Public Meeting Regarding Norwest Corporation and Wells Fargo & Company
Thursday, September 17, 1998
Transcript of Panel Eleven
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4
5 MS. NUGENT: Okay. Well, I just
6 wanted to thank you for allowing me to testify
7 in front of you today. My name is Danielle
8 Nugent, and I'm a senior at the University of
9 Minnesota Duluth. I'm also the Chair of the
10 State Board of Directors for the Minnesota
11 Public Interest Research Group, the group that
12 was listed to testify. They've asked me to
13 testify for them.
14 MPIRG is a student-run and funded
15 nonpartisan nonprofit organization. We work on
16 consumer and environmental issues that students
17 raise as concerns. I'm here today to
18 represented the concerns of MPIRG, its state
19 board, as well as the organization's 45,000
20 student and community members.
21 Our concerns over the proposed merger of
22 Wells Fargo/Norwest include the decreased
23 competition within the Minnesota marketplace,
24 the rise in banking fees that the merger could
25 cause the consumer, especially in light of Wells
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1 Fargo's less consumer-friendly fee schedule; the
2 concern that this merger would move the
3 headquarters of Norwest, making the bank less
4 responsive to the Minnesota consumer.
5 I would first like to address my testimony
6 to the lack of competition this merger will
7 create. This lack of competition would mean
8 that the ever-growing emerging banks would be
9 the only ones left for consumers to choose
10 from. The Federal Deposit Insurance Corporation
11 reports this trend is continuing at an even
12 faster pace, showing 146 banks have been
13 absorbed just in the first quarter of 1998
14 alone. This trend is the same in Minnesota.
15 Fewer banks means fewer choices, according to
16 our research, and higher fees. In our report
17 last fall, the big fee squeeze, we showed that
18 bigger banks mean bigger fees. An example,
19 Minnesota, the cost of maintaining a regular
20 checking account is 40 percent -- 46 percent
21 higher in a large bank than a credit union and 4
22 percent higher than in a small bank. A
23 no-frills checking account at a big bank costs
24 54 percent more than at a credit union and 13
25 percent more than a small bank. Bank fees for
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1 overdraft and ATM withdrawals are also on an
2 average higher at large banks. Large banks are
3 also more likely to charge service fees, which
4 impact low and fixed income consumers, such as
5 students, seniors are especially hit by this
6 fee.
7 On August 1st, 1998, Norwest raised its fee
8 for overdrafts from $21 to $25, almost a 20
9 percent increase. Is this because the new rate
10 is comparable with fees charged by Wells Fargo?
11 Can we expect these type of fee increases and
12 service costs to expand after the merger? Wells
13 Fargo discontinued its free checking for seniors
14 last year. Will we in Minnesota have the same
15 thing happen here?
16 Finally, we are concerned that the merger
17 would cause a lack of responsiveness from the
18 bank to the Minnesota consumer. If this merger
19 goes through, Norwest will be moving its
20 headquarters from Minnesota to San Francisco and
21 we no longer will have that management here.
22 Instead, they'll be on the other side of the
23 country. How will this new entity stay in touch
24 with the needs of the Minnesota consumer?
25 Instead of being a neighbor to Norwest, the
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1 consumer becomes a number on a computer screen
2 in some far away headquarter.
3 As a student and a leader of a student
4 organization, I must tell you that these mergers
5 are not in our best interest. We do not have
6 disposable income to spend on large fees and
7 charges. We need access and affordability in
8 our financial services. We need banks that are
9 responsive to our credit demands. Lower prices
10 require competition. We are concerned that by
11 allowing more of these banks to take over the
12 marketplace, you are dooming us to a future
13 where banking becomes a luxury only the rich can
14 afford. If two or three large banks are allowed
15 to become the consumers' only choice, then what
16 will stop them from adding service charges to
17 every transaction, slowly taking the money from
18 people who need it the most? Low income
19 individuals, senior citizens, as well as
20 students will suffer from this.
21 Please, we are asking you to deny this
22 merger. Give us a chance to not only have
23 access to but the ability to afford our banking
24 services.
