Public Meeting Regarding NationsBank and BankAmerica - Panel 23
Friday, July 10, 1998
Transcript of Panel Twenty-Three
508
18 MS. SMITH: We'll first have David Noguera
19 speaking for Mayor Elihu Harris, Mayor of Oakland.
20 MR. NOGUERA: Thank you. On behalf of the Mayor
21 of Oakland. As the mayor of a city where the vast
22 majority of the population consists of families of color
23 and is in the shadow of the largest financial institution
24 in California, I would like to express some of my concerns
25 regarding the merger with an institution that will become
26 an absentee landlord for all of Oakland.
.
509
1 Community reinvestment and economic redevelopment
2 must be more than a national pledge. To be meaningful,
3 there must be specifics for each affected community,
4 particularly communities that have historically been
5 underserved or redlined such as Oakland.
6 In California today, many financial institutions
7 have made specific pledges and set specific goals for
8 minorities and women for lending, for contracts and for
9 charitable contributions. I am concerned that NationsBank
10 is unwilling to do so.
11 Historically, our city and minority communities,
12 in particular, have been the object of general promises
13 that have failed to produce results. I'm also concerned
14 that the prestigious local community groups as well as
15 national minority organizations that know the work of
16 NationsBank, such as the National Black Chamber of
17 Commerce, the National Black Business Council and the
18 Asian Business Association and the Latin Business
19 Association, have all criticized this proposed measure due
20 to lack of specificity for underserved communities. I am
21 also concerned that, while other institutions have
22 committed to diversity goals that reflect our state's
23 extraordinary diversity, NationsBank has stated that it
24 will not set any goals or release any data on their
25 achievements.
26 Until the chairman of BofA and NationsBank put in
.
510
1 writing the type of specifics that their competitors have
2 produced regarding minorities and underserved communities,
3 I believe that it would be best to either deny the merger
4 or, in the alternative, impose such a condition of
5 approval of the merger. Thank you.
6 MS. SMITH: Thank you very much. Mr. Mosher.
7 MR. MOSHER: Thank you. Good morning, my name is
8 Mark Mosher, I'm Executive Director of the Committee on
9 Jobs, a coalition of 33 of San Francisco's largest private
10 sector employers.
11 Our organization focuses on public policy issues
12 affecting the city's economic vitality and quality of
13 life. During its eight-year history, Jobs has organized
14 corporate community involvement in a few key areas,
15 including major youth hiring and welfare-to-work
16 initiatives. It is in this context that I would like to
17 address the proposed merger and what we believe to be Bank
18 of America's post-merger commitment to San Francisco.
19 In every initiative Committee on Jobs has
20 undertaken, whether it is our effort to replace cuts in
21 the federal Summer Youth Employment Training Program or
22 the organization of hundreds of business volunteers
23 through Christmas in April, Bank of America has taken a
24 leadership role. The bank has demonstrated to us that
25 this leadership role will not decline in the wake of a
26 merger.
.
511
1 When the local business community came together
2 to address the challenge of welfare-to-work, Bank of
3 America led the way. Last year, the bank contributed
4 $250,000 to found San Francisco Works, an effort to help
5 transition 2,000 public assistance recipients into
6 self-sufficiency over the next three years. Bank of
7 America's involvement in this effort transcends checkbook
8 philanthropy. Bank Chairman Dave Coulter has personally
9 involved himself in the organization, participating in
10 board meetings, loaning his staff to counsel San Francisco
11 Works in current training methods and committing
12 employment opportunities to program graduates. The bank
13 has communicated to us that its commitment in each of
14 these areas will not decline after the merger.
15 I value Bank of America's role in San Francisco,
16 and I was surprised and disappointed when I heard the
17 headquarters would be moved to Charlotte. The move is
18 definitely a blow to the city's prestige. However, in
19 practical terms, David Coulter and half of the merged
20 bank's executive management team will remain in
21 San Francisco, several key operations will remain
22 headquartered in San Francisco, and the deep spirit of
23 community involvement and fostered by the bank's current
24 leadership will continue.
