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Public Meeting Transcripts

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

Wednesday, July 7, 1999

Transcript of Panel Seven

       18            MS. FEINGOLD:  My name is Ellen Feingold, 
         19   and I'm president of Citizens' Housing and Planning 
         20   Association.  Thank you for providing us with the 
         21   opportunity to testify today.  I'm also here as the 
         22   developer and manager of a large nonprofit 
         23   organization that provides housing for very 
         24   low-income elderly and another that provides housing 
         25   for homeless elderly.  I am on the ground as well as 
          1   being representing a large organization. 
          2            CHAPA was established in 1967.  It's a 
          3   nonprofit organization that advocates for the 
          4   production and preservation of affordable housing 
          5   for low-income people.  Our membership of 1500 is 
          6   made up of a broad range of interests, including 
          7   housing providers and developers, tenants, advocacy 
          8   organizations, government officials, local planners, 
          9   lenders, and many others.  We are one of the largest 
         10   and most diverse housing coalitions in the area. 
         11            The proposed merger between Fleet and 
         12   BankBoston is especially important to the affordable 
         13   housing community for three reasons: 
         14            Number one, to date we are facing an 
         15   enormous and growing housing crisis.  Low- and 
         16   middle-income residents in New England are being 
         17   priced out of home ownership and rental markets in 
         18   record numbers. 
         19            Number two, government cutbacks at the 
         20   state and federal levels have meant that affordable 
         21   housing developers must rely on private financial 
         22   institutions like BankBoston and Fleet to a much 
         23   greater extent than ever before. 
         24            Third, in recent years the housing 
         25   community has worked closely with both Fleet and 
          1   BankBoston to craft solutions to the housing 
          2   affordability problem.  This merger provides an 
          3   important opportunity to build and expand on this 
          4   recent progress.  But, on the other hand, without 
          5   certain specific lending commitments that will 
          6   directly benefit low and moderate income people, 
          7   this merger poses a real danger because community 
          8   investment could fall dramatically in the areas that 
          9   need it the most. 
         10            We take the banks' commitments to make one 
         11   plus one equal more than two as genuine, but there 
         12   need to be details behind that commitment.  Since 
         13   the merger was announced, Fleet and BankBoston have 
         14   submitted a general proposal to commit $4 billion in 
         15   affordable housing mortgages and $2 billion in 
         16   community development lending over the next five 
         17   years.  As part of your consideration of this 
         18   merger, the Federal Reserve should require that 
         19   Fleet and BankBoston do the following: 
         20            Number one, provide details, details on how 
         21   this overall commitment compares with the combined 
         22   lending of the two banks over the past three years  
         23   with a breakdown for each New England state.  Their 
         24   proposed level of commitment can't be evaluated with 
         25   that information. 
          1            Number two, provide specific programmatic 
          2   details for each lending area.  For example, it's 
          3   not enough to say that a certain amount of money 
          4   will go towards rental housing development.  The 
          5   proposal must specify what will be the terms, how 
          6   will it be achieved, what are the delivery systems, 
          7   and, most important, what income groups will be 
          8   served.
          9            Third and finally, Fleet and BankBoston 
         10   should enter into a written agreement with the 
         11   appropriate housing and community development 
         12   organizations similar to previous CRA agreements 
         13   that both banks have entered into.  It is absolutely 
         14   essential that a sound mechanism be developed to 
         15   ensure that these commitments will be upheld and 
         16   monitored, and the Federal Reserve must assure 
         17   continuing performance under these commitments. 
         18            In order for the banks to fulfill these 
         19   requirements, we ask that the Federal Reserve extend 
         20   its public comment period for an additional two 
         21   weeks after the banks submit a revised and more 
         22   detailed community investment proposal. 
         23            Now, CHAPA's particular focus is on 
         24   affordable housing, and we therefore would like to 
         25   see the following five priorities addressed as a 
          1   condition of the merger: 
          2            Number one, Fleet and BankBoston should 
          3   expand their commitment to the Soft Second Mortgage 
          4   Program statewide.  The Soft Second Program has been 
          5   one of the most effective programs for helping low- 
          6   income families become homeowners.  A statewide 
          7   expansion is necessary. 
          8            Second, the banks should convert their 
          9   required Massachusetts Housing Partnership Fund 
         10   commitment to equity, similar to that which 
         11   BankBoston did during the merger between BankBoston 
         12   and BayBanks.  While there are many sources of 
         13   permanent financing to build rental housing, it's 
         14   very difficult to obtain the equity so that 
         15   developers of low-income housing can provide more 
         16   affordable apartments. 
