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Public Meeting Regarding Banc One and First Chicago
Thursday, August 13, 1998
Transcript of Panel Sixteen

          3       MR. ELLIS:  Ladies and gentlemen, my name is
          4   Walter Ellis.  I'm the Director of an organization,
          5   United Affirmative Action Development Corporation.
          6            In 1995, UAD began negotiations with
          7   the then Premier Bank in Ruston and Baton Rouge,
          8   Louisiana, to expand banking opportunities for our
          9   underserved communities.
         10            The discussions specifically focused upon
         11   creating more employment opportunities for African
         12   Americans within the bank and making more loan
         13   capital available to support African American
         14   entrepreneurship.
         15            Thus, the discussion with Premier began,
         16   raising the issue of whether it was meeting the
         17   needs of Grambling, clearly an underserved
         18   community.
         19            Discussions continued over a period of
         20   months with UAD and Premier Bank attempting to
         21   effect an agreement that would result in a
         22   consulting relationship, wherein Premier would
         23   provide capital for commercial loans, create an
         24   internship program for Grambling University
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          1   students and graduates, and UAD would assist in
          2   providing applicants for each.
          3            Through the course of events, UAD worked
          4   with Grambling University and community officials
          5   toward bringing the internship program to
          6   fruition.
          7            Following what initially appeared to be
          8   an interest, the bank began to stonewall under
          9   the pretext of its acquisition by Banc One,
         10   subsequently breaking off all discussions.
         11            During this same period, UAD also
         12   presented to what has become Banc One of Louisiana
         13   several commercial loan applications.  None of
         14   these, at least one of which has been pending more
         15   than a year, have been funded, nor has an averse
         16   action been taken upon them.
         17            Though Banc One acknowledges an agreement
         18   between Premier, its predecessor in interest, and
         19   UAD, it now says that it, Banc One, is not bound by
         20   this agreement, refusing to honor same.
         21            It appears now that Banc One, first in
         22   anticipation of the Premier Bank acquisition, then
         23   the First Chicago merger, continued insincere
         24   dialogue with UAD to minimize the possibility of
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          1   UAD filing a complaint pursuant to the Community
          2   Reinvestment Act or existing FDIC Federal Reserve
          3   Regulations.
          4            I, therefore, respectfully request that my
          5   testimony be made part of the record of these
          6   proceedings and that the Federal Reserve approval
          7   of the subject merger with First Chicago be
          8   withheld until such time as a complete and thorough
          9   audit of Banc One's compliance with the spirit of
         10   the reverent acts and regulations in view of its
         11   behavior in African American communities throughout
         12   the nation generally and in Louisiana particularly
         13   can be completed.
         14            My first approach to Premier Bank was to
         15   close my account because I thought I had been
         16   treated in an unfair manner, racially discriminated
         17   against.  And from that, I was invited to sit down
         18   to talk to the manager at the bank.
         19            And at that time, Premier was in the
         20   process of merging with Banc One and they didn't
         21   want any racial complaints, in particular, to be
         22   lodged against them apparently.
         23            I didn't know what process was taking
         24   place, but I approached the local bank manager and
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          1   told him that I was working with a bank in
          2   California and that we believe we could help them
          3   with some of their solutions under the Community
          4   Reinvestment Act as we were working with banks in
          5   California.
          6            And from there, we began to sit down and
          7   negotiate an agreement that later led to some
          8   things in writing and some back and forth
          9   communications between Premier Bank and Banc One.
         10            Things seemed like they fell apart for a
         11   while.  And then when these other mergers started
         12   taking place, in particular the one in Louisiana,
         13   we were again negotiating with Banc One and
         14   appearing that it was done in good faith.
         15            Once this merger took place in Louisiana,
         16   then the negotiations fell apart again.  And now,
         17   Banc One officials are saying that there is no such
         18   thing as an agreement; and if it is, it's between
         19   premier and UAD; and that Banc One don't intend and
         20   never have and never will sign any type of
         21   agreement.  And I think they should.
         22       MS. SMITH:  Thank you very much.
         23            Ms. Hain, you've been around a long time
         24   waiting for this.