25 We urge approval of the merger. Thank you.
26 MS. SMITH: Ms. Duncan.
.
512
1 MS. DUNCAN: Yes, I am Emily Duncan, the
2 Executive Director of the Snohomish County Private
3 Industry Council. Snohomish County is located in
4 Washington State and it is just north of King County where
5 Seattle is.
6 We are a private industry council and we are the
7 managing partner for the Job Training Partnership Act
8 which we administer in Snohomish County. This law is
9 enacted to provide training funds for low-income youth and
10 adults and dislocated workers, but it's not the Job
11 Training Partnership Act that I want to talk about today,
12 it's Down Home Washington. Because that's the other half
13 of us.
14 Down Home Washington started ten and a half years
15 ago as what has now come to be known as Microenterprise
16 Program. In those days, we didn't know the name. What we
17 wanted to do was provide entrepreneurial training for
18 low-income women, half of whom were welfare recipients.
19 And we did do this. What is remarkable about this
20 particular experiment is that, although we had the
21 operating funds through our own Job Training Partnership
22 Act moneys, we didn't have a loan fund. And in those
23 days, no one, to speak of, had heard of Microenterprise
24 and I don't even know if the word had been invented yet.
25 But Sea-First, which is Bank of America in
26 Washington State, stepped up to the plate and they
.
513
1 provided the first dollars for that initial loan fund. It
2 wasn't a lot of money but it was incredibly important
3 because they were out front and in the leadership position
4 and it ended up leveraging many, many times, more than 15
5 times the amount of money that they contributed. So they
6 have been very responsive. And they are concerned about
7 the -- their position in the community and they try to
8 fill the gaps where those exist and where they understand
9 them.
10 One of the most incredible things about this
11 first program is that (unintelligible) came to all three
12 of the graduations over a three year period. She didn't
13 have to do that but I know that she enjoyed it as much as
14 I did.
15 We are very proud to be one of the grantees of
16 Sea-First/Bank of America in Washington State. Sea-First
17 also recognized the need for funding in rural areas and,
18 in fact, Bank of America now has a major rural area
19 initiative.
20 We support this merger. We do believe in the
21 commitment of the $350 billion over the period of time.
22 We do believe that greater resources will be made
23 available through it. We also know that NationsBank is
24 very supportive of the kinds of things that
25 Microenterprise is involved in. And without the support
26 of organizations like Sea-First, we would not be in the
.
514
1 position we are today where we have about $4 million
2 available in loan funds that cover 16 counties in the
3 State of Washington. From an initial operating budget of
4 $29,000, we now have an operating budget of $375,000, and
5 that growth has been fueled by support from Sea-First/Bank
6 of America.
7 We do have a concern and that concern is in
8 Washington State, there are no banks headquartered in
9 Washington State of any size any longer. And our concern
10 is that we will be almost invisible, and so along with
11 other groups from the Rural 2,000 Committee, we support a
12 fair allocation of resources by region and also by rural
13 and urban and other designations. Thank you very much.
14 MS. SMITH: Thank you. Ms. Singla.
15 MS. SINGLA: Good morning, and thank you for the
16 opportunity to testify regarding the proposed merger
17 between NationsBank and Bank of America. My name is
18 Indira Singla and I'm the President and CEO of Automation
19 M.H, Incorporated of Dallas, Texas.
20 We are a small woman-owned computer systems
21 integration company based in Dallas. I was also a
22 delegate from North Texas to the White House conference on
23 small business in 1995. As a small business owner, I take
24 deep interest in the affairs that affect all small
25 businesses, including minority and women-owned businesses.
26 Our relationship with NationsBank is a three-fold
.
515
1 relationship. First, as a business client, our banking
2 relationship with NationsBank goes back to over ten years.