         17            Third, the merged bank should expand its 
         18   commitment to funding and sustaining home buyer 
         19   education and counseling throughout the region.  As 
         20   banks move towards more flexible underwriting, it's 
         21   critical to support the network of homebuyer 
         22   counseling agencies for both pre-purchase, post- 
         23   purchase, and foreclosure prevention. 
         24            Four, the merged bank should continue its 
         25   membership in the Federal Home Loan Bank of Boston 
          1   over the long term -- now, Fleet is a member now; 
          2   BankBoston is not -- to ensure access to the Federal 
          3   Home Loan Bank's affordable housing and community 
          4   investment programs. 
          5            Five, the combined bank should expand its 
          6   commitment to foundation giving.  Many groups which 
          7   receive funds from both banks believe that they will 
          8   see reduced foundation funding as a result of this 
          9   merger.  We heard in Panel Five many groups who are 
         10   supported by both banks.  This kind of support must 
         11   continue at at least this level, and the Federal 
         12   Reserve needs to ensure that no reduction in 
         13   foundation-giving occurs. 
         14            We look forward to receiving more details 
         15   on the ways in which the merged bank will maintain 
         16   and expand its commitment to investing in low and 
         17   moderate income neighborhoods.  Thank you very much.  
         18   I appreciate the opportunity to testify.  (Applause)
         19            PRESIDING OFFICER SMITH:  You may stay 
         20   seated at the table.  You just pull the mike close 
         21   to you. 
         22            MR. GUSCOTT:  My name is Ken Guscott, I am 
         23   president of the Minority Developers Association of 
         24   Boston.  This is an association that consists of 35 
         25   minority builders, contractors, and developers, and 
          1   we're the ones that supply and can find minority 
          2   people to build the houses, whether they're low 
          3   income or commercial houses, within the Greater 
          4   Boston area.  And that's what I'm going to speak 
          5   about today. 
          6            We thank you for this public opportunity to 
          7   express our views on the impact of the proposed 
          8   merger of BankBoston and Fleet Bank upon our 
          9   community's minority and women-owned businesses. 
         10            As you know, small businesses employ over 
         11   53 percent of this nation's work force, and they 
         12   produce over half of the nation's gross domestic 
         13   product, and they provide virtually all of the new 
         14   Net jobs added to the economy. 
         15            Financial institutions have an obligation 
         16   to provide vital financial services to the 
         17   communities which they are located in.  In today's 
         18   growing economy, we have an opportunity to grow 
         19   productive, stable businesses, particularly within 
         20   the minority-owned business sector, that will 
         21   continue to provide job opportunities for community 
         22   residents. 
         23            Consolidation within the banking and real 
         24   estate industries makes access to capital for small 
         25   and midsized real estate companies difficult.  
          1   Smaller sized and mixed-use projects cannot be 
          2   financed through the public capital markets and 
          3   often rely on federal, state, and local programs 
          4   combined with creative, flexible, and innovative 
          5   bank financing in order to be successfully 
          6   completed. 
          7            Companies and customers located in inner- 
          8   city neighborhoods know that the untapped market 
          9   potential in their neighborhoods is enormous.  The 
         10   challenges for these businesses are also great.  
         11   Having a relationship with a bank which knows the 
         12   market and is experienced with the technical aspects 
         13   of public/private partnership financing enables 
         14   companies to spend less time trying to find capital 
         15   and more time growing their business. 
         16            BankBoston Development Corporation LLC, a 
         17   part of the BankBoston Community Banking Group, has 
         18   pioneered in meeting the financial needs of the 
         19   minority and women-owned business enterprises by 
         20   providing just such vital financial service:  equity 
         21   investments that grow minority businesses. 
         22            As part of the regulatory and community 
         23   review and approval of the proposed merger of 
         24   BankBoston and Fleet Bank, it is vital that an 
         25   equity investment fund, consisting initially of $500 
          1   million, be dedicated to continue providing 
          2   substantial equity investments in viable minority 
          3   and women-owned businesses. 
          4            I bring to your attention that yesterday 
          5   the President of the United States and the Chairman 
          6   of the Bank of America pledged that they would put 
          7   $500 to $600 million to serve these communities 
          8   because it's good business. 
          9            The emerging market, minority, and 
         10   women-owned businesses is the fastest-growing 
         11   segment of the business community.  These businesses 
         12   are also a tremendous growing business opportunity 
         13   for the new bank.  By building upon the successful 
         14   track record of BankBoston Development Corporation 
         15   and by expanding its capacity for direct equity 
         16   investment in minority and women-owned businesses, 
         17   this new financial institution will make a great and 
         18   lasting contribution to our community. 
