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Public Meeting Transcripts

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

Wednesday, July 7, 1999

Transcript of Panel Twenty

       23            MR. PORTER:  Thank you for allowing us to 
         24   speak here today.  My name is Alvin Porter, and I'm 
         25   the Executive Director of the New York Mortgage 
          1   Coalition.  The New York Mortgage Coalition is an 
          2   organization of ten banks and eight community 
          3   groups, and we provide mortgage counseling services 
          4   throughout New York, Long Island and Westchester. 
          5            Fleet Bank has been a member of the New 
          6   York Mortgage Coalition since its inception five 
          7   years ago, and last year they were one of the 
          8   leading lenders.  They originated more than $9 
          9   million in mortgage loans. 
         10            The New York Mortgage Coalition, since its 
         11   inception, has been responsible for over $100 
         12   million dollars in mortgage low.  We target low- to 
         13   moderate-income families throughout New York, Long 
         14   Island and Westchester.  The banks within our 
         15   organization provide grant money, which supports the 
         16   counseling efforts by our community groups. 
         17            Fleet has been an active member of the 
         18   Mortgage Coalition, and it has supported the 
         19   Mortgage Coalition since its beginnings.  They have 
         20   been a strong supporter of the Mortgage Coalition.  
         21   They're in touch with the community, and they're 
         22   responsive to the community needs.  Fleet, as an 
         23   organization, is supportive of mortgage counseling.  
         24   I think a lot of the problems that have been 
         25   expressed here today can be resolved through 
          1   mortgage counseling, and Fleet has been one of the 
          2   leaders in helping to provide and support mortgage 
          3   counseling throughout the past five years. Thank you 
          4   very much.
          5            HEARING OFFICER SMITH:  Thank you very much 
          6   for coming.  We will have a two-minute break for the 
          7   court reporter.
          8            (Brief recess)
          9            HEARING OFFICER SMITH:  We're ready to 
         10   start with our last panel, starting with Luz 
         11   Santana.
         12             MS. SANTANA:  Good evening.  My name is 
         13   Luz Santana.  I'm a member of a grass-roots 
         14   neighborhood organization named Vecinos Unidos, 
         15   which means in English United Neighbors, and we work 
         16   with disadvantaged residents to try to improve the 
         17   economic conditions.  And we have been working 
         18   with -- we have been dealing with issues of Fleet 
         19   for many years. 
         20            Back in 1978, '79, I believe the name -- 
         21   the previous name was Connecticut Bank and Trust, 
         22   and we had to deal with them, you know, with issues 
         23   like people on public assistance trying to cash 
         24   their checks and having problems and having the 
         25   police calling people who had, you know, differences 
          1   with some of the tellers and things getting kind of 
          2   out of hand.  We had to be involved. 
          3            And at this point, now, we turned our 
          4   attention to Fleet back in January, because we saw 
          5   an article in the paper, in the business section, 
          6   that they had been given an award from the President 
          7   because how great they were doing with the welfare 
          8   work, you know. 
          9            And we kind of got concerned and we called 
         10   a meeting.  I invited them.  However, we had a hard 
         11   time getting some of the decision-makers from Fleet 
         12   to come to meet with us.  We finally got a recruiter 
         13   staff to come and talk to us about how welfare was 
         14   working. 
         15            It happens to be that what seems to be a 
         16   successful story, it wasn't successful at all for us 
         17   in Connecticut, because what ends up to be, that 
         18   particular recruiter said that out of 20 people that 
         19   she hired, the person on recruiting, to work for the 
         20   Welfare to Work, none of the people stayed at the 
         21   job for, you know, 60 days or 30 days, and there was 
         22   no reason or explanation of what happened with the 
         23   person that stayed on the job. 
         24            And when we offered to -- we wanted to be 
         25   involved, we wanted to help them retain their 
          1   employees, and we also want to get people good jobs.  
          2   And it seems like we have a problem with that.  They 
          3   are not being too cooperative with us. 
