Public Meeting Regarding Fleet Financial Group, Inc., and BankBoston Corporation
Wednesday, July 7, 1999
Transcript of Panel Twenty
23 MR. PORTER: Thank you for allowing us to
24 speak here today. My name is Alvin Porter, and I'm
25 the Executive Director of the New York Mortgage
0514
1 Coalition. The New York Mortgage Coalition is an
2 organization of ten banks and eight community
3 groups, and we provide mortgage counseling services
4 throughout New York, Long Island and Westchester.
5 Fleet Bank has been a member of the New
6 York Mortgage Coalition since its inception five
7 years ago, and last year they were one of the
8 leading lenders. They originated more than $9
9 million in mortgage loans.
10 The New York Mortgage Coalition, since its
11 inception, has been responsible for over $100
12 million dollars in mortgage low. We target low- to
13 moderate-income families throughout New York, Long
14 Island and Westchester. The banks within our
15 organization provide grant money, which supports the
16 counseling efforts by our community groups.
17 Fleet has been an active member of the
18 Mortgage Coalition, and it has supported the
19 Mortgage Coalition since its beginnings. They have
20 been a strong supporter of the Mortgage Coalition.
21 They're in touch with the community, and they're
22 responsive to the community needs. Fleet, as an
23 organization, is supportive of mortgage counseling.
24 I think a lot of the problems that have been
25 expressed here today can be resolved through
0515
1 mortgage counseling, and Fleet has been one of the
2 leaders in helping to provide and support mortgage
3 counseling throughout the past five years. Thank you
4 very much.
5 HEARING OFFICER SMITH: Thank you very much
6 for coming. We will have a two-minute break for the
7 court reporter.
8 (Brief recess)
9 HEARING OFFICER SMITH: We're ready to
10 start with our last panel, starting with Luz
11 Santana.
12 MS. SANTANA: Good evening. My name is
13 Luz Santana. I'm a member of a grass-roots
14 neighborhood organization named Vecinos Unidos,
15 which means in English United Neighbors, and we work
16 with disadvantaged residents to try to improve the
17 economic conditions. And we have been working
18 with -- we have been dealing with issues of Fleet
19 for many years.
20 Back in 1978, '79, I believe the name --
21 the previous name was Connecticut Bank and Trust,
22 and we had to deal with them, you know, with issues
23 like people on public assistance trying to cash
24 their checks and having problems and having the
25 police calling people who had, you know, differences
0516
1 with some of the tellers and things getting kind of
2 out of hand. We had to be involved.
3 And at this point, now, we turned our
4 attention to Fleet back in January, because we saw
5 an article in the paper, in the business section,
6 that they had been given an award from the President
7 because how great they were doing with the welfare
8 work, you know.
9 And we kind of got concerned and we called
10 a meeting. I invited them. However, we had a hard
11 time getting some of the decision-makers from Fleet
12 to come to meet with us. We finally got a recruiter
13 staff to come and talk to us about how welfare was
14 working.
15 It happens to be that what seems to be a
16 successful story, it wasn't successful at all for us
17 in Connecticut, because what ends up to be, that
18 particular recruiter said that out of 20 people that
19 she hired, the person on recruiting, to work for the
20 Welfare to Work, none of the people stayed at the
21 job for, you know, 60 days or 30 days, and there was
22 no reason or explanation of what happened with the
23 person that stayed on the job.
24 And when we offered to -- we wanted to be
25 involved, we wanted to help them retain their
0517
1 employees, and we also want to get people good jobs.
2 And it seems like we have a problem with that. They
3 are not being too cooperative with us.
4 So we're very concerned about how this
5 acquisition will reflect in terms of the people who
6 are looking for jobs, meaningful jobs for them to
7 become self-sufficient. So at this moment we are
8 opposing this acquisition, and hopefully that will
9 put attention, because, as you know, companies are
10 being compensated for hiring people from Welfare to
11 Work, and what we're concerned is that if people are
12 not staying on the job, however, the people who did
13 the recruiting for the company is not necessarily
14 the people who are presenting the tax credits, you
15 know, for the Welfare to Work. So we're kind of
16 concerned that while people are not staying on the
17 job, the possibilities are they still can be able to
18 claim people, you know, for the tax credit. So we
19 would like to ask this Board to look into that, and
20 things will hopefully get better, and we can improve
21 all relations.
