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Public Meeting Transcripts

Public Meeting Regarding Fleet Financial Group, Inc., and BankBoston Corporation

Wednesday, July 7, 1999

Transcript of Panel One

       19            MR. MURRAY:  Thank you.  I'd like to begin 
         20   by thanking the Federal Reserve Board for inviting 
         21   me to speak on behalf of Fleet on our proposed 
         22   merger.  Since the months since we announced our 
         23   proposal, it has been a very proud and challenging 
         24   time for all of us at Fleet and Bank of Boston.  I 
         25   would particularly like to thank our employees, many 
          1   of whom have been working very hard this summer to 
          2   ensure that our company gets off on the right foot.  
          3            I know there are many questions and 
          4   concerns about this merger and we hope to address 
          5   them today.  All of us, employees and citizens 
          6   alike, are on the verge of ensuring that New England 
          7   will enter the 21st century with a hometown bank, 
          8   headquartered in this city, committed to serving our 
          9   customers and our community.  
         10            Four years ago when I testified before this 
         11   Board about Fleet's merger with Shawmut, I spoke 
         12   about the banking industry's trend towards 
         13   consolidation and how it affected our relations with 
         14   our customers and our communities.  Chad talked 
         15   about the same issues when it came time to discuss 
         16   BankBoston's merger with BayBanks.  We took steps 
         17   then to keep our institutions strong and 
         18   independent.  Neither of us expected to be here 
         19   today talking about a merger between our banks, but 
         20   we recognize that this merger is another necessary 
         21   step to ensure that New England continues to have a 
         22   major locally-based banking presence.  
         23            In the past few years we've seen a number 
         24   of bank megamergers like NationsBank and Bank 
         25   America, First Chicago and Bank One.  The number of 
          1   commercial banks in the U.S. decreased by a third 
          2   between 1987 and 1997.  The number of bank branches 
          3   increased by a third over the same period, as fewer 
          4   banks worked to expand access to service.  
          5            We've seen consolidation spill across 
          6   national borders as Deutsche Bank acquired Bankers 
          7   Trust, and we've seen it in France with Banque 
          8   Nationale de Paris' attempt to take over Sogen 
          9   Paribas to create a bank with a trillion dollars in 
         10   assets.  
         11            Already in Europe there are far fewer banks 
         12   than in the U.S., possessing far greater assets and 
         13   ability with which to compete in the global 
         14   financial markets.  In the U.S. we've also seen 
         15   interindustry mergers between Citicorp and 
         16   Travelers, and E-trade and Telebank, as new 
         17   technologies help to break down archaic barriers 
         18   between banking and other financial service 
         19   providers.  
         20            By increasing in size, banks achieve 
         21   economies of scale that allow us to invest more in 
         22   technology and in people so that we can develop 
         23   superior products and services like banking, 
         24   brokerage and investment services.  With products 
         25   such as these, we can match the increasingly 
          1   sophisticated needs of both the businesses and 
          2   consumers we serve.  
          3            Our merger also addresses the challenges 
          4   offered by new kinds of competitors.  We no longer 
          5   compete with just other banks.  We now compete with 
          6   institutions such as Fidelity, Merrill Lynch and 
          7   more recently with on-line banks.  More importantly, 
          8   this is a merger that seeks to strengthen our 
          9   national and international competitiveness while 
         10   making a deep local commitment.  
         11            Fleet-Boston brings together two of 
         12   America's oldest and most prestigious banks to 
         13   create one of the world's premier financial 
         14   institutions and financial providers right here in 
         15   the City of Boston.  
         16            When we announced the merger in mid-March, 
         17   our slides used the tag line, "One Plus One Equals 
         18   Greater Than Two."  This slide illustrated the idea 
         19   that our combined institution could do more in total 
         20   for our customers, communities and stockholders than 
         21   what the two premerger banks have done separately.  
         22   This was not a statistical assertion, but rather a 
         23   broad statement about how the new bank's synergies 
         24   would make Fleet-Boston more competitive than either 
         25   bank would be by itself.  The merger would enhance 
          1   our geographic diversification and our role as the 
          2   premier financial service provider from Bangor to 
          3   Brazil and from Cape May to Cape Cod.  
          4            This diversification will help reduce our 
          5   vulnerability to economic downturns.  Those of us 
          6   who went through the regional banking crisis of the 
          7   early '90s understand how important both geographic 
          8   and operating diversity are, and we don't want to be 
          9   at risk in the event of another economic downturn in 
         10   a particular region or industry sector.  