          4            So we're very concerned about how this 
          5   acquisition will reflect in terms of the people who 
          6   are looking for jobs, meaningful jobs for them to 
          7   become self-sufficient.  So at this moment we are 
          8   opposing this acquisition, and hopefully that will 
          9   put attention, because, as you know, companies are 
         10   being compensated for hiring people from Welfare to 
         11   Work, and what we're concerned is that if people are 
         12   not staying on the job, however, the people who did 
         13   the recruiting for the company is not necessarily 
         14   the people who are presenting the tax credits, you 
         15   know, for the Welfare to Work.  So we're kind of 
         16   concerned that while people are not staying on the 
         17   job, the possibilities are they still can be able to 
         18   claim people, you know, for the tax credit.  So we 
         19   would like to ask this Board to look into that, and 
         20   things will hopefully get better, and we can improve 
         21   all relations.
         22            HEARING OFFICER SMITH:  Thank you very 
         23   much. 
         24            Mr. Vickers. 
         25            MR. VICKERS:  I'm Greg Vickers.  Thank you 
          1   for having us here today.  I work with the Citizens' 
          2   Research Education Network, which is a small 
          3   research-oriented nonprofit in Hartford, and 
          4   representing today 21 organizations who have signed 
          5   on to our printed report, which we have handed in 
          6   and filed with you. 
          7            And I will talk about some of the concerns 
          8   that the coalition has raised.  The coalition is 
          9   Connecticut Friends of Community Reinvestment, and 
         10   it is kind of a broad-based coalition of women's 
         11   organizations, minority groups, small business, and 
         12   housing interests. 
         13            The coalition, there are several things 
         14   that we're concerned about.  I guess the three that 
         15   stand out are the anticompetitive nature of the 
         16   merger, Fleet's decline or the decline in home 
         17   mortgage lending of Fleet after the merger with 
         18   Shawmut, and Fleet's record of small business 
         19   lending.  I'm just going to touch on those. 
         20            Fleet's acquisition of Shawmut four years 
         21   ago resulted in the significant concentration of 
         22   deposits and services in one behemoth institution in 
         23   Connecticut, yet the increase of size created 
         24   absolutely the opposite effect desired by the Board:  
         25   It decreased the availability of services to the 
          1   Connecticut community. 
          2            If the merger is accomplished, Fleet Boston 
          3   will have almost 50 percent of the market share for 
          4   Hartford and 30 percent of the market share for the 
          5   state as a whole in terms of deposits.  The next 
          6   closest competitor has only 11 percent of the 
          7   deposits in Connecticut, and in Hartford, the next 
          8   two competitors, No. 2 and 3, if combined, would 
          9   still only be one fifth of the size of Fleet. 
         10            The sale of the new institution will 
         11   positively dwarf the remaining independent banks in 
         12   Connecticut.  Sharing the market among institutions 
         13   of is rarely considered -- rarely meets the 
         14   definition of competition. 
         15            With Fleet having already acquired its 
         16   closest competitor, Shawmut, and BankBoston having 
         17   acquired its closest competitor, BayBank, the 
         18   continuing concentration of the market from four 
         19   competing banks to one megabank constitutes an 
         20   alarming trend.  These mergers may result in gains 
         21   for stockholders, but they provide little or no 
         22   benefit to consumers who are to be protected by the 
         23   Board. 
         24            Our second concern has been affordable 
         25   housing lending, and this was the -- looking at the 
          1   HMDA data is when I was initially interested in this 
          2   whole issue.  I was originally not interested in the 
          3   merger, and people said, "Well, Greg, you know, 
          4   let's get together," and I said, "Well, you can meet 
          5   in my basement, but I'm not all that interested."  
          6   And when we began to look at the numbers, I began to 
          7   realize how significant this was. 
          8            In the Hartford Metropolitan Statistical 
          9   Area -- we have graphs for all of the statistical 
         10   areas in Connecticut in the submitted documentation.  
         11   In the Hartford MSA, the total mortgage lending of 
         12   both Fleet and Shawmut in minority households in 
         13   1994 was 469 loans.  In 1997 it had plummeted to 
         14   102, and by 1998 it had dropped to 78.  So that it's 
         15   less than one fifth. 
