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Public Meeting Transcripts

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

Wednesday, July 7, 1999

Transcript of Panel Two

        9            MAYOR MENINO:  Thank you very much and 
         10   thank you for allowing me to testify this morning.  
         11   In my remarks I want to focus on the impact that the 
         12   proposed merger would have on my city and ask you to 
         13   consider that impact in your deliberations.  
         14            This merger comes at a time when the local 
         15   and national economies are on a roll.  The 
         16   consolidation of firms into larger institutions is 
         17   happening in many industries.  This evolution is not 
         18   only fueling the stock market, it's also changing 
         19   the way we do business and the way companies can 
         20   grow within a region and even across international 
         21   borders.  
         22            Boston's banks can't hide from this trend.  
         23   They must go out and compete in these expanding 
         24   markets like any others.  But the consolidation of 
         25   capital in this merger will take Fleet to a position 
          1   where the banking needs of ordinary citizens will 
          2   seem insignificant compared to the attraction of 
          3   foreign markets and bigger deals, including 
          4   additional mergers.  
          5            As fewer banks survive and grow into bigger 
          6   players on the national and international stage, the 
          7   fundamental question we face is this:  Who will care 
          8   whether a community grows or dies?  The number of 
          9   banks whose fates are tied to the fate of Boston is 
         10   shrinking.  The Bank of New England is gone.  
         11   Shawmut Bank is gone.  BayBank is gone.  With this 
         12   merger BankBoston will also be gone.  Gone, too, 
         13   will be more local jobs and BankBoston's spirit of 
         14   dedication to every segment of our community.  
         15            In banking, the idea of fair service to all 
         16   is a result of the Community Investment Act.  It was 
         17   written into law because Americans saw what happened 
         18   when banks ignored some of our neighborhoods and 
         19   wrote off credit-worthy neighborhoods.  The 
         20   Community Reinvestment Act has brought people on the 
         21   margins into the mainstream of American life.  
         22   Without it, Boston would not be a city of come-back 
         23   neighborhoods.  It would see fewer first-time home 
         24   buyers, more abandoned houses, and whole 
         25   neighborhoods rotting from disinvestment.  
          1            Take Blue Hill Avenue, for example.  For 
          2   years it was little more than a depressing 
          3   collection of vacant lots and boarded-up buildings.  
          4   Since I became mayor we've invested over $65 million 
          5   up and down the avenue.  By building new homes and 
          6   businesses, we're rebuilding a whole community.  And 
          7   soon we'll start construction on the Grove Hall 
          8   Mall.  And some people said that would never happen.  
          9   A new shopping center with a supermarket, a 
         10   drugstore, a Dunkin' Donuts and other shops.  
         11            Our partner on this deal is BankBoston.  We 
         12   ended up with BankBoston because they could handle 
         13   the financing.  The bank wants to do this deal.  
         14   Chad Gifford knew this was important to the city, so 
         15   he put a good team on it, and today we have a deal.  
         16            Some banks are better than others.  In 
         17   spite of generous ratings from regulators, Fleet has 
         18   a troubled lending history in our community and 
         19   Fleet's approach to this merger leads me to believe 
         20   it will adopt a take-it-or-leave-it approach to 
         21   lending in our neighborhoods.  That troubles me, and 
         22   it should trouble every business leader in Greater 
         23   Boston, because the health of a city sets the tone 
         24   for investing throughout the wider region.  
         25            Some big banks believe the Community 
          1   Reinvestment Act gets in the way of their growth 
          2   strategy.  They see it as a nuisance.  They have 
          3   enlisted the help of their friends in Congress to do 
          4   away with it, people like Senator Phil Gramm of 
          5   Texas, who is no friend of the people in America's 
          6   cities.  For years Phil Gramm has been telling 
          7   government to get out of the business of rebuilding 
          8   communities.  Now he's telling business to get out 
          9   of that business, too.  
         10            Here in Boston the two banks have told us 
         11   their merger would mean a 20 percent reduction in 
         12   combined lending to our community.  If you want to 
         13   know what happens to a community when lending 
         14   disappears, try to remember the conditions of our 
         15   neighborhoods in the early 1970s.  Or follow 
         16   President Clinton's trip across the country with 
         17   business leaders this week.  Whether in Boston or 
         18   East St. Louis or Los Angeles, one stubborn fact 
         19   remains the same:  Capitalism does not work in a 
         20   community when that community is denied access to 
         21   capital.  
         22            As the mayor of this city I am concerned by 
         23   any merger that would deny my capital city in favor 
         24   of expanding markets somewhere else.  I am concerned 
         25   about a reduction in home mortgage loans, a 
          1   reduction in community development loans and small 
          2   business loans, and I'm concerned that the new bank 
          3   will not act as if it's life depended on the health 
          4   of our neighborhoods.  
          5            I ask you, how can any bank call itself a 
          6   local bank with pride if the bank is less than fully 
          7   committed to the local economy?  
          8            I am sorry to say that I have yet to hear 
          9   why this merger is a forward step for my community.  
