Board of Governors of the Federal Reserve System

Public Hearing Regarding Bank of America Corporation, and FleetBoston Financial Corporation

Held on Friday, January 16, 2004, at the Federal Reserve Bank of San Francisco

Unedited Transcript

0001
 1   
 2   
 3              PUBLIC MEETING AGENDA
 4           BANK OF AMERICA CORPORATION
 5      AND FLEETBOSTON FINANCIAL CORPORATION
 6   
 7   
 8                    ---o0o---
 9   
10   
11   
12              FEDERAL RESERVE BANK
13   101 MARKET STREET, SAN FRANCISCO, CALIFORNIA
14             Friday, January 16, 2004
15   
16                    ---O0O---
17   
18   
19   
20   
21   
22   
23   REPORTED BY:  KRISTIE L. HUBKA, CSR NO. 5974
24                 LAURA A. REDING, CSR NO. 9711
25   
0002
 1                          I N D E X
 2                                                     PAGE
 3   OPENING STATEMENT                                    3
 4   BANK OF AMERICA PANEL                                7
 5   PANEL NO. 1                                         30
 6   PANEL NO. 2                                         62
 7   PANEL NO. 3                                         80
 8   PANEL NO. 4                                        110
 8   
 9   PANEL NO. 5                                        132
 9   
10   PANEL NO. 6                                        149
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11   PANEL NO. 7                                        172
11   
12   PANEL NO. 8                                        182
12   
13   PANEL NO. 9                                        192
14   PANEL NO. 10                                       209
15   PANEL NO. 11                                       219
16   OPEN MIKE                                          232
17   
18                          ---o0o---
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21   
22   
23   
24   
25   
0003
 1             Friday, January 16, 2004, 8:30 a.m.
 2   
 3             DOLORES SMITH:  I'm pleased to welcome all of
 4   you to this very important public meeting on the
 5   application by Bank of America Corporation to acquire
 6   FleetBoston Financial Corporation.  I'll start by
 7   introducing myself.  I'm Dolores Smith, I'm the Director
 8   of the Division of Consumer and Community Affairs at the
 9   Federal Reserve Board in Washington, D.C.  I'm the
10   presiding officer for this public meeting.
11             Our other panelists starting from the extreme
12   left are Linwood Gill, Vice President, Banking
13   Supervision & Regulation from the Federal Reserve Bank
14   of Richmond.  Mike Johnson, Vice President, Banking
15   Supervision & Regulation from the Federal Reserve Bank
16   of San Francisco.  And Pat Robinson, Managing Senior
17   Counsel, Legal Division from the Federal Reserve Board.
18             The panel is representing the Federal Reserve.
19   The decision on the Bank of America application will be
20   made by the seven members of the Board of Governors back
21   in Washington, D.C.  We are holding this public meeting
22   because Bank of America Corporation, Charlotte, North
23   Carolina has applied for approval to acquire FleetBoston
24   Financial Corporation, Boston, Massachusetts.
25             When the Federal Reserve system considers one
0004
 1   of these applications, we look at a number of factors
 2   under the Bank Holding Company Act.  These include
 3   financial issues, managerial issues, competitive issues
 4   and the convenience and needs of the communities
 5   affected.
 6             In doing so, we particularly look at the
 7   record of performance of the parties under the Community
 8   Reinvestment Act.  The CRA requires the Board to take
 9   into account an institution's record of meeting the
10   credit needs of its entire community.
11             The purpose of the public meeting today is to
12   receive information regarding these factors.  We will be
13   seeking to elicit this information and to clarify
14   factual issues related to the application.  We are very
15   pleased that so many witnesses have been willing to come
16   and testify at this public meeting.  We have about 95
17   groups and individuals represented and I understand that
18   that number keeps changing.
19             I will say a little bit about the procedures.
20   This is what we call an informal public meeting.
21   Members of the panel may ask those who are testifying
22   about their testimony.  This is not a formal
23   administrative hearing so we are not bound by rules
24   regarding evidence, cross-examinations and some of the
25   more formal trappings of that kind of a proceeding.
0005
 1             And because we have so many witnesses, we will
 2   need to stick to the schedule so that everyone who has
 3   asked to testify, to offer oral testimony, will have a
 4   chance to do so.  We are going to ask the witnesses to
 5   be mindful of the needs of others and to help us stay on
 6   schedule.
 7             The panels of witnesses will be expected to
 8   stay within the alloted times that have been given to
 9   them.  We have a signal system with regard to timing.
10   We have a timekeeper right here up front.  Would you
11   raise your hand so that they will know to look for you.
12   She will give you a signal when you have one minute --
13   well, in the case -- it will vary by panel.  But in some
14   cases it might be five minutes as for this panel.  And
15   in other cases it will be one minute when there's one
16   minute remaining to speak.  And then another signal when
17   the time has expired.
18             There may be some people who were unable to
19   sign up in advance.  And to the extent possible, we want
20   to give them a chance to speak as well.  So at the end
21   of the meeting today, we will make the mike available to
22   anybody who would like to make a presentation time
23   permitting.
24             One more comment about testimony.  Witnesses
25   may submit a written supplement to their oral testimony
0006
 1   but they must do so by next Friday, January the 23rd.
 2   And then the record will be closed.  Any written
 3   supplements should be directed to Mr. Gill at the
 4   Federal Reserve Bank of Richmond and must be received by
 5   5:00 p.m. eastern daylight time on Friday, the 23rd.
 6             There is information at the registration desk
 7   on a blue sheet that gives you the address to which the
 8   supplemental comments may be sent.  If you have not
 9   turned in copies of your written testimony or if you
10   have any other written statements to put into the
11   record, we ask you to leave them with Federal Reserve
12   staff at the registration table.  It is important that
13   we get this material for the record.
14             A paper copy of the official transcript of
15   this meeting will be available by next Wednesday,
16   January the 21st, through the Federal Reserve Bank of
17   San Francisco and the Board.  In addition, the official
18   transcript will be available by close of business on the
19   21st on the Board's public website.  And I'll say this
20   but if you don't write it all down, we will make it
21   available at the information desk.  It's www.federal
22   reserve.gov/events/publicmeeting.
23             So with that, we're ready to begin the
24   proceedings and we will start with a panel from the Bank
25   of America and Fleet.
0007
 1             LIAM McGEE:  Good morning, thank you for
 2   having us.  I'm Liam McGee, President of Bank of America
 3   and for the past four years also President of Bank of
 4   America California.  It's a privilege to be here to
 5   represent our 135,000 Bank of America associates across
 6   the country, especially the 40,000 of them who live and
 7   work in the State of California.  And we welcome the
 8   opportunity to talk about our pending merger with
 9   FleetBoston Financial Corporation and the impact it can
10   have on the communities we serve.  Particularly for
11   those most in need of affordable convenient access to
12   financial services.
13             This merger will expand our markets.  But more
14   important it will put the capital power of the second
15   most profitable bank in the world behind our
16   unprecedented commitment to community economic
17   development.
18             I will speak from the California perspective
19   today.  Doug Woodruff, who is President of the Bank of
20   America Community Development Bank, will join me and
21   provide more California specific information.
22             As you know, we have just made a remarkable
23   national commitment to loan and invest $750 billion for
24   community economic development over the next ten years.
25   Doug is responsible for overseeing a large part of that
0008
 1   commitment.  Cathy Bessant, our company's chief
 2   marketing and communications executive and, quite
 3   frankly, the moving spirit behind our partnership
 4   approach to communities across America, will wrap up our
 5   presentation.  She will give you a broader perspective
 6   on how our company will look and function post-merger
 7   including an overview of our new philanthropic strategy.
 8             Ladies and gentlemen, it's appropriate for
 9   this hearing to be in San Francisco where 100 years ago
10   we were the first bank to begin providing California
11   residents with unexpectedly easy access to financial
12   services.  We have been growing with the state ever
13   since and investing in its future day by day.
14             Over the past five years 38 percent of the
15   corporate progress toward our 350 billion-dollar goal
16   for community development lending and investment has
17   been in California.  This state accounts for nearly
18   34 percent of our company's total deposits.
19             So the fact is that we're actually importing
20   resources to address California's critical economic and
21   community development needs.  And as you know, as a
22   result, our CRA rating is outstanding.  The point is
23   that for Bank of America as it is for the nation
24   California is a bellweather hugely important to the
25   spirit, character and success of our company and our
0009
 1   country.  We know this state and what makes it so
 2   important and we have mobilized our resources
 3   accordingly.
 4             Over the past year California has accounted
 5   for 40 percent of our retail market share growth
 6   nationally and more than 50 percent of the revenue we
 7   earn from small business relationships across the
 8   country.  In that regard, Alberto Alvardado, who heads
 9   the greater Los Angeles SPA district, the largest SPA
10   lending office in the nation, has said, and I quote,
11   "Bank of America truly understands the strengths and the
12   challenges of California's great ethnic diversity and
13   how the smallest neighborhood businesses provide jobs
14   and needed services to drive this state's giant
15   economy," end quote.
16             Across California we have 957 banking centers
17   and we plan to build nearly 100 more over the next three
18   years.  A third of our branches are in low to moderate
19   income neighborhoods.  When many other institutions fled
20   our inner cities, we stayed.
21             Today we have more offices in some
22   neighborhoods than all competitors combined.  South
23   Central Los Angeles is one example.  Another is
24   San Francisco's visitation valley where we are the only
25   bank in the neighborhood.
0010
 1             We also provide the convenience of more than
 2   4,000 automated teller machines in California and
 3   35 percent of those are in low and moderate income
 4   neighborhoods.  Our commercial small business private
 5   and premiere banks are growing as well.
 6             Because of this success we have dramatically
 7   deepened our involvement in matters crucial to the
 8   quality of life in California in the five years since
 9   the Nations Bank merger.  I'm talking particularly about
10   housing, small business development, education and
11   financial literacy.
12             From 1999 through November, 2003, Bank of
13   America community development activities in California
14   have totaled more than $86 billion.  And our largest
15   investment category is affordable housing and for good
16   reason.
17             The shortage of housing is one of the greatest
18   threats to California's economy and social stability.
19   It fuels an affordability crisis that hits California
20   families hard especially immigrant families.
21             This is a major public policy issue and we use
22   our influence to advance solutions including support for
23   the recent housing bond election.  But facts demonstrate
24   that we make a big difference through our own
25   initiatives.
0011
 1             Over the past five years our mortgage lending
 2   to low and moderate income borrowers combined with the
 3   financing of multiple housing construction has helped
 4   provide affordable homes for nearly 400,000 low and
 5   moderate income families.
 6             We've also developed low cost banking products
 7   including zero down payment loans and we've learned to
 8   adapt our underwriting processees to cultural realities.
 9             One example is our recognition and acceptance
10   of multiple incomes which is common in many Hispanic
11   households.  For these and other reasons we are
12   consistently one of the leading mortgage lenders to
13   minorities and families below median income and the
14   leading home improvement lender in underserved
15   communities.
16             Results like this have earned us
17   congratulatory letters from the Greenlining Institute,
18   one of the community advocacy groups here today.
19             Another factor is our loans solutions process
20   which enables our banking center associates to approve
21   mortgage applications within minutes and provide
22   complete mortgage services right there in neighborhood
23   locations.
24             Another high priority is small business
25   development.  In California's small neighborhood
0012
 1   companies add a cultural diversity that makes our cities
 2   among the most interesting in the world.  Small firms
 3   account for virtually all net new jobs and Hispanic and
 4   Asian owned businesses grow two to three times faster
 5   than business creation at all.
 6             Five years ago candidly small business was not
 7   a priority and we did very little SBA lending.  Then we
 8   revolutionized our approach and the results speak
 9   loudly.  Today we are far and away the market leader in
10   small business banking serving one in three small
11   companies across the state.  And we are the number one
12   SBA lender in California and the nation for the second
13   year running.
14             Through our banking centers we reach the
15   smallest of companies.  Our average business loan is
16   $27,000 which is a vivid way of confirming that we bank
17   neighborhood businesses and actively support
18   neighborhood economies across the state.
19             We also fund technical assistance providers
20   that help small businesses with credit issues and
21   planning.  I personally worked with the California
22   Reinvestment Committee to establish one such initiative
23   and we funded it with a first year grant of $400,000.
24             While we may not agree on every issue, we
25   share common concerns and goals for strengthening our
0013
 1   communities.
 2             We also invest in our own infrastructure.  We
 3   like to say that a Bank of America small business client
 4   can do everything that large businesses do, from online
 5   banking, electronic bill pay and other web based
 6   services to sweep account derivatives and other
 7   specialized credit services or they can simply rely on
 8   our business credit card.
 9             And as you know, the majority of these
10   entrepeneurs and owner operators are non-Anglo and many
11   are first or second generation immigrants.  In fact, in
12   many of our markets in California, Hispanics, Asians and
13   other ethnic groups are the majority.  We get this and
14   we act on it.
15             Last year we quadrupled our in language or
16   non-English advertising and we recruit to serve diverse
17   populations.  Over the past year nearly 65 percent of
18   our new employees in California have been non-Anglo and
19   more than 50 percent of our new employees in California
20   have been bilingual.
21             Education is another priority.  Over the past
22   five years we have invested more than $25 million in
23   supportive grants with the primary focus on training for
24   teachers and school administrators and financial
25   literacy.  A few quick examples.  $1 million for the
0014
 1   California reading literacy project which involves the
 2   collaboration of 33 colleges and universities with 600
 3   schools across the state.  A grant of one and
 4   three-quarter million dollars to establish the
 5   Educational Leadership Institute at the University of
 6   California Riverside.  And $750,000 to fund training for
 7   teachers and administrators in the San Diego City
 8   schools.  A.
 9             Core tenant of our community approach is
10   education and financial literacy, which is critically
11   important in a state that on average attracts 250,000
12   residents every year from other countries.
13             We also use our banking centers for financial
14   literacy training and homeownership seminars.  And as we
15   do, we offer low cost banking products to make it easier
16   for people to become our customer.
17             My access checking is one imaginative example,
18   it features a low opening deposit of $25, free checking
19   with direct deposit, no minimum balance, unlimited check
20   writing, free online banking with bill pay, a check card
21   with a photo security option, and unlimited access to
22   our unparalleled nationwide ATM network.
23             And this year we piloted a Spanish language
24   version of My Access Checking in Los Angeles and that
25   product will be widely available early this year as our
0015
 1   Nuevo Futuro account.
 2             We also partnered with the National Council on
 3   Economic Education to develop an interactive curriculum
 4   called Financial Fitness for Life in English and
 5   Spanish.  And we partnered with the Latino Education
 6   Acheivement Project to produce Spanish banking
 7   brochures.
 8             Before I wrap up my part of the comments, I'd
 9   like to make a personal statement and quick
10   introduction.  As I assume broader leadership
11   responsibilities with Bank of America and move with my
12   family toward our company headquarters in Charlotte, I
13   do so with a tremendous amount of personal pride in what
14   we've accomplished in this state with many of the people
15   in this room in recent years.
16             I feel honored to represent this great state
17   and the headquarters of the nation's leading financial
18   services company.  And in that regard I'm pleased to
19   make the first public introduction of the leader who
20   will succeed me as President of Bank of America of
21   California.  Someone many of you already know.  Please
22   meet Lynn Pike.  Lynn.
23             Lynn currently leads FleetBoston's consumer
24   businesses and oversees the work of 15,000 employees in
25   1500 branches in eight northeastern states.  She's also
0016
 1   a key member of the FleetBoston team that works to
 2   optimize that bank's commitment to the Community
 3   Reinvestment Act.
 4             Before joining FleetBoston in May, 2002,
 5   however, she was the regional president in Los Angeles
 6   where she again will reside for Wells Fargo where she
 7   established a strong record for community leadership and
 8   economic development.
 9             When the merger is completed, Lynn will also
10   be the president of small business banking for our newly
11   combined company as well as President of Bank of America
12   California.
13             Lynn, on a personal note, we're thrilled to
14   have you back in California.  And thanks for joining us,
15   making the effort to be here today.
16             With that, let me say thank you for this
17   opportunity personally.  Now here's Doug Woodruff to
18   speak in greater detail about California and our
19   recently announced ten year $750 billion commitment to
20   community economic development.  Thank you.
21             DOUG WOODRUFF:  Liam, thank you and good
22   morning.  Liam has already given you the facts of our
23   strong performance in California and conveyed the spirit
24   behind our ongoing corporate commitment to community
25   investment.  Let me comment quickly about our recently
0017
 1   publicized goal to lend and invest $750 billion for
 2   community and economic development over the next ten
 3   year.
 4             This is a lofty yet realistic goal that holds
 5   great promise for California.  And it reflects the
 6   potential to combine the organization of Bank of America
 7   and Fleet.  But in heartened spirit as well as in
 8   financial terms, it represents much, much more.  It
 9   embodies our company's determination to be the number
10   one community development lender and the bank of choice
11   in our growing ethnically and culturally diverse markets
12   across our franchise.
13             In 1998, this objective drove us to set our
14   unprecedented $350 billion ten-year goal for community
15   and economic development and has driven us in our
16   performance every year since.  In five years nationally
17   we have loaned over $230 billion, that's 230 billion
18   against that goal.
19             We have funded affordable housing, consumer
20   and small business lending in low income areas and
21   grants for nonprofit community groups.  In fact, therein
22   lies my theme for this testimony.
23             Five years ago when we created Bank of
24   America, our community development pledges were exactly
25   that, pledges.  But today we have a demonstrated
0018
 1   five-year record of an outstanding performance in
 2   California and nationally.
 3             This performance in combination with our plan
 4   to merger with Fleet and our desire to lead the nation
 5   in community development led us to set a new even more
 6   ambitious goal of $750 billion.
 7             At the current run rate for California, we
 8   estimate we'll reach $260 billion in total community
 9   development investments in this state as part of that
10   goal.  For comparative purposes, this projection gives
11   us 75 percent of the current national goal of 350
12   billion.  And looking back, we have, in essence, taken a
13   predecessor's California goal of $140 billion and nearly
14   doubled it.  This is demonstrable proof of what we said
15   in 1998.  We have and will use these goals as a floor
16   and not a ceiling.
17             As Liam noted, affordable housing is a
18   critical issue in our communities across the country but
19   nowhere is it more important than in California.  And,
20   therefore, it is our number one priority.  Our national
21   results in this area have accelerated significantly from
22   $9 billion in 1999 to nearly $27 billion in 2003
23   primarily single-family lending in all low and moderate
24   income neighborhoods.
25             Five years ago, we heard concerns in this very
0019
 1   room about our ability to meet a critical California
 2   need, financing affordable rental housing.  But let the
 3   facts today speak for themselves.  In 2003, Bank of
 4   America provided $530 million for the financing of
 5   affordable rental housing in California.  More than
 6   three times the predecessor's 1997 total.
 7             In terms of California performance,
 8   performance and fulfillment of our promises, we have
 9   financed over 400 affordable multi-family projects
10   providing safe, clean, affordable housing for 30,000 low
11   income Californians since 1999.  As examples, this total
12   includes 68 multi-family projects in San Francisco, 85
13   in the greater L.A. area, 60 in the greater San Diego
14   area, and 34 in and around Sacramento.  Along the way we
15   have invested $5.9 billion in affordable housing for
16   California's rural and Indian country communities.
17             As the largest originator of community
18   development loans in the United States, we're always
19   looking for alliances that will multiply the impact of
20   our investments.  Last June we continued our track
21   record of innovation by teaming with California based
22   Impact Community Capital in the first of its kind loan
23   program.  This program will result in the construction
24   of nearly 15,000 new affordable housing units over the
25   next three years.
0020
 1             We support multi-family housing in many ways.
 2   Nationally our low income housing tax credit investments
 3   have increased from $270 million in 2001 to over
 4   $450 million in 2003, including $200 million in
 5   California.  Again, triple the level of our predecessor
 6   in 1997.
 7             Three things have helped make these results
 8   and our new goal possible.  First, our local community
 9   based approach to growing businesses and supporting the
10   needs of low to moderate income households.  Second,
11   actively partnerships with neighborhood organizations to
12   innovate and drive solutions.  And finally a commitment
13   to public accountability.  We take that latter point
14   very seriously and report out at local, state and
15   national performance annually providing an unmatched
16   level of detail to all stake holders.
17             As I said, we're fully committed in community
18   based partnerships as a fundamental strategy and it's
19   been very successful for our company.  But we must
20   recognize that it can come with some controversy.  We
21   cannot and should not partner with everyone.  We cannot
22   and should not invest in every project or every group.
23   Our goal is not to be all things to all people.  But we
24   do strive to be a catalyst for market leading
25   development in both outcomes and approach.
0021
 1             In conclusion, the head line here is we said
 2   we would do more, we have done more and we will do even
 3   more in the future.
 4             Thank you, and I am pleased to introduce Cathy
 5   Bessant, a member of Bank of America's risk and capital
 6   committee and really the architect of our company's
 7   strategy of building a national framework for community
 8   impact and delivering it locally.  Cathy.
 9             CATHERINE BESSANT:  Thanks, Doug, good
10   morning.  As the applicant today and as you've heard
11   from Liam and Doug, we come before the public and before
12   the Board from a position of strength.  It is strength
13   built upon a deep dedication to communities and for both
14   Bank of America and FleetBoston a strength built on
15   strong records of performance validated by outstanding
16   CRA ratings.
17             I want to be clear, strength and arrogance are
18   not the same thing.  We come before you with the former
19   and not the latter.  We are deeply committed to our
20   neighborhoods and consider it our great and sincere
21   accountability to use our strong record as a catalyst to
22   do even more in serving our markets.
23             Importantly, our work has also been validated
24   by the public record in this transaction.  Literally
25   hundreds of comment letters have been received by the
0022
 1   Federal Reserve regarding this deal.  Contrary to what
 2   is popularly reported by opposition, the vast majority
 3   of these letters have been supportive of our record and
 4   of the transaction.
 5             Of the nearly 350 letters received to date
 6   close to 200 of those letters have been favorable in
 7   support of our record and moving forward.  This further
 8   reinforces the notion that Bank of America is, in fact,
 9   meeting the needs of its communities.
10             These letters describe the Bank of America
11   that I'm proud to work for.  The Bank of America that
12   has invested and will invest more in our communities
13   than any other financial institution.  And the Bank of
14   America that merits approval of this application.
15             We've talked a lot in the last two months
16   about the reasons for this merger and I think Liam and
17   Doug have just done a great job of laying out a very
18   compelling case.  I want to follow up on their comments
19   with further comments about the competitive and business
20   rationale that drove this decision and why our new
21   company will be better positioned than ever to serve our
22   customers, our communities and our shareholders.  It's
23   really all about three things, results, leadership and
24   intent.
25             We are building a company that will deliver
0023
 1   unparalleled financial service capabilities, unmatched
 2   convenience, innovation and resources to more Americans
 3   than ever before in our nation's history.  This breadth
 4   and depth means important benefits for all of our
 5   constituencies.  We will serve more than 33 million
 6   consumers.  We will provide market leading products for
 7   2.5 million business clients, 30 percent of the
 8   businesses operating in our combined 29 state franchise.
 9   All of this backed by the capital power of the second
10   largest banking company in the world.
11             Customers will benefit from the most extensive
12   franchise in the nation, a shared commitment to service
13   excellence and a full range of traditional and
14   innovative financial services.  Shareholders will
15   benefit from the best retail and wealth markets in
16   America, unmatched diversity of resources and revenue
17   and the most talented management team in the industry.