         11            This is indeed a very important time for 
         12   all of us who live in New England.  It is the time 
         13   for us to secure our economic future by responding 
         14   to the competitive challenge raised by world-wide 
         15   banking financial services, consolidation and 
         16   mergers.  
         17            While there are many opportunities and 
         18   benefits to this merger, at the same time there are 
         19   many concerns being voiced, and I'd like to address 
         20   them right now. 
         21            One of the compelling reasons for this 
         22   merger and why we know it will work is that each 
         23   company brings certain strengths to the table.  
         24   Right from the beginning Chad and I understood that 
         25   we must leverage the advantages of each company.  In 
          1   that spirit we will have BankBoston lead the way in 
          2   the area of community development.  They've done a 
          3   great job in this area for which they have been 
          4   rightly recognized.  
          5            Maintaining our outstanding CRA ratings 
          6   will continue to be a corporate goal for 
          7   Fleet-Boston.  We will use the BankBoston community 
          8   development approach, including First Community Bank 
          9   and the BankBoston Development Corporation.  
         10   Together we look forward to setting a new standard 
         11   of community development.  
         12            We have an outstanding CRA rating in 
         13   Massachusetts.  We have enormous successes and 
         14   successful partnerships that have worked to create 
         15   thousands of new homeowners that have invigorated 
         16   communities.  Moving forward, we plan to continue 
         17   these efforts.  
         18            We will also sustain our support of 
         19   neighborhood-oriented banking services, community 
         20   development programs and the charitable giving that 
         21   makes this commitment a reality.  
         22            Gail will speak about these initiatives in 
         23   detail, but I wanted to state that we strongly 
         24   believe that our recently announced commitment of 
         25   14.6 billion dollars is a realistic and achievable 
          1   plan and one that will increase affordable housing, 
          2   strengthen small business, and stabilize 
          3   neighborhoods in our footprint.  
          4            Moving forward with the new commitment, 
          5   we'll have an oversight board that will measure our 
          6   progress in serving community needs, a board with 
          7   representatives from many of the 125 community 
          8   groups we consulted when developing this plan.  
          9            Addressing antitrust concerns, it is 
         10   important to realize that the proposed merger is 
         11   more about combining the complementary businesses of 
         12   Fleet and BankBoston and not about combining 
         13   competing businesses.  In this regard Fleet's retail 
         14   branch operations extend to many Northeastern states 
         15   in which BankBoston has no branches, whereas, 
         16   BankBoston's large corporate banking business 
         17   extends across the nation, in 23 foreign countries 
         18   where Fleet has no presence.  
         19            The merger will also bring together 
         20   complementary nonbanking lines of businesses such as 
         21   Fleet's Quick & Reilly retail brokerage franchise 
         22   and BankBoston's Robertson Stephens, an investment 
         23   banking business.  Where the two banks do overlap, 
         24   we have proposed a divestiture plan that was 
         25   intended to preempt any conceivable competitive 
          1   concerns.  With more than 290 branches and 
          2   approximately 12-1/2 billion dollars in deposits, 
          3   the proposed divestitures are far and away the 
          4   largest ever made in the history of U.S. bank 
          5   mergers.  As a stand-alone entity, the divestiture 
          6   would rank among the top 50 bank holding companies 
          7   in the nation in terms of small business loans and 
          8   total assets. 
          9            Chad and I both grew up with banks 
         10   headquartered here in our home region, banks managed 
         11   by people who cared about New England and its 
         12   people.  I don't want my children or my 
         13   grandchildren living in a New England whose economic 
         14   fate is dictated from outside the region.  I want 
         15   them to have local institutions that are strong and 
         16   sophisticated, but that make decisions locally with 
         17   New Englanders in mind.  So many American cities 
         18   have lost that.  There's no longer a major 
         19   indigenous bank in Los Angeles, none in Miami, 
         20   Denver, Dallas, Philadelphia or Houston. 
         21            Panelists, I mentioned at the outset how 
         22   excited all of us at Fleet and BankBoston are about 
         23   this merger.  I'd like to finish by telling you how 
         24   much this merger means to me personally.  I grew up 
         25   in New England, went to school here, and I've worked 
          1   in banking here for almost four decades.  This is my 
          2   home and this is home to Fleet and BankBoston and 
          3   our tens of thousands of dedicated employees.  Our 
          4   legacy will be a large global institution domiciled 
          5   in New England with deep community commitments.  
