          6        in low-mod income census tracts in 1997 nationwide,   11:44:16

          7        is a clear violation of CRA.                          11:44:20

          8             In contrast, Norwest Bank made 85 loans in       11:44:20

          9        low-mod income census tracts in Des Moines alone in   11:44:24

         10        1997.  That's 34 percent of Wells Fargo's nationwide  11:44:28

         11        total.  That's the Iowa CCI testimony.                11:44:32

         12             I know nothing about this, but I'm reading it    11:44:38

         13        for Washington Reinvestment Alliance.                 11:44:42

         14             Honorable Governors of the Federal Reserve:      11:44:46

         15        The Washington Reinvestment Alliance (WRA) offers     11:44:48

         16        testimony regarding the merger of Wells Fargo and     11:44:50

         17        Norwest Mortgage.  The WRA is concerned that          11:44:52

         18        Norwest's poor record of mortgage lending to low-     11:44:56

         19        and mod income communities within Washington State    11:44:58

         20        will result in this merger's negative effect on       11:45:00

         21        these communities.                                    11:45:04

         22             Wells Fargo's presence in Washington has been    11:45:04

         23        marked by honest efforts to expand services to        11:45:08

         24        low-mod income communities.  When the bank acquired   11:45:10

         25        First Interstate in 1996, Wells made contact with     11:45:14



          1        the WRA to discuss the merger's impact.  In addition  11:45:20

          2        Wells has made investments and contributions that     11:45:22

          3        First Interstate had previously avoided,              11:45:24

          4        concentrating on corporate giving and investments     11:45:26

          5        for community economic development.                   11:45:30

          6             Norwest's mortgages performance has not been so  11:45:32

          7        praiseworthy.  This subsidiary of Norwest Bank makes  11:45:34

          8        only nominal corporate contributions within the       11:45:38

          9        state.  Unlike its mortgage branches in states with   11:45:42

         10        Norwest Bank branches, Norwest Mortgage does not      11:45:44

         11        widely offer mortgage products to Washington          11:45:48

         12        borrowers that help the bank earn credit under the    11:45:52

         13        CRA.  In 1997, the company made 50 percent more down  11:45:54

         14        payment assistance programs in loans in South         11:45:58

         15        Dakota -- where it originated at least six times      11:46:00

         16        fewer loans to low and moderate income borrowers --   11:46:04

         17        than in Washington.                                   11:46:08

         18             Analysis conducted by the Freemont Public        11:46:08

         19        Association, a HUD-certified agency that provides     11:46:10

         20        mortgage default counseling to at risk borrowers in   11:46:14

         21        the Seattle area, shows that Norwest's default rate   11:46:18

         22        is much higher than area lenders in proportion with   11:46:22

         23        its market share.  The FPA concludes that Norwest     11:46:26

         24        borrowers are much more likely to lose their homes    11:46:28

         25        than customers of nearly any other mortgage company.  11:46:30



          1        Norwest's unsatisfactory record is replicated on a    11:46:32

          2        state-wide level.  Norwest originated 2,223           11:46:36

          3        FHA-insured mortgage loans in the Spokane             11:46:42

          4        jurisdiction in the year 1997, ranking second in the  11:46:46

          5        number of FHA loans made; yet, Norwest's default      11:46:48

          6        rate on these loans was higher than 12 of the 24      11:46:52

          7        lenders surveyed.  In Seattle the record is worse.    11:46:56

          8        Norwest Mortgage ranked 34th out of 43 lenders in     11:46:58

          9        loss mitigation performance in 1997.                  11:47:02

         10             Based on these facts, the WRA can only conclude  11:47:04

         11        that Norwest is using its giant market share and its  11:47:06

         12        plentiful supply of HUD-insured mortgages to          11:47:12

         13        originate loans without supporting its low and        11:47:14

         14        moderate income borrowers.                            11:47:16

         15             To ensure that mortgage lending becomes more     11:47:18

         16        supportive of the community in the wake of the        11:47:22

         17        merger, the WRA recommends the following measures be  11:47:22

         18        taken by the combined company.                        11:47:26

         19             One, lending officers and loan servicing agents  11:47:28

         20        employed by Norwest Mortgage-Washington State         11:47:32

         21        branches receive training to provide more customer    11:47:36

         22        centered servicing of their loans, including          11:47:38

         23        specific instruction in preparing loss mitigation     11:47:42

         24        plans in cooperation with borrowers at risk in        11:47:44

         25        mortgage default.                                     11:47:48



          1             Two, the combined company make a significant     11:47:48

          2        new lending target on single-family home loans to     11:47:52

          3        low and mod income individuals and census tracts and  11:47:56

          4        minority home buyers.  The commitment should          11:47:58

          5        anticipate Norwest's expanded market share due to     11:48:00

          6        customers that currently shop for home loans through  11:48:04

          7        Wells Fargo.                                          11:48:08

          8             Three, the combined company contribute $1.25     11:48:08

          9        million to home pre-purchase and mortgage default     11:48:12

         10        counseling agencies over the next five years.  Thank  11:48:16

         11        you for your consideration.                           11:48:18


         13                  CHAIRPERSON SMITH:  Thank you.  We'll go    11:48:20

         14        to Ms. Wegner.


         16                  MS. WEGNER:  Good morning.  My name is      11:48:24

         17        Ferol Wegner.  I'm a board member of the Citizens     11:48:26

         18        for Community Improvement of Des Moines, Iowa.        11:48:30

         19        Citizens for Community Improvement of Des Moines has  11:48:32

         20        been working on the CRA in Des Moines' neighborhoods  11:48:36

         21        since 1977.  Our work has resulted in over $50        11:48:38

         22        million in loans and grant money being brought into   11:48:42

         23        our low and moderate income neighborhoods.            11:48:44

         24             Citizens for Community Improvement of Des        11:48:46

         25        Moines has three main concerns with the merger of     11:48:50



          1        Wells Fargo and Norwest Bank.  These concerns are     11:48:52

          2        customer service, mortgage lending, and commitment    11:48:54

          3        to communities.                                       11:48:58

          4             There's a real concern that services will be     11:49:00

          5        drastically reduced in low to moderate income         11:49:02

          6        neighborhoods as well as in smaller urban and rural   11:49:06

          7        communities.  Norwest stresses people are their       11:49:08

          8        greatest asset for growth, while Wells Fargo closed   11:49:10

          9        hundreds of branches, eliminated 7,000 jobs in the    11:49:14

         10        hostile takeover of First Interstate Bank, slashing   11:49:18

         11        a total of 12,600 jobs to date.  This can and         11:49:20

         12        probably will occur again with this proposed merger.  11:49:24

         13             Wells Fargo uses ATM machines and other          11:49:26

         14        technology where there are fewer flesh and blood      11:49:28

         15        bankers.  People like to see and talk to a friendly   11:49:32

         16        face, someone they can trust and feel comfortable     11:49:34

         17        with, knowing their concerns can be addressed by the  11:49:36

         18        bank's president or CEO.  They still want             11:49:38

         19        old-fashioned customer service with ATMs and          11:49:42

         20        Internet banking services as an extra amenity.        11:49:44

         21             We all know that technology plays a major role   11:49:48

         22        in our daily lives today.  What's wrong with          11:49:50

         23        traditional banking made better?  It appears to me    11:49:54

         24        that it all boils down to the bottom line: profits    11:49:56

         25        versus the human factor.  Where does that leave the   11:49:58



          1        other part of the equation, the human factor, and     11:50:02

          2        when does the steamroller stop?                       11:50:04

          3             In the documents sent by Norwest and Wells       11:50:08

          4        Fargo in response to Question 2 in the August 21st    11:50:10

          5        letter from the Board of Governors, Norwest and       11:50:12

          6        Wells Fargo did not explain their plans for mortgage  11:50:16

          7        lending products post-merger.  Mortgage lending is    11:50:18

          8        the backbone of CRA.  It was the driving force        11:50:22

          9        behind the CRA legislation, and is vital to           11:50:26

         10        community development.  Wells Fargo's lack of         11:50:28

         11        mortgage lending in low to mod income areas,          11:50:32

         12        originating only the 253 loans in low to moderate     11:50:36

         13        income census tracts in 1997, is a clear violation    11:50:40

         14        of the CRA.                                           11:50:44

         15             CCI is very concerned and uncomfortable in       11:50:50

         16        regard to the response from -- in from Norwest and    11:50:54

         17        Wells Fargo.  We are not satisfied that they          11:50:58

         18        neglected to explain their plans for mortgage         11:51:04

         19        lending products after the proposed merger.  We and   11:51:06

         20        other groups across the nation have worked and        11:51:08

         21        fought too long and hard to abandon our CRA efforts   11:51:10

         22        and the impact that CRA has done in our               11:51:14

         23        neighborhoods.  None of us want to return to the      11:51:16

         24        days of red lining.  Our low and moderate income      11:51:20

         25        areas in our communities will suffer, and our         11:51:22



          1        struggling inner cities will surely die.              11:51:24

          2             This issue is a serious one and it must be       11:51:28

          3        addressed in this merger and subsequent proposed      11:51:30

          4        mergers.  Citizens of Community Improvement Des       11:51:32

          5        Moines has been working with lenders on reinvestment  11:51:36

          6        since 1977.  We have lending agreements with several  11:51:38

          7        local lenders.  While we have worked with Norwest     11:51:42

          8        since 1992, when we asked for a meeting and written   11:51:44

          9        commitment with Norwest that would include national   11:51:48

         10        decision-makers, we were offered a meeting with       11:51:52

         11        local people only during the day when many of our     11:51:54

         12        task force members are at work.  We were also told    11:51:58

         13        that there was no need for a written, signed          11:52:02

         14        agreement.  There is no reason not to sign a          11:52:04

         15        commitment unless you have no intention of honoring   11:52:06

         16        it.                                                   11:52:10

         17             Our task force must ensure that the positive     11:52:10

         18        things that have happened in our communities          11:52:14

         19        continue to happen.  And with banks merging and       11:52:16

         20        decisions made farther and farther away, we need      11:52:18

         21        written commitments from lenders more than ever so    11:52:22

         22        we can be sure that our communities continue to       11:52:24

         23        grow.                                                 11:52:28

         24             Local banking institutions should be able to     11:52:30

         25        make their own decisions locally, not by those        11:52:32



          1        decision-makers in another state halfway across the   11:52:36

          2        country.  The financial needs in Iowa, which is an    11:52:38

          3        agricultural state, is much more different than in    11:52:40

          4        North Carolina or California.  We have been           11:52:44

          5        monitoring our local lenders and note that as         11:52:46

          6        mergers continue, it has become increasingly          11:52:48

          7        difficult to obtain written agreements with them;     11:52:52

          8        however, our local banks have no qualms about this.   11:52:56

          9        They want to do this.  This indicates to us that as   11:53:00

         10        banks merge, becoming larger and not locally owned,   11:53:02

         11        written agreements are crucial for our continued      11:53:06

         12        community growth in cities such as Des Moines, Iowa.  11:53:10

         13        Thank you very much for your time.                    11:53:14


         15                  CHAIRPERSON SMITH:  Thank you.  If there    11:53:16

         16        are no questions, then we thank you again for being   11:53:16

         17        here this morning, and we'll move on to the next      11:53:20

         18        panel, which is Panel 6.  We'll start with            11:53:22

         19        Mr. Brantley.                                         11:54:02


         21                  MR. BRANTLEY:  Thank you, Madame Chair.     11:54:06

         22        I'd like to take this opportunity to express my       11:54:10

         23        appreciation on behalf of the metropolitan Denver     11:54:12

         24        community to testify before the Federal Reserve in    11:54:16

         25        regards to the merger between Norwest and Wells       11:54:18



          1        Fargo.                                                11:54:22

          2             I'd like to start off by saying not only do I    11:54:24

          3        express my appreciation to the Federal Reserve        11:54:26

          4        panel, but I'd like to express my appreciation to     11:54:30

          5        those individuals who have testified as well.  And I  11:54:32

          6        have to share with you that based upon that           11:54:34

          7        testimony, my testimony has changed somewhat.  And I  11:54:36

          8        think that certainly what I'll be taking back to my   11:54:40

          9        community will reflect some of those changes.  I      11:54:44

         10        really do feel that individuals who come and          11:54:48

         11        participate in testimony such as this should not      11:54:52

         12        only testify but should listen very carefully to the  11:54:56

         13        individuals who are bringing information to share     11:54:58

         14        with them.  I have heard some outstanding,            11:55:00

         15        outstanding comments that I think will benefit my     11:55:04

         16        community and certainly plan to take it back to the   11:55:08

         17        metropolitan Denver community for hopefully sharing,  11:55:10

         18        and even more so, implementation.  But I've also      11:55:14

         19        heard some concerns, some concerns that I hadn't      11:55:18

         20        heard before, and I need to share with you that       11:55:22

         21        basically I will also be addressing those concerns    11:55:24

         22        as I go back to my community.                         11:55:28

         23             First of all, let me share with you, though,     11:55:30

         24        some of the very basic things that I had prior to     11:55:32

         25        hearing some of the comments today.  I really do      11:55:34



          1        feel that one of the primary factors of business      11:55:36

          2        mergers and concepts related to concepts of business  11:55:40

          3        within our community relate to the quality of life.   11:55:44

          4        I have to share with you that in the Denver           11:55:46

          5        metropolitan community, I feel that we have an        11:55:48

          6        outstanding quality of life.  The individuals that    11:55:52

          7        will also be sharing some of our comments related to  11:55:54

          8        our community, I think, are enviable throughout the   11:55:58

          9        rest of the country.  The quality of life is          11:56:02

         10        extremely important to me and, I'm sure, to you.  As  11:56:04

         11        we move throughout this community, as we take jobs    11:56:08

         12        and as we raise families, one of the primary things   11:56:10

         13        that we're looking for is an increase in the quality  11:56:12

         14        of life for our children and for our families.        11:56:14

         15             In relationship to quality of life, quality of   11:56:18

         16        life relates to the participation of individuals,     11:56:20

         17        those individuals who are in the three sectors of     11:56:24

         18        our economy.  We have the private sector, we have     11:56:28

         19        the governmental sector, and we have the nonprofit    11:56:30

         20        sector. 