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          1       MS. HAIN:  My name is Nancy Hain.  I'm the
          2   Secretary/Treasurer of the Paul A. Stradtman
          3   Construction Company in Cleveland, Ohio.  I'm also
          4   Mrs. Paul A. Stradtman.
          5            We're a customer with an 18-year
          6   relationship with Banc One.  We're an underground
          7   utility contractor in a very high-risk business
          8   that had several extremely bad years and have been
          9   in a rough situation with the bank as a result of
         10   those bad years.
         11            I recently -- with the news that were in
         12   the papers of the Banc One merger, I saw references
         13   to their interest in small business and how they're
         14   pursuing the small business lending.
         15            As a result of that article that I read, I
         16   contacted some of the senior people in the Banc One
         17   of Columbus.  And I've had a series of letters
         18   going back and forth, which have taken the
         19   situation that was not good to start with.  Each
         20   letter, the response gets worse.
         21            My most recent communication, which I'm
         22   going to read because it presents our position and
         23   the -- it gives a look at where a small business
         24   person is at if the world isn't a great and
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          1   wonderful place and if the bank doesn't happen to
          2   like your numbers.
          3            This is responding to a letter from the
          4   legal department.  And it says, I received your
          5   letter in response to my correspondence dated
          6   July 22nd.  We appreciate the review of the issues
          7   raised by my letter, but it appears that the
          8   purpose of the letter has been overlooked.
          9            This letter was asking for intervention or
         10   someone in the community reinvestment area to put
         11   me in contact with someone that could intervene in
         12   the situation we're in.
         13            The relentless collection methods and
         14   scorched Earth policy being followed by the bank
         15   representative and outside counsel representing
         16   Banc One against our business is what is at issue.
         17   The letter was an appeal for someone in
         18   the policy-making area of the bank to review our
         19   situation and hopefully intervene on our behalf.
         20            Contrary to your statement, I want to say
         21   that Paul Stradtman Construction always has and is
         22   honoring its commitments to Banc One.  The fact is
         23   evidenced by the uninterrupted payment history over
         24   the preceding 80 months, which totals $1,442,742.50
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          1   in principal and interest.
          2            PASCO's financial performance was severely
          3   impacted by three very bad municipal sewer projects
          4   undertaken during the '95 and '96 construction
          5   seasons, all of which we -- apparently were
          6   subsequently completed and were accepted by the
          7   municipalities.
          8            In spite of the severe losses incurred on
          9   these jobs, PASCO has and continues to live up to
         10   commitments to Banc One to retire the subject
         11   indebtedness.
         12            I would like to point out, once again,
         13   that PASCO began repayment of the $400,000 line of
         14   credit on its own volition at the rate of $10,000
         15   per month plus interest before Banc One demanded
         16   repayment in full.
         17            The obligation was reduced from
         18   the original $400,000 to $190,000 between
         19   February 1997 and July 1998, a period of
         20   18 months.  All of the payments included interest
         21   accrued to date on the outstanding balance.
         22            Although you've stated that we have failed
         23   to yield a satisfactory payment of debt, we feel we
         24   have made considerable progress under the
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          1   circumstances.
          2            In order to reassure the bank of our
          3   intent and ability to repay our obligation, we
          4   offer your representative, in addition to the
          5   collateral already held by the bank consisting of
          6   $2 million of construction equipment, a life
          7   insurance policy of $300,000 of Mr. Stradtman and
          8   our personal guarantees, to provide Banc One with a
          9   second mortgage on our piece of industrial real
         10   estate valued at over $3 million or a second
         11   mortgage on our piece of land zoned multifamily and
         12   valued at approximately a millions dollars.
         13            Our only request to Banc One through your
         14   representative was that PASCO be permitted to repay
         15   the line through the normal course of business at
         16   the rate of $10,000 per month and interest until
         17   paid in full.
         18            Your representative refused all of our
         19   offers to further secure the bank's position,
         20   demanded immediate repayment and, once again,
         21   pushed forward with legal action.
         22            The balance of the company's obligation --
         23   the balance of the loan is a company obligation.
         24   And the company is not able to repay the $190,000
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          1   demanded at this time.  The company has been
          2   hindered in securing a new banking relationship for
          3   a number of reasons.
