Public Meeting Regarding NationsBank and BankAmerica - Panel 20
Friday, July 10, 1998
Transcript of Panel Twenty
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14 MS. SMITH: We'll go ahead and start with
15 Ms. Supinski substituting for Mr. Lee.
16 MS. SUPINSKI: Yes, thank you.
17 Good morning, Ms. Smith and members of the
18 panel. This is the testimony of Matthew Lee, Executive
19 Director of Inner City Press Community on the Move and
20 of the Inner City Public Interest Law Center, together
21 known as ICP, which the California Reinvestment
22 Committee has been kind enough to present.
23 ICP on May 6th filed a 54-page protest to
24 this application along with the Black Citizen for
25 Justice Law and Order of Dallas, Texas and the New
26 Mexico Alliance, two of its whose members, Gilbert
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1 Sanchez and Robert Wells, you heard from yesterday.
2 We are opposed to this proposed merger
3 primarily due to NationsBank's continued predatory and
4 discriminatory practices through its finance companies,
5 NationsCredit and EquiCredit, and due to the
6 anti-competitive and branch-closing effects the proposed
7 merger would have in New Mexico and in Dallas, Texas.
8 NationsBank's ill-defined community
9 reinvestment pledge does nothing to address these
10 issues. In fact, as explained in a moment,
11 NationsBank's failure to live up to its commitment with
12 regard to NationsCredit, calls into question whether the
13 board could rely on NationsBank's press release pledge.
14 In 1996, when NationsBank announced its
15 proposal to acquire Boatmen's Bank shares, including its
16 subsidiary Sunwest, the larger bank in New Mexico, ICP
17 and the New Mexico Alliance filed comments with the
18 Federal Reserve Board. We critiqued the lending of
19 NationsBank and its higher than normal interest rate
20 finance company, NationsCredit, and documented that
21 NationsBank was referring applicants who were
22 disproportionately African Americans and Hispanics from
23 its banks to NationsCredit which offers higher than
24 normal interest rate credit, but that NationsCredit had
25 no policy or program to refer up to NationsBank
26 applicants who were entitled to normal interest rate
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1 credit.
2 We showed that NationsBank has been closing
3 branches in low-income communities of color and has been
4 opening NationsCredit offices in these communities.
5 The board has refused to conduct an
6 examination of NationsCredit but did ask NationsBank how
7 many lawsuits were pending against NationsCredit.
8 NationsBank submitted a skeletal list of 119 lawsuits
9 then pending against NationsCredit. We showed that the
10 list was incomplete, but, even if it were not, it would
11 seem that volume of litigation would trigger some
12 examination by the Federal Reserve.
13 During that protest, NationsBank CRA officer
14 was quoted in U.S. News and World Report to the effect
15 that NationsCredit would institute a practice referring
16 applicants who were entitled to normal interest rate
17 loans up to NationsBank banks from NationsCredit and
18 that this would be done by February of 1997.
19 NationsBank refused thereafter to provide
20 information about NationsCredit or this promise to
21 change. In January of this year, we were informed by
22 the Office of the Comptroller of the Currency that
23 NationsCredit still has not instituted any referral-up
24 program. NationsBank has since confirmed this,
25 proffering as its excuse that there has been a lot of
26 turnover at NationsCredit.
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1 Most recently, the Federal Reserve itself
2 asked NationsBank to describe all current and planned
3 referral programs between its banks, mortgage company
4 and finance companies. NationsBank's response has been
5 that everything is in flux.
6 Simply put, NationsBank's 350 billion
7 community reinvestment commitment is not credible since
8 NationsBank has not lived up to its previous
9 commitments. It is also important to note that
10 NationsBank has refused to make any more specific
11 geographic commitments even at the state, much less the
12 county, level. But the key point to us is that
13 NationsBank promises of future improvements do not in
14 fact take place.
15 After NationsBank bought Boatmen's and
16 Sunwest, NationsBank quickly closed eight branches in
17 New Mexico, even though there was not overlap between
18 NationsBank and Sunwest.
19 The Federal Reserve has said in its
20 NationsBank/Boatmen's conditional approval order that it
21 would monitor NationsBank's branch closing, but this has
22 had little to no effect.
23 More recently, after gaining approval to
24 acquire Barnett Banks of Florida, NationsBank has moved
25 to close over 200 branches in Florida.