         21             I represent the nonprofit sector.  I'm           11:56:34

         22        executive director of a private, nonprofit            11:56:36

         23        organization serving children within the              11:56:40

         24        metropolitan Denver area.  We have been very          11:56:42

         25        fortunate over the past several years to have the     11:56:44



          1        involvement of Norwest Bank within the development    11:56:48

          2        of our programs in early childhood education.  We     11:56:50

          3        have started some new programs within our             11:56:54

          4        metropolitan area.  One of them which our agency has  11:56:56

          5        initiated has been one which seeks out gifted         11:57:00

          6        children within the inner city.                       11:57:02

          7             I have to share with you a very small, almost    11:57:04

          8        joke, but it's not a joke.  When we first started     11:57:08

          9        looking for supporters of this program and shared     11:57:10

         10        with a couple of potential funders that we were       11:57:14

         11        looking for support for children -- for our program   11:57:16

         12        for gifted children within the inner city, one of     11:57:20

         13        our potential funders said, where do you expect to    11:57:22

         14        find them?  I asked the gentleman to leave my office  11:57:24

         15        because our discussion was over at that time.         11:57:28

         16             I think that -- that certainly, you know, the    11:57:30

         17        attitude that came forth from our Norwest Bank        11:57:34

         18        community was much, much different, and certainly     11:57:36

         19        exemplifies the concept of support that we have       11:57:40

         20        received for new projects and programs like our       11:57:44

         21        program for inner city gifted children.               11:57:46

         22             Once we heard the concept about the              11:57:50

         23        presentation to be shared with you today, we began    11:57:54

         24        to look at what CRA was specifically looking for.     11:57:56

         25        We heard the concepts of lending, we heard the        11:57:58



          1        concepts of investment, and we heard the concepts of  11:58:02

          2        service.                                              11:58:04

          3             One of the things that has changed today that I  11:58:06

          4        will certainly be going back to my community will be  11:58:08

          5        looking at the concept of lending.  I have heard      11:58:10

          6        some very, very disturbing concepts in regards to     11:58:14

          7        lending, and I think that basically there is a        11:58:16

          8        concept of CRA that not only relates to the business  11:58:18

          9        community, there's a concept of CRA that relates      11:58:22

         10        back to individuals, and that is community            11:58:24

         11        responsibility activities.  And that will be the CRA  11:58:28

         12        that I'll be taking back to our community because I   11:58:32

         13        think that if indeed there are responsibilities and   11:58:34

         14        concerns related to lending, then I feel that we      11:58:38

         15        have a responsible role to play in that.              11:58:40

         16             The second is investment.  You've heard and      11:58:44

         17        reviewed some outstanding statistical numbers         11:58:48

         18        related to investment.  And to be very frank with     11:58:52

         19        you, that's what I was going to share with you        11:58:54

         20        today, too, statistical numbers, but they were        11:58:56

         21        certainly outclassed by the individuals that are      11:58:58

         22        represented to you today in the formal documentation  11:59:02

         23        that you've received from both major CEOs of these    11:59:04

         24        corporations.  But, indeed, within our community I    11:59:08

         25        think that investment with the community has not      11:59:10



          1        only meant dollar and cent investment; it has meant   11:59:12

          2        the investment of the time and effort of the          11:59:16

          3        individuals within our community.                     11:59:18

          4             Our organization is a very small organization    11:59:22

          5        in comparison to many of the others in our            11:59:24

          6        community, and I think that was one of the reasons    11:59:26

          7        that I was asked to come and present to you today.    11:59:28

          8        But in the relationship to it being a small           11:59:32

          9        organization, I can list for you outstanding members  11:59:34

         10        of our community, such as John Nelson, David Bailey,  11:59:38

         11        David Jones, Chuck Henderson, Patricia Cortez, who    11:59:42

         12        have been outstanding members of our community and    11:59:46

         13        have served our community and the community has       11:59:48

         14        benefited from it, thus improving our quality of      11:59:52

         15        life.  And it is with those concepts in mind that I   11:59:54

         16        support the merger between the Norwest Bank and       11:59:58

         17        Wells Fargo.  Thank you very much.                    12:00:00


         19                  CHAIRPERSON SMITH:  Thank you.              12:00:02

         20        Mr. Garcia.                                           12:00:02


         22                  MR. GARCIA:  My name is Pete Garcia.  I'm   12:00:04

         23        the president of Chicanos Por la Causa in Phoenix.    12:00:06

         24        We're a state-wide community development corporation  12:00:08

         25        having 46 offices in 22 cities, and we see over       12:00:12



          1        66,000 people annually.  There are over one million   12:00:16

          2        Hispanics in Arizona that we consider ourselves to    12:00:20

          3        be a niche market that both of these institutions     12:00:24

          4        are interested in and have been interested.           12:00:26

          5             Our organization has had an extensive            12:00:28

          6        partnership with Wells Fargo Bank and Norwest Bank.   12:00:32

          7        As a personal member of the Norwest Bank Minority     12:00:36

          8        Advisory Council, we have provided input and set      12:00:42

          9        goals with the other John Campbell from Arizona, and  12:00:44

         10        top management on a number of key issues and factors  12:00:48

         11        that affect our communities in Arizona.  These        12:00:50

         12        include mortgages, affordable housing, small          12:00:54

         13        business lending, minority contracting, and           12:00:56

         14        contracting with vendors.                             12:01:00

         15             Our small business and S.B.A. micro-loan         12:01:02

         16        program have received loan loss reserve funds from    12:01:06

         17        Norwest Bank and Wells Fargo Bank, which has helped   12:01:12

         18        us lend over $2 million to over 225 companies, small  12:01:14

         19        businesses, in Arizona in the last three years.       12:01:18

         20        Norwest's deposit and Wells Fargo's $100,000 deposit  12:01:22

         21        in our federal credit union has enabled us to lend    12:01:28

         22        over $1.7 million to 16 hundred members of our        12:01:34

         23        credit union.  This is a real interesting concept     12:01:36

         24        here of a bank lending to a credit union.             12:01:40

         25             Most of these borrowers are first-time           12:01:44



          1        borrowers and bilingual Spanish speaking.  Norwest    12:01:46

          2        and Wells Fargo's investment of CPLC small business   12:01:50

          3        incubator has started the opportunity for small       12:01:56

          4        businesses in south central Phoenix to access         12:01:58

          5        affordable work space.  A second business incubator   12:02:02

          6        in Phoenix is currently under construction, and a     12:02:04

          7        rural, small business incubator will go to            12:02:06

          8        construction in Nogales, Arizona, along the           12:02:10

          9        Arizona/Mexican border in early 1999.                 12:02:10

         10             Other investments and grants that we have        12:02:14

         11        worked with with both institutions have targeted our  12:02:14

         12        special events and organizational capacity building   12:02:18

         13        in Phoenix and Tucson and other rural communities     12:02:22

         14        that we serve.  Our affordable housing programs in    12:02:24

         15        Somerton, Nogales, Tucson, South Tucson, Guadalupe, 

         16        and Phoenix have also benefited.  We have mortgages,  12:02:30

         17        mortgage write-downs for closing costs, funds to      12:02:34

         18        make housing affordable, investments of Norwest       12:02:36

         19        staff.  As board member of the Latino community for   12:02:40

         20        Norwest, our organization and our subsidiary, boards  12:02:44

         21        also contribute to the sound managements of our       12:02:48

         22        organization. 

         23             Our expanding partnership with Karen Wegman,     12:02:54

         24        Alonzo Morale, Edmundo Givalgo, with Wells Fargo      12:02:58

         25        Bank has also been rewarding, in many instances very  12:03:00



          1        creative and challenging, in that they have come to   12:03:02

          2        us and asked us what kind of mortgage products do     12:03:04

          3        our communities need, what kind of business           12:03:08

          4        investments do we need to make our communities work?  12:03:10

          5             Our purchase of a Wells Fargo Bank -- yes, we    12:03:14

          6        purchased one of your banks in south central Phoenix  12:03:18

          7        -- has enabled us to double the space of the Federal  12:03:22

          8        Credit Union.  We also maintain Wells Fargo as a      12:03:24

          9        presence in this particular facility in the Grant     12:03:28

         10        Park neighborhood, and it also provides incubator     12:03:30

         11        space for small businesses and minority               12:03:34

         12        entrepreneurs. 

