Public Meeting Regarding NationsBank and BankAmerica - Panel 12
Thursday, July 9, 1998
Transcript of Panel Twelve
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1 MS. SMITH: All set, great. I no longer know
2 what order people are supposed to go in. Let's see,
3 this is Panel 11 or do you not know?
4 (Laughter.)
5 MS. SMITH: We can start with Mr. Sissman.
6 MR. SISSMAN: Sure. My name is Mark Sissman.
7 I'm vice-chair of the Enterprise Foundation for
8 Strategic Initiatives and I'm here to speak in support
9 of the NationsBank/Bank of America proposed merger.
10 Enterprise is a foundation who was founded
11 1982 by Jim and Patty Rous with the mission to provide
12 the opportunity for decent, affordable housing for
13 low-income Americans and the opportunity and path up
14 out. Today Enterprise works with 1940 nonprofits in 280
15 jurisdiction. Enterprise has helped produce more than
16 86,000 units of housing.
17 We take pride in and will report to you on
18 the remarkable partnerships that we have with
19 NationsBank and Bank of America and the very significant
20 economic commitments which have been made to our work
21 and the work of nonprofits, nearly $1 billion in the
22 aggregate.
23 As impressive as the dollars are, the
24 personal commitments of the leaders and managers of
25 these institutions to community development and the poor
26 are clearly remarkable. I want to talk about those
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1 first.
2 When we bring opportunities to our partners
3 at NationsBank to change the lives of people by lending
4 in investment. There is an understanding of the
5 consequence of the work and willingness to go many extra
6 miles to get the transaction. Once a model is crafted,
7 their commitment to move it to an important skill is
8 there, and skill is important in this business. Doing
9 one development is nice and fine and may be important in
10 that community, but getting to scale, doing things with
11 lots of dollars that are reputable is fundamental in
12 changing communities and helping the poor.
13 There is a recognition of nations that
14 significant problems require big commitments from
15 financial institutions, and, in our work, those
16 commitments have been there.
17 Finally, there are corporate and personal
18 commitments to leadership in our field that are
19 important by both institutions. At NationsBank we have
20 appointed officers of both institutions to our national
21 board and local advisory boards, and they commit their
22 time dutifully.
23 But, also, as we travel in communities, we
24 get a sense and see that their service includes service
25 with local CDC's as advisers and as board members and on
26 other nonprofits. Not only is investing and lending
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1 important, but human resources and commitment of time
2 has been there as well.
3 Those individuals of the banks at senior
4 management levels and in the middle of the organizations
5 have changed how non-profits work and brought business
6 discipline to their social commitments, and we think
7 that's just as important as lending and investing.
8 At the same time, we see the very same thing
9 at Bank of America from our partners there. The
10 commitment has meant, and that personal commitment, has
11 meant significant results in both lending and investing.
12 NationsBank has committed more than $600
13 million of tax credit equity through our organization.
14 $10 million of investment dollars have been committed to
15 a unique endeavor to support businesses in federal power
16 zones. $50 million more has been invested in housing
17 preservation in buying existing apartments around the
18 country. And $25 million has been committed in
19 pre-development lending for nonprofits, so the hard-to-
20 do projects can get from the starting line to the point
21 where long-term financial commitments can be made.
22 Communities have seen the results of the
23 dollars. Let me give you just a few examples that we
24 have been involved in. In washington D.C.
25 pre-development construction lending and equity
26 investment enabled the development of a hundred-unit
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1 mixed income developments, 30 of whose units were for
2 homeless women.
3 In Baltimore, an equity investment has
4 enabled the development of an office building and
5 business center as part of the redevelopment of Murphy
6 Homes, a public housing project under the Hope Six
7 project.
8 Finally, in Dallas, as a joint venture lender
9 and investor in the rebuilding of HUD-foreclosed
10 properties, Nations has made a huge difference.
11 These examples are multiplied hundreds of
12 times over just in Enterprise's portfolio alone. Bank
13 of America has similar relationships with Enterprise in
14 its market area.
15 In every case the funding commitments are
16 able available to serve the very poor and make a
17 significant impact in neighborhoods.
18 By previous actions we believe that a merger
19 will multiply these activities substantially. We
20 support the merger. Thank you.
21 MS. SMITH: Mr. Gonzalez.
22 MR. GONZALEZ: Good afternoon, my name is
23 Gilbert Gonzalez, I am from San Antonio, Texas.
24 And like Jim was saying earlier, Jim Reed,
25 this is comforting to come to weather that's
26 substantially cooler than San Antonio's 105 degrees.