18   I wrote that part myself.
19             Our communities will benefit from our shared
20   tradition of public private partnership, community
21   development and philanthropy.  The central issue before
22   the board today is our record, our results and viewing
23   that record as a valid and predictive indicator of
24   future outcomes.  It is a record substantiated in our
25   ratings, our results and in the actuality of our
0024
 1   partnerships.
 2             Our national and California outstanding CRA
 3   ratings come as a result of a full scope review by our
 4   regulator and included an extensive full year of
 5   solicitation of public comment.  You've heard how
 6   successful we've been in delivering $230 billion in
 7   lending and equity investments throughout our franchise.
 8   It's a demonstrative record of neighborhood, not
 9   national, but neighborhood results.
10             We fully recognize in addition that creating a
11   strong, healthy community fabric takes a lot more than
12   lending and equity.  And we demonstrate that
13   understanding every day through equally impressive
14   results in other areas important to community
15   development.
16             Last year we donated more than $100 million in
17   charitable grants and sponsorships to not for profit
18   organizations.  Through our commitment to and with an
19   aggresive supplier diversity goal of 15 percent of our
20   total purchases, we have rapidly emerged as one of the
21   nations leading advocates for companies owned by
22   minorities, women or the disabled.
23             In 2002 alone we spent more than $545 million
24   with these companies representing over 7 percent of our
25   total purchases.  We fully expect in 2003 to have the
0025
 1   numbers come in at just close to 9 percent of our total
 2   purchases as well.
 3             And finally we know that product innovation is
 4   critical in meeting the needs of low and moderate income
 5   neighborhoods.  We have done this, as Liam and Doug has
 6   both described, with terrific products such as My
 7   Access, Safe Send and a host of affordable mortgage
 8   products.
 9             We operate all of what we do on three basic
10   principles.  Number one, we're relationship builders.
11   Number two, we set national goals and then deliver on
12   them locally by relying on our local leaders.  And
13   number three, we believe very strongly in
14   accountability.  Regardless of the requirement of the
15   regulation, every year we publicly report our results at
16   the community, state and national levels in greater
17   detail than any financial institution out there.
18             The key to our success in building this record
19   of results has been our strategy in creating alliances
20   with community organizations.  Listening to these
21   organizations has made a real difference in our
22   capability to be effective.  We build strong and
23   productive partnerships with many community based
24   organizations and you'll be hearing from some of them
25   today.
0026
 1             Investment in neighborhoods, though, is more
 2   than about just dollars, it's about leadership and it's
 3   about advocacy.  And in this area, Bank of America
 4   stands second to none.  We have actively led efforts in
 5   favor of legislation actually strengthening the CRA,
 6   funding is strong and consistent Small Business
 7   Administration, creating CDFI programs and funding,
 8   permanently extending the low income housing tax credit
 9   and actually helping to create the New Market tax
10   credit.
11             In this advocacy we often sound more like
12   community based organizations than like a large
13   corporation and that often makes us very unpopular with
14   our peers.  We do this, though, because we understand
15   the importance of capital in neighborhoods.  We know the
16   importance of creativity and of leadership and we apply
17   our intensity every day to ensure that we stay on the
18   cutting edge.
19             I'd like to take just a couple of minutes to
20   be forward looking and to talk about a couple of areas
21   that while not technically relevant to approval of the
22   application are hugely important to California and to
23   many of the groups in this room.  Specifically our
24   target for philanthropy.  Our charitable giving goals
25   translate to an annualized rate of charitable
0027
 1   contributions of about $150 million a year.  This giving
 2   level of cash contributions to nonprofits through our
 3   foundation and otherwise translates to the highest, if
 4   not the number one spot, nationally and in the world, in
 5   corporate philanthropy.  We truly are striving to set
 6   the highest standards of performance and accountability.
 7             We've reaffirmed and demonstrated that local
 8   lending and equity investment experts will remain in
 9   place.  That these local experts will have the resources
10   they need to make an outstanding difference in their
11   markets and that the experts will have the mandate from
12   the company and from their local leadership in making
13   results happen in neighborhoods.
14             Time and time again Bank of America has
15   delivered.  Our record speaks for itself and we intend
16   to continue to build on that record to produce even more
17   outstanding results for California and for the country.
18   Thank you.
19             DOLORES SMITH:  Thank you very much.
20   Questions from the panel?
21             LINWOOD GILL:  Just one thing, I'd like to ask
22   Doug to clarify.  You indicated that of the 350 billion
23   total commitment, 260 of that would be in California you
24   anticipate; is that correct?
25             DOUG WOODRUFF:  No.  What I said was, at the
0028
 1   current run rate of California under our new $750
 2   billion commitment, $260 billion would be projected for
 3   California.
 4             LINWOOD GILL:  Of the 750 billion?
 5             DOUG WOODRUFF:  Correct.
 6             LINWOOD GILL:  Okay, thank you.
 7             PAT ROBINSON:  I also have a question.  What
 8   dollar amount of the 750 billion-dollar pledge
 9   represents outstanding dollar amounts from existing
10   pledges of Bank of America and Fleet and what amount
11   represents new dollar amounts?
12             DOUG WOODRUFF:  In terms of other programs
13   that we have announced, partnerships with local and
14   national partners, opportunities to do investments,
15   those would all be accumulated into the
16   750 billion-dollar aggregate goal.
17             PAT ROBINSON:  What about also Fleet has a
18   current pledge, Bank of America has a current pledge.
19             DOUG WOODRUFF:  This would replace all of
20   those previous pledges.
21             PAT ROBINSON:  Another question quickly.  How
22   do you plan to administer your CRA programs in the
23   different regions or states where you're expanded
24   footprint is going to be and from what base or basis do
25   you plan to administer the CRA programs?
0029
 1             DOUG WOODRUFF:  Pat, we have the largest bank
 2   led community development banking group in the country
 3   with over 300 associates combining with another hundred
 4   in the Fleet organization.  My expectation is we would
 5   do it in much the same way that Bank of America has done
 6   it heretofore, placing local accountable people in all
 7   of our key markets to make sure that they can work, not
 8   only to produce affordable housing, small business
 9   opportunities, but also to continue our work in
10   communicating with and dialoguing with local community
11   based organizations.
12             MICHAEL JOHNSON:  One quick question, a little
13   drill down on the accountability of these.  Since that
14   is such a linchpin to your overall program, local
15   accountability, how do you oversee that and what's the
16   program to ensure that that actually takes place?
17             LIAM McGEE:  Michael, as Doug indicated, we
18   have local Community Development Bank personnel in the
19   markets and we have a substantial portion of the number
20   that he said we have here in California led by Irene
21   Riley who runs our Community Development Bank activities
22   here.
23             As the California state president, I worked
24   very closely with them and the accountability ultimately
25   is at the local market president level as it will be for
0030
 1   Lynn going forward in her role as California market
 2   president.  So we have a very clear set of
 3   accountability for the activities and then ultimately
 4   one of the key responsibilities in accountability for
 5   the market president is delivering all business
 6   activities including community development.  So it's
 7   very much locally run and very locally accountable.
 8             DOLORES SMITH:  Anything else?  Thank you very
 9   much.
10             LIAM McGEE:  Thank you.
11             DOUG WOODRUFF:  Thank you.
12             DOLORES SMITH:  We will move on to our second
13   panel.  I'll start, though, by asking people please to
14   turn off your cell phones so they won't interrupt our
15   hearing, our meeting.  And then I'll also say with
16   respect to this next group that if you have looked at
17   the agenda, you will see that it is a very large group.
18   They do have 45 minutes and Mr. Gnaizda is in charge of
19   assuring that they stay within that 45 minute alloted
20   time schedule.  I don't know exactly how he plans to
21   manage it but I have great confidence that he will -- he
22   will start us off with music.
23           (Guitarist playing a song in Spahinsh.)
24             ROBERT GNAIZDA:  Good morning to the
25   community.  Good morning to the bank.
0031
 1             DOLORES SMITH:  You'll need to speak into the
 2   mike.
 3             ROBERT GNAIZDA:  Good morning to the
 4   community.  Good morning to the bank.  And good morning
 5   to the Federal Reserve.  My name is Bob Gnaizda and I'm
 6   the policy director at the Greenlining Institute.
 7             Because of the enormous magnitude of this
 8   merger and this commitment of $750 billion and the hope
 9   of the community and the concern and fear of the
10   community at the same time, we have asked Reverend Mark
11   Whitlock, who is the executive director of the largest
12   church based economic development program in the western
13   United States and we believe to be the best in the
14   United States, to open with a brief prayer.
15             REVEREND MARK WHITLOCK:  Let us pray.  Oh,
16   God, it was the father to the fatherless, a mother to
17   the motherless, and a friend to the friendless.  We come
18   seeking fellowship with your power and peaceful presence
19   as we celebrate the birth of Dr. Martin Luther King, Jr.
20   in a culture still filled with divisiveness,
21   disconnectedness, domination by disciples of corporate
22   greed.  We pause for a moment of centric cosmic
23   consciousness that will bring wholeness and economic
24   healing to the poor and to our nation and ourselves.
25             We take time to remind the leadership of Bank
0032
 1   of America and all financial institutions of their moral
 2   and social responsibility to the 20 million minority
 3   families living in California who have contributed to
 4   the success of Bank of America.
 5             African Americans, Hispanic Americans, Native
 6   Americans and Asian Americans have contributed to the
 7   success of Bank of America by purchasing groceries and
 8   pharmaceutical goods and clothing from local retail
 9   shops or department stores banking with Bank of America.
10   They contributed to the success of the bank by borrowing
11   bank funds to purchase their first home, automobile,
12   household appliance, furniture and other home services.
13             Yet for many of those who have contributed to
14   the bottom line, to the benefit of bank shareholders,
15   they have continued to stand in food lines, rent space
16   in slum buildings and attend substandard schools.
17             We pray that Bank of America substitutes
18   courage for caution, that Bank of America not merely be
19   led by a bottom line insatiable thirst for profit but
20   above the line moral conscious that seeks to make
21   Dr. Martin Luther King's dream a reality.  Oh, God,
22   deliver us from the domination of individual and
23   institutional greed.  Liberate us for leveling the
24   economic playing fields for those who have no voice that
25   is heard in the hallowed halls of palatious (sic) board
0033
 1   rooms.  Liberate us from a self-centered materialism and
 2   liberate us to serve America's 30 million citizens who
 3   were disenfranchised, some homeless and helpless.  And
 4   liberate us from building wealth for wealthy
 5   shareholders and liberate us for the creation of new
 6   stake holders of social justice.
 7             Now, God, we thank you for liberating, your
 8   liberating love which redeems, reveals your presence in
 9   us and restores yesterday's broken dreams and tomorrow
10   save neighborhoods, thriving minority businesses and
11   contributors to the great society.  And in closing we
12   also thank you, God, for returning Lynn Pike to
13   California.
14             ROBERT GNAIZDA:  Good morning.  This panel
15   will consist of approximately 20 speakers from diverse
16   communities expressing many diverse thoughts, but
17   there's some commonality.  They all have hope regarding
18   this commitment.  Many will have praise and many will
19   also express concerns.  One thing, however, that I want
20   to note at the beginning is we all miss that the CEO of
21   the Bank of America, a great leader, Ken Lewis, is not
22   here and he was in Boston.  We hope that this is not a
23   harbinger of the future and that he will visit here
24   frequently.
25             From Greenlining's point of view, we have
0034
 1   great praise for the 750 billion-dollar commitment.  It
 2   is the largest CRA commitment in the history of this
 3   nation or the world.  And it is twice the commitment of
 4   any other institution, which is Washington Mutual with
 5   375 billion.  And its potential is enormous.
 6             And the philanthropic commitment of
 7   1.5 billion is the largest ever made by any bank and
 8   it's a long-range strategic commitment which we
 9   appreciate.  It means that the banking institution -- a
10   banking institution with vision and strategy will be
11   able to leverage these grants in a way probably a
12   hundred times more valuable than any government dollar
13   and certainly more restrictive -- less restrictive.
14             And we're pleased that this is a floor, that
15   is, the bank will seek more, and I believe the bank can
16   achieve much more if it develops its strategic plan with
17   the communities.
18             Now I want to just briefly express five major
19   concerns that many of the members who will be speaking
20   today, not just from Greenlining but throughout the day,
21   have.  The first is the absence of a California specific
22   commitment.  We were heartened that Doug Woodruff said
23   that at the present rate they expected 260 billion of
24   this commitment in CRA to go to California.  We would
25   like to see a specific commitment of a minimum of
0035
 1   250 billion of this to California.  And we'd like that
 2   commitment to be made today.
 3             Secondly, we want to make sure that the
 4   1.5 billion in philanthropy does not go to North
 5   Carolina and new England.  It has disproportionately in
 6   the past gone to North Carolina.  We want to be sure
 7   that a minimum of 40 million a year and perhaps
 8   50 million a year is designated for California and more
 9   as the commitment grows because I believe the commitment
10   will grow as the profits grow.
11             The second concern is the Bank of America has
12   been the leader in many fields.  It is not the leader in
13   all fields, however, including some important ones.  It
14   is the leader in SBA lending.  It is not the leader in
15   small business lending overall.
16             And as Greenlining's most recent reports,
17   which we will provide to the Federal Reserve again,
18   demonstrate the Bank of America finished fifth out of
19   the seven largest financial institutions in conventional
20   home loans to African Americans and was 30 percent below
21   the statewide average for all institutions.
22             Similarly it finished fourth out of the seven
23   largest for Latino's and was 20 percent below the state
24   average.  So our concern is not that the Bank of America
25   just be here, but it be the leader.  And we were
0036
 1   heartened that many of the bank's speakers said they
 2   would be the leader.
 3             Similarly for supplier diversity, the bank has
 4   a pledge to be the leader but it is not yet.  Just
 5   1 percent of its contracts were awarded to African
 6   Americans last year.
 7             Third, and this is a concern heard across the
 8   country, we want parody with North Carolina and we want
 9   parody with new England and FleetBoston which has just
10   secured a chairman and has secured seven board members.
11   We have no chairman, we have no CEA -- CEO, excuse me,
12   and we have but one board member.
13             Fourthly, we want a CEO who comes to
14   California frequently to meet the community, frequently.
15   Not once or twice but frequently.  And we want a strong
16   leader in California and I believe that step has been
17   met with Lynn Pike who is well-known to many community
18   leaders and well respected.
19             And lastly, the bank is committed to
20   transparency but it must be full transparency and it
21   must be combined with quarterly meetings with the
22   California President with community groups.  Those are
23   our five concerns.
24             There's one other matter I wanted to mention.
25   We're very proud that the BofA made a commitment of
0037
 1   $6 billion for a Boston group for affordable housing.
 2   We'd like to suggest that the bank do the same for the
 3   faith based community of $6 billion for affordable
 4   housing and for equity.
 5             In closing, we all wish the BofA to be the
 6   leader.  We wish you to make every no here a yes for
 7   this merger.  We wish you to make every skeptic here a
 8   believer.  And we wish you to make 20 million minorities
 9   stronger.  And when you do so, you will be stronger as
10   well.  Thank you.
11             BEN BENAVIDEZ:  My name is Ben Benavidez.  By
12   the way, my voice is weak and I had a stroke so please
13   have patience.  Currently the President of the Coalition
14   of Rural Pueblos, an economic development based in
15   Fresno, California in the middle of the San Joaquin
16   Valley.  I've been a board member of Greenlining for 18
17   years and I was national state president of Mexican
18   American Bowling Association for twelve years.  I just
19   retired this past January.  A very strong organization
20   that's a leader amongst, not Hispanics, not Latinos,
21   Mexicanos which comprise 89 percent of what you call
22   Hispanics.  And that's one thing you got to watch out
23   for, we don't like you or you to define us and describe
24   us.  We know what Mexicanos are and they're in the
25   San Joaquin Valley from Bakersfield to San Joaquin where
0038
 1   Mr. Giannini founded the Bank of Italy that became the
 2   Bank of America.  Yet, I have never seen Mr. Liam McGee
 3   or Mr. Pike -- I'm sorry, Lynn, and Mr. McCall, the
 4   first CEO of North Carolina.
 5             As you know, Mr. -- wow, real quick.  I vote
 6   ADA.  I'm disabled.  I would like to have another
 7   minute, please, if you don't mind.  I'd like to have
 8   another minute because I'm ADA.
 9             My point is this, we have to make sure that
10   you deal with the merger like Mr. Richard Rosenberg did
11   back in the late '80s with Security Pacific.  He visited
12   the San Joaquin Valley where a lot of people need what
13   is in the commitment.  But we don't want for you to talk
14   the talk, we want you to walk the walk.  And the way you
15   do that is by really being committed.  And if you're
16   from North Carolina and you're from New England, all
17   they do is talk about the beautiful Golden State of
18   California and you know that.  So don't make it a bad
19   triangle -- business triangle, make it a very positive
20   triangle.
21             And, Lynn, I invite you to the great
22   San Joaquin Valley where Bank of America was founded and
23   the red, white and blue Bank of America name that you
24   use be American created by the same way.
25             DOLORES SMITH:  Thank you.
0039
 1             GELLY BORREMEO:  Good morning, my name is
 2   Gelly Borremeo, I'm the executive director of the
 3   National Council of Asian American Business Associations
 4   and also the publisher of Asian Enterprise Magazine
 5   which is the largest Asian business focused magazine in
 6   North America.
 7             It's difficult for me to provide a very strong
 8   testimony today which I had prepared actually but
 9   because of the announcement that Lynn Pike will be head
10   of California.  I have changed my tone in presenting the
11   things that I have concerns of with Bank of America.  I
12   wanted to just take note of what Cathy Bessant and Doug
13   mentioned earlier.
14             First of all, I think the philanthropic
15   contributions of Bank of America is substantial.
16   Although, I think Wells Fargo is far ahead of you if you
17   base it on the number of deposits.  Bank of America,
18   while you are number one in deposits in California, are
19   not number one in terms of the percentage of deposits
20   that you get.
21             Number two, the other concern that I have is
22   that in expanding your footprint I liken it to a child
23   being in school and not making the grade.  And you're
24   adding on a lot of extracurricular activities.
25             The other thing that I have to tell you about
0040
 1   this expansion is that, while it may seem like it's a
 2   good thing to do for everyone, I don't agree because
 3   it's like I have a kid who is 18 years old and is in
 4   college here in Santa Cruz, she has the freedom to do a
 5   lot of things, but she still has to say, "Mother, may
 6   I," where the pocketbook is concerned.
 7             Number three, in terms of I think it was
 8   Mr. McGee or I'm not sure who it was earlier who had
 9   mentioned about -- I think it was Cathy Bessant who said
10   your MBE is number one in the nation.  Again, I beg to
11   disagree.  You are actually not even there where Pacific
12   Bell is concerned.
13             There are familiar faces here like Brian from,
14   you know, Chicago who we've worked with, but I have to
15   tell you that in terms of the outreach to the Asian
16   Pacific American community, and I have discussed this
17   with some of the, you know, leadership within Bank of
18   America, translation, Doug, does not translate to
19   significant outreach.  Your ad agency of record had told
20   me to my face that the APA small business community is
21   not a priority for the bank.  So I don't know how you're
22   going to address this.  But with Lynn Pike here, I have
23   a lot of confidence that, you know, this is all going to
24   be rectified.  Thank you.
25             DOLORES SMITH:  We'll start with
0041
 1   Mr. Hernandez.
 2             JOE HERNANDEZ:  My name is Joe Hernandez.  I
 3   am the vice president of the Mexican American Grocers
 4   Association which is a nonprofit organization here in
 5   the United States.  We are a national grocery
 6   organization founded in 1977 in Los Angeles, California.
 7             We are made up of many industries.  Not only
 8   are we the retail distributors but we're also
 9   international.  We have now membership of retail coming
10   in from Mexico starting to build storage here.  We are
11   developing a lot of jobs, possibily 200 employees per
12   store which says a lot of taxpayers.
13             I'm very offended that the CEO of Bank of
14   America is not here.  We will not deal with anybody
15   less.  I'm very offended because we at the Mexican
16   American Grocers now have and our people have here in
17   the United States the purchasing -- economic purchasing
18   power, that he's not here to respect that.
19             Things have changed.  The tables have changed
20   and the times are changing.  The financial industry is
21   now starting to pay attention to the Hispanic market in
22   the United States for that.  Thank you.
23             DOLORES SMITH:  Mr. Pina.
24             AL PINA:  Good morning, everybody, I'm Al
25   Pina, acting chair of the Florida Minority Community
0042
 1   Reinvestment Coalition.  I'm here with a couple of
 2   colleagues, Helman Sawyer (phonetic) from the Florida
 3   Black Business Investment Board, the largest -- state's
 4   largest -- Florida's largest minority business
 5   organization, and Willy Logan, the most prolific
 6   minority CDC in the country.  I'll say that's ADHT, too.
 7   So what are we doing here in Florida -- I mean, in
 8   California?
 9             One, we're partnering with Greenlining to
10   start a similar organization in Florida.  Two, it's
11   better to be heard here than in New England.  And three,
12   great seafood.
13             We approve this merger because Bank of America
14   needs to compete globally in a much -- not only
15   domestically, but globally.  They're going to need
16   economic soldiers.  In Florida in ten years the
17   minorities will account for a majority of the population
18   in the State of Florida.  Let me give you some figures.
19   52 percent of minorities in high school drop out.
20   65 percent of children to minority single mothers live
21   in poverty.  For the last three years there's been an
22   8 percent increase in minority families living in
23   poverty.  82 percent of all minority families live in
24   LMI zones.  43 percent of minorities are less likely to
25   be homeowners than non-minorities.  These are your
0043
 1   future economic soldiers and basically they cannot read
 2   or write.
 3             The key, absolute key to this, we believe, is
 4   building up of the minority CDCs.  They will become your
 5   partners in Florida, we'll help.  So we can do something
 6   not good in Florida, let's do something great.  Thank
 7   you.
 8             DOLORES SMITH:  Thank you.
 9             DAN BRAJKOVICH:  Dan Brajkovich, Mission
10   Language and Vocational School.  I'm speaking on behalf
11   of Rosario Anaya.  Mission Language and Vocational
12   School is a nonprofit community based organization in
13   San Francisco's Mission District, a proud Latino
14   immigrant community.  I want to offer congratulations on
15   your CRA commitment.  However, I want to discuss briefly
16   how that money is actually going to get spent which
17   seems to be a larger issue here today.
18             I want to raise the awareness of the non- --
19   role nonprofits and community based organizations play.
20   CBOs are grassroots level organizations.  They reach the
21   truente (phonetic), the true people of our communities,
22   the communities that are represented here.  There's ten
23   people from our school here today, none of them have a
24   Bank of America account.
25             In the elapsed time of the speakers here today
0044
 1   how many accounts of Latinos have done business today as
 2   opposed to how much money has been spent in philanthropy
 3   in the Latino community in San Francisco, in Oakland,
 4   east   San Jose, east Los Angeles?  Willingness is
 5   always an antecedent to action.  I ask that you work
 6   with the CBOs.
 7             I can tell you that Mission Language and
 8   Vocational school have submitted multiple proposals to
 9   work with BofA but to no avail.  Why?  Not a funding
10   priority was the response.  Why?  Well, no really good
11   response actually.
12             MEL WASHINGTON:  Good morning.  My name is Mel
13   Washington, President of the San Francisco Black Chamber
14   of Commerce, an organization that was founded in 1973.
15   We don't oppose this merger.  As a matter of fact, we
16   support this merger.  Especially with additional
17   commitments that Bank of America is making.