         16            And I did some math after Jim Campen's 
         17   comments about the one plus one equals less than or 
         18   more than two, and it seemed to me, and my math may 
         19   be wrong here, but that one plus one is equal to .4 
         20   when it comes to minority lending and home 
         21   mortgages. 
         22            If you look at Hartford again, in the low- 
         23   to moderate-income loans in the Hartford MSA, they 
         24   went from '94, in 1994, which was again the year of 
         25   the merger, from 609 down to 151, or 25 percent.  Of 
          1   the mortgages that Fleet and Shawmut together did, 
          2   they were doing one quarter of that; Fleet by itself 
          3   was doing one quarter of that in '98.
          4            In Fleet's SBA lending -- there is more 
          5   documentation on Fleet's small business lending, but 
          6   just in terms of their SBA lending, even though 
          7   they're a preferred lender, and they are the largest 
          8   lender in the state, they ranked, in the first seven 
          9   months of the '98-'99 fiscal year, Fleet Bank was 
         10   23rd in the total -- 23rd of all lenders in the SBA 
         11   lending in this state. 
         12            And I will conclude, then, quickly.  There 
         13   is more that you will see when you read the 
         14   documentation.  But I want to say one thing.  We 
         15   would love to say see an extension of the public 
         16   comment period for two weeks after Fleet's published 
         17   commitment, after it's published and folks have had 
         18   a chance to look at it.
         19            Also we would love to see a public hearing 
         20   in Connecticut, and while I'm sure at this hour 
         21   that's not at all what you're interested in hearing, 
         22   there are a lot of organizations and groups which I 
         23   have talked to that would love to have an 
         24   opportunity to address you. 
         25            And last, we would ask that the Federal 
          1   Reserve Board deny the merger until and unless there 
          2   are negotiated, detailed, signed and publicly 
          3   monitorable CRA agreements, and until there is a 
          4   more extensive divestiture plan. 
          5            HEARING OFFICER SMITH:  Thank you very 
          6   much. 
          7            Mr. Garvin. 
          8            MR. GARVIN:  Good evening, ladies and 
          9   gentlemen.  My name is Roger Garvin.  I thank you, 
         10   Board, for having me speak tonight.  I'm here 
         11   because I'm a businessman in Roxbury.  I'm also 
         12   running for Roxbury District 7 City Councilor.  And 
         13   because I am a businessman in Roxbury, it becomes 
         14   very important to me to talk to you for just a few 
         15   minutes. 
         16            It's very important that the Roxbury 
         17   community have a stake in Roxbury.  It bothers me as 
         18   a businessman because in this community, more people 
         19   go to jail than in any other community that I can 
         20   think of.  Because they go to jail, it's a very 
         21   serious issue.  It is because, mostly, economic 
         22   development, as a businessman, I look at economic 
         23   development on a very, very broad plan. 
         24            In order to keep people from going to jail, 
         25   we need to do something about that.  No. 1 is 
          1   providing monies to existing businesses so that they 
          2   can improve their businesses, so that they can 
          3   provide more jobs for the people in the community.  
          4   We do not have access to the lending institutions.  
          5   We do not have access to monies that we should have.  
          6   Believe it or not, if the people in District 7 who 
          7   are in business already could have access to monies, 
          8   just the businessmen alone could solve a lot of 
          9   problems and a lot of issues that are now plaguing 
         10   District 7. 
         11            I'm here tonight.  I'm not begging, I'm 
         12   just pleading to you to act on a more positive basis 
         13   as far as getting and making access and making 
         14   monies more available to the businesses in Roxbury.  
         15   I have provided a lot of jobs, but if I cannot 
         16   provide a lot more jobs, it's because of 
         17   accessibility to funds.
         18            As we approach the beginning of a new 
         19   millennium, megamergers are the talk of the times.  
         20   Presently, the merger being discussed is the one 
         21   with Fleet and BankBoston.  If these type mergers 
         22   are to occur, then it should happen to best benefit 
         23   the community in which it does its business. 