          6            The financial system that is now taking 
          7   shape in which the Federal Reserve Board has done so 
          8   much to make possible is one that reflects the 
          9   vision and innovation that has made our nation the 
         10   world's financial leader.  
         11            I'm also pleased that the House of 
         12   Representatives last week passed the Financial 
         13   Services Act of 1999.  With the House and Senate 
         14   both voting to appeal the outdated Glass-Steagal 
         15   Act, we're a step closer to ensuring that this 
         16   nation's financial institutions can thrive and 
         17   compete in the next century.  
         18            Thank you for the opportunity to speak, and 
         19   let me also thank the concerned citizens of all 
         20   viewpoints who cared enough to join us today and 
         21   share their thoughts.  
         22            PRESIDING OFFICER SMITH:  Thank you.  I'd 
         23   like to remind witnesses that they can submit their 
         24   full written statement for the record, so that to 
         25   the extent you can abbreviate your comments, that 
          1   would be helpful and help us stay within the 
          2   allotted time for the panel. 
          3            Mr. Gifford?
          4            MR. GIFFORD:  That's one heck of an 
          5   introduction.  Thank you.  I'll move quickly in my 
          6   mind.  But thank you, Terry.  Thanks all for 
          7   participating with us.  I, too, welcome this 
          8   opportunity to discuss some of the reasons behind 
          9   and benefits of BankBoston's proposed merger with 
         10   Fleet.  I feel strongly, strongly that this merger 
         11   is in the best interests of all our stakeholders, 
         12   our employees, our customers, our communities, not 
         13   just shareholders.  I do not want to pick out any 
         14   one of those as being more important than any other, 
         15   but it's no secret -- and we said this in March when 
         16   we announced it -- the opportunity to preserve a 
         17   financial service powerhouse in New England was 
         18   important, and you heard Terry comment on that.  I 
         19   clearly share his passion for preserving the 
         20   hometown banks in the region, serving the individual 
         21   cities and communities that make up this great 
         22   fabric.  
         23            I, too, am a New Englander.  I'm a son of a 
         24   former New England bank chairman, so the importance 
         25   of a strong, locally-based banking organization has 
          1   been with me for a long, long time, and surely, as 
          2   Terry also referenced, all of us learned a very 
          3   painful lesson about the importance of a strong 
          4   banking organization about a decade ago.  
          5            As Terry has described, the consolidation 
          6   and convergence are the hallmarks, the realities of 
          7   financial services today.  BankBoston is no stranger 
          8   to that tradition, having participated in the 
          9   purchase of BayBanks in '95, Robertson Stephens, an 
         10   investment bank, in 1998 as part of a continued 
         11   consolidation in convergence of financial services.  
         12            I'm moving faster now, Madam Chairwoman.  
         13   But our proposed merger is not just about size and 
         14   strength, of course, but quality and commitment.  
         15   Our first principle from our first conversation has 
         16   been to preserve the best of Fleet and the best of 
         17   BankBoston, to build a new company that leverages on 
         18   respective strengths as well as honors and reaffirms 
         19   our shared commitments.  
         20            We will take the best talent and best 
         21   practices and make them one of everyday standards 
         22   and go on to build one of the premier financial 
         23   service organizations in the world and surely one 
         24   this region will be proud of.  
         25            The new Fleet-Boston will be one of the top 
          1   two employers in the region.  After the merger, 
          2   divestitures and consolidations, we will employ some 
          3   25,000 New Englanders and infuse into this company 
          4   no less than a billion-five in purchasing power and 
          5   tax dollars.  
          6            Acknowledging the painful impact of job 
          7   loss on some employees, we have pledged to treat 
          8   affected employees fairly and compassionately.  We 
          9   will provide a generous severance program and a 
         10   cutting-edge transition assistance program of 
         11   support for career retraining, starting a business, 
         12   or doing bank-subsidized community work.  At the 
         13   same time, and I think very importantly, we envision 
         14   career opportunities for tens of thousands of local 
         15   residents in a dynamic growth company.  