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1 I am here on behalf of the San Antonio
2 Business Development Fund in support of the
3 NationsBanks/BofA merger. Let me give you some history
4 about the San Antonio Business Development Fund. It is
5 a targeted small-business fund started as a small bank
6 CDC. In 1997 we were certified as a CFI through
7 Department of Treasury.
8 The program was initiated by the City of San
9 Antonio and 21 banks in San Antonio, and, sharing with
10 you, that's just about every bank in San Antonio.
11 In 1994, to address the underserved needs of
12 small minority and women owned businesses throughout
13 Bear County. In a city where small business comprises
14 about 80 percent of the marketplace and 90 percent of
15 the work force, access to credit is vital to our
16 economy.
17 According to a recent study conducted by the
18 -- in San Antonio by the Woodstock Institute, the SBA
19 low dot program was not addressing the underserved needs
20 of minority borrowers or minority neighborhoods. In a
21 city, if we were to maximize its trade, economic and
22 growth potential, it must be understood that small
23 business is the engine that drives our economy.
24 Without adequate access to credit, however,
25 that engine will not move. The SABDF's mission is to
26 find a solution that these underserved markets by being
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1 a partner with the city and the banks and creating the
2 synergy to create innovative enhancements to remove the
3 credit barriers encountered in these markets.
4 For example, NationsBank and Bank of America
5 have been strategic partners in ensuring the continued
6 success of the San Antonio Business Development Fund.
7 Both institutions were involved in the initial
8 capitalization of the SABDF. Presently we have 2.75
9 million of capital under management provided by our bank
10 consortium. Of that, NationsBank has provided 275,000
11 in permanent or borrowed capital.
12 Since '94 our capital has nearly tripled
13 thanks to the community bank partners. It's through
14 these innovative public and private partnerships they're
15 able to bridge the credit needs of these markets.
16 Are we effectively impacting our community?
17 In 42 months of lending, the SABDF has made 45 loans for
18 2. -- for 2 million to small minority-owned and
19 women-owned businesses, leveraged to about 6.8 with bank
20 financing, created and preserved over 600 jobs and, more
21 importantly, provided an access to credit.
22 There are many other services that our bank
23 partners continue to provide that are too numerous to
24 mention.
25 In 1997 and 1998, Jamesville from NationsBank
26 CDC office in Dallas facilitated our board retreat. His
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1 staff in Sarasota, Florida continues to provide ongoing
2 technical support to our office and to other emerging
3 CDCs and CDFI's throughout the country.
4 On July 24th this year, San Antonio and --
5 San Antonio/NationsBank, Texas will sponsor a statewide
6 CDC/CDFI conference introducing the CDC/CDFI study
7 commissioned by NationsBank and conducted by Shore Bank
8 Advisory Services.
9 There is more that I could probably say about
10 the public, private partnerships and how positive they
11 have had impact. I can see colleagues from San Antonio
12 sitting in the audience, and three or four years ago
13 none of these programs existed.
14 In a town where you have 80 percent of the
15 marketplace being small business, it's essential that we
16 have these resources to go to.
17 I want to close by just saying I support the
18 merger, I can see Jamesville, I can see the staff of
19 both BofA and NationsBank continuing to support our
20 efforts. Thank you.
21 MS. SMITH: Ms. Kleiman.
22 MS. KLEIMAN: Thank you. I am glad to have
23 the opportunity to be here today. I am here to support
24 the merger before NationsBank and AmericaBank Corp. --
25 MS. SMITH: Can you identify your
26 organization, please?
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1 MS. KLEIMAN: Yes. I am Executive Director
2 of Charleston Affordable Housing, Inc., a 501C3
3 nonprofit development organization in Charleston, South
4 Carolina. As well, I am the CEO of American Street
5 Foundation which strives to bring money from the rock
6 and role world to redevelopment in housing.
7 I want to talk today about the role
8 NationsBank has played in communities that are not big,
9 big urban areas in big cities, those that don't have
10 major corporate headquarters, that don't have the
11 Xeroxes and the Kodaks and the major foundations and the
12 major corporations.
13 NationsBank has come from an area which is
14 the south, our major financial centers have been Miami,
15 Atlanta and Charlotte.
16 Well, all of the other cities in the south
17 don't have that regional support that those cities have,
18 and it's been NationsBank that has helped the normal
19 city build an infrastructure that has helped get credit
20 to people who never really had access to credit before.
21 NationsBank has been a partner to not only
22 myself but to many, many small programs, small
23 nonprofits that have tried to start programs throughout
24 the south and in Charleston.
