Public Meeting Regarding Norwest Corporation and Wells Fargo & Company
Thursday, September 17, 1998
Transcript of Panel Nine
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7 MR. FINN: Good afternoon. It's a
8 pleasure to be here. I will not say that
9 it's -- I appreciate being here or thank you for
10 being here because, frankly, it's my right to be
11 here. And under the laws for citizens of this
12 country and as a member of the community that is
13 affected by these banks -- and the unfortunate
14 piece is that there are not enough public
15 hearings on the public good and public policy
16 regarding these mega mergers that are going on
17 of which we are going to talk about today.
18 I'm going to keep my remarks more in the
19 area of industry concentration and market
20 concentration, which is part and parcel to what
21 is going on with this bank merger. In
22 particular, I'd like to talk about vertical and
23 horizontal integration or conglomeration, the
24 first one being the vertical piece, which is a
25 policy trend that's going on in the banking
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1 industry which is allowing, for example,
2 insurance and stocks and market portfolios to be
3 integrated with lending and deposits. And while
4 the -- it's been a cautious road for the last
5 two years, it appears that we're going to be
6 making some wholesale decisions regarding this
7 in the next few years which will make a bank to
8 all instances for a community a one-stop
9 shopping center for financial products. This --
10 this vertical integration or conglomeration on
11 policy seems to be going on as a course in the
12 banking industry, which it's basically being
13 ignored in terms of the concept of regional
14 markets and community markets and how that
15 affects it.
16 I'm going to include with that, though, the
17 common measure of integration, which is the HH
18 index, which you are all familiar with. And for
19 this part of my testimony I would like included
20 in my previous testimony on record with the
21 First Bank Marquette merger. So I would like
22 that included, which speaks to this integration
23 problem regarding the HH index and the problems
24 with the index, which I won't talk about today.
25 The HH index, for example, for Norwest and
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1 First Bank, which is now Bank One in the
2 Minneapolis area, has been basically ignored.
3 And we now have essentially two banks owning
4 more than 70 percent of the market in deposits
5 in the Minneapolis area. We'd also note from
6 testimony that's out there that in certain areas
7 of Nevada and other places where Wells Fargo and
8 Norwest are coming together, they are actually
9 going to be at market percentages well above
10 that, including one community where they are
11 going to own virtually 100 percent of the
12 market.
13 I would like to speak more to this about
14 this, but the bank at this time has agreed with
15 the Norwest argument that they will not disclose
16 divestiture information. And, frankly, I think
17 that's unconscionable. I think -- I think it's
18 illegal. It's unprecedented. And for that
19 reason alone, this decision should be -- should
20 be stopped until that divestiture information
21 can be brought out into the public in a public
22 debate and can happen on it. So in that
23 particular instance, I think -- I think this
24 hearing is important that it raises those
25 critical issues. And that decision of -- a
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1 major public policy decision like this on
2 divestiture cannot happen in the dark.
3 But in terms of these indexes, we need to
4 be very careful because the HH index has always
5 been used to measure the concentration -- the
6 market concentration of banks in one community.
7 But what is happening with the trends, which I
8 think Wells and Norwest are probably the best
9 example in the country at this time, after the
10 various mergers that they've already brought
11 about is the fact that they are not -- we need
12 to develop a new measure which looks at market
13 concentration across regions. Because, indeed,
14 I don't think it's too hard -- I don't think I'm
15 really overstating myself when I say that the
16 new Wells Fargo will be a market almost
17 monopolist in the midwest, western regions. And
18 particularly, that's true in some markets where
19 I don't think you can quibble about a monopoly
20 when they own 100 percent of the business in
21 those communities.
22 This -- this is disturbing. I like to
23 think about this -- this type of thing as --
24 using a metaphor of -- in Africa, the elephants
25 where they are protected, which all of us
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1 believe is important and in some communities are
2 actually sacred. But for the villagers in those
3 protected areas where elephants cannot be
4 controlled, an elephant can walk into the
5 village and can eat it or decimate it. And they
6 can be without home or livelihood or whatever.
7 In the same way, Wells Fargo is going to be
8 able to move across the midwest protected by
9 essentially the staking out in communities with
10 ATMs, protected by the fact that their deep
11 pockets make it almost impossible for other
12 banks to compute -- or compete in terms of
13 deposit wars or to cause a competition. And
14 this is -- this is going to be devastating.
15 I'm going to continue because there are
16 only two of us.
17 CHAIRPERSON SMITH: Well, we do
18 have --
19 MR. FINN: Okay. I'll be short,
20 then.
21 CHAIRPERSON SMITH: All right.
22
23 MR. FINN: I'm very concerned that the
24 Federal Reserve is abdicating its responsibility
25 in this area and that it hasn't actually -- as a
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1 protector of the nation's banking as it's formed
2 under our country's laws, has not been out there
3 in the forefront wondering about these things.
4 And the people from the community have to bring
5 them up to them. I think at the very least,
6 given these trends that are now part of the
7 public testimony, I think we have to look at
8 this model and say, well, a safe course is
9 something like what happened with Nations Bank.
10 I think the people here that are talking about
11 indexes being at a minimal level across and
12 guidelines put into the Wells Fargo agreement
13 that says that Wells Fargo will not essentially
14 breach on the HH index in any of their
15 communities above a certain minimal level is
16 something important and prudent to put into this
17 agreement.
18 And last, I'd like to suggest that while
19 everybody here that has been here today and
20 testified on this has been well-intentioned and
21 has told great stories. I think you should take
22 into account the people who have come here and
23 told the other side, the dark side of banking
24 business, the dark side of Norwest and in the
25 histories, because there are courageous acts
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1 here. And it's those type of things that you
2 are charged to insure do not happen. And union
3 busting is something that is happening. And I
4 don't think we can turn our backs on them.