         24            I would like to see corporate mergers such 
         25   as a proposed merger of Fleet and Boston bank have a 
          1   viable and positive impact on the City of Boston, 
          2   the fair and equitable lending practices for small 
          3   businesses, educational programs, citywide programs 
          4   for the elderly, and continued partnerships with 
          5   housing programs, such as the ACORN housing program. 
          6            In closing, I would like to see Fleet and 
          7   BankBoston be sensitive to the economic needs of 
          8   lower and moderate income families as well as 
          9   demonstrating a commitment to invest in the 
         10   community.  I thank you. 
         11            HEARING OFFICER SMITH:  Thank you very 
         12   much. 
         13            Ms. Hurewitz. 
         14            MS. HUREWITZ:  Good evening, I would like 
         15   to thank the Federal Reserve Bank of Boston for 
         16   holding this public hearing on Fleet and giving me 
         17   the opportunity to speak here tonight. 
         18            My name is Vickie Hurewitz.  I work for 
         19   SENSES, a statewide organization in New York State.  
         20   The acronym stands for the Statewide Emergency 
         21   Network for Social and Economic Security.  We 
         22   advocate for a variety of issues that affect low- 
         23   income New Yorkers.  I work on community 
         24   reinvestment matters for SENSES. 
         25            I am here today to testify about Fleet's 
          1   lending in New York State, particularly our Capital 
          2   District and Orange County, two areas that are 
          3   particularly active in CRA work.  On its last CRA 
          4   exam in New York State, Fleet got a low satisfactory 
          5   on the lending and service tests. 
          6            The Capital District of New York State is 
          7   roughly a six-county area consisting of Albany, 
          8   Schenectady, Rensselaer, Saratoga, Schoharie and 
          9   Montgomery Counties.  Fleet Bank is the region's 
         10   largest, with over $3 billion in deposits, and it 
         11   has branches in all Capital District counties.
         12            Within these counties are several declining 
         13   central cities and pockets of rural poverty.  You 
         14   might have heard of the three cities of Albany, 
         15   Schenectady and Troy.  Those are within our Capital 
         16   District. 
         17            Orange County is downstate.  Many residents 
         18   commute to Manhattan to work.  However, the county 
         19   has two distressed central cities, Newburgh and 
         20   Middletown, and Kiryas Joel, an Hasidic Jewish 
         21   community that is in need of reinvestment. 
         22            On Friday, July 2nd, myself and 
         23   representatives of 17 community organizations met 
         24   with Fleet representatives, including Mr. Hermes 
         25   Ames, the president of Fleet National Bank, to 
          1   discuss Fleet's lending in the Capital District.  
          2   I'm attaching to this testimony a proposal that was 
          3   presented to Fleet and served as the focus of our 
          4   Capital District meeting. 
          5            I won't belabor the numbers that we've 
          6   heard several times here today, but during the last 
          7   several years Fleet has acquired Shawmut Bank and 
          8   NatWest, both of which had branches that were 
          9   located in New York State, and their home purchase 
         10   loans had dropped precipitously, 70 percent 
         11   statewide, and in low-income census tracts their 
         12   home purchase loan rate had dropped 76 percent from 
         13   1995 to 1997 after the mergers. 
         14            I have also done my own analysis of Fleet's 
         15   1997 home purchase lending in the Capital District 
         16   and Orange County, and I had found that the bank had 
         17   extremely low market shares, no matter whether the 
         18   geography was the county, the city or the distressed 
         19   neighborhood.  And I didn't find this surprising, 
         20   given the finding for the state. 