25 Their personnel are totally committed to not
26 only giving capital support, but they're very involved.
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1 They do put their money where their mouth is. They have
2 absolutely been the institution that has built an
3 infrastructure in the south that has allowed for
4 programs to be bloomed and blossomed, that have given
5 people opportunities to get into affordable housing,
6 into economic development, into some labor opportunities
7 that would have never been available before.
8 They have given grants, they have been good
9 construction lenders, they have been equity partners.
10 They have stepped up to the plate, and, in every
11 opportunity that has presented itself, they have been
12 supporters for small nonprofits, for CDCs for other
13 corporations to get going in an area where there wasn't
14 a lot of movement and organization.
15 When I went back to Charleston in 1992, and I
16 had been running the low-income housing program in New
17 York City, and I went home to Charleston to start a
18 nonprofit, I was the only nonprofit. In 1992 there were
19 no nonprofits in a city as big as Charleston, South
20 Carolina.
21 So the CDC and the community development
22 movement is very new to parts of the south, and
23 NationsBank is a product of its history and
24 circumstances. It's been a southern bank that has taken
25 every opportunity to be supportive of the movement to
26 enhance credit opportunities, to enhance housing
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1 opportunities and to enhance participation opportunities
2 in all walks of life for the citizens of the markets in
3 which it does business.
4 I think that the merger should be supported
5 and through personal commitments, financial commitments,
6 I know and feel that NationsBank will continue to honor
7 their commitments and participation in both the
8 secondary and primary cities and communities throughout
9 the nation.
10 Thank you.
11 MS. SMITH: Thank you. Ms. Landecker.
12 MS. LANDECKER: Good afternoon. Thank you
13 for inviting me. My name is Anita Landecker. I am Vice
14 President with the Local Initiative Support Corporation
15 and Managing Director of its affiliate, the California
16 Equity Fund.
17 LIST, for those of you who don't know, like
18 Enterprise, provides grass roots neighborhood-based
19 organizations financial and technical assistance
20 throughout the country.
21 LIST was established 19 years ago and has
22 helped about 1800 community development corporations in
23 over a hundred cities, raised about $3.1 billion in
24 grants, loans and equity investments and CDCs and
25 leveraged an additional three-and-a-half billion dollars
26 in public and private support.
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1 These dollars have produced over 80,000
2 affordable homes and nearly 12 million square feet of
3 community facilities in commercial and industrial space,
4 all in the effort to transform distressed neighborhoods.
5 Bank of America and NationsBank are widely
6 considered key leaders, industry leaders in the field of
7 community development and together have invested
8 hundreds of millions of dollars in poor communities
9 across this country.
10 Since LIST's beginning, Bank of America has
11 invested $336 million in the form of grants, loans and
12 equity in LIST and our affiliate. This total includes
13 226 million invested in our affiliate called the
14 National Equity Fund making Bank of America our largest
15 equity investor by far.
16 Additionally, Bank of America has provided
17 bridge financing to our fund, which gets complicated,
18 but that's totalled another $200 million.
19 NationsBank has supported list since 1982
20 providing $12 million in grants and loans and equity to
21 support our local programs as well as an emerging
22 national rural program.
23 Between the two banks, LIST received support
24 for programs in Chicago, Houston, Kansas City, Little
25 Rock, Los Angles, Miami, New York City, Palm Beach
26 County, Phoenix, Richmond, San Diego, San Francisco, Bay
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1 Area, Seattle and Washington D.C.
2 But, most of all, I want to address something
3 that Mark mentioned, which was the importance of the
4 people and the leadership of the people we deal with at
5 Bank of America.
6 It starts at the top. Dave Coulter is on
7 LIST's board and has provided enormous leadership and
8 has led the way for his institutions.
9 Don Milane has been an absolutely key leader
10 in Los Angeles where I come from, and throughout the
11 country. I just want to mention that that kind of civic
12 leadership, he has been the civic leader in Los Angeles
13 representing Bank of America, and he has served on major
14 committees, most recently, a blue ribbon committee on
15 slum housing that has really transformed how the City of
16 Los Angeles deals with slum housing.
17 Mike Mantle is on LIST's National Equity Fund
18 board and plays a major role. He's with the Bank of
19 America Community Development Bank. Numerous names,
20 Glenn Sonata, Mitch Thompson, Carla Dartas. Jim Wagley,
21 I especially want to say, he's kind of what I consider
22 this wonderful conscience, he also plays the chair of
23 the rural -- our rural program.