18             But I do ask that, one, Bank of America
19   consider a larger contribution to the African American
20   community.  Contrary to many beliefs, we have a sizable
21   population of African Americans in San Francisco that is
22   underserved, not only by Bank of America, by other
23   financial institutions as well.  Liam McGee mentioned
24   the Visitation Valley branch.  I live in that community
25   as well as own a business in the Bay View/Hunters Point
0045
 1   community.  Those banks were there when it was called
 2   the Bank of Italy.  They need improvements at those
 3   branches.  They need to be updated.
 4             We have a community that is undergoing change.
 5   We have a community that has a bright future.  So we ask
 6   that you come out, take a look, I'll give you a tour,
 7   and see in some of the areas or ways you can help this
 8   specific community.  Thank you.
 9   
10             DOLORES SMITH:  Thank you.  We'll start with
11   Mr. Silva.  If you'll hand him the mike.
12             RON SILVA:  Thank you very much.  Well, I've
13   heard a lot of good things this morning and I'm hoping
14   that we do -- that Bank of America does step up to the
15   plate.  I've heard some strategies here that seem pretty
16   general but, again, I'm a person that likes to deal with
17   specifics, clarity.  So I'm hoping that BofA can set up
18   some meetings with some of our community based
19   organizations and work with us in a positive
20   partnership.  I believe in proactive partnerships.  And
21   those are the things that I, as president of the
22   Hispanic Chamber of Commerce of Alameda County, are not
23   seeing with Bank of America in our area, specifically in
24   the Fruitvale District which is a Latino dominated
25   district.
0046
 1             We've just recently -- and actually it's
 2   coming -- it's opening this coming month in February the
 3   Transit Village.  It was in operation.  We looked for
 4   loans to develop the program which includes affordable
 5   housing, it includes commercial space for businesses,
 6   specifically small businesses, and it's now seen as a
 7   national pilot model.  People are now throughout the
 8   country looking at this project.  They didn't come to
 9   the plate.  In fact, their competitor from New York came
10   to the plate and supported the project.
11             Again, I'm not happy with this but, again, I
12   want to see more participation and as an organization
13   we're willing to create a stronger partnership with Bank
14   of America.  Thank you.
15             DOLORES SMITH:  Thank you.
16             DARLENE MAR:  Good morning, all right.  I
17   think you have my name and association.
18             DOLORES SMITH:  Would you say it for the
19   record, please?
20             DARLENE MAR:  Oh, I'd love to.  Okay, because
21   I wasn't sure of the time.  My name is Darlene Mar and I
22   represent the Council of Asian American Business
23   Associations.  We have ten associations in California.
24   We wish to thank you for sharing, I was here before with
25   the other merger of Bank of America and NationsBank, so
0047
 1   unfortunately I'm here again.
 2             Probably the reason that -- I don't think
 3   anything we say here, you know, will stop the merger or
 4   delay it but maybe something we say is that we question
 5   and we're concerned about the -- with this kind of event
 6   more nonprofits will suffer because there is a declining
 7   number of banks, all right.
 8             Even though Bank of America is going -- is
 9   presenting a high commitment amount for the next ten
10   years, we applaud that.  It's not just the money, it's
11   also where are they placing the money that it counts?
12   They spoke about Southern California.  But Northern
13   California is not what it used to be, all right.
14             What we would like to see is a business plan
15   with specific on the bank that focus on low income
16   communities of color and fund all the essentials to
17   building a whole community versus just doing a regular
18   CIA.
19             NationsBank took our California Bank of
20   America, our neighborhood, and became we call an
21   absentee landlord.  I think we can say that because he's
22   not here, obviously we're not that important.  His
23   property managers are president and I know that Liam
24   McGee has tried very hard but now he's going to be
25   transferred.  She said time.  Can I stay two couple more
0048
 1   things?  All right.
 2             The trend is that they transfer away at will.
 3   The North Carolina makes all the decision.  Also the
 4   tokens -- or the commitments they give to our
 5   communities are tokens to a nonprofit and does not help
 6   with the operation's funds.  Even though the nonprofit
 7   shows (unintelligible) has been around many times.
 8             Their contracts supply diversity used to be
 9   the envy of all corporate America.  It's only a shadow.
10   And now there's a new guy there.  And we been -- I spend
11   like phone hours -- you know, about three hours on phone
12   conversation and how we can partner together to increase
13   it and all that.  He didn't even want to see it, all
14   right.
15             So all I'm saying is that, as you review the
16   documents, remember the promises, the pledge, the
17   promises that quite not fulfilled and now with the new
18   pledge canceling out the old ones.  Don't let Bank of
19   America be a commercial, you know like the old
20   commercial, promise them, the Federal Reserve,
21   everything or anything but give California only tokens.
22             DOLORES SMITH:  Thank you.  Mr. Hernandez.  Or
23   I don't have your name.  Do you have a --
24             VINA HA:  Vina Ha.  I'll state it.  My name is
25   Vina Ha and I'll be giving a statement on behalf of the
0049
 1   assembly majority floor leader and chair of the Latino
 2   Legislative Caucus, Marco Firebaugh.  I also have a
 3   brief statement on BofA's record on home lending.
 4             So I'll start with the statement from
 5   Assemblyman Firebaugh.  Members of the Federal Reserve
 6   Board, the recognition by Bank of America of the
 7   importance of keeping in touch with the communities it
 8   serves underscores the main point I wish to make today;
 9   namely, that following the merger Bank of America must
10   ensure that there's adequate leadership and
11   representation for California consumers.
12             This can be best accomplished by including
13   Californians on the newly configured board of directors,
14   providing for similar representation in upper management
15   levels, designating a bank president in California who
16   will be primarily based in our state, and ensuring that
17   Bank of America's CEO makes regular visits to our state.
18   These recommendations will ensure that the needs of
19   California consumers, including the Latino community,
20   will be represented in a post-merger environment and
21   that Bank of America will be accessible to the
22   communities and interest and advocacy groups it serves.
23             And also I have my own statement on home
24   lending.  If Bank of America is to truly become the
25   leading financial institution in California, it must be
0050
 1   the leader in creating home ownership opportunities
 2   amongst minority and low income communities in
 3   California.  Today it is not.
 4             Bank of America ranks fifth amongst the major
 5   banks in making conventional home purchase loans to
 6   African Americans in California.  For 2002 the bank made
 7   just 2 percent of all of its conventional purchase loans
 8   to African Americans while the state average was
 9   3.6 percent.  For Latinos Bank of America ranks fourth
10   amongst the major banks.  For 2002 the bank made just
11   15 percent while the state average was 18.3.
12             If Bank of America intends on performing as a
13   true leader in California, it must prove so in the area
14   of home lending for California's most underserved
15   communities.  Thank you.
16             DOLORES SMITH:  Thank you.  Let me say that
17   where you have written comments, if you would give them
18   to Federal Reserve staff who can give them to the court
19   reporter that would be very helpful to us.
20   Mr. Hernandez.
21             ALEJANDRO HERNANDEZ:  My name is Alejandro
22   Hernandez, I'm the vice president for Charro Community
23   Development Corporation, a leading economic development
24   corporation serving the Hispanic community in the
25   Los Angeles area.
0051
 1             I'm here to make three basic statements.  One,
 2   the fact that we do recognize the track record from Bank
 3   of America as demonstrated by their CRA rating, the many
 4   branches that they have in low income communities and
 5   also the fact that they do make home loans and business
 6   loans to the community.
 7             I'm also here on behalf of the Hispanic
 8   community to let them know that it's not just about
 9   making loans and lending but it's about putting money
10   back into the community as well.  So we urge Bank of
11   America with the new President Lynn Pike to work with
12   community organizations, especially those that are
13   performance based organizations, so that we as nonprofit
14   organizations can help them accomplish their mission and
15   their goals.
16             And third, I'm here on behalf of the
17   organization and the community to support the merger of
18   Bank of America.
19             DOLORES SMITH:  Thank you very much.  And
20   maybe as panelists finish their presentation,
21   Mr. Gnaizda, maybe they could just rotate off and have
22   someone else take their place.  Why don't we start with
23   you.
24             DANIEL BERNHAL:  Good morning, my name is Dan
25   Bernhal, I'm the Deputy District Director for
0052
 1   Congresswoman Nancy Pelosi here in San Francisco.  And
 2   we do have a prepared statement which I'll share with
 3   the recorders and I've been asked by the Institute to
 4   read an abbreviated version of that which I will do now
 5   and enter the entire statement into the record.
 6             Before I read from it, the Congresswoman did
 7   ask me to thank the Board of Governors for convening
 8   this hearing so that the concerns of the community may
 9   be heard and also to thank the Greenlining Institute for
10   organizing this panel.
11             In her statement she does commend Bank of
12   America for their strong record on community
13   reinvestment and serving underserved communities and
14   urges them to continue and expand in this regard.  And I
15   will read the excerpts from her testimony now.
16             It is vital that Bank of America provide more
17   than a generalized commitment to support housing and
18   economic development on a broad nationwide basis.  In
19   all regions of the nation in which the new expanded bank
20   will operate Bank of America should provide specific
21   measurable community investment plans on a state by
22   state basis that meet the credit needs of underserved
23   low and moderate income and minority communities.
24             Entering into formal agreements with community
25   organizations will make clear the bank's commitment to
0053
 1   community reinvestment and help formulate and implement
 2   these investment plans.  It must clearly differentiate
 3   any new commitments of community funding from prior
 4   public commitments as well as from lending and
 5   investment activities in which either bank would
 6   otherwise engage under the Community Reinvestment Act.
 7             Finally, Bank of America must pledge to
 8   implement an equitable process for selecting board of
 9   directors and senior staff that assures that all regions
10   of the country in which Bank of America operates will be
11   fairly represented.
12             She also did ask me to let everyone in the
13   audience know that she will be working closely with
14   Congressman Barney Frank, the ranking member of the
15   House Budget Committee, to monitor this process and to
16   help ensure that all of the commitments that are made
17   are met.  Thank you for your time.
18             DOLORES SMITH:  Thank you.  If you'll pass the
19   mike.
20             CALVIN LOUIE:  Good morning.  My name is
21   Calvin Louie and I'm here representing the Conservation
22   American Business Association.  Our group comprises of
23   many attorneys, CPAs, architects, engineers, contractors
24   and other business groups.
25             I'd like for this merger to consummate.  I'd
0054
 1   like to put in some changes, meaningful changes,
 2   regarding the procurement process.  As Bob Gnaizda
 3   mentioned, there's only 1 percent of contracts going to
 4   African Americans.  The only way we can get more
 5   participation from minority groups is if Bank of America
 6   would break up many of these larger contracts into
 7   smaller ones so that more companies could bid and maybe
 8   be able to obtain some of these contracts.  Because a
 9   lot of the jobs that we see in California is going to
10   come from the small business and we need to have those
11   contracts broken up.
12             The other thing I want to mention is that,
13   with regards to workshops, for the last 15 years Bank of
14   America has conducted a lot of these workshops for
15   trying to obtain contracts but nothing has transpired
16   from those workshops.  So we don't need any more
17   workshops.  What we need is smaller contracts.  Thank
18   you very much.
19             DOLORES SMITH:  Thank you.  Next.
20             ALEXI OCHOLLA:  Good morning, members of the
21   Board.  My name is Alexi Ocholla, with the Miaso Family
22   Health Center in San Diego in the inner city of City
23   Heights, San Diego.
24             Since the merger of Bank of America with
25   Nations, three of the most vital services that any
0055
 1   financial institution provides has been reduced.  For
 2   example, in the inner cities services to the consumer
 3   has been reduced since the merger with NationsBank in
 4   the inner city of San Diego.  The lending for average
 5   loans has been eliminated, that's African loans serves
 6   the most -- the lowest income families.
 7             And lastly, contributions to not for profit
 8   entities that serve the communities.  The philanthropic
 9   contributions have been reduced.  And so if that measure
10   did not increase in services, how can we expect this one
11   to increase services?  Thank you.
12             DOLORES SMITH:  Mr. Arteaga.
13             LUIS ARTEAGA:  Good morning.  My name is Luis
14   Arteaga, I'm the executive director of Latino Issues
15   Forum.  Latino Issues Forum is a public policy and
16   advocacy institute dedicated to improving the quality of
17   life for Latinos in the State of California.
18             One of the most critical issues impacting our
19   community is the abysmal home ownership rate.  For all
20   the different reasons that exist -- I'm sorry.
21             The Latino Issues Forum is a public policy and
22   advocacy institute.  We're dedicated to improving the
23   quality of lives for Latinos in the State of California.
24   One of the most critical issues impacting our community
25   is the issue of home ownership and the abysmal rate of
0056
 1   home ownership for all of the different reasons that
 2   exist.
 3             We think that this bank needs to be an active
 4   player in helping to address that.  Not as charity but
 5   as smart investing.  Because it will help improve not
 6   only the quality of life in the community currently, but
 7   as you know, home ownership is the number one source of
 8   intergenerational wealth transfer.  So in getting home
 9   ownership up for this generation, will help improve that
10   for future generations.  We want them to be active in
11   helping us address that crisis.  Thank you.
12             DOLORES SMITH:  Thank you very much.  Please.
13             NOEL ABASTILLOS:  Good morning.  My name is
14   Noel Abastillos (phonetic) and I'm here on behalf of
15   Joel Jacinto who publishes the California Journal for
16   Filipino Americans.  He's asked me to testify today on
17   behalf of the journal and the Filipino Chamber of
18   Commerce in Los Angeles.
19             We believe that BofA should be commended for
20   its 750 billion-dollar CRA commitment and for pledging
21   1.5 billion over ten years for philanthropy.  However,
22   BofA has yet to demonstrate that it is committed to
23   California and it's 20 million minorities, including
24   over 1 million Filipino Americans, as it is to customers
25   in North Carolina and potential new customers in
0057
 1   New England.
 2             We urge the CEO of Bank of America and other
 3   top leaders at the bank to treat California on par with
 4   North Carolina and New England.  We want to see a
 5   bigger, more profitable BofA, but also a BofA that is
 6   sensitive and committed to the needs and interests of
 7   the communities in which it does business.  Thank you.
 8             ROBERT GNAIZDA:  I would like to just take a
 9   half a minute to have -- because time is running out
10   after this panel and I want to introduce two other
11   leaders from Florida who will be speaking later today.
12             HELMAN SAWYER:  I'm Helman Sawyer with the
13   Florida Black Business Investment Board.
14             MR. GNAIZDA:  Thank you.
15             WILLY LOGAN:  And I'm Willy Logan, CEO Opalaka
16   (phonetic) Community Development Corporation and also
17   representing the Florida Federation of CDCs.
18             ROBERT GNAIZDA:  We thank our Florida
19   delegation very much.
20             MONIQUE CHAVOY:  Hi, good morning.  My name is
21   Monique Chavoy (phonetic) and I'm going to be reading on
22   behalf of Latin Business Association on behalf of Jorge
23   Corralejo who is a board member of the LBA.
24             The LBA has about 1300 active members and he
25   expresses -- the LBA expresses the following concerns
0058
 1   regarding the merger of Bank of America with
 2   FleetBoston.  Will BofA develop a new plan to reach its
 3   original commitments to minority businesses in
 4   California?  Will BofA stand by its slogan of higher
 5   standards and develop a stronger supplier diversity goal
 6   that surpasses 15 percent?  And what examples of
 7   leadership can the Latino businesses and communities
 8   expect from BofA CEO Ken Lewis when he has never met
 9   with community groups in California?  And any answers
10   that BofA gives to these questions it must include a
11   strong resolute leadership plan to meet the needs of
12   California's Latino community.  Thank you.
13             DOLORES SMITH:  Thank you.
14             KARINA DE RASARIO:  My name is Karina De
15   Rasario, I represent the National Council of Asian
16   American Business Associations and I'm here to read the
17   written testimonies of Faith Bautista, San Diego
18   Advertising Specialties, and Linda Sarno, President of
19   the Filipino American Chamber of Commerce of Orange
20   County, both of whom are members of National CAABA.
21             Distinguished members of the Federal Board,
22   this is from Faith Bautista, Bank of America needs to
23   improve on its supplier diversity program.  It needs it
24   to become more proactive by making their bids more
25   accessible.  Bank of America does not have an outreach
0059
 1   program.  As a small business, I have no way of knowing
 2   how to do business with Bank of America, unlike Wells
 3   Fargo, they go out to the community and promote their
 4   supplier diversity program.  I wish Bank of America will
 5   give more priority to small businesses.  After all, most
 6   of us bank with you.  Please reach out to small
 7   businesses.
 8             This is from Linda Sarno.  Bank of America has
 9   been known for its cash philanthropy program.  However,
10   in my almost ten years of involvement as a civic
11   volunteer for the Asian and Filipino community, I have
12   not received any financial support from Bank of America,
13   unlike the other banks such as Wells Fargo, Citibank and
14   Union Bank.  While it is commendable to focus on the
15   needy, support to organizations and committed to serving
16   the business community as well as the community in
17   general should likewise be considered.  These
18   organizations for the most part focus on educating its
19   constituents and the community at large.  But the
20   results of this are more widespread and permanent.  For
21   example, by providing a business with information will
22   allow one to run the business with greater confidence.
23   Included with the broad term, information is assisting
24   minority businesses on the different supplier diversity
25   program and I request Bank of America for more
0060
 1   participation on this program.  Helping the growth of a
 2   business entity means creation of new jobs which would
 3   result in a healthier economy.
 4             DOLORES SMITH:  Thank you.
 5             KARINA DE RASARIO:  Thank you.
 6             TIFFANY GREEN:  I'll try to speak as slowly as
 7   possible without taking too long.  My name is Tiffany
 8   Green and I've been asked by Mateo Camarillo of the
 9   Chicano Federation to read a statement on his behalf.
10             I want to praise Bank of America for making
11   the $750 billion CRA commitment and allocating
12   1.5 billion in philanthropy.  I am concerned, however,
13   about Bank of America's lack of leadership in
14   California.  The bank prides itself on being the number
15   one bank amongst Latinos with bank accounts but the CEO
16   has failed to visit any community or minority groups to
17   discuss how it can improve the economic vitality of
18   California's new majority.
19             Furthermore, although California is one-third
20   of Bank of America's market, the bank has treated
21   California like a distant colony.  Of the 20 board
22   members, only one is from California, and there are no
23   planned board meetings in California.  I believe that a
24   real leadership statement will be made if CEO Ken Lewis
25   makes regular visits to California making Bank of
0061
 1   America an outstanding leader in serving the needs of
 2   California's new majority.  Thank you.
 3             ELIZABETH DARIUS:  Good morning.  My name is
 4   Elizabeth Darius (phonetic) and I will be reading a
 5   statement on behalf of Manuel Pena, President of the
 6   Minority Business Council of Orange County.
 7             Although BofA has sent a strong message with
 8   its recent CRA commitment, because of the absence of
 9   details, the BofA has yet to win the confidence of
10   California's minority community.  Specifically, BofA
11   must detail what share of California will receive from
12   the CRA and philanthropy commitments.
13             Based on BofA's market share in California, I
14   believe the state should receive $180 billion or
15   200 billion in CRA commitments over ten years and
16   400 million in philanthropy over ten years.  I also
17   believe that at least 80 percent of the philanthropy
18   should go to support community development, minorities
19   and the poor, much as Wells Fargo does.  Thank you for
20   your time.
21             UNIDENTIFIED SPEAKER:  And just briefly, the
22   Greenlining coalition will have a press conference
23   20 feet that way, over there.  Thank you.  And the
24   Community Reinvestment Coalition will also join us.
25             DOLORES SMITH:  We'll take a couple of minutes
0062
 1   to make sure that we get you the information that you
 2   need on who spoke on behalf of whom and how to spell
 3   names.
 4                        (Short break.)
 5             DOLORES SMITH:  Welcome to panel No. 2.  We're
 6   all ready?  Okay.  This panel will have three minutes
 7   each and you will be paying attention to our timer over
 8   here.  So we'll start with Ms. Andrews.
 9             NANCY ANDREWS:  Thank you.  My name is Nancy
10   Andrews and I'm the President and CEO of the Low Income
11   Investment Fund and I'm happy to have the opportunity to
12   speak with you today in support of the merger between
13   Bank of America and Fleet Bank.
14             Bank of America is one of my organization's
15   largest supporters.  In fact, they made a very large
16   investment in us at a point when we were right at the
17   cusp of growing.  And with the help of that, we grew
18   from about $36 million in assets to an organization that
19   has about $200 million in assets under management today.
20   We regard that early support as very important to us in
21   making the leap moving forward.
22             They have also provided grant support for us
23   in housing and in child care which is very important to
24   the work that we do.  We are a community development
25   financial institution, and as I said, one of the largest
0063
 1   in the country with about $200 million in assessments
 2   under management.  We work here in California throughout
 3   the state and we work in New York City which are
 4   locations that are important both to the Bank of America
 5   and to Fleet Bank.
 6             Over the years we have provided about
 7   $350 million in loans to low income communities for
 8   housing, child care, educational facilities.  We've
 9   supported about 44,000 units of housing, 13,000 units of
10   child care, about a thousand spaces in schools for
11   children, low income kids, and about 1.2 million square
12   feet of commercial space.
13             Over the 19 years of my organization's life,
14   we've lost only $200,000 in capital.  So we regard that
15   as a good and strong record and regard the bank as one
16   of the important partners that's made that possible for
17   us.
18             I also want to express appreciation for the
19   personal support of -- the human support that we've
20   received from individuals within the bank.  A member of
21   the bank, Stephanie Smith, serves on our board and has
22   provided important stewardship and leadership to us.
23   We've also received important supportive facilitation
24   from Linda Hann(phonetic) within the bank and we regard
25   those relationships every bit as importance to us as the
0064
 1   capital that we receive.
 2             Our hope for this merger is that the newly
 3   formed bank will be able to provide even more support to
 4   the community and social mission that we endorse and
 5   that is part of our agenda.  And while we support the
 6   merger, we also endorse a number of proposals that have
 7   been made here, particularly with respect to the trends
 8   around charitable giving within the bank.  We would like
 9   to see this increase over the coming years.  We are
10   delighted with the announcement of the bank's
11   750 million-dollar commitment.
12             We were pleased this morning to read in the
13   New York Times that the bank is enjoying a high degree
14   of profitability in one of its cross centers and we hope
15   that that will percolate into the charitable giving.
16             We also would like to add our voice to those
17   that raise concerns about subprime mortgages and urge
18   the bank to develop a screen so that it makes no
19   investments in predatory subprime mortgages.  We really
20   look to the bank for this kind of leadership and I know
21   that other financial institutions do as well.  Thank you
22   very much.
23             DOLORES SMITH:  Thank you.  Ms. Tan.
24             LYDIA TAN:  Thank you.  My name is Lydia Tan,
25   I'm executive vice president of Bridge Housing
0065
 1   Corporation.  I'm here on behalf of Carol Gallante
 2   (phonetic) who had a death in the family so I'm taking
 3   her place.
 4             The Bridge Housing Corporation is a
 5   nonprofitable housing developer, we operate in
 6   California and currently house about 25,000 residents
 7   among our properties.  And we've had a long-standing
 8   relationship with Bank of America both before and after
 9   the merger with NationsBank and is very much in support
10   of the current proposed merger.
11             To date, Bank of America has been a lender to
12   us at a market rate -- at market rate rates.  They have
13   been an investor in many of our projects and also has
14   been an investor in Bridge as well at a below market
15   rate -- arrangement.
16             And throughout our I believe it's probably a
17   13-year relationship with the bank now they've always
18   been very supportive, they've always come up with
19   innovative ways of meeting our needs as an affordable
20   housing developer throughout the history.  They've also
21   come up with products that are needed just in the nick
22   of time I would say.