         10   So until the Federal Reserve Board can convince me 
         11   otherwise, I cannot offer the City of Boston's 
         12   support for this merger.  
         13            You as regulators hold great power over the 
         14   future of banking in America.  You hold great power 
         15   over the economy of our communities and you have a 
         16   responsibility to protect the public interest.  So I 
         17   respectfully request that you remember the interests 
         18   of my constituents whose banking needs rest upon 
         19   your shoulders while you deliberate and decide the 
         20   merits of this merger. 
         21            In closing, let me say, my office would be 
         22   happy to supply you with some of the facts of my 
         23   detailed statement.  Also -- let me just finish up.  
         24   This might be a good deal for the stockholders, but 
         25   I don't believe this is a good deal for the 
          1   stakeholders.  Thank you very much. 
          2            (Applause)
          3            PRESIDING OFFICER SMITH:  And we will not 
          4   exactly follow the order.  We'll go next to 
          5   Congressman Capuano. 
          6            CONGRESSMAN CAPUANO:  Thank you.  First of 
          7   all, I'd like to thank the Federal Reserve for 
          8   having this hearing because it wasn't on the 
          9   original schedule when this merger was announced, 
         10   and I know that the Federal Reserve listened to the 
         11   requests of many people in this community to have 
         12   this.  I also know you have a very long day ahead of 
         13   you and I respectfully send my regrets for that, but 
         14   my thanks for having me here nonetheless. 
         15            As each of you know, the Congressional 
         16   delegation of Massachusetts has sent several letters 
         17   on this matter to the Federal Reserve and to others.  
         18   We have another one in the record today that 
         19   basically reiterates what we have said in the past, 
         20   naming four points that we've tried to focus on.  
         21   The fact that we want our community banks to have a 
         22   fair opportunity to bid and then purchase a fair 
         23   portion of the divested parts of this merger if and 
         24   when it happens; that we want both the remaining 
         25   bank of this particular item and whoever wins the 
          1   divestitures to continue and to expand their 
          2   neighborhood investment.  
          3            We want the Federal Reserve to make sure 
          4   that all employees are fairly treated and honestly 
          5   treated, and, of course, we want local charities to 
          6   continue the relationship they've had with the banks 
          7   in the past.  That's what the delegation has said. 
          8            For myself, for the last four months as a 
          9   member of the banking community and a new member of 
         10   Congress I've actually worked a little harder on 
         11   this than most because I've had a lot of catching up 
         12   to do on these kinds of matters.  And when this 
         13   merger was announced, right from the beginning I 
         14   asked for several pieces of information -- I think 
         15   pretty easy pieces of information -- such as the 
         16   details of charitable giving, some statistics on low 
         17   and moderate income loans, things like that.  
         18            Since then we've had a study done by a 
         19   professor at UMass-Boston that's come out that's 
         20   raised some serious questions on the lending 
         21   practices of these institutions.  We've had comments 
         22   from a group called Inner City which has raised 
         23   serious questions.  We've had the bank itself come 
         24   out with a 14.6 billion dollar community investment 
         25   proposal that has virtually no detail to it.  
          1            Those are serious issues and I believe they 
          2   have been seriously presented.  However, not until 
          3   yesterday at three o'clock in the afternoon did any 
          4   representative from the bank have anything to say 
          5   about any of those matters.  
          6            Now, I'll tell you that I do think that 
          7   both Fleet and the Bank of Boston have done a good 
          8   job going out and listening and I do think it's 
          9   important to maintain a strong regional bank in 
         10   Boston.  I think that's fine.  And I congratulate 
         11   the banks for going out to listen.  But listening is 
         12   only one half of the equation.  The second half of 
         13   the equation is then responding to what you have 
         14   heard.  Not necessarily agreeing with it, not 
         15   necessarily disagreeing with it, but simply 
         16   responding.  Do you agree?  Don't you agree?  Let's 
         17   work this out.  There has been none of that until 
         18   three o'clock yesterday.  
         19            Today has been an extended period of time 
         20   for public comment.  I don't think that less than 24 
         21   hours for people to respond or to react to the 
         22   response is a fair amount of time.  I think it's an 
         23   inappropriate amount of time.  (Applause)  And I 
         24   think it could raise any number of questions.  I 
         25   know that this is a difficult merger.  I understand 
          1   that and I respect the fact that the bank has been 
          2   busy.  If that's the case, okay; great.  It also 
          3   raises potential questions that the bank is being 
          4   insensitive to community input.  If that's the case, 
          5   that's the worst possible scenario.  
          6            The whole reason we're doing this is to 
          7   make sure that the successful bidders and the merged 
          8   entity are responsive to community needs.  If there 
          9   wasn't a community component to that, we wouldn't be 
         10   here.  If it was simply banking, bottom-line 
         11   banking, you wouldn't do this, you wouldn't need our 
         12   input, we wouldn't have a whole lot to offer.  
         13            We're not bankers.  We're here representing 
         14   the community, and if the community is not listened 
         15   to, not necessarily agree with them on every point, 
         16   what have we done?  You're wasting your entire day.  
