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Public Meeting Transcripts

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

Wednesday, July 7, 1999

Transcript of Panel Three

        11            MR. REILLY:  Good morning.  My name is Tom 
         12   Reilly.  I'm the Attorney General for Massachusetts.  
         13   I want to thank you for the opportunity to offer 
         14   comments to this panel today on the proposed merger.  
         15   I know you have a long day ahead of you and I will 
         16   certainly do my best to not make that day any 
         17   longer.  
         18            There are a number of important issues that 
         19   you have to consider.  We've heard a lot about CRA 
         20   issues.  They certainly are important.  I have 
         21   submitted a letter, and I would ask with your 
         22   permission on those issues to have that letter be 
         23   made part of the record.  
         24            I would like to focus my attention and my 
         25   comments on competition, the need to replace the 
          1   competition that will be caused by this merger.  
          2            By way of background, my office has done an 
          3   extensive investigation that is not yet complete on 
          4   this proposed merger.  We've done it along with the 
          5   Department of Justice.  We've administered several 
          6   investigative demands, market surveys, retained the 
          7   services of a respected economist, Dr. Kalamaris, 
          8   from Columbia University.  We've conducted scores of 
          9   interviews with all the affected communities and 
         10   businesses and people that are involved in this 
         11   process.  Now, that investigation, as I said, is 
         12   still ongoing, but we have identified certain 
         13   problems and certain major concerns that I would 
         14   like to share with you today.  
         15            First, as you well know, this is 
         16   unprecedented in terms of this merger.  The one and 
         17   two major players for key sectors of our economy are 
         18   merging, and the key sector I want to focus on today 
         19   is the middle market.  And that creates problems 
         20   whenever that competition is lost.  
         21            Secondly, this merger has national 
         22   implications, because there are other markets 
         23   throughout this country that are looking at this in 
         24   order to determine and foresee what the rules are 
         25   going to be.  So I think this is important that we 
          1   take the time in terms of doing it right. 
          2            Now, the problem, and the major problem 
          3   that we have identified, is the problem that this 
          4   merger creates risk, and I believe that risk is 
          5   unnecessary and I believe that that risk can be 
          6   avoided and perhaps prevented if this is done right.  
          7            Now, the major area that is at risk as a 
          8   result of this merger is the middle market, the 
          9   so-called middle market, and that's not some elusive 
         10   term.  I mean, these are real companies.  These are 
         11   real people.  A textile manufacturer in Fall River, 
         12   maybe 30 million in revenues, maybe 250 employees.  
         13   Real people that depend upon the success of this 
         14   company.  Metal fabrications plant maybe in the 
         15   central part of the state, Worcester, with 200 
         16   people, $60 million in revenues, does business in 
         17   the Far East, needs sophisticated banking services, 
         18   international letters of credit.  A paper 
         19   manufacturer in the western part of the state or the 
         20   trucking companies throughout the state.  
         21            This is a major part of our economy.  
         22   Perhaps at least 1,000 companies that are affected 
         23   by this merger.  A hundred thousand people that are 
         24   impacted.  They have a stake in this, too, and they 
         25   need to be heard as well. 
          1            Right now in the current state of our 
          2   economy, they're doing well.  They're benefitting 
          3   because of the competition between BankBoston and 
          4   Fleet.  They have a demand for credit.  As I said, 
          5   letters of credit, international letters of credit, 
          6   currency centers.  They're getting all that and 
          7   they're getting it at a price that they can afford, 
          8   a competitive price, and certainly we are all the 
          9   better for that.  And I just want that to continue 
         10   and I want a major competitor to come in and replace 
         11   this competition.  
         12            Now, it's going well now, but what happens, 
         13   even in good times, if the price of credit goes up  
         14   and the price of borrowing goes up?  I don't care 
         15   whether it's a quarter or a half a point or a full 
         16   point.  What happens?  It effects an increase in the 
         17   cost of doing business in this state and this 
         18   region.  We don't need any more of that.  We want to 
         19   keep competitive pricing.  