23             In fact, they are one of our key lenders in a
24   project here in San Francisco where we really pushed the
25   limit, it's a hundred million dollar Hope Six
0066
 1   revitalization project, a partnership that we have with
 2   the San Francisco Housing Authority in which we really
 3   asked the banks to stretch their underwriting limits,
 4   really make -- you know, it really made the case for how
 5   important this particular project was to both the city,
 6   the neighborhood and the existing public housing
 7   residents, and Bank of America certainly came through
 8   with that for us.
 9             The other thing I would say is the bank has
10   been very good about making sure that products that are
11   available from their mergers are accessible in
12   California.  They've also taken care to make sure that
13   products that are not necessarily viable in California
14   don't necessarily compete with other things that are
15   going on here.
16             And very specifically during the Nations
17   merger there was the Nations Community Development
18   Corporation which has development capacity is very
19   effective in other parts of the country with something
20   that was made available to us here in California.  And
21   then it turns out it really wasn't necessary, we have a
22   lot of very strong nonprofits.  And after a lot of
23   conversation, that project was pulled off the market.
24   We really appreciate that responsiveness from the bank.
25             And the last thing I would like to comment on
0067
 1   the bank's commitment to making sure that the affordable
 2   housing industry community development grows and the
 3   education that they put out through their low income
 4   housing challenge and making sure that their
 5   professionals that come into our field that are very
 6   high caliber.
 7             They're currently participating in something
 8   called an Urban Fellows Program in which Bridge also is
 9   a participant.  Where we're subsidizing very high
10   caliber folks come in and get education in the field so
11   they can stay and we can grow this field into the
12   future.  So I really appreciate the bank's participation
13   and this merger.  Thank you.
14             DOLORES SMITH:  Mr. Deasy.
15             BERNARD DEASY:  Thank you.  My name is Barney
16   Deasy and I'm the President of Merritt Community Capital
17   Corporate.  Merritt is a nonprofit local tax credit
18   equity fund.  It was formed by the City of Oakland in a
19   public/private partnership in 1989.  We're now an
20   independent nonprofit raising capital for investments in
21   tax credit housing projects.
22             Over the years, we've raised about
23   $180 million in tax credits to support 39 projects in 14
24   different counties with 24 different sponsors in
25   Northern California.  And since the beginning, Bank of
0068
 1   America has been an investor with Merritt Capital and,
 2   in fact, over the recent past they have increased the
 3   amount of investment in Merritt substantially in which
 4   we certainly appreciate and we enjoy not only their
 5   support financially but their support of their staff.  A
 6   member of the bank serves on our board.  In addition to
 7   that, many members of the bank staff have always been
 8   very helpful to Merritt as we've built our business over
 9   the last 14 years.
10             We very much are in support of the merger
11   particularly with Fleet because Fleet also has an
12   outstanding CRA record in its area and we anticipate the
13   combination of these two banks with outstanding records
14   in community lending and investing will continue.
15             But I would like to echo Nancy's concerns that
16   the banks pay particular attention to the subprime
17   market because we feel that's a major area where
18   attention really needs to be brought where banks can
19   really bring their services at low cost and/or least
20   reasonable cost to peoples in low income communities.
21   Thank you.
22             DOLORES SMITH:  Mr. Blitch.
23             LEE BLITCH:  My name is Lee Blitch, I'm the
24   President and CEO of the San Francisco Chamber of
25   Commerce.  And with my gray hair and blue suit I look
0069
 1   the typical chamber role but I am here to tell you that
 2   our chamber is very different.  We just are proud, we
 3   worked with the ACLU to beat back some anti-affirmative
 4   action programs.  We have worked supporting bond issues
 5   for the low income housing.  We just graduated 50
 6   students in biotech, unemployed and underemployed this
 7   week.  My public policy senior VP founded the National
 8   Center for Lesbian Rights.  And we also were the leaders
 9   in pushing for domestic partner benefits so, not your
10   typical chamber.
11             My counterparts in New England, of course,
12   I'm sure are concerned about community involvement after
13   a merger as we were several years ago when NationsBank
14   happened.  I'm here to tell you that in the last several
15   years they have maintained and increased their support
16   in the community and I can speak specifically about the
17   chamber.  They still have board involvement, their
18   financial support has stayed the same, even though we've
19   had cutbacks on many businesses because of the severe
20   recession we've had in San Francisco over the last
21   couple of years.
22             They have become a leader in the business arts
23   council which encourages the business community get
24   involved in the arts community which is critical to the
25   extent that they now -- senior manager of Bank of
0070
 1   America chairs the business arts community.  We push the
 2   develop, give women chances, managers for mentoring and
 3   networking.  They have chaired that committee at the
 4   chamber.
 5             They helped us -- I talked about the
 6   graduation of the underemployed and unemployed, they've
 7   been a leader in that program.  They helped us launch
 8   Just For The Kids California which is the best practices
 9   so we can take schools that are performing poorly, find
10   schools demographically that look the same that are
11   doing well and bring those practices to help the
12   teachers do that.  They helped us get that off the
13   ground in California.  We have a million students on our
14   database working on that.
15             The Business Times also every year analyzes
16   corporate philanthropy and who is doing the best jobs.
17   They have continued to stay right at the top of that
18   list over the last several years.  So I think we're the
19   best case of saying, you know, what's going to happen
20   after a merger when you look four or five years after it
21   happened here.  Their involvement has stayed solid.  And
22   I'll give you some Greenlining time back.  Thank you.
23             DOLORES SMITH:  Thank you.  Do we have any
24   questions from the panel?  Thank you very much.  And we
25   have two others from this same panel.  Please go ahead.
0071
 1             MARY KAISER:  Hi, my name is Mary Kaiser.  I'm
 2   the President of the California Community Reinvestment
 3   Corporation.  I will abbreviate that to CRIC because I
 4   only have three minutes to talk.
 5             CRIC is a nonprofit lending consortium founded
 6   by the Federal Reserve Bank of San Francisco and banking
 7   executives back in 1989.  We provide permanent financing
 8   for affordable housing multi-family and senior projects
 9   throughout California.  Bank of America was a founding
10   member on the task force and has served on the board of
11   directors with CRIC ever since.  They also serve on our
12   loan committee which approves all of the deals that bind
13   our members to fund.
14             Since our inception, we have originated close
15   to $500 million in affordable housing mortgages and Bank
16   of America has always been a part of our program.  In
17   fact, they've been the largest investor in both of our
18   programs since inception.
19             This past year when we ran out of funds in our
20   bond program, BofA increased their commitment to CRIC by
21   $17 million bringing their total commitment to our
22   programs to $87 million.
23             They are the largest investor, as I said, in
24   both of our programs.  21 percent of our capital in the
25   mortgage pool and 45 percent in the bond program.
0072
 1             Our loan approval process requires a seven
 2   member bank loan committee.  And when those seven member
 3   banks say yes, 43 member banks are required to fund, so
 4   BofA is involved as well as the other banks, it's very
 5   important for the rest of the member banks in our
 6   organization.
 7             In addition, we work with the Bank of America
 8   account officers to jointly develop with affordable
 9   housing developers projects with a seamless loan program
10   trying to reduce the cost and the underwriting and
11   increase the underwriting efficiencies.
12             In that program in just in the last two years
13   we've originated $38 million in permanent mortgages for
14   1200 units of affordable housing.
15             Their leadership has been invaluable to
16   attracting additional investors.  I think a lot of
17   smaller banks in our communities look to BofA as a
18   leader in terms of endorsing programs and they've been
19   there since the beginning for us.  They also provide a
20   credit review team on a two year rotational basis that
21   comes in and provides an annual credit review which we
22   share with all of our members which sort of gives the
23   new housekeeping seal of approval to the credit quality
24   and the portfolio that our banks fund.
25             We are also a customer on the deposit side
0073
 1   with Bank of America, we have 13 checking accounts with
 2   them including lock box investment services totaling
 3   about $8 million.  We are very supportive of the merger,
 4   know FleetBank well on the east coast and look forward
 5   to a long and mutually beneficial relationship with
 6   BofA.  Thank you very much.
 7             DOLORES SMITH:  We've expanded this panel a
 8   bit but not by much.  Mr. Marks and a group that he has
 9   brought with him will have a total of ten minutes.  And
10   I also note we have an open mike session at the end of
11   the day.  And so anyone who doesn't have the opportunity
12   to speak can come back at that point since this is an
13   unscheduled addition to the panel.  I don't know how you
14   have arranged your time but we start now and so we'll
15   turn it over to you, Mr. Marks.  Ten minutes.
16             BRUCE MARKS:  Thank you.  Thank you for making
17   the adjustments.  I am Bruce Marks, I'm the CEO of the
18   Neighborhood Assistance Corporation of America, NACA.
19   We are here in support of the merger between BofA and
20   Fleet and we know Fleet very well but let's focus on
21   BofA.
22             I have with me on the panel homeowners who
23   have benefited from the commitment that Bank of America
24   has provided in terms of affordable mortgages.  It is
25   important that the homeowners speak and so I want to
0074
 1   keep my comments short.
 2             But let me first provide a little bit of
 3   background.  Five years ago when Bank of America said
 4   that they were going to make the $350 billion
 5   commitment, there were a lot of skeptics.  But they have
 6   not only met that, they have exceeded it.
 7             So when they say that they're going to provide
 8   750 billion-dollar commitment, we feel comfortable that
 9   you can take that to the bank, that it will get done.
10             But when you talk about a broad commitment,
11   let's talk about some of the specifics.  They have
12   committed to NACA as just one of their commitments the
13   best mortgage product in America.  Because they respect
14   the reality that hard working people have to work two or
15   three jobs to survive and it's tough to save.  So a
16   product that provides no down payment, no closing costs,
17   no fees, the bank pays all of the closing costs and all
18   of the fees, you don't need perfect credit and the
19   interest rate is 30 year fixed 4.875 percent today.
20             You can do a one to four family home, purchase
21   rehab, you can refinance a predatory loan at again
22   4.875 percent fixed.  That's as good as it gets and they
23   have committed over $6 billion to that.
24             So with that, let me turn it over to some of
25   the homeowners because it's much more than me saying
0075
 1   that it's true, I think it's important that you hear
 2   from the people who are the foundation of this
 3   organization and have worked with Bank of America
 4   directly.
 5             DOLORES SMITH:  I would also say if we don't
 6   have the names, you will collect them and turn them in
 7   to the court reporter after.  Please, go ahead.
 8             MEDO ELDIN:  Hello, my name is Medo Eldin and
 9   I consider it an honor to be here today.  Every day that
10   I wake up I feel like I'm living in a dream because of
11   NACA and Bank of America.  I live in a four unit
12   building right now, it's a four-plex in Sacramento and
13   Bank of America loaned me almost half a million dollars
14   to buy this building at 4.5 percent interest.  And
15   because of that, I'm a homeowner.  I could not have
16   afforded to even buy a house the year before.  Now I own
17   this great building, I have great tenants, and because
18   of that my future is so bright.
19             I think this program is excellent and I think
20   that the support that Bank of America has given this
21   program is phenomenal because it puts people like me
22   person to person in the community and I'm renting out to
23   people who I recognize.  You know, maybe they don't have
24   perfect credit but they're hard working people and, you
25   know, they're willing to come in and pay their rent so I
0076
 1   have a Latino couple that I just rented to, they have a
 2   small child with them and I rented to them even though
 3   they didn't have perfect credit but they are one of my
 4   best tenants.
 5             And so, again, once again, I just want to
 6   thank Bank of America personally from my heart.  I mean,
 7   you really changed my life.  And I look forward to the
 8   great things you're going to continue to do.  Thank you
 9   very much.
10             DOLORES SMITH:  Next.
11             ADDIE ELLIS:  I am Addie Ellis, and much like
12   Medo, is for me waking up into the dream.  I have a
13   house, because I'm educator, and as most of you know, we
14   work hard but we're not seen as deserving of those
15   really high incomes.
16             I did have perfect credit but I was an
17   educator, single income family, so every lender I went
18   to I was told, sorry, no.  So going through the NACA
19   program, that gave me the opportunity to be able to
20   purchase my home.
21             I live in the community that I work in so my
22   families have the opportunity to see that this is an
23   option for them.  They can have a home.  They can be
24   able to purchase and live in the community.  And we live
25   in -- I'm in the Sacramento area as well and it is in a
0077
 1   more urban area so ofttimes the young people I work with
 2   see it as being another part of the American dream, not
 3   something they can attain.  So to see me there on their
 4   campus and I live in their community, they look as more
 5   of a role model.
 6             And I can say that you can go through the NACA
 7   program as well when I'm counseling the parents.  And I
 8   explain that I've had wonderful experiences with Bank of
 9   America and with NACA and being able to have my home.
10             DOLORES SMITH:  Thank you.
11             RONECIA McCOY:  Good morning.  My name is
12   Ronecia McCoy and I, too, just like this panel here am a
13   homeowner.  However, I'm from Los Angeles.  And my
14   situation is somewhat unique with Bank of America simply
15   because I did -- I just bought a -- purchased a triplex
16   in Los Angeles via the help of NACA as well as BofA.
17             However, for me, on the day that I closed
18   escrow, there were a lot of unforeseen damages that
19   incurred so much expense that I could not afford.  I
20   mean, to the point where we were opening up walls and
21   there was a lot of damages and I broke out in tears.
22             I called BofA and they could have closed the
23   door on me.  They could have told me, well, you know
24   what, you own the property so that's your fault.  And
25   they didn't.  I mean, with the help of a woman named
0078
 1   Jasia Johnson (phonetic), got bless her, from Bank of
 2   America who moved heaven and earth from where I sit.
 3   She moved heaven and earth.  And they went in, and not
 4   only did they just give me a loan, they remodified my
 5   loan and reduced my interest rate from 5.1 to 4.75.  And
 6   I'm not talking about lending me $10,000, I'm talking
 7   about 30 to $40,000 in damages that I had to put into
 8   this property to make it livable for me.
 9             So as far as I'm concerned, BofA made it
10   happen along with NACA, but they made it happen with
11   just the customer service and opening that door and not
12   closing the door on me.  I didn't get lost in the
13   process.  And to me as a homeowner, that was extremely
14   important.  So I say again thank you to BofA as well.
15             DOLORES SMITH:  Thank you.
16             YVONNE MURPHY:  Good morning.  My name is
17   Yvonne Murphy.  I'm originally from Oakland, California
18   and I now line in Sacramento.  I'm a 57 year old first
19   time home buyer thanks to Bank of America and especially
20   NACA with their no down payment, no closing costs and I
21   got in at 4.249 percent.  Thank you very much.
22             DOLORES SMITH:  Thank you.
23             DAG ANDFARGATCHEW:  Hi, my name is Dag
24   Andargatchew.  I just want to echo what everybody else
25   said.  In my case, again, the low interest rate, 4.7, 30
0079
 1   year fixed, no closing costs and no down payment.  And
 2   because of this I and four other people were able to buy
 3   abandoned and boarded up houses in west Oakland next to
 4   each other in an area now known as the Miracle on 34th
 5   Street.  And that has really revitalized that area, that
 6   community, in west Oakland.
 7             And Bank of America not only provided the loan
 8   for the purchase of the homes but also to renovate
 9   the -- these houses.  And in my case a 1911 dilapidated
10   two bedroom, one bath house has been converted to a five
11   bedroom three bathroom home.  So thank you.
12             BRUCE MARKS:  And if I can say -- if I can say
13   in conclusion, one of the issues that has been brought
14   up in the hearing was where is the CEO of Bank of
15   America?  And we have met with Ken Lewis who is now the
16   CEO of Bank of America and we have met with Hugh McCall
17   (phonetic) who is a previous CEO of Bank of America.
18   And we said only you can make the decisions to make the
19   commitments.  But we were proved wrong because, as
20   unique as it is in this institution, when they have
21   people and they have staff that get the job done, make
22   the decisions, make the commitments and get the results.
23             So when they put Cathy Bessant in charge to do
24   it, I want to say to all the community groups, she gets
25   the job done and she gets the job done well.  It would
0080
 1   be nice that the CEOs are here, you're in good hands
 2   because she will get it done with $6 billion for NACA
 3   and much more for the other community groups in
 4   California and throughout New England.  Thank you very
 5   much.
 6             DOLORES SMITH:  Thank you very much.  We go to
 7   panel three.  We will take a break after this next
 8   panel.
 9             The members of this panel will have three
10   minutes each and you will receive a signal from our
11   timer when you have one minute remaining so try to kind
12   of pay attention to her.  We'll follow the order.  We'll
13   start with Mr. Ainger.
14             UNIDENTIFIED SPEAKER:  Actually, we're going
15   to start with Mr. Fisher.
16             DOLORES SMITH:  Okay, we will definitely start
17   with Mr. Fisher then.
18             ALAN FISHER:  Good morning.  We appreciate the
19   Federal Reserve having hearings in San Francisco.  I
20   think this is historic in a sense that it's not where
21   the merger is taking place but I think it recognizes in
22   a way the needs in California are not being met.
23             DOLORES SMITH:  Would you say your name and
24   affiliation?
25             ALAN FISHER:  Alan Fisher, executive director
0081
 1   of the California Reinvestment Committee.  We're a
 2   statewide coalition of more than 200 nonprofits.  We
 3   have CRA agreements with California's major
 4   institutions.  Our relationship with Bank of America
 5   dates back to the late '80s.
 6             And we opposed the purchase by NationsBank of
 7   Bank of America in 1998 out of concerns that this merger
 8   would decrease the bank's responsiveness to California
 9   communities.  And this is what we've seen over the last
10   five years and that's the reason that half the letters
11   opposing this merger came from California raising those
12   issues.
13             Community reinvestment is about neighborhoods
14   and their local needs.  Our issue with this merger
15   reflects two interconnected concerns.  The first is
16   decreasing support for diverse communities.  Bank of
17   America is less responsive with affordable housing,
18   small business, consumer accounts, community
19   contributions, investments, vendor purchases and other
20   products and programs than it was in 1998.
21             Secondly, this now huge national bank seeks to
22   do one national product that works everywhere and that
23   does not work in California.  This type of lending
24   leaves masses of credit worthy people with nowhere to
25   turn for credit but pawn shops, finance companies, et
0082
 1   cetera.  And I think this is bad for communities and we
 2   do not see the Federal Reserve, the comptroller of the
 3   currency, the office of supervision, the FDIC really
 4   looking at these banks and being sure that they offer
 5   equal access.
 6             It's wonderful that the bank has made a
 7   750 billion-dollar pledge that includes $1.5 billion in
 8   foundation contributions, though I wonder what the and
 9   other that Ms. Bessant mentioned is.  But Wall Street
10   says this pledge is meaningless so that raises questions
11   for us as well.
12             And people on these panels from the California
13   Reinvestment Committee and communities will be talking
14   about issues with affordable housing, the drops in
15   charitable contributions, which hopefully this pledge
16   remedies, small business lending issues, accounts that
17   work for low income people, the investments in subprime
18   mortgages where there are no screens beyond those
19   minimally required to screen out predatory lending, and
20   the lack of goals which has been talked about by other
21   speakers in terms of minority, disabled and women owned
22   businesses, the purchases from them.
23             We did a study of a bunch of our members in
24   preparation for a planned meeting with the bank in
25   December, in October and November of last year before we
0083
 1   knew of the merger.  And two representative comments
 2   from our members are, since NationsBank took over, BofA
 3   has virtually disappeared.  They were a prime lender for
 4   years, we had a great relationship with them, and now
 5   nothing.  We don't even know who to contact anymore.
 6             The other was we have our accounts with Bank
 7   of America and do not know who our contact person is.
 8   The bank manager left.  The assistant who became interim
 9   manager left.  And then I received a letter from someone
10   introducing herself as our new contact.  I phoned her
11   two weeks later and was told she was no longer worked
12   there.  So the bank has a real problem from our point of
13   view in meeting directly the needs of communities and in
14   its infrastructure as well.
15             So our position is not that this is a bad bank
16   but that it's a bank not taking advantage of the
17   opportunities with new and old customers in California
18   because it's doing cookie cutter productsw.
19             The reason that we oppose this merger was we
20   see this as further worsening this problem and further
21   moving the bank away from California and away from the
22   products we need.
23             And as a side note, I wanted to say that I
24   heard from many of my members that the bank has been
25   very aggressive in contacting community grantees and
0084
 1   asking them to testify.  So I would ask you to discount
 2   testimony from anyone who is a grantee that speaks in
 3   favor.  Thank you.
 4             DOLORES SMITH:  Mr. Williams.
 5             CLARENCE WILLIAMS:  Good morning.  My name is
 6   Clarence Williams, I'm President of California Capital
 7   Financial Development Corporation, a nonprofit community
 8   development organization located in Sacramento.
 9             California Capital is celebrating its 21st
10   year of providing financial products and services for
11   small and microbusinesses in low income communities
12   within the Sacramento Valley.  I also serve as chair of
13   the board of the California Reinvestment Coalition.
14             I would like to thank and commend the Federal
15   Reserve Bank for holding this hearing which allows me
16   and many other community development and reinvestment
17   practitioners and advocates a forum to express feelings
18   of frustration that we have experienced as result of
19   Bank of America's failure to commit the presence of its
20   personnel and the unwillingness to engage in meaningful
21   dialogue with local community development organizations.
22             In short, Bank of America's retreat from
23   visible service participation in or support of local
24   community development and reinvestment activities.
25             I am pleased to report that several financial
0085
 1   institutions, community based nonprofits and
 2   governmental organizations within Sacramento, Yolo,
 3   Placer and El Dorado Counties have formed a successful
 4   cohesive partnership to create the Northern California
 5   Reinvestment Consortium, NCRC, a nonprofit membership
 6   organization.
 7             In the eight years that NCRC has existed, the
 8   consortium has dedicated itself to the assessment of
 9   promotion of community reinvestment throughout the
10   greater Sacramento region.  These efforts have been the
11   impetus for the creation of an anti-predatory education
12   project, micro-enterprise development lending, financial
13   literacy, affordable housing and limited non-English
14   speaking financial education initiatives.
15             Many financial institutions that are members
16   of NCRC have developed their own proprietary products an
17   initiatives addressing many of these same topics.
18   However, what distinguishes those NCR members, banks,
19   from Bank of America is that they have recognized the
20   value of participating in NCRC as a viable enhancement
21   to their products and services and community
22   reinvestment opportunities in the Sacramento area.
23             In addition, the FDIC and the OCC have
24   sponsored the Sacramento Valley CRA roundtable which
25   meets on a quarterly basis to discuss, address and
0086
 1   support community reinvestment issues and opportunity.
 2             Again, Bank of America has made little if any
 3   effort to participate in the CRA roundtable quest to
 4   address the community development and reinvestment needs
 5   of Sacramento.
 6             The Sacramento Asian Pacific and Black Chamber
 7   of Commerce are dedicated to, among other things, the
 8   development and creation of opportunities for local
 9   business owners of color.  However, Bank of America has
10   chosen not to participate or support their programs.
11             Interestingly -- and I've had the opportunity
12   to serve as a founding member of the Bank of America
13   Community Development Bank's community advisory board
14   and continued to serve in that capacity until Bank of
15   America's merger with NationsBank.  Since that merger
16   and subsequent mergers, Bank of America has increasingly
17   distanced themselves from service activies throughout
18   the Sacramento community and has virtually no on the
19   street presence.  And in response to the frequently
20   asked question of who should contact or invite -- or
21   should we invite from Bank of America, the answer is
22   call Sacramento.  Leadership and community development
23   and -- in the Sacramento area requires local leadership,
24   local accountability and local telephone numbers.
