Public Meeting Regarding NationsBank and BankAmerica - Panel 4
Thursday, July 9, 1998
Transcript of Panel Four
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5 MR. MOSLEY: First of all, I'd like to thank
6 the Federal Reserve for allowing me to come and submit
7 testimony on behalf of Congresswoman Maxine Waters who
8 would have loved to be here. However, other business has
9 taken her away. I'd like to read her statement into the
10 record if I might. Once again, my name is Kevin Mosley
11 and I represent Maxine Waters, chair of the Congressional
12 Black Caucus.
13 "Good morning. As a member of congress
14 representing the 35th Congressional District and as the
15 chair of the 39-member Congressional Black Caucus, I am
16 pleased to have the opportunity to submit testimony to
17 you today regarding the proposed merger between
18 NationsBank Corporation and Bank of America Corporation.
19 I believe this merger will have a significant effect on
20 the people I represent.
21 "I testify today as one of many individuals who
22 will be raising questions about this merger. Many
23 consumer groups, community activists, and business
24 persons are worried about the inevitable closure of bank
25 branches, layoffs, the proliferation of evermore costly
26 bank fees, and a basic inability to have direct contact
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1 with local bankers.
2 "I have been struggling with these issues for
3 quite some time. I am even considered to be an irritant
4 to many CEO's and top bank managers in this country. I
5 believe, however, that my first responsibility is to
6 represent consumers who expect their elected officials to
7 protect them from public policies that create hardships
8 in their lives and have constantly challenged the banking
9 community to pay attention to inner cities and rural
10 communities.
11 "In January of this year, I took the
12 extraordinary step of hosting Chairman Alan Greenspan,
13 former comptroller of the currency, Eugene Ludwig, and
14 director of the Office of Thrift Supervision, Ellen
15 Seidman, in my district to interact with members of
16 congress, senior bank officials, community bankers,
17 community-based organizations, and small business
18 owners. This occasion afforded the captains of the
19 industry and the regulators the opportunity to interact
20 with people of my community who are desperate to
21 strengthen ties to the banks in order to grow and help
22 our communities.
23 "I believe that those in attendance got the
24 message I constantly irritate them about. We need
25 capital, we need investment that will eliminate blight,
26 create businesses, create ownership, create a new
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1 generation of entrepreneurs, and create a better life for
2 those who have been denied access to comprehensive
3 banking services.
4 "In 1995, the Federal Reserve paid the national
5 average of banking officers per 10,000 residents at 3.4.
6 The average in South Central was only 0.3 offices per
7 10,000 residents or one branch for every 41,700
8 residents. In 1996, Federal Reserve data showed South
9 Central Los Angeles received only 1.6 percent of loan
10 dollars for small business lending but represented 2.5
11 percent of small businesses. White-owned businesses
12 still received three times more loan dollars per dollar
13 of equity than do African-American businesses with
14 identical borrowing characteristics. In the construction
15 industry, this disparity increases from 3.1 to 15.1.
16 "As we participate in the hearing today, the
17 federal government is implementing a new system of
18 payment for welfare and social security recipients.
19 These citizens will be receiving their grants and
20 payments via electronic transfer. Many of these citizens
21 have never had a bank account or access to any banking
22 services. In addition, we're discovering many banks do
23 not provide them with the services they need to receive
24 their electronic transfers.
25 "There are banks that also have arrangements
26 with check cashers to keep citizens, many of whom are new
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1 citizens to this country, out of their banks. These
2 people who lack access to banking services must resort to
3 check cashers, who charge absorbent fees for cashing
4 checks and often do not provide other needed services.
5 "Although branches have been closing down
6 everywhere as a result of other mergers, branch banking
7 has never adequately served urban and rural communities.
8 When we add to all these concerns the lack of capital to
9 deal with deteriorated and underdeveloped inner cities
10 and rural communities, you can then understand why we
11 question all mergers.
12 "We do not oppose mergers for the sake of
13 opposing mergers. We have real issues. Although there
14 have been some improvements in home lending and the
15 provision of home mortgages -- in fact, total home
16 lending in South Central actually increased 28 percent
17 from 1995 to 1996 -- it has not been enough to allow many
18 families in low-income communities to achieve the dream
19 of home ownership.
20 "Are we to expect this colossal merger is going
21 to correct any of the concerns I've delineated here
22 today? The conventional wisdom in my community is as
23 banks become bigger, a greater distance is created
24 between the institutions and the communities they're
25 supposed to serve. In other words, they'll truly be too
26 big to be bothered.
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1 "My question today is what will this merger do
2 to ensure the communities will not be worse off? What
3 can we do to insure CRA will be honored, that capital
4 will be made available, and access to banking services
5 will be made more likely.
6 "Perhaps these questions can be answered.
7 Perhaps mergers can be used to bridge the gap between
8 banks and communities. But what plans are banks placing
9 before our communities that will inure to our benefit?
10 We're very much aware of so-called commitments that have
11 been made in the past. We're aware of the 45 billion
12 dollar commitment from Wells Fargo, their 140 billion
13 dollar commitment originally committed by Bank of
14 America, and the $75 billion committed my Washington
15 Mutual.
16 "I now understand this new merger between
17 NationsBank and Bank of America has created a 350 billion
18 dollar commitment. We have not seen the results of
19 earlier commitments, which makes us suspicious of the
20 present commitments. We don't see tracking systems in
21 place that will tell us where, when, how, and to whom
22 this money goes.
23 "Perhaps there is a plan that's worthy of my
24 support and the support of others who will testify
25 today. If there is, then it's time for the banks to roll
26 it out. It is time for the banks to create and implement
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1 a concrete, straightforward, verifiable plan with
2 specific commitments that will deal with all aspects of
3 the problems that I've repeatedly identified.
4 "I'm not here today asking for a gift from the
5 banks. We expect banks to get a reasonable return on
6 their loans and investments. We believe that banks that
7 lend money in our communities can make a profit on those
8 loans and do it safely and soundly.
9 "I testify as a public policy maker and support
10 federal deposit insurance for banks to have a continued
11 safety net. I testify as a member of congress who has
12 witnessed the federal government bail out both savings
13 and loans and banks with taxpayer money, and I'm here to
14 insure that taxpayers receive the support and respect of
15 the banks that we insure and protect.
16 "How can we work together to increase home loans
17 and introduce new products and investments that help the
18 average wage earner own a home? I conclude my testimony
19 by making an appeal to the banks in this merger to
20 respond to all the issues that I and others have and will
21 discuss today and to work with elected officials,
22 community organizations, community lenders, and consumers
23 in ways that will help to develop well-rounded
24 communities with decent housing, commercial enterprises,
25 and entrepreneurial opportunities. Thank you.
26 MS. SMITH: Thank you very much.
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1 MR. GNAIZDA: Thank you very much for this
2 opportunity. Before I begin and we take our time, I just
3 want to let you know we have approximately ten speakers
4 who will be taking about approximately three minutes each
5 and then we have approximately 12 others who will try to
6 keep their remarks to approximately a minute. And we'll
7 try to be within the 50 minutes.
8 And before I use my time, I just want to express
9 a sentiment that many panelists have expressed, and that
10 is where are the CEO's to hear us? Where are they?
11 I'm only going to respond to the largest
12 absentee landlord statements, and I'll restrict myself to
13 that. And these are concerns expressed by three
14 congresspersons today, Waters, Alford, and Lee. And I
15 preface it with this: There's no data. There are no
16 goals. The achievements are modest and particularly
17 modest in comparison to their competitors, Wells Fargo,
18 Union Bank, and WaMu.
19 And one thing has been lost here by Mr. McColl
20 and Mr. Coulter. They intend to be the largest bank in
21 the world. They can't just be average. They must be the
22 best, the best. And they're not.
23 First, McColl says they're great on charity.
24 Why doesn't he tell you they have the lowest percentage
25 of pre-tax earnings directed to charity of any of the
26 major banks, just under one percent? Wells has two
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1 percent. Why don't they tell you that only ten to 20
2 percent is directed at the community? Wells Fargo last
3 year directed 85 percent or more than eight times more as
4 a percentage. And why don't they tell you that their
5 executive compensation every year for the top officers
6 exceeds their total charitable contributions? And why
7 don't they tell you about their Golden Parachutes? They
8 will exceed by five-fold the total amount of charitable
9 contributions that the B of A will make. Compare that
10 with their competition.