         13             Wells Fargo's bank investment of $1,250,000 at   12:03:40

         14        zero percent interest for five years with an          12:03:44

         15        additional two percent over the next ten years, is    12:03:46

         16        way beyond the cutting edge.  These are the kind of   12:03:50

         17        partnerships that we're interested in developing      12:03:54

         18        with both institutions and continuing.  This          12:03:56

         19        investment expands our ability to lend to             12:03:58

         20        micro-borrowers, create a venture capital pool, a     12:04:00

         21        revolving line for new construction in Tucson for     12:04:06

         22        our for-profit construction company, and it enables   12:04:10

         23        us to leverage $600,000 to build a new office         12:04:14

         24        building in Tucson and pay off an office complex      12:04:18

         25        mortgage in a small rural town in southwestern        12:04:22



          1        Arizona that leases office space from the state of    12:04:24

          2        Arizona.                                              12:04:28

          3             Funding of special projects, community           12:04:28

          4        celebrations has made Wells Fargo a new power in the  12:04:32

          5        Arizona bank market.  Grants to organizations has     12:04:34

          6        involved small business lending, social work, arts,   12:04:38

          7        that round out a true concept of partnering in our    12:04:40

          8        community: not just taking our deposits but actually  12:04:44

          9        putting something back.                               12:04:48

         10             We would point to the exemplary record of staff  12:04:48

         11        involvement and outreach in how community             12:04:52

         12        reinvestment is truly done in America.  Management    12:04:54

         13        of both institutions still needs to work on board     12:04:56

         14        membership.  Upper level executives are still         12:05:00

         15        lacking, but through our ongoing efforts, these are   12:05:04

         16        problems we can solve together.  Branching            12:05:08

         17        duplication can be solved through partnership with    12:05:10

         18        nonprofits that benefits the total community as well  12:05:12

         19        as my first example of the Wells Fargo branch in      12:05:14

         20        south central Phoenix.                                12:05:16

         21             Our community meetings with citizens and         12:05:18

         22        organizations, community leaders in the upcoming      12:05:20

         23        follow-up meeting state-wide leaves us with a strong  12:05:24

         24        indication that more progress will occur with the     12:05:26

         25        merged institution, and we encourage your positive    12:05:28



          1        confirmation of this merger and invite you to visit   12:05:32

          2        and seek community reinvestment at work in Arizona.   12:05:34

          3        Thank you.                                            12:05:36


          5                  CHAIRPERSON SMITH:  Ms. Gold.


          7                  MS. GOLD:  My name is Autumn Gold, and I'm  12:05:42

          8        from Denver, Colorado.  I work for Atlantis 

          9        Community.  I'd just like to thank you for giving me  12:05:48

         10        this opportunity to speak today.  Atlantis            12:05:50

         11        Community, Incorporated is a 23-year old Colorado     12:05:52

         12        not-for-profit corporation providing services to      12:05:56

         13        people with disabilities in metro Denver, and, when   12:05:58

         14        necessary, throughout Colorado.  Atlantis services    12:06:04

         15        include home health, housing benefits advocacy,       12:06:06

         16        independent living skills training, basic education   12:06:10

         17        and home ownership counseling and education.          12:06:16

         18        Atlantis is recognized nationally for its work in     12:06:16

         19        disability rights and for creating new and            12:06:20

         20        innovative programs.                                  12:06:22

         21             In 1992, Atlantis Community, Incorporated        12:06:22

         22        brought to Norwest Bank a unique concept that became  12:06:26

         23        the first home ownership mortgage program for people  12:06:28

         24        with disabilities in America.  In conjunction with    12:06:32

         25        Atlantis, Norwest created the Disability Community    12:06:34



          1        Home Mortgage Program, known as DCHOP.  The DCHOP     12:06:38

          2        home mortgage program for people with disabilities    12:06:44

          3        was the first to offer an opportunity to participate  12:06:46

          4        in the American dream of home ownership.              12:06:48

          5             Norwest, at Atlantis's direction, developed a    12:06:50

          6        program that accepts alternative income such as       12:06:54

          7        social security, food stamps, tax credits, and much   12:06:56

          8        more.  High debt to income ratios play a large part   12:07:00

          9        in success of the program as well as reduced closing  12:07:04

         10        costs and only a two percent down payment.            12:07:08

         11             The American dream of owning your own home was   12:07:10

         12        just that, a dream for people with disabilities,      12:07:12

         13        until Norwest introduced the DCHOP program in 1993.   12:07:14

         14        Prior to the DCHOP program, people with disabilities  12:07:18

         15        and their families' only choice was to rent an        12:07:20

         16        apartment or someone else's home.  That apartment or  12:07:24

         17        home was most likely not accessible, either.  With a  12:07:26

         18        population that is 80 percent unemployed and living   12:07:30

         19        on a fixed income from social security of $700 a      12:07:34

         20        month or less, they had little chance to even dream   12:07:36

         21        of home ownership.  The DCHOP program offers more     12:07:40

         22        than just a dream.  It offers but does not guarantee  12:07:46

         23        the reality of home ownership.  People with           12:07:50

         24        disabilities still must qualify for a home loan just  12:07:52

         25        as everybody else.  Norwest simply leveled the        12:07:54



          1        playing field.                                        12:07:58

          2             Norwest was bold to move to create the           12:07:58

          3        Disability Home Ownership Program when no other       12:08:04

          4        lending institution had the courage to take the       12:08:06

          5        first step.  They must be applauded.  Had not         12:08:10

          6        Norwest taken that step, people with disabilities     12:08:14

          7        still today would be excluded from the American       12:08:16

          8        dream.  Those first steps designed a program that     12:08:18

          9        has proved that people with disabilities could be     12:08:22

         10        homeowners without high foreclosure rates and         12:08:24

         11        without high delinquency rates.  The DCHOP program    12:08:28

         12        encouraged US Banks to create their Disability        12:08:32

         13        Advantage Program because another lending             12:08:36

         14        institution, Norwest, had taken the initial risk.     12:08:38

         15             Norwest's success with the DCHOP program         12:08:42

         16        brought Fannie Mae to Denver to learn about and to    12:08:46

         17        study its workings.  From that visit came Fannie      12:08:48

         18        Mae's home choice program: 16 states, $50 million     12:08:52

         19        pilot project modeled after the DCHOP program.        12:08:58

         20        Fannie Mae's pilot project and US Bank's Disability   12:09:00

         21        Home Advantage Program validates Norwest's wisdom in  12:09:06

         22        1992.                                                 12:09:06

         23              After five years of providing home ownership    12:09:08

         24        counseling, there is no doubt that these potential    12:09:12

         25        home buyers have the ability and the desire to own    12:09:14



          1        homes.  Atlantis's home ownership program aspires to  12:09:16

          2        increase awareness and availability of home           12:09:22

          3        ownership opportunities for people with               12:09:26

          4        disabilities.  Atlantis's commitment is to assist     12:09:28

          5        potential buyers in understanding the complex         12:09:32

          6        process by providing them with the information that   12:09:34

          7        along with their own determination will prepare them  12:09:38

          8        to become homeowners and improve their quality of     12:09:42

          9        life, like you said.                                  12:09:44

         10             My goal is to see people feel confident about    12:09:46

         11        the home buying process and comfortable with home     12:09:48

         12        ownership, comfortable as homeowners armed with the   12:09:52

         13        knowledge and empowered to make the important         12:09:54

         14        decisions to undertake their responsibility of home   12:09:56

         15        ownership.  I personally and strongly believe in      12:10:00

         16        home ownership counseling and education.  And         12:10:02

         17        partnered with the DCHOP program, Atlantis and        12:10:04

         18        Norwest have pioneered home ownership for             12:10:08

         19        individuals with disabilities.                        12:10:12

         20             It is Atlantis's hope that with the merger of    12:10:12

         21        Norwest and Wells Fargo that the commitment to the    12:10:16

         22        DCHOP not only continue but the size of the program   12:10:20

         23        increase to reflect the size of the merger.  To date  12:10:22

         24        Norwest has provided 955 mortgages to people with     12:10:24

         25        disabilities and families in Colorado, valued in      12:10:30



          1        excess of $64 million.  Norwest has made it possible  12:10:34

          2        for people with disabilities to dream the impossible  12:10:38

          3        dream of home ownership.  Thank you.                  12:10:40


          5                  CHAIRPERSON SMITH:  Thank you.              12:10:42

          6        Mr. Jimenez.                                          12:10:42


          8                  MR. JIMENEZ:  Thank you, Governor Smith,    12:10:46

          9        Board of Governors, and Federal Reserve staff.  My    12:10:50

         10        name is Pierre Jimenez.  I'm the director of Denver   12:10:52

         11        Community Television, but that's not why I'm here     12:10:54

         12        today.  I was originally solicited to become a        12:10:56

         13        member of the Norwest community forum because of my   12:11:00

         14        community activism.  And when we were coming up in    12:11:02

         15        the shuttle today, I felt a sense of ambivalence      12:11:08

         16        seeing the demonstrators sitting on the side of the   12:11:10

         17        sidewalk, because I think after hearing a lot of the  12:11:14

         18        testimony today, you have to give validity to many    12:11:16

         19        of the comments that were made, and so I would ask    12:11:18

         20        the executives of Norwest and Wells Fargo to please   12:11:22

         21        keep in mind what these people are saying because     12:11:24

         22        much of this testimony comes from the heart.  It's    12:11:28

         23        what they believe to be true.  Now we can quarrel     12:11:30

         24        about the degree and the magnitude, but we can't      12:11:32

         25        quarrel about the fact that it exists.  Because, for  12:11:36



          1        example, I can recall back in 1950, my father         12:11:40

          2        returned from World War II and decided to become      12:11:44

          3        part of the American dream as a Mexican American in   12:11:46

          4        Denver, Colorado, first by becoming a licensed        12:11:50

          5        electrician, the second one in the state, but more    12:11:54

          6        importantly, trying to borrow $10,000 from a bank to  12:11:58

          7        build a house, to begin building the foundation of    12:12:00

          8        becoming part of the stakeholders in America.  He     12:12:04

          9        was denied that opportunity.  Fortunately for him,    12:12:08

         10        he had the opportunity to borrow from friends, and    12:12:10

         11        they built this house.                                12:12:14

         12             In the same spirit that my father built that     12:12:16

         13        house back 1950, 48 years ago, we are here today      12:12:20

         14        discussing what CRA means to the American public.     12:12:24

         15        And at the heart of that is loans to people to        12:12:28

         16        become stakeholders in the American dream.            12:12:30

         17             Now, it's been my experience with Norwest Banks  12:12:34

         18        for the past several years that I've been on the      12:12:36

         19        community forum that they have listened, often times  12:12:40

         20        not very well, but they have changed their behavior,  12:12:42

         21        sometimes reluctantly.  And as one of them said,      12:12:46

         22        well, if you drag us kicking and screaming into the   12:12:50

         23        21st century, maybe it will do some good, and it      12:12:52

         24        has, because what it's done, it's created an          12:12:56

         25        opportunity for, one, more loans to low to moderate   12:13:00



          1        income families seeking loans for mortgages since     12:13:04

          2        I've been on the forum.                               12:13:06

          3             Secondly, what it's done is gone into other      12:13:08

          4        areas where traditional banks have refused to go.     12:13:12

          5        Several years ago we talked about a concept of urban  12:13:14

          6        banking, which was creating branches, either loan     12:13:18

          7        offices or full service branches, in inner city       12:13:22

          8        neighborhoods.  Some in the banking community said    12:13:28

          9        it won't work.  Poor people don't take advantage of   12:13:30

         10        banking services or products.  Well, today the        12:13:34

         11        bottom line is -- and that's why we're here -- the    12:13:36

         12        bottom line is banks are in the business to make      12:13:40

         13        money.  We know that, we're not going to argue that   12:13:42

         14        point, but the fact of the matter is in Denver,       12:13:46

         15        Colorado, they are making money in the inner city,    12:13:50

         16        and they're meeting their bottom line.  And when you  12:13:52

         17        meet your bottom line that means then you can move    12:13:54

         18        on to other areas.  So they've expanded loans to      12:13:56

         19        small businesses, and I speak specifically about      12:14:00

         20        people of color.                                      12:14:02

         21             Beyond that, they're taking a look now about     12:14:04

         22        micro loans, smaller amounts to people who really     12:14:06

         23        have an idea.  The concept of entrepreneurship,       12:14:10

         24        especially in the Latino community, is huge.  What    12:14:16

         25        they need is the opportunity to find a way to make    12:14:20



          1        it happen.  Norwest Banks in Denver is making that    12:14:22

          2        happen.                                               12:14:26

          3             Now you had an earlier speaker that talked       12:14:26

          4        about how wonderful Wells Fargo was, and they may     12:14:28

          5        be.  You know, the agreements to provide billions of  12:14:34

          6        dollars of loans to people of color I think is        12:14:34

          7        important.  At the same time, let's not forget that   12:14:38

          8        banking is more about personal relationships than     12:14:40

          9        products or services.  It's about the one-to-one      12:14:44

         10        personal contact.  I really don't care if the bank    12:14:50

         11        president comes down to greet me in the lobby.        12:14:52

         12        However, I do care if somebody treats me with         12:14:54

         13        dignity and respect as an individual, and I think     12:14:58

         14        the people that I represent or that I consider to be  12:15:02

         15        constituents are those type of individuals.           12:15:06

         16        Otherwise, one fourth of the American public would    12:15:08

         17        be taking advantage of banking services.              12:15:12

         18             So I would say to you at the point in this       12:15:14

         19        discussion that we asked about this merger, I would   12:15:16

         20        have us keep in mind if we're providing a service to  12:15:20

         21        the American public that will make us a stronger      12:15:24

         22        country and still meet the bottom line, then let's    12:15:26

         23        add that final bid of compassion that people talked   12:15:30

         24        about earlier and will talk about this afternoon so   12:15:34

         25        that we can become the country that we have always    12:15:38



          1        been and can become even greater than we know.        12:15:40

          2        Thank you.                                            12:15:44


          4                  CHAIRPERSON SMITH:  Thank you.  We'll go    12:15:46

          5        to Ms. Tingerthal.                                    12:15:46


          7                  MS. TINGERTHAL:  That's correct.  Thank     12:15:50

          8        you.                                                  12:15:50

          9             Good afternoon.  My name is Mary Tingerthal,     12:15:50

         10        and I'm the president and chief executive officer of  12:15:52

         11        the National Equity Fund, commonly referred to as     12:15:56

         12        NEF.  I'm also here speaking on behalf of National    12:16:00

         13        Equity Fund's parent organization, the Local          12:16:02

         14        Initiatives Support Corporation, commonly referred    12:16:06

         15        to as LISC.                                           12:16:08

         16             To understand our long-term relationship with    12:16:10

         17        Wells Fargo and Norwest, let me first explain who     12:16:14

         18        LISC and NEF are.  LISC is the nation's largest       12:16:18

         19        community development intermediary and is a           12:16:22

         20        certified community development financial             12:16:24

         21        institution.  In that role LISC often serves as an    12:16:26

         22        intermediary for banks like Norwest and Wells Fargo   12:16:30

         23        to invest in low income communities.                  12:16:32

         24             Since its founding 19 years ago, LISC has        12:16:36

         25        helped nearly 18 hundred community development        12:16:38



          1        corporations, like many of those that you've heard    12:16:42

          2        from today, in more than a hundred cities and rural   12:16:44

          3        areas across 39 states and Puerto Rico.  In this      12:16:48

          4        work, LISC has attracted the support of almost 2,000  12:16:50

          5        donors and investors, including Norwest and Wells     12:16:56

          6        Fargo.                                                12:17:00

          7             Through that support, LISC has raised $3.1       12:17:00

          8        billion in grants, loans, and equity investments,     12:17:06

          9        and an additional $3.5 billion of public and private  12:17:08

         10        support has been leveraged by those dollars.  That's  12:17:12

         11        meant 80,000 affordable homes and over 12 million     12:17:14

         12        square feet of community facilities, commercial and   12:17:18

         13        industrial space.                                     12:17:22

         14             Both Norwest and Wells Fargo have been           12:17:24

         15        instrumental in their support of LISC in bringing     12:17:26

         16        about revitalized neighborhoods in the cities where   12:17:28

         17        they operate by working with LISC and NEF.  NEF is    12:17:32

         18        the largest nonprofit syndicator of the federal       12:17:38

         19        government's low income housing tax credits.          12:17:40

         20             For 11 years now we've used that program to      12:17:44

         21        stimulate investment in affordable housing built and  12:17:46

         22        operated exclusively by nonprofit organizations that  12:17:50

         23        work exclusively within their communities.            12:17:54

         24             To date, we've raised nearly $2 1/2 billion      12:17:56

         25        from 140 investors, which has resulted in over        12:18:00



          1        44,000 rental homes targeted to low income families.  12:18:04

          2             LISC and NEF are national organizations, but we  12:18:10

          3        operate very much on a local level, and we rely on    12:18:14

          4        local decision-making and local leadership such as    12:18:18

          5        that that's been provided by numerous individuals in  12:18:22

          6        our local programs by executives from Wells Fargo     12:18:26

          7        and Norwest.                                          12:18:30

          8             I can point to Norwest and Wells Fargo being     12:18:32

          9        instrumental in community development because of      12:18:34

         10        their historical core contributions to LISC and       12:18:36

         11        their continuing investments in NEF, as well as       12:18:40

         12        their long-term active involvement in the local       12:18:44

         13        communities on a first-hand basis.                    12:18:48

         14             From 1989 through today, Norwest has invested    12:18:52

         15        almost $14 1/2 million in LISC and NEF, with $14      12:18:56

         16        million of that being NEF investments since 1990,     12:19:00

         17        and about 350,000 in grants to LISC since 1989,       12:19:04

         18        which supports six of our local programs, in          12:19:10

         19        Minneapolis, Duluth, Las Vegas, Milwaukee, Phoenix    12:19:14

         20        and St. Paul.                                         12:19:18

         21             From 1983 through today, Wells Fargo Bank has    12:19:20

         22        invested over $120 million with LISC and NEF.  This   12:19:24

         23        total includes approximately $117 million in equity   12:19:30

         24        investments in our national fund and our California   12:19:34

         25        fund, with Wells Fargo serving as one of our very     12:19:38



          1        first investors when the low income housing tax       12:19:42

          2        credit was created.  It also includes almost $3       12:19:46

          3        million in grants to LISC since 1983, which supports  12:19:48

          4        seven local programs, which include the San           12:19:54

          5        Francisco bay area, Houston, Las Vegas, Los Angeles,  12:19:56

          6        again Phoenix, San Diego, and Puget Sound, as well    12:20:00

          7        as LISC's national rural program.                     12:20:06

          8             The financial support from Norwest and Wells     12:20:10

          9        Fargo over the years has been matched in many places  12:20:14

         10        by the people leadership as bank executives serve on  12:20:16

         11        our advisory committees in eight of our local         12:20:20

         12        programs and also with our rural LISC program.        12:20:24

         13             I heard a comment earlier today from someone     12:20:28

         14        indicating that they were disappointed at the use of  12:20:30

         15        intermediaries by these banks in providing services,  12:20:34

         16        particularly in rural areas.  I can understand that   12:20:36

         17        there's some disappointment at the loss of banking    12:20:40

         18        presence, but I do applaud these organizations for    12:20:44

         19        reaching out in ways that may be unconventional to    12:20:46

         20        continue to serve these important organizations.      12:20:50

         21             We do urge that as the bank executives approach  12:20:54

         22        the merger that they consider not stepping away from  12:20:58

         23        the level of investment that they've shown to LISC    12:21:02

         24        and NEF in the past, but to continue those levels     12:21:04

         25        and to continue their support of community            12:21:08



          1        development.  Thank you.                              12:21:10


          3                  CHAIRPERSON SMITH:  Thank you.  Any         12:21:14

          4        questions?  Okay.  If not, then we thank you very     12:21:14

          5        much, and we were scheduled to reconvene at 1:30.     12:21:22

          6        We are hoping to -- we were scheduled to reconvene    12:21:32

          7        at 1:30.  We would like to reconvene at 1:15.  It     12:21:36

          8        will depend on whether we can assemble the 1:30       12:21:42

          9        panel to be here at that time.  So you might try to   12:21:44

         10        be back here by 1:15.                                 12:21:50


         12                  VOICE:  We will be here at 1:15.            12:21:54


         14                  CHAIRPERSON SMITH:  Great.  Then we'll      12:21:56

         15        start at 1:15 and see you then.                       12:21:56


         17                           (Recess taken.)










          2    STATE OF MINNESOTA)
                                          ) ss.             CERTIFICATE
          3    COUNTY OF RICE    )
          4         Be it known that I took the testimony and 
               proceedings in the matter of Norwest Bank and Wells 
          5    Fargo Bank, had on the 17th day of September, 1998, at 
               Minneapolis, Minnesota;
          7        That I was then and there a Notary Public in and for 
               the County of Rice, State of Minnesota, and that by 
          8    virtue thereof, I was duly authorized to administer an 
         10        That the testimony and proceedings were recorded in 
               shorthand by me and transcribed into typewriting under 
         11    my direction and that the transcript is a true record of 
               the proceedings to the best of my ability;
         13        That I am not related to any of the parties hereto 
               nor interested in the outcome of the action.
         15                      WITNESS MY HAND AND SEAL this ____ day 
               of _______________, 1998.
         18                             ______________________________
                                              Holly J. Nordahl







          1                  (Hearing resumed after lunch break.)
          3                  CHAIRPERSON SMITH:  Okay.  We are
          4        ready with Panel Number 7.  And we are going to
          5        start with Dana Wise.
          7                  MR. WISE:  Thank you, Miss Smith and
          8        the Federal Reserve.
          9             My name is Dana Wise, and I do bank
         10        research for the Strategic Projects Department
         11        of the United Steelworkers of America.  I'm also
         12        a member of a community-based coalition of
         13        nonprofit housing and community developers in
         14        New Mexico.  And as part of that coalition, I
         15        was party to the development of a 1.3 billion
         16        dollar community lending initiative recently
         17        announced by Norwest and Wells Fargo for New
         18        Mexico.  The Steelworkers Union praises this and
         19        the recent California commitment for increased
         20        lending to working families and their
         21        communities.  The Wells Fargo has questioned our
         22        motives and involvement in pushing for this
         23        review of their treatment of working families in
         24        their communities.  Wells Fargo should not
         25        underestimate the union's commitment to defend

          1        the interests and needs of its members, their
          2        families and their neighborhoods.  The
          3        Steelworkers Union has more than 700,000 members
          4        nationwide.  Our members are a part of families,
          5        and these families are a part of their
          6        communities.  These communities pay taxes.  They
          7        support our country's financial system.  And our
          8        members are also part of communities that make
          9        deposits at Well Fargo.  It is the union's duty
         10        to insure that these resources are used in a
         11        manner that promotes decent living-wage jobs,
         12        affordable housing and community economic
         13        development.  The union will continue to work
         14        hard to support the efforts of allies here in
         15        Minnesota, in Iowa, in Wisconsin, in Texas, in
         16        Washington and Los Angeles to improve the
         17        performance of Wells Fargo in serving the best
         18        interests of working families and their
         19        neighborhoods.
         20             Last month we published research on the
         21        recent community lending performance of Wells
         22        Fargo.  We've shared this research broadly with
         23        CRA advocates, local government officials and
         24        the media.  The research on Wells Fargo's CRA
         25        performance showed a bank hungry for fees from

          1        retail customers, a bank that was especially
          2        unfocused on serving the needs of its primary
          3        service area, especially low-income areas and
          4        rural areas, and a bank that promotes high-tech
          5        marketing over traditional banking, even when it
          6        appears that these methods make the bank less
          7        able to serve low-income and minority
          8        communities.
          9             I'm speaking here about Wells Fargo's
         10        published commitments that it is leading world
         11        communities, its heavy reliance on borrow or
         12        profarming data bases for its small business
         13        lending and small farm lending and its heavy
         14        reliance on the Internet and high technology for
         15        the delivery of financial services.
         16             Among the principal findings of our study
         17        were over the past three years following the
         18        takeover of First Interstate by Wells Fargo, in
         19        the majority of cities and towns where Wells
         20        Fargo pursued its branch consolidation and
         21        restructuring, these changes negatively affected
         22        low-income Spano and other minority
         23        communities.  Also, Wells Fargo closed a
         24        disproportionate number of branches in
         25        nonmetropolitan areas.  And in 70 percent of

          1        counties where Wells Fargo made small business
          2        and small farm loans, the bank failed to match
          3        its competitors in its relative level of service
          4        to low-income communities.  Wells Fargo's
          5        primary response to our research has been to
          6        question the appropriateness of a union showing
          7        concern about a bank's lending to low-income and
          8        minority families.  Predictably, Wells Fargo
          9        also challenges the study's methodology.  But
         10        it's clear from their response that they never
         11        bothered to read past the executive summary.
         12        The union stands by the findings of its study.
         13        And we ask that this document be included as
         14        part of the written record of this testimony.
         15             Furthermore, we urge Wells Fargo to get to
         16        work with community-based fair lending and CRA
         17        coalitions in the 19 other states that will be
         18        impacted by this merger.  Wells Fargo must agree
         19        to address the charges that the bank's practices
         20        hurt the working families and their
         21        communities.  The union will join its resources
         22        with those of its allies in the community
         23        development movement.  And those are the 13.2
         24        million member AFL/CIO to bring Wells Fargo to
         25        justice.  Until that happens, the AFL/CIO has

          1        asked its 73 international unions, their 30,000
          2        local unions and individual members in every
          3        state to close any institutional or personal
          4        accounts that they have with Wells Fargo.
          5        AFL/CIO President John Sweeny said, "Our resolve
          6        in this matter will send a clear signal not only
          7        to Wells Fargo, but to other banks that would
          8        use our own deposits against working families
          9        and our unions."
         10             Thank you.
         11                  CHAIRPERSON SMITH:  Thank you.
         12             Miss Gallardo?
         14                  MS. GALLARDO:  Hello.  I'm Joyce
         15        Gallardo.  And I'm here from Pueblo, Colorado on
         16        behalf of the United Steelworkers of America and
         17        our local union, 3267.  I appreciate the
         18        opportunity to testify today.
         19             And I would like to voice my objection to
         20        the merger of Norwest and Wells Fargo and
         21        introduce you in a personal manner to my
         22        struggle and personal nature in which my union
         23        brothers and sisters are being affected by the
         24        refusal of Oregon Steel Mill to bargain in good
         25        faith with our union and allow us to return to

