Public Meeting Regarding NationsBank and BankAmerica - Panel 8
Thursday, July 9, 1998
Transcript of Panel Eight
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14 MS. LeBLANC: My name is Brenda LeBlanc.
15 I am here representing Citizens for Community
16 Improvement of DeMoines, specifically their Reinvestment
17 Task Force which was initiated in 1977 to work on the
18 problem of getting home loans in areas that had been
19 redlined.
20 After 20 years we have developed working
21 agreements for special CRA programs with ten financial
22 institutions. We work with each bank to help them
23 improve their lending record, and we also provide
24 services, such as a Home Buyers Club, which helps
25 prepare people not ready to buy. We also produce Credit
26 & Home Buying seminars that provide a day-long session
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1 of information about the process of home buying and
2 introduce the various bank programs. More than 300
3 people attended our last seminar.
4 But we've had some problems in the last
5 several years with bank mergers. Hawkeye Bank, a
6 State-wide holding company was bought out by Mercantile.
7 Hawkeye had a branch in a low-mod neighborhood. But,
8 when Mercantile took over, they attempted to close
9 it. We fought this move and succeeded in keeping the
10 branch open.
11 But, while we had a good relationship with
12 Hawkeye, we find we do not now have the same kind of
13 relationship with Mercantile.
14 First Interstate Bank was another we had
15 an agreement with since 1978. They were out after a few
16 years by Boatmen's Bank. A new president came to
17 DeMoines from St. Louis and he told our task force that
18 we didn't need an agreement with them, because Boatmen's
19 had a great record of CRA lending, they had done great
20 things in
21 St. Louis, he told us, therefore, they knew all about
22 what was needed to be done.
23 We pointed out that DeMoines is not St.
24 Louis and what works there may not necessarily work
25 here. We pointed out we had developed expertise in our
26 situation and our needs, therefore, they needed to work
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1 with us for a CRA program in DeMoines to be successful.
2 They eventually agreed and after that we had a signed
3 agreement with Boatmen's
4 Then a year ago Boatmen's was bought out
5 by NationsBank. We started out through the whole
6 familiar process again. Since last December we have
7 been debating back and forth about an agreement with no
8 success.
9 In dealing with the local banks after they
10 are bought out we are for the most part dealing with the
11 same people locally we have dealt with all along. The
12 problem is they are now getting directives from people
13 above, from people far aware we can not talk to and
14 people who seem not to care about whether CRA programs
15 work or not in our neighborhoods.
16 When we learned at our national NPA
17 conference that other cities were having the same kinds
18 of problems with mergers, we agreed that the time had
19 come to develop a national agreement that would give
20 official sanctions to our locally developed programs.
21 It was with high hopes that I attended the
22 meeting in St. Louis with NPA and executives from
23 Nations and Bank of America. If we could get an
24 agreement at the national level, we could move forward
25 at the local level then with assurance that we have
26 support from the top. And this would set a precedent.
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1 With one such national agreement, we could move on to
2 others and all of us in our local communities could then
3 keep working with local branches to get loans moving
4 into our neighborhoods.
5 It was a big and important step for us,
6 but it was disastrous. That conversation reminded me of
7 the very first conversation we had with local banks who
8 back then had no idea what we were talking about,
9 confused reinvestment with charity and thought that
10 people in our neighborhoods couldn't afford to buy homes
11 and were all poor risks.
12 This morning I had this charitable thing
13 brought up again. The Mayor of Houston talked about
14 their volunteerism and philanthropy. That's commendable
15 and very good, but it's not reinvestment. We're talking
16 about -- we not talking about giving money to folks in
17 neighborhood, they're talking doing business with them.
18 We're talking about bringing us into the capitalist
19 system so that we also can do what people in the suburbs
20 can do, buy homes and start businesses.
21 Our local bankers now understand that with
22 smaller loans and relaxed guidelines our residents can
23 buy homes they can afford. These loans are improving
24 our neighborhoods and it's providing banks with a whole
25 new source of business, good business, but they cannot
26 do it without working with local people.
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1 The main problem is one of marketing,
2 letting people know their options, and this is something
3 we constantly work on.
4 We were treated at that meeting in St.
5 Louis with contempt. Our decades of effort in our
6 communities were dismissed as, quote, petty politics,
7 unquote. And this from a person who is a chief CRA
8 officer for Nations.