11 On diversity, they're high on diversity, but
12 they won't release their data and they won't set any
13 goals. Washington Mutual has set goals and is releasing
14 its data. Their goals are to reflect this panel and this
15 audience, not an all white male panel. Minority
16 contracts, they won't release their data. They can't
17 it's so low.
18 The real statistic for NationsBank if you look
19 at all contracts just for minorities, not minorities and
20 white women, is just about four percent, meaning a little
21 over one and a half percent for each of the minorities.
22 B of A it's two percent for African-Americans. Compare
23 this with Washington Mutual's goal of 40 percent for
24 minorities.
25 Minority business loans, this is what they fear
26 the most. And they have every reason to. The moment
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1 Alan Greenspan says, "I want the Federal Reserve to
2 scrutinize the business loans," this merger cannot be
3 approved.
4 Considerably less than one percent of the dollar
5 volume of all business loans made by NationsBank in any
6 year in its history or B of A in its history went to
7 African-American-owned businesses. Similarly for Latino
8 and Asian-American businesses. Why don't they produce
9 that data?
10 And they talked about two billion in lending in
11 low-income areas. Why doesn't the Federal Reserve look
12 at that data and see that 90 percent want to white-owned
13 businesses, including a huge amount around the World
14 Trade Center.
15 Lastly, they say they got the best goal in
16 America. That's untrue. Adjusted for size, Washington
17 Mutual has easily beaten them. They've committed six
18 percent of their assets. Washington Mutual has committed
19 eight and they're specific. The OTS will be able to
20 effectively scrutinize them.
21 Lastly, one comment by CEO Coulter, whom we have
22 great respect for and we're very sad that he will be
23 departing. Because that is the feeling, he will be
24 departing. That's why Greenlining and other groups from
25 all other the country serenaded him yesterday with a
26 Mariachis band. We're sorry he's going.
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1 But, Mr. Coulter, we have to tell you this:
2 That B of A has lent far more in South Korea than it lent
3 in South Central in the last 50 years. And it's lost far
4 more in South Korea, 3.1 billion, than it ever lost in
5 the black community, the inner city, the Hispanic
6 community, and the Asian community.
7 Gail Smith from our coalition presented a letter
8 earlier to Mr. McColl and Coulter as they fleed the
9 scene. It asked for a community meeting today so that
10 they can hear these concerns. We invite all of you if
11 the B of A will respond. Thank you.
12 We now have our guest from the furthest away,
13 from Texas, if she'd begin.
14 MS. CAMPBELL: Thank you. Thank you for the
15 opportunity to appear today. I am Angelique Campbell,
16 and I'm from the Texas Office of Consumers Union and I
17 represent the Texas Community Reinvestment Coalition.
18 And I come today on behalf of TCRC to discuss our
19 concerns about the merger's impact on low-income
20 consumers and persons of color in Texas.
21 We believe our position in this merger is unique
22 since NationsBank and Bank of America are two of our
23 state's largest financial institutions, NationsBank being
24 the largest in Texas. If the merger is approved, the new
25 bank will control an even larger share of the Texas
26 market.
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1 As the only statewide community reinvestment
2 group in Texas, TCRC's interest is ensuring that the
3 credit needs of our local communities in Texas are not
4 ignored. But unfortunately, our most recent HMDA study,
5 which is "Access to the Dream, Home Mortgage Lending in
6 Texas," which you all have a copy of, shows that there
7 are problems with NationsBanks and Bank of America's
8 lending performance in low-income communities and
9 communities of color in Texas.
10 If the merge bank is to lead the financial
11 industry in community lending as it asserts that it will,
12 then the board should delay this merger for two reasons,
13 to address unresolved questions about the bank's current
14 performance and to require conditions prior to approval
15 to assure that all communities credit needs are met.
16 Without a detailed plan, the 350 billion pledge
17 is hollow. And based on the two banks' performance in
18 under-served communities in Texas, TCRC questions the new
19 bank's ability to meet this pledge.
20 The bank needs to make firm, binding geographic
21 income and ethnic specific commitments, and the
22 regulators need to monitor and enforce those commitments
23 in the following areas: We ask that no branch closings
24 occur in low-income communities and communities of
25 color. In Texas, when we suffered from 40 percent of the
26 NationsBank failures in the 1980's, it was our low-income
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1 neighborhoods that were affected most by the bank
2 closures. As banks moved out of those neighborhoods,
3 higher cost non-bank institutions moved in.
4 It concerns our coalition that of the total
5 number of NationsBank branch openings and closings that
6 occurred in 1996, upper and middle income areas received
7 40 new branches while low and moderate income communities
8 only received ten.
9 We are also asking for improved lending
10 performance to persons of color. In Texas, according to
11 our study, African-American and Latino borrowers are two
12 to three times as likely to be denied for a home loan by
13 NationsBank than a white borrower. Data also shows
14 NationsBank disproportionately loaned 86 percent of their
15 dollars for home loans to white borrowers.
16 In some Texas cities, the disparity is worse.
17 In the Beaumont-Port Arthur MSA, two majority
18 Africa-American cities, NationsBank made only four loans
19 to black families, and only one of them in a black tract
20 census area, yet NationsBank holds nine percent of the
21 deposits in that particular MSA.
22 In San Antonio, NationsBank holds 14.5 percent
23 of all deposits in the city while Bank of America
24 controls another 5.5 percent, yet NationsBank made only
25 1.7 percent of San Antonio's home loans.
26 And in the Fort Worth-Arlington MSA, another
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1 majority African-American city, NationsBank made only two
2 loans in a black census tract area, yet its depository
3 share in that city is 15.1 percent.
4 We are also asking for the development of
5 desirable affordable housing products. The most recent
6 HMDA data shows Bank of America disproportionately
7 targets Texas low-income consumers and persons of color
8 with manufactured housing loans. The interest rates on
9 these home loans have ranged as high as 13.25 percent,
10 substantially higher than the average seven percent rate
11 for a 30-year conventional loan.
12 Since Bank of America's recent decision to sell
13 its manufactured housing unit, Bank of America has not
14 offered an alternative affordable housing plan which
15 meets their community reinvestment obligation,
16 particularly in Texas.
17 We watch these changes in the banking industry
18 with deep anxiety for the effects the mergers will have
19 on our communities. Loss of competition, higher fees, an
20 erosion of CRA come to mind. The single most important
21 step that must be taken in the wake of these bank mergers
22 is to increase accountability of our lenders to our
23 communities' un-met banking and credit needs. And it is
24 not only the right thing to do. It is the law.
25 We trust that the board will do what is
26 necessary to ensure that our -- that the banks remain in
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1 compliance with our fair housing and fair lending laws
2 and accountable to our credit needs. Thank you.
3 MR. OBLEDO: My name is Mario Obledo. I'm the
4 president of the California Coalition of Hispanic
5 Organizations. And I'm also representing the League of
6 United Latin American Citizens, otherwise known as
7 LULAC.
8 We feel that the merger has been approved.
9 Without any disrespect whatever, if it had not been
10 approved, Alan Greenspan would have been here chairing
11 the meeting at the headquarter cities of Bank of
12 America. Instead, they have sent a lower level
13 bureaucrat to conduct this very, very important meeting.
14 NationsBank is fully aware of the request of the
15 Greenlining Coalition. Whether they will respond or not
16 is up to them. Our quarrel is not with the Federal
17 Reserve Bank. Our quarrel is with NationsBank and Bank
18 of America. If they do not meet their commitment to the
19 people of color of the state of California -- and, by the
20 way, the Greenlining Coalition represents the majority of
21 the people of the state of California -- we are going to
22 demurrage the merger. We will act as our own Federal
23 Reserve board. We will close down the branches and we'll
24 ensure their failure in California.