          1        work.
          2             A few months prior to staff forcing us out
          3        on strike, October 3rd, 1997, I purchased a
          4        small hotel in a town 35 miles west of Pueblo.
          5        I planned to refurbish it and have it ready to
          6        open by December of 1997.  The main purpose in
          7        undergoing this project was a means of
          8        supplementing what would be a very meager
          9        retirement income and to get it up and running
         10        and well-established before my retirement.  The
         11        building now sits empty except for one room in
         12        the back of the hotel that I occupy.  Because of
         13        the mortgage payments on this empty building, I
         14        am forced to live in extreme uncomfortable
         15        conditions.  And after 32 years with one
         16        company, I'm only one step above the homeless.
         17             The winter of 1977 began with a strike of
         18        October 3rd and a denial of unemployment
         19        compensation.  After being out of work a month
         20        and a half, I accepted a position with a
         21        telemarketing firm where I earned a whopping $6
         22        per hour.  Working for this wage, I knew I could
         23        make the mortgage payment, put gas in my car and
         24        drive the 35 miles back and forth to work, but
         25        all other expenses would have to be kept to a

          1        minimum.  I knew I could not afford to fire up
          2        the boiler in this 6,000 square foot building,
          3        so I attempted to survive the winter using two
          4        space heaters.  And once a week, I would turn on
          5        the convection oven in the kitchen -- quotes --
          6        and prepare enough food for an entire week, then
          7        just reheating in the microwave as I wanted to
          8        eat, all in an attempt to keep my expenses
          9        down.  I thought I was home free.  I thought I'd
         10        made it through the winter with my space heaters
         11        when one night in late February I arrived home
         12        after dark.  And when I opened the door, I
         13        stepped into water up to my ankles.  I thought I
         14        had all the pipes upstairs turned off and
         15        draining, but the old plumbing had played a
         16        terrible trick on me.  Water was pouring through
         17        the ceiling in the lobby.  Now I had more to do
         18        to the building, no money, no hope of being able
         19        to qualify for another loan to do any
         20        construction, no place to turn.  Another
         21        winter's coming up, and I'm going to be in the
         22        same predicament that I was last year; no money
         23        to fire up the boiler, no way to get out of this
         24        situation that I am in.  Even though interest
         25        rates have dropped almost two percent below what

          1        my mortgage is set at, I can't qualify to
          2        refinance my loan, which, if I could, would drop
          3        my payments considerably.
          4             Many of my union brothers and sisters are
          5        going through at least as desperate a situation
          6        as I am, and some have it much worse.  One of
          7        our union brothers took his own life at the
          8        beginning of summer.  This rocked all of us,
          9        thinking that we saw this brother several times
         10        a week and didn't realize what pain he was in.
         11        He had lost his wife to cancer ten months
         12        earlier.  And that is when we worried about
         13        him.  He was in his early middle years, had no
         14        children at home, and his whole life revolved
         15        around his wife.  But he made it through those
         16        months and now we lost him to this.  I know of
         17        at least four couples personally that are going
         18        through a divorce even though before this work
         19        stoppage they seemed to have a very stable
         20        marriage.  Quite a few of our brothers and
         21        sisters have had to find work in other cities
         22        and are now trying to support two households on
         23        top of being separated from their families at
         24        least during the week.  And many of them are not
         25        even close enough to come home on weekends.

          1        This has been a few of the many problems brought
          2        on by this company's refusal to bargain in good
          3        faith.  And although the company has suffered a
          4        tremendous loss and continues to lose money
          5        daily, much to our dismay, Wells Fargo Bank and
          6        some other smaller banks continue to bankroll
          7        CF&I.  They've now changed their name to Rocky
          8        Mountain Steel, and I'm not sure of the real
          9        purpose in that.  But as long as this practice
         10        continues of Wells Fargo bankrolling CF&I, the
         11        longer CF&I will remain in a position to keep us
         12        off of our jobs.  This is a union town.  The
         13        economy of Pueblo was built around CF&I and the
         14        steelworkers.
         15             When we began this strike, our local banks
         16        worked with our union brothers and sisters on
         17        their personal loans and mortgages, allowing
         18        them to pay only the interest in some instances
         19        and giving them deferred payments in other
         20        cases.  As far as I can determine, Norwest Bank
         21        did not offer any leniency for any type of
         22        payments.  A bank has an obligation to help the
         23        communities they move into.  And I cannot even
         24        imagine Wells Fargo being a part of this
         25        community after turning their backs on the union

          1        workers to help finance CF&I in their efforts to
          2        break our union.  And what is worse, even though
          3        they know how it's affecting our people, they
          4        continue this practice.
          5             On behalf of the membership of Locals 2102
          6        and 3267, I want to thank you all for listening
          7        to me.  I appreciate the opportunity.
          8                  CHAIRPERSON SMITH:  Thank you.  And
          9        would you make sure that our -- that our Federal
         10        Reserve staff have a copy of your statements?  I
         11        know yours is in writing so --
         12                  MR. WISE:  Okay.
         13                  CHAIRPERSON SMITH:  -- if we can make
         14        a copy?  And then we'll go to Miss Pacheco.
         15                  MS. GALLARDO:  Certainly.  Whatever
         16        works.
         18                  MR. PACHECO:  My name is Howard
         19        Pacheco.  I would like to thank this board for
         20        allowing me this opportunity to speak on behalf
         21        of my Local 2102 and 3267.
         22             For 31 years I worked as a steelworker.
         23        Working in the steel mill is not easy work.
         24        It's hot, it's dirty, and it's dangerous.  It
         25        takes teamwork.  Because of this, your fellow

          1        employees become family.  My extended family and
          2        I have been through a lot.  In order to keep the
          3        Pueblo plant productive, we made sacrifices.  We
          4        took wage cuts, combined jobs, gave up our
          5        incentive rate, which was one-third of our pay,
          6        increased health care premiums and much more.
          7        We as a family thought the worst was behind us.
          8        We were forced out on strike because of unfair
          9        labor practices by the company, Oregon Steel
         10        Mill.  October 3rd, 1997, we offered to return
         11        to our jobs.  The company said no to 1,100 and
         12        took back only 27 employees.  Wells Fargo bailed
         13        out the company twice, possibly three times.
         14        This is not the first time Wells Fargo has lent
         15        money to a company in the mist of -- in the
         16        midst of a labor dispute.  The undue hardships
         17        caused by Wells Fargo can never be mended.  We
         18        have had numerous divorces and separations, and
         19        one of the other brothers committed suicide.
         20        Many of my fellow brothers and sisters have
         21        cashed in their 401K plans to sustain themselves
         22        and their families.  Some have had their autos
         23        repossessed.  The list of hardships goes on and
         24        on.
         25             I have been on the picket line and seen

          1        replacement workers flash $100 bills or their
          2        paychecks and then flip us off as they drive by
          3        with their new cars.  Let me tell you, it hurts
          4        when you know it's Wells Fargo who is financing
          5        all this misery.  Heaven only knows what it
          6        would be like if Wells Fargo were allowed to
          7        merge with Norwest Bank.  There are no Wells
          8        Fargo Banks in Pueblo, but there are Norwest
          9        Banks in our town.  I have seen with my own eyes
         10        what Wells Fargo has done to my family and from
         11        a thousand miles away and heard with my own ears
         12        what they have done to the people in
         13        San Francisco.  I'm afraid of what they might do
         14        to my family next.
         15             Thank you.
         16                  CHAIRPERSON SMITH:  Go ahead.
         18                  MS. PACHECO:  I'd like to thank the
         19        board for allowing me to testify today.  My name
         20        is Jan Pacheco.  I'm the wife of Howard
         21        Pacheco.  We're here today representing the
         22        Unites Steelworkers of America and 1,100
         23        families in Pueblo, Colorado.
         24             Have you ever attended a church service and
         25        seen the hostility in the eyes of one toward

          1        another or have you ever been the playground
          2        monitor for your son's or daughter's elementary
          3        school and heard "I can't play with you.  You're
          4        daddy's a scab."  Or even worse, close knit
          5        families being destroyed because one in the
          6        family chose to not cross the picket line and
          7        another did.  I have, and it's happening in
          8        Pueblo, Colorado.  It's happening because Wells
          9        Fargo Bank is the key lender to a company my
         10        husband works for, Oregon Steel Mill, a company
         11        who has illegally replaced him and 1,100 other
         12        workers in Pueblo, Colorado, a company who is
         13        hell bent on destroying our families and our
         14        community.
         15             The bank is just as guilty because they are
         16        lending the company money to sustain them during
         17        this struggle, a bank which has extended the
         18        company's credit line twice and just recently a
         19        third time, a bank who claims they are not
         20        involved in our struggle.
         21             During the last year, I have had the honor
         22        of standing beside my husband talking to
         23        churches, organizations, politicians, union and
         24        union members about our struggle.  Most
         25        recently, Howard and I have been in the City of

          1        San Francisco, the home base of Wells Fargo
          2        Bank.  We placed an ad in the "Bay Guardian"
          3        newspaper.  The ad read, "We're unhappy with
          4        Wells Fargo.  Are you?  Have you had problems
          5        with poor customer service or hidden fees?
          6        We're conducting a study of dissatisfied
          7        customers.  Tell us your story."
          8             We were shocked at the number of responses
          9        we received.  Hundreds of complaints came in.
         10        And here are some direct quotes from those phone
         11        calls.  These are only a few of the quotes that
         12        I have for you today.
         13             Number one, "I got the $25 miskeyed entry
         14        fee for accidentally putting the wrong amount in
         15        the ATM and was absolutely shocked.  I can
         16        hardly -- I had hardly ever checked my bank
         17        statement, but I went back through them and
         18        started finding all these ridiculous fees."
         19             A second one said, "They closed down the
         20        branch in my neighborhood and left ATMs there so
         21        that no other bank can move in.  They're
         22        clearly -- they've clearly cut down their
         23        employee staff, increased the amount of time you
         24        have to wait, increased their fees.  They have
         25        done just about everything wrong so far as

          1        keeping up good employees and customer
          2        relations, trying to increase their profit
          3        margin as much as possible without worrying
          4        about customer service."
          5             Number three, "In the last four months,
          6        Wells Fargo has reneged on their promise of free
          7        lifetime checking.  Suddenly they are going to
          8        charge me $7 a month.  They're real sorry about
          9        it.  And I've written them a letter telling them
         10        where to stick their stagecoaches."
         11             Number four, "There are fees for just about
         12        everything.  There are fees to get my checks
         13        back.  There are fees to keep my checks.  There
         14        are fees to go into the branch rather than the
         15        ATM.  There's fees to go to the other ATMs."
         16        The list goes on.
         17             Our seniors also spoke out.  "I was a First
         18        Interstate customer before Wells Fargo merged
         19        with First Interstate and was grandfathered in
         20        on free checking.  They changed the rules
         21        several times, charging me fees and finally went
         22        back on their promise totally."
         23             And number six, "I was mistakenly charged a
         24        fee for a bounced check.  I was supposed to call
         25        every day to see what happened to my money, so I

          1        called.  They charged me for those calls.  I had
          2        to take off work three times to be able to speak
          3        with the representative.  It took me months to
          4        get this fee off my account even though they
          5        were responsible."
          6             If Wells Fargo and Norwest Bank merge, our
          7        fear is, what is going to happen next given
          8        Wells Fargo's track record?
          9             Thank you.
         10                  CHAIRPERSON SMITH:  Thank you.
         11             Miss Rosenthal?
         13                  MS. ROSENTHAL:  Good afternoon.  My
         14        name is Mary Rosenthal.  And I am the Minnesota
         15        State Director for the National AFL/CIO.  Thank
         16        you very much for this opportunity to testify.
         17        The AFL/CIO's member unions represent 400,000
         18        working people here in Minnesota and hundreds of
         19        thousands more within Northwest -- Norwest's
         20        service area.  This is a region of farms and
         21        small towns, highly vulnerable to capital
         22        draining by distant financial institutions.  The
         23        Wells Fargo/Norwest merger is the takeover of a
         24        regional giant with a poor record of serving
         25        working people by a giant national bank with a

          1        worse record.  Wells Fargo's merger with Norwest
          2        will pass control of our region's largest
          3        financial institution to a West Coast bank that
          4        by its nature and as a result of the business
          5        strategies it has chosen to pursue cannot be
          6        focused on the financial service needs of our
          7        communities.  Wells Fargo is 181st out of the
          8        top 200 financial institutions in its
          9        reinvestment rate in the primary service area
         10        communities from which it takes deposits.  A
         11        study by our affiliate, the United Steelworkers
         12        of America, has shown that Wells Fargo's
         13        definition of its service areas in the southwest
         14        has excluded lower income census tracks.  Wells
         15        Fargo's loan origination and management programs
         16        is data based and Internet driven with a
         17        decreasing emphasis on loan officers who know
         18        the communities in which they lend.
         19             On the consumer side, Wells Fargo is a
         20        leader in charging high fees for basic banking
         21        fees and in closing branches in low-income
         22        communities.  Norwest service area includes a
         23        variety of communities vulnerable to the
         24        withdrawal of financial services.  Large cities
         25        with substantial low and moderate-income

          1        communities like Minneapolis, St. Paul and
          2        Denver where Norwest's record has already been
          3        poor, smaller towns and rural areas dependent on
          4        agriculture that have been repeatedly devastated
          5        by commercial banks' withdrawal from the
          6        agriculture credit markets and areas of extreme
          7        rural poverty, like the Pine Ridge Indian
          8        Reservation in South Dakota, Norwest's record in
          9        these communities has already been the subject
         10        of prior protests by AFL affiliates -- AFL/CIO
         11        affiliates to the Board of Governors.  For all
         12        these communities, this merger promises more
         13        expensive and less accessible financial
         14        services.  In fact, even before the merger has
         15        been approved, Norwest appears to be raising a
         16        variety of fees to match levels at Wells Fargo.
         17        This merger also promises to create more towns
         18        like Pueblo, Colorado, where Wells Fargo has
         19        financed a savage campaign to break the
         20        Steelworkers Union at Oregon Steel, a campaign
         21        that has illegally denied a thousand people the
         22        middle class jobs that were a foundation of that
         23        community's economic strength.
         24             Wells Fargo claims that this is somehow not
         25        an issue affecting its treatment of its service

          1        area.  We think it exemplifies Wells Fargo's
          2        outright hostility to the needs of working
          3        families as consumers of financial services and
          4        as contributors to the economic well-being of
          5        the bank's service.  We oppose this merger
          6        because it will not benefit the working families
          7        of this region and because we believe Wells
          8        Fargo has not complied with the Community
          9        Reinvestment Act in its current service area.
         10        Finally, we urge the Federal Reserve not to
         11        accept empty assurances from Wells Fargo.  Wells
         12        Fargo has a history of mischaracterizing the
         13        impact of its merger activities on its
         14        constituencies.  When Wells Fargo acquired First
         15        Interstate, it announced it would destroy
         16        only -- in quotes -- 7,200 jobs.  And then after
         17        the deal was done, Wells Fargo said it would
         18        really be 10,000 jobs.  And then it turned out
         19        it was really 14,000 jobs, almost twice what
         20        they told regulators and the public when they
         21        were getting approval for the merger.  The
         22        AFL/CIO would be pleased to work with the
         23        Federal Reserve in its further consideration of
         24        this merger to insure the Community Investment
         25        Act is complied with and that the interests of

          1        the working families in both bank service areas
          2        are protected.
          3             Thank you.
          4                  CHAIRPERSON SMITH:  Thank you.  We
          5        have Mr. Kamp speaking on behalf of Mr. Lee.
          7                  MR. KAMP:  Okay.  Thank you.  Now, I
          8        get to wear two hats today, so -- good
          9        afternoon, Ms. Smith, and other members of the
         10        Panel.  This is the testimony of Matthew Lee,
         11        Executive Director of Inner City Press,
         12        Community on the Move of the Inner City Public
         13        Interest Law Center.  Together, ICP, which Marv
         14        Kamp with the Wisconsin Rural Development Center
         15        has been kind enought to present.  ICP on August
         16        21st filed a protest to this application based
         17        on Norwest's disparate lending record,
         18        particularly of its high interest rate,
         19        so-called subprime subsidiaries and based on the
         20        Federal Reserve Board's withholding of all
         21        information about Norwest's divestiture
         22        proposal.  The comments that Wells Fargo has
         23        made in California -- the commitments that Wells
         24        Fargo has made in California does nothing to
         25        address this issue.