9 When the person who is in charge of CRA
10 for a whole national bank's operation displays such
11 appalling ignorance, how can we expect CRA to survive as
12 mergers progress?
13 After we had the meeting in St. Louis, we
14 held a meeting in DeMoines with our local NationsBank
15 president and our chief CRA officer. The CRA officer is
16 the same person we have been dealing with for ten years
17 through three different ownerships of the bank. We know
18 the local personnel support our working agreement, and,
19 when we challenged them the problem is with upper
20 management, they did not deny it. The explanation was
21 the same it was in
22 St. Louis a lame, "We just don't do agreements."
23 Mr. McColl this morning said, and I quote,
24 I wrote this down verbatim, he said, "We will keep
25 decisions in the hands of local bankers who know how to
26 serve their communities. But in DeMoines, since
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1 December, they have been trying to kill our local
2 agreement and the relationship that we've had for a
3 decade.
4 They have a cookie cutter program that's
5 national that they're trying to foist off on us. The
6 reason we can't accept it, the program is fine except
7 for one aspect, this program is targeted to low-income
8 people and not to low-income neighborhoods. Ironically
9 it was the same bank that ten years said to us, "We'd
10 like to do it differently."
11 We had other banks targeting to our
12 neighborhoods because redlining was the problem and
13 still is the problem. They said, "We'd like to target
14 instead to people below 80 percent of median income. We
15 said, "Okay. Chances are most of those people live in
16 our neighborhoods, so it would still have the same
17 effect."
18 But, after two years, we looked at the
19 figures. Not the same effect at all. They were making
20 lots of loans to people below 80 percent of median
21 income, but none of them were going in our neighborhood.
22 We said this isn't working, and they said, no, it isn't.
23 They went to targeting.
24 So now, eight years later, we've got
25 NationsBank telling us this is our program and you have
26 to accept this and ignoring our local people that have a
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1 different history. Maybe it works other places, it
2 doesn't work in DeMoines.
3 We had no choice but to protest the
4 merger. It is our request that you disallow any bank
5 merges without a national agreement that will assure
6 that local banks be allowed to develop working
7 relationships with the local organizations. If this
8 cannot be done, then CRA will surely die. It is
9 survived only through the determination of people like
10 us in cities all over the country. If these big mergers
11 keep going on, it will eventually be beyond our ability
12 to deal with our local problems.
13 You, as regulators, can keep this from
14 happening if you will require that bank mergers only be
15 allowed with national CRA agreements that will allow and
16 honor local agreements.
17 MS. REICHER: What she said.
18 My name is Leslie Reicher, and I am the
19 second representative of the Pittsburgh Community
20 Reinvestment Group. As I traveled here to San
21 Francisco, I was wondering whether it was worth it given
22 that these institutions have really a very minuscule
23 presence in our city.
24 Because it was clearly quite an expense
25 for us to come here both for PCRG, the organization I'm
26 representing, and my own community organization that I
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1 work for.
2 But, based on our research, at PCRG and
3 the very limited experience we've had with Nations and
4 Bank of America and what I've heard here today, I'm glad
5 I'm here, mostly to voice our opposition.
6 I was trying to place myself in your
7 position, because my head is kind of swimming, I'm
8 hearing all these stories about what Nations isn't doing
9 and I'm hearing stories about some of the wonderful
10 things they are doing.
11 But, as Brenda said, that's charity,
12 that's relationship building and it's not lending. I
13 think what we're here to talk about today is lending.
14 We're talking about the regular course of doing
15 business. And I think we need more assurances than some
16 individual relationship to have that assurance going
17 forward in this age of mega mergers and acquisitions.
18 So I'm really concerned about it.
19 I know today the impact on such an
20 acquisition in a San Francisco, in cities, in Illinois,
21 in Iowa and all the places we've heard of today, I have
22 no doubt that tomorrow it's going to be Pittsburgh.
23 We've already experienced an acquisition with National
24 Citibank buying one of our local Pittsburgh banks. We
25 were very worried about it because the -- we were not
26 going to have the home office, the corporate office
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1 being in Pittsburgh.