25 We're not going to stand for any disrespect by
26 corporate America. The people of color are people of
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1 pride and honor and courage, and we will teach them a
2 lesson. This is going to be a street fight and we're
3 prepared to engage in it. Thank you.
4 MR. NGUYEN: Good morning. My name is Philip
5 Nguyen. I'm the executive director of the Southeast
6 Asian Community Center.
7 Now, we all agree that the American has
8 experienced an unprecedented booming economy. The good
9 thing is that the rich become richer and the poor -- the
10 bad thing is the poor become poorer. The gap between the
11 rich and the poor is greater than ever.
12 Now, as the greatest nation at work, as the
13 people, and we so suggested we cannot afford it. Now,
14 that isn't why the congress enact the 1977 CIA.
15 Now, many people here believe that the deal has
16 been cut. The merger will be approved regardless of what
17 we're going to say. I tried not to believe so. I tried
18 to believe that the merger will be approved with certain
19 condition.
20 Now, one of the conditions is that the CIA.
21 The merger, the NationsBank, and the Bank of America
22 promise to have $350 billion for the CIA, but it don't
23 say anything. As my colleagues point out, these are
24 hollow commitment. When they don't have any specific on
25 how much they help the poor, how much they help the
26 minority, and how much they have the women and the
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1 low-income, the low area. We would love very much that
2 the NationsBank and the Bank of America spell out
3 specifically what they want to help, the poor, the
4 minority, the women, and how to improve the low-income
5 minority.
6 The second condition -- and I'd like to point
7 out is if there's a merger, it should be tried to have
8 the minimum branch go out, the minimum -- I mean,
9 employee be laid off. The better is nobody would be laid
10 off, no branch be closed down.
11 Now, these are the two minimum requirement and
12 we would like the NationsBank and Bank of America to
13 commit to this one. They should follow the example of
14 the Western Mutual. They may be even better, therefore,
15 because they're bigger bank.
16 Now, if these minimum requirement has not been
17 met, they choose to ignore it, please convey our message
18 to Mr. Greenspan stop the merger. Thank you.
19 MR. GLOVER: Good morning. My name is David
20 Glover. I'm the executive director of the Oakland
21 Citizens Committee for Urban Renewal and board member of
22 the Greenlining Institute.
23 Unlike many who may feel that this is an
24 absolute fait accompli, I would hope that the review
25 panel and others are receiving the appropriate education
26 and the appropriate facts this morning that may be
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1 opening some eyes.
2 I stood alongside members of the Gionini family
3 just a couple months ago at a founders day at an East
4 Oakland outlet at Eastmont Mall celebrating the remaining
5 branch of 30 years in that community, and I only wonder
6 in light of this proposed merger what will happen to that
7 branch and certainly what that symbolizes in terms of the
8 original principals of the Bank of Italy and lending in
9 the alternative way and serving the under-served as the
10 institution believed.
11 We are clear on the fact that even though the
12 film "It's a Wonderful Life" may have been financed by
13 the bank, it is not a wonderful life in Oakland. It is
14 not a wonderful life in San Francisco, LA, Richmond, and
15 a number of other communities in the California area.
16 Urban centers are suffering from the lack of lending,
17 credit, branches, access, et cetera. We have to deal
18 with the critical issues that face California in light of
19 the loss of this partner, this community lender. Feels a
20 little bit like the Cleveland Browns. You know, even
21 they received compensation when Art Modell pulled out of
22 town.
23 We are looking at the testimony from Florida,
24 from Texas, from North Carolina, and we see that we are
25 not inviting a good neighbor into this marriage. And we
26 can't really call it a marriage. It's really an
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1 acquisition. There are things about this 350 billion
2 dollar pledge that, as Stella said earlier, are scatter
3 gun and we like to call it hollow. In many ways it's
4 regressive.
5 The Greenlining Institute has set alongside many
6 CEO's and negotiated agreements that really
7 quantitatively speak to the goals for California and the
8 goals for the low-income community, the goals for
9 minority lenders, the goals for those who have to survive
10 at management level and at line staff level. And we
11 don't see any of that disclosure here. We see none of
12 that good faith.
13 It is important to talk about California
14 compensation, it is important to talk about the
15 principals by which we have to survive in this community
16 and other inner cities around the country.
17 I'm not encouraged by what I hear from Nations
18 as a partner. I think it's important to look at welfare
19 reform and the impact it's having on this community.
20 It's important to look at 209 and the impact it's having
21 on this community and bring it back to lending and talk
22 about a partnership that has to be either approved or
23 disapproved based on its quantitative delivery for a
24 community that has no place to turn.
25 And I appeal to not only the process being
26 broadened on a public hearing level but to you to not
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1 just consider this to be, as Kevin said, a golf course
2 deal that's already sealed. Let's look at this list.
3 Let's open it up and let's examine it for all that it has
4 to be in order for citizens to be adequately served in
5 this community. Thank you very much.
6 MR. HEAD: My name is James Head, and I'm the
7 president of the National Economic Development and Law
8 Center, which is based in Oakland, California.
9 The center is a national nonprofit public
10 interest community and economic development technical
11 assistance provider. I'm also on the board of the
12 California Reinvestment Committee here in California and
13 a board member of the California Economic Development
14 Lending Initiative, as well as a former member and
15 chairman of California Advisory Council of the Federal
16 Reserve. And it's good to see you, Dolores, again after
17 so many years.
18 MS. SMITH: Good to see you.
19 MR. HEAD: This week I received a telephone
20 call from a reporter with the American Banker Newspaper
21 in Washington D.C., and he wanted to know why I was going
22 to testify at this hearing. And I found this question a
23 little odd, so I asked him sort of what was the basis of
24 the question. And he explained to me that in light of
25 the fact that opportunities to present written comments
26 were available and that many people had done so, what
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1 would be accomplished by appearing in person and
2 testifying?
3 I responded to him that it is important for
4 those making decisions in matters like this to attach
5 faces and descriptive facts and antidotes to the issues
6 to be decided. This gives context and hopefully some
7 grounding to the issues. It's also important for those
8 who are making these unique decisions to understand that
9 there are a lot of issues related to unique states like
10 California and others who will be impacted by the
11 merger.
12 So my feeling is that a part of this process is
13 to help those who are deciding this matter shape the
14 information that they have, to look at it from the
15 standpoint of how this may impact the communities either
16 positively or negatively by the decisions that are made.
17 My remarks are not going to focus on whether --
18 whether this merger should or shouldn't be approved. My
19 remarks will focus on a couple of key issues that I think
20 are critical to a decision about the merger.
21 One of them is loans to minorities. And you've
22 heard a lot about the facts and issues related to loans
23 to minorities. I think there continues to be a continued
24 perception, if not reality, to the fact that, in general,
25 minorities are not getting loans in the same volume or at
26 the same levels as their white counterparts. While these
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1 perceptions are very difficult to either verify or
2 dismiss, there is information either antidotal or factual
3 that continue to support it.
4 I would point you back to a Wall Street Journal
5 poll that was done a number of years ago of several
6 hundred black business owners who found that 92 percent
7 of them said that they had been turned down by banks
8 while trying to finance their firms. They stated that
9 lack of collateral, a paucity of black lenders and loan
10 officers, and a public perception that blacks lacked
11 business acumen was among the major reasons they felt
12 that they were not able to get this collateral.
13 For all of those complaints, however, banks
14 are -- over 73 percent of these same firms indicated they
15 ultimately obtained their collateral. When asked what
16 would be their preferred source or sources of capital, 63
17 percent responded that banks were their preferred
18 source.
19 Does this mean that NationsBank and Bank of
20 America are not lending equitably? While I can't speak
21 to NationsBank's record of lending to minorities, my
22 experience with Bank of America is that they have made
23 great efforts and with a lot of success in expanding
24 their lending to minorities. But if you hear from others
25 that this is an issue of concern and you accept the fact
26 that the generally perceptions continue to exist, you
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1 should closely examine the records of these two
2 institutions regarding minority lending and should
3 determine whether the merger increases their capacity to
4 be responsive.