         20            What happens in a downturn?  What are the 
         21   protections there?  What about the loss of jobs if 
         22   there's a credit squeeze and a tightening of credit 
         23   and the job growth is lost?  What's the impact that 
         24   has?  What is the impact of putting all our eggs in 
         25   one basket?  There's no other competitor.  What 
          1   happens to our economy?  Certainly these are good 
          2   institutions and strong institutions and wise 
          3   institutions, but if there's only one of them and a 
          4   series of mistakes happens, what happens next?  
          5            I believe that all this can be avoided.  I 
          6   believe that this merger can be done, and it can be 
          7   done right.  It can be done by playing by the rules.  
          8   In my opinion, the way to do that is to bring in -- 
          9   that all of the assets that are going to be divested 
         10   go to one buyer for the entire region.  One buyer 
         11   comes in and picks up this package, it ensures 
         12   competition.  It ensures that there's going to be 
         13   regional competition in Massachusetts and throughout 
         14   this region.  That is what I believe should happen.  
         15            Now, there are those -- and certainly I 
         16   respect their opinions and I value their opinions -- 
         17   that we should carve out for some community banks.  
         18   I support community banks.  Everyone supports 
         19   community banks.  They don't service the middle 
         20   market.  And they won't service the middle market 
         21   when this is all said and done.  
         22            If a major competitor picks up this piece 
         23   and someone with the size and scope and scale and 
         24   the expertise to service this middle market, it is 
         25   my opinion they will divest.  They will not need all 
          1   these branches, particularly some of the smaller 
          2   branches, and that divestiture will occur in an 
          3   orderly fashion and they'll be making good business 
          4   decisions as to what they can divest, and that is 
          5   the way that I certainly would urge and recommend 
          6   that the Board adopt the direction that I think we 
          7   should go. 
          8            In the end this is about preserving 
          9   competition and maintaining the competition that 
         10   exists and filling that gap and filling that void 
         11   that is in that middle market.  If we do that, and 
         12   we do it right, we'll set the standard to make sure 
         13   the flow of affordable credit and competitive credit 
         14   flows to the businesses of Massachusetts and this 
         15   region that depend upon them for their survival and 
         16   the economic future and health of this region.  
         17   Thank you very much.
         18            My colleague Richard Blumenthal from 
         19   Connecticut is next.  (Applause)
         20            PRESIDING OFFICER SMITH:  Mr. Blumenthal?
         21            MR. BLUMENTHAL:  Thank you very much.  I 
         22   want to join my colleague, Attorney General Tom 
         23   Reilly, in thanking you for this opportunity and say 
         24   that I also join in sympathizing with the arduous 
         25   day you're devoting to this subject.  I want to make 
          1   it clear I think you need to devote another day, if 
          2   you choose to do so, in Hartford, which we've asked 
          3   you to do, and you're always welcome, as you were 
          4   some years ago. 
          5            I want to say that my comments have been 
          6   submitted formally in writing, and I will just 
          7   briefly summarize them.  And I want to say that 
          8   we've appreciated the cooperation and the help that 
          9   we've received from the Commonwealth of 
         10   Massachusetts, General Reilly and his staff, who 
         11   have done excellent work.  We've done much the same 
         12   kind of investigation and ours, too, is ongoing 
         13   involving documents that we've subpoenaed from the 
         14   banks, which are in confidential form and submitted 
         15   to you in excerpt.  
         16            We've also spoken to customers, 
         17   competitors, other banks that will be affected.  We 
         18   have reviewed the complaints that we've received 
         19   over the years, not only in my office, but the 
         20   banking department, and we have benefitted from the 
         21   economic analysis done by Charles Cavanaros. 
         22            And today's situation brings me to somewhat 
         23   different conclusions than my colleague, General 
         24   Reilly, but we share a similar view of the enormous 
         25   peril and threat to competition and consumer 
          1   interests that are inherent in this merger.  