24 These are people that are just absolutely so
25 critical to community development altogether. Maybe
26 what I want to say, finally, is that the Bank of America
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1 Community Development Bank, especially, is so critical
2 to community development in California that I hope in
3 this merger it is maintained and enhanced and its staff
4 is maintained.
5 Especially, and the reason why it and other
6 institutions at Bank of America have been successful is
7 that they've often taken on the culture of the community
8 development field and hired people from the field. That
9 has made it extremely successful.
10 I just want to give you a couple other
11 examples of work. NationsBank has loaned LIST 1 million
12 to capitalize an acquisition and construction loan fund
13 in Richmond that has absolutely been critical to the
14 Richmond LIST program and has provided a significant
15 grant to the LIST's national rural program, again, under
16 the leadership of Jim Wagley.
17 In conclusion, our relationship with Bank of
18 America Corporation and NationsBank over the years has
19 been extraordinary both in terms of financial support
20 and exceptional leadership from their executives.
21 We support the merger and expect anticipate
22 that the new entity will do even more to support the
23 development of affordable housing and the creation of
24 economic opportunities in distressed communities.
25 Thank you.
26 MS. SMITH: Thank you. Mr. Smith.
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1 MR. SMITH: Good afternoon, Madam
2 Chairperson, members. My name is Lloyd D. Smith and I
3 am the President and CEO of the Marshall Heights
4 Community Development Organization located in Washington
5 D.C. We serve Ward 7, which is -- has a population of
6 over 50,000, 96 percent African American.
7 Marshall Heights is a 19-year-old community
8 development corporation providing business development,
9 light industrial business incubators, commercial,
10 retail, we have developed 165,000-square-foot shopping
11 center with two banks and various other retail
12 commercial facilities.
13 We have over -- done over a hundred single-
14 family houses, nearly 500 multi-family units. Social
15 services, child welfare programs, SRO, community schools
16 and many, many other things that we do with the support
17 of NationsBank.
18 On behalf of the board of directors, I'm
19 pleased to lend our support of the NationsBank
20 acquisition and of the Bank of America Corporation.
21 We have enjoyed a strong and rewarding
22 partnership with NationsBank and its predecessor,
23 American Security Trust, for more than 11 years.
24 We started with a 250,000 line of credit for
25 our housing program for in-fill development that has
26 grown to a $750,000 line of credit, based on our
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1 demonstration of increased production and our credit
2 capacity.
3 We have jointly developed a creative
4 partnership with NationsBank CDC. Chris LoPiano
5 [phonetic], who heads that in our Kennelworth light
6 industrial park as a result of a 1994 CDC tax credit
7 that we received from HUD and as a component of the
8 empowerment program.
9 This is one of the first and largest deals in
10 the country since only 20 CDC's nationwide were given
11 the two million CDC tax credit award.
12 In addition, NationsBank has invested an
13 additional one million in equity in this project at our
14 Kennelworth light industrial park.
15 We are about to commence a multi-use for sale
16 new housing development area program in the Deanwood
17 Burwell area in our area. NationsBank will provide much
18 of the needed equity and we will provide the
19 construction managing, marketing, sales and
20 compreshensive housing counseling services.
21 This partnership will enable us to increase
22 the scale of our activities and improve our ability to
23 target our efforts.
24 They have also -- Nations has also provided
25 several years of grant support, in particular a
26 three-year commitment of 15,000 per year for the
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1 transitional housing program that we run.
2 They have been innovative, creative and have
3 tried to find ways to say this can be done. One of
4 their key staff persons, Chris LoPiano, came from the
5 Marshall Heights Community Organization. He worked with
6 us for eight years. So he knows the CDCs, he knows what
7 they need, he knows what can be done.
8 We expect to expand this effort. I'm also
9 wearing another hat today. I'm chairman of the new and
10 the first CDFI community development bank to be
11 organized in the district of Columbia, Washington D.C.
12 We hope to open the bank this fall in August or
13 September. NationsBank has participated with South
14 Shore Advisory Services in helping us set up this new
15 bank.
16 What have they done this? They, through
17 NCIAIF, they are investing a million dollars in equity.
18 We are going to share an ATM servicing agreement. They
19 are assisting us with furniture and assistance and we
20 are going to talk about holding deposits.
21 So they are assisting a fledgling startup
22 CDFI in the district, which will be the first one in the
23 country -- in our city, rather, to start up. They have
24 been very, very supportive of this effort.
25 So we are totally in support of this merger.
26 MS. SMITH: Thank you. Ms. Nakata.
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1 MS. NAKATA: Thank you and good afternoon.