         17   I'm wasting an awful lot of time and most of the 
         18   people in this audience have wasted an awful lot of 
         19   time.  (Applause)  
         20            To my way of thinking, I want this merger 
         21   to end up in one plus one is greater than two.  I 
         22   really do.  Not just for the shareholders; also for 
         23   the communities and, as the mayor put it, for the 
         24   stakeholders.  That's why today the written 
         25   testimony that I've given, which is a little bit 
          1   more detailed than the verbal comments, I'm asking 
          2   for a couple of things:  
          3            If the Federal Reserve finds it in the 
          4   interest of the community, which I think it is 
          5   obviously, I ask that the Federal Reserve delay any 
          6   decision-making and extend the public comment period 
          7   of time to at least 30 days after these responses 
          8   have been given by the bank, because we need a fair 
          9   amount of time to see whether their responses are 
         10   fair or not fair, reasonable or not reasonable.  
         11   Absent that extension of time, then I have to 
         12   strongly oppose this merger at this time.  
         13   (Applause)  And I have to oppose it not because I 
         14   have made a final decision in my own mind as to 
         15   whether this merger serves the needs of the 
         16   community, but because I haven't been allowed the 
         17   time to do that.  So I respectfully ask the Federal 
         18   Reserve to extend the period of time to 30 days 
         19   after receipt of responses by the banks, and if they 
         20   can't do that, then I have to oppose this merger.  
         21   Thank you.  
         22            (Applause)
         23            PRESIDING OFFICER SMITH:  Senator 
         24   Wilkerson.
         25            SENATOR WILKERSON:  Good morning to you, 
          1   Presiding Officer, members of the Board.  For the 
          2   record, my name is Dianne Wilkerson and I currently 
          3   serve as State Senator in Massachusetts and I have 
          4   done so for seven years.  Prior to that I practiced 
          5   law in Massachusetts and was a member of the 
          6   Community Investment Coalition which negotiated with 
          7   Fleet Bank in 1990 when it took over the Bank of New 
          8   England.  The CIC also negotiated again in 1994 the 
          9   Shawmut-Fleet merger, and I represented as a lawyer 
         10   over 600 individuals who were victims of the 
         11   infamous second mortgage scam, one of the most 
         12   devastating financial scandals that destabilized 
         13   both the Boston and Springfield Afro-American home 
         14   ownership communities.  
         15            I also was a member of the team that 
         16   negotiated the second mortgage scam settlement with 
         17   BayBank, the former BayBank and the former Shawmut 
         18   Bank.  And I have previously testified before this 
         19   Board where I have raised serious issues and 
         20   concerns to this body.  
         21            However, I have never testified in 
         22   opposition to a merger until now, and I do so with 
         23   sadness and disappointment.  (Applause)  Since April 
         24   of this year I have served as the convener of what 
         25   is called the Community Advisory Committee for the 
          1   Fleet Bank-BankBoston merger.  The committee is a 
          2   40-plus member group comprised of racial, gender and 
          3   professional, university, government and religious 
          4   areas from across the Commonwealth who came together 
          5   to solicit comments and concerns from interested and 
          6   impacted parties across the state.  The committee 
          7   hosted a statewide town meeting in May.  Over 200 
          8   persons turned out to offer testimony, and we have 
          9   provided the videotape of that meeting to the banks 
         10   and to this Board.  
         11            The committee met with members of our 
         12   Congressional delegation.  We met with officials 
         13   from the Department of Justice Antitrust Division, 
         14   the Federal Reserve Bank of Boston, the Attorney 
         15   General of the Commonwealth of Massachusetts, and 
         16   the Massachusetts Division of Banks.  We've had the 
         17   unprecedented support and collegiality from our 
         18   entire Congressional delegation from the mayor of 
         19   our City of Boston and it's never happened before, 
         20   and I think that that unified position ought to tell 
         21   you something, because this is different. 
         22            We also met with the bank principals early 
         23   in June and at that meeting we transmitted to them a 
         24   lengthy written document in addition to other 
         25   information that the committee had gathered.  It was 
          1   our hope and expectation that those concerns would 
          2   be taken into account as the proposal was developed.  
          3   The committee waited for some time to offer public 
          4   comment because we were optimistic that the 
          5   committee would be able to engage in a productive 
          6   dialogue with bank principals to ensure that the 
          7   banking needs and the needs of the Massachusetts 
          8   communities, in particular women and people of color 
          9   in low and moderate income communities would be met.  
         10   I'm sorry to say that that June 4th communication 
         11   and the detailed concerns and issues that have been 
         12   raised have never had the courtesy of a response.  
         13            On June 24th we received the bank's 
         14   proposal and have spent a considerable amount of 
         15   energy reviewing this plan.  In sum, the proposal 
         16   does not meet the regulatory standards that the 
         17   Federal Reserve Bank must have satisfied in order to 
         18   approve this merger application.  There is much that 
         19   I could offer, but I will focus my testimony on two 
         20   pieces of the criteria of review for this Board 
         21   under the Bank Holding Company Act.  That is, 
         22   competition and convenience and needs of the 
         23   community.  
