Public Meeting Regarding First Chicago and Banc One
Thursday, August 13, 1998
Transcript of Panel Three
15 MR. DAVIS: Good morning. I'm Denver City
16 Councilman Hiawatha Davis. I represent Denver's
17 City Council District Number 8, a predominantly low
18 to moderate income and minority community.
19 AUDIENCE MEMBER: Can hardly hear you.
20 MR. DAVIS: Is that better? Let me start all
21 over.
22 I'm the Denver City Councilman Hiawatha
23 Davis. I represent Denver's City Council Number 8,
24 a predominantly low to moderate income district.
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1 This council district is in the city
2 center, and it is being impacted by dramatic
3 economic surge and a population increase that has
4 contributed to increasing rents and virtually loss
5 of low to moderate income house choices in the
6 city.
7 As rents increase, moderate income
8 families would do better if they could purchase a
9 home before they are completely priced out of this
10 city's housing market. Rental opportunities and
11 home ownership opportunities are shrinking to the
12 point of crisis.
13 Yes, Denver is in the midst of an upscale
14 housing boom with downtown loft projects and middle
15 income housing developments springing up all over
16 the city.
17 Denver is also in the midst of its worst
18 crisis in terms of affordable, low and moderately
19 priced housing.
20 There is very little capital being made
21 available for low and moderate income home buyers,
22 and not much being made available to non-profit
23 developers of low and moderately priced housing.
24 If trends continue, this crisis will only get
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1 worse.
2 I'm here today to ask for your help in
3 getting Banc One to live up to the principles
4 articulated in the Community Reinvestment Act as it
5 pertains to Denver.
6 Prior to the close of initial comments
7 on this merger, I was joined by 10 of my 13
8 colleagues on City Council, Denver's Congresswoman,
9 three Colorado State representatives and a State
10 Senator, all of whom were concerned about
11 Banc One's discriminatory lending practices toward
12 minorities especially in the areas of home
13 mortgages.
14 We all requested an extension to the
15 comment period, which we thank the Federal Reserve
16 Board for granting, and requested a public hearing
17 in Denver.
18 While we are disappointed a hearing in
19 Denver could not be accommodated, I'm honored to be
20 here today to testify on the merger between
21 Banc One and First Chicago.
22 This merger is of no small matter to my
23 community and constituents. The new entity will be
24 the biggest bank in between the Appalachians and
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1 the Rockies serving millions of consumers who will
2 be directly affected by the way it does business.
3 And if the way it is conducting its
4 business currently is any guide, Banc One needs to
5 significantly change its approach to lower income
6 and minority communities.
7 Its record of providing mortgage financing
8 in Denver has been appalling. In 1995, Banc One
9 made 12 mortgage loans to African Americans and
10 Latinos. In 1996, it made none. It took no
11 applications from Latinos or African Americans in
12 1996, either.
13 As I mentioned earlier, I represent a
14 predominantly minority district. I have plenty of
15 constituents struggling with high rent, struggling
16 to get ahead, who want to achieve the American
17 dream of becoming home owners, but that dream won't
18 be achieved with any help from Banc One.
19 They could not find a single minority in
20 the city of Denver in 1996 to even take an
21 application for a mortgage from.
22 Something is wrong. And unless Banc One
23 makes some commitments to change this record, when
24 my constituents ask me where to go in terms of
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1 their banking, I won't be able to say Banc One.
2 This lack of service to the minority
3 community in Denver is outrageous. Latinos make up
4 23 percent of the population in Denver and African
5 Americans account for 12.8 percent of the
6 population. To ignore over one out of three
7 consumers in the Denver area is unconscionable.
8 Access to credit is essential to breaking
9 the cycle of poverty. Home ownership is the best
10 route to building wealth and achieving the American
11 dream.
12 One of the most important measurements of
13 an institution's commitment to move American
14 families to self-sufficiency and economic stability
15 is the entrance into home ownership.
16 Renters have greater difficulty
17 accumulating and maintaining wealth than home
18 owners.
19 Particularly for African Americans, home
20 ownership is a bellwether for wealth. According to
21 the Department of Housing and Urban Development,
22 African American renters have a net worth of $500
23 on average, while African American home owners have
24 a net worth of more than $48,000.