2 My name is Suse Nakata. I am CEO of Keystone Community
3 Ventures. Keystone assists nonprofit businesses whose
4 primary mission is to provide jobs for the low income,
5 disconnected, disabled and at-risk folks. We provide
6 unsecured debt and long-term vested management
7 assistance and guidance. It's a venture capital
8 approach for nonprofit run enterprises.
9 For the sake of disclosure, I also need to
10 say I've worked at Bank of America Community Development
11 Bank and Keystone receives operating support from BofA
12 Foundation.
13 Bank of America has proven itself a leader in
14 supporting community economic development and in
15 building communities. But this meeting is not about
16 identifying who is more relevant to California or to
17 low-income markets. This meeting is to discuss how to
18 ensure benefits to our low-income communities.
19 As I review the management chart for the new
20 bank, there is a disturbing message about the importance
21 of community development. I have been a trainer in this
22 room and at a dozen other Fed-sponsored locations.
23 When bankers have asked me, what makes the
24 difference between a good and great community
25 development banking program? My answer, without a
26 doubt, is the importance of corporate commitment and it
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1 manifests itself in the organizational structure.
2 At Bank of America, the person with primary
3 responsibility for community development reports
4 directly to the CEO. The new bank will have at least
5 one more management layer.
6 This dilution is compounded by the fact that
7 the person with primary responsibility for community
8 development in the new bank has not been identified and
9 will not be identified evidently, during this comment
10 period.
11 So, in the absence of having the CEO's ear or
12 of knowing who is making recommendations or decisions on
13 community development, as a member of the California
14 Reinvestment Committee, we asked about specific numbers
15 or programs. The response, "No specifics, because the
16 bank needs to evaluate best practices."
17 May I be so bold as to propose six best
18 practices?
19 One, a commitment to develop and train
20 leaders of community-based organizations so that they
21 become the rightful and successful owners of economic
22 and housing developments.
23 Two, a focus to do the small, the inner city,
24 the rural deals, not just the showcase deals.
25 Three, to value inclusive in hiring seasoned,
26 nonprofit and public sector staff. Then listening as
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1 the staff engages with the community.
2 Four, to set aside a portion of the
3 foundation budget for strategic community economic
4 development and not tie every allocation to regional
5 profits.
6 Five, to value community-based organization
7 input in program development as evidenced by advisory
8 boards and specific initiatives.
9 And, six, to fill the credit needs with the
10 right product, not the only product.
11 These components are integral to helping
12 build communities and need to be adopted by the new
13 bank.
14 The new bank has promised to retain the
15 structure of Bank of America Community Development Bank,
16 which is a request that I've heard repeatedly in the
17 last few panels.
18 But it is silent on the critical issues of
19 decision-making for that entity, on what happens to the
20 community development division of the Federal Savings
21 Bank, which is, frankly, the legal entity providing the
22 affordable housing credits outside of California. But
23 it's an integral part of Community Development Bank.
24 And, thirdly, about the huge differences in
25 corporate cultures or strategies. The promise to keep
26 community development bank simply as a legal structure,
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1 in my book, is a hollow response at this time.
2 To get back to the question at hand of how to
3 best serve the credit needs of low income communities,
4 my response is for NationsBank to put into action
5 Mr. McColl's earlier statement to CRC, and I
6 quote, "Bank of America Community Development Lending
7 Group is best," unquote. And to put that statement into
8 action by retaining the mission, the strategies, the
9 current decision-makers and have them report to the CEO.
10 Anything less is a loss for our communities.
11 And, if that's the case, frankly, the communities might
12 be better served if the Federal Reserve would encourage
13 NationsBank to sell the Bank of America Community
14 Development Lending Group to an interested outside
15 lender such as Washington Mutual.
16 My comments are based on observations and
17 learnings. Supporting the proposed new bank at this
18 time is extremely difficult without a more detailed plan
19 on community development lending and investments.
20 I applaud the Federal Reserve for extending
21 the comment period to give the new bank more time --
22 just wrapping up -- to share their implementation plan,
23 so that we may then provide meaningful input to the
24 board of governors.
25 Thank you.
26 MS. SMITH: Thank you.
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1 MR. FRIERSON: Just to clarify one point.
2 The comment period was extended by the board. It
3 expires today.
4 Last week there was a submission sent to
5 current commenters, and the comment period for the
6 commenters who received that submission was extended to
7 July 17th, which is the same day that people appearing
8 at the meeting today can supplement their comments.
9 MS. SMITH: Thank you for the correction.
10 If there are no questions from the panel,
11 then we'll go on to the next one. Thank you very much.