          1             Norwest, the applicant here, is one of the
          2        largest mortgage lenders in the country.  The
          3        disparities in its mortgage lending record are
          4        troubling, particularly but not only in the
          5        overlap markets.
          6             Some examples:  In 1996 Norwest Bank Texas
          7        South denied 46 percent of the applications from
          8        Hispanics and only 7 percent of the applications
          9        from Whites.
         10             Norwest Bank, Midland, Texas denied 61
         11        percent of the applications from Hispanics and
         12        only 13 percent of the applications from
         13        Whites.  Norwest Bank Texas Kelly Field denied
         14        49 percent of the applications from Hispanics
         15        and only 14 percent of the applications from
         16        Whites.  And only 18 -- okay.
         17             Norwest Bank Texas denied 46 percent of the
         18        applications from African Americans, 40 percent
         19        of the applications from Hispanics and only 19
         20        percent of the applications from Whites.
         21             When ICP raised these issues in 1996,
         22        Norwest was acquiring Prudential Home Mortgage.
         23        Norwest responded with a letter dated April
         24        30th, 1996 to Mr. James Lyon of this Federal
         25        Reserve Bank of Minneapolis in which Norwest

          1        acknowledged that, quote, "Norwest Mortgage's
          2        record of minority lending is below market
          3        average in some markets.  To address the needs
          4        of the markets with high concentrations of
          5        minority populations, Norwest Mortgage has
          6        committed to hiring of a community development
          7        loan officer to focus on the underserved
          8        communities," unquote.
          9             Here, however, was Norwest Mortgage's full
         10        year 1996 lending record in the New York City
         11        MSA.  For full year 1996, Norwest Mortgage had
         12        more than twice the market share of loans to
         13        Whites than to African Americans, as well as a
         14        denial rate disparity for African Americans
         15        significantly above the industry average in this
         16        MSA.  It cannot be said that Norwest Mortgage
         17        denial rate disparity is explained or justified
         18        by greater than average outreach to the
         19        minorities given the market share numbers.
         20             Question.  Did Norwest Mortgage ever take
         21        steps it said it would in this April 30th, 1996
         22        letter to the Federal Reserve?  Was it ever
         23        followed up on?  Neither Norwest's application
         24        nor the Federal Reserve's questions to date
         25        address this in any detail.  Similarly, were

          1        Norwest's representations about improving
          2        Prudential Home Mortgage's lending disparities
          3        ever followed up on?  Our experience is no.
          4             Norwest Funding, Incorporated, nationwide
          5        in 1996 made 6,521 loans to Whites and only 228
          6        loans to African Americans and only 252 loans to
          7        Hispanics.  In the New York City MSA in 1996,
          8        Norwest funding made 101 loans to Whites, only
          9        10 loans to African Americans and eight loans to
         10        Hispanics.  Meanwhile, in the predominantly
         11        minority South Bronx of New York City, Norwest
         12        has opened an office of its high interest rate
         13        Island Finance subsidiary.  ICP members have
         14        been informed that Norwest's Island Finance
         15        office charges virtually all borrowers for
         16        personal loans 25 percent interest, the absolute
         17        maximum under New York usury prohibitions.
         18        Borrowers, virtually all of them protected
         19        class, are charged 25 percent regardless of
         20        their credit history.
         21             The public has also been denied access to
         22        information, assessing and commenting on this
         23        proposal.  Norwest has sought confidential
         24        treatment for all information specifying its
         25        divestiture proposal.  The public has a right to

          1        review and comment on Norwest's actual proposal,
          2        including its divestiture proposal.  ICP filed a
          3        Freedom of Information Act appeal on August
          4        21st, 1998.  The information has yet to be
          5        released.
          6             On the current record, this mega merger
          7        proposal, which would expand Norwest's
          8        practices, could not legitimately be approved.
          9             There are other adverse issues, including
         10        Norwest's record in its existing states, ably
         11        raised by the Wisconsin Rural Development Center
         12        and the other groups represented here today.
         13        For all the reasons stated, this proposed merger
         14        should be denied.  Thank you for your
         15        attention.  We will be submitting further
         16        comments by April -- September 24th, 1998.
         17        Thank you.
         18                  CHAIRPERSON SMITH:  Thank you.
         19             Questions?  Thank you very much for coming
         20        here today.  And again, be sure to give us a
         21        copy of your written comments.
         22                  MS. GALLARDO:  Thank you very much.
         23                  CHAIRPERSON SMITH:  We'll move on to
         24        the next panel, Panel Number Eight.  And we'll
         25        start with Ms. Caplan.

          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.
         21                  CHAIRPERSON SMITH:  Any questions?  If
         22        not, we thank you for coming here today.  And
         23        again, be sure and give your statements, if you
         24        haven't already done so, to the Federal Reserve
         25        Bank staff that take it.

          1             Okay.  We're at Panel 9.  And we have -- we
          2        really have two panelists, one of them
          3        representing her organization and another one.
          4        If Miss Mendoza will come forward.  Yes, she's
          5        on her way.  And we'll start with Mr. Finn.
          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.)
         24                  CHAIRPERSON SMITH:  We're ready to
         25        start with Panel 10.  I think you can sit

          1        anywhere.  I'll call you in the order that you
          2        appear, but you may sit anywhere.
          3             Okay.  Again, a reminder that if the five
          4        minutes expire before you have finished your
          5        statement, we will include the -- your complete
          6        statement in the record, if you will make sure
          7        that we have a copy of it at the registration
          8        desk.  So if they don't have one now, make sure
          9        that they have one before you leave.  And we'll
         10        start with Mr. Cody.
         12                  MR. CODY:  Well, thank you.  I'm Ron
         13        Cody, President of Junior Achievement of the
         14        Upper Midwest.  And I appreciate the opportunity
         15        to speak on behalf of Norwest Bank and share our
         16        views on the impending merger.  Norwest Bank's
         17        commitment to youth and education we feel is
         18        exemplified by their very extensive involvement
         19        with the organization I represent, Junior
         20        Achievement, throughout our assigned geographic
         21        territory, which includes the States of
         22        Minnesota and North Dakota and, incidentally,
         23        four boarder counties in Wisconsin.
         24             So that you know what we do to refresh you,
         25        Junior Achievement's purpose is to educate and

          1        inspire young people, to value free enterprise,
          2        business and economics, to improve the quality
          3        of their lives.  And Junior Achievement's
          4        mission is to insure that every child in America
          5        has a fundamental understanding of our free
          6        enterprise system.  And Norwest Bank is a
          7        natural and valued partner in those endeavors.
          8        During the school year just underway,
          9        partnerships with various sponsoring
         10        organizations both in the private and public
         11        sector, and including Norwest, will result in
         12        75,000 students meeting weekly in their
         13        classrooms with over 3,000 volunteers who will
         14        transform textbook theory into real-life
         15        situations and, in the process, persuade young
         16        people of the critical importance of education.
         17        And as a very conscientious corporate citizen,
         18        Norwest has played a critical role in this area
         19        by actively encouraging and supporting
         20        employees' weekly visits to area classrooms to
         21        work with students and deliver the Junior
         22        Achievement curriculum.  The primary thrust of
         23        Norwest's involvement with JA is financial
         24        education.  At the elementary, middle and senior
         25        high grade levels, Norwest employees make

          1        personal and business finance come alive for
          2        students.  And are they making an impact?
          3        Absolutely.  We know that by not only local
          4        surveys and evaluations, but national studies
          5        done by outside evaluation firms.
          6             Last school year, 146 Norwest Bank
          7        Minnesota employees contributed 1,022 hours of
          8        time in classrooms teaching finance and
          9        economics to approximately 4,370 students K
         10        through 12.  That took place in 168 Metro area
         11        classrooms.  Norwest banking officials have
         12        indicated to us they fully expect the number of
         13        volunteers to increase during the current and
         14        subsequent school years.
         15             In addition, various Norwest banking sites
         16        arrange with Junior Achievement to host
         17        approximately 200 area students in a
         18        finance-related career-oriented job shadow
         19        experience on site in the banks during spring of
         20        last year.  And we will -- we anticipate they
         21        will provide a similar opportunity this year for
         22        young people to see what goes on in those tall
         23        buildings and encourage them to develop the
         24        marketable skills they'll need to work in those
         25        buildings.

          1             In addition to all of this, Norwest Bank
          2        Minnesota is a major financial supporter of
          3        Junior Achievement.  And this financial support
          4        provides the funds for the classroom materials,
          5        the textbooks, the workbooks that are provided
          6        to the schools and the students at no cost.  And
          7        this is in the seven-county Metro area alone.
          8        Norwest Bank Minnesota financially supports JA
          9        programs in many communities throughout
         10        Minnesota, provides volunteers, financial
         11        support and serves on the boards in Duluth,
         12        Mankato, Moorhead, Brainerd and in North
         13        Dakota -- several communities in North Dakota as
         14        well.  Norwest Bank Minnesota's management has
         15        been represented on the Junior Achievement Board
         16        of the Upper Midwest, the corporate board, for
         17        45 consecutive years.  And Jim Campbell and Pat
         18        Donovan have both served on the Junior
         19        Achievement Board and have personally
         20        volunteered time with the Junior Achievement
         21        programs.
         22             In closing, I want to -- in speaking for
         23        our Board of Directors and our staff, the staff
         24        of Junior Achievement of the Upper Midwest, we
         25        regard Norwest Bank Minnesota as the ideal

          1        corporate citizen in light of Norwest's
          2        long-term, demonstrated commitment to community,
          3        to young people, to education.  And we're proud
          4        to say to Junior Achievement, "We're absolutely
          5        confident of Norwest's continued commitment to
          6        this community following a merger regardless of
          7        where the headquarters is located.  In fact, at
          8        Junior Achievement, we view a larger, stronger
          9        banking organization as being able to generate
         10        additional resources that can, in turn, be
         11        reinvested in the local communnities in various
         12        ways, and including organizations like Junior
         13        Achievement.  Again, we appreciate the
         14        opportunity to share our views with you.
         15                  CHAIRPERSON SMITH:  Thank you.
         16        Mr. Cramer?
         18                  MR. CRAMER:  Good afternoon.  My name
         19        is Steve Cramer.  I'm the Executive Director of
         20        Project for Pride in Living.  We are a Twin
         21        Cities area nonprofit working on community
         22        redevelopment inner city neighborhoods.  I
         23        appreciate the opportunity, as well, to express
         24        to you our confidence that our long-standing,
         25        multifaceted relationship with Norwest in our --

          1        in helping us accomplish our mission of
          2        revitalizing inner city communities will
          3        continue and be strengthened in the future under
          4        this proposed merger.
          5             I'd like to just very briefly reflect on
          6        the many ways in which we interact with Norwest
          7        to accomplish this mission of inner city
          8        revitalization.  One way is through the
          9        financing that is extended by Norwest to low
         10        income buyers of single-family homes that we
         11        construct or renovate in inner city
         12        neighborhoods.  Norwest is a consistent and
         13        reliable lender for our buyers, all of whom are
         14        low income, 80 percent of whom are people of
         15        color, including buyers from emerging ethnic
         16        communities in the Twin Cities, new Americans.
         17        And their CHOP product in particular extends
         18        affordability to very low-income buyers and is a
         19        very effective tool for promoting ownership in
         20        inner city neighborhoods.
         21             Norwest also services loans in programs
         22        that we administer in communities and
         23        neighborhoods throughout the Twin Cities.  And I
         24        must say that in many neighborhoods that we work
         25        with, the request is specifically that we

          1        partner with Norwest for loan servicing because
          2        of the high degree of customer service that
          3        their local branch banks throughout the Twin
          4        Cities and neighborhoods that we work in offer
          5        to area residents.
          6             As Ron indicated, Norwest extends its
          7        professional expertise to community development
          8        work through their active participation in our
          9        board and committees that we have overseeing our
         10        various programs in housing, employment and
         11        training, education and human services.  They
         12        provide technical assistance to our staff in
         13        areas including residential finance,
         14        underwriting of our various development projects
         15        and even occasionally helping us work out some
         16        of the problems that our projects run into.  And
         17        as much as is money, whether it's financing or
         18        grant funds through the foundation, that
         19        extension of professional expertise into the
         20        community is extremely valuable in the work that
         21        we do.
         22             Norwest has also sponsored for us
         23        applications to the Federal Home Loan Bank that
         24        has resulted in affordable housing program
         25        grants to projects that we have been involved

          1        in; most recently, a project called Anishinabe
          2        Wakiagun, which you, perhaps, heard about from
          3        an earlier panel, a project that houses homeless
          4        chronic inebriates in the poorest neighborhood
          5        in the City of Minneapolis.  We have partnered
          6        with Norwest to our mutual benefit in trying to
          7        place hard-to-employ men and women that we work
          8        with, especially through our Welfare to Work
          9        Program, in their operations center meeting both
         10        their employment need, but also providing an
         11        effective outlet for our employment placement
         12        efforts and then working together to make that
         13        employment placement successful.  And then also,
         14        their foundation has been quite supportive of
         15        all of our programming areas; housing,
         16        employment training, self-sufficiency services
         17        and education.  Norwest was the single largest
         18        giver to our recently established endowment for
         19        our self-sufficiency program.  And their most
         20        recent gift will support our efforts in
         21        improving educational achievement in many of the
         22        inner city neighborhoods that we -- that we live
         23        in.  So across these many dimensions, our
         24        partnership with Norwest has been effective,
         25        long-standing, focused on the poorest and lowest

          1        income and most diverse neighborhoods of the
          2        Twin Cities.  And they have consistently been a
          3        reliable partner.
          4             I, as well, believe that this mode of
          5        operations will continue.  It's clear to me that
          6        decision-making is decentralized in Norwest,
          7        that autonomy flows to the people that we need
          8        to work with sort of closest to the action, so
          9        to speak.  And I am confident that that -- that
         10        corporate culture will be maintained and our
         11        partnership will -- will flourish into the
         12        future.
         13             Thank you.
         14                  CHAIRPERSON SMITH:  Thank you.
         15             Mr. Cutts?
         17                  MR. CUTTS:  My name is Jerry Cutts.
         18        I'm the Executive Director of the Development
         19        Corporation for Children.  We're a state-wide
         20        nonprofit organization.  We help lower income
         21        communities to plan, develop and finance
         22        children's facilities, like Headstarts and child
         23        care centers.
         24             We -- our key activities have been in the
         25        area of actual development and construction of

          1        facilities.  And a couple years ago we decided
          2        that we were interested in investigating the
          3        creation of a loan fund to help participate in
          4        these activities.  And so what I wanted to do is
          5        just very quickly tell you the brief story of
          6        Norwest's involvement because I think it's
          7        good.
          8             We started by working with some funds from
          9        a national foundation to coordinate statewide
         10        policy round tables to look at the demand for
         11        this kind of fund.  And Norwest immediately
         12        jumped in and played a very critical role in
         13        that process.  Muffy Gabler in particular was
         14        very, very involved with us, not only in
         15        participating in the round tables and playing a
         16        leadership role, but in giving us advice -- our
         17        advice that we settle on along the way about how
         18        we might effectively be able to pull in other
         19        banks, investors, as well.  And over the series
         20        of four or five round tables, we were able to
         21        come up with recommendations to the Legislature
         22        and to the private sector, as well, for
         23        potential for their involvement.  And we were
         24        successful in doing that.
         25             I wanted to point out a couple things.  One

          1        is that this fund, which is called First
          2        Children's Finance.  It's now up and running and
          3        make loans left and right.  Norwest has a loan
          4        officer on our loan committee and continues to
          5        provide us with technical assistance.  The
          6        foundation as well provides us with operating
          7        support.  And Norwest has made an equity
          8        investment into the pool -- revolving pool of
          9        financing.  So that's all been very, very
         10        valuable to us.  I'm -- have been very happy
         11        with not only the technical assistance, but
         12        their collaborative spirit.  And I think that's
         13        hard to do in a competitive environment where
         14        you -- we have a situation where we've got lots
         15        of high-profile investors and lenders.  And
         16        Norwest has done a great job of providing
         17        leadership and kind of keeping a quality among
         18        the players.  So that's the main story that I
         19        wanted to tell.  I'm very appreciative of all
         20        aspects of their support and anticipate that
         21        that will continue.
         22                  CHAIRPERSON SMITH:  Mr. Fulton?
         24                  MR. FULTON:  Thank you.  It is really
         25        a privilege to be here today.  The Family

          1        Housing Fund, the organization of which I'm
          2        president, was formed back in 1980.  And its
          3        mission is to sort of rally the private
          4        philanthropic sector as a partner for -- with
          5        the federal government, the state government,
          6        local government in providing for the affordable
          7        housing needs of people in our community.  So
          8        the fund is really an intermediary
          9        organization.  And one of our responsibilities
         10        is to kind of keep track of everything that's
         11        going on in the community in terms of knowing
         12        exactly where the needs are.  We divide our
         13        programs up into three general areas,
         14        homeownership -- affordable homeownership for
         15        lower income working families.  Secondary is the
         16        production of affordable generic rental housing
         17        for people who don't have quite the incomes to
         18        get into homeownership.  And the third area is
         19        what we call special needs housing or more than
         20        shelter, which is the combination of housing and
         21        human services for very vulnerable people,
         22        people who are often homeless.  So basically a
         23        good community housing policy, good community
         24        housing programs, will involve a partnership
         25        between the public and private sector and will