26 In this proposal NationsBank and Bank of
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1 America overlap in Mexico -- in New Mexico and in
2 Dallas. NationsBank has refused to disclose how many or
3 which branches it would close. It has also put forth a
4 laughable low divestiture proposal that would allow them
5 to predominate and raise prices in Dallas and a number
6 of New Mexico markets.
7 NationsBank has apparently paid numerous
8 group to come and testify in its support at this public
9 meeting, but the facts, as they say, are the facts.
10 NationsBank said it would institute a
11 referral-up program from NationsCredit to its banks by
12 February of 1997, and NationsBank did not do so. This
13 proposed merger would be anti-competitive in Dallas and
14 numerous New Mexico markets and NationsBank's
15 divestiture proposal is sorely insufficient.
16 NationsBank has refused to disclose what the
17 actual effects of the merger would be, including branch
18 closings.
19 There are other adverse issues including the
20 foreseeable loss of various Bank of America programs
21 ably raised by the California Reinvestment Committee and
22 others. For all reasons stated, this proposed merger
23 should be denied.
24 Thank you for your attention and we will be
25 submitting further written comments. Thank you.
26 MS. SMITH: Thank you very much.
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1 Ms. Kurudisha.
2 MS. KURUDISHA: Thank you for the opportunity
3 to testify.
4 I am Program Director of the West Contra
5 Costa Business Development Center. I'm also owner of a
6 small business called Associates for Community Change
7 and Development. In the two capacities, I have worked
8 with the West Contra Costa Community for the last nine
9 years.
10 The president, the current president of the
11 board of the West Contra Costa Business Development
12 Center is Mr. Robert Leet, who is Executive Vice
13 President of the Mechanics Bank and the chief lending
14 officer of that bank.
15 The West Contra Costa Business Development
16 Center is a result of years of effort by the West Contra
17 Costa community to work with the banking community to
18 develop an approach to economic development and
19 community development in the West Contra Costa
20 community.
21 We have worked with all of the regulatory
22 agencies and as many as 22 banks in our effort to put
23 together a community reinvestment plan for our
24 community. The years of effort have resulted in the
25 development of the West Contra Costa Business
26 Development Center as an intermediary for community
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1 development and economic development in the West Contra
2 Costa community.
3 When we look at our efforts to work with Bank
4 of America, we applaud their participation in the
5 community meetings that have been held on banking in
6 West Contra Costa. We also applaud their contribution
7 to the West Contra Costa Business Development Center
8 which has been $25,000.
9 We, however, point out that, while this has
10 supported our effort, it has not matched the request for
11 a five-year commitment on the part of the bank to the
12 community development effort of the West Contra Costa
13 Business Development Center.
14 We would like an opportunity to develop, as
15 an intermediary for our community and give the small
16 cities that we represent an opportunity to develop an
17 urban core process and strategy that allows us to
18 resolve some of the problems that are centered in the
19 low-income and moderate-income communities that we
20 represent.
21 The community bank, which is Mechanics Bank,
22 strongly endorses and calls for additional banking
23 meetings to be held in West Contra Costa where large
24 banks, like BofA, make real contributions to community
25 reinvestment.
26 When the bank sees in the inner core, urban
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1 inner core of our community, lines that extend out the
2 door of minorities who come in to do checking and other
3 banking services, and downsize their branch so that
4 those lines now extend out into the rain, we do not
5 believe that they are responding to the interests of the
6 community.
7 When they downsize their branch so that
8 merchants in the inner core cannot have change to
9 continue business, we do not view that as contributing
10 to economic development or listening to the needs of the
11 community.
12 We have had Bank of America at the table with
13 us over the last eight years and we applaud the things
14 that they have done in the large urban areas of
15 California. However, most of America is not large urban
16 areas. It is small cities that often, like West Contra
17 Costa, have urban problems to resolve that are growing.
18 We would like an opportunity to take
19 advantage of the open land that remains in our area to
20 develop small businesses that include indigenous
21 population. We call on the Federal Reserve Board to
22 develop a fair and open process for community planning
23 that includes the interest of small cities and economic
24 development and small business development.
25 MS. SMITH: Thank you very much.
26 Mr. Thompson.
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1 MR. THOMPSON: Yes. Thank you very much.