25             Without a specified commitment by Bank of
0087
 1   America to change its service model for participating in
 2   local community based community reinvestment efforts I
 3   am deeply concerned that this proposed merger will
 4   exacerbate their existing pattern of disengagement
 5   within the Sacramento community and I urge the Federal
 6   Reserve Bank to require Bank of America to commit to a
 7   substantive plan of service within local communities.
 8   Thank you.
 9             DOLORES SMITH:  Thank you very much.
10   Mr. Bliesner.
11             JAMES BLIESNER:  My name is James Bliesner,
12   I'm the director of the joint City and County
13   Reinvestment Task Force in San Diego.  I'm directed by
14   City Council policy and county board of supervisor
15   policy to monitor lending practices in the San Diego
16   region and to develop reinvestment agreements with banks
17   directed at that region.
18             In 1992 we developed a plan with Bank of
19   America that addressed CRA lending and investments in
20   San Diego.  That agreement was a ten-year agreement.  We
21   repeated our request during the NationsBank merger that
22   the new bank reaffirm and update their San Diego plan
23   doing this, as I say, at the direction of the City
24   Council and board of supervisors.
25             They refused to acknowledge and reaffirm their
0088
 1   commitment to the San Diego region.  The lack of
 2   interest by NationsBank staff in honoring the plan was
 3   predictive of their attention to this market as an
 4   institution.
 5             The relationship of the bank to the local
 6   market has deteriorated since the acquisition.  These
 7   shortcomings are the basis for our letter of objection
 8   and I request that the merged bank open dialogue
 9   regarding an updated San Diego reinvestment plan.
10             The areas in which their performance have
11   diminished includes diminished service delivery through
12   branches.  The bank failed to accomplish an outstanding
13   rating in the area of services, you know, lending
14   investment services.  In 19 of 22 states their ranking
15   for services in the last performance year was below
16   standard, below the outstanding mark of the other
17   categories.
18             We believe that the bank changes during the
19   merger process diminished services to all customers but
20   particularly low income consumers and products and that
21   a similar effect will result from the Fleet merger.  We
22   think that the process of compressing the two banks
23   negatively impacted their capacity to serve low income
24   communities.
25             The second area, reduced home mortgage lending
0089
 1   to CRA qualified commitments.  Previously the BofA had
 2   an outstanding record in low income communities.  In the
 3   last performance year, HMDA data shows that the
 4   predominant amount of BofA's lending is to those persons
 5   above 120 percent of the median area income.  Their
 6   target population has moved up and left low income
 7   people behind.
 8             The Bank of America engaged in the purchase of
 9   subprime credit products from subprime lenders.  In
10   San Diego, that's purchases from options on financial.
11   These are predatory products.  We think it diminishes
12   the bank's integrity in the region.
13             There's a pending lawsuit against the bank's
14   performances in the mutual fund management and -- before
15   the SEC.  We think this is another example of the bank's
16   ability to absorb another bank in a merger process.
17             Finally, we've seen reduced corporate giving
18   and lending for affordable housing in the San Diego
19   region.  They've reduced their affordable housing
20   lending.  In 2000, they loaned $78 million for
21   affordable housing.  One year after the merger, they
22   loaned 17.5 million.  That's a significant reduction and
23   represents sort of chaos in their staff management
24   activities.
25             We ask that you delay this merger, encourage
0090
 1   the bank particularly to honor its 1992 written
 2   commitment to reinvestment in the San Diego market and
 3   to update its partnership with the community, the City
 4   of San Diego and the County of San Diego.  Thank you
 5   very much.
 6             DOLORES SMITH:  Thank you.  Mr. Ainger.
 7             PAUL AINGER:  My name is Paul Ainger, I'm the
 8   director of development for Community Housing
 9   Opportunities Corporation also known as CHOC in Davis.
10             CHOC is a nonprofit housing developer that has
11   developed over 1100 units of multi-family rental
12   housing, 74 single family homes and a 150 space mobile
13   home park.  We serve Yolo, Sacramento and Solano
14   Counties.  All of these developments are financed to
15   reach low and very low income families, some who earn as
16   little as 20 percent of the area median income.
17             I also serve on the California Reinvestment
18   Committee Board.  I've been with CHOC for over four
19   years but I've been in affordable housing for 15.
20   Through the years, as I told Cathy Bessant and Doug
21   Woodruff, I have borrowed over $60 million from Bank of
22   America and paid it all back.
23             I come before the Federal Reserve Board with
24   major concerns regarding the merger based upon my
25   experience with NationsBank's turnover -- takeover of
0091
 1   Bank of America a few years back.  I remember
 2   participating in those discussions and NationsBank kept
 3   on saying, "Trust us, don't worry, everything will be
 4   better.  We will have even more money to invest."
 5             Because of my abiding faith in the decency of
 6   the people involved, I wanted to believe those
 7   representations.  Most of the people involved are no
 8   longer with the bank, and in hindsight, I should have
 9   been worried.  The new bank was different, much
10   different, than the Bank of America I knew.
11             Since the merger, Bank of America has almost
12   disappeared in rural California.  At one point the bank
13   was a major player in the mutual self-help housing
14   program which is an important home ownership program in
15   rural California.  Self-help agencies are now turning to
16   other lenders.  One major self-help agency director told
17   me, "We will never use Bank of America again."
18             Bank of America dismantled its Community
19   Development Bank.  The explanation was "It was not
20   sustainable."  I believe that is code for Wall Street
21   doesn't like it.  Well, affordable housing developers
22   liked it a lot and miss it.  The bank has become less
23   competitive in the affordable housing industry.
24             I'm sure we will hear from the bank that they
25   are making record volumes of loans in affordable
0092
 1   housing.  And by certain definitions that may be
 2   correct.  But a closer examination would look at the
 3   market share the bank has on projects with deep
 4   targeting for very low and extremely low income projects
 5   such as those done by CHOC and other nonprofits.
 6             If you count lending for projects that reach
 7   60 percent of the median, well, go to parts in south
 8   Sacramento, south Stockton, all of Fresno, Escalon,
 9   Linden, in those communities, 60 percent AMI is market
10   rate.  Should Bank of America receive any CRA credit for
11   providing financing for market rate housing?
12             Based upon my conversation with peers and the
13   key consulting groups, Community Housing Partnership
14   and -- the California Housing Partnership and Community
15   Economics, Bank of America's share in the affordable
16   housing industry has dropped steadily since its merger
17   with NationsBank.  Why has it lost its leadership?
18   There are a host of technical reasons such as a higher
19   loan to value requirements strict -- underwriting, loss
20   of permanent lending ability in multi-family housing.
21             But most importantly I believe the bank has
22   simply lost its will to understand the unique nature of
23   California overall and rural California in particular.
24   I have no reason to believe that the situation will
25   improve with the merger.
0093
 1             As I've said to many, I miss the old Bank of
 2   America.  I hope one day to see a revitalized Bank of
 3   America.  And in my mind, the best way for that to
 4   happen is to undo the merger with NationsBank, but I
 5   doubt that will ever happen.
 6             DOLORES SMITH:  Thank you very much.  We'll go
 7   to Ms. Halpern.
 8             JONI HALPERN:  I am a full-time volunteer
 9   attorney and director for the Supportive Parents
10   Information Network which is an organization of nearly
11   2,000 low income families who are trying to get from low
12   income to self-sufficiency.
13             The problem is that these folks are relegated
14   to the assets stripping establishments like check
15   cashing places and liquor stores to make use of their
16   funds because they have no way to access mainstream
17   banking services.
18             So in order to address that problem, we met
19   with many of the parents and public officials and
20   banking officials and we tried to devise an answer to
21   that problem.  And what we came up with was a limited
22   direct deposit savings account for people who couldn't
23   qualify for regular bank accounts.  We wanted an account
24   that, for a small monthly fee, would allow a parent to
25   have an employment check and a public assistance check,
0094
 1   if both were there, directly deposited into the account,
 2   have a little bank card like everybody else and have the
 3   opportunity to purchase two or three money orders at a
 4   low cost each month.
 5             We envisioned financial literacy training as a
 6   prerequisite to this account and we talked with one of
 7   the main providers of it, Consumer Credit Counseling in
 8   San Diego.  They're experts in it.  The account could
 9   not be overdrawn because it's a savings account and a
10   similar account was piloted in Los Angeles successfully
11   by strategic actions for a just economy.  It was very
12   successful.
13             We improved on that account.  And we asked
14   Bank of America if they could think about instituting
15   this account as a pilot project in the premiere area of
16   our city that has the highest number of low income
17   workers.  And they said, "We have something already,
18   it's called My Access."
19             My Access is a checking account that forgives
20   NSF history beyond three years, and if a customer pays
21   for a financial literacy course along with the penalties
22   incurred from NSF charges, then low income folks can use
23   the My Access checking account like everybody else.
24             We explained My Access won't work for our
25   parents.  Why not?  Because the definition of low income
0095
 1   is that you got no income to spare.  As in not having 50
 2   bucks for the financial literacy course.  As in not
 3   having the money to pay back NSF fees for checks that
 4   were never paid by the bank in the first place.  And
 5   checking accounts can be overdrawn by people who are
 6   just trying to get back in the mainstream banking
 7   system.  So we were looking out for the bank.
 8             Bank of America said its My Access or no
 9   access at all.  We're asking them for very little.  We
10   want them to take seriously the need for mainstream
11   banking access for people who are trying to get to a
12   place of self-sufficiency.  There just is simply no way
13   to demonstrate that you are entitled to more in the
14   banking system until you prove your value at less.
15             And low income workers have walled off from
16   this because Bank of America protects itself from all of
17   those low income workers by making their prerequisites
18   so high that nobody that we represent can ever qualify,
19   no matter how reliable they are in the workplace.
20             I just want to mention this.  BofA is
21   converting to a banking model that has very little
22   personal contact with customers allowing it to reduce
23   branch labor costs and move a host of functions to low
24   cost labor pools maybe some of them even out of the
25   country.  I don't know.
0096
 1             And I'm sure the biggest argument against the
 2   type of account we request underneath everything is that
 3   it shows in bright relief how much of a burden the bank
 4   now places on its existing customers, high fees, minimal
 5   free service contacts, and a feeling that customers can
 6   be mined for all profitability.  If these feelings
 7   weren't prevalent among your customers, they wouldn't be
 8   moving to credit unions.
 9             Bank of America, I should remind you also,
10   grew to its present size on the income of low wage
11   workers, some of them working for the bank itself.
12   Because back in the last 30 years tellers made so little
13   at Bank of America that if they had a family they could
14   qualify for public assistance, cash aid, food stamps and
15   Medi-Cal.
16             So I'm reminding you what Claire Giannini told
17   me, she said, "This bank forgot that little people built
18   it."  I think it's time for them to remember.
19             DOLORES SMITH:  Thank you.  Ms. Garcia.
20             DEBRA GARCIA:  Good morning.  My name is Debra
21   Garcia, I work with Consumers Union, the nonprofit
22   publisher of Consumer Reports Magazine.
23             And we're here to express our concerns about
24   Bank of America's lack of a basic commitment to low
25   income consumers especially in the area -- two areas,
0097
 1   one that Joni has already talked about, the fact that
 2   Bank of America does not offer an affordable bank
 3   account for low income consumers.  Yes, it's a free bank
 4   account with direct deposit.  But when you're living on
 5   the financial edge, you bounce one check with one
 6   subtraction error, and you are -- you're off the edge,
 7   you are not going to recover from that -- from those
 8   bounced check fees and you're going to damage your check
 9   rating and get more into a deeper hole.
10             So we're asking that Bank of America would
11   just provide some sort of meaningful bank account for
12   low income consumers that would consist of things like
13   five money orders -- five free money orders a month so
14   that people can pay their basic bills every month.
15             The other area of concern is around Bank of
16   America's policy of surcharging people to get their
17   welfare benefits out of their ATMs.  As you know,
18   electronic benefit transfer or EBT is now the way that
19   public assistance recipients receive their monthly
20   benefits every month.  So now instead of getting a check
21   every month, they go to the bank ATMs and withdraw their
22   benefits.
23             So far Washington Mutual and U.S. Bank have
24   agreed to waive surcharges for EBT card holders as
25   long -- as well as many other smaller banks and many
0098
 1   credit unions.
 2             The California Welfare Directors Association,
 3   the California State Treasurer and several community
 4   based organizations across California have asked BofA to
 5   also waive surcharges for public assistance recipients.
 6   They in a letter have refused to do so saying that that
 7   would be a disincentive to public assistance recipients
 8   joining the financial mainstream.  We're not quite sure
 9   how that works out, why it would be a disincentive.
10             But that is one area of concern, one area, a
11   very basic thing that Bank of America could do but has
12   refused to do is to waive the surcharges on when people
13   get their money out of their bank -- out of their ATMs.
14   And this is not a free service because they are making
15   money off the interchange fees, so they're not -- it's
16   not totally for free.  And we're just asking that they
17   not continue to take limited money, limited funds, that
18   welfare recipients have and use and take them as
19   surcharges.
20             So for those two specific areas, lack of basic
21   commitment, two basic things that Bank of America could
22   do.  We just -- we would ask that the Federal Reserve
23   Board delay what probably is going to be the ultimate
24   approval of the merger but look at it a little bit more
25   closely.  Thank you.
0099
 1             DOLORES SMITH:  Thank you.  Ms. Marshall.
 2             CATHERINE MARSHALL:  Thank you.  Good morning.
 3   My name is Catherine Marshall, I'm the CEO of CAMEO
 4   which is the California Association for Microenterprise
 5   Opportunity.
 6             CAMEO is a network of nonprofits and agencies
 7   that provide small business development services to low
 8   and moderate income individuals starting and operating
 9   small businesses.  Typically financial institutions
10   support the work of these nonprofits because
11   microenterprise development builds healthy businesses
12   and new customers for the banks.
13             Prior to the NationsBank merger, Bank of
14   America was a leading financial institution contributing
15   to small business programs.  Since the 1998 merger, Bank
16   of America has all but abandoned supporting
17   microenterprise programs in California.  The bank has
18   drastically cut its charitable contributions in
19   California for the past five years and moved them away
20   from community development.  All this while pretax
21   income increased by $3 billion from 2001 to 2002.
22   Charitable contributions should be at least 2 percent of
23   the bank's net income before taxes.
24             The little contributions that are available
25   for nonprofits are not easy to find.  Those nonprofit
0100
 1   programs that try to wade through the Bank of America
 2   grant application process have only nightmares to
 3   report.  Nonresponsive staff, changed staffing,
 4   reorganized application procedures and frustrating
 5   delays create a not so fun house of sliding doors and
 6   dead ends.  One nonprofit reported their experience
 7   trying to receive grant funds from Bank of America as
 8   humiliating.
 9             On a practical level, we need to encourage
10   Bank of America to get the contributions on to the
11   street, get the money on the streets, not just in
12   promises.  It is very clear that Bank of America does
13   not take its responsibility as a community partner very
14   seriously.  This will not improve with this proposed
15   acquisition.
16             The California Association of Microenterprise
17   Opportunity urges the Federal Reserve to encourage Bank
18   of America to keep its promises to the community.
19             DOLORES SMITH:  Thank you very much.
20   Ms. Serna.
21             RHEA SERNA:  Hello, my name is Rhea Serna, I'm
22   with the California Reinvestment Committee and I'm going
23   to be testifying today in protest of the merger
24   application that Bank of America has with FleetBoston.
25   And I appreciate the opportunity to speak before you
0101
 1   today as well.  I'm going to cover two basic points.
 2   Briefly go over charitable contributions as well as
 3   deposit accounts.
 4             CRC and its members would like to see a
 5   foundation which is involved in local communities.
 6   Community organizations need to have interactive
 7   relationships with the bank which -- so that they can
 8   understand the processees for those applications and
 9   have application processees that are transparent and
10   accountable.
11             In 2001, the bank contributed approximately
12   $96 million.  The bank decreased its charitable
13   contribution in 2002 to approximately $81 million.  This
14   trend has continued in 2003 with charitable
15   contributions being reported at $75 million.
16             In 2002, education, health, arts were
17   84 percent of total charitable contributions while
18   community development was just 16 percent of total
19   charitable contributions.
20             Since announcement of the merger, BofA
21   Foundation plans to respond to its top 25 markets
22   throughout the country by identifying individual issues.
23   Local market development managers will be responsible
24   for responding to local community needs.
25             CRC and its members are concerned that,
0102
 1   despite these changes, market development managers will
 2   not have time to be able to truly respond to
 3   communities.  BofA Foundation can only be accountable to
 4   communities through building relationships and gaining
 5   trust.  BofA Foundation needs to be transparent in its
 6   focus with its application process.
 7             Currently their online process of applying for
 8   a grant is confusing.  And for many community based
 9   organizations that have limited online accounts and
10   internet access, it's basically impossible.
11             CRC protests Bank of America's merger
12   application.  We urge the Federal Reserve to require the
13   bank to raise its contributions to 2 percent of their
14   net income before taxes.  The Foundation's commitment to
15   $1.5 billion over the next ten years needs to specify
16   where the contributions will come from.  BofA states
17   that funds will come from, quote, "our foundation and
18   otherwise."  We need to know what "otherwise" means.
19             With regards to deposit accounts, as you've
20   already heard, My Access checking account has
21   limitations.  It truly cannot work for low income
22   individuals and first-time bank consumers as it is right
23   now.  People on limited budgets need inexpensive money
24   orders, not checks.  Checks are likely to bounce when
25   account balances are minimal.  Fees incurred for
0103
 1   nonsufficient funds can serve to destroy credit rather
 2   than helping consumers build equity and good credit
 3   reports.  Other fees that are assessed to this account
 4   which may -- other fees assessed to this account may
 5   also deter first-time home -- first-time customers.
 6             In closing, we once again are protesting the
 7   merger and we ask that, if approval of the merger is
 8   given, that these considerations be taken into account.
 9   Thank you.
10             DOLORES SMITH:  Thank you.  Mr. Stein.
11             KEVIN STEIN:  Thank you.  Good morning.  My
12   name is Kevin Stein, I'm also with the California
13   Reinvestment Committee.  I want to first thank the
14   Federal Reserve for convening these hearings.  You don't
15   need to do it and we appreciate it and we think that
16   it's critically important that you solicit the public's
17   input as you're doing.  So thank you for that.
18             As you've heard and you will hear, we oppose
19   the merger for several reasons.  What I'm going to speak
20   to in my few minutes is what we regard as the predatory
21   financing activities of Bank of America.
22             As you mentioned in your introductory marks,
23   this is about whether the bank is meeting the
24   convenience and needs of its communities, at least in
25   part.  And that's what we're here to speak to.
0104
 1             In many respects, the bank is doing some
 2   positive things as they have been happy to tell you.
 3   But we think in some respects they're not only not
 4   helping communities, they're actually hurting
 5   communities and distributing harmful products.  There
 6   are three specific examples that I can give you.
 7             One is the securitization, the issuance and
 8   underwriting of subprime securities of which Bank of
 9   America will be viewed to be a major player.  The recent
10   acquisition of an equity interest in Oakmont Mortgage, a
11   subprime member.  And thirdly, what we are coming to see
12   as a disturbing relationship that's probably in the form
13   of credit lines to payday lenders that are serving
14   California or I should say disserving California.
15             The basic message is -- and this is -- what we
16   had heard from Bank of America when we've raised these
17   issues is we are no longer in subprime.  We sold our
18   subprime mortgage lenders a couple of years ago.  But,
19   unfortunately, Bank of America is involved in subprime
20   and other predatory products.  We think it's taken the
21   form of behind-the-scenes financing and investing in a
22   way that gives them less visibility but probably greater
23   profits.
24             In some of the products -- hopefully I'll have
25   time to describe or you'll be able to investigate on
0105
 1   your own.  If the bank was originating these products,
 2   we would be outraged and I think you would be concerned.
 3   And how could it be less significant that they're
 4   financing these products?  It seems to be that that's a
 5   distinction that's not really a distinction.
 6             The main message I want to convey is, as,
 7   Ms. Smith, you mentioned in the beginning, this is about
 8   clarifying the factual record here.  And I think the
 9   factual record on these points is not clear and we need
10   for the Fed to do as it has done in the past, to
11   investigate these issues, these problematic issues that
12   are being raised in the form of questions that you raise
13   to Bank of America.
14             As I mentioned or I think I mentioned, we've
15   been asking Bank of America for well over a year about
16   these activities and really have received no information
17   forcing us to try to investigate with our limited
18   capacity.  And so what I'm going to represent is what we
19   were able to discover.  And we think perhaps if you ask
20   the bank about these activities you will get a better
21   response we would hope.
22             And it raises the question why is the bank
23   which generally -- you know, and Mr. Woodruff, who I
24   respect very much, made the point that the bank is very
25   invested in accountability and providing information and
0106
 1   it feels like it provides more information than many
 2   institutions to community groups.  Why is it not
 3   providing this kind of information?  Are these
 4   activities the bank is not proud of?  We suspect the
 5   answer is yes.
 6             So very quickly, in looking at SEC filings, we
 7   see that the bank is securitizing, it's issuing and
 8   underwriting loans that we view as predatory with rates
 9   that -- interest rates that begin at over 13 percent,
10   that can increase up to 19 percent, that never get below
11   12 percent, and most of them include prepayment
12   penalties.
13             In most of these pools California is the
14   number one state where the loans are being originated.
15   So we're particularly concerned.  Prepayment penalties
16   lasting for five years, loan to value ratios up to and
17   sometimes exceeding a hundred percent, balloon payments,
18   negative amortization.
19             As was mentioned by Mr. Bliesner, subprime
20   loans for problematic lenders for whom there is
21   currently litigation outstanding.  It's one thing that
22   we would suggest is that you seek the litigation docket
23   of Bank of America certainly but also some of these
24   lenders that they're doing business with, including some
25   problematic servicers that they're doing business with
0107
 1   like Ocwen.
 2             The second examply very quickly.  Oakmont
 3   Mortgage, this is new, this apparently just happened,
 4   and in our limited time we've contacted the California
 5   Department of Corporations and understand that a few
 6   complaints have been filed by consumers in California
 7   concerning business practices of Oakmont Mortgage.  This
 8   is also not a state agency that people generally view as
 9   a place to go with complaints.  So whenever anybody
10   complains to the Department of Corporations, we think
11   it's significant.
12             And finally and perhaps most disturbingly, we
13   see in looking at UCC filings that Bank of America is
14   listed as an administrative agent, I believe, for
15   Advanced America and for Check Into Cash, two payday
16   lenders.  That administrative agent role we believe
17   suggests strongly that they are extending credit lines
18   to those payday lenders, both of whom have several
19   retail outlets in California, both of whom offer payday
20   loans.
21             You know, in a similar, I guess, theme we
22   called one of them and we asked, "What is the APR on a
23   payday loan?"  And they don't give that information.  I
24   guess they're also not proud of the product that they're
25   delivering.  And the other institution we called and
0108
 1   they said, this was in San Jose, "The APR is about 460
 2   percent."
 3             So, again, these are products that we don't
 4   think -- if Bank of America was originating them, we
 5   would be outraged.  That they're financing them we
 6   believe we think is no less disturbing.  And, again,
 7   this is based on our preliminary research.
 8             So, you know, in conclusion, my final -- my
 9   final urging of you, again, is to do what we are unable
10   to do which is to find out exactly what are the
11   relationships and what are the investments that Bank of
12   America is not really telling us about that may very
13   well counterbalance any of the positive things they're
14   doing on the other hand.
15             And, again, I thank you and I guess for the --
16   you know, we should say for the members of the public
17   and for the Fed and for members of Bank of America we
18   have fortune cookies in the lobby that express, you
19   know, our concerns about the big dollar commitment.  So
20   thank you.