          4            One of those reasons is the ongoing legal
          5   actions taken by Banc One against PASCO and Paul
          6   and I personally and their demands for immediate
          7   repayment.
          8            We are currently using personal assets for
          9   working capital until the company is strong enough
         10   to run on its own.  Large amounts of working
         11   capital are required to fund our construction
         12   projects before cash flow begins.  To repay the
         13   obligation from personal funds would leave us
         14   unable to meet the day-to-day operating needs of
         15   the company.
         16            We have good jobs in progress with almost
         17   all equipment working on job sites.  Our volume is
         18   ahead of last year.  We have every reason to expect
         19   a good year.
         20            For the bank to take the equipment, in
         21   lieu of our offers of additional security, would be
         22   disastrous to our company and the developers for
         23   whom we are working.
         24            It would mean the loss of jobs for our
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          1   24 employees, most of whom are highly-paid Local 18
          2   operating engineers and Local 860 laborers, many of
          3   whom have been with the company since it started
          4   business in 1980.
          5            I need another few seconds to wrap
          6   this up.
          7            We appreciate your commiseration with the
          8   unfortunate circumstances in which we find
          9   ourselves, but what we do not understand is why
         10   Banc One has chosen to relentlessly pursue the
         11   liquidation of PASCO's construction equipment and
         12   the ultimate destruction of the construction
         13   company and the life's work of the owners when:
         14            One, Banc One holds $2 million in
         15   construction equipment as collateral for a $190,000
         16   obligation.
         17            The original $400,000 obligation has been
         18   reduced every month since February, 1997, by at
         19   least $10,000 per month plus interest from the
         20   operating proceeds of the business, $210,000 in
         21   18 months.
         22            PASCO's original business checking
         23   accounts, both general and payroll, are with Banc
         24   One, as they have been for over 18 years.
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          1            Banc One is collecting interest every
          2   month on the declining balance.  PASCO is paying
          3   fringe benefits to union welfare funds administered
          4   by Banc One.
          5            In spite of what Mr. Sanford says, PASCO,
          6   by its actions, has demonstrated integrity,
          7   commitment and its intent and ability to meet
          8   obligations under extremely difficult and adverse
          9   conditions.  It would seem that these should be
         10   desirable qualities in a human or business
         11   relationship.
         12            PASCO's asking only for consideration that
         13   is totally within the power of the policy-makers of
         14   Banc One to grant that the company be permitted to
         15   repay the remaining balance of the line of credit
         16   of $190,000 at the rate of $10,000 per month plus
         17   interest until paid in full.
         18            The response to this is that we will be in
         19   court a week from tomorrow to be held in contempt
         20   for not turning our equipment over to the bank.
         21            So I think that in view of this situation
         22   with the small business, as this merger goes
         23   forward, I think the practices of the bank and
         24   their handling of small business accounts should be
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          1   examined because there -- small businesses are
          2   risky by their very nature.  And it's not a pretty
          3   picture when you end up creating a bad situation
          4   with them.
          5       MS. SMITH:  Thank you.
          6       MS. HAIN:  Thank you for your listening.
          7       MS. SMITH:  Mr. Hawthorne.
          8       MR. HAWTHORNE:  Hello, and thank you for
          9   allowing me to speak today.
         10            My name is Robert Hawthorne.  I am the
         11   Executive Director of Martindale Bright Community
         12   Development Corporation, a grassroots development
         13   corporation in Indianapolis.
         14            And I represent today Indianapolis
         15   Coalition for Neighborhood Developers, whose
         16   membership organization represents 15 grassroots
         17   community operations in Indianapolis who serve over
         18   200,000 people residing in low-income neighborhoods
         19   in Indianapolis.
         20            I'm here today, I guess, not to speak
         21   directly against the merger, but to ask for an
         22   extension of the comment period to allow for
         23   additional negotiations or conversations to take
         24   place with Banc One and NBD and hopefully,
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          1   subsequently, the new bank which will be a result
          2   of this merger.
          3            ICND -- I'm going to read from a prepared
          4   statement of the organization.
          5            ICND is extremely concerned about the
          6   pending merger of Banc One and NBD, particularly as
          7   it relates to the future development and leadership
          8   of the banking industry in Indianapolis community
          9   development with Indianapolis community development
         10   movement.