2 My name is David Thompson. I am the City of
3 Richmond Redevelopment Director.
4 Our Mayor, Rosemary Corbin gave most of the
5 testimony that I would like to give this morning, so I'm
6 not going to burden you with repeating that. A number
7 of the comments that Ms. Kurudisha has provided are also
8 my thoughts.
9 I would, though, like to comment on some of
10 the issues that I see as the Redevelopment Director with
11 regard to relationship with banking institutions
12 generally and with the Bank of America and the possible
13 merger with NationsBank and the acquisition by
14 NationsBank in terms of its impact in our community.
15 The most effective relationships that we have
16 had have been ones where we have been able to develop a
17 personal relationship working with banking officers and
18 where there is a corporate commitment to doing that and
19 to making things happen in communities. Our concern is
20 that through this merger the decision-makers are going
21 to be remote and that the products are going to be more
22 generic and are going to be more difficult to work with.
23 In many cases in our community it is going to
24 take a combination of financing to make projects work
25 including our redevelopment agency and other public
26 funding. Our needs are for revitalizing our older
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1 commercial neighborhoods.
2 We know that in many cases the bank by itself
3 cannot do that. We have to have a vehicle for sitting
4 down with somebody and saying, "This is the program that
5 we need for this community and we're prepared to do this
6 much, can you do the other?"
7 Let me say that the example that Mayor Corbin
8 noted with regard to Rubicon programs was in fact a
9 situation like that that happened with the bank. Out of
10 the Community Development Bank, it was a very aggressive
11 senior loan officer who came to the city and said,
12 "We're interested in doing business in your city," and
13 we put together a deal with Rubicon programs that
14 involved our city and involved the Bank of America.
15 Our concern, quite frankly, is that with this
16 merger we are not going to be able to have that kind of
17 relationship. So, whether it goes through or doesn't go
18 through, we want to preserve a relationship here in
19 California, particularly in Northern California, so that
20 we can continue that kind of relationship.
21 Earlier the question of the independent banks
22 and the case, this case, the Mechanics Bank, which
23 started in 1906 in Richmond, and it's role in the
24 relationship. I point out over the last -- well, from
25 1994 to 1996, they had a significant growth in their
26 deposit base from the household business sector, while,
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1 in fact, in West Contra Costa County the Bank of
2 America's deposit base declined.
3 I am concerned about that because, while the
4 community bank has ability to do certain kind of
5 lending, and, quite frankly, they're reasonably
6 effective on the small business side of things, when it
7 comes to the larger transactions, such as the Ford
8 Building, which will be a $70 million project in the
9 City of Richmond, a 500,000 square foot Ford assembly
10 building, that Mechanics Bank is not going to be able to
11 be a serious player in that kind of a project. We've
12 talked with them about it.
13 There are other real estate transactions like
14 that where it is going to be more appropriate for a
15 larger bank.
16 Our concern is, again, as this goes forward,
17 that we preserve the ability to be able to have a
18 relationship and to enter into a real process of
19 discussing West Contra Costa County's community
20 development reinvestment needs.
21 Again, I want to thank you for the
22 opportunity to present here. This is unusual and we
23 appreciate it.
24 MS. SMITH: Thank you very much. Mr. Henry.
25 MR. HENRY: Good morning. Excuse me, I've
26 got a small cold, on my way down here, by the way.
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1 Thank you once again for allowing me to come
2 before you to state the problem that we have with Bank
3 of America in our area. It's called OMI. Ocean
4 View/Merced/Ingelside District. It's in the southern
5 part of the city where most of everybody that goes
6 through there goes right through our area; however, if
7 you go down the main street over there, which is called
8 Ocean Avenue, you'll find that it also runs, Ocean
9 Avenue, runs all the way out to the ocean.
10 But, when you look at the businesses that's
11 in that corridor, you'll find that for years, years,
12 many, many years, that there was only one bank on that
13 corridor and that was Bank of America. Everything that
14 Bank of America got out of that neighborhood came from
15 that corridor.
16 Now, what I'm alluding to right here right
17 now is Bank of America up and pulled out. We contacted
18 them on many occasions to try to get them to keep that
19 branch open. Why? For the simple reason, this area is
20 an area where most of low-income families are retired.
21 We have many, many seniors that has medical problems,
22 and they closed the bank. They don't have access to a
23 bank in that area within a half a mile. That would be
24 the closest.
25 Now, in this area also, transportation is
26 fairly good, I wouldn't say excellent, but the seniors
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1 can't use the bank to get to the AMT [sic] machines.