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1 Banc One's failure to provide this needed
2 credit demonstrates its disregard for Denver's
3 minority communities and consumers.
4 The vast bulk of Banc One's mortgages went
5 to the wealthiest and the whitest Denver
6 neighborhoods. 42 percent of its mortgages were
7 made in census tracts where the population was more
8 than 90 percent white.
9 An additional 41 percent of its home
10 purchase mortgages were made to neighborhoods where
11 whites made up between 75 and 90 percent of the
12 population.
13 Only one of its loans under two percent
14 went to a census track where minorities were more
15 than half the population in 1996. And that loan
16 was not even made to a Latino or African American,
17 since we know that no applications were taken from
18 this population in 1996.
19 Banc One has a comparable disregard for
20 low income communities. In 1995, more than
21 one-third of those under 50 percent of the median
22 income were rejected for home mortgages, more than
23 three times the rate of Africans earning
24 120 percent of the area median income.
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1 In 1996, it took more than 80 percent
2 fewer applications from low income people. Just 4
3 or less than 7 percent of its mortgage loans went
4 to neighborhoods with 50 percent of the area median
5 income.
6 Additionally, Banc One has so far refused
7 to make a lending commitment for the Denver area.
8 It has pledged 4 billion for Chicago and 3 billion
9 for Detroit, but not one penny for Denver.
10 MS. SMITH: Mr. Davis, could you bring it to a
11 conclusion. We'll be glad to have your entire
12 statement put into the record.
13 MR. DAVIS: I have submitted 11 copies of that
14 statement to the folks where I checked in.
15 But essentially the point I'm trying to
16 make here is that Banc One still has a long way to
17 go. We think that, in other words, for them to get
18 there that this merger needs to be put on hold
19 until they're able to really establish some real
20 relationships with low-moderate income communities
21 in Denver and minority communities.
22 And I am asking you to, in fact, put this
23 merger on hold until they have been able to work
24 out and really develop some serious commitments
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1 that allow them to live up to the principle and the
2 objectives of the Community Reinvestment Act.
3 Thank you very much.
4 MS. SMITH: Thank you. Mr. Ries.
5 MR. RIES: Hello. My name is Leo Ries. I'm
6 the director of Housing and Neighborhood
7 Development for the city of Milwaukee. And I'm
8 here representing Mayor John Norquist, who sends
9 his regrets that he was not able to be here
10 personally.
11 My purpose in being here today is not to
12 really speak in favor of the merger or to protest
13 the merger, but rather to report on our experience
14 with Banc One as a corporate citizen.
15 Clearly, all banks can do a better job,
16 especially in terms of lending to low and moderate
17 income communities.
18 And clearly, the effect of this merger
19 will be different in various communities. For
20 example, unlike Indianapolis, there is very little
21 overlap in Milwaukee between First Chicago and
22 Banc One's services.
23 But having said that, I also have to say
24 that our experience with Banc One in Milwaukee has
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1 generally been very positive. And we have no
2 reason to believe that that will change after the
3 merger.
4 That didn't occur after Banc One purchased
5 Milwaukee-owned Marine Bank in 1987 and we don't
6 suspect it will happen after this merger.
7 I would like to provide a couple examples
8 which will provide a basis for assessment. First
9 of all, in 1991, Mayor Norquist, along with
10 Congressman Jerry Blejka (phonetic), called
11 together a number of local banks and community
12 agencies to talk about the problem of affordable
13 lending.
14 What grew out of that discussion was a
15 locally based coalition called NOHOM or New
16 Opportunities for Home Ownership in Milwaukee.
17 This has been a collective effort
18 involving community groups and local lenders to
19 focus on the issue of affordable lending and to
20 address -- to look at products that will meet that
21 market need and to also work with lenders to expand
22 the availability of credit.
23 Banc One was a leader in helping to form
24 this partnership and they have continued to be a
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1 very active member to this day. As a matter of
2 fact, one of their senior bank officials chaired
3 this effort for a couple of years.
4 We're currently working on an effort
5 involving the whole problem of home improvement
6 lending. And, again, Banc One is very active on
7 that task force.