21             DOLORES SMITH:  Thank you very much.  Any
22   questions?
23             LINWOOD GILL:  One for Mr. Stern -- Mr. Stein,
24   excuse me.  The loans that you were talking about that
25   were predatory.  What types of loans are they?  Are they
0109
 1   mortgage loans?
 2             KEVIN STEIN:  Yes, these are -- to my
 3   understanding, these are all mortgage loans.  And what
 4   we have to do is go through the SEC filings where, you
 5   know, these are long documents where BofA is either the
 6   issuer, meaning they -- they're purchasing the loans
 7   from subprime lenders or the underwriter where they're
 8   bringing these pools of loans to the market.  And you
 9   have to search or -- you know, I guess what we suggest
10   is you ask Bank of America.  And you could get
11   information on the underlying loans.
12             This is information that's publicly available
13   to investors, and yet when we ask for it, we get -- we
14   don't know that we're actually doing that.  And then
15   when we say, "Well, we just found out that you are," we
16   don't get much of a response.  And we think this is
17   really something that you guys need to look into as well
18   as the relationship with the payday lenders which is not
19   entirely clear to us but does suggest a credit line.
20             And then another question would be not only
21   does that relationship exist and are there credit lines
22   but for what purpose?  Is it -- are these actually loans
23   that are translating into payday loans through payday
24   outlets in California and nationally?
25             DOLORES SMITH:  Any other questions?
0110
 1             If not, thank you very much.  And we are ready
 2   for a break.  So see you again very promptly in 15
 3   minutes.
 4                        (Short break.)
 5             DOLORES SMITH:  All right.  We are ready to
 6   start and we will start with Sister Donoghue, Sister
 7   Diane.
 8             SISTER DIANE DONOGHUE:  My name is Sister
 9   Diane Donoghue, I'm the executive director of Esperanza
10   Community Housing Corporation in Los Angeles.
11             We have been developing and building
12   affordable housing for very low income families for the
13   last 15 years.  I gave testimony at the time of the
14   merger of Bank of America and Security Pacific in the
15   late '80s.  We had 30 banks in South Central at that
16   time and it was reduced to 15.  That was the beginning
17   of the transfer to the payday loans, the nicks, the pawn
18   shops, and it's been going downhill ever since.
19             I'm very concerned about the commitment that
20   was made in 1998 with the Nations merger as it relates
21   to community development, specifically in affordable
22   housing and in philanthropy.  I saw a complete exit on
23   the part of Bank of America as a corporate citizen
24   participating and being very active and an influence in
25   input into the local civic life of Los Angeles.  It was
0111
 1   most, most evident.
 2             Esperanza Housing serves multi-family and we
 3   do it at an income level from 30 to 50 percent of median
 4   income.  That's -- for a family of four, that's 18 to
 5   24,000.  Those are the folks that pay 60 percent of
 6   their income on rent.
 7             So when -- I totally support first-time home
 8   buyers -- any kind of home buyer education, we do it,
 9   but the reality is the folks that actually live in our
10   buildings are at that income level.  And so it's
11   incredible, then, for them to -- and for us to serve
12   that need because it's a significant population in
13   Los Angeles.
14             When we talk about serving low income people,
15   very often the cutoff is 80 percent of median and that
16   is the problem because you start at 80 percent and go to
17   120.  We start at 30 and go to 50.  And so there is an
18   incredible gap.  So when we say very low and low, that's
19   what we're talking about and that's where there's a
20   tremendous lack in terms of multi-family lending.
21             I'm also concerned as a nonprofit.  As a
22   member of the California Reinvestment Committee, I'm one
23   of the 200 nonprofits that was mentioned, and we have
24   been very active in supporting the work of the CRC as
25   well as giving testimony to the concerns of this very
0112
 1   low income population.  These are folks that simply do
 2   not have a voice.  And one of the things we do is give
 3   them a voice, not by me talking, but by us doing
 4   trainings so that they speak on their own behalf.
 5             The L.A. Times this morning, and you probably
 6   saw it, but it has Bank of America and Fleet and others
 7   post higher profits.  So this means that BofA did
 8   4 percent and Fleet almost tripled their profits.  So
 9   when we talk about philanthropy and grants, and we're
10   talking about a 2 percent level, last year, quoting,
11   "BofA, the number three U.S. bank, said a net income
12   rose to 2.73 billion for last year."
13             So when we talk about the need and the
14   opportunity to make a good contribution it is at
15   2 percent and it's based on this.
16             I want to conclude by telling you that I am a
17   member of the Los Angeles branch of the Federal Reserve
18   12th District.  The reason that I was asked to
19   participate on the Federal Reserve Board is because the
20   priorities for the 12th District, first, is a California
21   budget; second, is the crisis in affordable housing;
22   third, is transportation; fourth is water.
23             I come before you because I feel I have a
24   mandate as a member of the Reserve Board in Los Angeles,
25   as a member of CRC and certainly as a community resident
0113
 1   of more than 30 years in South Central Los Angeles.
 2   Thank you.
 3             DOLORES SMITH:  Thank you very much.
 4   Mr. Espinoza.  Pass the mike, yes.
 5             TOMMY ESPINOZA:  Good afternoon.  My name is
 6   Tommy Espinoza, I'm President and CEO of the Raza
 7   Development Fund.
 8             Excuse me, I have laryngitis so I'm trying to
 9   get through this.
10             We are a subsidiary of the National Council of
11   Raza which is one of the largest Hispanic organizations
12   across the country.  And we represent approximately 300
13   organizations and affiliates.
14             You know, I'm glad we started with prayer
15   because sometimes you get wrapped up with emotions so
16   you've got to deal with a philosophy that I have and
17   that's that the truth will set you free.
18             I've got to tell you that Raza Development is
19   a national partner of Bank of America and we started the
20   relationship prior to it being Bank of America with
21   NationsBank.  It's interesting to hear names tossed out
22   but I can tell you from personal experience that I've
23   sat across the table with Cathy Bessant cutting some
24   pretty hard deals in trying to get some capital invested
25   into our CDFI and with Doug Woodruff.  And so far our
0114
 1   experience has been that they've been very
 2   straightforward and very honest.  We've also negotiated
 3   with Ken Lewis, and prior to that, how soon we forget,
 4   the prior CEO of Bank of America.
 5             I'm here to tell you that there is never
 6   enough capital for the Hispanic community in this
 7   country so let me start by saying that.  I mean, there's
 8   always a need for more.  And, furthermore, it would be
 9   an insult to the other groups in this org- -- in this
10   body to say that the needs are not there, they are
11   there.  But our personal experience has been that BofA
12   invested over $20 million, $10 million in loans and
13   $10 million in grants, to support community development
14   with our affiliates across the country.
15             So far we've been able to lend out 41 million
16   and leveraged 71 million to -- which inclusively would
17   be over $110 million in capital that has gone into the
18   Hispanic community.
19             The NCLR affiliate groups, which we touch base
20   with, did have some reservations with Fleet.  There's no
21   real connection to the Hispanic community in the
22   northeast.  Obviously we feel comfortable that BofA will
23   rectify that because they've had a track record of doing
24   that in other parts of the country.
25             Furthermore, NCLR is an organization that's
0115
 1   focused in a number of areas of concern, once again,
 2   feeling very comfortable that Bank of America will
 3   resolve these issues.  One being the immigrant capital
 4   remittance programs of capital going into Mexico.  They
 5   have come out with SAF SEND, some concern that maybe we
 6   should work harder to get into some poorer communities.
 7             An issue that has been raised is, when you
 8   have mergers, you also have mortgages that have been
 9   purchased and sometimes you have interest rates that are
10   a bit too high, I forget the terminology as we all know.
11             The other issue that was raised is also the
12   question that if, in fact, there's an ability or if the
13   Federal Reserve decides that Bank of America should
14   divest itself of some of the bank branches that those go
15   to minority organizations or minority entrepreneurs to
16   support growth in the minority community.
17             Raza Development Fund endorses our national
18   partner Bank of America in this merger and National
19   Council of La Raza, our parent, is not against the
20   merger.
21             So, for the record, I will leave a copy of a
22   letter that was given to me by our parent, National
23   Council of La Raza for the record.  Thank you.
24             DOLORES SMITH:  Mary.
25             MARY MAZYCK:  Good morning.  My name is Mary
0116
 1   Mazyck, I'm the Vice President of programs and services
 2   at Senior Community Centers of San Diego.  Paul Downey,
 3   our CEO, sends his regrets that he was not able to be
 4   here himself.
 5             Senior Community Centers is a nonprofit social
 6   services agency based in San Diego, California.  We
 7   provide intensive programs and services for seniors
 8   living in poverty.  These include nutrition, social work
 9   assistance, healthcare, mental healthcare, homeless
10   services and housing.
11             The agency's financial well-being is dependent
12   on support from the community and our corporate
13   partners.  It is our pleasure to report to you that Bank
14   of America has been exemplary in its support of Senior
15   Community Centers.
16             The bank has not only provided generous
17   financial support over more than a decade but its
18   employees also volunteer to serve meals and provide
19   socialization to our seniors.
20             We have also been fortunate to have had a
21   series of Bank of America executives serving on our
22   board of directors and advisory council.  Their
23   financial and business expertise has been invaluable to
24   us, especially since the agency has been experiencing
25   significant growth over the last few years.  Each of
0117
 1   them has had a passion for our mission and a willingness
 2   to give generously of their time.
 3             Senior Community Centers just completed a 200
 4   unit low income housing project in downtown San Diego
 5   called Market Square Manor.  When we needed a
 6   construction loan for the project, we turned to Bank of
 7   America.  I was continually impressed by their
 8   professionalism and patience with us through our first
 9   construction project.  There's little doubt that we will
10   approach them first on our next building.
11             Thank you for the opportunity to offer our
12   support.
13             DOLORES SMITH:  Thank you.  Ms. Klein
14   (phonetic).
15             KATHERINE KLEIN:  Good morning.  My name is
16   Katherine Klein and I am speaking on behalf of our
17   President Jeffery Brown who also sends his regrets, he
18   could not be here.
19             U.S.A. Properties is one of the leading for
20   profit affordable housing developers in California.  Our
21   portfolio consists of approximately 7,000 units and we
22   serve tenant populations of family and seniors.  And our
23   income range is typically 50 to 60 percent of area
24   median income.  However, we have communities that serve
25   as low as 20 percent of area median income and as high
0118
 1   as 80 percent.
 2             The mission of U.S.A. Properties Fund is to
 3   create outstanding housing for value conscious seniors
 4   and families as stated.  We are our own general
 5   contractor, developer, property manager.  Our
 6   extensive -- we have extensive history and offer
 7   services from acquisition through property management.
 8             Our relationship with Bank of America began in
 9   1992 with the creation of a 124 unit affordable housing
10   project in Sacramento.  To date, with the financial
11   assistance of Bank of America Community Development
12   Bank, we have created 15 projects totaling 1,978 units.
13   This is throughout California and Nevada, specifically
14   communities in Southern California, the Bay Area, the
15   County of Sacramento and some in Nevada.  The financial
16   assistance has totaled $90 million and that is a
17   substantial figure.
18             When you look at the 7,000 units and the
19   creation of almost 2000 units by the assistance of Bank
20   of America, I think that speaks volumes to the history
21   that we have.
22             I've heard some testimony that the bank has
23   seemingly not been offering programs recently in
24   affordable housing, however, that has not been our
25   experience.  We actually are just completing a couple
0119
 1   projects and are moving forward on another one.
 2             I wanted to speak to my experience with the
 3   bank of -- over twelve years and my personal experience
 4   of eight years.  The commitment to customer service, to
 5   excellence, to being there when there have been
 6   extenuating circumstances, issues.  If we needed a
 7   creative financing structure, an extension on a
 8   construction loan, please fund my draw time lease so I
 9   can get the project built, they've always been there.
10             I believe and U.S.A. believes that Bank of
11   America Community Development Bank is an asset.  It
12   creates opportunities for affordable housing developers
13   such as U.S.A. Properties to bring the much needed
14   housing and create healthy neighborhoods to our
15   communities.
16             And I just wanted to thank you for this
17   opportunity to speak on our relationship with Bank of
18   America.
19             DOLORES SMITH:  Thank you.  We'll go to
20   Ms. Howroyd.
21             JANICE BRYANT HOWROYD:  It's still morning,
22   right?
23             DOLORES SMITH:  Yes, it is.
24             JANICE BRYANT HOWROYD:  Good morning.  Thank
25   you so much for the opportunity to speak today.  Let me
0120
 1   candidly state that I do speak in favor of the merger
 2   between Bank of America and Fleet.
 3             My name is Janice Bryant Howroyd and I am the
 4   founder and CEO of Act One Personnel Group which I
 5   believe is the largest female minority owned staffing
 6   service in the country.  And in that capacity, I'd like
 7   to speak to what the merger of Bank of America and Fleet
 8   means on a different -- maybe perchance from a different
 9   perspective.
10             I've had a relationship with Bank of America
11   for more than several years now.  As a matter of fact,
12   we were an infant relationship to Security Pacific Bank
13   during the time that that relationship enjoined itself.
14   We have had a consistent relationship.  It has been one
15   of growth where today I can tell you that in the year
16   2003 we were able to run through our temporary help
17   services more than 25,000 people who were employed in
18   this country.
19             I would like to say candidly that the support,
20   that the nurturing, that the incubator opportunity of
21   new business through Bank of America has been phenomenal
22   to the growth of our company.
23             Any company has in front of it a need to
24   engage in technologies, engage in reeducation, and
25   engage in the community in order to grow in a healthy
0121
 1   way.  I'm happy that we have an environment in America
 2   where we can speak in a forum like this about how we
 3   face success and how we face the new world.
 4             As I sat here and listened to people testify
 5   today, I thought to myself and more than once I noted to
 6   my sister Trish that could be us one day.  That could be
 7   us one day.  And truthfully that could be us one day.
 8             A company sitting in a public forum listening
 9   to how to grow responsibly and how to create new
10   opportunities through merging the best of histories from
11   two separate companies.  And I'd love, I'd really love
12   to speak this moment about in these last few moments I
13   have about why my heart and my head had a conversation
14   that ended them both on the same side of support for
15   this merger.
16             My company is 25 years old.  I'm more than
17   double that age.  I was born, oddly enough, in North
18   Carolina and migrated to California.  Bank of America
19   was one of the first customers we had.  Bank of America
20   is not a lending institution to my company.  Bank of
21   America is not the prime banking relationship we have.
22   Bank of America has, in fact, been a foundational part
23   of our group and a strategic part of the success we've
24   had in being able to afford to design and implement
25   technologies that have helped us to use geography, to
0122
 1   use technology as our geography.
 2             And I will tell you that having this merger
 3   occur creates a better opportunity for companies like
 4   mine, minority women owned companies, to grow our
 5   businesses as this company grow.
 6             So where then is the question for me?  The
 7   question really is can I be like a Bank of America one
 8   day, a responsible company growing through invention,
 9   through new creative thought and through helping other
10   companies to grow?
11             As a minority female owned company, we're all
12   familiar with WMBE guidelines and the best intended
13   plans of mice and men still can put a cap on the growth.
14   And I thought to myself therein is the synergy.  To deny
15   a company to grow itself because of whether or not it
16   gives back or whether or not it can create a responsible
17   environment is not the answer.  Rather, to encourage it
18   to grow and to engage it to be responsible.
19             Bank of America has been a very responsible
20   business partner.  It has been a responsible partner in
21   the communities where our employees work.  And I would
22   like to say that our mutual customers, people who need
23   jobs and people who work, benefit from this merger.
24             And I thank you and encourage you to give it
25   your best and your fastest consideration.
0123
 1             DOLORES SMITH:  Thank you.
 2             DEBORAH LA FRANCHI:  Good morning.  I'm
 3   Deborah La Franchi, I'm the executive in charge of
 4   investment fund development for Genesis L.A.
 5             Genesis L.A. is a 501(c)(3) nonprofit that was
 6   created in 1998 just for investment in Los Angeles'
 7   inner city communities.  I'm here to testify in support
 8   of the Bank of America merger in that Bank of America
 9   has been a tremendous supporter of double bottom line
10   investment funds within California.
11             Five years ago when Genesis L.A. was created
12   under Mayor Reardon, its main mission was to facilitate
13   the creation of double bottom line investment funds.
14   These are investment funds that do good in that they
15   create jobs for the communities in which they invest.
16   They do well in that they provide a return to the
17   investors.  So hopefully they come back for future
18   investments and continue the positive cycle.
19             Genesis has been a key player in this industry
20   in that we've created three such investment funds of
21   more than over $150 million targeted in Los Angeles low
22   income communities.  What I'd like to do is briefly
23   sketch a picture of BofA's involvement with the three
24   funds that we have developed over the past five years.
25             In 1998, when we conceptualized the Genesis
0124
 1   L.A. Real Estate Fund, a fund that would invest in low
 2   to moderate income communities in Los Angeles for
 3   commercial and industrial development that it would go
 4   into blighted and vacated properties to bring jobs back
 5   to communities that most need jobs.  We approached a
 6   number of investors.
 7             I have to say BofA was one of the very first
 8   to step up to the plate.  This fund was the first of its
 9   kind in the country.  It was not proven, it had no track
10   record, it was a theory.  We were trying to prove that
11   our investors could make money while creating jobs in
12   the inner city.  Fortunately, it's been a great success.
13             It's since been replicated across the country,
14   Sacramento now has a similar fund, the Bay Area fund,
15   Florida is creating a fund, San Diego, and we're
16   actually helping Tel Aviv create such a fund.
17             But it was the early commitment from investors
18   like BofA that enabled us to create this investment
19   vehicle, leveraging more than half a billion dollars
20   ultimately from the 85 million that our fund
21   capitalized.
22             Our second fund was the Growth Capital Fund.
23   At $27 million, this fund invests in women and minority
24   owned manufacturing and service companies in low income
25   communities within Los Angeles.  BofA invested --
0125
 1   brought to the table $5 million, almost 20 percent of
 2   that fund.
 3             And our third fund, which is currently being
 4   capitalized, the Genesis Work Force Housing Fund, will
 5   create housing within the urban core areas of Southern
 6   California for people that are being priced out of being
 7   able to buy a home in the urban core.  Nurses, teachers,
 8   firefighters, people that are 80 to 120 percent of
 9   average to median income has become a tremendous issue
10   for employers in the urban core that their employees
11   have three to four hour commutes.  If they want to own a
12   home, they have to go out to Lancaster and Palmdale.
13             BofA is currently capitalizing this.  We
14   should have a first -- significant first close within
15   the next few weeks and BofA has made a very substantial
16   commitment which at this time as we're going through the
17   legal closing I can't get into details but I must say
18   they've been very supportive and one of the initial
19   investors in this fund.
20             In summary, Genesis L.A. is very exited that
21   the double bottom line industry has grown tremendously
22   over the past five years and we want to provide our
23   support to Bank of America in its merger in that we
24   recognize that, without the early support that BofA
25   provided in taking a leap of faith by investing in these
0126
 1   funds here and in the Bay Area, this industry would not
 2   have grown as quickly.  Their continued support of these
 3   funds is very evident to us and we anticipate that they
 4   will continue to be there for double bottom line funds.
 5             Thank you very much.
 6             DOLORES SMITH:  Thank you.  Pass the mike,
 7   please.  Now you get two.
 8             HENRY WILLIAMS:  Good afternoon.  I'm Henry
 9   Williams, I'm the founder and President of Job Work
10   Development Corporation.  That company was started after
11   the 880 Cypress Freeway fell in Oakland and I served on
12   that committee from the beginning all the way through
13   the building of the 880 Cypress Freeway.  So I have much
14   history of what took place there and many years ago in
15   Oakland and a lot of experience through Bank of America.
16             Now, they didn't do the job there after the
17   880 Cypress Freeway fell.  As far as supporting the
18   peoples and helping the peoples, many people lost their
19   homes there in Oakland and many peoples couldn't get a
20   loan, you know, not even for a few hundred dollars -- a
21   few thousand dollars from Bank of America.
22             As a matter of fact, Bank of America moved out
23   of West Oakland.  They were at 12th and Broadway.  You
24   know, so there's a long history.
25             There's many people in East Oakland lost homes
0127
 1   over the years behind that same thing.  The city and
 2   other title company just took peoples' homes for a
 3   little of nothing and that's the reason a lot of blacks
 4   don't own a lot of homes in Oakland right now.  That's
 5   one of them.
 6             Also, I'm against this merger, you know, with
 7   FleetBoston and Bank of America for many ways.
 8   FleetBoston, they is a company that is linked to
 9   slavery.  Through all of these Delaware corporations is
10   a link to slavery.  One way or another they hooked on
11   together.  So, you know, we had a over 2 billion-dollar
12   lawsuit here in the San Francisco court against Cotellas
13   (phonetic) and the railroad companies here in 2000.
14             So we have a case where the 880 Cypress
15   Freeway fell, all of these railroad companies, Union
16   Pacific and all the rest of them over there, they stole
17   and sold over 500 blocks there in West Oakland and
18   through Emeryville, okay.  These are all of them is
19   Delaware corporations.
20             John Brown, he was a Delaware corporation.
21   Linked all the way back to when he had his family, they
22   said that through their history he was freeing blacks in
23   the south, bringing them out of the slavery.  That
24   wasn't the case.  He actually was kidnapping them,
25   bringing them to California, selling them to the coal
0128
 1   miners and the gold miners.  You know, this was long
 2   before the Civil War broke out, you know.
 3             And many black kids was brought out here, you
 4   know, and many of them died right there in Antioch coal
 5   mines with long accounts at the age of twelve years old.
 6             So -- but here in Oakland, the ferry -- John
 7   Brown Ferry used to dock right there at 7th and
 8   Broadway -- 7th and -- down on 7th and Bay Streets in
 9   West Oakland between 7th and 8th.  That ferry brought in
10   the slaves there.  They had over a thousand slaves
11   taking care of thousands of horses in West Oakland and
12   also there across 106th and West Oakland in the hills in
13   a slave camp.  Not only there but they had it in Antioch
14   where a lot of these slaves died there.
15             The history of California speaks about through
16   the six -- the 1860s there was only about a thousand
17   blacks in the State of California.  That was not true.
18   That was -- they counted the blacks within the cities,
19   L.A. and like San Francisco and Oakland, Sacramento and
20   Stockton, places like that.  So -- but they didn't count
21   slaves -- they didn't even count slaves in Alabama, you
22   know.  They was a number, you know.  I have all of my
23   roots papers on my roots all the way back to the 1840s
24   and '50s there in Alabama.  So they didn't count slaves
25   there and they didn't count slaves here.
0129
 1             That was a senator gave his life in a dual,
 2   Dave Brodrick (phonetic), right here in San Francisco,
 3   he died in a dualing in the streets, a shoot out with
 4   three blacks.  Okay, this bill that went before the
 5   House many times, number one, and he was fighting to
 6   free blacks.  He was killed by the chief justice in
 7   1883.
 8             But I'm against this merger here.  I know that
 9   there's bigger things here to do.  A lot of companies
10   and organizations wind up in the Federal Court and also
11   in the United Nation Court through these Delaware
12   corporations and here that they all is linked together.
13   So I'm very much against this merger.
14             And so, as a matter of fact, I'm a reparation
15   agent and I've done a lot of studies and research what
16   the law says and the Lord tells us how to receive what's
17   there for us.  So what we haven't been receiving is
18   justice.