         16            The new Fleet-Boston will be a leader in 
         17   many markets around the world, able to meet the full 
         18   financial service needs of consumers, businesses of 
         19   all sizes, large and small, public sector entities 
         20   and nonprofit organizations.  We will be the premier 
         21   banking franchise in the Northeast, serving eight 
         22   million households through nearly 6,000 branches and 
         23   ATMs.  Nationwide the new company will serve more 
         24   than 20 million consumers and will have 450,000 
         25   small business customers and more than 100 billion 
          1   dollars in assets under management.  
          2            When our wholesale banking capabilities are 
          3   combined, the results will be equally valuable for 
          4   commercial customers.  We're talking about a bank in 
          5   CNI lending in the top three, the number one bank in 
          6   commercial field, premier investment bank, top five 
          7   in cash management provider, the top tier leader in 
          8   private equity, a strong company based here in 
          9   Boston.  
         10            BankBoston's unique Latin America 
         11   franchise, formed more than 80 years ago, of the 
         12   commercial needs of New England merchants will 
         13   continue to put Boston on the world map, helping to 
         14   forge links between businesses and nations in our 
         15   hemisphere.  The new Fleet-Boston will be able to 
         16   leverage this connection even further.  
         17            Finally, Fleet-Boston will have the 
         18   resources that Terry also referenced to be a major 
         19   player in E-banking, leveraging, for example, 
         20   BankBoston's base of a half million on-line banking 
         21   customers and Fleet's quarter million electronic 
         22   sure trade customers, again assuring that Boston 
         23   will participate in this very important growth 
         24   industry. 
         25            In short, a local financial service 
          1   company, competitive across the country and around 
          2   the world, will be a valuable asset to individuals 
          3   and communities and an invaluable partner to New 
          4   England businesses seeking to operate in today's and 
          5   tomorrow's global economy.  
          6            But again, this is not about size alone.  
          7   It's ironic, just as we're on the verge of an 
          8   industry that will conduct more and more of its 
          9   business electronically, without walls and without 
         10   boundaries, without bricks and mortar, without paper 
         11   or passbooks.  Our determination also to be grounded 
         12   in our local communities is greater than ever.  
         13            For me, this merger would not be effective, 
         14   would not be right if we were only able to build a 
         15   powerful regional, national, global business, if we 
         16   were only a large and strong employer, and if we 
         17   left behind the communities that have nurtured both 
         18   companies for a few centuries.  As we are poised to 
         19   become one of the leading financial institutions, we 
         20   have also pledged to remain a local partner and one 
         21   that will -- he took all the time.  (Laughter)  I'm 
         22   not sure how the system works.   
         23            I want to emphasize we remain a local 
         24   partner, continuing the development of our 
         25   communities.  We look at community development very 
          1   broadly as a strategic -- as a business opportunity.  
          2   We see as part of it the access by minority and 
          3   women-owned businesses, to the purchasing power of 
          4   Fleet-Boston.  We intend to continue and strengthen 
          5   our minority vendor programs.  
          6            We see as part of community development the 
          7   support we offer employee volunteers.  Between Team 
          8   Fleet and Eagle Core almost 20,000 of our employees 
          9   devote 150,000 hours making our community stronger 
         10   and healthier.  We see as part of community 
         11   development the embracing of individuals of all 
         12   races, genders, sexual orientations, customers and 
         13   employees.  
         14            Diversity will be an integral part of the 
         15   management of Fleet-Boston reporting directly to me.  
         16   We will continue to add to the very strong record we 
         17   are trying to achieve.  
         18            Terry has been explicit about the intention 
         19   to proceed with the BankBoston model for community 
         20   investment and very complimentary about our record.  
         21   To say that I am proud of First Community Bank and 
         22   BankBoston Development Company is an understatement, 
         23   but it is very important that we will continue to 
         24   play a leadership role in our new company.  
         25            Therefore, I ask you all to look at these 
          1   pledges in light of the very strong community 
          2   leadership records of Fleet and BankBoston, and 
          3   driven by our shared New England values, operating 
          4   in a global economy, grounded in the local 
          5   community, Terry and I will be supported and aided 
          6   by the 25,000 employees who, like us and our 
          7   company, call this region home.  We will preserve 
          8   and enhance the best of our two approaches and 
          9   records.  We will commit our honor and we will honor 
         10   our commitments.  