         24            As to competition, among other things, this 
         25   application would involve the largest branch 
          1   divestiture in the history of the United States.  
          2   However, even if a large bank were to purchase all 
          3   the branches, the most it could represent would be 
          4   six percent of the Massachusetts market share.  The 
          5   merged institution would be at least 30 percent, 
          6   leaving its next closest competitor about five times 
          7   smaller, hardly an encouraging picture for 
          8   competition.  
          9            The divestment discussion to date has 
         10   ignored an important and serious issue for the 
         11   communities which I represent, and that is that many 
         12   of the branches on the divestment list were cited 
         13   specifically to fill a void in urban and rural 
         14   markets which until the last five years were 
         15   woefully underserved by banks and saturated with 
         16   check-cashing stores.  The citing of many of the 
         17   branches on the sale list were negotiated in the 
         18   aftermath of the last two mergers.  Several of the 
         19   branches were cited based on an acknowledgment and a 
         20   determination that the convenience and needs of a 
         21   certain segment of our community were not being met.  
         22            Special care must be taken by this Board to 
         23   ensure that we don't go backwards.  It would be our 
         24   position that no grant cited in an urban market to 
         25   fill a void should be sold to anyone who does not 
          1   intend at least to keep the branch open.  Who gets 
          2   these branches is also of critical importance to us.  
          3   We have been fortunate in the Greater Boston 
          4   community of color to have a bank that is certified 
          5   with the United States Treasury as the only bank 
          6   community development finance institution in the 
          7   state and whose focus market is urban, the urban and 
          8   LMI communities, and especially people of color, 
          9   African-American, Latino.  
         10            Local and community banks should be 
         11   strengthened by this merger, not weakened.  You must 
         12   pay special attention to the Boston Bank of Commerce 
         13   and the market that they serve.  
         14            Lastly, much has been made about the 
         15   expectation of the applicant banks that there would 
         16   be competition in the market to pick up market share 
         17   in areas where the applicant will decrease lending 
         18   and spending; for example, in mortgage lending.  It 
         19   is our contention that there is simply no basis for 
         20   such an assumption, and in fact history tells us 
         21   different.  With the slim pickings to be left in the 
         22   bank market for mortgage seekers, there is no 
         23   rational expectation that the purchasing bank or the 
         24   remaining Massachusetts banks soon to be but one, if 
         25   the next merger is approved, could pick up the slack 
          1   with the merged bank to continue the double-digit 
          2   decreases in mortgages that have been made to 
          3   African-Americans and Latinos that we have been 
          4   sustaining every year for the past four years.  
          5            Oddly enough, the biggest hits have come 
          6   post merger of BankBoston and BayBank and even 
          7   bigger decreases in the post Fleet-Shawmut Bank 
          8   merger, and unless the Federal Reserve takes special 
          9   consideration of the need to ensure contingent 
         10   competition for the low and moderate income market, 
         11   there will be little or none available.  
         12            And please note that we do not consider 
         13   second-mortgage companies charging 20-plus percent 
         14   interest competition for the LMI and minority income 
         15   market.  
         16            I know that Professor Campen is going to be 
         17   testifying later, but I think that the analysis that 
         18   he has done is uncontroverted and would hope that 
         19   this Board would take some special note to look at 
         20   those numbers, and not only the numbers for Boston, 
         21   but for the Commonwealth of Massachusetts as a 
         22   whole.  The loans to black borrowers decreased 52 
         23   percent.  From 1997, 1998, the loan to 
         24   Latin-American, Latino borrowers decreased 49 
         25   percent and the loan to LMI borrowers decreased by 
          1   fifty percent as a result of both the BayBank- 
          2   BankBoston merger and the Fleet-Shawmut merger.  And 
          3   we accept this concept that there would be some 
          4   decrease, but the double-digit decreases that we 
          5   have sustained in these two particular communities 
          6   are irrational, inexplicable, and can only be 
          7   explained by racial factors.  And even the 
          8   Massachusetts Banking Council has supported that 
          9   position.  
         10            This Federal Reserve did a study which set 
         11   off a whole litany of similar studies across this 
         12   country, and I think that it's important to note 
         13   that the Federal Reserve Bank of Boston led the way 
         14   nationally on what became a higher standard and 
         15   reported for tons of data.  
         16            Given what we understand to be the standard 
         17   of review for the Federal Reserve in assessing 
         18   merger applications, we believe in order for the 
         19   Federal Reserve to recommend approval of this 
         20   merger, the bank would have to find that the bank's 
         21   proposal of June 24th which provides for a 14.6 
         22   billion dollar commitment for six states over five 
         23   years meets the convenience and needs of the 
         24   community, although the figure represents less 
         25   resources from the combined bank than the two banks 
          1   provided separately in 1998.  
          2            For the record, I never expected one plus 
          3   one to equal greater than two.  I was prepared to 
          4   declare victory of one plus one equal to one and a 
          5   half.  It doesn't.  Apparently the comments from 
          6   Fleet-BankBoston suggest even they acknowledge that 
          7   the formula has changed.  On July 1st there were two 
          8   statements issued that said, one, it was never our 
          9   intention when we made that statement in March to 
         10   suggest that between us we would be greater than the 
         11   two.  What we really meant was that the divestiture 
         12   bank would be responsible with us and we would hold 
         13   them accountable to the community.  