19             I heard a little bit about a lot of things but
20   very little about the truth and about justice and for
21   the people --
22             DOLORES SMITH:  But could you wind up,
23   Mr. Williams?
24             HENRY WILLIAMS:  Yes.  The last thing I'm
25   going to say is a lot has been given here, even for Bank
0130
 1   of America and a lot of things they did, but the rating
 2   on black people were really bad.
 3             My -- the church I'm a member of, Humanitarian
 4   Baptist there in Oakland, they've been doing business
 5   with Bank of America for over 30 years and couldn't get
 6   a business loan, okay.
 7             But I thank you all for being here and I have
 8   some copies of things I spoke of.  I'd like to leave for
 9   you all.
10             DOLORES SMITH:  We'd like to take your written
11   statements.
12             HENRY WILLIAMS:  And I would like someone to
13   contact me, okay.
14             DOLORES SMITH:  Thank you very much.
15             HENRY WILLIAMS:  Thank you, God bless you.
16             DOLORES SMITH:  All right, we'll move on to
17   Mr. Sheehy.
18             DANIEL SHEEHY:  Good morning.  My name is
19   Daniel Sheehy.  I'm appearing today to give testimony in
20   support of the application of Bank of America
21   Corporation to merge with FleetBoston Financial
22   Corporation.  A fascinating history lesson.  My
23   testimony won't be as colorful, it's going to be a
24   little more on the modern, current side.
25             I'm the President and Chief Executive Officer
0131
 1   of Impact Community Capital.  Impact is a community
 2   development investment intermediary owned by major
 3   insurance companies.  Our offices are in San Francisco,
 4   California.
 5             As an institutional investor, we do not have
 6   direct access to the community development marketplace,
 7   community development loans and investments.  And as
 8   such, we need and must rely on the expertise and
 9   presence of those who do, Bank of America fits that to a
10   T.
11             Impact and Bank of America have worked
12   together continuously since the bank's merger with
13   NationsBank.  That being so because Impact is only five
14   years of age.  However, through that period it's been
15   our experience that the bank has maintained a clear
16   focus on community development and has demonstrated a
17   continuing commitment to enhancing its community
18   development activities and supporting those of Impact.
19             And I personally know that the bank's
20   commitment to growing its business year over year into
21   the future is valid and real.  Based specifically on
22   Impact's experience, the bank's commitment includes not
23   just traditional lending but responding to market needs,
24   specifically new affordable housing arena where they've
25   been most helpful to Impact.  For example, it is only
0132
 1   through our respective organizations and mutual
 2   commitment and desire for results and innovation that we
 3   together were able to build and execute on the
 4   multi-year community Impact loan product launched in
 5   2003.
 6             This 475 million-dollar affordable
 7   multi-family housing, new construction and permanent
 8   loan product was specifically designed to meet market
 9   needs.  It will provide housing for approximately 15,000
10   families.  We together will continue to hone the product
11   design to accommodate both evolving and changing
12   affordable housing market needs.
13             Impact alone could not have launched this
14   ambitious, unique and innovative market undertaking.  It
15   couldn't have happened.  The expertise, effort and
16   energy supplied by the bank are invaluable and the bank
17   has committed to Impact its continuing active support
18   for our joint adventure.
19             I thank you for the opportunity to present my
20   views.
21             DOLORES SMITH:  Thank you very much.  We're
22   ready for panel No. 5.  Okay, We'll start with
23   Mr. Banner.
24             MICHAEL BANNER:  Good morning.  Sitting in the
25   audience, I used to work for a bank in the old days and
0133
 1   this reminds me of working a complaint desk.  You have
 2   good customers and you have bad customers and your job
 3   is to figure out where the real truth lies.
 4             I'm Michael Banner, I'm a resident of
 5   Los Angeles, California, I'm the President and Chief
 6   Executive Officer of the Los Angeles LDC, Inc.
 7   Los Angeles LDC, Inc. is a community development
 8   financial institution with a mission to improve the flow
 9   of capital into distressed census tracts throughout
10   California.  Additionally I serve on the board of
11   directors of the California Reinvestment Coalition.
12             I testify in opposition to the application by
13   Bank of America Corporation to merge with FleetBoston
14   Financial Corporation.  As a customer of Bank of
15   America, both a consumer and small business account
16   holder, I believe the merger is detrimental to low
17   income and under banked neighborhoods in California.
18             If allowed to close, this merger will increase
19   disinvestment and further decline in community
20   development banking services and low income census
21   tracts that Bank -- that are in Bank of America's
22   assessment area in California.
23             In my opinion, the dedication of Bank of
24   America to serve low income neighborhoods in California
25   steadily declined since its acquisition by NationsBank
0134
 1   and its relocation of its headquarters to
 2   North Carolina.
 3             As you have heard today, its dedication to
 4   community development is not what it used to be.  And it
 5   is deemed to be mediocre at best by most community
 6   development industry.  California has a vast number of
 7   low income urban communities that suffer from a lack of
 8   access to experienced commercial bankers that deliver
 9   products and services that meet a wide variety of basic
10   financial needs.
11             I testify today to let you know that Bank of
12   America is failing to meet these needs.  Especially as
13   it relates to community development banking in
14   California.
15             Recent events would indicate that Bank of
16   America, like its other peers, have excels, but not in
17   delivery of fairly priced financial services but in
18   costly unethical behavior that has resulted in
19   multimillion dollar fines and settlements extricated by
20   local officials with legitimate concerns for consumer
21   protection.
22             And I simply ask where were our banking
23   regulators when Enron and the mutual fund pricing
24   scandals have occurred?  It's all happened on their
25   watch.  This raises an obvious question.  Is Bank of
0135
 1   America too large to regulate?
 2             Events of this kind clearly demonstrate that
 3   bigger is not always better and I believe the Bank of
 4   America/FleetBoston merger is just the latest example of
 5   two CEOs chasing trillion dollar balance sheets by while
 6   eagerly giving lip service to the level of community
 7   development investment and the necessary human capital.
 8   And I want to emphasize human capital especially needed
 9   in California to make deals that make a difference in
10   low income communities.
11             Clearly the community development industry in
12   California fully understands the many long-term negative
13   impacts that results from mega-banking mergers.
14             I urge the Federal Reserve Bank to reject the
15   merger application.  If you choose not to follow my
16   recommendations it's essential that you hold hearings
17   also in Southern California, give folks down there the
18   same opportunity that you're giving folks in Northern
19   California.  Because it cost me a great deal in expense
20   since I run a nonprofit to take off time and fly up here
21   to speak to you about this today.  And last time I
22   checked, Southern California is one of the major markets
23   in the world.  So to me it's regulating malpractice for
24   you not to go down there and let the community there in
25   Southern California speak its mind.
0136
 1             DOLORES SMITH:  Thank you very much.  Would
 2   you pass the mike?  Mr. Bystry.
 3             DOUGLAS BYSTRY:  Thank you.  My name is
 4   Douglas Bystry, I'm the President and CEO of the
 5   Clearinghouse CDFI.  We are a certified community
 6   development financial institution located in Orange
 7   County, California but we make affordable housing and
 8   community development loans throughout all of Southern
 9   California.
10             In preparing to speak about this merger, I'm
11   reminded that no bank is all good or all bad.  And as
12   we've heard from so many organizations and so many
13   speakers, it's clear that Bank of America is doing many
14   good things in the community.  However, my own
15   experience at working with the bank has been much
16   different.
17             Clearinghouse CDFI has received equity debt
18   and deposits from over 40 regulated financial
19   institutions.  We currently have over 50 million in
20   assets and as a community lender are striving to always
21   do more in the community.  In showing people our list of
22   investors and supporters, I'm very frequently asked,
23   "Where is Bank of America?  Why aren't they supporting
24   you?"  And I honestly don't have an answer to that.  And
25   certainly not through our lack of effort in trying to
0137
 1   get them involved in the activities that we're doing.
 2             In 1995, we approached Bank of America about
 3   being a charter investor in our initial
 4   10 million-dollar capital offering.  We were turned down
 5   by the bank and generally informed that they would be
 6   handling community development lending through their own
 7   Bank of America Community Development Bank.
 8             This response has not passed the test of time.
 9   Since the NationsBank's merger, the Community
10   Development Bank's role has greatly diminished.  Today
11   the Community Development bank is seemingly nonexistent.
12   Yet its disappearance has not triggered an increase in
13   CRA activity by the bank as witnessed in the communities
14   that I represent.
15             Talk a little bit about where our office is in
16   Orange County, California.  Orange County, California is
17   the fifth most populated county in the United States.
18   Not California, the United States.  It's a diverse urban
19   county that has one of the most severe affordable
20   housing crisis in the nation.  Bank of America has more
21   branches and deposits in the county than any other bank.
22   They have 90 branches, over 350 ATMs with $8.7 billion
23   of deposits, but their CRA presence is truly
24   nonexistent.
25             I'd like to read some experts from their CRA
0138
 1   exam that occurred just three years after we approached
 2   the bank and these are quotes.  "Bank of America's
 3   geographical loan distribution for all products reflects
 4   weak penetration in LMI geographies."  Second one,
 5   "Investment volume is weak."  Third quote, "Service
 6   performance in the MSA is weak."  And lastly, my
 7   favorite, "Under the investment test, Bank of America's
 8   investments total 9,500 and consists of five community
 9   development grants.  This level of investment reflects
10   nominal responsiveness to community development needs,"
11   end quote.
12             And, again, juxtapose the deposits that
13   they're receiving in this county versus the $9,000 in
14   investments and I think we have a problem.
15             While these quotes are old, I think the
16   problem has only become worse.  Bank of America is now
17   more invisible than in previous years.  And I would also
18   like you to refer to a letter that you received from
19   Alan Baldwin, who is the oldest nonprofit affordable
20   housing developer in Orange County, and he submitted a
21   letter basically saying the same thing.
22             In closing, I would just like to say that Bank
23   of America is still struggling with the NationsBank
24   merger.  Certain CRA communities in Southern California
25   have been neglected or ignored by the new Bank of
0139
 1   America.
 2             I respectfully ask the Federal Reserve to hold
 3   off in approving this merger until Bank of America
 4   provides some specific details on how they will overcome
 5   the current problems and increase CRA activities in the
 6   communities that they serve throughout Southern
 7   California.
 8             I know that I am just one of many speakers who
 9   are here today that would gladly welcome their increased
10   involvement with open arms.
11             DOLORES SMITH:  Thank you.  Mr. Becker.
12             JAMES BECKER:  Thank you for giving me the
13   opportunity to testify at today's hering.  My name is
14   Jim Becker, I'm the Executive Director of Housing
15   California.
16             Housing California is the state association
17   that represents over a thousand affordable housing
18   developers, home service organizations and housing
19   homeless advocates.  Bank of America has been a strong
20   partner in the affordable housing movement for many
21   years, has supported -- Housing California is one of the
22   lead sponsors in our annual state conference.
23             Bank of America has played a special role in
24   encouraging young people to enter the field through the
25   bank's affordable housing challenge.  We also appreciate
0140
 1   the fact that Bank of America has developed a CRA
 2   commitment in collaboration with communities from
 3   throughout California.
 4             Bank of America was the largest lender to
 5   enter into the affordable multi-family lending market
 6   over 20 years ago.  But, unfortunately, that has
 7   decreased.  Bank of America was the only major direct
 8   purchaser of tax exempt bonds for many years but has
 9   dropped that program as well.
10             Over the past few years, Bank of America's
11   role as an affordable multi-family housing lender has
12   fallen off consistently.  Our constituents in rural
13   California have noted that Bank of America has largely
14   dismantled its development bank which was the major
15   funder and investor of rural low income housing
16   development.
17             We believe that Bank of America should
18   increase its contributions to nonprofit organizations to
19   2 percent of net income before taxes and that 40 percent
20   of the total contributions be made for affordable
21   housing and community and economic development.
22             We believe that the bank needs to create a
23   competitive construction to term project and combine
24   construction lending with permanent financing.
25             The bank at this point does not have a tax
0141
 1   exempt construction to term product and the only taxable
 2   product they have is not competitive in price.
 3             In contrast, CitiBank and U.S. Bank provide
 4   very competitive construction to term products and as a
 5   result are getting most of the business.  The problem is
 6   they don't have the capacity to handle the amount of
 7   need in California.
 8             We also believe that Bank of America, excuse
 9   me, should work with nonprofit affordable housing
10   developers to meet the needs of families at or below
11   30 percent of area median income.  It is at this level
12   that those suffering most greatly from the California
13   housing crisis can be served.
14             These people represent California's working
15   poor and those with disabilities living on a fixed
16   income and they deserve safe and affordable housing.
17             BofA also has some excessive equity
18   requirements.  They currently require 25 percent of a
19   project's tax credit equity be invested during
20   construction.  Both U.S. Bank and CitiBank are flexible
21   on this issue and the most that they require an investor
22   to put in is ten to 25,000 in construction to close.
23             While we've been successful in working with
24   the bank to count the MPV of the Section 8 and
25   50 percent of the commercial income in calculating the
0142
 1   loan to value for the construction loan, it's been a
 2   real struggle and it's been an exception to their normal
 3   underwriting.
 4             Bank of America has been a strong partner with
 5   the affordable housing movement in California for many
 6   years.  However, since it was acquired by NationsBank,
 7   it's role in the affordable housing program has been
 8   eroding.
 9             CitiBank and Union Bank have stepped up to
10   fill the part of the void left by Bank of America but
11   they cannot match the need in California.  We need Bank
12   of America to recapture its role as a leader in
13   affordable housing if we are truly to make an impact on
14   the housing crisis in California.  Thank you.
15             DOLORES SMITH:  Thank you.  Mr. Phillips.
16             WILLIE PHILLIPS:  Thank you for allowing me to
17   speak today.  Good afternoon.  Good evening.  I'm Willie
18   Phillips, I'm with the West Berkeley Neighborhood
19   Development Corporation, I'm presently the Chair and
20   President of that organization.  And a little
21   background.
22             We are essentially a nonprofit organization
23   that essentially has been operating for ten years.  But
24   I would like to be able to at least give a personal
25   story because I think that it's really important to make
0143
 1   this relevant in terms of the organizations and
 2   particularly grassroot organizations that are barely
 3   thriving if nothing else but they serve a very important
 4   constituency in this community.
 5             DOLORES SMITH:  Could you pull the mike a
 6   little closer?
 7             WILLIE PHILLIPS:  Sure.  I believe that most
 8   of the issues are being able to create relationships
 9   with organizations and the bank itself.  The very fact
10   is that we have been in this community for ten years.
11   We represent a large, broad cross section of community
12   leaders.
13             One of my particular board members wanted to
14   address this issue on the basis that she's involved with
15   an association that she's the president of and she
16   can't -- her particular organization can't afford to
17   even bank at the Bank of America because it's a small
18   business or small organization.  That really reflects
19   many of the issues that this particular community is
20   addressing when you're talking about an organization, in
21   particular like the bank that is beginning to
22   decentralize.
23             We had a relationship with a particular member
24   of Bank of America several years ago, to be exact in
25   1996, in which the member is actually here in this
0144
 1   particular audience.  She's no longer working with Bank
 2   of America.  But there was a relationship that was
 3   created based on the fact that there was accessibility.
 4             Many nonprofits are addressing this issue now
 5   when the organizations are getting larger and in some
 6   context are not accessible.
 7             I would also like to address another issue
 8   that's very important in this particular phase.  We're
 9   dealing with a particular market that is diversity.  In
10   many cases, we're dealing with a large Latino community
11   and, for that matter, African Americans.  It has been
12   addressed here in this audience that essentially many
13   minorities are not able to get loans for businesses.
14   That particular issue is widening, that gap is
15   increasing.  It's important to have various management
16   and people that are sensitized to that.
17             Being able to even deal with some of the
18   diversity in terms of even how banks are addressing some
19   of their particular income streams or in terms of
20   investment is beginning to be the very issue itself in
21   terms of the laws that are breaking down, particularly
22   the Glass Steagle Act (phonetic).  In a sense that
23   you're looking at the very fact that banks are not only
24   giving loans but they're also inequity.  It's important
25   to start dealing with the diversity and looking at
0145
 1   creative ways of being able to make those particular
 2   transitions.
 3             I'd like to thank you for allowing me to speak
 4   to you today and, again, I strongly encourage you not to
 5   support this particular merger.
 6             ANNE WILSON:  Hello.  My name is Anne Wilson,
 7   I'm the director of housing and real estate development
 8   of Community Housing Works from San Diego, California.
 9             Community Housing Works is a nonprofit
10   corporation that is operated throughout San Diego County
11   for over 15 years.  We develop housing.  We make
12   first-time home buyer loans and home buyer education.
13   We have resident services and do civic education and
14   leadership training.
15             We presently own and operate 21 housing
16   developments with close to a thousand units.
17             We're not taking an official position for or
18   against the merger.  My board has not done that.  But
19   we're here to talk about our relationship and our
20   services that we perceive from Bank of America.
21             Community Housing Works has a long-standing
22   relationship with Bank of America.  The bank has
23   provided grants to support our general operations and
24   the amounts of these grants have increased over the past
25   three years.
0146
 1             Most importantly, Bank of America has provided
 2   us with solid loan products and excellent service
 3   flexibility and support, both before and after the
 4   NationsBank merger.  Multi-family housing development is
 5   the core of our production and Bank of America's
 6   financing tools are consistently competitive in pricing
 7   and excel in service in the current market.
 8             We presently have three construction loans
 9   with the bank totaling over $15 million.  All three
10   loans are on excellent terms and were negotiated and
11   executed in a clear and straightforward manner.
12             Bank of America has extended itself to support
13   our community development goals.  And by this, I mean
14   two of the construction loans we have out today are for
15   special needs projects.  One has 60 -- about 80 percent
16   of the units are farm worker housing, very low income
17   farm worker housing, and one is a transitional housing
18   project.
19             They have involved between ten and 14 loan
20   products, separate sources of money.  Bank of America
21   has served as our fund manager for all of this.  It has
22   been quite a headache, I don't recommend it on anyone.
23   They have proven incredibly flexible and I think their
24   ability to deal with unusual loans and special needs
25   loans is unmatched in the marketplace.
0147
 1             We hope that the best practices that we've
 2   experienced with Bank of America exist for other
 3   nonprofit corporations and certainly hope it's extended
 4   to more of them.
 5             We -- the reinvestment committee has raised
 6   several important issues about the merger and I would
 7   like to speak to a few of their requests that are
 8   particular to our work.
 9             First of all, it's vital that Bank of
10   America's grant giving continue and continue to match
11   the size of its bank because it's a core foundation for
12   many nonprofits to receive grants to support their work.
13   We cannot do it all on fees alone.
14             The CRC is also requesting financial
15   institutions that have the size and capacity like Bank
16   of America, Fleet and CitiGroup to make permanent loans
17   and to continue to take on higher risk projects.
18             We have found the market for perm loans to be
19   competitive, however, this will only continue if the
20   larger banks remain in the permanent loan business and
21   do perm loans both for the secondary market and to hold
22   in their portfolio for the ones that are more unusual.
23             And then we also truly believe that a bank
24   like Bank of America and the larger banks should have a
25   California specific community investment lending plan
0148
 1   with target specific to Southern and Northern
 2   California.  The two markets are very different and need
 3   some targeting.
 4             Again, we've worked consistently with Bank of
 5   America, received excellent service and we are here to
 6   testify to that today.  Thank you for this opportunity.
 7             DOLORES SMITH:  Thank you very much.  Any
 8   questions?
 9             MICHAEL JOHNSON:  I had a question for
10   Mr. Bystry.
11             DOUG BYSTRY:  Yes.
12             MICHAEL JOHNSON:  You had referenced in your
13   testimony some quotes from a CRA examination.
14             DOUG BYSTRY:  Yes.
15             MICHAEL JOHNSON:  Do you have any specific
16   information related to that exam?  Dates, years and so
17   on, some reference points for us?
18             DOUG BYSTRY:  Yeah.  My understanding, it was
19   '97 or '98.  It was the one that when I went into the
20   branch yesterday and asked to see a copy of the CRA
21   exam, it was the one presented to me.  So if, for
22   example, there is a more recent one, then that branch
23   did not have it.  And I have made copies of these.  I'd
24   be happy to leave these for the panel.
25             DOLORES SMITH:  If you would, please.
0149
 1             MICHAEL JOHNSON:  That would be excellent,
 2   thank you.
 3             DOUG BYSTRY:  Absolutely.  I'll start where I
 4   quoted.
 5             DOLORES SMITH:  And where you do have written
 6   remarks, if you would give them to the Reserve Bank
 7   staff at the table, that would be very helpful to the
 8   court reporters.  And to us.  So thank you very much.
 9             We're on panel No. 6 and we will start with
10   Mr. Gary.  Three minutes each.  Our timer will let you
11   know when you have one minute remaining and when your
12   time has expired.
13             PRINTICE GARY:  My name is Printice Gary and
14   I'm the managing partner of Carleton Residential
15   Properties located in Dallas, Texas.
16             Carleton Residential is a for profit developer
17   and general contractor for affordable housing in market
18   rate multi-family housing in the State of Texas and
19   throughout the southwest.  Carleton also happens to be a
20   100 percent minority owned firm and it includes myself
21   as well as two of my partners, other minority partners
22   back in Dallas.
23             And I'm here to speak in favor of the merger.
24   I founded Carleton back in 1991 and my relationship with
25   Bank of America goes back to 1992.  Since that time, in
0150
 1   ten transactions we've produced over 2200 units, most of
 2   which were affordable housing units, and that calculates
 3   to about $150 million of value all together.
 4             During that period of time, of course, Nations
 5   merged with Bank of America and it was almost seamless
 6   to us in terms of how we interacted with the bank.  We
 7   had the same account managers and everything.  They've
 8   been a tremendous help to us because it's always
 9   difficult, particularly for minority firms, to have
10   access to capital.
11             Our relationship with Bank of America has been
12   distinguished by their ability to be innovative and
13   their willingness to venture with us in new creative
14   development formats, financing structures even in very
15   hostile environments.  Which I'll display to you in a
16   minute.
17             By way of example, it's difficult to get
18   equity for any developer particularly for minority
19   developers.  Of course, there's tax credits, we do that,
20   but that only goes up to the 60 percent factor.
21             We had discovered a niche in the 60 to
22   80 percent of AMI range which we had real difficulty
23   raising any capital whatsoever to satisfy.  However, we
24   thought it was a cogent strategy.  And this is a true
25   story.
0151
 1             In 1998, there appeared in the Wall Street
 2   Journal an article describing a conversation that was
 3   going on on an airplane among Jessie Jackson, Cathy
 4   Bessant and some other Bank of America executives, and
 5   out of that was born the Catalyst Fund which was really
 6   directed at providing equity capital for underserved
 7   markets.
 8             I wrote Cathy a letter, followed up with a one
 9   page of white paper on the strategy.  To make a long
10   story short, we worked out a joint venture equity fund
11   exclusively for us to the tune of $20 million in about
12   18 months.  It wasn't easy to do because this isn't what
13   a bank does typically.
14             And we went to every other bank and other
15   financial institution in our service territory and no
16   other bank was willing to venture with us on this basis.
17             The second example, we performed as
18   development advisor for the Fort Worth Housing Authority
19   and their program to replace 268 units.  And in their
20   deal with HUD, there were two important things,
21   deconcentration and dispersion of these populations.
22             So we contracted to purchase on their behalf
23   583 units, existing units, in one development in
24   southwest Fort Worth and targeted 20 percent for
25   affordable housing.
0152
 1             When the intentions of the Fort Worth Housing
 2   Authority were shared with the southwest Fort Worth
 3   neighborhood, there was nothing less than an explosion
 4   of emotion and negative reactions to the plan which was
 5   exacerbated by it being on television every night for
 6   two weeks.