2 That's what they left there, they left the AMT machines,
3 and they expect those people to go there and use those
4 machines. I tell you, that's not a very good idea,
5 because those machines and that bank that they left
6 there was ripped off. The machines was ripped off. So
7 it's not safe for seniors to be in that area at that
8 machine.
9 Now, I would also like to say I disagree with
10 this merger simply because the first of next year all
11 government checks will automatically be electronically
12 transmitted. Now, what does that mean to a senior
13 citizen that has to use an AMT machine? Can't speak to
14 anyone, most of them are afraid to use the machines. I
15 don't like to use them myself and I'm much younger than
16 they are.
17 I'll give you a little example of what
18 happened to me. I used AMT machine, put in the amount
19 of money that I wanted to withdraw, it went through the
20 transaction, I'm looking for my money to come out, lo
21 and behold, no money. So, it was the weekend. So what
22 happened? I had no one to talk to, had no place to go.
23 So, finally, Monday morning came around, I
24 went to the bank and I told them what happened. Well,
25 these things happen. There is no one there to talk to.
26 We need a bank in our area, we need tellers, so that the
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1 senior citizens can talk to and get service through.
2 I would only ask that this merger not be
3 accepted. Thank you.
4 MS. SMITH: Thank you very much.
5 Ms. Blosser.
6 MS. BLOSSER: Yes. I'm Regina Blosser, and
7 I'm from the Ocean View Merced Heights Neighbors in
8 Action. Ceasar and I are both members of this public
9 safety and neighborhood improvement organization in the
10 Ocean View District of San Francisco.
11 The Federal Reserve sent me a copy of the
12 Bank of America closure policy adopted by the Social
13 Policy Committee of BofA on September 14th, 1993. I
14 wish to read it to you in as much time as I am allowed
15 item by item and then tell you how we believe that the
16 BofA did not follow its own closure policy when it
17 closed our bank on Ocean Avenue.
18 Item, bit by bit, every sentence, "Bank of
19 America is committed to providing access to banking
20 services to all members." Well, obviously it's not
21 committed to providing access to banking to us, because
22 it closed our branch.
23 Number two, "Furthermore, the bank will
24 reasonably strive to minimize any negative impact on the
25 community." BofA didn't strive to minimize any negative
26 impact on our community, in fact, when we make phone
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1 calls to community development department that wrote
2 this little document, they are never returned. We call,
3 they don't call back. We leave an answer on the
4 answering machine.
5 Number three, "Review and concurrence by
6 corporate community development must be an integral part
7 of the California retail banking branch closure decision
8 process." Well, we would like to see this review
9 because we have not received any justification for
10 closing our branch through any sort of document. We
11 would like to see the review of this policy when it had
12 to do with closing our bank.
13 Number four -- again, we wish to see a review
14 of these closure recommendations.
15 Number four states, "Once a bank has been
16 identified for potential closure, a representative from
17 Corporate Community Development will review corporate
18 recommendations to be sure any negative impacts on the
19 community and its serving area are identified and
20 included in subsequent considerations." Well, we
21 certainly wrote them a lot of letters stating the
22 negative impact we knew would be created in our
23 commercial district.
24 Merchants can't make change anymore, they
25 depend on this. They have to have a secure place to put
26 their deposits. They no longer have this because the
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1 branch closed. Business has gone down. They have to
2 spend their time going to another bank by car. They
3 cannot simply walk down the street to use banking
4 services that merchants need.
5 These things you would think would have to do
6 with potential negative impacts. The decision was
7 already made to close our bank before any of these
8 impacts were considered. On and on and on.
9 I'll submit the rest to you on a point-by-
10 point basis. This is their own branch closure policy.
11 I don't know how beholden they are to follow this
12 policy. I'll tell you item by item they did not follow
13 it. You can ask anyone of our residents in the OMI if
14 they realize or know they followed this closure policy.
15 This is their own document.
16 This is a map. I put a half-mile circle
17 around every branch in San Francisco that I could find
18 listed in the phone book. You can see it's all covered
19 in green. This obviously is downtown where a lot of
20 branches are needed to serve people. This is industrial
21 district. This is residential -- this little blank spot
22 here is residential area where there are no commercial
23 corridors to locate a bank. It's hilly country with
24 sparsely located houses. All of this is green in the
25 city. This red is our neighborhood. Do you see any
26 green half-mile radius circles going to our
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1 neighborhood?