         14            Also, this proposal represents 80 percent 
         15   of what we have been doing because we are divesting 
         16   20 percent of our branches, so we're going to be 
         17   smaller.  In some categories it's more than 80 
         18   percent.  We haven't found them yet.  
         19            Various members of the committee have run 
         20   the numbers in different variations and we all keep 
         21   getting the same results.  The numbers simply don't 
         22   support the bank's representation of this equaling 
         23   even 80 percent, the current activity, let alone 
         24   100.  
         25            Meeting the needs of the convenience and 
          1   needs of the community is not just about CRA.  One 
          2   of the best indicators of future performance is past 
          3   history.  That being the measure, the Federal 
          4   Reserve Bank must look very carefully not only at 
          5   the recent data it studied on the bank's 
          6   performance, but also on the compliance or lack 
          7   thereof to prior commitments and agreements.  The 
          8   history is substantial.  I have included some 
          9   information that attests to this history, which we 
         10   will submit to you for the record, including the 
         11   committee's June 4th letter to the bank, which never 
         12   received the courtesy of a response.  
         13            We believe there's at least a segment of 
         14   the community; namely, the LMI urban and rural 
         15   communities and women whose needs are not being 
         16   adequately served.  There is a fear that with 
         17   another merger history suggests these communities 
         18   will sustain yet another decrease. 
         19            PRESIDING OFFICER SMITH:  Thank you very 
         20   much, and we'll be glad to have your full statement 
         21   for the record.
         22            SENATOR WILKERSON:  If I could end by 
         23   making a request to you, as the Congressman and the 
         24   Mayor have done, and that would be that you would 
         25   use your regulatory powers to do the right thing by 
          1   the communities who depend on the regulatory 
          2   authority for protection.  Whatever this proposal 
          3   is, it's not complete.  Even the bank principals 
          4   referred to it yesterday afternoon as a work in 
          5   progress.  You can say no.  You can say go back to 
          6   the drawing board.  You can say you need more 
          7   information.  You can say to the banks, respond to 
          8   the questions that have been asked.  But whatever 
          9   you say, don't say that this is enough to meet the 
         10   standard, because it's not, and the community has 
         11   nowhere else to go but to you. 
         12            PRESIDING OFFICER SMITH:  Thank you very 
         13   much.  (Applause)   Now we have Ms. Boone on behalf 
         14   of Senator Kerry.  
         15            MS. BOONE:  My name is Jeanette Boone, and 
         16   I currently serve as senior issues manager in the 
         17   Boston office of Senator John Kerry.  On behalf of 
         18   Senator John Kerry I want to thank you for the 
         19   opportunity to express the Senator's views on the 
         20   Fleet-BankBoston merger.  While Senator Kerry is 
         21   unable to give this testimony in person, I want to 
         22   thank you for the opportunity to place his full 
         23   testimony in the record today.  
         24            As a member of the Senate Banking 
         25   Committee, I have witnessed an unprecedented amount 
          1   of consolidation in the banking and financial 
          2   services industry.  The Fleet-BankBoston merger is 
          3   further proof that the continued consolidation of 
          4   financial services markets is one of the 
          5   inevitabilities of the new global economy.  
          6            Today there are 30 percent fewer banks in 
          7   the United States than there were just 10 years ago.  
          8   Our banks are competing beyond city limits and 
          9   neighborhood borders, competing against banks across 
         10   the country and literally across the world.  To do 
         11   so effectively they must have the strength, the 
         12   market share and the ability to deliver high-quality 
         13   service.  
         14            This proposed merger will make the planned 
         15   Fleet-Boston Corporation the eighth largest bank in 
         16   the country and one of the most significant 
         17   financial presence in New England.  I believe it is 
         18   imperative to maintain a strong and robust financial 
         19   services industry based in New England.  To this 
         20   end, it is critical that we take the appropriate 
         21   steps to ensure that Boston remains a hub of 
         22   financial services in the new century and that New 
         23   England-based banks will continue to be available to 
         24   depositors in New England.  
         25            We must move forward in that process in a 
          1   careful and measured way with government, business, 
          2   and community leaders working together to ensure 
          3   that high standards of customer service and 
          4   corporate community engagement are maintained.  
          5            Corporate citizenship should be a part of a 
          6   redefined bottom line in banking.  Everyone 
          7   understands the importance of capital in developing 
          8   our low-income neighborhoods.  Access to credit, 
          9   along with education, healthcare and decent housing, 
         10   is one of the most important tools working Americans 
         11   need to compete successfully in this country.  
         12            Massachusetts banks, large and small, have 
         13   the responsibility, the very real responsibility of 
         14   providing access to capital to our underserved 
         15   communities.  They are integral partners in our 
         16   effort to lead the transition to a new economy where 
         17   no one is left behind.  Through the Community 
         18   Reinvestment Act, Congress set standards for the 
         19   private sector in building an economy in which we 
         20   can all participate.  CRA has been extremely 
         21   successful in Massachusetts where financial 
         22   institutions have made more than 1.6 billion in 
         23   commitments to assist low-income neighborhoods.  