         19            With substantial financial equity 
         20   investment focused on our community's MBE and WBE 
         21   businesses, the new bank will empower the 
         22   productive, economic capacity of our community's 
         23   businesses.  The hard work, long hours, and personal 
         24   sacrifices of the owners of these MBE/WBE 
         25   businesses, properly capitalized, will then generate 
          1   new jobs, security for the working families of our 
          2   community, and successful role models for our 
          3   children. 
          4            I thank you for the opportunity to appear 
          5   before you.  (Applause)
          6            PRESIDING OFFICER SMITH:  Thank you very 
          7   much.  Ms. Maker, speaking on behalf of Rashmi 
          8   Rangan and yourself? 
          9            MS. MAKER:  Right.  I'm going to be myself.  
         10   I have overheads.  Is this on now? 
         11            I am Ruhi Maker, and I'm coconvenor of the 
         12   Greater Rochester Community Reinvestment Coalition 
         13   and a senior attorney with the Public Interest Law 
         14   Office of Rochester. 
         15            I am a data freak, I have to confess to 
         16   that, and therefore I will spare you some of the 
         17   anecdotes and share some data with you.  We've been 
         18   analyzing data since 1993.  I just released my fifth 
         19   lending analysis which is included as part of these 
         20   comments.  And I think really the data says many of 
         21   the points I want to make.  I'll turn this on and 
         22   hope you people can see. 
         23            Essentially -- and this is included in my 
         24   comments -- essentially what's happened with Fleet 
         25   in the last three years and really in the last five 
          1   years is lending has declined.  You know, in the MSA 
          2   they're down 20 percent.  In the city they're down 
          3   53 percent.  Black/Hispanic households they're down 
          4   66 percent.  They only made 41 loans in 1997, and 
          5   the trend continues. 
          6            Earlier there was an indication that, well, 
          7   of course we all know that market share has changed 
          8   really dramatically in the last five years, much of 
          9   my report speaks to that, and we go into great 
         10   detail as to who is doing the lending now.  
         11   Unfortunately, some of that lending has gone to some 
         12   primes. 
         13            But we need to put the context of Fleet 
         14   along with their peers, and I think that's extremely 
         15   important.  And I'm going to do that for a minute 
         16   and show you what some of the other banks have done, 
         17   because we have been working very closely with a 
         18   number of other banks, and we have commitments from 
         19   them and, for one reason or another, they have 
         20   managed to do a better job than Fleet.  And this is 
         21   just comparing the top eight banks, and I'll show 
         22   you a market share in a minute. 
         23            When you look at 3 percent of Fleet's total 
         24   loans were to Black/Hispanic households, when you 
         25   compare their total MSA lending, whereas looking at 
          1   their competitors, the top eight area banks, 7 
          2   percent was to Black and Hispanic households. 
          3            Going on, 26 percent low-moderate income 
          4   households in the MSA, that's Fleet, everyone else, 
          5   their peers were doing better, 30 percent.  It 
          6   continues.  I think particularly the minority census 
          7   tracts, 1 percent of Rochester MSA loans Fleet were 
          8   minority tracts compared with 4 percent of the top 
          9   eight area banks. 
         10            I know this is a lot of data, I asked for 
         11   20 minutes, but I'll try and condense it into five.  
         12   Bear with me.  And I think this little market share 
         13   chart, it really is all in there, so you don't have 
         14   to try and absorb it all.  I don't know how well you 
         15   can see, but if you look down Fleet's column, and if 
         16   you look at the middle column where it says "Market 
         17   Share," 5 percent of the market share in Rochester, 
         18   and the market share in all its other communities, 
         19   communities we care about, the city, Black/Hispanic, 
         20   low-mod household, is less than its MSA market 
         21   share.  And that is only true for Fleet.  All of the 
         22   other competitors do at least as well in the 
         23   underserved communities as they do in the MSA, and 
         24   Fleet is the only bank that shows that. 
         25            To lighten things up a little bit and show 
          1   you a little color map of small business lending -- 
          2   I'll trying to wake you guys up since it's 
          3   lunchtime, and I know I've been up since 5:30.  
          4   There we go.  This I think -- I'll show you the rest 
          5   of the map. 
          6            As you know, small business loans, we don't 
          7   know which census tracts, the data isn't available 
          8   by census tract.  However, we do know where a bank 
          9   made no loan at all.  And the little blue map in the 
         10   corner shows the minority neighborhoods, and the 
         11   little Fleet map up there shows that they had 
         12   absolutely no small business loans in predominant 
         13   areas of the City of Rochester and a large 
         14   correlation with the minority. 
         15            And their small business lending, by the 
         16   way, it is just about the only bank that managed to 
         17   decrease its small business lending and lost to some 
         18   of its competitors, who I know I've been critical of 
         19   in the past.  If you look at Marine and M&T, a 
         20   pretty good spread.  Fleet's small business lending 
         21   goes down.  I know a colleague of mine -- well, a 
         22   colleague of somebody's earlier spoke about how well 
         23   they do in Rochester, New York. 