3 This relationship is based on the commitment that
4 NationsBank has for small business development. I have
5 found them very sensitive to the needs of small business
6 community. NationsBank has supported us in times of need
7 through loans, lines of credit, and other services
8 numerous times. Over the years, we have come to depend
9 upon NationsBank and their employees for exceptional
10 quality service and commitment to assist small businesses.
11 The second relationship we have with NationsBank
12 is a vendor relationship. NationsBank has been our
13 customer for over three years. During this period, we
14 have supplied them with mid-range units, hardware,
15 software, integration consulting and network services. We
16 have worked with their Asset Management Interest
17 Department, Capital Markets Department and the Strategic
18 Technologies Group. Most recently, we provided service
19 for their E-mail capabilities between NationsBank and Bank
20 of America.
21 Over the years, NationsBank -- as a small
22 business owner knows, that all of this will not be
23 possible if NationsBank did not have a commitment to give
24 an opportunity to small business like ours to participate
25 in such opportunities. They have demonstrated this
26 commitment by participating in many, many small business
.
516
1 development activities in Dallas.
2 Thirdly, as NationsBank, as it applies to the
3 community relationship, as a citizen of Dallas, I have
4 observed NationsBank to play a leading role being the
5 community investment expert in the financial services
6 industry through the delivery of special programs for low-
7 and moderate-income individuals and communities.
8 NationsBank is an active participate in the South Dallas
9 Economic Development Program. I see this merger bringing
10 more opportunities to thousands of small businesses across
11 the nation just like Automation Image. So I support this
12 merger. Thank you.
13 MS. SMITH: Thank you very much for your
14 testimony. Next, we have Mr. Esquibel.
15 MR. ESQUIBEL: Good morning. My name is Eduardo
16 Esquibel, I am the Executive Director of United Housing
17 and Educational Development Corporation. United Housing
18 is a nonprofit 501C3 organization formed in 1990 in the
19 State of Arizona that provides affordable housing in the
20 rural areas of Pima and Pinal Counties. United Housing is
21 currently under contract with the United States Department
22 of Agriculture, Rural Housing Services, to operate and
23 provide technical assistance under the 523 self-help
24 program. This program targets families in need of safe,
25 decent and affordable homes. Families qualify for a
26 housing loan from Rural Development called a 502 direct
.
517
1 loan program based on their income and need. The families
2 income cannot exceed 80 percent of the area's median
3 income. Subsidy is awarded to families based on family
4 size and income.
5 These families are considered low and very low
6 based on income standards. United Housing is pleased to
7 be a partner with Bank of America's Community Development
8 Bank. Bank of America has already established an
9 effective partnership which has enabled local self-help
10 housing organizations like ours to expand the opportunity
11 for self-help families to achieve homeownership.
12 Bank of America in 1997 established its Rural
13 2,000 Initiative which is addressing rural concerns of
14 reaching out to markets that either no service is
15 available and/or is underserved. Bank of America's Rural
16 2,000 Initiative will make available funds to provide
17 mortgage loans by partnering with the Department of
18 Agriculture as well as with Fannie Mae to start the 502
19 direct blended loan program which is being piloted through
20 the Rural 2,000 Initiative. The 502 direct loan program
21 current funding level is $1 billion this fiscal year. The
22 rural initiative is assisting nonprofit organizations with
23 lines of credit for construction loans and infrastructure
24 loans that will provide critical resources to facilitate
25 development of building sites for low-income families who
26 are willing to commit the time and energy to build their
.
518
1 homes for themselves and their neighborhoods.
2 United Housing has demonstrated success in the
3 development of self-help housing. In fact, since 1990,
4 United Housing has assisted 102 families in the successful
5 construction of their homes through the mutual self-help
6 program. The State of Arizona is currently ranked No. 2
7 in the United States for providing self-help homeownership
8 under the Department of Agriculture's national self-help
9 program. United Housing was nationally recognized in 1996
10 by the Fannie Mae Foundation as a recipient of the Maxwell
11 Award of Excellence for the production of low-income
12 housing. At the same time there are many families who are
13 waiting for the opportunity to join with their neighbors
14 to build better homes for themselves and their children.