         24   It's making a difference in Boston's inner city 
         25   neighborhoods from Roxbury and Jamaica Plain to the 
          1   South End and has increased home ownership, 
          2   affordable housing development and minority small- 
          3   business lending across Massachusetts.  
          4            However, even at this time of record 
          5   economic growth, there is much work left to be done.  
          6   The Boston Federal Reserve showed conclusively that 
          7   African-Americans get turned down on mortgage 
          8   applications 1.6 times more often than whites, even 
          9   after taking into account many economic, income and 
         10   creditworthiness differences.  
         11            More than 35 million Americans still live 
         12   in poverty.  Almost one in five children lives in 
         13   poverty.  We must continue to expand the winner's 
         14   circle to empower every community to participate in 
         15   this economic expansion.  We must not allow any 
         16   community to be denied access to credit or new 
         17   banking facilities and services.  It is with these 
         18   principles in mind that together with the entire 
         19   Mass. Congressional delegation I signed a letter to 
         20   the new Fleet-Boston Corporation to stress the 
         21   importance of maintaining a vigorous community 
         22   reinvestment effort.  
         23            I am pleased that the new Fleet-Boston 
         24   Corporation has begun a dialogue with the major 
         25   organizations in Massachusetts that are dedicated to 
          1   housing and community reinvestment.  I am hopeful 
          2   that this dialogue will continue and that this 
          3   merger will result in progress toward the goals of 
          4   the Community Reinvestment Act and not an 
          5   opportunity to pass this responsibility to others.  
          6            I have also sent a letter with Senator 
          7   Kennedy to Assistant Attorney General Joel Klein 
          8   requesting that the Justice Department consider 
          9   allowing a small portion of the new Fleet-Boston 
         10   Corporation's assets to be sold to a Massachusetts 
         11   minority-owned community development financial 
         12   institution that has been providing access to 
         13   capital to many of our low-income neighborhoods and 
         14   working families.  With your approval I would like 
         15   to make both letters part of the record.  
         16            We have other responsibilities as well, 
         17   particularly the responsibility of meeting the 
         18   immediate challenges of work force dislocations 
         19   caused by this merger.  Any time two large firms are 
         20   combined, restructuring can be expected.  Layoffs 
         21   seem to be an inevitability in the reshuffling to 
         22   maximize cost efficiencies.  The Boston Globe has 
         23   estimated we expect to see the loss of 4,000 to 
         24   5,000 jobs as a result of this latest decision.  
         25   Every effort must be taken to minimize job loss and 
          1   provide sufficient retraining and job placement 
          2   assistance to workers displaced by this decision.  
          3            I believe the best way to minimize the 
          4   anticipated job loss resulting from this merger is 
          5   to see that the required divested deposits, branches 
          6   and ATMs of the Fleet-Boston Corporation are sold to 
          7   banks based in New England.  Back in April I wrote 
          8   to Assistant Attorney General Joel Klein to express 
          9   my opposition to any decision to sell all divested 
         10   funds to a single financial institution based 
         11   outside of Massachusetts.  Any divestiture related 
         12   to this merger must encourage local competition and 
         13   expand consumer choice.  
         14            In that letter I also asked that every bank 
         15   in Massachusetts be given the opportunity to bid on 
         16   the assets that the merged banks will be required to 
         17   divest.  I am pleased that the Justice Department 
         18   has taken my advice and will not insist that all 
         19   assets be acquired by a single buyer, so long as 
         20   there is a buyer in the mix that will preserve 
         21   competitive conditions in middle-market lending.  
         22            I am hopeful that the new Fleet-Boston 
         23   Corporation will seriously consider any competitive 
         24   bids from all New England-based banks.  Small, 
         25   medium sized and independent banks have been an 
          1   important source for financial services to small 
          2   businesses and low-income communities in 
          3   Massachusetts.  This will also help ensure that 
          4   Boston remains a hub of financial services in the 
          5   next century and that Boston-based banks will 
          6   continue to be available to depositors in New 
          7   England.  
          8            Finally, it is the best way to minimize the 
          9   job loss related to the merger.  Over the last years 
         10   in the Senate Banking Committee I have come to 
         11   realize that economic change, particularly in the 
         12   financial service industry, is an inevitability that 
         13   must be wisely managed.  We cannot lull ourselves 
         14   into believing that we are powerless to shape the 
         15   contours of this new economy.  We know the New 
         16   England banking industry can provide economic 
         17   leadership, but we also expect and demand that our 
         18   banks demonstrate leadership in customer service and 
         19   corporate citizenship as well.  
         20            I know that from our efforts on the Banking 
         21   Committee to your work here, we will be watching to 
         22   ensure that those goals are merged into one unifying 
         23   vision of banking in New England.  