         24            I had a coalition member come and tell me 
         25   when I was here in Boston last fall talking to some 
          1   of the CRA corporate officers, and we were trying to 
          2   get, you know, some investments, and essentially I 
          3   was told, "Well, Fleet doesn't have a CRA problem in 
          4   New York, why should we do anything for you?"  And 
          5   I'm here to say, "Hey, guys.  Fleet does have a CRA 
          6   program in New York, a big problem." 
          7            This is my eighth merger in about five 
          8   years.  I testified last year at City Group.  And 
          9   essentially City Group went through -- maybe I'm 
         10   being cynical, I assume this will go through, but 
         11   what can you do? 
         12            What you can do, what we have found works 
         13   is, when you have written commitments, you can 
         14   condition this merger on specific lending 
         15   commitments by region.  So what are they going to do 
         16   in Rochester?  What are they going to do in New 
         17   York, not just Massachusetts?  Much was said of New 
         18   England and we care about New York.  (Applause)  So 
         19   I conclude now. 
         20            PRESIDING OFFICER SMITH:  Ms. Yager, will 
         21   you be speaking? 
         22            MS. MAKER:  I'm doing Rashmi's. 
         23            So now let's pretend we're in sci-fi, I 
         24   don't know, whatever, 21st century, and I'm now 
         25   Rashmi Rangan, into a quick switch.  Actually, she 
          1   is the same size as me in brown, I think, slightly 
          2   different accent. 
          3            My name is Rashmi Rangan, I'm the executive 
          4   director of the Delaware Community Reinvestment 
          5   Action Council, or DCRAC.  For over 12 years our 
          6   organization has advocated for fair and equal access 
          7   to credit and capital for the underserved 
          8   Delawareans. 
          9            We are opposed to the merger proposal of 
         10   Fleet Financial Group (Fleet) and BankBoston Corp.  
         11   (BankBoston).  This application should be denied.  
         12   The merger proposal does not serve the convenience 
         13   and needs of the community, nor does the merger 
         14   proposal have a positive market impact. 
         15            The Federal Reserve cannot approve any 
         16   proposal under Section 3 of the Bank Holding Company 
         17   Act which would substantially lessen competition in 
         18   any banking market, unless the anti-competitive 
         19   effects are clearly outweighed in the public 
         20   interest by the convenience and needs of the 
         21   community.  This propose merged merger is 
         22   anti-competitive.  Public convenience and needs are 
         23   not served through this merger.  The Federal Reserve 
         24   Board should deny this application.  By reference, 
         25   DCRAC introduces the June 6, 1999, comments of Inner 
          1   City Press and its analysis of the anti-competitive 
          2   effects of this merger. 
          3            Again, DCRAC submits, by reference, ICP's 
          4   analysis on the same Fleet's Troubling Fair Lending 
          5   Record Calls for Denial.  Fleet acquired Shawmut in 
          6   1995, and NatWest in 1996.  Fleet's combined 
          7   entities' lending volume declined 70 percent between 
          8   '95 and '97.  The decline is greater in lending to 
          9   minorities and in LMI census tracts.  Fleet's past 
         10   mergers have not only hurt communities, but an 
         11   adverse factor under the CRA, they have 
         12   disproportionately harmed low and moderate income 
         13   communities. 
         14            Fleet's Predatory Lending Abuses Call for a 
         15   Denial.  In May 1996, Fleet settled discrimination 
         16   charges with the U.S. Department of Justice, charges 
         17   that it systematically overcharged minorities from 
         18   its two New York City area mortgage offices.  In 
         19   1999, Fleet continues abusive lending practices. 
         20            By reference I enter the Boston Globe 
         21   article "Easy Loan Program Nothing but a Headache 
         22   for Some Consumers" by Patricia Wen and Bruce Mohl, 
         23   June 6, 1999.  The article reports that Fleet's 
         24   "fast-loan check" program delivered an easy-to-cash 
         25   check of $10,000 to a 74-year-old mentally impaired 
          1   man whose sole residence and mailing address in the 
          2   past 18 years was a veterans' hospital in Bedford.  