2 Now, we've been told that it's only a
3 three-minute drive to the next branch. But every other
4 neighborhood in this city is not required to make -- and
5 it's not a three-minute drive, let me tell you. It's
6 more like 15 or 20 minutes after you've found a parking
7 spot or you've been transferred to another bus to get
8 there. It is certainly not a three-minute ride to the
9 next branch.
10 Anyway, you see my point. I had to show you
11 this in color. This area is the only area that does not
12 have a green half-mile distance to the next nearest
13 branch. A lot of these overlap, lot of branches are
14 less than a half-mile in other neighborhoods, Bank of
15 America branches.
16 The yellow are what we call banker's rows.
17 There is a banker's row here, they passed resolution at
18 the planning department stating they wanted no more
19 banks on their commercial district because all they had
20 were banks and no practical places like grocery markets
21 or shoe stores, nothing but banks. And we can't even
22 find one bank. And we have tried, we have tried to find
23 Sterling.
24 The Mayor's Office of Economic Development
25 asked Sterling Bank to come to our neighborhood. When
26 they met with Bank of America representatives to take
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1 over the old bank building and to use as a Sterling
2 Bank, Bank of America refused to remove its ATMs. So
3 Sterling did not want to locate there.
4 We have tried looking for, you know,
5 consumers unions, credit unions, that might expand their
6 field of membership. But you might know that the
7 American Bankers Association brought a lawsuit against
8 credit unions and presently credit unions cannot expand
9 its fields of membership to neighborhoods like ours that
10 need some kind of service, banking service.
11 Presently there is a bill in the house, and
12 perhaps it will be passed, and we will be able to find a
13 credit union, but right now we're stymied. We want a
14 bank and we can't get one.
15 Numerous non-profits have come to you to
16 state their satisfaction with these bank's financing of
17 their programs. This is fine, but the only thing our
18 neighbors and merchants want is a bank. We feel no
19 desire for charitable giving.
20 That's what we want, we want to take care of
21 ourselves and we want to be independent, self-sufficient
22 and prosperous, and we need a bank. That has been
23 denied us, and our attempts to get a bank have been
24 sabotaged by the Bank of America by not allowing ATMs
25 for a new bank, by the Bankers Association by not
26 allowing us to pursue a credit union as an alternative.
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1 We think that we really must talk about this
2 merger and how they comply with the Community
3 Reinvestment Act.
4 MS. SMITH: Thank you very much. Please do
5 submit your complete statement and your map that you
6 have outlined in color as well.
7 Do you have questions?
8 MR. FRIERSON: Mr. Thompson, could I ask you,
9 do you work with both in-state and out-of-state banks as
10 a redevelopment director.
11 MR. THOMPSON: We work primarily with
12 in-state banks.
13 MR. FRIERSON: Could you just elaborate a
14 little bit, contrast your experiences working with
15 in-state versus out of state banks?
16 MS. SMITH: Would you move the mike closer to
17 you?
18 MR. THOMPSON: Sure. We haven't had much
19 experience to out-of-state banks. They don't market to
20 us. Where we do run into -- where we do work with them
21 is a result generally of a developer bringing the
22 out-of-state financing in toW. Sometimes it is banks,
23 sometimes it's insurance companies and other financial
24 institutions. But, for the most part, we rely on
25 working with the institutions that are here that are
26 headquartered here and with whom we can develop
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1 relationships and with whom our non-profits develop
2 working relationships.
3 I have to tell you a brief story. I was
4 working with Bridge Housing on a housing development
5 project, and we were negotiating and I said, "Well,
6 what's in your commitment letter?" And they said, "What
7 commitment letter? We just call them up and tell them
8 what we need." Now, it would be nice for all of us to
9 have that kind of relationship and Bridge is a very
10 large and experienced housing development group.
11 But what it said was that the corporate
12 relationship that existed between Bridge Housing and
13 that financial institution, it's the other big one in
14 town, was such that they were able to do things to make
15 projects move and get done that you wouldn't be able to
16 do if you didn't have those kinds of senior executive
17 kinds of relationships that are both formal and
18 informal.
19 MS. SMITH: Thank you very much for coming
20 this morning and do submit your complete statements for
21 the record. You have until next Friday to do so, but
22 the sooner you can do it the better. Thank you.