2 And they resisted an agreement and flew us
3 up to Cleveland to talk us out of insisting on the
4 agreement, but eventually understood, because we're
5 going to be gone tomorrow, those bankers are going to be
6 gone tomorrow and we'll have nothing left.
7 We cannot go just on good will. They say,
8 "Trust us," and we say, "We don't know you, we can't
9 trust you." Who we trust are the people we have been
10 working with and they may not be here tomorrow, so we
11 need some way institutionalizing this.
12 I have prepared remarks and I will give
13 them to you. I mean, this booklet here is our protest
14 and it's probably bigger than the number of applications
15 received in Pittsburgh from either Nations or
16 BankAmerica.
17 We have mortgage corporation subsidiaries
18 in Pittsburgh for both banks. They do very little
19 lending, hardly any lending, like two loans to African
20 Americans, two loans in the whole city of Pittsburgh in
21 1996, none in 1997 for NationsBank.
22 BankAmerica had a little bit more
23 activity. I'm not going to bore you with that. It's in
24 here, our letters of protest are in here from 13
25 organizations in addition to Pittsburgh Community
26 Reinvestment Group, which is a 29-member coalition in
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1 the city.
2 So I would just would like to say that I
3 really hope that you will postpone your decision until
4 some specific agreements with the local -- with local
5 cities can be worked out.
6 I hope that you, as a regulator, can
7 develop a system that kind of matches this age of
8 national mergers. We need a better system to have
9 these hearings be more accessible to people.
10 It's really -- I mean, I can't get over
11 how many people actually were able to come.
12 So, thank you for having it and I hope
13 you have more and I hope you have them in more
14 places.
15 MS. SMITH: Thank you.
16 MR. GOODWIN: My name is Gordon Goodwin.
17 I am with Rural Development and Finance Corporation.
18 I'll read a short, prepared statement.
19 Rural Development and Finance Corporation
20 is a development finance intermediary headquartered in
21 San Antonio, Texas. We provide technical assistance and
22 loans to entrepreneurs and community development
23 corporations that are building enterprises, affordable
24 housing and community facilities in our countries most
25 severely poverty impacted areas.
26 To date we have invested over $12 million
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1 in 21 states, created or retained 2500 jobs and financed
2 the construction of over 500 units of affordable
3 housing. With more people working primarily along the
4 Texas/Mexico border. In the past we've worked in
5 California as well as in North Carolina, Florida, New
6 Mexico.
7 Like other financial intermediaries, we
8 rely on partnerships with financial institutions such as
9 banks, corporations, religious orders and foundations to
10 make the low market rate investments in our loan fund so
11 that we can obtain flexible, affordable capital that we
12 can re-lend.
13 Because a large part of our work is
14 providing problem-solving assistance to rural
15 entrepreneurs and housers, we turn to these same sources
16 to underwrite some portion of our cost to provide that
17 help.
18 Bank of America has been an important
19 partner with us in doing our work and the work in the
20 development field at large in general, and has been
21 important as a grantor and as an investor. It's the
22 only large-scale bank that has institutionalized its
23 community development lending mission by capitalizing a
24 separate institution, the Bank of America Community
25 Development Bank.
26 Over the last five years, the development
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1 bank has financed some $2 billion of multi-family
2 housing and small business development in low income
3 communities. It has also made well over $500 million in
4 equity investments.
5 In 1997, Bank of America committed to
6 invest $500 million over the next two-and-a-half
7 years to rural communities. This investment
8 commitment is backed with a pledge to make $5 million in
9 grants to support innovative and meaningful
10 partnerships. This is the most significant commitment
11 ever made to the credit needed of rural areas by a
12 banking institution.
13 This level of commitment is critical to
14 our work, and we urge both Bank of America and
15 NationsBank to uphold and even to expand this commitment
16 to match the breadth and scope of the new market area
17 the merger may encompass.
18 Thank you.
19 MS. SMITH: Thank you. Questions?
20 MS. REICHER: Ah, come on.
21 MS. SMITH: Thank you very much.
22 MR. FRIERSON: I would like to thank you
23 all for the panelists, to thank you for coming the
24 distances. Your information has been very helpful
25 and useful, and we will consider it carefully.
26 We will also consider it carefully.
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1 Thank you very much.
2 (Pause in proceedings.)