          3   Fleet sees no shame in it. 
          4            Fleet's Poor Record of Serving the 
          5   Convenience and Needs of the Community calls for a 
          6   Denial.  A bank which treats its long-term customers 
          7   the way Fleet treats its elderly says much about the 
          8   bank's efforts at not meeting the convenience and 
          9   needs of its community.  By reference, I enter the 
         10   Providence Journal article of May 29, 1999, "A 
         11   Really Big Bank Leaves Little Room for the Small 
         12   Stuff," by Bob Kerr, who reports that the elderly 
         13   customer, slapped with fines for insufficient funds, 
         14   was told he could get $25 back, but only if he 
         15   purchased overdraft protection for $24.  Then he 
         16   "was told he could get $37.50 back, but only if he 
         17   purchased overdraft protection and signed up for 
         18   direct deposit of Social Security checks." 
         19            Fleet in Delaware.  It has been our 
         20   practice to approach Delaware's non-profit status 
         21   providing community such small business lenders and 
         22   counselors and home ownership counseling agencies to 
         23   learn about a bank's direct involvement in our 
         24   community.  Consistently, each agency maintained 
         25   with Fleet's acquisition of NatWest in 1996, Fleet 
          1   has done nothing in Delaware.  They do not even have 
          2   a CRA officer?  Vindicating charges of Fleet's bad 
          3   performance after each of its past acquisitions.  
          4            Fleet's HMDA Analysis for Delaware.  The 
          5   following Fleet entities conducted mortgage lending 
          6   business:  Fleet Funding Corp. and Fleet Home Equity 
          7   USA.  Between the two, they received 63 applications 
          8   for mortgage, home improvement, and refinance loans. 
          9            Fleet did not collect data by race for 40 
         10   of these applications, or 63.4.  This is a violation 
         11   of the Home Mortgage Disclosure Act (HMDA).  HMDA  
         12   was enacted with the goal of assessing who is and 
         13   who is not having access to the credit system.  By 
         14   eliminating fully 64 percent of data from review, 
         15   Fleet violates the intent and spirit of the law.
         16            Fleet's approval rate for whites was 65 
         17   percent compared with 50 percent for African 
         18   Americans.  Fleet's denial rate for whites was 23 
         19   percent compared with 25 percent for African 
         20   Americans.  Fleet received 18 applications from 
         21   white applicants and three from African Americans. 
         22            Relative to applicant incomes, from 
         23   applicants with median incomes below 50 percent, 
         24   Fleet received two applications and denied both, a 
         25   denial rate of 100 percent.  From applicants with  
          1   median incomes 50 to 79 percent, there's a little 
          2   more, they basically conclude, you know, it says 
          3   what we've been saying, that there's a problem, and 
          4   let's try and do something about it.  Thank you.
          5            PRESIDING OFFICER SMITH:  Fine.  We'll have 
          6   the complete statement.  Ms. Wallace. 
          7            MS. WALLACE:  Good morning.  My name is 
          8   Joan Wallace-Benjamin, and I am the president and 
          9   CEO of the Urban League of Eastern Massachusetts.  
         10   The Urban League of Eastern Massachusetts an 
         11   82-year-old civil rights, direct service, and 
         12   advocacy organization in the City of Boston.  We are 
         13   part of a large national organization of 114 Urban 
         14   League affiliates across the country. 
         15            On behalf of the Urban League and the 
         16   communities we serve, I am here to express our 
         17   concerns about and make recommendations about the 
         18   proposed merger and the accompanying bank branch 
         19   divestiture.  I am also here to speak to Fleet 
         20   Boston's proposed Community Investment Plan as well 
         21   as its likely negative impact, if care is not taken, 
         22   on minority, low and moderate income people, small 
         23   businesses, and community development programs.
         24            Before I begin my comments, I would like to 
         25   take a moment to thank you for granting me this 
          1   opportunity to testify before you. 
          2            The proposed merger is a clear example that 
          3   "the big are getting bigger."  Currently Fleet and 
          4   BankBoston are the number one and number two largest 
          5   banks in New England.  If they merge, the newly 
          6   combined Fleet-Boston Bank will not only be the 
          7   dominant lender in the New England region, it will 
          8   be the eighth largest bank in the United States.  In 
          9   other words, Fleet Boston is about to become a 
         10   megabank. 
         11            As we enter the new millennium, banks 
         12   should be expanding access to credit/capital and 
         13   affordable investment opportunities to minorities 
         14   and women and in low- and moderate-income 
         15   communities.  We are not asking Fleet-Boston to do 
         16   this alone.  We are asking, however, as a leading 
         17   lending institution and increasingly powerful bank 
         18   that it do its reasonable and fair share.  This 
         19   includes, at the very least, maintaining its 
         20   premerger lending level.  Such an institution would 
         21   have a widely disseminated community investment 
         22   strategy, with accountability features built in, 
         23   that incorporates specific written standards to 
         24   document and measure progress and success. 