5 The next issue is equity capital for startup and
6 expansion businesses. In an presentation at a community
7 investment and access to credit meeting in Los Angeles in
8 January of this year, Chairman Alan Greenspan suggested
9 that additional debt through loans might not be the most
10 effective solution to meeting the needs of communities
11 like South Central. He suggested that equity investments
12 might prove to be more effective and key to immediate and
13 long-term economic revival.
14 For a number of years now, California advocates
15 have been discussing and educating Bank of America staff
16 on the need for loan products that provide equity or
17 patient capital for new and expanding businesses. This
18 need can serve the merging nonprofit sector that are
19 developing successful for-profit businesses to bring jobs
20 and goods to low-income communities, the emerging
21 entrepreneurs like, welfare recipients, youth, and
22 skilled, unemployed, and underemployed workers that are
23 identifying small business niches that can help them
24 become economically self-sufficient, and emerging and
25 expanding small businesses that are trying to continue
26 the creation of employment and economic stability in
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1 low-income communities.
2 Our discussion with Bank of America has been
3 around strategies and mechanisms for developing loan
4 products that will address the credit needs of these
5 constituencies and also will allow the bank to make
6 money.
7 We hope that you will question NationsBank and
8 Bank of America on their willingness and commitment to
9 continue to work towards addressing these critical
10 needs. At the very least, we believe that the merged
11 bank should commit to being the leader in the development
12 of loan products that provide the kind of patient capital
13 that's needed. This is cutting edge work, and it should
14 not be abandoned or delayed because of the application
15 for merger.
16 The last issue is one that is dear to me because
17 we put a lot of time in it. During the first quarter of
18 '98, Community Economic Development leaders and Bank of
19 America staff collaborated to development an innovative
20 community economic development philanthropic initiative
21 called readiness for the 21st century to promote economic
22 readiness for individuals, communities, and
23 community-based organizations.
24 We put a great deal of time into the development
25 of this initiative, which was tied to the bank's 140
26 billion dollar community lending commitment. We would
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1 hate to see this initiative either delayed or either
2 forgotten in the process of this merger. We feel that
3 this is an appropriate approach to putting some meat to
4 the NationsBank 350 billion dollar commitment and hope
5 that you will consider it.
6 I've been told that my time is up, and I will
7 conclude with this by turning back to where I started.
8 Initially I'm convinced that it is important to
9 communicate these issues in person. The various opinions
10 I've heard this morning only reconfirms to me that
11 opinion. In business as in life, you gain more by direct
12 dialogue and debate than by indirect prose and
13 avoidance. Also, words alone can sometimes lack impact
14 and emotion. Imagine if we only had Dr. King's "I Have a
15 Dream Speech" in a written version rather than the
16 powerful presentation he delivered in Washington or
17 President Kennedy's promise of a man on the moon had been
18 only in an editorial in the Washington Post rather than
19 the inspired delivery we have all seen.
20 Lastly, even in the face of advancing technology
21 like the Internet, some of us are still more comfortable
22 making our point in a face-to-face discussion than
23 those -- with those responsible for making the final
24 decisions. That is why I'm here to speak today and why I
25 hope you will create opportunities for us to have
26 continued face-to-face discussions with NationsBank and
.
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1 Bank of America. Thank you.
2 MR. WILLIAMS: Good morning. My name is
3 Clarence Williams, and I am here on behalf of the
4 Sacramento Black Chamber of Commerce and California
5 Capital Small Business Development Corporation and as
6 much as I serve in the capacity of president of both
7 organizations. In addition, I am a founding and current
8 member of the Bank of America Community Development Bank,
9 Community Development Bank Advisory Board.
10 The Sacramento Black Chamber of Commerce is a
11 501C6 membership organization established more than 12
12 years ago for the purpose of mitigating and eliminating
13 arbitrary and discriminatory barriers which preclude
14 African-American-owned businesses from fully
15 participating in the marketplace.
16 California Capital is a Northern California
17 based 501C3 corporation under contracts with the State of
18 California and the Sacramento Municipal Utility District
19 to provide loan guarantees on bank loans. In addition,
20 we are contracted with the Solano County Organizing
21 Committee and with the Federal U.S. Department of
22 Agriculture and Rural Development Administration to
23 administer loans, several in rural areas of Northern
24 California.
25 The purpose of my testimony is to support the
26 cause of the Federal Reserve Bank and its continuing
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1 obligations to the community development and
2 revitalization and to emphasize that as a condition of
3 the merger of these institutions, a specific negotiated
4 overall written commitment of dollars, products, and
5 services must be required for California and its
6 respective regions, with my concern focusing on the
7 Sacramento Valley.
8 To date, these institutions have been unwilling
9 to make a specific written commitment to California.
10 Without such a commitment, under-served inner city and
11 rural communities must rely on a "trust us" commitment.
12 Consequently, we are being asked to acquiesce to
13 this merger on the basis of blind faith. These
14 institutions are profit motivated, and their primary
15 concern is return on investment for shareholders.
16 Creating jobs, and community reinvestment is not
17 necessarily perceived as being in their primary economic
18 interest.
19 However, our communities cannot remain silent
20 and inert as the number of financial institutions
21 continue to contract from as many as 25,000 to a
22 projected eight, six, or 4,000. This contraction and a
23 debate thereof should not be restricted to an analysis
24 that only pursues the goals of increased efficiency and
25 global competitiveness if these goals are at the expense
26 of inner city and rural communities.
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1 We cannot accept costs such as increase in
2 unemployment and investment being shifted from the
3 balance sheets of banks to the banks of our communities.
4 If financial institutions and their shareholders are the
5 beneficiaries of consolidation, then our communities
6 should also realize substantive benefits and not only be
7 required to absorb the costs of this proposed
8 consolidation.
9 Furthermore, it is obvious that these financial
10 institutions view negotiated written commitments as
11 mitigation to transfer negative cost impacts resulting
12 from consolidation. If accepted as mitigation by the
13 community, we must assure that these scarce dollars and
14 resources are firmly committed in writing and reinvested
15 for the purpose of community growth and sustainability.
16 I am certain that my testimony at these hearings
17 will identify numerous -- I am certain that the testimony
18 at these hearings will identify numerous and specific
19 instances where the principals of this merger have been
20 unwilling to specify in writing the commitments necessary
21 for the approval of this application. However, I shall
22 note for the record their failure to increase Bank of
23 America's 1997 70 billion dollar allocation to
24 California, to support nonprofit technical assistance
25 providers who assist small businesses, to make equity
26 investments and CDC's and SBIC's, to provide venture
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1 capital to minority and women-owned businesses located in
2 distressed areas, to purchase at least 25 percent of its
3 goods and services from minority and disabled-owned
4 businesses, and to make a written commitment maintaining
5 Bank of America Community Development Bank, along with
6 its institutional expertise with regard to community
7 reinvestment.
8 In closing, I am aware of the Federal Reserve's
9 specified authority to enforce and negotiate a
10 commitment. Nothing precludes this panel from verifying
11 whether agreements made by the participants of this
12 merger represent either billions of dollars, smoke and
13 mirrors, or a substantive written covenant of commitments
14 involving long-term partnerships and relationships to
15 revitalize and to sustain inner city and rural
16 communities. Thank you.
17 MR. CORRALEJO: My name is Jorge Corralejo.
18 I'm on the board of directors of the Latin Business
19 Association. The Latin Business Association is one of
20 the largest chambers of commerce in the United States.
21 We represent part of the largest or the faster growing
22 entrepreneurial segments in America.
23 We know that any financial institution should be
24 interested in conducting business with us. I think we
25 all know that all of us that represent all of the
26 organizations that are here today. But what we see
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1 developing here is a battle brewing. And being a
2 business person, it's not in my interest to see this kind
3 of development occur. I think that it's important that
4 we take a look at who is here, the depth, the depth and
5 the breadth of the people that are here expressing these
6 strong, strong concerns regarding this acquisition.