5 Thank you.
6 CHAIRPERSON SMITH: Thank you.
7 Ms. Mendoza will be speaking on behalf of her
8 own organization and then also of the Rapid City
9 Housing Coalition. I don't know what order.
10
11 MS. MENDOZA: Thank you. My name is
12 Lilly Mendoza and I'm the CEO of of Earth
13 Walker, which is a consulting business. And
14 what I'm doing today is representing them
15 organizations from Rapid City, South Dakota.
16 And one of the things I'd like to share with
17 you, in listening today, you hear the good and
18 the bad of both. But what I can share with you
19 is what -- what we're -- what's going on in
20 Rapid City and the feelings that are there of
21 the people that I'm representing. Rapid City
22 has a population of 54,000 people. Of that
23 54,000 people, 9,000 are American Indian
24 people. At any one time throughout the year,
25 Rapid City deals with and serves 22,000 Native
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1 American people. And those individuals are
2 coming in from the surrounding reservations.
3 There is an Indian Health Service there that
4 serves American Indian people. And so that's
5 where we draw that number from. So the American
6 Indian people really do bring a lot of revenue
7 into the Rapid City area.
8 One of the concerns that the people have is
9 their treatment when they walk into banks and
10 the feelings that they get and not feeling
11 comfortable being there, as well with the 60
12 percent denial in loans within the Rapid City
13 area and the surrounding reservations. So
14 that's an issue as well.
15 The organizations that I'm working with are
16 the Rapid City Housing Coalition and an
17 organization that serves young women between the
18 ages of 10 and 24. What's interesting and
19 exciting and what's going on in Rapid City is
20 that this organization -- these two
21 organizations -- the oldest person working
22 within those organizations is 27 years old. And
23 it's real exciting to me to see these young
24 people that are coming out. And they are
25 sharing their concerns about their community
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1 because they care about their community. And
2 these individuals that work within these
3 organizations come from low-income families and
4 know the barriers and struggles that they need
5 to get through. And so they are willing to take
6 the lead and work hard to make a difference.
7 We have met with Norwest Bank. We had an
8 initial meeting August 14th at which time we
9 began to discuss some possible solutions. We
10 requested some information -- some information
11 from the individual and actually didn't get back
12 to those organizations for about a month. And
13 we had to call the meeting again. At that time
14 then, the organizations met with the president
15 of the bank. And I was the mediator. What's
16 interesting is that when I said the word
17 "mediator," he became very angry because he
18 said, "We are both on the same side." And I
19 said, "That may be, but we both live on
20 different sides of the tracks." And that's the
21 whole issue is that we are -- Rapid City is a
22 city that is divided. There is a west side and
23 there is a north side. And if you travel
24 through our town, you can really tell the
25 difference. You can see where the low-income
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1 people live. And you can tell the difference in
2 parks. So what we are saying is -- to Norwest
3 is that we would like a commitment from
4 Norwest. And the merger with Wells Fargo, you
5 know, if it's going to happen, it's going to
6 happen and we'll be in support of that. But
7 what we're saying is that we need a commitment
8 from the bank that individuals in the bank
9 serving American Indian people need to really
10 walk their talk and help people as far as going
11 in and getting loans, because there is different
12 circumstances and people deal with different
13 issues coming from different walks of life. So
14 what it's really -- what it's really coming down
15 to is the broken promises and making sure that
16 there is follow-through.
17 We have already discussed putting together
18 a steering committee to work with Norwest Bank.
19 Norwest Bank has stated to the organizations
20 that they will take the lead in this. We've yet
21 to hear from them within the last couple weeks.
22 They were supposed to call a news conference and
23 they haven't done that. So what we need is a
24 commitment to our community. Right now in the
25 community they're doing, you know, a big press
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1 release and public relations kinds of things and
2 there are billboards and there are TV ads. And
3 it's a really huge show. Okay. And -- but what
4 we really want is commitment. So those are the
5 concerns that the organizations have from Rapid
6 City.
7 Thank you very much.
8 CHAIRPERSON SMITH: Okay. Thank you.
9 And we're going -- we have other members of the
10 panel who have just arrived so we will stay put
11 for a while. We have Ms. Seals from the
12 Minneapolis NAACP.
13
14 MS. SEALS: Good afternoon. Leola
15 Seals, Minneapolis Branch, NAACP President. And
16 I would just like to briefly address that in the
17 bank end with Norwest Bank, we have not been
18 getting the loans from Northwest to the African
19 American communities as we should. Northwest
20 Bank, we are asking that you support this status
21 quo and not the people in poverty. We are not
22 asking for you to continue to do this. We
23 challenged this institution to step up to the
24 plate and meet its community development goals
25 by financially supporting the NAACP and
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1 endorsing a self-sufficient initiative where we
2 take the lead in solving our own issues. We are
3 fed up with responses that we get that affect
4 our communities. No one knows the struggle,
5 plight and solutions for our community better
6 than we do. No one deserves an opportunity to
7 serve our community more than we do, since we
8 live here. We need solid commitment from the
9 bank to work with us. Remember, in most
10 instances it is not the cash that we are
11 speaking but mortgage commitments. Our office
12 has a large overflow of people in poverty being
13 turned down for loans. We would like for the
14 bank to engage and become a partner with us and
15 the NAACP.
16 Thank you.
17 MS. SMITH: Thank you very much. If
18 there are no questions, then we are going to
19 take a 15-minute break. And so we will see you
20 at a little after 2:45.
21
22 (Whereupon a break was taken.)