         11            All ICND members have enjoyed a strong and
         12   committed relationship with NBD, many for nearly
         13   20 years.  The relationship between ICND members
         14   and Banc One -- excuse me, and NBD have resulted in
         15   general operating support for our members, various
         16   financing mechanisms for projects, technical
         17   assistance and affordable housing products that are
         18   critical in our efforts to revitalize our inner
         19   city neighborhoods.
         20            In addition, NBD Bank has provided a
         21   community leadership within the banking industry,
         22   brought the necessary attention to community
         23   development and, most importantly, clearly values
         24   the work of our members from both a business
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          1   perspective as well as a philanthropic
          2   perspective.
          3            For this reason, it's critical that the
          4   comment period be extended to allow the community
          5   time to delineate precisely what Banc One's
          6   commitment will be to community development
          7   corporations in Indianapolis.
          8            One aspect of this merger which will be
          9   unique to Indianapolis is the divestiture that Banc
         10   One will have to complete.
         11            This divestiture will result in the
         12   introduction of a new, likely unknown bank who will
         13   immediately capture the third largest market share
         14   in Indianapolis, as well as the first and second
         15   largest market share among African American people,
         16   of which the community development corporation
         17   represent a great deal.
         18            ICND requests that this new bank be
         19   required to fill the same commitment to community
         20   development corporations as NBD has and articulate
         21   these comment -- these commitments in a five-year
         22   CRA plan.
         23            I'll just briefly take time to just go
         24   through the items.  One, we're looking to -- for
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          1   Banc One and the new bank to increase the number of
          2   types of mortgage project products which are for
          3   low-income people with special circumstances.
          4            We also look for Banc One to increase its
          5   commitment to retail development in Indianapolis,
          6   as well as small minority business development.
          7            We look for ICND members to have a direct
          8   relationship with NBD Bank over the last years.
          9   And cooperating support has been a part of that
         10   relationship.
         11            ICND requests that Banc One commit to
         12   creating endowment fund with the proceeds of
         13   divesture for the purpose of providing cooperating
         14   support to ICND and our members who serve to
         15   eliminate deterioration in inner city communities.
         16            In closing, both Banc One and NBD have
         17   been excellent Indianapolis corporate citizens
         18   supporting the business community, as well as the
         19   African American community.
         20            In a city where many of the low-income --
         21   low- and moderate-income communities are seeing a
         22   resurgence in quality housing, it is extremely
         23   important that both Banc One and the new bank
         24   commit to furthering the development of
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          1   Indianapolis inner city community and
          2   neighborhoods.
          3            We ask that the comment period be extended
          4   to allow for community -- more community input in
          5   this matter.  Thank you.
          6       MS. SMITH:  Thank you very much.  Ms. Haste.
          7       MS. HASTE:  Good afternoon.  My name is
          8   Bridgette Haste.  I'm the chairperson for a local
          9   community group, ACORN in Milwaukee.  I'm here
         10   today to tell you about my experience with Banc
         11   One's lending group.
         12            Back in 1991, I applied for a home loan
         13   with Banc One and was denied.  I had been on my
         14   present job for over five years.  I had deposits of
         15   over $16,000 in Banc One.
         16            Once they checked my credit record, I was
         17   told that would probably take me a couple of years
         18   to fix my credit to the position that would qualify
         19   me for a loan with Banc One.
         20            They told me that I could request a copy
         21   of my credit report from the local credit bureau.
         22   When I received it, the only thing that I could see
         23   on my credit record that would disqualify me was a
         24   doctor bill that was minimum in amount and that had
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          1   been paid.
          2            They could not tell me the reason why I
          3   was denied, only that I would need to contact my
          4   local credit bureau.
          5            Since then, in the same year I received
          6   several loan -- other type of loans, major credit
          7   cards, a credit line of $10,000 and a home loan
          8   with no questions asked and my credit report was
          9   submitted to them through factual data.