7 I have just a copy of an article from American
8 Banker, NationsBank making overtures towards Hispanics.
9 In this article, it states that, "Hispanic groups have
10 not formally protested the merger but they do have
11 concerns." Well, this is wrong. We are formally
12 protesting the merger. Not just the LBA, but we're
13 working in concert with several other organizations,
14 statewide and nationally, including -- I'll give some of
15 the names -- American G.I. Forum, California Coalition of
16 Hispanic Organizations, California Hispanic Chambers of
17 Commerce, Chicano Federation of San Diego, Mexicana
18 National, ourselves, Latino Issues Forum,
19 Mexican-American Growers Association, and Los Angeles
20 Community Union. That's just a small sampling of some of
21 the people who are organized in protest of this merger,
22 this acquisition.
23 So I want you to take to heart the level of the
24 concern that is expressed here. We understand that we
25 represent the majority of people and will become the
26 majority of businesses in the State of California. How
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1 can you approve the acceptance of a monopoly situation
2 without any kind of working agreement? We in California
3 have a history over the last several years of working
4 with a majority if not almost all of the financial
5 institutions and have developed successful and profitable
6 businesses at our end, as well as their end.
7 And I think that's a critical impact here, is
8 that we're looking to develop wealth in all of our
9 communities over a period of time. And I think without
10 the kind of working relationship that we're seeking,
11 we're certainly requesting that you take some time. And
12 I hate this discussions -- the discussions about this
13 being a done deal. I hope that's really not the
14 situation. That you postpone a decision to enable other
15 organizations to continue to express their concerns with
16 what is at hand here.
17 And, also, to take a look at perhaps proposing
18 the idea that they do, in fact, continue to work with us
19 to work on some goals. We're not talking about enormous
20 goals that don't make sense. We're talking about goals
21 over time. Especially in our situation where we're
22 dealing again with a majority of Californians. So we ask
23 at least that much, if not much more. But please take it
24 from us.
25 And like I said earlier, we are in concert with
26 several other organizations in protesting this merger.
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1 So contrary to other evidence, let it be on record that
2 this is, in fact, the case. Thank you very much.
3 MS. SMITH: Thank you.
4 MR. RICHARDSON: My name is Carlos Richardson.
5 I'm with Neighborhoods First Alliance. I'm from San
6 Antonio, Texas. I'd like to give special thanks to
7 Angelique Campbell and Consumers Reports.
8 What I have to offer this morning are simple
9 facts. Based on the most recent HMDA data, it is
10 reflected NationsBank has redlined eastern San Antonio
11 community. There were three loans made in our
12 neighborhood. One loan was made to one Hispanic for
13 $14,000, another to one African-American $21,000, and one
14 undisclosed ethnic group for $26,000.
15 NationsBank began negotiations with
16 Neighborhoods First Alliance with this statement: "We do
17 not sign agreements with neighborhood groups." This is a
18 clear demonstration of the lack of will in making a
19 commitment. NationsBank also refused to agree to any
20 measurable goal or timetable to rectify problems, thus
21 refusing to be held accountable for its performance due
22 to such institutional policies as redlining the eastern
23 sectors economically deprived.
24 The neighborhood is populated by the elderly and
25 working poor and has not been a participant under the
26 economic growth of San Antonio. The area is besieged by
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1 warehouses, encroachment, tank farms, and hazardous
2 waste, and lack of mortgage and lending and is denying
3 the residents of the neighborhood, the type of investment
4 that -- this is the type of investment that destroys
5 living environment and ultimately the neighborhood
6 itself.
7 After the Neighborhoods First Alliance requested
8 NationsBank incriminating HMDA data, an executive of the
9 bank discovered one of the members was employed by The
10 United Way. The executive called United Way and the
11 leader involved was ultimately put on job probation.
12 This attempt to cripple our neighborhood leadership
13 demonstrates this corporation's arrogance and willingness
14 to use its power to step on the poor communities.
15 I'm also a member of the Housing Trust. And
16 although I can't speak for them now, it is part of the
17 research I've done in that capacity that has shown that
18 this organization has been lying, nursing at the tip of
19 government while our elderly have burned to death in
20 their homes.
21 We're opposing this merger and we hope that we
22 can seek help from our federal government to see that it
23 doesn't happen. That's all I have to say. And thank
24 you.
25 MR. DILLARD: Good morning. First let me thank
26 you for the opportunity to address this vital and
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1 important issue concerning the merger of Bank of America
2 and NationsBank.
3 My name is Eddie Dillard, and I'm president of
4 the Oakland Black Board of Trade and Commerce, an
5 organization of small and midsize Oakland-based black
6 business owners.
7 The Oakland Black Board of Trade and Commerce is
8 an advocate for small business growth and development.
9 We create employment opportunities in our communities and
10 contribute to a tax base of the city of Oakland.
11 I'm also a member of the Economic Development
12 Advisory Commission for the City of Richmond and an
13 Oakland-based small business owner.
14 With me today are four members of the Oakland
15 Black Board of Trade and Commerce, Mr. Bill Matthews,
16 owners of Uniform America, a clothing manufacturing
17 company, Mrs. TJ Robinson, owner of the Gingerbread House
18 and Restaurant, Mr. Garfield White, president of Select
19 Communications, a telecommunications company, and Mr. Ron
20 Carter, owner of FARC Construction Company and a member
21 of the board of directors of the Bay Area Black
22 Contractors Association.
23 Each of these Oakland-based black business
24 owners were denied financing by Bank of America. Not
25 only have these worthy small black business owners been
26 denied access to capital, but the honorable mayor of the
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1 city of San Francisco, Willie Brown, and the honorable
2 mayor of the city of Oakland, Mayor Elihu Harris, were
3 denied a loan from Bank of America in an attempt to
4 purchase a radio station in the city of Oakland.
5 Over the past ten years, we've witnessed a
6 dramatic decline in the availability of access to capital
7 in the city of Oakland and the San Francisco-Oakland Bay
8 Area in general. There are approximately 554 banks in
9 the state of California. Only two of these banks are
10 African-American banks.
11 The recent mergers of large banks is threatening
12 to create less competition and more Monopoly control of
13 the availability of credit to the black community. Bank
14 of America's recent public relations campaign slogan,
15 "let's be neighbors," flies in the face of reality. The
16 lack of small business growth in the black community can
17 be directly attributed to the downsizing of Bank of
18 America in the black community.
19 The black community contributes substantial
20 revenues to Bank of America's bottom line. For example,
21 of the 340 black churches in Oakland, 40 percent bank
22 with Bank of America. That means that every Monday,
23 approximately 136 black churches deposit $400,000 into
24 Bank of America's system. This represents approximately
25 $20 million annually. Yet we've seen Bank of America
26 abandon our community, forcing our church members, small
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1 black business owners, nonprofit organizations, and
2 citizens to travel outside of our community for banking
3 services.
4 Bank of America's market shares is approximately
5 40 percent of the 379 black individuals who reside in the
6 nine Bay Area counties. Bank of America has been
7 unresponsive to the credit needs of the black community
8 while providing lip service to the black community
9 through sponsorships of high profile and special events.
10 We've seen Bank of America and other financial
11 institutions spend billions of dollars to reconstruct
12 countries like West Germany, Indonesia, Korea, and even
13 Russia at the expense of American blacks. Charity
14 begins at home.
15 For the past 50 years, we've seen a
16 deterioration of our communities to the point where today
17 many of our neighborhoods look like boarded out war zones
18 with boarded up commercial stores and severely
19 dilapidated housing. In the past decade, we've watched
20 Bank of America expand in the suburbs and shopping malls
21 and grocery stores outside the inner city and provide a
22 wide range of financial services to the white communities
23 that remain unavailable to the inner city black
24 community.
25 For example, in West Oakland, an area of
26 approximately 27,000 residents, Bank of America at one
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1 time had four branches. Today there are none. As a
2 direct result of this wholesale denial of credit, this
3 community has no pharmacy, no grocery store, and no
4 bank. Has the wholesale withdrawal of Bank of America
5 affected this community?
6 Most assuredly. Another example is East
7 Oakland, an consisting of 48,000 residents. Bank of
8 America at one time had seven branches. Today there are
9 three. Not only has this abandonment of our community
10 forced blacks to travel on average four miles for banking
11 services, but the reduction in employment has caused
12 undue hardship to many black families and the community
13 at large.