          2            You will remember that four years ago I 
          3   spoke to you in Hartford regarding the proposed 
          4   merger of the Fleet Financial Group and the Shawmut 
          5   National Corporation, and we had high expectations 
          6   at that time that Fleet Bank would provide superior 
          7   services to consumers and small businesses as well 
          8   as to larger customers and that its community 
          9   investment commitment would be a model to the 
         10   nation.  In fact, we negotiated a package of 
         11   divestiture and community commitments that we 
         12   believed offered tremendous promise for our region 
         13   and for the nation.  
         14            The record since 1995, I say regrettably, 
         15   offers warning for grave caution.  The record has 
         16   been at best mixed.  I expressed concern then that 
         17   large banks often do not give sufficient priority to 
         18   smaller customers, and we've seen throughout the 
         19   industry a limitation in competition, unceasing ATM 
         20   litigation and voluminous consumer complaints.  
         21            At least in 1995 one of the reassuring 
         22   thoughts was that Fleet would still face meaningful 
         23   competition and BankBoston was a viable remaining 
         24   rival.  Now Fleet is again before this Board seeking 
         25   approval to acquire its largest New England 
          1   competitor, BankBoston.  And this proposed merger 
          2   would create a behemoth of more than 200 billion 
          3   dollars in assets, dwarfing its next largest New 
          4   England competitor by more than ten fold.  
          5            To counter this economic and competitive 
          6   threat, Fleet offers to sell less than one half of 
          7   BankBoston's Connecticut presence; really an offer 
          8   that would create a mere shadow of the competitive 
          9   force that premerger BankBoston offered.  
         10            Essentially talking about the rules as 
         11   General Reilly did, talking about the antitrust 
         12   rules that I am bound to enforce as Connecticut's 
         13   chief antitrust official, Fleet and BankBoston have 
         14   attempted to justify this result with an antitrust 
         15   argument that is simply out of touch with those 
         16   rules and with economic reality.  They divided New 
         17   England into numerous artificial municipal and 
         18   metropolitan markets and they have argued that even 
         19   the smallest of banks and credit unions compete on 
         20   an equal footing, despite the fact that they have 
         21   recognized themselves in other contexts, the 
         22   importance of size and scale in economies that drive 
         23   down costs.  
         24            The key flaw in this case is that it 
         25   persists in mistakenly using the same incorrect 
          1   formula in antitrust terms to determine that 
          2   competition won't be harmed.  Artificially defining 
          3   those markets with municipal boundaries rather than 
          4   seeing them as statewide or regional. 
          5            I urge that there be a package of larger, 
          6   more extensive divestiture, a more satisfactory sale 
          7   of assets that is necessary to counter the 
          8   anti-competitive effects of this merger.  In a sense 
          9   that kind of larger-scale divestiture would enable 
         10   various kinds of purchasers to use those assets to 
         11   increase themselves as competitive, pro consumer 
         12   forces in the marketplace.  
         13            A sufficient number of branch banks, 
         14   deposits, ATMs, other assets must be made available 
         15   to our growing regional financial institutions, 
         16   including the community bank, so that they will grow 
         17   from the ground up.  
         18            At the same time I urge that a substantial 
         19   block of assets -- not all, but a block -- from all 
         20   three states that are affected be sold on a combined 
         21   basis to a strong major purchaser that has economies 
         22   of scale and scope to directly and immediately 
         23   compete with Fleet-Boston.  
         24            In contrast to this approach, what Fleet 
         25   offers is what it has called a clean sweep of 
          1   BankBoston assets.  But their broom, it seems to us, 
          2   is really a worn-out brush applied to one or two 
          3   cities; not to the relevant market as a whole.  
          4   BankBoston doesn't operate out of Hartford alone or 
          5   out of Torrington alone in the State of Connecticut.  
          6   It has a statewide presence.  The mid market is key 
          7   and will be the victim of less competition, tighter 
          8   credit, higher rates and lower quality service if 
          9   this merger is permitted to go forward as it is 
         10   structured now.  