         21            Prior to the meeting with Fleet, I had 
         22   called Don Prusak of Fleet Bank and asked him about 
         23   obtaining the results of Fleet's INCITY program, the 
         24   megapledge Fleet Bank made when it acquired Shawmut 
         25   in 1995.  He told me the results of INCITY could be 
          1   found in the HMDA data.  When I related to him the 
          2   poor results of the analysis, he said, "There are 
          3   some problems with those numbers.  You need to look 
          4   at our 1998 HMDA data."  Subsequently, he supplied 
          5   me with the 1998 data for the Capital District and 
          6   Orange County. 
          7            As I mentioned, in 1997, I found that Fleet 
          8   had very low market shares for home purchase loans, 
          9   no matter the geography.  By 1998 Fleet's home 
         10   purchase lending had increased by 115 percent in 
         11   Albany County.  However, the bank made no loans in 
         12   the distressed neighborhoods in the City of Albany. 
         13            In Rensselaer County the lending was flat.  
         14   The bank made no loans in the City of Troy in either 
         15   1997 or 1998.  In Schenectady County, lending went 
         16   down by 41 percent, although the dollar amount in 
         17   the distressed neighborhoods went from $59,000 to 
         18   $82,000, a small increase of small dollars. 
         19            Also I had been speaking to community 
         20   groups around the Capital District, and they had 
         21   informed me that Fleet has affordable housing 
         22   products.  However, they felt that the bank was 
         23   reluctant to use the product and was not out 
         24   actively seeking mortgage application. 
         25            During our meeting Fleet related that there 
          1   had been a problem with their mortgage origination 
          2   department after the mergers.  60 mortgage 
          3   originators had left to form their own company.  
          4   Fleet informed us that it had hired new originators; 
          5   however, when I mentioned they had still not 
          6   penetrated the lower-income neighborhoods in our 
          7   region in 1998, they additionally informed us that 
          8   they had recently reworked their commission 
          9   structure that so that each originator got a minimum 
         10   of $500 per loan. 
         11            We encouraged them to hire a noncommission 
         12   community service loan officer like some their 
         13   competitors to outreach to community organizations 
         14   and actively seek applications. 
         15            I belabor these points about home purchase 
         16   lending because these problems occurred while Fleet 
         17   had a megapledge in place, the INCITY program I 
         18   mentioned.  Fleet has currently offered another 
         19   $14.6 billion pledge with very few specifics.  I 
         20   urge the Federal Reserve to ensure that this pledge 
         21   be made locally specific and locally accountable so 
         22   that we can be certain that this new pledge does not 
         23   go the way of INCITY. 
         24            During our meeting we also spoke about home 
         25   improvement lending, bank services and investments.  
          1   A disturbing trend noted in all the distressed 
          2   neighborhood is that the depository institutions are 
          3   leaving and the subprime lenders are arriving, which 
          4   is not good news for low-income households.  For 
          5   example, in Arbor Hill, a low-income neighborhood in 
          6   Albany, Fleet made no loans.  The subprime lenders 
          7   were the leading lenders there. 
          8            I'll finish with just saying that even 
          9   though Fleet has an outstanding record in 
         10   investments in New York State, I still urge you to 
         11   make sure that this $14.6 billion pledge, as many of 
         12   my colleagues up here have said, will be locally 
         13   specific and locally accountable.  It is very 
         14   important for the future of lending by this bank in 
         15   our neighborhood. 
         16            Thank you. 
         17            HEARING OFFICER SMITH:  Mr. Timilty. 
         18            MR. TIMILTY:  My name is Greg Timilty, and 
         19   I'm a candidate for the City Council, citywide.  I'm 
         20   also an employee of an investment banking firm.  I 
         21   come here to testify tonight as neither.  I come 
         22   here to testify actually as we get on past nine 
         23   o'clock, I come as a 24-year-old resident of the 
         24   City of Boston, which probably makes me one of the 
         25   youngest people to testify today. 
          1            I remarked to someone as I came in today, I 
          2   said, "I wonder who's last today."  Little did I 
          3   know.  But I think that that also gives me an 
          4   enviable position because I am going to forgo my 
          5   remarks now as we get past nine o'clock, and I would 
          6   like to just leave you with a theme, because it's a 
          7   theme that was one of the main reasons why I came 
          8   here to testify tonight, one of the reasons why I 
          9   stayed, and I applaud everyone in the audience for 
         10   staying this long.  It's been a long day; I know 
         11   it's been a long day for you. 