8 But more significant, I think, is their
9 actual practice of lending or their actual history
10 of lending patterns in Milwaukee.
11 Annually, the office of the City
12 Comptroller prepares an analysis in which we
13 analyze the lending patterns of various financial
14 institutions in the Milwaukee area and especially
15 focus on their lending in what we've designated as
16 the local target area, which is the area that has
17 the lowest level of home ownership in the city.
18 And in the most recent report, copies of
19 which I've shared and I've left with the Board of
20 Governors, Banc One was listed as the best lender
21 in the target area of banks having assets of over
22 150 million.
23 And so I think it does demonstrate that,
24 again, clearly banks can all do a better job, but
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1 based on our analysis of other lenders in the
2 Milwaukee area, Banc One has done a better than
3 average job.
4 Banc One has also been very active in
5 various other community development efforts through
6 their CDC by investing in low income housing, tax
7 credit projects and also through their various --
8 through their Banc One Foundation.
9 And so for all of these reasons, I can --
10 I want to just say on behalf of the Mayor that we
11 have been very satisfied with their performance as
12 a corporate citizen in Milwaukee.
13 MS. SMITH: Thank you very much. Mr. Flood.
14 MR. FLOOD: Yes, good morning. My name is
15 Lawrence Flood. I'm special council to the
16 Attorney General of Illinois.
17 And I would like to preface my remarks by
18 telling you that our office has no position
19 regarding the merger, the Banc One merger.
20 We would tell the Federal Reserve Board
21 that we would cooperate with them if we were called
22 upon to provide some assistance to you here in the
23 state of Illinois.
24 Several months ago, the Office of the
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1 Attorney General was appointed receiver for the
2 now-dissolved Dixmoor Park District after a finding
3 in chancery court that the Park District was
4 totally lacking in organization and financial
5 record-keeping.
6 It was also learned that certain
7 commissioners and members of that Park District
8 Board had misappropriated certain monies received
9 from the issuance of bonds on behalf of the Park
10 District.
11 Banc One was the underwriter. And the
12 amount of the bonds issued totaled approximately
13 $700,000 over a period of several years.
14 Criminal charges were filed against
15 members of the Board. Some of those defendants
16 have pled guilty, and some of those cases are still
17 pending.
18 When our office was appointed receiver,
19 the court directed that we review processes by
20 which the bonds were issued by Banc One.
21 We have substantially reviewed documents
22 provided by Banc One and have interviewed several
23 of the bank personnel involved in the transaction.
24 Banc One has fully cooperated with us in
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1 providing documents and also making available to us
2 for interview bank personnel familiar with this
3 matter.
4 At this point in time, we have no reason
5 to believe that Banc One acted inappropriately in
6 the issuance of those bonds. And I bring that to
7 you for your information. Thank you.
8 MS. SMITH: Thank you. Mr. Smithers.
9 MR. SMITHERS: Good morning. My name is Ralph
10 Smithers, and I'm executive assistant to Greg
11 Lashutka, Mayor of Columbus.
12 I'm here today at the request of the
13 Mayor, who's travelling in Europe and unable to
14 present his testimony in person.
15 As you know, the merger of Banc One and
16 First Chicago is a bittersweet development for the
17 people of Columbus.
18 On one hand, it signifies that our
19 hometown bank has truly become a national company;
20 but on the other hand, its decision to relocate its
21 headquarters from Columbus to Chicago is difficult
22 for us to accept.
23 Perhaps an apt analogy would be one of a
24 parent who has watched their child grow up, but sad
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1 to see the child leave home to go out into the
2 world.
3 But in a sense, this is different.
4 Banc One is growing up, but not really leaving us.
5 Banc One employs more than 10,000 in Columbus. And
6 following the merger, that number is not expected
7 to diminish.
8 In fact, the continued prosperity of the
9 company will likely cause an increase in employment
10 in the Columbus market. Many of Banc One's
11 significant businesses, including their retail
12 banking and computer operations center, will remain
13 in Colorado.
14 Along with these important lines of
15 business, many people will also remain. The people
16 of Banc One are leaders.