         11            And as General Reilly has said so well, 
         12   this mid market really is the engine that fuels our 
         13   economic growth in the State of Connecticut and 
         14   throughout the region.  These are small and middle- 
         15   sized businesses that employ tens of thousands of 
         16   our citizens and, most importantly, most critically, 
         17   even in good times, they are the economic forces 
         18   that employ new workers and create new jobs. 
         19            Let me just say finally that I urge the 
         20   Board to require Fleet-Boston to make good on the 
         21   commitments that it has articulated more 
         22   specifically this morning by further defining them, 
         23   by stating them even more specifically, but most 
         24   important, saying explicitly what it will do to make 
         25   sure that the community investment commitments are 
          1   actually realized.  What we found in the last 
          2   go-around on community investment is that they are 
          3   completely dependent on community outreach and 
          4   promoting aggressively the kind of opportunities 
          5   that are made available.  The numbers mean nothing 
          6   unless they are backed by a solid, aggressive 
          7   program of community outreach.  (Applause)  And that 
          8   is what I urge the Federal Reserve Board to require.  
          9            I very much appreciate this opportunity to 
         10   be with you this morning and for you to give me this 
         11   chance to talk to you.
         12            PRESIDING OFFICER SMITH:  Thank you very 
         13   much.  Ms. Nappier. 
         14            MS. NAPPIER:  Good morning.  My name is 
         15   Denise Nappier and I am treasurer of the State of 
         16   Connecticut.  I am pleased to join with Attorney 
         17   General Richard Blumenthal from my State of 
         18   Connecticut and his counterpart here in 
         19   Massachusetts to share with you some serious 
         20   concerns about the proposed merger as it stands 
         21   today.  I would also like to thank you for the 
         22   opportunity to testify, although I must express my 
         23   disappointment in your decision not to hold a 
         24   hearing in Connecticut on a matter that will 
         25   effectively remake the financial landscape in 
          1   Connecticut.  
          2            The Connecticut State Treasurer's interest 
          3   in the proposed merger are substantial.  We are a 
          4   shareholder and a major customer of both banks.  The 
          5   combined shares of both banks held by the state 
          6   treasury is in excess of 630,000.  For the past two 
          7   years the state treasury has spent nearly $6 million 
          8   on banking service fees, of which 90 percent has 
          9   been spent or paid to Fleet and BankBoston, Fleet 
         10   representing the lion's share of roughly 77 percent 
         11   of all fees paid, and BankBoston 15 percent. 
         12            I believe that a sense of responsibility 
         13   for the well-being of the citizens of Connecticut 
         14   can and must go hand in hand with the fiduciary 
         15   responsibilities of the state treasurer's office, 
         16   and it's within that context that I express my 
         17   concern.  
         18            Let me say from the onset that I believe 
         19   that this merger could be a tremendous opportunity 
         20   for Connecticut and New England.  There could be 
         21   great promise in the establishment of a strong 
         22   regional bank, a great player on the national stage, 
         23   but that's not the blueprint we see today.  
         24            My office is taking a look at Fleet's track 
         25   record in lending in the communities, and I am 
          1   concerned.  Fleet has claimed that the merger will 
          2   generate greater capacity for the bank to provide 
          3   superior services to customers.  It sounds good, but 
          4   I believe in checking the record, and so far the 
          5   record tells a different story. 
          6            For example, Fleet's history of post-merger 
          7   performance demonstrates a declining level of 
          8   commitment in providing better access to banking 
          9   services, home mortgage and small business loans, as 
         10   well as other forms of community investments.  