         24            Over the past several months I have worked 
         25   with the Community Advisory Committee and a large 
          1   number of groups involved with housing and economic 
          2   development from across Massachusetts.  It is my 
          3   strong hope that you will listen carefully to the 
          4   testimony that representatives from these groups 
          5   will be making today and give serious consideration 
          6   to the level of need in the community.  This merger 
          7   cannot deal a devastating blow to underserved 
          8   communities by undercutting the current programs by 
          9   BankBoston and Fleet, especially those in the areas 
         10   of small business lending, affordable housing and 
         11   mortgage lending to low and moderate income 
         12   homeowners, community development and consumer 
         13   lending and equity investment and technical 
         14   assistance and support.  
         15            I urge you to weigh and evaluate this 
         16   testimony as you reach decisions regarding this 
         17   proposed merger.  Ultimately it will be our 
         18   responsibility to ensure that this process moves 
         19   forward with a fair and competitive merger and 
         20   divestiture process that encourages local 
         21   competition and investment while expanding consumer 
         22   choice. 
         23            PRESIDING OFFICER SMITH:  Thank you very 
         24   much, Ms. Boone.  We'll take it all and put it all 
         25   into the record. 
          1            Mr. Ferguson on behalf of Congressman 
          2   Kennedy.
          3            MR. FERGUSON:  Thank you, Madam Presiding 
          4   Officer and members of the Board.  For the record my 
          5   name is Larry Ferguson.  I'm the District Director 
          6   for Congressman Patrick Kennedy of Rhode Island, and 
          7   I'm here today on his behalf.
          8            Congressman Kennedy has a strong interest 
          9   in the financial industry of New England and most 
         10   notably his concern that integrity and competition 
         11   is upheld in the everchanging marketplace.  He feels 
         12   strongly that the upcoming merger of Fleet Bank and 
         13   BankBoston will uphold the goals of integrity and 
         14   consumer choice through competition.  
         15            What I would like to do now is to read into 
         16   the record a letter that he sent to the Board dated 
         17   June 29th.  "Dear Mr. Johnson:  I write in support 
         18   of the proposed merger between Fleet Financial Group 
         19   and BankBoston and urge that the Board move 
         20   expeditiously to approve the merger.  To comply with 
         21   the requisite regulatory and antitrust aspect of 
         22   this transaction, the two institutions have done an 
         23   excellent job in reaching out to a large number of 
         24   community-based organizations throughout its market 
         25   area.  They have also reached out to elected 
          1   officials on the state and local level and those of 
          2   us in Congress.  As a consequence I believe that an 
          3   effective job has been done in explaining the 
          4   rational behind the merger, the plans for 
          5   restructuring the combined organizations in a most 
          6   efficient and effective way possible and in 
          7   anticipating and dealing with the impact of the 
          8   merger on customers of the institutions and the 
          9   communities impacted.  
         10            I am very pleased to learn that an issue of 
         11   major concern to me that local and regional 
         12   institutions be allowed to bid on some or all of the 
         13   assets being divested was clarified recently by the 
         14   Department of Justice.  Furthermore, it is 
         15   reassuring to learn Fleet and BankBoston will soon 
         16   announce a major community reinvestment program 
         17   valued at more than fourteen million dollars over 
         18   the next five years.  This plan will be designed to 
         19   deal with affordable housing, small business 
         20   lending, urban renewal and consumer education 
         21   programming.  
         22            I believe that the successful bidders on 
         23   the Fleet and BankBoston branches to be divested 
         24   will provide effective competition and enhanced 
         25   choices for consumers.  I therefore urge the Board 
          1   to approve this merger which should produce both 
          2   substantial short- and long-term public benefits.  
          3   Sincerely, Patrick Kennedy, member of Congress." 
          4            Again, I want to thank you for allowing me 
          5   the opportunity to submit this letter for the record 
          6   and allowing me to testify here today.
          7            PRESIDING OFFICER SMITH:  Thank you very 
          8   much.  Questions from the panel? 
          9            MS. BROWNE:  I have a question for Mayor 
         10   Menino.  You expressed some deep concern about the 
         11   loss of BankBoston.  Perhaps you might elaborate a 
         12   little bit more about what makes BankBoston special 
         13   from your perspective, what distinguishes it perhaps 
         14   from other institutions.  
         15            MAYOR MENINO:  Well, my dealings in the 
         16   last six years with BankBoston have been on a 
         17   continual basis. We had an issue in the 
         18   neighborhoods that we developed a neighborhood or 
         19   needed money for housing, they were there.  They 
         20   were the first ones out willing to work with us to 
         21   fashion different programs to our needs, and they 
         22   were very helpful to what we did on the 
         23   revitalization of a lot of the neighborhoods of the 
         24   City of Boston. 
         25            MR. KWAST:  I have a question for Mayor 
          1   Menino and Senator Wilkerson.  Could you explain a 
          2   little bit more whether you think a bank 
          3   headquartered out of Boston could or could not enter 
          4   the Boston market and become an effective competitor 
          5   for the banks that are already in Boston? 