22 HEARING OFFICER SMITH: Thank you very
23 much.
24 Mr. Vickers.
25 MR. VICKERS: I'm Greg Vickers. Thank you
0518
1 for having us here today. I work with the Citizens'
2 Research Education Network, which is a small
3 research-oriented nonprofit in Hartford, and
4 representing today 21 organizations who have signed
5 on to our printed report, which we have handed in
6 and filed with you.
7 And I will talk about some of the concerns
8 that the coalition has raised. The coalition is
9 Connecticut Friends of Community Reinvestment, and
10 it is kind of a broad-based coalition of women's
11 organizations, minority groups, small business, and
12 housing interests.
13 The coalition, there are several things
14 that we're concerned about. I guess the three that
15 stand out are the anticompetitive nature of the
16 merger, Fleet's decline or the decline in home
17 mortgage lending of Fleet after the merger with
18 Shawmut, and Fleet's record of small business
19 lending. I'm just going to touch on those.
20 Fleet's acquisition of Shawmut four years
21 ago resulted in the significant concentration of
22 deposits and services in one behemoth institution in
23 Connecticut, yet the increase of size created
24 absolutely the opposite effect desired by the Board:
25 It decreased the availability of services to the
0519
1 Connecticut community.
2 If the merger is accomplished, Fleet Boston
3 will have almost 50 percent of the market share for
4 Hartford and 30 percent of the market share for the
5 state as a whole in terms of deposits. The next
6 closest competitor has only 11 percent of the
7 deposits in Connecticut, and in Hartford, the next
8 two competitors, No. 2 and 3, if combined, would
9 still only be one fifth of the size of Fleet.
10 The sale of the new institution will
11 positively dwarf the remaining independent banks in
12 Connecticut. Sharing the market among institutions
13 of is rarely considered -- rarely meets the
14 definition of competition.
15 With Fleet having already acquired its
16 closest competitor, Shawmut, and BankBoston having
17 acquired its closest competitor, BayBank, the
18 continuing concentration of the market from four
19 competing banks to one megabank constitutes an
20 alarming trend. These mergers may result in gains
21 for stockholders, but they provide little or no
22 benefit to consumers who are to be protected by the
23 Board.
24 Our second concern has been affordable
25 housing lending, and this was the -- looking at the
0520
1 HMDA data is when I was initially interested in this
2 whole issue. I was originally not interested in the
3 merger, and people said, "Well, Greg, you know,
4 let's get together," and I said, "Well, you can meet
5 in my basement, but I'm not all that interested."
6 And when we began to look at the numbers, I began to
7 realize how significant this was.
8 In the Hartford Metropolitan Statistical
9 Area -- we have graphs for all of the statistical
10 areas in Connecticut in the submitted documentation.
11 In the Hartford MSA, the total mortgage lending of
12 both Fleet and Shawmut in minority households in
13 1994 was 469 loans. In 1997 it had plummeted to
14 102, and by 1998 it had dropped to 78. So that it's
15 less than one fifth.
16 And I did some math after Jim Campen's
17 comments about the one plus one equals less than or
18 more than two, and it seemed to me, and my math may
19 be wrong here, but that one plus one is equal to .4
20 when it comes to minority lending and home
21 mortgages.
22 If you look at Hartford again, in the low-
23 to moderate-income loans in the Hartford MSA, they
24 went from '94, in 1994, which was again the year of
25 the merger, from 609 down to 151, or 25 percent. Of
0521
1 the mortgages that Fleet and Shawmut together did,
2 they were doing one quarter of that; Fleet by itself
3 was doing one quarter of that in '98.
4 In Fleet's SBA lending -- there is more
5 documentation on Fleet's small business lending, but
6 just in terms of their SBA lending, even though
7 they're a preferred lender, and they are the largest
8 lender in the state, they ranked, in the first seven
9 months of the '98-'99 fiscal year, Fleet Bank was
10 23rd in the total -- 23rd of all lenders in the SBA
11 lending in this state.
12 And I will conclude, then, quickly. There
13 is more that you will see when you read the
14 documentation. But I want to say one thing. We
15 would love to say see an extension of the public
16 comment period for two weeks after Fleet's published
17 commitment, after it's published and folks have had
18 a chance to look at it.