14 One black church member told me that for 50
15 years, she had a checking account and a savings account
16 with Bank of America. When she retired from two
17 full-time careers, she decided to remodel her home, which
18 was estimated to cost $23,000. With annual retirement
19 income of over $3,000 a month, she was denied a
20 refinancing loan by Bank of America. Three weeks later
21 she qualified for a larger loan from another institution
22 with a more favorable interest rate and a payment
23 schedule that fit within her budget.
24 This is but one example of how Bank of America
25 has consistently denied blacks access to capital. Bank
26 of America has raped the black community of our resources
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1 and transferred our savings and deposits to communities
2 that have no direct or indirect impact on the quality of
3 life in the black community in Oakland.
4 For example, Bank of America provided the
5 financing for the Shorenstein Development Company to
6 purchase the city center project in downtown Oakland and
7 the amount estimated to be $23 million and reported this
8 financing under CRA as a loan to a minority. Well, the
9 truth of the matter is the Shorenstein Company is one of
10 the largest white-owned office and shopping center
11 developers in the country, and how the financing can be
12 designated as fulfilling its CRA objectives is not only
13 misleading but boarders on fraud.
14 I'll close with saying that Bank of America has
15 not been loyal to the black community and it does not
16 advertise effectively or in any meaningful way. The
17 withdrawal of bank services in our community has created
18 pockets of poverty, pockets which breed hopelessness,
19 anger, and despair. Only when organizations such as Bank
20 of America and NationsBank fully realize and actively
21 partner with black institutions and organizations to
22 address these issues can we say we're building bridges to
23 the new millennium. Thank you.
24 MR. HOBBS: Good morning. My name is Greg
25 Hobbs. I'm the vice president of the National White
26 Business Council and I'd also like to recognize my
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1 chairperson of the National Black Business Council
2 sitting at the end of the table to show her support. We
3 have 75,000 businesses across the country which we're in
4 contact with electronically.
5 Today specifically I'm representing one of our
6 affiliates from the state of Florida, the Coalition of
7 Black Businesses. The Coalition of Black Businesses from
8 the state of Florida have concluded that an approval of
9 this acquisition without specific commitments to build
10 capacity for black-owned businesses will retard or
11 reverse the gains and capital access by black-owned
12 businesses in every state the bank operates.
13 Florida, we think, presents the ideal case study
14 for accessing the impact of the economic well-being of a
15 state such as California which stands to lose a major
16 heritage bank to decision makers outside the state. As
17 you know, Florida just lost its major headquarter bank,
18 Barnett Bank, to NationsBank through an acquisition. For
19 this reason, the coalition feels it is essential in
20 assessing the impact of this acquisition that the Federal
21 Reserve hold a hearing in the state of Florida.
22 Upon information and belief, NationsBank has not
23 adequately provided capital for black-owned businesses in
24 the state of Florida. Further, although reports --
25 NationsBank reports not to track race data on business
26 loans, it is our belief that less than one percent of
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1 NationsBank's Florida business loans are made to
2 black-owned businesses.
3 We've requested the OCC do a random study of the
4 bank's loan portfolio as part of the CRA performance
5 evaluation to adequately determine what that number is.
6 However, there's a preponderance of evidence which
7 supports the coalition's claim.
8 In 1985, Florida lawmakers created a unique
9 network to provide access to capital for black-owned
10 businesses in the state of Florida. NationsBank,
11 previously NCNB, was one of the initial members of this
12 investor bank network. The network via loan guarantees
13 and direct loans has been a primary source of capital for
14 black-owned businesses in the state of Florida, providing
15 more than 40 million in capital since inception.
16 Prior to the acquisition of Barnett Bank,
17 NationsBank was the third largest member investor in this
18 network behind Barnett and First Union. But over the
19 past 12 years, NationsBank has provided only ten loans
20 guaranteed by this network as compared to Barnett, which
21 has made 117 and Sun Trust, which has made 120, and First
22 Union, who's made 75.
23 NationsBanks guaranteed loans amount to, over
24 the 12-year period, to $268,000 to black-owned businesses
25 as compared to Barnett Bank at 10.8 million, as compared
26 to Sun Trust of 9.3 million and First Union of 5.5
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1 million.
2 The network guaranteed loans by NationsBank
3 through the system represents seven-tenths or one percent
4 of the total funding provided through this network. We
5 can go even further and take a look at SBA guaranteed
6 loans. According to SBA guaranteed loan volume reported
7 by state and race, SBA guaranteed loans by NationsBank
8 for African-Americans in the state totaled zero in 1993
9 and 465,000 in 1994. This number is important because
10 it's in our belief that 90 percent of the commercial bank
11 loans to black-owned businesses in the state of Florida
12 are provided with SBA guarantees. Therefore, SBA
13 guarantees are a major reflection of the bank's loan
14 portfolio, particularly as it relates to black-owned
15 businesses.
16 NationsBank SBA guaranteed loans for
17 African-Americans in 1994 would have represented
18 three-tenths of one percent of its small business loans
19 in the state of Florida as reported in its 1995 CRA
20 performance evaluation. Total small business loans in
21 Florida for 1995, 1996, and 1997 were not available for
22 analysis. However, it is our belief that this
23 insubstantial performance continued in these years as
24 well.
25 There's a significant group of black-owned
26 business owners, black business organizations, and black
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1 professionals in the state of Florida which have
2 expressed concern in NationsBank delivery of credit.
3 Moreover, of the seven institutions that make up this
4 unique network in the state of Florida, after being
5 requested to submit letters of support by NationsBank,
6 only one submitted a letter of support. And it's
7 interesting to note that the one submitting that letter
8 of support for this acquisition, the president of that
9 institution is a member of the board and the chairman is
10 an area president of NationsBank.
11 The bank's insubstantial delivery of capital
12 black-owned businesses in the state of Florida is not due
13 to any lack of demand, just an extremely conservative
14 lending policy that lacks an understanding and innovation
15 in meeting the capital needs of black-owned businesses in
16 the state of Florida.
17 A lot has been said and I'm going to cut my
18 comments short by concluding that we, like many people
19 who have spoken earlier, strongly would like to express
20 that the Federal Reserve hold more hearings, particularly
21 in the state of Florida, but also that the Federal
22 Reserve compel NationsBank to sit down with community
23 groups to work out specific commitments for their CRA
24 investment within the very states which it serves. Thank
25 you.
26 MR. NEREE: Good morning, members of the board
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1 of governors and proactive community leaders. My name is
2 Dufirstson Neree. I'm here representing The Credit is
3 Due Project, a community development financial
4 institution in Miami, Florida, and the Little Haiti
5 Community Alliance, a coalition of 24 community-based
6 organizations and 1,028 residents united to fight
7 redlining in the city of Miami.
8 I got here early this morning, 1:00 precisely.
9 The tickets was bought with the pooled savings of ten
10 local residents, each making solely $10,000 for the
11 entire year. I'm sure if a public hearing was advertised
12 in the state of Florida, many other community groups
13 would have made the same type of effort.
14 Not knowing the specifics of this public
15 hearing, I have prepared a 15-minute and a 30-minute
16 presentation, but out of respect for your time and
17 respect for local groups in San Francisco, I can
18 succinctly limit my presentation and just summarize
19 NationsBank record of poor lending, poor community
20 outreach, and failure to comply with the CRA and with the
21 following censuses.
22 Two years ago, we had six different banks
23 operating in our community. In the past, when our
24 residents faced local bank discrimination, we could take
25 our money elsewhere or we could use the CRA to protest
26 the poor services that we received. Last year, with the
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1 merger of NationsBank/Barnett Bank, our community went
2 from having six local bank branches to having just two.
3 Now what choice do we have in terms of where we
4 decide to do our banking and what choice do we have --
5 what voice do we have in using the CRA to fight for more
6 access to capital in an area when we know that it's
7 common banking protocol to renege on CRA commitments?