         11            Two months ago I was privileged to 
         12   represent BankBoston at a White House ceremony where 
         13   we were given the Ron Brown award for corporate 
         14   leadership.  BankBoston was cited for its community 
         15   banking group which has successfully served the 
         16   urban population as an emerging market.  I was 
         17   joined on that day, as I have been joined throughout 
         18   this effort, by the woman who is most singly  
         19   responsible for the success of our community banking 
         20   efforts at BankBoston and who will become the leader 
         21   of Fleet-Boston's community banking investment 
         22   initiatives, a daughter of a community activist, a 
         23   product of the community, a 30-year veteran of 
         24   BankBoston and by friend, Gail Snowden. 
         25            MS. SNOWDEN:  Thank you, Chad, and thank 
          1   you to the Board for the opportunity to present our 
          2   viewpoints and vision for the new bank now taking 
          3   shape.  It's extremely gratifying to me to have 
          4   heard from both Terry and Chad on the strong 
          5   position that community investment and in particular 
          6   BankBoston's model of development will take in the 
          7   new entity.  
          8            Nine years ago BankBoston began to redefine 
          9   the mission and objectives of its retail business in 
         10   the inner city.  By taking a more holistic approach 
         11   to economic development, we acknowledged that 
         12   economic growth must evolve from job creation to 
         13   wealth creation if sustainable growth was to happen.  
         14   We knew we had to prove we were willing to take 
         15   risks and to truly invest in community growth in a 
         16   more direct way.  
         17            We have learned much along the way, 
         18   receiving national recognition for our efforts in 
         19   urban banking through First Community Bank and the 
         20   BankBoston Development Company, both of which will 
         21   become part of the new company.  
         22            Like BankBoston, Fleet has been a leader in 
         23   small business and mortgage lending, helping to 
         24   revitalize entire neighborhoods and create new 
         25   enterprises, particularly those owned by minorities 
          1   and women.  Continuing these records going forward, 
          2   Fleet-Boston Corp. intends to be the number one 
          3   small business bank in New England, maintaining its 
          4   strong ties to keep partnerships with organizations 
          5   such as the SBA.  
          6            We believe the key to our success has been 
          7   our commitment to strong partnerships in the 
          8   community, whether with individuals, community 
          9   groups, governments or private organizations.  They 
         10   provide us with essential ties to the fabric of the 
         11   community.  These relationships have helped Fleet 
         12   and BankBoston to be more responsive to the unique 
         13   needs of our diverse communities by providing the 
         14   customer focus that did not exist before.  
         15            Over these last few months I have joined 
         16   with my colleagues at both banks in listening to the 
         17   frank discussions that took place with 
         18   representatives from over 125 community 
         19   organizations throughout New England.  Our goal was 
         20   to gain maximum insight into the needs of emerging 
         21   low to moderate income markets and to develop a 
         22   comprehensive investment plan that was both business 
         23   minded and community minded.  These discussions have 
         24   underscored the tremendous gains that our banks have 
         25   made in helping to revitalize entire neighborhoods 
          1   within our New England communities such as Codman 
          2   Square and Egleston Square.  
          3            The key themes that surfaced provided the 
          4   framework for our community investment commitment.  
          5   The result is a 14.6 billion dollar commitment over 
          6   five years which incorporates the best of our banks' 
          7   programs while establishing a leadership role of 
          8   continuing to earn an outstanding CRA rating.  This 
          9   dollar commitment represents a continuation and in 
         10   most cases an enhancement of LMI lending activities 
         11   by Fleet and BankBoston when adjusted for divested 
         12   branches and deposits.  We view the plan as 
         13   responsive and affirmative and continuing to enhance 
         14   those programs that support wealth creation and 
         15   economic development.  
         16            In the past, particularly during merger 
         17   discussions, various banks have reached agreements 
         18   with community organizations that may have been too 
         19   narrowly focused with regard to issues or geography.  
         20   Fleet-Boston has chosen to create a broad-based plan 
         21   for its entire marketplace that effectively responds 
         22   to critical community issues and will offer 
         23   significant opportunities for multi-state 
         24   partnerships with organizations as committed as we 
         25   are to the revitalization of urban and rural areas.  
          1            I would now like to spend some time 
          2   outlining the five-year 14.6 billion dollar 
          3   strategy.  Because we believe entrepreneurs are the 
          4   engine for growth creation and job creation that 
          5   transform entire communities, over half of this 
          6   entire commitment, 17.5 billion, is earmarked for 
          7   the support of small business lending.  We will 
          8   continue our strong support of small business 
          9   development in LMI communities, with special 
         10   consideration given to minority and women-owned 
         11   businesses.  