         25            Under the circumstances, Fleet-Boston's 
          1   proposed community commitment to set aside $14.6 
          2   billion over five years for low-income borrowers, 
          3   small businesses, and community development programs 
          4   is woefully inadequate.  No community investment 
          5   plan with measurable and verifiable indices of 
          6   progress and success has been disseminated for 
          7   review and/or comment. 
          8            $14.6 billion sounds like a lot of money; 
          9   however, a closer look clearly demonstrates that it 
         10   is not so much.  In fact, this amount is 
         11   significantly less than Fleet Bank and BankBoston's 
         12   premerger combined lending in the small business, 
         13   affordable housing/mortgages to low and moderate 
         14   income borrowers, and the community development 
         15   investment categories. 
         16            More specifically, the analysis of 
         17   Fleet-Boston's proposed commitments regarding 
         18   Fleet's and BankBoston's current lending levels by 
         19   Inner City Press, for example -- and that analysis 
         20   was presented by Inner City press to the Federal 
         21   Reserve as part of its June 7th protest -- using 
         22   Fleet's proposed methodology shows large shortfalls 
         23   in the aforementioned small business, affordable 
         24   housing/mortgages to low- and moderate-income 
         25   borrowers, and the community development lending/ 
          1   investment categories. 
          2            Rather than creating a lending shortfall, 
          3   we believe that, at the very least, the overall 
          4   volume of business currently done by the banks 
          5   should also be maintained after the merger. 
          6            The banks do business in eight states.  The 
          7   Community Investment Plan, as currently designed, is 
          8   to be dispersed in those states.  The fairness or 
          9   the unfairness of the proposed set aside cannot be 
         10   adequately judged because the banks have failed to 
         11   date to provide sufficient or detailed information 
         12   as to how they came up with this $14.6 billion 
         13   figure or how it would be dispersed among or between 
         14   the eight states in which it will operate.  Simple 
         15   mathematical averaging, however, demonstrates that 
         16   $14.6 billion spread over six categories:  small 
         17   business lending; affordable housing/mortgages to 
         18   low- and moderate-income borrowers; community 
         19   development lending/investment; community lending in 
         20   LMI areas; equity investments; and technical 
         21   assistance and support, divided by eight over five 
         22   years will not go very far. 
         23            On the issue of the 250-bank branch 
         24   divestiture, we are opposed to one or more large 
         25   banks being allowed to purchase all of the divested 
          1   bank branches.  Fair competition and community 
          2   service concerns demand that small to midsized 
          3   community and minority banks should be allowed to 
          4   purchase the divested branches.  In fact, we 
          5   strongly suggest that, as a minority-owned and 
          6   -managed community bank in the City of Boston, the 
          7   only bank that is a Community Development Financial 
          8   Institution (CFDI) in New England, the Boston Bank 
          9   of Commerce receive a sufficient base of branches to 
         10   secure its position as a primary lender and a major 
         11   minority business. 
         12            No divestiture of a bank branch in a 
         13   low-income or minority community should be made to a 
         14   bank that does not intend to keep the bank branches' 
         15   doors open.  People who live or work in these 
         16   communities should not have to travel long distances 
         17   or be forced to go into unfamiliar or unwelcoming 
         18   communities.  We need banks that will aggressively 
         19   market their products in low- and moderate-income 
         20   minority communities.  This reality is compounded by 
         21   the fact that past and present patterns of 
         22   discrimination have created an environment where 
         23   members of these communities have not been well 
         24   served.  We need to ensure that women, low- and 
         25   moderate-income people are not left post-merger with 
          1   less access to fulfill individual and community 
          2   specialized banking needs. 
          3            In our view, in spite of the fact that 
          4   Fleet-BankBoston representatives have indicated  
          5   their CEO's goal of having this new "big" 
          6   divestiture buyer pick up the 20 percent share of 
          7   community investment obligations that Fleet Boston 
          8   plans to relinquish, we want to ensure that this 
          9   buyer is obligated to meet CRA goals.  We know that 
         10   the Fleet-Boston divestiture plan is not altruistic.  
         11   It is being done to make the bank more profitable 
         12   and to increase shareholder and senior officer 
         13   wealth. 
         14            Therefore, as stated earlier, they must as 
         15   a combined entity maintain the investment level each 
         16   bank has currently achieved.  Knowing that they will 
         17   be successful, as their asset size grows, a 
         18   proportionate share of those increases must be 
         19   committed to the community into the future and make 
         20   achieving these goals a part of their CRA rating.
         21            PRESIDING OFFICER SMITH:  Thank you very 
         22   much.
         23            MS. WALLACE:  We hope you carefully 
         24   consider these recommendations.  Thank you. 