8 In our community, the CRA is virtually useless.
9 The two banks who operate there now, Washington Mutual
10 and NationsBank, are two of the largest institutions in
11 the United States of America. We don't expect a merger
12 anytime soon. If you as our public officials do not
13 force these mega-banks to make enforceable CRA
14 commitments, low-income communities and minority
15 communities like mine will have no option but to become
16 the punching bags for mega-banks like NationsBank, who
17 have in the past showed very poor records of community
18 reinvestment act lending.
19 MS. SMITH: Thank you. I encourage you to
20 submit your 30-minute presentation for the record.
21 MR. WONG: Members of the Federal Reserve, my
22 name is Dennis Wong, and I'm the president of the Asian
23 Business Association, Northern California. We're a
24 nonprofit and we focus on economic development through
25 education. As part of that, we sent nine of our members
26 to the White House conference on small business in 1995
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1 to address many of the issues that you hear before you
2 today. We'd like to also lend our concerns to the
3 proposed merger by saying that without specific
4 commitments from the new NationsBank and without
5 identifiable measurable results, we are very concerned
6 that the effectiveness and the intent of CRA will be
7 greatly diminished. Thank you.
8 MR. GNAIZDA: Members of the panel, we now have
9 a series of one-minute speakers who will be using the
10 mic.
11 MR. BETZ: We promise to be extremely brief.
12 We're representing a number of organizations that wanted
13 to be here today but, because of the cost of getting to
14 San Francisco, were not able to. So we'd like to make
15 brief statements on their behalf.
16 I'm going to start with a statement from Leo
17 Avila, who's a member and former past chair of the
18 American G.I. Forum. And he wants to go down on the
19 record the following statement: "The American G.I. Forum
20 is our nations most prominent and largest Hispanic
21 veterans organization. We oppose any merger that fails
22 to ensure that the Latino community, a community that put
23 America first in every war, fully and specifically
24 benefits from this merger.
25 "We want home loans, we want business loans, and
26 we want the banks to move their charitable dollars from
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1 the ballet to the barrio. Until there are specific
2 commitments, we say to Chairman Coulter, McColl, and Alan
3 Greenspan no merger. Remember, the Latino community is
4 the future for California and any bank that operates
5 here. Thank you."
6 UNIDENTIFIED SPEAKER: Good morning. I'm
7 speaking here on behalf of George Dean, the CEO and
8 president of Phoenix Urban League. The Phoenix Urban
9 League has had a very good relationship with the B of A.
10 However, we must, no matter what the risk, set forth our
11 concerns.
12 First, NationsBank may not be as sensitive to
13 the unique minority cultures in Arizona.
14 Second, all the major banks in the west have
15 recognized a multi-billion dollar potential of minority
16 markets and set specific goals. Nations refuses to do
17 so. We ask why.
18 Third, although community groups appreciate
19 grants, it should not be noted -- it should be noted that
20 as a percentage of profits, the record of the new banks
21 is only half of its competitors such as Wells Fargo.
22 Forth, this merger should be modified to require
23 specific minority lending and contract goals and a
24 substantial charitable commitment to the under-served
25 communities. Thank you.
26 MR. GNAIZDA: Members of the board, if you
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1 would allow us to make one little exception. Maryann
2 Mitchell has just flown in from Washington. She's the
3 national head of one of the largest black business
4 councils in the country, National Black Business
5 Council. If she could make a brief observation, we'd
6 appreciate it.
7 MS. MITCHELL: Good morning. I think it's
8 still morning. Again, I'm Maryann Mitchell. I'm the
9 president of the National Black Business Council out of
10 Silver Springs, Maryland and a business owner. And I
11 just want to say a couple of things.
12 We absolutely positively as it stands today
13 oppose this merger for the following reasons: The
14 lending practices and policies of Bank of America and
15 NationsBank, the contracting record. I'm a business
16 owner and I get called to the White House all the time
17 for them to tell my success as being one of the most
18 successful African-American business owners in the
19 country.
20 That is just -- it's outrageous that I prefer
21 doing business with the federal government rather than
22 Bank of America because it is absolutely impossible to
23 have access. It is also impossible to do anything with
24 NationsBank as far as contracting because they have a
25 22-page survey on the Internet that requires a business
26 plan for you to do business with them. This is
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1 outrageous. It just cannot happen. So you have Bank of
2 America and NationsBank doing business with other Fortune
3 500 companies and not the community businesses.
4 I just want to also say to Bank of America and
5 NationsBank that we will advocate through our 75,000
6 members across the United States that they don't do
7 business with them, plain and simple. We will also
8 advocate to our employees that they just don't have bank
9 accounts with Bank of America and Nations. We will also
10 tell our employees to advocate to their families to just
11 close their accounts and go somewhere else because it
12 makes more sense. We will do business with people who do
13 business with us.
14 MR. CALDERA: Good morning. I'll be reading a
15 statement from Steve Soto, who's the president and CEO of
16 the Mexican-American Growers Association, an organization
17 representing over 7,000 growers in California. And my
18 name is Arquimides Caldera for the record.
19 Our association's success is a harbinger of the
20 future of the state. If we truly want California to be a
21 golden state again, banks must tap all of California's
22 minority resources, as much as Wells Fargo is attempting
23 to do.
24 The B of A/Nations pledge fails to tap this
25 potential. The result is likely to be a lack of lending
26 and economic development funds. We urge NationsBank and
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1 Bank of America to develop specific minority lending and
2 contract goals. Until that is done, our support cannot
3 be secured and the new bank will not achieve its profit
4 goals.
5 Our association also protests the lack of
6 hearings in Southern California. Thank you.
7 MS. VENERACIAN: Good morning. My name is
8 April Veneracian for the record, and I will be reading a
9 statement for Alex Esclamado, president of Filipino
10 Political Association.
11 It seems almost incomprehensible, if not
12 ridiculous, for us to testify today on behalf of our
13 communities that Bank of America and NationsBank have
14 been less than forthcoming in their collective intent to
15 engage in a mutually beneficial partnership with our
16 communities.
17 Minorities, including the Filipino-American
18 community, represent a significant potential consumer
19 base for B of A and NationsBank and yet we are here
20 before you to attest that they have not taken a
21 definitive and affirmative stance towards tapping our
22 communities.
23 In studies of businesses discrimination
24 conducted across the country, institutional
25 discrimination has been pinpointed as the primary cause
26 of minority business failure and minority community
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1 underdevelopment. Financial institutions in particular
2 are at the heart of those discriminatory practices.
3 We ask and urge the regulators not to allow Bank
4 of America and NationsBank to actively or passively carry
5 on this tragic legacy by not offering specific courses of
6 action for lifting and alleviating such institutional
7 barriers. Thank you.
8 MS. THRASH: Tunua Thrash, for the record, is
9 my name, and I'm reading a statement on behalf of Mark
10 Whitlock, who is executive director of economic
11 development for First AME Church in Los Angeles. It's
12 one of the largest Africa-American churches here in the
13 state.
14 "As the executive director of a major inner city
15 African-American church operating economic development
16 programs with 16,000 family constituents, I have grave
17 misgivings about an absentee landlord. Our community has
18 suffered from generations of an absentee landlord
19 neglect.
20 "You want to think about the fact when all of
21 the banks competitors, including Washington Mutual and
22 Wells Fargo, have made specific minority pledges, one has
23 to wonder as to the motives of the one who refuses.
24 "Third, many members of our church would like to
25 testify but cannot be here today because the hearings are
26 held in San Francisco. Please hold a Los Angeles hearing
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1 as we previously requested.
2 "The African-American market nationwide is over
3 $600 billion. Those who ignore us do so at their peril.
4 We come not to the table to beg but with the desire to
5 create civil and a prosperous society. Thank you."
6 MS. DIAZ: Good afternoon. My name is Haydee
7 Diaz, and I am reading a statement from Willis White,
8 California Black Chamber of Commerce.
9 "I join with the National Black Chamber, the
10 Black Business Association, and the National Black
11 Business Council in criticizing a merger that abandons
12 the African-American community. We have never shared in
13 either bank's loan pool or contract program, nor in
14 Golden Parachutes for senior, white males worth over $200
15 million, nor have we equitably shared in their economic
16 development projects.