         12            In addition, we will go beyond the 
         13   traditional role of lending to small businesses by 
         14   providing 100 million in equity investment over five 
         15   years to help new business development.  We also 
         16   foresee an enhanced SDA partnership in addition to 
         17   our conventional loan activity.  With affordable 
         18   housing in the forefront of community concerns, we 
         19   are committing four billion over the next five years 
         20   to provide additional options for low and moderate 
         21   income homebuyers in need of home purchase mortgages 
         22   and refinancing.  
         23            Additionally, it provides sufficient 
         24   product flexibility to continue our existing 
         25   mortgage program partnerships such as the soft 
          1   second mortgage program to first-time home buyers in 
          2   Massachusetts.  
          3            The bank will continue its leadership in 
          4   community development lending, including at a 
          5   minimum 1.5 billion in CRA-eligible loans in LMI 
          6   areas.  In addition, the bank will invest 500 
          7   million in low-income housing tax credit investments 
          8   in support of the development of much needed 
          9   affordable housing.  
         10            We will continue to meet basic consumer 
         11   borrowing needs with the commitment of one billion 
         12   for consumer lending in LMI areas.  
         13            Finally, the bank will expand its technical 
         14   assistance and support with the commitment of 15 
         15   million.  Interwoven throughout this commitment is 
         16   what I view as a precedent-setting partnership that 
         17   we are announcing between Fleet-Boston and Fannie 
         18   Mae over the next five years.  The 
         19   Fleet-Boston/Fannie Mae communities initiative will 
         20   commit much needed resources to home ownership and 
         21   affordable housing and is projected to create 
         22   affordable housing options for tens of thousands of 
         23   families in the communities we serve.  
         24            Affordable home ownership, loans to LMI 
         25   home borrowers through a variety of innovative and 
          1   flexible programs such as a new women head of 
          2   household mortgage initiative, affordable 
          3   multifamily rental housing, a comprehensive plan to 
          4   preserve and accelerate the production of affordable 
          5   rented housing units.  We heard this so many times 
          6   from community groups.  
          7            And finally, neighborhood revitalization.  
          8   Fleet-Boston and Fannie Mae will stimulate new 
          9   housing and community development activity through 
         10   an innovative, comprehensive, strategic neighborhood 
         11   investment initiative. 
         12            What I have presented is a framework of the 
         13   partnership with Fannie Mae, and we will be 
         14   announcing more details in the next month or so. 
         15            Accountability.  We see community 
         16   organizations as critical partners in implementing 
         17   our commitment for capital access, outreach and 
         18   education.  Key to this approach is the issue of 
         19   accountability, and we are prepared to be held 
         20   publicly accountable for meeting all the commitments 
         21   laid out today.  An oversight board comprised of 
         22   community leaders will be formed and will meet twice 
         23   a year to receive information and to give us 
         24   feedback.  A community investment subcommittee of 
         25   the Fleet-Boston board will meet regularly during 
          1   the year to monitor the corporation's accountability 
          2   for community initiatives.  And in addition, a 
          3   business line steering committee will meet regularly 
          4   to monitor business line performance against our 
          5   commitments and our goals.  
          6            In conclusion, I look upon this new 
          7   organization, Fleet-Boston, with the same enthusiasm 
          8   and excitement as when we undertook the challenge of 
          9   building a profitable business in New England's 
         10   underserved urban markets nine years ago.  We enter 
         11   our alliance with Fleet Financial Group with a 
         12   blueprint for success in this emerging market in 
         13   which everyone benefits:  Our shareholders, our 
         14   customers and the communities we serve.  
         15            My colleagues at BankBoston and I are 
         16   gratified by this opportunity that Terry and Chad 
         17   are giving us to continue our work within a larger, 
         18   stronger community.  I believe in their commitment 
         19   to community investment and neighborhood 
         20   revitalization and that's why I'm sitting here today 
         21   committed to realizing upon this initiative.  
         22            At this point I would like to pass the 
         23   microphone to my colleague, Agnes Bundy Scanlan, who 
         24   has been instrumental in developing and managing 
         25   Fleet's community development program since 1994 and 
          1   who has worked tirelessly over the past few months 
          2   in meeting with community groups to help develop 
          3   this community investment commitment. 