          6            SENATOR WILKERSON:  I don't believe I ever 
          7   said I didn't believe that they could.  I suggested 
          8   that if a large bank bought all the branches, the 
          9   best they could do is 6 percent of the market and 
         10   that I don't consider that competition in the 
         11   literal sense of the word because this resulting 
         12   merged bank would be 30 percent, and they're going 
         13   to be the eighth largest in the country, not just in 
         14   Massachusetts.  So it depends on what your 
         15   definition of "competition" is.  
         16            Our concern is that there will be no one 
         17   competing for the business of my constituents unless 
         18   this Board takes a special look at that and looks at 
         19   banks who have had track records in doing business 
         20   and believe that our communities are about business.  
         21   It's not about charity, and that's a very -- it's an 
         22   offensive discussion.  We always get to that.  We're 
         23   not asking for people to give us money, you know.  
         24   This is about mortgages.  This is about if I present 
         25   the same kind of indicators as everyone else, that I 
          1   shouldn't be denied.  And the records are just 
          2   overwhelmingly supportive of the notion that that's 
          3   what's happening, and we don't think there's any 
          4   other competition outside of large banks like this 
          5   that are going to be picking up that market unless 
          6   you take that into consideration and are looking at 
          7   our small and local banks who see us as business and 
          8   are making money in ways.  
          9            So if you just talk about selling to a big 
         10   bank, we don't think that that particular sector and 
         11   segment of our community's banking needs are going 
         12   to be met.  But I have no opposition to an outside 
         13   bank.  I actually for the record also want to say, I 
         14   think we'd be better off having a bank that -- you 
         15   know, I want to keep Fleet-BankBoston here.  We're 
         16   not opposed to that.  Given the choice, I'd rather 
         17   have a Massachusetts headquartered bank.  But that 
         18   doesn't mean I don't then get to raise questions 
         19   about this proposal and the plan that they put on 
         20   the table, because I don't think it's going to 
         21   satisfy what I understand to be your regulatory 
         22   standards in its present form.  We could get there 
         23   with your help, but we're not there. 
         24            MAYOR MENINO:  I agree with the Senator on 
         25   the fact that Fleet-BankBoston merged.  No big 
          1   problem.  But what's the commitment?  What's the 
          2   future?  We can't talk about the past.  I think 
          3   we're talking about the past.  I'm talking about the 
          4   future.  When this merger happens, what does the 
          5   future look like for the community that I represent 
          6   as Mayor of Boston, Senator Wilkerson, Congressman 
          7   Capuano.  And sometimes, I'll tell you, having a 
          8   homegrown institution headquarters doesn't mean a 
          9   lot to you, but sometimes a foreign bank who might 
         10   have an office or an operation in the city will do 
         11   more for you.  I have several world headquarters in 
         12   our city, and I get more out of some other 
         13   corporations that aren't home based.  
         14            So it's the attitude, and it's the attitude 
         15   of the folks.  Do they really want to get involved 
         16   in the community or are they saying we're Boston 
         17   based.  You have to love us.  We don't have to love 
         18   you.  We have to tolerate you, but you have to love 
         19   us.
         20            CONGRESSMAN CAPUANO:  I want to make it 
         21   clear that the delegation as a whole has opposed 
         22   bringing in someone from the outside.  We feel that 
         23   bank competition is good.  We understand what the 
         24   general goal is, but bank competition doesn't have 
         25   to be from the outside.  There has been nothing that 
          1   has stopped an outside bank from coming in for 
          2   several years now.  You know as well as I do -- in 
          3   fact, better than I do -- Citicorp already had 
          4   several hundred people in Boston for years, for 
          5   years.  It's not new.  Most of the large banks do 
          6   business in Boston right now.  Right now.  It's not 
          7   new.  Nothing could stop them at all -- well, not 
          8   nothing.  You could.  But theoretically you wouldn't 
          9   stop them from buying small branches today over the 
         10   last several years.  
         11            That's not the issue.  The issue is what do 
         12   you want to do with the divested branches if this 
         13   merger is allowed now, and our argument has been, 
         14   build from the inside.  Help your own family to get 
         15   stronger as opposed to giving it away to the 
         16   outside.  The outside is going to come in.  There's 
         17   nobody here trying to create a Chinese wall along 
         18   the borders of New England.  They're here now.  They 
         19   will continue to grow.  When they grow, where's the 
         20   competition going to be?  
         21            And I just want to go back historically.  
         22   It strikes me that many of you were probably around 
         23   the last time, well before Tom Menino was mayor, 
         24   when Boston was in serious trouble back in the late 
         25   '70s.  No bank in the world should have loaned them 
          1   a nickel, but the Bank of Boston did because they 
          2   understood the benefits of having a strong City of 
          3   Boston instead of having the City of Boston go 
          4   bankrupt.  That is the benefit of a regional -- 
          5   strong, locally based regional bank.  And that's 
          6   what we're trying to keep and that's what we're 
          7   trying to grow.  (Applause)
          8            PRESIDING OFFICER SMITH:  Thank you very 
          9   much.  We'll go on to Panel Three.  We will start 
         10   with Mr. Reilly.
Last update: December 3, 2010