17 "Consider this: Bank of America alone lent more
18 to South Korea, $3.1 billion to be exact, than the total
19 it has lent African-American-owned businesses over the
20 last 50 years. And remember, B of A has lost $3.1
21 billion in South Korea and nothing in the inner city.
22 Until they show us the money and walk the talk, we will
23 criticize this merger."
24 MS. VILLANUEVA: My name is Trina Villanueva,
25 and I will be reading a statement from Mateo Camarillo,
26 who is the vice chair of the Chicano Federation of San
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1 Diego. He could not fly up here today.
2 "No bank mega-merger should occur without
3 specific minority and geographical pledges. In San
4 Diego, over 40 percent of the county are minorities and
5 the majority of potential homeowners and small business
6 entrepreneurs are persons of color.
7 "We in San Diego invite CEO McColl to visit us
8 and pledge that the new bank will set specific minority
9 lending and business goals just like Washington Mutual,
10 Wells Fargo, and the Union Bank of California. Until
11 this is done, competition may decide the financial fate
12 of this merger. Why should we do business with a bank
13 that ignores us when Wells and WaMu courts us? Thank
14 you."
15 MS. NGUYEN: Hello. My name is Vy Nguyen, and
16 I'm here to read a statement from Mai Cong, CEO of the
17 Vietnamese Community of Orange County, Incorporated.
18 She writes, "The Vietnamese-American community
19 has been inadequately served by B of A's small business
20 lending and fears an absentee landlord with little
21 knowledge of our culture will do even worse. Frankly,
22 only targeted minority marketing and goals as recently
23 set by B of A's competitors, such as Union Bank, can
24 correct this lack of capital to an emerging U.S. market
25 that is far greater than many overseas markets.
26 "On behalf of Orange County's 160,000
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1 Vietnamese-Americans, I wish to deliver a personal
2 message to Chairman Greenspan with whom I recently met.
3 Don't forsake us. Compel NationsBank to set specific
4 minority goals for small business lending and to promote
5 people of our community into senior management. Thank
6 you."
7 MR. ROMERO: Good morning. I'll be reading a
8 statement on behalf of Reverend James H. Daniel, Jr.,
9 chairman and CEO of 21st Century Partnership.
10 "The 21st Century Partnership is a nonprofit
11 community development corporation concerned with many
12 issues pertaining to community development here on the
13 east coast. Among them is the changing face of the
14 financial service industry. As ministers and servants to
15 the community, we believe that mega-mergers must create
16 concrete results for the traditionally under-served.
17 "The CRA record of NationsBank is a concern to
18 us. Its lack of commitments to those who led the
19 struggle for economic justice as represented by Martin
20 Luther King, Jr. is appalling. And we serving in the
21 interests and voicing the concerns of millions of
22 African-Americans decry the Federal Reserve's Board of
23 Governors refusal to grant us in a hearing in each state
24 in which NationsBank and B of A have failed to render
25 adequate financial services to the under-banked among
26 us. Only a lack of funds has prevented us from
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1 personally testifying.
2 "Respectfully, Reverend James H. Daniel, Jr."
3 MR. CALDERON: Gene Calderon. And I'll be
4 reading in a statement from Burt Corona, the executive
5 director of the Hermandad Mexicana Nacional.
6 "I offer this testimony on behalf of the nations
7 largest immigrant service center and advocacy
8 institution. We have offices in Washington D.C., New
9 York, Illinois, as well as in California. This merger
10 could be harmful to all communities. It's particularly
11 so for low-income, immigrant, and minority communities.
12 "Over the last six decades, we have witnessed
13 the danger of absentee landlords and those that view the
14 poor from afar. I refuse to testify so that my personal
15 absence is evidence against Chairman Greenspan's decision
16 to prevent low-income persons from voicing their
17 concerns. Unless they live in the San Francisco area or
18 have a rich uncle bank to fund their trip.
19 "I also question the safety and soundness of a
20 bank which lacks the confidence of persons of color. We
21 constitute two-thirds of Los Angeles county's population,
22 a population greater than that of North Carolina. Thank
23 you."
24 MR. FERRAH: My name is Freddie Ferrah. I'm a
25 special project manager with the Greenlining Institute
26 and I wanted to just say with all the respect I can that
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1 I am amazed and appalled at the fact that the nations
2 largest two-bank merger -- I don't count Citi and
3 Travelers because Travelers isn't a bank. Well, not yet
4 anyway. It will be as soon as that's complete. But
5 nonetheless, that the largest banking merger, $560
6 billion of capital, only allows -- and the Federal
7 Reserve and Mr. Greenspan should really consider this --
8 is only having one meeting, one meeting in San Francisco
9 to allow city -- or community members and groups to voice
10 their concern over something of such monumental
11 importance. This bank is going to cover a third of all
12 the states in the nation, yet only one city is going to
13 be the center point for community-based comments.
14 The banks have proven and the testimony here
15 just reinforces the fact that Nations has done about as
16 bad a job at serving the communities it works in as any
17 bank could possibly do.
18 I am here to represent 49 million people with
19 disabilities, people who I hope can understand and
20 realize the negative impact of this kind of merger and
21 will quickly, as I have already done, move the account
22 from Bank of America to a bank that supports our needs.
23 I don't want to take up any more time because
24 the real beef isn't here. Coulter, McColl, and
25 Greenspan, I don't know where they're at, but they're
26 probably unpacking Golden Parachutes or doing what it
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1 might be that people of high importance do. I just wish
2 they'd show us more respect because there are a lot of
3 people that are very concerned with this merger. And it
4 certainly isn't taking place in any way that makes me
5 feel any more respected at all. I oppose this merger.
6 Thank you.
7 MR. FREEMAN: My name is David Freeman. I
8 represent the Commission on Disability in Berkeley,
9 California.
10 And to be honest, I really have never heard such
11 a ridiculous statement about a bank such as nations in my
12 life. I think it's pretty depressing pretty much when
13 you look at the future of banking in this country if this
14 merger is allowed to go through, especially with these
15 two banks.
16 There needs to be definite specific arrangements
17 so that the community does get reinvestments back into
18 it. As a disabled person, as an African-American, I know
19 that the system was not built with me in mind, but I
20 definitely intend to partake in it no matter what entity
21 may put itself up against me.
22 NationsBank and Bank of Atrocities needs to be
23 notified that we're entering the year 2000 and the
24 disabled community in particular is not going to stand
25 for the garbage. I think this is all garbage. I don't
26 have any beautiful words to put it into. I'm just going
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1 to say it plain and simple.
2 This is nonsense. And if the Fed does not
3 enforce what's already on the books or if the Fed does
4 not make sure that these two banks invest in the
5 communities that they set up ATM's in and they withdraw
6 money from like an endless vacuum, what do you expect to
7 happen?
8 I'm dead against this merger. This merger
9 should not happen. If it does happen, it's just another
10 sign of the times that the Federal Reserve is kind of
11 schizophrenic. Okay? It's not facing reality, and
12 that's just the bottom line. I'm against the merger.
13 Thank you.
14 MR. GNAIZDA: Members of the panel, we want to
15 thank you all very, very much from the approximately 70
16 speakers on the two panels that you arranged with Joy
17 Hoffman's assistance. Although we obviously have
18 expressed displeasure at the lack of hearings, I think
19 all of us owe you a debt of gratitude for being as
20 flexible as you have been and as courteous as you have
21 been and as open. So we thank you very much.
22 MS. SMITH: I, in turn, want to thank everyone
23 who presented testimony this morning. You have provided
24 us with important information, and I want to assure you
25 that as part of the record that the board will have when
26 it makes its decision on this application, the board will
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1 review the materials that you have presented and will
2 take into account the concerns that you have expressed.
3 So thank you very much.
4 MR. GNAIZDA: Thank you.
5 MS. SMITH: We will continue with -- we're
6 behind schedule, but we're going to continue with the
7 next panel before taking our lunch break, which may be
8 shorter than the half hour we had allocated. But if the
9 next panel will come on up, then we will proceed
10 immediately.