         11            (Applause)  Now, I do understand the art of 
         12   statistics, but the facts speak for themselves and 
         13   as a fiduciary, I don't typically engage in those 
         14   forms of tactics.  So I am here to say to you that 
         15   in Connecticut we know that the amount of loans to 
         16   low and moderate income households before the merger 
         17   of Fleet and Shawmut was twice the level it is 
         18   today.  (Applause)  I understand that the CEO of 
         19   Fleet was recently quoted as saying that the merged 
         20   bank will be for everyone.  Well, my concern is over 
         21   just who is being left out here.  (Applause)  I am 
         22   generally concerned that the big losers in the 
         23   merger, the people being left out, may be the 
         24   consumers and businesses of Connecticut.  That is, 
         25   people who are trying to get a small business up and 
          1   running or expand a growing business and need a 
          2   reasonable loan.  Or the low or moderate income 
          3   family living in our rural communities or in the 
          4   inner city trying to afford their first home and 
          5   need a mortgage at an affordable rate.  And 
          6   consumers depend on reasonable rates, healthy 
          7   competition and banking parties that respond to 
          8   their needs.
          9            Let me briefly highlight nine critical 
         10   areas of concern.  First, due in large part to the 
         11   competition for business between Fleet and 
         12   BankBoston, the state treasurer's office here in 
         13   Connecticut has saved nearly $1 million reduction in 
         14   banking service fees from 1994 to 1998.  While I can 
         15   speak only for the business relationship of the 
         16   state treasury, it would not be unreasonable to 
         17   assume that Fleet may possess substantial 
         18   competitive control over other business 
         19   relationships in our state.  
         20            We are concerned that the savings achieved 
         21   by my office may well be eroded as competition is 
         22   eliminated.  Adequate capital is frequently cited as 
         23   the major barrier to growth and development of small 
         24   businesses.  Undercapitalization is the largest 
         25   contributor to business venture failure.  Therefore, 
          1   the economic stability and well-being of small 
          2   businesses in our state is directly tied to the 
          3   availability of choices of banking services and the 
          4   fair lending practices of the financial institutions 
          5   serving our state.  That's why reduction in 
          6   competition is of concern here.  (Unintelligible) 
          7   bank is a program that helps small Connecticut 
          8   businesses that are unable to obtain conventional 
          9   financing with an emphasis on minority and women- 
         10   owned businesses.  
         11            As part of the Fleet-Shawmut merger Fleet 
         12   was required three years ago to maintain a high 
         13   level of urban loans.  Once meeting its obligations, 
         14   under the agreement Fleet's participation with  
         15   (unintelligible) dwindled considerably, from 1.2 
         16   million in fiscal 1998 to 295,000 in fiscal 1999.  
         17   That track record is cause for serious concern.  
         18            The Community Reinvestment Act has fought 
         19   discrimination in lending practices and increased 
         20   access to capital for home mortgages and business 
         21   start-up for more than two decades.  Any entity 
         22   emerging from a merger between Fleet and BankBoston 
         23   should be a leader obligated to formulate, promote 
         24   and implement unfolding principles of community 
         25   investment.  
          1            We have seen just the opposite.  For 
          2   example, the 1998 CRA rating report showed that 
          3   Fleet made nine community development loans totaling 
          4   just over $16 million in Connecticut while they made 
          5   19 community development loans totaling nearly 157 
          6   million dollars in Massachusetts.  Of the 200 
          7   million in community development loans, 
          8   Massachusetts received 72 percent of the loans to 
          9   Connecticut's 7.5 percent, even though Connecticut 
         10   has 25 percent of the bank's branches to 
         11   Massachusetts' 33 percent.  
         12            Obviously every potential borrower in 
         13   Connecticut is concerned about those stats.  In 
         14   Connecticut we understand the value of community 
         15   banking, where the bankers know all the 
         16   businesspeople and are aware of potential business 
         17   problems before they become critical.  BankBoston 
         18   has developed an internationally recognized model 
         19   for community banking.  Fleet has not.  And even the 
         20   BankBoston model has worked more effectively in 
         21   Massachusetts than in Connecticut.  
         22            Any approved merger plan should include the 
         23   preservation of the banking relationships developed 
         24   by First Community Bank and a commitment to the 
         25   continued success of the First Community Bank.  Now, 
          1   we're concerned that won't happen.  Connecticut's 
          2   urban and rural communities have traditionally been 
          3   underserved by financial institutions.  Yet nearly 
          4   half of the branches targeted for sale in connection 
          5   with the proposed merger are located in the rural or 
          6   urban areas of our state.  Location is particularly 
          7   important to low and moderate income families where 
          8   transportation is frequently limited.  We're 
          9   concerned that service to these communities will be 
         10   disrupted at best and perhaps in some cases will be 
         11   eliminated.  