19 Also we would love to see a public hearing
20 in Connecticut, and while I'm sure at this hour
21 that's not at all what you're interested in hearing,
22 there are a lot of organizations and groups which I
23 have talked to that would love to have an
24 opportunity to address you.
25 And last, we would ask that the Federal
0522
1 Reserve Board deny the merger until and unless there
2 are negotiated, detailed, signed and publicly
3 monitorable CRA agreements, and until there is a
4 more extensive divestiture plan.
5 HEARING OFFICER SMITH: Thank you very
6 much.
7 Mr. Garvin.
8 MR. GARVIN: Good evening, ladies and
9 gentlemen. My name is Roger Garvin. I thank you,
10 Board, for having me speak tonight. I'm here
11 because I'm a businessman in Roxbury. I'm also
12 running for Roxbury District 7 City Councilor. And
13 because I am a businessman in Roxbury, it becomes
14 very important to me to talk to you for just a few
15 minutes.
16 It's very important that the Roxbury
17 community have a stake in Roxbury. It bothers me as
18 a businessman because in this community, more people
19 go to jail than in any other community that I can
20 think of. Because they go to jail, it's a very
21 serious issue. It is because, mostly, economic
22 development, as a businessman, I look at economic
23 development on a very, very broad plan.
24 In order to keep people from going to jail,
25 we need to do something about that. No. 1 is
0523
1 providing monies to existing businesses so that they
2 can improve their businesses, so that they can
3 provide more jobs for the people in the community.
4 We do not have access to the lending institutions.
5 We do not have access to monies that we should have.
6 Believe it or not, if the people in District 7 who
7 are in business already could have access to monies,
8 just the businessmen alone could solve a lot of
9 problems and a lot of issues that are now plaguing
10 District 7.
11 I'm here tonight. I'm not begging, I'm
12 just pleading to you to act on a more positive basis
13 as far as getting and making access and making
14 monies more available to the businesses in Roxbury.
15 I have provided a lot of jobs, but if I cannot
16 provide a lot more jobs, it's because of
17 accessibility to funds.
18 As we approach the beginning of a new
19 millennium, megamergers are the talk of the times.
20 Presently, the merger being discussed is the one
21 with Fleet and BankBoston. If these type mergers
22 are to occur, then it should happen to best benefit
23 the community in which it does its business.
24 I would like to see corporate mergers such
25 as a proposed merger of Fleet and Boston bank have a
0524
1 viable and positive impact on the City of Boston,
2 the fair and equitable lending practices for small
3 businesses, educational programs, citywide programs
4 for the elderly, and continued partnerships with
5 housing programs, such as the ACORN housing program.
6 In closing, I would like to see Fleet and
7 BankBoston be sensitive to the economic needs of
8 lower and moderate income families as well as
9 demonstrating a commitment to invest in the
10 community. I thank you.
11 HEARING OFFICER SMITH: Thank you very
12 much.
13 Ms. Hurewitz.
14 MS. HUREWITZ: Good evening, I would like
15 to thank the Federal Reserve Bank of Boston for
16 holding this public hearing on Fleet and giving me
17 the opportunity to speak here tonight.
18 My name is Vickie Hurewitz. I work for
19 SENSES, a statewide organization in New York State.
20 The acronym stands for the Statewide Emergency
21 Network for Social and Economic Security. We
22 advocate for a variety of issues that affect low-
23 income New Yorkers. I work on community
24 reinvestment matters for SENSES.
25 I am here today to testify about Fleet's
0525
1 lending in New York State, particularly our Capital
2 District and Orange County, two areas that are
3 particularly active in CRA work. On its last CRA
4 exam in New York State, Fleet got a low satisfactory
5 on the lending and service tests.
6 The Capital District of New York State is
7 roughly a six-county area consisting of Albany,
8 Schenectady, Rensselaer, Saratoga, Schoharie and
9 Montgomery Counties. Fleet Bank is the region's
10 largest, with over $3 billion in deposits, and it
11 has branches in all Capital District counties.
12 Within these counties are several declining
13 central cities and pockets of rural poverty. You
14 might have heard of the three cities of Albany,
15 Schenectady and Troy. Those are within our Capital
16 District.
17 Orange County is downstate. Many residents
18 commute to Manhattan to work. However, the county
19 has two distressed central cities, Newburgh and
20 Middletown, and Kiryas Joel, an Hasidic Jewish
21 community that is in need of reinvestment.