          4            MS. SCANLAN:  Thank you, Gail.  Good 
          5   morning.  I'm pleased to be here today speaking on 
          6   behalf of the Fleet-BankBoston merger.  Fleet and 
          7   BankBoston are committed to working toward improving 
          8   the quality of life and the overall vitality of our 
          9   communities.  I would like to reiterate the pledge 
         10   expressed  by Terry, Chad and Gail.  We stand 
         11   committed to continue to meet the needs of 
         12   communities we serve through a wide range of 
         13   financial services and products.  
         14            We enthusiastically embrace our role in 
         15   fostering job creation, promoting home ownership, 
         16   enhancing economic growth and providing education 
         17   and support to individuals and businesses in urban, 
         18   rural and suburban communities.  This is without 
         19   question the most rewarding part of my job.   
         20            Understandably there have been concerns 
         21   expressed about this merger in terms of its effect 
         22   upon communities, businesses, and consumers.  Terry, 
         23   Chad, Gail and I have addressed some of them here 
         24   and in other meetings with concerned parties.  
         25   Nonetheless, apprehension and misapprehensions 
          1   remain, fueled in part by incomplete and in some 
          2   instances incorrect information.  
          3            In fact, we have some very good stories to 
          4   tell which have not been noted to date.  Affordable 
          5   housing.  In our 125 community meetings, and indeed 
          6   in everyday conversations, it becomes clear that 
          7   affordable housing is of great importance to all of 
          8   us.  When Professor James Campen released his study 
          9   on mortgage lending, it garnered a great deal of 
         10   attention.  He noted that Fleet cut back on its 
         11   lending following the Shawmut merger and concluded 
         12   that bank mergers mean less mortgage lending for LMI 
         13   and minority borrowers.  
         14            Fleet did experience a decline in mortgage 
         15   lending overall.  It is important to note that Fleet 
         16   did not intentionally cut back on its loan volume or 
         17   cede market share willingly.  Rather, several 
         18   factors contributed to reductions in overall 
         19   mortgage lending, including increased competition 
         20   within the marketplaces, particularly from 
         21   non-banks, merger-related branch divestitures and 
         22   significant management turnover and operational 
         23   changes at Fleet Mortgage.  
         24            Despite these developments, Fleet has 
         25   remained the leader in affordable housing.  For the 
          1   six-state region cited in the study, Fleet held the 
          2   number one market share for home purchase loans to 
          3   LMI borrowers in 1995 and 1996, and held the number 
          4   two market share to these borrowers in 1997, 
          5   exceeding industry averages.  
          6            In Massachusetts, a primary area 
          7   highlighted in the Campen study, Fleet held the 
          8   number one market share for LMI black and Hispanic 
          9   borrowers for the period 1995 through 1997.  In this 
         10   regard, even though our combined bank will only be 
         11   65 percent of its predivestiture size in 
         12   Massachusetts, today we have announced a commitment 
         13   commensurate with 100 percent of our predivestiture 
         14   size for affordable housing lending in this state.  
         15            In the City of Boston Fleet also held the 
         16   number one market share for LMI and minority 
         17   borrowers for the three-year period 1995 through 
         18   1997.  I believe these statistics confirm our 
         19   commitment to LMI minority borrowers.  Fleet and 
         20   BankBoston are doing the heavy lifting here.  
         21            Perhaps we should consider the point that 
         22   as other lenders increase market share, they have an 
         23   obligation to increase their share of lending to 
         24   these traditionally underserved markets.  Even if 
         25   they do not have CRA requirements as the banks do, 
          1   the combined voices of community groups, opinion 
          2   leaders and the public generally can raise this 
          3   imperative.  
          4            Small business lending.  In the course of 
          5   our meetings we heard concerns about the 
          6   availability of credit to small business.  But I 
          7   think one should consider the fine record of both 
          8   companies in working with small businesses as an 
          9   indication of our commitment moving forward.  In 
         10   fact, the largest component of our commitment to 
         11   small businesses at 7.5 billion over five years, 
         12   coupled with technical assistance support, is large.  
         13   At Fleet we serve more than 320,000 small business 
         14   customers in eight states.  
         15            Today Fleet is the largest provider of 
         16   financial services to small businesses in New 
         17   England.  According to the latest industry data, as 
         18   of June 1998, Fleet is ranked 10th among bank 
         19   holding companies for small businesses.  We are a 
         20   leading SBA lender.  In 1997 Fleet was the top SBA 
         21   lender in New England with more than 70 million in 
         22   total SBA volume.  