15 One of the continuing obstacles we face is the difficulty
16 of acquiring affordable building sites. Bank of America
17 funds through the Community Development Bank has assisted
18 United Housing in the development of suitable building
19 sites.
20 The opportunity of this merger can provide
21 greater resources to nonprofits like ourselves in
22 partnering with the federal resource dollars that have
23 been available in the past to operate programs such as the
24 self-help program. The Bank of America/NationsBank $350
25 billion commitment to provide funding resources, as I have
26 discussed earlier, will have an impact on rural area
.
519
1 markets that have been underserved and misunderstood for
2 years.
3 Bank of America has a proven track record in
4 effectively managing the Community Development Bank by
5 providing funds which has created homeownership
6 opportunities for hard working low-income families within
7 our service area and throughout rural America. United
8 Housing supports the merger between Bank of America and
9 NationsBank.
10 Thank you for the opportunity to speak on behalf
11 of the families that we served and United Housing. Thank
12 you.
13 MS. SMITH: Thank you very much. Mr. Price
14 MR. PRICE: Thank you very much. Good morning.
15 My name is Al Price, I'm from Beaumont, Texas, I'm a
16 retired captain for American Airlines, and for the past 21
17 and a half years, I've been a member of the Texas House of
18 Representatives. Today I represent the Southeast Texas
19 Community Development Corporation, Incorporated, SETCDC
20 which I serve as president.
21 SETCDC is certified as a CHDO by the Texas
22 Department of Housing and Community Affairs to serve rural
23 Texas and certified as a CHDO by the Cities of Beaumont,
24 Port Arthur and Orange.
25 In the past five years, SETCDC has completed new
26 construction and rehab in excess of $2.2 million. We
.
520
1 anticipate construction of 250 new homes and the rehab of
2 over 100 in the next three years. As we expect to also
3 expand into rural Texas.
4 Some eight years ago, when we were reviewing the
5 lending practices of banks in our community, I met Ms.
6 Cathy Bessant of NationsBank, she came to Beaumont to work
7 with us to talk about achieving the aims of the Community
8 Reinvestment Act. She was very cooperative and I'm very
9 pleased to know that she will be involved in this great
10 effort.
11 Our organization has developed a business
12 relationship with NationsBank which includes the
13 arrangement of permanent financing of loans for our
14 homeowners. In this manner, we've been successful in
15 addressing the housing and banking needs of a clientele
16 that is traditionally below the regular commercial banking
17 floor. Through our Homebuyer Education Program, we work
18 with persons who are currently renters. We inform them,
19 encourage them, cajole them, if necessary, spurring them
20 to dare achieve the dream of homeownership.
21 Virtually every one of our clients utter in
22 disbelief at closing, "I never thought I'd ever own my own
23 home." These are new homeowners. These are first-time
24 home buyers, these are new mortgages in our community,
25 this is new money being generated, this is private
26 enterprise doing what it can do best and much better than
.
521
1 the government. This is removing people from the public
2 dole. This is putting housing and economic development in
3 the private sector without dependency on public funds.
4 Upon learning of the proposal of NationsBank to
5 make $350 billion available to address the needs of
6 low-income and rural areas, I contacted NationsBank to
7 discuss ways that we and they could partner with local
8 officials and community leaders to plan and execute
9 locally conceived programs that would benefit the
10 community while concurrently achieving the goals of
11 NationsBank and SETCDC. This $350 billion infusion
12 represents a pool of resources that will allow communities
13 to do housing and economic development on a scale that
14 will be both trendsetting and transforming. And if done
15 correctly, it will allow a level of efficiency that can
16 significantly stretch those dollars.