         12            But I think that one of the main reasons 
         13   why I came today is I represent a growing dynamic in 
         14   the City of Boston of young people, young men and 
         15   women who are faced with an uncertain future.  As 
         16   one of the panelists in the previous panel spoke 
         17   about, housing ownership in the City of Boston is an 
         18   abysmal failure, I think, for the banking industry. 
         19            I think that if you look at some of the 
         20   figures as far as the involvement in local 
         21   communities, based upon a person who owns their 
         22   house as opposed to someone who just rents, and you 
         23   look at how that can change, I think our 
         24   communities, and the communities that the Fleet Bank 
         25   and the merged company will serve, are much stronger 
          1   as a result of housing ownership. 
          2            I think that my generation is largely an 
          3   ATM generation, a generation that doesn't have the 
          4   resources that my parents' generation had, where 
          5   when you go to look for a loan, whether it be for 
          6   your child's education or whether it be for your 
          7   first home, you're looked at as a number and not an 
          8   individual.  And I think especially when you look at 
          9   low- and moderate-income families, when they go into 
         10   those banks and they sit across that desk, they're a 
         11   number, they're not an individual.  We've lost 
         12   banking with a conscience. 
         13            And it's caused, if you see, as the 
         14   panelist before, Pat Cusick, mentioned, 5 percent in 
         15   the area of Roxbury in home ownership.  Something 
         16   has got to be done about that.  I think that a lot 
         17   of it goes to the community, and the community is 
         18   doing a great job.  They need help.  They are 
         19   communities that will bank will represent, and it 
         20   only makes the bank stronger to have the community 
         21   stronger that it represents. 
         22            My generation, as I said, is left in an 
         23   area where we don't know what's the future.  We 
         24   don't know if we're going to be able to own a home 
         25   in a neighborhood on a street in the City of Boston 
          1   or anywhere else in the New England area.  We don't 
          2   know, as we get into the next 10 to 15 years, how 
          3   we're going to fund our children's education. We 
          4   don't know what the costs will be.  We don't know 
          5   what the structure, the financing will be. 
          6            But what we do know, in leaving this room 
          7   today, and this merger with this bank, is that 
          8   there's going to be no competition.  The bank down 
          9   the street, the local bank that my family went to to 
         10   get their loan for their first house, is no longer 
         11   existent.  It has been one of the 450 banks that 
         12   Fleet now encompasses.  And without that type of an 
         13   outlet, where do these low- and moderate-income 
         14   family go?  Where does my generation go?  Without 
         15   that, we don't have a community, and without a 
         16   community, you don't have the customers that you 
         17   want, you don't have the customers that you deserve, 
         18   and the banks are going to suffer. 
         19            I just want to leave you with a theme.  As 
         20   you leave here tonight, and as you think this over, 
         21   and as this -- as this deal is brokered, it's my 
         22   generation's future that's brokered, because right 
         23   now it's a transient generation, as I said, it's an 
         24   ATM generation.  It's not a generation that's used 
         25   to going down the street and knowing their banker 
          1   and being seen as an individual. 
          2            If we move away from banks looking at 
          3   individuals, rather than numbers, if we look at this 
          4   merger as being good for Wall Street, although it's 
          5   not good for River Street in Matapan, and if we look 
          6   at this as enhancing shareholder value, and not 
          7   enhancing the communities that they serve, then I 
          8   think that we lose.  The shareholders might gain, 
          9   but I think the communities that this bank serves 
         10   lose. 
         11            I just want to thank you for the 
         12   opportunity to testify today, I know I'm the last.  
         13   Hopefully, I left with you a high note and something 
         14   to think about as you go on.  Thank you. 
         15            HEARING OFFICER SMITH:  Questions? 
         16            (No response)
         17            HEARING OFFICER SMITH:  Thank you very much  
         18   for coming to testify today.  We do have the open 
         19   mike session following, and I understand that we 
         20   have at least one person who has signed up.  The 
         21   name is R.K. Schwartz.

Last update: December 3, 2010