          1        address the housing needs along that entire
          2        continuum; homeownership, rental housing,
          3        special needs housing.
          4             I have worked with Norwest closely for the
          5        entire 18 years, just about, that I've been
          6        president of the Family Housing Fund.  And I can
          7        report that they, Norwest, has been extremely
          8        active, played critical, decisive roles in each
          9        one of those three areas; homeownership, rental
         10        housing, special needs housing.  Norwest has
         11        what I would consider a state-of-the --
         12        state-of-the-art mortgage lending program that's
         13        targeted to lower income buyers, communities of
         14        color, first time home buyers.  They have a
         15        very -- a very, very successful commitment
         16        through the CHOP Program, which Steve has
         17        mentioned, in providing flexible financing
         18        that's helped, I would say, hundreds of families
         19        become homeowners.  We have a lot of special
         20        programs.  For example, programs to help public
         21        housing tenants become homeowners, to help
         22        people move from rental to ownership, to help
         23        people convert their Federal Section VIII
         24        certificates to homeownership.  Each one of
         25        those programs to be successful combines public

          1        subsidies with a private mortgage.  And I can
          2        say that Norwest has worked just extraordinarily
          3        well with each of those programs to provide
          4        those homeownership opportunities for those
          5        special populations.
          6             One of the things that my experience has
          7        been with Norwest is that some organizations and
          8        businesses do little, if anything, in the area
          9        of housing and community development.  Some do
         10        it in kind of a token or begrudging way and some
         11        do it with genuine commitment and enthusiasm.
         12        And that -- my uniform experience with Norwest
         13        as an institution and all the people that work
         14        there is that there is genuine commitment to
         15        affordable housing and community development in
         16        this community.  It's expressed through their
         17        willingness to provide financial resources that
         18        are needed both through the normal bank lending
         19        programs wherever possible and investment
         20        programs and tax credits.  The -- in addition to
         21        the homeownership programs in the area of rental
         22        housing and special needs housing, Norwest Bank
         23        has invested in -- as an equity partner in
         24        specific rental projects serving low-income
         25        people and projects that have combined housing

          1        with support services for people with special
          2        needs.  Unusual kinds of loans, but critical in
          3        terms of the successful financing of those
          4        projects.
          5             The other -- the other one thing that I'll
          6        mention is that -- the volunteers of Nor --
          7        Norwest.  We've talked about some of the
          8        individual employees.  Norwest executives have
          9        served on countless boards and organizations
         10        with which we've come into contact.  Pat Hanson
         11        from Norwest serves on the Board of the Family
         12        Housing Fund.  And everybody I've seen here from
         13        Norwest today is -- I have had personal
         14        experience with them in terms of their being
         15        active volunteers and decision-making bodies.
         16                  CHAIRPERSON SMITH:  Thank you.
         17             We'll go on to Mr. Watt.
         19                  MR. WATT:  Good afternoon.  My name is
         20        Jim Watt.  I'm Executive Director of Twin Cities
         21        Neighborhood Housing Services.  And thank you
         22        very much for the opportunity to be here and
         23        express my views and those of Twin Cities
         24        Neighborhood Housing Services and our affiliated
         25        partners.

          1             A brief overview.  For more than 20 years
          2        Twin Cities NHS has been rebuilding the American
          3        dream one home at a time.  We help low and
          4        moderate-income families purchase a home by
          5        arranging financing for families who might not
          6        qualify or even know how to get conventional
          7        mortgages by providing home buyer education to
          8        more than 1,100 first time home buyers in 1997
          9        alone and by rehabilitating decaying
         10        neighborhoods, resulting in revitalized
         11        communities.  Yearly we also sponsor Neighbor
         12        Works Week, a community beautification program
         13        that brings more than 400 volunteers together in
         14        various inner city neighborhoods to make their
         15        communities better places to live.  We couldn't
         16        do any of it without partners like Norwest
         17        Bank.
         18             Our relationship with them goes back 20
         19        years.  Norwest and its predecessors have been
         20        there since the beginning working with us,
         21        assisting low and moderate-income families.
         22        Norwest plays a significant role in our lending
         23        efforts within the inner city.  We work together
         24        in true partnership to provide homeownership
         25        opportunities for families who might not

          1        otherwise qualify for conventional financing.
          2             Norwest also supports us in the form of
          3        operating and program grants.  They have already
          4        contributed more than $500,000 to Twin Cities
          5        NHS in operating grants alone.  They also
          6        support us with a variety of mortgage and rehab
          7        loan products designed specifically for our
          8        constituents.  These products are necessary for
          9        the success of our mission.  Knowing that grants
         10        and loans are decided upon on a regional and
         11        local basis is very important to us.  We have no
         12        concern that philanthropic decision-making will
         13        change with either their headquarters or their
         14        name.  Norwest corporate citizen philosophy and
         15        the trust we have in them based on our
         16        experience are enough for us to feel very
         17        comfortable with the merger.
         18             Norwest executives sit on our various
         19        boards and get involved.  Pat Hanson is
         20        treasurer of our Board of Directors.  Pat
         21        Donovan chairs our campaign.  The corporation
         22        itself supports employee volunteer efforts
         23        throughout the year and is another sign of being
         24        a great corporate partner and meeting the
         25        additional needs of area nonprofits.

          1             To reiterate and conclude, we truly believe
          2        this merger with Wells Fargo will be a good
          3        thing, bringing Norwest corporate citizen
          4        philosophy to the merged organization, will
          5        enhance the cultural differences with Wells that
          6        have been talked about.  Because of the
          7        leadership roles that it looks like Norwest will
          8        be taking with the merger, because of the
          9        outstanding CRA rating Norwest has maintained,
         10        because of the continuation of regional and
         11        local philanthropic decision-making and because
         12        of our history with Norwest Corporation, we
         13        strongly support their merger.
         14             Thank you.
         15                  CHAIRPERSON SMITH:  Thank you very
         16        much.  If there are no questions, then we thank
         17        you again for being here this afternoon.  And we
         18        will go on to the next panel, Panel 11.  Shall
         19        we wait for her?
         20             Are you going to come closer or -- so that
         21        you'll -- so you look like a member of our
         22        panel?  You'll be recognized as a member of the
         23        panel.
         24                  MS. THEKELSEN:  Oh, okay.
         25                  CHAIRPERSON SMITH:  We'll start with

          1        Miss Nugent, who is speaking on behalf of some
          2        of the people listed who were unable to be
          3        here.  And if you will explain.
          5                  MS. NUGENT:  Okay.  Well, I just
          6        wanted to thank you for allowing me to testify
          7        in front of you today.  My name is Danielle
          8        Nugent, and I'm a senior at the University of
          9        Minnesota Duluth.  I'm also the Chair of the
         10        State Board of Directors for the Minnesota
         11        Public Interest Research Group, the group that
         12        was listed to testify.  They've asked me to
         13        testify for them.
         14             MPIRG is a student-run and funded
         15        nonpartisan nonprofit organization.  We work on
         16        consumer and environmental issues that students
         17        raise as concerns.  I'm here today to
         18        represented the concerns of MPIRG, its state
         19        board, as well as the organization's 45,000
         20        student and community members.
         21             Our concerns over the proposed merger of
         22        Wells Fargo/Norwest include the decreased
         23        competition within the Minnesota marketplace,
         24        the rise in banking fees that the merger could
         25        cause the consumer, especially in light of Wells

          1        Fargo's less consumer-friendly fee schedule; the
          2        concern that this merger would move the
          3        headquarters of Norwest, making the bank less
          4        responsive to the Minnesota consumer.
          5             I would first like to address my testimony
          6        to the lack of competition this merger will
          7        create.  This lack of competition would mean
          8        that the ever-growing emerging banks would be
          9        the only ones left for consumers to choose
         10        from.  The Federal Deposit Insurance Corporation
         11        reports this trend is continuing at an even
         12        faster pace, showing 146 banks have been
         13        absorbed just in the first quarter of 1998
         14        alone.  This trend is the same in Minnesota.
         15        Fewer banks means fewer choices, according to
         16        our research, and higher fees.  In our report
         17        last fall, the big fee squeeze, we showed that
         18        bigger banks mean bigger fees.  An example,
         19        Minnesota, the cost of maintaining a regular
         20        checking account is 40 percent -- 46 percent
         21        higher in a large bank than a credit union and 4
         22        percent higher than in a small bank.  A
         23        no-frills checking account at a big bank costs
         24        54 percent more than at a credit union and 13
         25        percent more than a small bank.  Bank fees for

          1        overdraft and ATM withdrawals are also on an
          2        average higher at large banks.  Large banks are
          3        also more likely to charge service fees, which
          4        impact low and fixed income consumers, such as
          5        students, seniors are especially hit by this
          6        fee.
          7             On August 1st, 1998, Norwest raised its fee
          8        for overdrafts from $21 to $25, almost a 20
          9        percent increase.  Is this because the new rate
         10        is comparable with fees charged by Wells Fargo?
         11        Can we expect these type of fee increases and
         12        service costs to expand after the merger?  Wells
         13        Fargo discontinued its free checking for seniors
         14        last year.  Will we in Minnesota have the same
         15        thing happen here?
         16             Finally, we are concerned that the merger
         17        would cause a lack of responsiveness from the
         18        bank to the Minnesota consumer.  If this merger
         19        goes through, Norwest will be moving its
         20        headquarters from Minnesota to San Francisco and
         21        we no longer will have that management here.
         22        Instead, they'll be on the other side of the
         23        country.  How will this new entity stay in touch
         24        with the needs of the Minnesota consumer?
         25        Instead of being a neighbor to Norwest, the

          1        consumer becomes a number on a computer screen
          2        in some far away headquarter.
          3             As a student and a leader of a student
          4        organization, I must tell you that these mergers
          5        are not in our best interest.  We do not have
          6        disposable income to spend on large fees and
          7        charges.  We need access and affordability in
          8        our financial services.  We need banks that are
          9        responsive to our credit demands.  Lower prices
         10        require competition.  We are concerned that by
         11        allowing more of these banks to take over the
         12        marketplace, you are dooming us to a future
         13        where banking becomes a luxury only the rich can
         14        afford.  If two or three large banks are allowed
         15        to become the consumers' only choice, then what
         16        will stop them from adding service charges to
         17        every transaction, slowly taking the money from
         18        people who need it the most?  Low income
         19        individuals, senior citizens, as well as
         20        students will suffer from this.
         21             Please, we are asking you to deny this
         22        merger.  Give us a chance to not only have
         23        access to but the ability to afford our banking
         24        services.
         25             Thank you.

          1                  CHAIRPERSON SMITH:  Thank you.
          2             Mr. Tatum?
          4                  MR. TATUM:  Yes.  My name is Steve
          5        Tatum, and I am the President of New Century I
          6        Community Lending Cooperative.  And we have a
          7        brief statement that we would like to read to be
          8        included in the record.  New Century I Community
          9        Lending Cooperative's mission is to pursue the
         10        economic development and well-being of its

         11        members.  New Century was established to provide
         12        lending and borrowing opportunities to
         13        individuals and organizations previously
         14        excluded from the traditional sources of these
         15        services.  As a result of these exclusionist
         16        practices, a fundamental economic incentive had
         17        been created.  This incentive joins us together
         18        to provide for ourselves the capital that is the
         19        economic life blood of our community.
         20             Because of the -- our late notice of this
         21        public hearing, we haven't had the opportunity
         22        to review all the technical aspects of this
         23        merger, but our members felt it was important
         24        that we attend and participate.  Because the
         25        Federal Reserve Bank has the mandate to protect

          1        the interests of all citizens of this country as
          2        it pertains to banking and banking practices, we
          3        are here to get the assurance of the Federal
          4        Reserve that the important issues of
          5        discrimination, access to banking services by
          6        low-income individuals and the prevailing
          7        practices of red lining minority and low-income
          8        communities are addressed in this merger.
          9             Also, we feel there should be a formal
         10        commitment made by both financial institutions
         11        involved in this merger that minority and
         12        low-income individuals will have equal access to
         13        the capital that will insure the continued
         14        development of our businesses and communities.
         15        In this situation, the standard rhetoric "We
         16        will do better" is grossly inadequate.  It is
         17        our position to insure the fulfillment of this
         18        commitment.  A specific dollar figure should be
         19        designated as investment in traditionally
         20        underserved businesses and communities.  Our
         21        organization feels strongly that these issues
         22        are important to a large and growing
         23        constituency and be served the same
         24        consideration as any other financial element of
         25        this merger.

          1             Lastly, financial institutions that operate
          2        at the public trust have a legal, moral, and
          3        ethical responsibility to insure equal treatment
          4        of all citizens.  And it is the responsibility
          5        of the Federal Reserve Bank to insure that these
          6        institutions are in compliance with this
          7        mandate.  We plan to collaborate with all
          8        interested groups and organizations to monitor
          9        this process.
         10             Thank you.
         11                  CHAIRPERSON SMITH:  Thank you.
         12        Ms. Therkelsen.
         14                  MS. THERKELSEN:  Thank you for
         15        allowing me to speak.  I was under the
         16        impression that this had already been decided,
         17        that -- that Norwest and Wells Fargo were going
         18        to merge.  So I appreciate your allowing me to
         19        speak at this time.
         20             I've been a customer of Norwest Bank since
         21        1972.  And I was a customer at the Nor --
         22        North -- Nor -- well, they call it Nordeast
         23        Minneapolis office.  And then when I moved to
         24        south, I'm still a customer of the northeast
         25        office.  I'm very pleased with Norwest Bank.

          1        They're very helpful.  And I'm on direct deposit
          2        so it goes directly into the bank.  But, I mean,
          3        joining a bank is not for me a thermos or a
          4        blanket or something like that.  That's not
          5        what's important to me.
          6             I understand when you have to pay for
          7        checks.  That I understand, and overdrafts and
          8        things like that.  That makes sense to me.  But
          9        being on direct deposit, I have 50 cents in the
         10        bank right now.  And I just -- you know,
         11        Norwest, as long as I keep the 50 cents there,
         12        is not going to be charging me extra money to
         13        keep the 50 cents, like if you fall below a
         14        certain amount, which is common for most banks.
         15        I do miss more ATMs.  Norwest doesn't have
         16        enough.  But I -- I just think that they are
         17        known very much for their customer service and
         18        their good record.  And I'm opposing the merger
         19        partly because of that basis.  I had heard some
         20        concerns about customer service of Wells Fargo.
         21        I'm sorry.  I can't tell you exactly where I
         22        heard it, so I'm not going to quote somebody
         23        that I might be wrong about.  But it talked
         24        about taking away the free checking and things
         25        like that, and I can't afford it.  And I don't

          1        think a lot of other people who have the senior
          2        rate can, and so I'm opposing it respectfully.
          3                  CHAIRPERSON SMITH:  Thank you very
          4        much.
          5             If there are no questions from the panel,
          6        then I thank you all for coming here this
          7        afternoon and presenting your views on this
          8        application.
          9             And I don't know whether -- is our next
         10        panel here?  But thank you very much.
         11             Yes, please.  Do we have one more?  Okay.
         12        We have one more member of the panel coming, but
         13        we'll go ahead and start with Mr. Jensen.
         15                  MR. JENSEN:  Thank you.  Thank you for
         16        allowing me to be here today.  I'm here to just
         17        talk about our involvement with Norwest over the
         18        past 13 years with the Anoka County Economic
         19        Development Partnership and the Anoka Sherburne
         20        County Capital Fund.  I'm the director of the
         21        partnership, the Anoka County Economic
         22        Development Partnership, which is a 501C3
         23        nonprofit corporation that does economic
         24        development work in the 21-community Anoka
         25        County area.  And I'm also the President of the

          1        Anoka Sherburne County Capital Fund, which is
          2        a -- which is the State of Minnesota's first
          3        multibank, multiinvestor community development
          4        corporation that makes investments in emerging
          5        technology-based companies.
          6             First, a little bit about the partnership.
          7        We were formed in 1985.  And I've been Director
          8        since we started.  Norwest has been involved
          9        with us from the beginning.  Dave Raider of
         10        Norwest Service and our Board of Directors
         11        and -- and they have also not only committed
         12        their time and their expertise, but also they
         13        have contributed financially to the nonprofit,
         14        which is -- I'm obviously greatful for.  And
         15        it's something that, of course, you need that
         16        capital.
         17             The partnership has focused a little --
         18        they've taken a different approach to economic
         19        development.  And we've focused primarily on
         20        emerging technology-based businesses.  We don't
         21        chase existing companies around as a way of
         22        doing economic development, but we look at
         23        working with emerging technology-based
         24        businesses because they are not just moving
         25        companies around.  They are new jobs and,

          1        second, that they are -- also pay the best.  And
          2        I think that's important to the State.
          3             So we decided that we were going to -- if
          4        we were going to do that, we found out that
          5        entrepreneurs in emerging companies need one
          6        thing more than other things, and that was they
          7        needed access to capital.  Access to capital for
          8        the emerging companies is difficult today.  Even
          9        though we have record stock market activity and
         10        there is a lot of dollars and the economy is
         11        good, the one area that -- that there is not a
         12        lot of money for is emerging companies that are
         13        looking for, like, 250,000 to a million
         14        dollars.  The venture capitalists have so much
         15        money under management that they go for the five
         16        million dollar and up deals.  And so they're --
         17        that's a real void, which is a problem because
         18        we're also setting records these days for new
         19        company startups.  So with that background set,
         20        we decided that we were going to create our own
         21        equity fund to address that need.  And so we
         22        started, like I said, the multibank,
         23        multiinvesting Community Development
         24        Corporation.  So you can imagine me walking into
         25        Norwest and saying, "Have I got a deal for you.