         12            Fleet and BankBoston have recently 
         13   announced a $14.6 billion commitment for 
         14   lower-income borrowers, small businesses, community 
         15   development programs over a five-year period of 
         16   time.  Our internal analysis indicates this is only 
         17   a slight increase from the current lending patterns 
         18   and we have no idea from Fleet how this will affect 
         19   our state.  Given the uneven distribution of Fleet's 
         20   attention to community development efforts in the 
         21   past, it would not be unreasonable to assume that 
         22   Connecticut would not fare as well as Massachusetts.  
         23   We remain concerned about that and would much prefer 
         24   that Fleet show leadership in all jurisdictions in 
         25   which it operates.  Thank you very much.  (Applause)
          1            PRESIDING OFFICER SMITH:  Thank you.  
          2   Questions from the panel?     
          3            MR. McDONOUGH:  I have a question for Mr. 
          4   Reilly.  Your remarks today have centered around the 
          5   antitrust implications of this merger, particularly 
          6   your concern about middle market lending, and you're 
          7   advocating a solution where a large institution 
          8   would come in and acquire all the assets in all 
          9   three states?
         10            MR. REILLY:  Yes.
         11            MR. McDONOUGH:  Whereas, Mr. Blumenthal was 
         12   suggesting that maybe a large institution could 
         13   acquire some assets, a sufficient number, toehold or 
         14   whatever, to meet the middle market.  Is that a 
         15   potential solution to this issue or do you still 
         16   believe -- obviously you believe -- but would it be 
         17   sufficient if a large institution acquired 
         18   sufficient assets in the three states rather than 
         19   acquiring everything? 
         20            MR. REILLY:  I think the key for me would 
         21   be whether or not the bank that acquired the new 
         22   buyer was sufficient in size and scope and expertise 
         23   to meet the competitive demands or competitive needs 
         24   of that middle market.  That's the focus.  Once that 
         25   was satisfied, certainly I'm open to other 
          1   considerations.  But that's the main focus.  That's 
          2   the main consideration.  And I am concerned about in 
          3   terms of carving out a piece, who's going to do the 
          4   carving out?  Is it going to be Fleet-Boston?  Isn't 
          5   that a conflict?  What about the inevitable 
          6   cherrypicking that's going to go on?  It's going to 
          7   make it all the more difficult for a new, viable, 
          8   strong competitor that I'm looking for to come in 
          9   here and be willing to come in here under those 
         10   circumstances, if there are going to be carveouts in 
         11   the first stage regionally or carveouts individually 
         12   within the states.  
         13            I think it makes it more complex.  It makes 
         14   it more difficult.  Is it impossible?  No, but I 
         15   think it's a real challenge to put on the table.  
         16   It's a problem that I think can be solved by the 
         17   solution that I'm proposing.  Are there other 
         18   solutions?  Perhaps, but we need to be very, very 
         19   careful here and proceed with caution.  This can be 
         20   done I believe, but it has to be done right and I 
         21   believe that complicates it the more layers of 
         22   carving out that there are.  But it could be solved.  
         23   If there is one strong competitor, wherever that 
         24   competitor comes from or evolves that can meet the 
         25   competitive needs of have middle market, I'll be 
          1   satisfied, and I think this merger would ultimately 
          2   be a good thing for this region and for the state. 
          3            MR. McDONOUGH:  Thank you.
          4            MR. ALVAREZ:  I have a question for Mr. 
          5   Blumenthal and Mr. Reilly.  Do you find, in looking 
          6   at the middle market, that there is much competition 
          7   from banks or other lenders outside the market in 
          8   the contiguous area?  The middle market tends to be 
          9   a larger geographic market than some retail markets, 
         10   and I'm wondering what kind of competition you're 
         11   finding outside the particular State of Connecticut 
         12   or the State of Massachusetts.  