         10            I am now the proud owner of a duplex
         11   home on the north side of Milwaukee in which I have
         12   been living there for seven years, no thanks to
         13   Banc One.
         14            My loan denial was not an isolated
         15   incident.  In 1996, Banc One's own lending
         16   practices and data shows the rejection rate for
         17   African American and Latinos in the city of
         18   Milwaukee of 54 percent.  This is not acceptable.
         19            I am recommending that the proposed merger
         20   between Banc One and First Chicago NBD Corporation
         21   be denied.  Thank you very much.
         22       MS. SMITH:  Thank you.  Ms. Howard.
         23       MS. HOWARD:  Good afternoon.  My name is
         24   Minnie Howard, and I'm a member of Wisconsin ACORN
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          1   also.  I will testify today on the racial and
          2   discriminatory lending practices of Banc One in
          3   Milwaukee.
          4            The statistics that I will be using were
          5   taken from Banc One's own HMDA data.  I will also
          6   point out that Banc One is not making an effort to
          7   provide services that match the needs of minority
          8   communities.
          9            In light of these practices, I will also
         10   recommend that the proposed merger between Banc One
         11   Corporation and First Chicago NBD Corporation be
         12   denied.
         13            Banc One is holding over $1.16 billion in
         14   deposits from its central city branches, where the
         15   majority of African American and Latinos live.
         16            However, in 1996, only 2 single-family
         17   conventional mortgages went to African Americans
         18   and only 3 to Latinos, as compared to 79 for
         19   Whites.
         20            Furthermore, 57 percent of African
         21   American applicants were denied mortgages, more
         22   than 5 times the rate of denial for White
         23   applicants.
         24            Rates of home ownership among African
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          1   Americans and Latinos are drastically below home
          2   ownership rates for Whites.
          3            Banc One is contributing to a tremendous
          4   disparity and actually increasing it by providing
          5   such a disparate proportion of its mortgages to
          6   Whites.
          7            As home ownership rates among African
          8   Americans continued to decrease in Milwaukee,
          9   Banc One should be responding by increasing
         10   mortgage loans.
         11            However, at a meeting with Connie
         12   McDonald, CRA, Officer for the Eastern Region, and
         13   Milwaukee's CRA representative, Gwen Dansby, they
         14   said that rather than responding to the community
         15   needs, they will be putting even less emphasis on
         16   mortgage loans.
         17            The Banc One CRA representative that we
         18   met with claimed that mortgages were not their
         19   specialty.  So we looked at their record for home
         20   improvement loans and refined loans in Milwaukee,
         21   I'm going to say, which is approximately 20 percent
         22   minority.
         23            Banc One provided an incredible 3,596
         24   refinancing loans in 1996 to Whites and only 165 to
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          1   Blacks and 59 to Latinos.  In this case, 523 Blacks
          2   applied for refinancing loan and more than half or
          3   54 percent were rejected.
          4            Even though Milwaukee is one of the most
          5   segregated cities in the country, other banks do
          6   not approach Banc One's rejection rate for Blacks.
          7            For all banks in the market area,
          8   34 percent of Black African Americans were denied.
          9            For all banks in the market area,
         10   34 percent of Black applicants were denied
         11   refinance loans, but at Banc One the rejection rate
         12   for Blacks topped 50 percent, an almost incredible
         13   figure.
         14            In home improvement loans, the pattern
         15   holds.  In 1996, Banc One made 1,176 home
         16   improvement loans to Whites and only 147 to Blacks
         17   and 28 to Latinos.
         18            Banc One's record of lending in Milwaukee
         19   is one of the most racially discriminatory lending
         20   records of any bank in any city in the country.
         21            We have had meetings with CRA
         22   representatives over the past several years where
         23   they have promised to improve, yet their own data
         24   shows no improvement.
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          1            Furthermore, they are ignoring the very --
          2   they're ignoring the minority community's needs for
          3   access to home ownership by turning their focus
          4   away from mortgage loans.
          5            In light of this information, it is the
          6   recommendation of Wisconsin ACORN that the proposed
          7   merger between Banc One Corporation with First
          8   Chicago NBD Corporation be denied.  Thank you.
          9       MS. SMITH:  Thank you very much.  Any
         10   questions?  Thank you very much for coming this
         11   afternoon.  We've been through a very long day.
         12            And we will move on to Panel 17 now.
         13   Ms. Johns, if you'll grab the mike, we'll start
         14   with you.

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