          1        We're going to -- we're kind of a quasi public
          2        sector" -- even though we're not public sector,
          3        but we have money coming in from the public
          4        sector -- "economic development group.  And
          5        we're going to invest in high-risk dried up
          6        companies."  But I guess the reason I was
          7        interested in talking to you today is because we
          8        had selected Norwest as a bank with a large
          9        presence in our area.  And even though they
         10        didn't grasp this right away, they did think
         11        about it.  And after awhile, they decided this
         12        was a unique way of approaching economic
         13        development.  So they became our lead investor
         14        and took our -- our CDC through the offices that
         15        control the currency, made the initial
         16        investment.  And today we now have 22 investors,
         17        ten of which are banks.  We have NSP,
         18        Minnegasco, Minnesota Power.  All the major
         19        utility companies are involved.  The State of
         20        Minnesota has made an investment in our fund.
         21        And we've made 22 -- 24 investments to date.  A
         22        lot of those are in the Urban Initiative Fund
         23        target area with our business incubator in
         24        Columbia Heights.  We have created well over 100
         25        very high-paying jobs in this area.  We have --

          1        and with the pro -- you know, the prognosis of
          2        many hundreds more as these companies grow and
          3        mature.  They have also -- Norwest is our
          4        largest investor.  They jut made a follow-up
          5        investment of $50,000.  Actually, they
          6        approached us on the Banking Enterprise Zone.
          7        We happen to be a certified Community
          8        Development Financial Institution.  Muffy Gabler
          9        and -- one day and said, "Hey, we've -- we got a
         10        way for us to participate even in a greater
         11        extent."  And so they've -- they've done that.
         12             So I just wanted to be here today to talk
         13        about the great experiences that we've had with
         14        Norwest and share those with you.
         15             Thank you.
         16                  CHAIRPERSON SMITH:  Thank you.
         17             Mr. McLean, you're next.
         19                  MR. McLEAN:  Excuse me.  My name is
         20        Warren McLean, and I am the President and CEO of
         21        the Metropolitan Economic Development
         22        Association.
         23             First of all, I want to say thank you for
         24        giving me the opportunity to testify at this
         25        public meeting about MEDAs relationship with

          1        Norwest Corporation.  For the benefit of the
          2        committee, MEDA is a private nonprofit minority
          3        business development organization.  We provide
          4        small business consulting, financing and sales
          5        development services to nearly 600 minority
          6        entrepreneurs each year.  We have been in
          7        operation for nearly 27 years.  For the record,
          8        MEDA's relationship with Norwest has been
          9        outstanding.  First, Norwest Corporation and its
         10        CEO at the time, Phil Harris, was one of four
         11        executives who helped start MEDA 27 years ago.
         12        An original founder and funder, Norwest remains
         13        a leading contributor to MEDA, having
         14        contributed over $667,000 in operating funds
         15        alone since 1971.  In 1989 MEDA spun off a
         16        minority venture capital fund called Milestone
         17        Growth Fund.  Norwest helped capitalize the fund
         18        by providing $200,000 in capital.  In addition,
         19        I consulted regularly with Norwest Venture
         20        Capital staff for help in designing, developing
         21        and implementing the fund.  Norwest Venture
         22        Capital President, Dan Haggerty, was one of
         23        Milestone Growth Fund's original board members.
         24             Further, in 1995 MEDA established a MEDA
         25        loan program.  It's a 5.3 million dollar working

          1        capital fund for minority-owned businesses.  The
          2        fund is a collaboration of six banks, the
          3        McKnight Foundation and the State of Minnesota.
          4        The banks comprise a consortium.  And together
          5        they agreed to provide 3.3 million dollars in
          6        loanable funds.  And Norwest Corporation was one
          7        of two banks that agreed to provide one million
          8        dollars of that loan fund.  Moreover, Wally
          9        Drogenmueller, who is Norwest's Vice President
         10        and Deputy -- Deputy Senior Credit Officer, took
         11        the lead in determining the mechanics of the
         12        program.  Wally developed the overall lending
         13        criteria.  He also reviewed and tested the
         14        various lending scenarios.  Wally crafted a
         15        design that was acceptable to all six banks.
         16        And for Wally's efforts, he was selected MEDA
         17        volunteer of the year.
         18             To Norwest Corporation's credit, they have
         19        remained vigorous supporters of the program.
         20        Either Tom Burke, Terri Banizuski or Lori Powell
         21        have attended all the credit committee meetings
         22        since the program's inception in 1995.  And they
         23        meet monthly.  They also close and personally
         24        administrate each Norwest consortium loan.
         25             In 1996 MEDA launched a Vision 2000, which

          1        is a major expansion of our services.  To
          2        achieve this expansion, we asked several of our
          3        funders to double their financial support.  And
          4        Norwest Corporation was the first to literally
          5        double its support, which they did that very
          6        year.  Norwest Corporation has also funded and
          7        provided training to MEDA clients.  Jeff Judy,
          8        one of Norwest's top internal trainers, has
          9        conducted training sessions for MEDA clients on
         10        several occasions.  Jerry Gray, who was our
         11        Norwest Executive Vice President, continues a
         12        long tradition of proactive board leadership on
         13        the MEDA board.  And he recently proposed a 10
         14        million dollar expansion to the MEDA loan
         15        program.
         16             Finally, Norwest Chairman and CEO, Dick
         17        Cobosovich, is a member of the MEDA Advisory
         18        Board.  And he was the keynote speaker at MEDA's
         19        1997 annual meeting.  And he's hosted a few MEDA
         20        client lunches.
         21             This concludes my remarks.  And again, I
         22        thank you for the opportunity to provide
         23        testimony.
         24                  CHAIRPERSON SMITH:  Thank you very
         25        much.

          1             Mr. Milburn?
          4                  MR. MILBURN:  I have handouts, so you
          5        can't hit that button yet because my speech is
          6        exactly five minutes long.  But if I could pass
          7        these around for the group.  Thank you.
          8             Now, my name is Curt Milburn, and I'm the
          9        Project Director of the Phalen Corridor
         10        Initiative.  I'm also the Executive Director of
         11        the East Side Area Business Association in
         12        St. Paul, Minnesota.
         13             It makes good -- good sense -- good
         14        business sense and common sense to help rebuild
         15        the inner city.  And Norwest Bank, through its
         16        house and lending programs, continues to
         17        contribute to the urban revitalization of
         18        St. Paul.  But I think that's a story best told
         19        by some of these gentlemen, some other folks.  I
         20        feel compelled today to give you some background
         21        about the community where I work and Norwest
         22        Bank's participation with that community.
         23             The East Side of St. Paul, once a
         24        manufacturing powerhouse, has lost 2,500 jobs in
         25        the last 30 years.  There are areas of the East

          1        Side with as high as 17 percent unemployment.
          2        Since the 1970's companies like Whirlpool closed
          3        plants, throwing hundreds of people out of
          4        work.  Just last year, Stroh Brewery and Can &
          5        Conveyor closed their -- closed their doors with
          6        a loss of 500 additional jobs.
          7             There has been a number of dreams to
          8        redevelop this community, but it wasn't until
          9        the City Parks Department brought together
         10        business and community members to give input on
         11        a proposed bike path that a spark took hold.
         12        The community responded with envisioning much
         13        more than a bikeway.  Craig Johnson, the Branch
         14        Manager of two Norwest Banks on the East Side,
         15        volunteered to chair a comprehensive initiative,
         16        the likes of which -- which had never been tried
         17        in the City of St. Paul.
         18             I turn your attention to the first article
         19        inside the sleeve, which is about Craig Johnson
         20        from the "East Side Review."  Craig was raised
         21        on the East Side and remembered it as a place of
         22        opportunity, not a place of despair.  The Phalen
         23        Corridor Initiative is about reclaiming polluted
         24        lands called brown fields to attract
         25        manufacturing companies.  It's about workforce

          1        development striving to get East Siders in the
          2        jobs we attract.  It's about green space.  It
          3        has the nation's first project that's taking an
          4        abandoned shopping center and turning it back
          5        into the wetland that it once was.  It's also
          6        about building a road to get access to these
          7        community assets.
          8             And I turn your attention to the "City
          9        Business" article as well as the sleeve, which
         10        is the "PCI Today," that gives you some general
         11        background about our project.
         12             On his own time, Craig led the initiative,
         13        even flying to Washington to secure funding from
         14        the federal government to begin construction of
         15        this road.  But Norwest is not just one banker.
         16        The East Side is changing, and our initiative
         17        reflects those changes.  When Craig was promoted
         18        to a new position, Norwest had the foresight to
         19        replace him with the first Hmong banker in the
         20        country.
         21             And I turn your attention to an article in
         22        there as well on Kou Vang.
         23             Kou Vang is the first Hmong branch manager
         24        and bank vice president in the United States.
         25        The cash machine at his bank reads in English

          1        and in Hmong, probably the only one in the
          2        country.  A visit to that bank is like visiting
          3        the world.  African Americans, Latino, Hmong and
          4        Whites are not only customers, but they are
          5        employees as well.  I'm proud to report that Kou
          6        has been recently made the Vice Chair of the
          7        Phalen Corridor Initiative, a position that
          8        leads directly to the position of chair of the
          9        project.
         10             It's not just on the neighborhood level
         11        that Norwest has integrated itself with the
         12        community, either.  Norwest has backed us with
         13        this commitment with joining nine other
         14        community funders to support the initiative.
         15        Also, Larry Hague, a media relations expert with
         16        the bank, has provided three separate media
         17        trainings for us.
         18             Now, you folks should remember the Phalen
         19        Corridor Initiative is about community members,
         20        local business people, residents, local
         21        officials, not slick PR professionals.  Most of
         22        us had rarely talked to a news person,
         23        nonetheless been confronted with the lens of a
         24        television camera.  Larry helped us communicate
         25        our vision.  And that's a vision that has

          1        captured the imagination of national and local
          2        leaders.
          3             Joan Germinski, President and District
          4        Manager of Norwest, sits on what we call our
          5        advisory committee.  Along with our Mayor,
          6        Congressmen and others, Joan helps chart our
          7        course, strongly stressing the use of Norwest
          8        programs for inner city residents.
          9             Another community leader is Pat Donovan.
         10        Mr. Donovan is the Norwest Regional President.
         11        And he acted as co-chair of the Citywide
         12        Community Development Agenda.  Pat helped devise
         13        the blueprint of how a city can compassionately
         14        build its members and its institutions.
         15        Mr. Donovan continues to honor us and the
         16        employees of Norwest who works with -- who work
         17        with us by citing the Phalen Corridor as
         18        St. Paul's best example of comprehensive
         19        community development.  Without the commitment
         20        of Norwest Bank and its employees, we would not
         21        have the success we have today.  Our wetland
         22        project is underway.  It's actually being
         23        built.  Our first industrial park has three
         24        confirmed tenants, bringing hundreds of jobs to
         25        the East Side.  And the first funding for our

          1        roadway is in place.  Without the contribution
          2        of Norwest Bank in the future, I fear we may not
          3        realize our vision of rebuilding the East Side.
          4        We have been assured that their commitment will
          5        continue.  And we've never been misled by this
          6        institution or its dedicated employees.
          7             I thank you for this opportunity to talk
          8        about one of our community partners.  And I'm
          9        free to answer any questions you might have.
         10             Thank you.
         11                  CHAIRPERSON SMITH:  Thank you
         12        Mr. Shreffler?
         14                  MR. SHREFFLER:  Very good.  Thanks.
         15        I, too, appreciate the opportunity to speak with
         16        you.  I also appreciate that there's this
         17        process that allows for community input.  As --
         18        as a member -- or as a part of Northeast
         19        Minnesota and living in the Duluth area, I
         20        really want to stress that the community
         21        involvement really depends on leadership of
         22        large agencies and organizations like Norwest
         23        Bank to make that community happen.  My
         24        experience with Norwest is why I'm here.  I want
         25        to share that with you briefly.  The LSS Loan

          1        Fund is a loan fund that was created eight years
          2        ago.  We loan money to low-income families to
          3        purchase vehicles or repair vehicles so they can
          4        go to work, continue work and kind of maintain
          5        that family stability, really, is the essence of
          6        it.  Self-sufficiency, family stability is what
          7        we're about.  We partnered with Norwest Bank
          8        eight years ago.  It was a unique partnership.
          9        No one else that we knew of in the country was
         10        doing anything like that.  They joined with us
         11        to loan money to low-income families to get them
         12        to work.  In eight years, we've loaned 1.4
         13        million dollars to a little -- a little over 800
         14        families in the northeast region of Minnesota.
         15        Norwest was instrumental in creating the process
         16        that we're able to use to loan money to people.
         17             The -- five years ago, the loan fund went
         18        statewide.  The McKnight Foundation supported
         19        the loan funds and expanded the concept of the
         20        loan funds to a statewide program.  The Twin
         21        Cities had programs that did not use banks.
         22        Northeast Minnesota was the first to use a bank
         23        involvement -- Norwest's involvement.  And then
         24        when they went statewide, McKnight said, "We
         25        want the bank process to be a part of that

          1        initiative.  So five years ago three other
          2        Norwest Banks in the state, southeast, southwest
          3        and then west central, got involved in the loan
          4        fund, as well, and are -- are currently joining
          5        or partnering, as we do with -- as Norwest does
          6        in northeast Minnesota, they also do throughout
          7        those other three areas of the state.  So almost
          8        half the state is covered by Norwest's
          9        involvement in these loan funds.
         10             The other thing that happened about three
         11        years ago is that the Family Service America and
         12        the McKnight Foundation went nationwide with the
         13        loan fund program.  One of the things that they
         14        stressed was the involvement of the bank in that
         15        partnership process so that the banks can do
         16        what they do best and that social service
         17        agencies can do what they do best.  And, really,
         18        that's loaning money to people to get them back
         19        to work.  That program has gone nationwide.
         20        It's in ten cities now.  It will be in 20 cities
         21        as soon as those programs are up and running.
         22             What I'm -- my intent and what I'm
         23        stressing, really, is that the -- what was
         24        created in northeast Minnesota eight years ago
         25        has become a model for what banks can do in

          1        relationship to social service and low-income
          2        needs.  And Norwest in northeast Minnesota took
          3        the initiative, got involved.  And now it's
          4        expanded as a model that's been spread out
          5        throughout the nation.
          6             So I do expect that with the merger with
          7        Wells Fargo, it will help us to move that
          8        mission forward and will not hinder us.  It will
          9        open doors for us.  It won't close them.  And I
         10        certainly expect our relationship in northeast
         11        Minnesota to continue to be as strong as it's
         12        been.
         13             So thank you.
         14                  CHAIRPERSON SMITH:  Thank you very
         15        much for coming this afternoon.  If there are no
         16        questions from the panel, then we will move on
         17        to the next panel, assuming that we have some
         18        number from them here.  Great.
         19             Thank you very much for coming.  We're
         20        going to start with Miss Young.  Is that all
         21        right?
         22                  MS. YOUNG:  I knew I'd take the wrong
         23        seat.  This is okay.
         24                  CHAIRPERSON SMITH:  No.  You're from
         25        the previous panel.  That's why thought we would