         13            MR. REILLY:  In Massachusetts we're finding 
         14   that there is some competition, but there is no 
         15   question that the two major competitors are 
         16   BankBoston and Fleet.  At the lower end of that 
         17   middle market you'll find some competition at the 
         18   very higher ends.  Obviously there are already more 
         19   options.  But right smack in the middle there, these 
         20   are the two major competitors, and essentially the 
         21   only major competitors, and that's the void that 
         22   certainly I'm very concerned about.  There's a 
         23   little bit of competition, but these are the primary 
         24   players here, and they're competing, and it's a good 
         25   thing.  I just want to keep it going. 
          1            MR. BLUMENTHAL:  Much the same is true in 
          2   Connecticut.  There is now competition, we find, 
          3   talking to customers, between BankBoston and Fleet 
          4   for mid-market business, and one of the key 
          5   differences, disagreement between ourselves and 
          6   Fleet-BankBoston, is on precisely that point.  They 
          7   have in essence said they are doing enough now in 
          8   terms of divestiture, and going to the first 
          9   question that was asked, I think the focus ought to 
         10   be on the clean sweep.  Let's really use a broom.  
         11   Let's sell more of those assets so that they can be 
         12   made available not only to a major purchaser who can 
         13   offer competition in the mid market, but also to 
         14   community banks and regional financial institutions 
         15   that are grown from the ground up and can also begin 
         16   to offer competition for that mid market.  
         17            These solutions are by no means mutually 
         18   exclusive.  If the broom sweeps clean and hard 
         19   enough and assets are really made available, both 
         20   can be done.  But the competition that now exists is 
         21   very much on a regional and statewide basis, and 
         22   ought not to be defined artificially and 
         23   unrealistically and inaccurately by municipal 
         24   boundaries or metropolitan areas, as the submission 
         25   from Fleet-BankBoston essentially does. 
          1            PRESIDING OFFICER SMITH:  Other questions? 
          2            MR. KWAST:  A follow-up with Attorney 
          3   General Blumenthal for a moment.  Do you have a feel 
          4   for how large a bank needs to be to serve 
          5   effectively the middle market in Connecticut or the 
          6   rest of New England? 
          7            MR. BLUMENTHAL:  I can't put a precise 
          8   number on its assets.  I would be glad to get back 
          9   to the Board with that kind of estimate.  Part of 
         10   what we're doing now essentially is working with our 
         11   economist on exactly that question, which obviously 
         12   is an core one for you as it is for all of us.  But 
         13   our feeling is that the sale of assets can be done 
         14   realistically and aggressively so as to enable a 
         15   major competitor, a large purchaser and at the same 
         16   time the community banks to both be involved.  And 
         17   what exactly the size is I would be happy to submit 
         18   in further written testimony if the Board will 
         19   permit me to do so. 
         20            MR. REILLY:  I thought a little bit about 
         21   that, and I don't have a hard figure, but the 
         22   starting point is that this merged bank is going to 
         23   have what?  170 billion dollars in terms of assets, 
         24   and certainly the closer you get to that figure, the 
         25   better off you're going to be.  I don't know whether 
          1   it's 30, 40, 80, 100, but the closer you get to that 
          2   figure, certainly the more comfortable I think we're 
          3   all going to be if we reach that kind of competitive 
          4   size and dimension that's going to provide real deep 
          5   pockets, real competition.
          6            PRESIDING OFFICER SMITH:  Thank you very 
          7   much for coming this morning.
          8            MR. BLUMENTHAL:  Thank you. 
          9            PRESIDING OFFICER SMITH:  We'll move on to 
         10   Panel Four.  We're ready to start and we have Ms. 
         11   Campbell reading a part of the statement from Ms. 
         12   Hurd, and I have assured her that the entire 
         13   statement will be part of the record.  
Last update: December 3, 2010