         25            PRESIDING OFFICER SMITH:  Thank you very 
          1   much.  (Applause)
          2            MS. YAGER:  My name is Martha Yager, I am 
          3   program coordinator for the Granite State Community 
          4   Reinvestment Association in New Hampshire, which is 
          5   a project of the New Hampshire program American 
          6   Friends Services Committee.  Appearing with me is 
          7   Arnold Albert, chair of GSCRA. 
          8            GSCRA was formed six years ago in response 
          9   to the Shawmut and Dartmouth merger.  Our mission is 
         10   to assist local community groups, especially low 
         11   income and minority groups, in assessing local and 
         12   credit service needs and to promote public 
         13   involvement to influence the policies and practices 
         14   of financial institutions that are practicing in New 
         15   Hampshire.  The association includes religious 
         16   groups, civil rights, and social justice advocacy 
         17   organizations and is staffed by the American Friends 
         18   Services Committee. 
         19            The Fleet-BankBoston merger does not serve 
         20   the convenience and needs of the communities of New 
         21   Hampshire and poses significant potential loss of 
         22   lending and services.  In April we met with Fleet 
         23   and BankBoston community development teams.  We 
         24   followed that with a letter reiterating the need for 
         25   the bank to make specific commitments to lending for 
          1   affordable housing, small business, and community 
          2   development.  We also asked for an explanation of 
          3   the unusually high denial rates by Fleet Bank in its 
          4   mortgage lending.  We have had no response to these 
          5   matters from Fleet other than form letters saying 
          6   that it will make no local commitments. 
          7            Community development lending does not 
          8   happen easily at Fleet.  The bank prefers large 
          9   deals with big customers, cookie-utter loans that 
         10   require little or no human interaction, and 
         11   guaranteed loan programs.  Fleet's highly 
         12   centralized structure makes it a difficult partner 
         13   in putting together deals.  This is not behavior 
         14   that lends itself to building community trust that 
         15   the bank will create a functional community 
         16   development lending strategy.  Quite the contrary.  
         17   This lack of performance has been documented by 
         18   federal regulators in the steadily decreasing CRA 
         19   ratings throughout the Fleet system outside of 
         20   Massachusetts. 
         21            One plus one was to equal at least two.  
         22   The nation market area has paid a high price for 
         23   bank consolidation.  We have documented dramatic 
         24   decline in mortgage lending in this area in other 
         25   documents and will not repeat that information here.  
          1   Since banks are the source of many of the loan 
          2   products designed for lower-income borrowers, this 
          3   decline has been particularly punishing for low- 
          4   income people wanting to buy their own home. 
          5            Community groups across the region have 
          6   harped on the theme of one plus one is at least 
          7   equal to two, meaning simple arithmetic, in loan 
          8   volumes for affordable housing, community 
          9   development, small business lending, and charitable 
         10   giving.  And yet Fleet doesn't get it.  In a letter 
         11   dated June 8th over the signature of Agnes Bundy 
         12   Scanlan and Gail Snowden, the bank says that they 
         13   understand, quote, that "one plus one equals two 
         14   means retaining the best of both institutions and 
         15   improving on them." 
         16            No.  That's not what we mean.  We are 
         17   talking simple arithmetic as well as programs.  
         18   Since Fleet's mortgage lending is below its market 
         19   share relative to other banks in the area, one plus 
         20   one is an absolute minimum.  Please see our 
         21   correspondence from the Federal Reserve for those 
         22   details. 
         23            MR. ALBERT:  One of the problems with this 
         24   merger the way it's been handled has been the 
         25   divestiture aspect.  You've heard today references 
          1   to there being three states from which Fleet will 
          2   have to divest.  Actually there are four.  The 
          3   fourth state is New Hampshire.  New Hampshire is a 
          4   separate state.  It has its own unique tax system, 
          5   different levels of state support for affordable 
          6   housing and economic development, different local 
          7   economic profile and, for better or worse, its own 
          8   political climate. 
          9            Now, Terry Murray when he started out this 
         10   morning, he said something, I don't have the exact 
         11   quote, but I believe he said he wants children and 
         12   grandchildren to have local institutions.  And he 
         13   said that so many of our nation's cities have lost 
         14   that.  He talked about the need for a hometown bank.  
         15   Well, in Nashua, as Martha has mentioned, there is 
         16   no longer such a thing as the hometown bank.  The 
         17   hometown bank, NFS, was lost to BayBanks, which was 
         18   lost to BankBoston.  Indian Head became part of 
         19   Fleet. 
         20            From the beginning of this process, public 
         21   statements have indicated that the Massachusetts 
         22   divestiture would go to a single large bidder in the 
         23   effort to create a strong competitor for Fleet in 
         24   the Boston area.  The problem with this is that New 
         25   Hampshire in need of small banks in this affected 
          1   market was listed as part of the Massachusetts sale.  