17 I've submitted a proposal to NationsBank to
18 establish a pilot program in a small county in southeast
19 Texas. This proposal, which could be quickly implemented,
20 calls for our convening the county commissioners plus the
21 mayors and council members of each city with a population
22 of 10,000 family -- population in that county, along with
23 the officials of HUD, the State of Texas, local nonprofit
24 groups and the private sector for the purpose of assisting
25 local communities in the creation of a plan for housing
26 and economic development.
.
522
1 Such a procedure could be replicated anywhere and
2 at will. Through SETCDC and other nonprofits, NationsBank
3 will then be able to extend its financial tentacles into
4 hamlets that are presently inaccessible, thereby
5 transforming old communities.
6 Homeownership is the cornerstone of safe,
7 desirable neighborhoods and, therefore, is essential to
8 any plan to revitalize communities. People who own their
9 own homes care about their streets, their property values
10 and their schools. They generate business, they pay
11 taxes, and more often than not, they vote. By providing
12 safe, sanitary desirable homes to low- to moderate-income
13 families, CHDO will work to fend off the renters'
14 mentality with this emphasis on dependency, consumership
15 and apathy and replace this renters' mentality with a
16 homeowners' mentality with this emphasis on independence,
17 productivity and involvement.
18 Ladies and gentlemen, because I'm so pleased to
19 see this expression of corporate responsibility and
20 goodwill and because I view this as a definitive measure
21 to put affordable housing and community development firmly
22 into the private sector and away from dependency on
23 government handouts. I'm very pleased to support this
24 merger. Thank you.
25 MS. SMITH: Thank you very much. Ken, you have a
26 question?
.
523
1 MR. BINNING: I would like to ask Mr. Mosher a
2 question, please. We heard a number of speakers express
3 concern that support and understanding for California
4 needs would fall off when the headquarters is moved to
5 North Carolina. And I believe you stated that you and
6 your organization have been convinced by BofA that that
7 won't happen and I was just curious if you could elaborate
8 a little on what types of information or assurances from
9 them have given you that confidence?
10 MR. MOSHER: I have to admit that my experience
11 is very parochial in that my organization's jurisdiction
12 is that of San Francisco. I happen to know the chairman
13 of Bank of America through my organization and through a
14 lot of the community initiatives that we sponsor. And, if
15 anything, in the wake of the merger announcement, I think
16 we've seen really expanded commitment to some of the
17 programs that we've started, such as San Francisco Works,
18 the welfare-to-work initiative, and we've seen that in the
19 form of really a commitment that has gone from at the
20 outset a financial commitment to the program, what has
21 turned into, in some cases, senior executives of the bank
22 coming out and expressing an interest in helping local
23 nonprofit organizations do a better job of training people
24 coming off of public assistance to what I would
25 characterize as really up-to-the-minute specifications for
26 jobs that are available in the banking industry.
.
524
1 So what we've seen is -- I mean, first of all, a
2 commitment to see this program through to whatever
3 conclusion, you know, its board of directors decides it
4 wants to reach. But also the bank giving more than
5 dollars sending senior executives to, in effect, go out
6 and serve as consultants to some nonprofits that are doing
7 job training in an effort to try and get public assistance
8 recipients trained for jobs in this particular bank. And
9 the commitment that has been made is that they not only
10 want to make a financial commitment and a commitment of
11 expertise, that they want to integrate former public
12 assistance recipients into the bank post-merger.
13 MR. MENDELL: Thank you.
14 MS. SMITH: Mr. Price, you used the term that
15 sounded like CHDO and you may have explained what it was
16 earlier but I missed it.
17 MR. PRICE: I'm sorry, that's an acronym for
18 Community Housing Development Organization.
19 MS. SMITH: So CHDO.
20 MR. PRICE: CHDO. Some bureaucrat thought that
21 up.
22 MS. SMITH: Do you have any questions? Well,
23 thank you very much, we appreciate your coming this
24 morning to talk to us. And if you have any additional
25 comments that you want to submit for the record, you have
26 until next Friday but not later than 5:00 o'clock eastern
.
525
1 daylight time.