          1        put you on first.
          3                  MS. YOUNG:  Oh, okay.  Okay.  My name
          4        is Zula Young.  I work and I live in St. Paul.
          5        I'm the Vice President of Rondo Community Land
          6        Trust, the Board of Directors.  And I wish to
          7        thank the Federal Reserve for giving me the
          8        opportunity to speak on the proposed merger
          9        and -- between North -- Norwest and Wells Fargo
         10        Company.
         11             I'm a single parent who has had the
         12        opportunity to purchase the first completed land
         13        trust home in St. Paul.  I grew up in the
         14        neighborhood where my home is located.  I'm very
         15        active within my community.  I'm also an
         16        organize -- organizer of the Community Guidance
         17        Project called SAGE.  I'm a member of the
         18        Summit-University Weed & Seed Project.  And I
         19        work as a paraprofessional in the public school
         20        systems.
         21             The land trust model is fairly new to the
         22        Twin Cities and Minnesota.  And Norwest was the
         23        first and to date the only mortgage company
         24        willing to take a chance with Rondo Community
         25        Land Trust and separating the land from the

          1        building and agreeing to the ground lease
          2        documents.  The land trust model is unique in
          3        its limits -- and it does limit the equity, but
          4        it provides a long-term 99-year affordable
          5        housing for low and moderate-income families.
          6        Norwest was willing to put the extra time in to
          7        understand the land trust model that works and
          8        the ability to make lending decisions here in
          9        the community.  They have had the ability to say
         10        yes to new ideas at a local level.  Norwest has
         11        not done land trust mortages before mine, but
         12        because of Rondo Community and Norwest, I had
         13        that opportunity to own my own home now.
         14             Our relationship with Norwest is built
         15        around people.  And we work on a -- that we work
         16        with on a regular basis and also affordable
         17        housing.  Rondo has developed a trusting working
         18        relationship with some individuals at Norwest
         19        Corporation.  We deal with Carl Swindinberg of
         20        Norwest Mortgage; Sally Burke from Norwest Real
         21        Estate Management Services; Mary Gabler, Norwest
         22        Twin City Community Development; and Bill
         23        Canfield, Norwest Mortgage.
         24             Rondo would like and hope and expect the
         25        Norwest philosophy will continue that allows us

          1        to work with Carl, Sally, Mary and Bill after
          2        the merger.  And it's the individual people
          3        within an already very large corporation that
          4        makes it work now.  And these are the people
          5        that help it work in the future.
          6             Norwest was willing to take a chance with
          7        their ground leased.  And we hope the Norwest
          8        philosophy to continue that allows people within
          9        the corporation to listen to new ideas, such as
         10        land trust, and act on them also on a local
         11        level.  While Rondo Community Land Trust is a
         12        small housing organization in St. Paul, we are
         13        providing affordable housing one house at a
         14        time.  And so far Norwest has been there one
         15        mortgage at a time.  When the shortage of
         16        affordable housing is better understood at both
         17        the local and national level, there is more
         18        willingness to provide funds to build and
         19        renovate affordable housing.  And we all
         20        increase our production levels.  And when that
         21        day comes, we hope the Norwest philosophy of
         22        working with neighborhood housing
         23        organizations -- organizations -- excuse -- to
         24        be there with us.  And we want to see Norwest
         25        Mortgage expand the use of the land trust and

          1        affordable mortgages throughout the country.
          2        And we believe the philosophy of local
          3        decision-making and a regional approach will
          4        insure Rondo Community Land Trust will have the
          5        same working relationship we now have with
          6        Northwest -- I'm sorry -- Norwest.  You know I'm
          7        nervous.  Bear with me.
          8             So we hope that as the merger talks
          9        continue both here and in Washington that
         10        Norwest and Wells would commit to the
         11        following:  One, a defined regional approach
         12        which will be established throughout the
         13        country, a regional system that allows real
         14        decision-making within each area for -- and,
         15        two, Carl, Sally, Mary and Bill should keep
         16        their current phone numbers without an 800
         17        prefix.  While some departments in Norwest are
         18        currently centralized, every effort should be
         19        made that allows for decision-making at a local
         20        level.  And, three, to continue to take risks,
         21        listen to the ideas within the low-income
         22        community because that is where the answers are
         23        to solving our housing shortage.
         24             And I thank you for your time.
         25                  CHAIRPERSON SMITH:  Thank you very

          1        much.
          2             Mr. Ernest?
          4                  MR. ERNEST:  Thank you.  I'd like to
          5        comment a little bit on Norwest's commitment to
          6        agriculture.  I'm a grain farmer.  I grow corn
          7        and soybeans.  And, in fact, 24 hours ago I was
          8        combining a terrific soybean crop.
          9             What I'd like to do is I'd like to talk
         10        very briefly about a number of kind of mega
         11        trends that's happening in agriculture.  And
         12        some of the things that I'm going to ask you to
         13        consider when you consider the -- the dynamic of
         14        the merger between Wells Fargo and Norwest
         15        Bank.  Many of you have heard of Freedom to
         16        Farm.  Or now they're talking Freedom to Fail a
         17        little bit in the paper.  What's happening in
         18        our business is we're becoming less dependent on
         19        agriculture.  And right now we're kind of going
         20        through a series of streams of declining
         21        payments from the government to get out of
         22        agriculture.  We don't know where we're
         23        ultimately going to end up with Freedom to
         24        Farm.  What we have learned in the last two
         25        years is the business is extremely cyclical.

          1        The highs are very high.  The lows are very
          2        low.  Corn is $1.48 right now.  26 months ago it
          3        was $5.08.  So we're in a business and an
          4        environment where we have to deal with a lot of
          5        volatility.  We're also in an environment that
          6        is speeding up technology -- with technology or
          7        having a biotech -- big technical pieces of
          8        equipment.  And we have extremely high capital
          9        needs.
         10             We're in a business that's really
         11        changing.  And being a customer of Norwest for
         12        approximately 15 years and looking at
         13        agriculture and looking at all these things that
         14        are happening, there's a key element that --
         15        that I think has become apparent.  And that's
         16        what I want to speak to today.
         17             We in production agriculture, the people
         18        that grow the crop and have to endure these
         19        cycles, cannot have fair-weather lenders.  We
         20        need people that are going to be with us in good
         21        times and bad.  We need people that are
         22        committed to agriculture.  We need people that
         23        agriculture is a very big part of their
         24        business.  In fact, when the combination of
         25        Wells Fargo and Norwest originally was announced

          1        in our neck of the woods, which is down by
          2        Mankato, I was not real comfortable about the
          3        whole thing because I knew Norwest's commitment
          4        to agriculture.  And I knew nothing about Wells
          5        Fargo.  Well, I was delighted to learn that
          6        Wells Fargo is the number one ag lender in the
          7        United States.  And it seems to me if you put
          8        the number one ag lender in the United States
          9        and the number two ag lender in the United
         10        States together, you're going to have a pretty
         11        formidable bank that could really help
         12        agriculture.  And, in fact, I, for one, will be
         13        extremely disappointed if, as a by-product of
         14        this merger, if we do not get some new financial
         15        services, some innovative financial services.
         16        And I believe the combination of these two
         17        elements are going to really help production
         18        agriculture.
         19             There's no way, with the commitment of
         20        Wells Fargo and Norwest and how big agriculture
         21        is a part of their business, that they can be a
         22        fair weather lender.  And we cannot endure fair
         23        weather lending in these cyclical environments.
         24             The other thing that is happening in our
         25        business is we no longer grow a generic crop.

          1        We grow specialty crops.  We grow waxy corn.  We
          2        grow high-oil corn.  We grow all these -- these
          3        products.  What works here does not work 100
          4        miles from here.  What works 100 miles from
          5        there doesn't work beyond the road.  What that
          6        speaks to is we need local control and we need
          7        local decision-making and we need people that
          8        can be local and understand our business.  And
          9        in my judgment working with Norwest over the
         10        last 15, 16 years, that's probably been one of
         11        their greatest strengths.  And I am hopeful that
         12        that will continue.  And -- and I'm confident it
         13        will.
         14             So in conclusion, as a producer and a small
         15        businessman and a consumer of credit, I'm
         16        excited about the merger.  And I believe the
         17        merger can be very positive for agriculture.

         18        And I would encourage you to consider these
         19        aspects that I just discussed when you're
         20        considering the merger.
         21             Thank you.
         22                  CHAIRPERSON SMITH:  Thank you very
         23        much.
         24             Mr. Koy?

          1                  MR. KOY:  Thank you, ma'am.  My name
          2        is Chantha Richard Koy.  I'm a mortgate
          3        counselor with the Powderhorn Resident Group.
          4        Powderhorn Resident Group is a nonprofit
          5        corporation -- community corporation.  And the
          6        relationship with PRT, which is what we call
          7        short for Powderhorn Resident Group, PRT, with
          8        Norwest is through a variety of thing.  One is
          9        through the development of multi-family housing
         10        for the low-income people in the Southeast Asian
         11        community.  Norwest has been a great asset for
         12        our community and has been blessed for our
         13        Southeast Asian people that get -- receive
         14        financial -- directly financial support from
         15        Norwest.  The added relationship that we have
         16        with Norwest is the Home Buyer Education Program
         17        and Counseling Program for all -- not just for
         18        Southeast Asian community, but for all the
         19        community at large.  We just design for low to
         20        moderate-income people to understand the process
         21        of buying a home.  Beside that, Norwest has been
         22        a leader in -- in term of developing and
         23        supporting, you know, affordable housing in the
         24        community home buying program.  Muffy Gabler
         25        have spent tremendous of time -- and other

          1        mortgage counselor and other loan officer and
          2        underwriter from Norwest have spent tremendous
          3        of time in our community to study what type of
          4        program should be created and should be
          5        established in term of reaching the goal of
          6        affordable housing in our community.
          7             So I strongly speak not just on behalf of
          8        the Powderhorn Resident Group, but also on
          9        behalf of my Cambodian community that we have
         10        been -- received a lot of support from Norwest.
         11        We hope and I hope that the merger with Wells
         12        Fargo will bring more prosperity for our
         13        community and more opportunity, more program,
         14        you know, in term of affordable housing and home
         15        buying education program and establish more --
         16        more -- you know, expanding the existing
         17        mortgage program that Norwest have with just the
         18        CHOP Program, one of the leader in our, you
         19        know, mortgage lending community and hold
         20        that -- to expand that to our community.
         21             And that's all I have to stay today.  Thank
         22        you.
         23                  CHAIRPERSON SMITH:  Thank you very
         24        much.
         25             Ms. Vitela?

          2                  MS. VITELA:  Thank you.  My name is
          3        Mary Vitela.  I have been a realtor going on ten
          4        years now.  I'm currently with Stevens Realty in
          5        St. Paul.  I am here to speak on the Community
          6        Homeownership Program.  This program is
          7        available through Norwest in Minneapolis and
          8        St. Paul.  I support this program strongly
          9        because I use it in about 95 percent of my
         10        business.  The basis of my business is by word
         11        of mouth or referrals or past clients.  These
         12        clients refer their relatives and their
         13        coworkers to me.  So it is very important that I
         14        am able to help these new buyers.  My clients
         15        are mostly from the West Side of St. Paul.  Some
         16        of them have a limited understanding of the
         17        English language and some of them only speak
         18        Spanish.  For this reason, and because I am
         19        fluent in Spanish, the majority of my business
         20        comes from the Hispanic population.  They rely
         21        very strongly on any information I relate to
         22        them.  I use the Community Homeownership Program
         23        because I feel it is the best for my clients.
         24             Some of the most important highlights are
         25        it's a conventional mortgage with five percent

          1        down.  And extremely important is that it has no
          2        private mortgage insurance payment.  This
          3        insurance can add an average of 38 to $42 to the
          4        mortgage payment.  And to some people that are
          5        working two jobs, this can -- is a large
          6        amount.  In over the life of the loan, it can
          7        become a considerable amount.  Because of the
          8        five percent down and no insurance on top of the
          9        mortgage, the buyer starts the loan off with
         10        some equity.  The mortgage being lower, they
         11        have lower monthly payments.  Also through this
         12        program, the seller can contribute to some of
         13        the closing costs.  And the bank also has
         14        special funds available to help with the down
         15        payment.  And, therefore, the buyers need less
         16        of their own money to purchase a home.  Also
         17        because of the 38 percent qualifying ratios,
         18        more low to moderate-income people are able to
         19        qualify for a nicer home.
         20             The buyers that I help are buying homes for
         21        the first time, the majority of them.  They
         22        basically do not know where to start in the
         23        process of owning their own home and feel they
         24        cannot afford their own home.  They feel they
         25        need thousands of dollars to buy and have no

          1        substantial money saved.  These buyers usually
          2        can pay for their rent and their household
          3        expenses.  But they have no credit cards, they
          4        have no installment loans, and they have no debt
          5        because they can't afford to have any debt.
          6        They prefer to pay for cash.  I mean, they
          7        prefer to pay in cash for items as they need
          8        them.  Their employment outlook is usually
          9        pretty good and constant.  They are reliable and
         10        extremely responsible and hard-working people.
         11        They only need a little direction.  They don't
         12        understand the process.
         13             They -- I feel that these buyers are
         14        classic examples of the type of buyers that the
         15        CHOP Program is designed to help.  This program
         16        has enabled me to obtain mortgages for my
         17        clients that otherwise might not have been able
         18        to buy a house.  I have used this particular
         19        program since 1991.  Through the years, I have
         20        developed a relationship with Norwest, and I
         21        know their policies toward approve -- approval
         22        of obtaining a mortgage.  And I prepare my
         23        clients to meet these policies.  Whether they
         24        are quickly approved or even if it takes a year,
         25        the buyers have a goal, and they work toward

          1        it.  I have gotten a 99 percent approval for
          2        these people.  Most of my -- the majority of my
          3        buyers are satisfied.  Satisfied buyers are very
          4        appreciative of being homeowners.  And they
          5        believe it to be a dream come true.  I feel that
          6        Norwest has enabled them to establish roots in
          7        the community, and all their help throughout the
          8        years has been invaluable to me.  I will
          9        continue to use their services indefinitely,
         10        especially if they continue to use this special
         11        program, the CHOP Program, Community
         12        Homeownership Program.
         13                  CHAIRPERSON SMITH:  Thank you.
         14             Mr. Vitela, were you going to make a
         15        presentation?
         16                  MR. VITELA:  No.  I'm just here for
         17        her.
         18                  CHAIRPERSON SMITH:  For moral and
         19        other support?
         20                  MR. VITELA:  Right.
         21                  MS. VITELA:  Yes.
         22                  CHAIRPERSON SMITH:  Thank you.
         23             If there are no questions from the panel,
         24        this may also turn out to be the last panel.  I
         25        don't know whether we have any other witnesses

          1        who were coming to testify.  Would you like for
          2        us to -- should we wait for a couple of
          3        minutes?
          4             Is there anyone who has not signed up to
          5        present testimony who would like to make a
          6        statement from the audience?  If not, we --
          7        there are a couple of people who were scheduled
          8        to be on later.  We don't know whether they will
          9        appear or not.  Do you want to stay and --
         10                  MR. BINNING:  I wonder if we should --
         11        we should maybe take a quick break?
         12                  CHAIRPERSON SMITH:  We're going --
         13        we'll -- what we'll do is we'll take a break.
         14        And then if -- and reconvene if they come
         15        sometime relatively soon.  It's 4:15 so we're
         16        not -- we're not rushing off anywhere.
         17             But I want to thank you.  And thank you, as
         18        the representatives of all of the panels who
         19        have gone before, in the sense that we
         20        appreciate your coming to present your views, to
         21        sharing information with us, whether it has been
         22        in support of the application that is before the
         23        Federal Reserve or opposing the application.
         24        The information that you have shared has been
         25        important to the process.  And we thank you very

          1        much for coming.
          2             And with that, we will take a small
          3        recess.
          5                  (Whereupon a break was taken.)
          7                  CHAIRPERSON SMITH:  I'm reconvening
          8        the meeting long enough to adjourn since no
          9        other panelists have shown up and since we are
         10        approaching or maybe have hit quarter of 5:00,
         11        which is when they were due to be on the panel
         12        if they were going to be on a panel.  So thank
         13        you all again for coming to this public
         14        meeting.  And we are adjourned.
         16                  (Hearing concluded at 4:45 p.m.)
Last update: December 3, 2010