25 Thank you.
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1 CHAIRPERSON SMITH: Thank you.
2 Mr. Tatum?
3
4 MR. TATUM: Yes. My name is Steve
5 Tatum, and I am the President of New Century I
6 Community Lending Cooperative. And we have a
7 brief statement that we would like to read to be
8 included in the record. New Century I Community
9 Lending Cooperative's mission is to pursue the
10 economic development and well-being of its
11 members. New Century was established to provide
12 lending and borrowing opportunities to
13 individuals and organizations previously
14 excluded from the traditional sources of these
15 services. As a result of these exclusionist
16 practices, a fundamental economic incentive had
17 been created. This incentive joins us together
18 to provide for ourselves the capital that is the
19 economic life blood of our community.
20 Because of the -- our late notice of this
21 public hearing, we haven't had the opportunity
22 to review all the technical aspects of this
23 merger, but our members felt it was important
24 that we attend and participate. Because the
25 Federal Reserve Bank has the mandate to protect
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1 the interests of all citizens of this country as
2 it pertains to banking and banking practices, we
3 are here to get the assurance of the Federal
4 Reserve that the important issues of
5 discrimination, access to banking services by
6 low-income individuals and the prevailing
7 practices of red lining minority and low-income
8 communities are addressed in this merger.
9 Also, we feel there should be a formal
10 commitment made by both financial institutions
11 involved in this merger that minority and
12 low-income individuals will have equal access to
13 the capital that will insure the continued
14 development of our businesses and communities.
15 In this situation, the standard rhetoric "We
16 will do better" is grossly inadequate. It is
17 our position to insure the fulfillment of this
18 commitment. A specific dollar figure should be
19 designated as investment in traditionally
20 underserved businesses and communities. Our
21 organization feels strongly that these issues
22 are important to a large and growing
23 constituency and be served the same
24 consideration as any other financial element of
25 this merger.
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1 Lastly, financial institutions that operate
2 at the public trust have a legal, moral, and
3 ethical responsibility to insure equal treatment
4 of all citizens. And it is the responsibility
5 of the Federal Reserve Bank to insure that these
6 institutions are in compliance with this
7 mandate. We plan to collaborate with all
8 interested groups and organizations to monitor
9 this process.
10 Thank you.
11 CHAIRPERSON SMITH: Thank you.
12 Ms. Therkelsen.
13
14 MS. THERKELSEN: Thank you for
15 allowing me to speak. I was under the
16 impression that this had already been decided,
17 that -- that Norwest and Wells Fargo were going
18 to merge. So I appreciate your allowing me to
19 speak at this time.
20 I've been a customer of Norwest Bank since
21 1972. And I was a customer at the Nor --
22 North -- Nor -- well, they call it Nordeast
23 Minneapolis office. And then when I moved to
24 south, I'm still a customer of the northeast
25 office. I'm very pleased with Norwest Bank.
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1 They're very helpful. And I'm on direct deposit
2 so it goes directly into the bank. But, I mean,
3 joining a bank is not for me a thermos or a
4 blanket or something like that. That's not
5 what's important to me.
6 I understand when you have to pay for
7 checks. That I understand, and overdrafts and
8 things like that. That makes sense to me. But
9 being on direct deposit, I have 50 cents in the
10 bank right now. And I just -- you know,
11 Norwest, as long as I keep the 50 cents there,
12 is not going to be charging me extra money to
13 keep the 50 cents, like if you fall below a
14 certain amount, which is common for most banks.
15 I do miss more ATMs. Norwest doesn't have
16 enough. But I -- I just think that they are
17 known very much for their customer service and
18 their good record. And I'm opposing the merger
19 partly because of that basis. I had heard some
20 concerns about customer service of Wells Fargo.
21 I'm sorry. I can't tell you exactly where I
22 heard it, so I'm not going to quote somebody
23 that I might be wrong about. But it talked
24 about taking away the free checking and things
25 like that, and I can't afford it. And I don't
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1 think a lot of other people who have the senior
2 rate can, and so I'm opposing it respectfully.