17 They have made important contributions to
18 Columbus, starting with the Chairman, John B.
19 McCoy, who has chaired one of the City's most
20 significant urban renewal programs in our history,
21 the Capital South Community Urban Redevelopment
22 Corporation.
23 Mr. McCoy has committed to the Mayor that
24 he will continue on in his capacity as chairman of
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1 Capital South and other Banc One officers will also
2 continue to serve in leadership roles for our
3 Riverfront Development, our Chamber of Commerce,
4 the City's Neighborhood Development Loan Committee,
5 the Columbus Compact and Fannie Mae's Columbus
6 Partnership Office and many other initiatives which
7 are important to our community.
8 The people of Banc One volunteer to help
9 children with their school work through our
10 Adopt-a-school program. They provide help to the
11 homeless and food to the needy.
12 They're actively engaged in supporting
13 quality healthcare in our community and have
14 consistently set the pace for one of the most
15 successful United Way Organizations in America.
16 Perhaps less well-known are the many
17 unsung personal contributions made by the employees
18 of Banc One who, as they have prospered on an
19 individual basis, have provided significant support
20 to the Columbus Foundation.
21 The Columbus Foundation is one of the
22 largest community foundations in America. The
23 generous contributions from people who work for
24 companies like Banc One have made this possible.
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1 With respect to economic and community
2 development, Banc One has been a reliable partner
3 as long as I can remember. And I've been around
4 for more than 30 years.
5 When the City undertook a large and risky
6 central city redevelopment project in the 70s,
7 Banc One stepped forward to help with the
8 financing.
9 When the federal government threatened to
10 pull its financial support, Banc One lenders flew
11 to Washington to change their minds.
12 When the City of Columbus decided to
13 launch a major public-private partnership with the
14 Enterprise Foundation to promote home ownership and
15 foster community based development, Banc One
16 stepped out in front with both it's human and
17 financial capital.
18 During the last five or so years, Banc One
19 has financed more than 1,200 units of affordable
20 rental housing in the city of Columbus, including
21 two major YMCA and YWCA single room occupancy
22 projects and the first redevelopment of a public
23 housing project in the State.
24 Last year alone, Banc One made more than
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1 12,000 loans to consumers residing in low and
2 moderate income neighborhoods of the Columbus area
3 and financed $162 million in small business loans
4 to more than 1,800 small business owners.
5 Recently, a group of neighborhood
6 representatives wanted to undertake a comprehensive
7 revitalization of their community.
8 They went to Banc One for help in getting
9 started. Banc One's staff took the group to other
10 markets where they had participated in similar
11 initiatives.
12 I accompanied the group to Indianapolis to
13 study how projects started. The one thing we
14 learned is that partnership is the foundation of
15 community development and that partnerships are
16 built on local resources and local commitment.
17 No two cities are the same. And the
18 beauty of a company like Banc One is that it has
19 the local capital -- financial, human, technical
20 and philanthropic -- and the autonomy to commit to
21 worthy local endeavors.
22 There are some folks who think this merger
23 will cause Banc One to turn its back on the
24 Columbus community or who think that the commitment
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1 of its people will somehow diminish if the
2 corporate headquarters leaves the city.
3 But I don't think this merger is about
4 creating something less or dismantling the culture
5 that made Banc One a great institution.
6 I have seen what Banc One has accomplished
7 in other markets. And their commitment to the
8 community is no less today than it will be in
9 Columbus tomorrow.
10 We look forward to your approval of this
11 merger and to a bright future with a strong
12 company. We are proud to be a Banc One community
13 and look forward to working together in the days to
14 come to address the needs of our common
15 constituencies.
16 MS. SMITH: Thank you very much.
17 Any questions from the panel? Thank you
18 very much for coming this morning. We'll, again,
19 be glad to have your entire statements entered into
20 the record. And we'll move onto Panel 4.
21 I will mention as the panelists are coming
22 to the table that there have been some changes from
23 the names that were listed on your agenda, so we
24 will -- we do have -- we will have people introduce
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1 themselves and say their names for the benefit of
2 the audience who may not be able to see the name
3 plates.
4 We are going to start with Ms. Coleman.