22 On Friday, July 2nd, myself and
23 representatives of 17 community organizations met
24 with Fleet representatives, including Mr. Hermes
25 Ames, the president of Fleet National Bank, to
0526
1 discuss Fleet's lending in the Capital District.
2 I'm attaching to this testimony a proposal that was
3 presented to Fleet and served as the focus of our
4 Capital District meeting.
5 I won't belabor the numbers that we've
6 heard several times here today, but during the last
7 several years Fleet has acquired Shawmut Bank and
8 NatWest, both of which had branches that were
9 located in New York State, and their home purchase
10 loans had dropped precipitously, 70 percent
11 statewide, and in low-income census tracts their
12 home purchase loan rate had dropped 76 percent from
13 1995 to 1997 after the mergers.
14 I have also done my own analysis of Fleet's
15 1997 home purchase lending in the Capital District
16 and Orange County, and I had found that the bank had
17 extremely low market shares, no matter whether the
18 geography was the county, the city or the distressed
19 neighborhood. And I didn't find this surprising,
20 given the finding for the state.
21 Prior to the meeting with Fleet, I had
22 called Don Prusak of Fleet Bank and asked him about
23 obtaining the results of Fleet's INCITY program, the
24 megapledge Fleet Bank made when it acquired Shawmut
25 in 1995. He told me the results of INCITY could be
0527
1 found in the HMDA data. When I related to him the
2 poor results of the analysis, he said, "There are
3 some problems with those numbers. You need to look
4 at our 1998 HMDA data." Subsequently, he supplied
5 me with the 1998 data for the Capital District and
6 Orange County.
7 As I mentioned, in 1997, I found that Fleet
8 had very low market shares for home purchase loans,
9 no matter the geography. By 1998 Fleet's home
10 purchase lending had increased by 115 percent in
11 Albany County. However, the bank made no loans in
12 the distressed neighborhoods in the City of Albany.
13 In Rensselaer County the lending was flat.
14 The bank made no loans in the City of Troy in either
15 1997 or 1998. In Schenectady County, lending went
16 down by 41 percent, although the dollar amount in
17 the distressed neighborhoods went from $59,000 to
18 $82,000, a small increase of small dollars.
19 Also I had been speaking to community
20 groups around the Capital District, and they had
21 informed me that Fleet has affordable housing
22 products. However, they felt that the bank was
23 reluctant to use the product and was not out
24 actively seeking mortgage application.
25 During our meeting Fleet related that there
0528
1 had been a problem with their mortgage origination
2 department after the mergers. 60 mortgage
3 originators had left to form their own company.
4 Fleet informed us that it had hired new originators;
5 however, when I mentioned they had still not
6 penetrated the lower-income neighborhoods in our
7 region in 1998, they additionally informed us that
8 they had recently reworked their commission
9 structure that so that each originator got a minimum
10 of $500 per loan.
11 We encouraged them to hire a noncommission
12 community service loan officer like some their
13 competitors to outreach to community organizations
14 and actively seek applications.
15 I belabor these points about home purchase
16 lending because these problems occurred while Fleet
17 had a megapledge in place, the INCITY program I
18 mentioned. Fleet has currently offered another
19 $14.6 billion pledge with very few specifics. I
20 urge the Federal Reserve to ensure that this pledge
21 be made locally specific and locally accountable so
22 that we can be certain that this new pledge does not
23 go the way of INCITY.
24 During our meeting we also spoke about home
25 improvement lending, bank services and investments.
0529
1 A disturbing trend noted in all the distressed
2 neighborhood is that the depository institutions are
3 leaving and the subprime lenders are arriving, which
4 is not good news for low-income households. For
5 example, in Arbor Hill, a low-income neighborhood in
6 Albany, Fleet made no loans. The subprime lenders
7 were the leading lenders there.
8 I'll finish with just saying that even
9 though Fleet has an outstanding record in
10 investments in New York State, I still urge you to
11 make sure that this $14.6 billion pledge, as many of
12 my colleagues up here have said, will be locally
13 specific and locally accountable. It is very
14 important for the future of lending by this bank in
15 our neighborhood.