         23            I have some more remarks that I would like 
         24   to submit for the record, but in deference to time 
         25   I'd like to submit my time and yield to Terry Murray 
          1   to close. 
          2            MR. MURRAY:  Thank you, Agnes.  And that 
          3   concludes our remarks.  We'll be happy to respond to 
          4   the panel. 
          5            PRESIDING OFFICER SMITH:  Thank you.  
          6   Questions from the panel? 
          7            MR. ALVAREZ:  I have a question.  There are 
          8   a number of commenters who have referred to the 
          9   study that Ms. Scanlan discussed, suggesting that 
         10   Fleet's lending in LMI areas in particular, in home 
         11   mortgage lending in particular, has declined after 
         12   each of the last two major mergers Fleet has been 
         13   involved in, and that has caused some folks to be 
         14   concerned that one plus one does not equal greater 
         15   than two in low and moderate income neighborhoods.  
         16            I understand that the program that you have 
         17   discussed, the CRA plan, is going forward.  I was 
         18   interested in how the 14.6 billion dollar plan 
         19   compares to the amount of lending that the two 
         20   organizations are doing now and whether there are 
         21   any special steps that Fleet proposes to take to 
         22   ensure that lending will not decline after this 
         23   merger if this is approved. 
         24            MS. SNOWDEN:  I'll take that one.  In terms 
         25   of how we got to the number, particularly on 
          1   affordable mortgage lending, we took a look at the 
          2   past three years, and the projected combined annual 
          3   average amount was 820 million dollars a year.  We 
          4   then took an 80 percent divestiture factor, which 
          5   would give you a number of 736 million.  
          6            However, our plan commits on an average 
          7   annual amount of 800 million.  So we feel that we 
          8   are maintaining the same level, and in fact this one 
          9   is an enhanced level.  How you make sure you meet 
         10   your goals, you have goals, you have tracking at the 
         11   line of business level.  You have the oversight 
         12   committee, you have the CRA Council that reports to 
         13   Chad.  And so we'll be monitoring this initiative, 
         14   as we do most business initiatives, to make sure 
         15   that we stay on track.
         16            PRESIDING OFFICER SMITH:  Other questions? 
         17            MR. KWAST:  I have a question regarding 
         18   proposed divestitures.  As I think Mr. Murray 
         19   pointed out, you are proposing to divest a large 
         20   amount of offices and dollars of deposits.  My 
         21   question is, when considering who to divest your 
         22   offices to, what are the major factors that you 
         23   consider in deciding who the winning bidders are.   
         24            MR. MURRAY:  Well, to a large degree 
         25   Justice has certain ground rules.  They are 
          1   obviously looking for a major new competitor in this 
          2   marketplace.  Subject to that, however, we've been 
          3   fortunate in that there's been a great deal of 
          4   interest in the pieces as well as the whole of the 
          5   divested package.  And we have received enormous 
          6   amounts of interest.  And I guess from an ideal 
          7   point of view we can address Justice's concerns in 
          8   terms of viable competitors as well as some of the 
          9   local concerns, and that is something the community 
         10   banks and local banks participated in these 
         11   purchases.  
         12            Over the next two or three weeks we 
         13   collectively will be looking at the various bids.  
         14   Obviously it is an auction, and price is a 
         15   consideration, but not the sole consideration.  And 
         16   I think it's a balance.  It's balancing factors 
         17   between community bank expansion possibilities as 
         18   well as satisfying Justice's issues of viable 
         19   competition.  
         20            The major divestiture is in the State of 
         21   Massachusetts, which is 8 to $9 billion of the 12 
         22   billion dollar package; the others being in Rhode 
         23   Island and Connecticut.  But there have been dozens 
         24   of bids on the packages. 
         25            PRESIDING OFFICER SMITH:  Other questions?  
          1   If not, thank you very much for coming this morning.  
          2   And we'll go on to panel number two.  
          3            Thank you very much.  
          4            (At this point there was a chant from some 
          5   members of the audience, saying "Shame on you")
          6            PRESIDING OFFICER SMITH:  We're going to 
          7   call on the panelists in the order in which they are 
          8   listed.  So we'll start with Mayor Menino. 
Last update: December 3, 2010