          2   When it began to appear that small banks could apply 
          3   in the bidding process, there was nowhere near 
          4   enough time for small banks to put together a bid.  
          5   Small banks don't have a mergers department that's 
          6   doing this all the time. 
          7            The complete disregard for the market needs 
          8   of an entire metropolitan area is unacceptable.  If 
          9   this application is to proceed toward approval, we 
         10   request that the bidding process be reopened for 90 
         11   days allowing small banks to bid on individual 
         12   branches.  Governor Jean Shaheen and the New 
         13   Hampshire Banking Commissioner will be making a 
         14   similar request which you will receive by letter 
         15   today. 
         16            There are a host of reasons why this merger 
         17   should not be approved.  It's a classic case of 
         18   business done solely for the benefit of the 
         19   stockholders at the expense of the rest of the 
         20   stakeholders.  It is anti-competitive even with the 
         21   divestiture.  A bank with a steadily declining CRA 
         22   record is buying a bank that does a better job of 
         23   listening to and responding to community credit and 
         24   service needs.  That performance should not be 
         25   rewarded.  A bank that has redlined rural markets, 
          1   as was the case with Fleet in New Hampshire, should 
          2   not be rewarded with its next merger request. 
          3            There is no specific plan for how the bank 
          4   will meet community development needs addressing the 
          5   needs of different markets.  Given the dismal record 
          6   of decreased lending following other mergers 
          7   involving these banks, simplistic plans are simply 
          8   not enough.  We urge the Board of Governors to deny 
          9   this application.  Thank you.  (Applause)
         10            PRESIDING OFFICER SMITH:  Thank you very 
         11   much. 
         12            Please be sure your statements have been 
         13   submitted for the record.  And do we have any 
         14   questions?
         15            MS. BROWNE:  I guess I have a question.  
         16   Perhaps several of the panelists might want to 
         17   respond.  The attorneys general from Massachusetts 
         18   and Connecticut made the case that they were very 
         19   eager to see a large player enter the market because 
         20   of the concerns of middle market businesses.  Yet 
         21   several of you emphasize the importance of smaller 
         22   banks having a role here.  Are you concerned about 
         23   the entry of a large player?  You would like to see 
         24   small entities, smaller banks as well, or perhaps 
         25   you could clarify?  Is this a conflict, or is it you 
          1   would just like to see an opportunity for smaller 
          2   banks as well?  Or do you feel the middle market 
          3   issue is not a real one? 
          4            MR. GUSCOTT:  I'd be glad to take a stab at 
          5   that question.  We have met with the Attorney 
          6   General and discussed his point of view.  And as we 
          7   explained to the Attorney General of Massachusetts, 
          8   you have an emerging local market of MBEs and WBEs, 
          9   minorities and women, and it takes a special type of 
         10   structure to deal with them.  You have to be very 
         11   sensitive to what their needs are.  And it's our 
         12   feeling that you should have a local smaller bank 
         13   that understands the community that they're in to 
         14   provide services to this need -- for this group of 
         15   people. 
         16            That's why -- he understood what we 
         17   requested.  But that's our reason why we wanted to 
         18   see not just one big bank but some local banks 
         19   involved in this, to better service the community.
         20            MS. WALLACE:  We made special reference to 
         21   the Boston Bank of Commerce, because we believe 
         22   this is an opportunity to build and strengthen a 
         23   historically owned, African-American-owned 
         24   and -operated financial institution.  When you do 
         25   that, like you do that with other minorities/small 
          1   business, you build the security and stability of 
          2   the community, as well as the customer service 
          3   affinity that a bank like BBOC would have. 
          4            And so I think that if there were a large 
          5   player, which would not be our preference, there are 
          6   some real preconditions that must exist in the way 
          7   they interact with the community in order for that 
          8   to be possible.  But our preference would be that it 
          9   would be small and community-based financial 
         10   institutions. 
         11            MS. YAGER:  The New Hampshire situation is 
         12   a little bit different.  In this particular market 
         13   area it has proven the theory wrong.  When 
         14   interstate banking was being passed about five years 
         15   ago, there was almost a mantra, there will always be 
         16   small community banks around.  Well, in this area 
         17   there are no small community banks remaining.  There 
         18   are none serving an area of over 150,000 people.  
         19   That's a very different situation than you have in 
         20   Massachusetts.  There are community banks around in 
         21   many of the towns there.  We have a need to have 
         22   some of these branches broken out and sold to the 
         23   very small little banks that are in the area that 
         24   could move into that market, if given the amount of 
         25   time they need to put a bid together. 
          1            PRESIDING OFFICER SMITH:  Thank you very 
          2   much for coming. 

Last update: December 3, 2010