16 Thank you.
17 HEARING OFFICER SMITH: Mr. Timilty.
18 MR. TIMILTY: My name is Greg Timilty, and
19 I'm a candidate for the City Council, citywide. I'm
20 also an employee of an investment banking firm. I
21 come here to testify tonight as neither. I come
22 here to testify actually as we get on past nine
23 o'clock, I come as a 24-year-old resident of the
24 City of Boston, which probably makes me one of the
25 youngest people to testify today.
0530
1 I remarked to someone as I came in today, I
2 said, "I wonder who's last today." Little did I
3 know. But I think that that also gives me an
4 enviable position because I am going to forgo my
5 remarks now as we get past nine o'clock, and I would
6 like to just leave you with a theme, because it's a
7 theme that was one of the main reasons why I came
8 here to testify tonight, one of the reasons why I
9 stayed, and I applaud everyone in the audience for
10 staying this long. It's been a long day; I know
11 it's been a long day for you.
12 But I think that one of the main reasons
13 why I came today is I represent a growing dynamic in
14 the City of Boston of young people, young men and
15 women who are faced with an uncertain future. As
16 one of the panelists in the previous panel spoke
17 about, housing ownership in the City of Boston is an
18 abysmal failure, I think, for the banking industry.
19 I think that if you look at some of the
20 figures as far as the involvement in local
21 communities, based upon a person who owns their
22 house as opposed to someone who just rents, and you
23 look at how that can change, I think our
24 communities, and the communities that the Fleet Bank
25 and the merged company will serve, are much stronger
0531
1 as a result of housing ownership.
2 I think that my generation is largely an
3 ATM generation, a generation that doesn't have the
4 resources that my parents' generation had, where
5 when you go to look for a loan, whether it be for
6 your child's education or whether it be for your
7 first home, you're looked at as a number and not an
8 individual. And I think especially when you look at
9 low- and moderate-income families, when they go into
10 those banks and they sit across that desk, they're a
11 number, they're not an individual. We've lost
12 banking with a conscience.
13 And it's caused, if you see, as the
14 panelist before, Pat Cusick, mentioned, 5 percent in
15 the area of Roxbury in home ownership. Something
16 has got to be done about that. I think that a lot
17 of it goes to the community, and the community is
18 doing a great job. They need help. They are
19 communities that will bank will represent, and it
20 only makes the bank stronger to have the community
21 stronger that it represents.
22 My generation, as I said, is left in an
23 area where we don't know what's the future. We
24 don't know if we're going to be able to own a home
25 in a neighborhood on a street in the City of Boston
0532
1 or anywhere else in the New England area. We don't
2 know, as we get into the next 10 to 15 years, how
3 we're going to fund our children's education. We
4 don't know what the costs will be. We don't know
5 what the structure, the financing will be.
6 But what we do know, in leaving this room
7 today, and this merger with this bank, is that
8 there's going to be no competition. The bank down
9 the street, the local bank that my family went to to
10 get their loan for their first house, is no longer
11 existent. It has been one of the 450 banks that
12 Fleet now encompasses. And without that type of an
13 outlet, where do these low- and moderate-income
14 family go? Where does my generation go? Without
15 that, we don't have a community, and without a
16 community, you don't have the customers that you
17 want, you don't have the customers that you deserve,
18 and the banks are going to suffer.
19 I just want to leave you with a theme. As
20 you leave here tonight, and as you think this over,
21 and as this -- as this deal is brokered, it's my
22 generation's future that's brokered, because right
23 now it's a transient generation, as I said, it's an
24 ATM generation. It's not a generation that's used
25 to going down the street and knowing their banker
0533
1 and being seen as an individual.
2 If we move away from banks looking at
3 individuals, rather than numbers, if we look at this
4 merger as being good for Wall Street, although it's
5 not good for River Street in Matapan, and if we look
6 at this as enhancing shareholder value, and not
7 enhancing the communities that they serve, then I
8 think that we lose. The shareholders might gain,
9 but I think the communities that this bank serves
10 lose.
11 I just want to thank you for the
12 opportunity to testify today, I know I'm the last.
13 Hopefully, I left with you a high note and something
14 to think about as you go on. Thank you.
15 HEARING OFFICER SMITH: Questions?
16 (No response)
17 HEARING OFFICER SMITH: Thank you very much
18 for coming to testify today. We do have the open
19 mike session following, and I understand that we
20 have at least one person who has signed up. The
21 name is R.K. Schwartz.