 7             Carleton chose Bank of America as the lender
 8   for this 3 million-dollar acquisition due to their
 9   experience across the country in these kind of
10   transactions.  Not only did they attend public hearings
11   and defend the reasonableness of the transaction sharing
12   the positive experience it had had across the country,
13   they also held their position in the face of substantial
14   threats from people and the local community who
15   threatened to pull their accounts from the bank.  They
16   stuck to their guns and the transaction closed.
17             Bottom line, we're very much in favor of the
18   merger.  We think that it won't impact the competitive
19   banking environment in Texas whatsoever.  Together
20   they'll have more capital and hopefully they will use it
21   to produce more affordable housing and also foster the
22   development and growth of minority businesses across the
23   country.  Thank you.
24             DOLORES SMITH:  Mr. Lowe.
25             STANLEY LOWE:  Thank you.  Good afternoon.
0153
 1   How are you today?  I can just tell you I'm really
 2   thrilled and eager to be --
 3             DOLORES SMITH:  Would you stay your name and
 4   affiliation, please.
 5             STANLEY LOWE:  My name is Stanley Lowe, I'm
 6   the Vice President for the Community Vitalization
 7   Department of the National Trust for the Historic
 8   Preservation in Washington, D.C.
 9             Is the mike all right, can you hear me okay?
10   I flew in last night.  I wanted to be here.  Actually
11   I'm pumped up for two reasons because I know about five
12   or six years ago I would probably be sitting here saying
13   don't you dare approve this merger.
14             As a matter of fact, I'm the chairman ` had
15   started an organization in Pittsburg called the
16   Pittsburg Reinvestment Group just to deal with equal
17   lending patterns and practices of the banking in that
18   area.
19             But I'm here today representing the National
20   Trust for the Historic Preservation.  I'm probably one
21   the few people who will be talking about the nexus
22   between capital and historic preservation.  Our
23   organization is a congressionally chartered nonprofit
24   organization established in 1949 to be the leader of the
25   historic preservation movement in the United States.
0154
 1   We're located in Washington, D.C. and in six regional
 2   offices including San Francisco.
 3             The trust owns and operates or has
 4   co-stewardship affiliations with some of the country's
 5   most significant historic sites representing the full
 6   diversity of the American experience including James
 7   Madison's (unintelligible) estate, Manhattan's lower
 8   east tenement museum, and Boston's African American
 9   Meeting House.
10             Over the past 25 years, the trust has led the
11   historic preservation movement beyond its traditional
12   role of protecting architectural landmarks to a much
13   greater focus on community revitalization.  Today
14   preservation strategies are increasingly an integral
15   part of the success of our efforts to rebuild divested
16   commercial and residential neighborhoods.
17             Federal and state historic tax credits and
18   local property tax abatements are now important tools
19   for producing affordable housing, creating jobs and
20   providing retail services to middle, mixed and low
21   income communities.
22             The National Trust, and I want to say this
23   unequivocally, the National Trust supports the proposed
24   merger of Bank of America and Fleet Bank.  Both of these
25   national institutions have shown a keen understanding of
0155
 1   their obligations under the Community Reinvestment Act.
 2             We believe and I believe that this merger will
 3   provide opportunities for the trust to agressively
 4   expand its community development, debt and equity
 5   products in the mid-Atlantic and New England states.
 6             Currently most of Fleet's market area is
 7   outside of the footprint of the Bank of America making
 8   many of our products out of market for most of the
 9   northeast.  These states, because of their rich history
10   and preservation ethic, has always led the nation in the
11   reuse of historic resources to meet the community in
12   economic development objectives.
13             Through the merger, we hope to be able to work
14   with Fleet's community development investment staff to
15   better understand how the trust community development's
16   financing tools can have a terrific impact in our oldest
17   and most historic neighborhoods.
18             With the strong support of the Bank of America
19   we recently received a 127 million-dollar commitment of
20   the first round of the new market's tax credit program,
21   the sixth largest among 66 allocatees, and we're hoping
22   to continue that effort with Bank of America.
23             Before closing, I want to point out that --
24   very small story.  In my relationship with Bank of
25   America, I tend to judge relationships based upon the
0156
 1   little things.  When a new market's tax credit program
 2   first came out, most banks in this country were very,
 3   very conservative.  Bank of America fought agressively
 4   to work with the National Trust because it recognized
 5   that the potential use of the new market's tax credits
 6   in a lot of low and moderate neighborhoods, they were
 7   right they're with us, they partnershipped with us, they
 8   helped us receive the sixth largest award and today
 9   together we have spent -- leveraged and spent over
10   $50 million in several low to moderate communities in
11   this country.  And I'm here to wholeheartedly just tell
12   you they've worked with us and we want the merger to
13   proceed.  Thank you.
14             DOLORES SMITH:  Thank you very much.
15             KRISTEN GROWNEY:  My name is Kristen Growney
16   and I'm the Chief Financial Officer of Rubicon Programs.
17             Rubicon is a nonprofit located in Richmond,
18   California, one of the poorest communities in the Bay
19   Area.  We serve over 4,000 individuals a year and these
20   people are low income and disenfranchised members of our
21   society.
22             We're here to give information about how the
23   bank has worked with us over the last several years.
24   Like most here, we're certainly in support of general
25   efforts to make sure that as many resources as possible
0157
 1   are committed by the bank for community investment in
 2   community development.  And we are hopeful that this
 3   merger will ensure that significant amounts of resources
 4   will continue to support economic development in the
 5   most challenged communities in California.
 6             I can report today that during the past four
 7   years the work of Rubicon Programs to create affordable
 8   housing, provide supportive services and create economic
 9   development programs in the lowest income communities in
10   California have been significantly supported by the Bank
11   of America.
12             In particular, we have benefited from both
13   financial capital in the forms of grants and loans for
14   affordable housing as well as human capital.  This human
15   capital is in the form of board membership from senior
16   leadership in the bank.  This human capital has meant
17   significant time and work on the part of the board
18   member for community development and has helped to shape
19   and improve our affordable housing programs in the
20   communities that we serve.
21             We are confident that the merger, if approved,
22   will step -- will allow the bank to play an even deeper
23   role within our communities and address the essential
24   poverty issues in California.
25             DOLORES SMITH:  Thank you.
0158
 1             FORESCEE HOGAN-ROWLES:  Good afternoon.  My
 2   name is Forescee Hogan-Rowles and I'm President and CEO
 3   of Community Financial Resource Center in Los Angeles.
 4   I also have to acknowledge I am Dorothy Hogan's
 5   daughter, and anybody that knew my mother, knew that
 6   when I made a decision to come, I made an executive
 7   decision to do this in support of Bank of America's
 8   merger.
 9             So as one of the other earlier panelists
10   suggested that you discount testimony from those of us
11   that might be members of their organization, I ask you
12   not to discount my testimony but take what I'm about to
13   say very seriously because I support what the bank is
14   doing.
15             Having said that, I also want to acknowledge
16   that this is King weekend, and Dr. King weekend is very
17   important to me in that he stood for economic justice.
18   And with the support of Bank of America our
19   organization, Community Financial Resource Center, has
20   been solid in working and continuing to work toward our
21   goals of economic justice for low and moderate income
22   communities in Los Angeles.
23             Our primary target area is, in fact, South
24   Central.  In fact, that's where our offices are.  So
25   just so we can put it in perspective, our target area
0159
 1   has 1 million people in it.  It's actually a little bit
 2   over a million people.  We are a CDFI, a Community
 3   Development Financial Institution, and we have had an
 4   integrated public private partnership with Bank of
 5   America since inception.
 6             I find myself in a very unique position
 7   because not only does the bank participate as a partner
 8   but as a founding member of CFRC.  We were founded in
 9   1993 which sort of brings it full circle because we were
10   founded as a result of at that time Mayor Bradley saying
11   that the banks needed to come to the table because of
12   the time Bank of America was looking to merge with
13   Security Pacific bank.
14             And so I'm proud to say that while I've been
15   with the organization now nine years coming up in
16   February, we have had a long-standing relationship with
17   the bank.  It wasn't a merger commitment that went away.
18             As a result of our work, we've created over
19   870 jobs which is one -- and, by the way, South Central
20   has a joblessness rate seven times higher than the
21   national average.  So that becomes very important for us
22   because one of the major goals of our organization is
23   job creation through small business development.
24             And as a result, the economic impact to South
25   Central is a little over $30 million that we've been
0160
 1   able to leverage as a result of our job creation.
 2             In our small business lending portfolio,
 3   again, we're a financial intermediary so we do what's
 4   called near bankable lending.  And for us it's important
 5   because, as Bank of America has linked with us, we've
 6   been able to deliver microloans starting at $500 all the
 7   way to expansion loans up to $250,000.  And we're
 8   reaching people that could not get to traditional
 9   banking -- a financial institution but had the
10   wherewithal to come to an organization like ours.  And I
11   tell you we would not be there without the leadership of
12   the bank.
13             And finally what I want to offer is, the
14   support of the bank not only comes in dollars and cents
15   but it also comes in leadership and management skills.
16   And for us at this point in time it just so happens as
17   in my nine years at CFRC as a nonprofit I've actually
18   served under six different board chairmen and chairwomen
19   so I can tell you I've had a lot of experience in
20   dealing with board changes and such.  I have to say that
21   at this time, and I'm not saying this because he's at
22   Bank of America, but our current leader of our chairman
23   is -- our chairman of our board is Al Argearyo
24   (phonetic) who is a Bank of America employee and has
25   really made the long-standing commitment, not only on
0161
 1   bank time, but personal time, and I believe that
 2   leadership role that he plays in developing our board
 3   has not only served our organization internally but
 4   externally.  Because in a nonprofit, in order to develop
 5   an organization, has to be both.  And without that
 6   leadership commitment of Bank of America we would not be
 7   the strong organization that we are right now.  We've
 8   now leveraged well over $15 million just from that seed
 9   that was planted from the initial merger.
10             So I am fully in support of this work that the
11   bank is doing, and I expect that it will expand over
12   time and we hope to be a part of it.  Thank you very
13   much.
14             DOLORES SMITH:  Thank you.  And I think we
15   have two other members of the panel on this panel.  Or
16   three.
17             Mr. Quinn, if you would just pull the mike
18   towards you and start.
19             MARK QUINN:  Very good.  Thank you very much
20   for the opportunity to speak on behalf of the Small
21   Business Administration in support of the Bank of
22   America.  My name is Mark Quinn, I'm the District
23   Director of the U.S. Small Business Administration for
24   Northern California.
25             I'm speaking here really on behalf of what
0162
 1   Bank of America does in Northern California in my
 2   experience, in my 15 years of experience in working with
 3   the Small Business Administration and with the Bank of
 4   America and with many other small business lenders in
 5   Northern California.  But I can also speak to Bank of
 6   America's SBA activity nationwide and what it's done and
 7   how that's really increased our ability to reach small
 8   businesses.
 9             Bank of America has been a major partner with
10   SBA for long term.  It's always been the case that BofA
11   has always been a good partner to small business and to
12   be a good SBA lender.  It's certainly the case when the
13   merger when NationsBank happened.  We were all very
14   concerned whether that kind of long-term commitment was
15   something that we would see BofA continue to be the
16   strong player that we had seen in the past.  BofA had
17   been the largest SBA lender for two prior years prior to
18   the merger.
19             After the merger, it was not the case that
20   BofA was the largest lender.  Fleet Bank ironically was
21   the largest SBA lender nationwide for the two years
22   after the Bank of America merger.  But at that time
23   those kinds of numbers agency wide were relatively what
24   we thought were good numbers in terms of small
25   businesses receiving SBA assistance through Fleet/Bank
0163
 1   of America.  But those numbers were around 2400 or 2500
 2   loans nationwide.
 3             Since that time, in the last two years, Bank
 4   of America is again the largest SBA lender in the
 5   nation.  But the numbers that Bank of America is
 6   generating to help small business are remarkable to us
 7   in several different ways.
 8             First off, the SBA lending by Bank of America
 9   last year was about 9400 loans.  Again, as compared to
10   several years before that we were looking at about 2400
11   loans nationwide.
12             In California, Bank of America is by far the
13   largest SBA lender.  It's by far the largest SBA lender
14   in Northern California.  It's by far the largest SBA
15   lender nationwide.  About 50 percent higher than the
16   next largest lender.
17             All businesses -- all banks support small
18   business.  There isn't any lender that would say that
19   small business is not an important customer of theirs.
20   But from our point of view, what we really look at is
21   the proof is really in the outcome.  And it certainly is
22   the case in Bank of America's lending that the outcome,
23   in the terms of its lending, has been remarkable in
24   terms of the increase in the reach to small business
25   that we had not saw any lender step up and do and really
0164
 1   is doing now from Bank of America's side.
 2             We really see that what they're doing now is
 3   an approach to reach small businesses, not just in
 4   larger numbers, but to a different tier of small
 5   businesses than we have ever seen before.
 6             Bank of America not only is lending to a
 7   larger number of lenders -- or a larger number of
 8   borrowers but they're doing that with much smaller loans
 9   than SBA had ever seen RSBA partners do.  The SBA
10   lending program typically goes to larger loans to small
11   business.
12             Bank of America's average loan size this last
13   year nationwide is about 37,000, much smaller than the
14   average loan size, and they almost single-handedly have
15   pulled down the average SBA loan size nationwide to
16   reach a much smaller business who have a much more
17   difficult time in accessing credit.
18             So from our point of view, they're not only
19   reaching a larger number of businesses but they're
20   reaching a larger number of small businesses who have
21   never had access to commercial credit.
22             And in addition and finally, I think it's
23   important from our point of view that it's not just in
24   the absolute numbers but in the proportion of their
25   lending that is to women and minority businesses have
0165
 1   been a significant part of what Bank of America has
 2   always done, and now that they're reaching to a much
 3   smaller tier of borrower, they're actually reaching a
 4   larger number of women and minority businesses both in
 5   absolute numbers and in proportional terms.
 6             So from our point of view, SBA really sees
 7   Bank of America as a tremendous partner for us and we
 8   would certainly support them expanding what they do and
 9   continue to do more.
10             DOLORES SMITH:  Can you pass the mike over?
11             VICTOR HSI:  My name is Victor Hsi, I'm the
12   business director at the Southeast Asian Community
13   Center here in San Francisco.  We're located in the
14   Tenderloin District.
15             We are a multi-service business assistance
16   nonprofit organization serving the community and also
17   small businesses in San Francisco and the Bay Area.
18             The Southeast Asian Community Center has long
19   provided technical assistance and loans to small
20   businesses in the Bay Area.  We began providing those
21   services in the mid '80s.
22             In 1987, we started operating business
23   assistance programs with the City of San Francisco under
24   a contract with the San Francisco mayor's office.
25             We've also become one of the two operators of
0166
 1   the SBA's microloan program.  This is the 7M program.
 2   And it's a bit different from the 7A program.
 3             Under this program we make loans of between a
 4   thousand to 35,000 to small businesses that would not
 5   normally qualify for a bank loan.  There are many
 6   businesses like this.  As you may know, many businesses
 7   that are starting up would not be able to qualify for a
 8   bank loan for different reasons.  So we do serve a very,
 9   very large pool of small businesses.
10             Since starting this program in 1993, our
11   agency has funded approximately 150 loans to small
12   businesses in the Bay Area.  A large percentage of the
13   loans were made to minority owned businesses and also
14   low income business owners.
15             In order to operate a microloan program as a
16   nonprofit, we need funds for loan loss reserves and
17   matching purposes.  And while the loan funds come from
18   the Small Business Administration, each program officer
19   must raise its own loan loss fund reserves in a fixed
20   matching requirement.
21             The SBA also provides technical, assistance
22   grants to microloan lenders that are used to provide
23   services to new and existing microloan borrowers.  So
24   there are a number of needs for grants.  And, of course,
25   these funds require that the recipient organization come
0167
 1   up with the grant funds.
 2             The Bank of America -- Bank of America has
 3   been a generous donor to us over the years and has
 4   provided over 300,000 in grants to our organization for
 5   these purposes.
 6             Over the past several years, our staff has
 7   worked closely with Bank of America community
 8   development staff to identify ways the bank can provide
 9   more outreach activities to the microloan program
10   applicants.  Numerous presentations on the microloan
11   program have been made by our staff to bank loan
12   officers and managers.  We continue to work with the
13   bank on various ongoing programs to improve our outreach
14   to small business owners.
15             We are grateful to Bank of America for its
16   support of a needed loan program for this largely
17   underserved small business community in the Bay Area.
18   We believe the bank has shown sensitivy to low and
19   moderate income small business owners and their
20   employees and has been willing to invest financial
21   resources and programs to assist them.
22             For these reasons, we support their
23   application for a merger with Fleet Bank.
24             DOLORES SMITH:  Thank you very much.
25   Mr. Thompson.
0168
 1             J. PETER THOMPSON:  Thank you.  Good
 2   afternoon.  My name is Peter Thompson and I'm the
 3   managing partner of Opportunity Capital Partners.
 4             Our company is a private equity firm that
 5   provides financing to minority owned companies and I
 6   would like to take just a minute or two to share some
 7   comments with you regarding our relationship with the
 8   bank.  A relationship that is noteworthy in part because
 9   it spans the period of more than 30 years now.  It's a
10   relationship that started in 1971 when the bank made its
11   first investment in our company.
12             The investment at that time was critical not
13   only because of the capital that it provided but also
14   because other Bay Area companies regarded the bank as a
15   leader in the minority economic development arena and
16   were inclined to follow the bank's lead in that regard.
17             Ten years later, in 1981, the bank made its
18   second investment.  And, again, as was the case in 1971,
19   we were able to leverage the bank's involvement with
20   additional investments from other Bay Area companies.
21   Not only did the bank provide capital but the bank also
22   invested time in providing guidance in the form of
23   making available to us on a very consistent basis senior
24   executives who served as members of our board of
25   directors and as members of our various advisory
0169
 1   committees.
 2             This capital and this guidance as provided by
 3   the bank assisted us in successfully providing capital
 4   to a sizable number of minority owned companies and
 5   allowed us to become successful in producing investment
 6   results that the investment community would regard as
 7   both respectable and competitive.
 8             Rolling the tape forward, from 1981 to 1992,
 9   we then realized at that point that the size and other
10   aspects of our marketplace had evolved to a point where
11   we needed to raise a substantially larger pool of
12   capital in order to remain responsive to the growing
13   needs of our target marketplace.
14             As a consequence, we went back to the bank a
15   third time and made a proposal, and as before, the
16   bank's response was favorable.  BofA then responded with
17   a capital commitment of $15 million which we believe was
18   at the time the largest single corporate commitment of
19   capital to a single minority focused venture capital
20   company.
21             As it turns out, that commitment for us was
22   doubly important, because it played a key role in our
23   success in entertaining a matching 18 million-dollar
24   commitment from a funding source based on the east
25   coast.
0170
 1             As a result of these two excursions in the
 2   capital market, was that we were able to increase our
 3   capital base to $35 million.
 4             Based on the results produced by our prior
 5   funds and the steady increase in the size of
 6   transactions in our particular market niche, in the year
 7   2000 we decided that we needed to raise an even enlarger
 8   fund to provide financing to minority businesses and we
 9   then approached the bank a fourth time.
10             And as before, the response was favorable.  In
11   this case, the bank made a capital commitment of nearly
12   $25 million which was followed by commitments from
13   several other major funding sources including CALPERS
14   and resulted in the formation of our fourth fund with
15   total committed capital of $100 million and therefore
16   increased our total capital under management to
17   $135 million.
18             Those funds were used to provide capital to
19   companies in industries ranging from healthcare to
20   broadcasting to manufacturing.  Companies that have
21   provided employment to more than 4,000 people and
22   companies that have a current combined gross market
23   value of more than $2 billion dollars.
24             Of course, we are all pleased with these
25   results but, as importantly, I think it's important to
0171
 1   note that accomplishing these results it would have been
 2   very difficult, if not impossible, had it not been for
 3   the continuing willingness of the bank to provide, not
 4   only capital, but also non-financial involvement over a
 5   period of time which again spans more than 30 years.
 6             I'll close just by saying that I appreciate
 7   the opportunity to make these comments and I'm obviously
 8   in favor of the merger and I would be pleased to answer
 9   any questions from you at any time.  Thanks.
10             DOLORES SMITH:  Thank you.  Questions from the
11   panel?
12             Thank you very much for coming today.  And
13   with that, we'll adjourn for the morning's session.  And
14   we will reconvene at 1:30.
15                        (Lunch break.)
16   
17   
18   
19   
20   
21   
22   
23   
24   
25   
0172
 1          (Beginning of Afternoon Session, Whereupon 
 2       Laura Reding replaced Kris Hubka as the reporter)
 3           MS. DOLORES SMITH:  We're on Panel 7.  The members 
 4   each have -- each one has three minutes.  And our timer will 
 5   give you the "one minute" and then "your time is expired" 
 6   signal, which is time is up.  So when you get to that point, 
 7   if you will just try to wind up, you know, fairly 
 8   expeditiously.  You don't have to stop in the middle of a 
 9   sentence, but if you could sort of wind up.  
10           And we will start with Mr. Ballesteros.  
11           MR. FRANK BALLESTEROS:  Madam Chairperson and 
12   members of the Federal Reserve Board, I want to -- my name is 
13   Frank Ballesteros and I'm the community development -- CDFI 
14   most notably noted for their microenterprise zone funds in 
15   Arizona.  
16           And I've been sitting in the audience here listening 
17   to the testimony, and I don't think it's a matter of being 
18   here telling you yes, I oppose or no, I oppose, but how can 
19   we get the Federal Reserve Board, Bank of America, and the 
20   practitioners or the CDFIs how to work better?  
21           We know that this is going to happen.  We know that 
22   this is the -- a merger that's happening.  And sure, I'm not 
23   going to sit here and tell you I oppose it, but how can we 
24   get the Federal Reserve Board and Bank of America and Frank 
25   Ballesteros in Tucson, Arizona -- because I had to fly just 
0173
 1   to be here and I have to fly right out of here again.  But I 
 2   wanted to make sure that you guys know here that -- how 
 3   important it is because Bank of America has the money and our 
 4   communities in rural Arizona and the border communities are 
 5   lacking it.  
 6           And it's not that we're -- that we want Bank of 
 7   America to make bad loans or bad decisions.  We just want to 
 8   make sure -- and I want to go on record this morning or this 
 9   afternoon saying -- I was supposed to testify this morning -- 
10   but this afternoon saying I want to be Bank of America's 
11   partner.  
12           This testimony here doesn't do me or anybody any 
13   good, and I decided not to read it, because I think that 
14   after what I heard here today, I think it's a matter of how 
15   can we work together?  How can we work together?  And I want 
16   to make sure that Bank of America knows in Arizona I am their 
17   number one advocate.  
18           There are numerous microbusiness associations, not 
19   only in Arizona but, as you heard, here in California and 
20   throughout the country that are dying to be partners with 
21   Bank of America.  They want to go ahead and get the 
22   opportunity to work with Bank of America because Bank of 
23   America has money, the resources.  
24           I've been trying to work with Bank of America -- and 
25   yes, they dabbled here and dabbled over there a little bit, 
0174
 1   but I want a major investment so that I can continue to do 
 2   what I do best in the areas where there's poverty, in the 
 3   areas where there's high unemployment, in the areas -- and 
 4   there's a lot of people here that are opting to go to 
 5   self-employment because that's the only way they can make an 
 6   honest living for their families.  And if we don't do it, if 
 7   CDFI PMHDC doesn't do it in Tucson, Arizona, then who will?  
 8           I'm trying to see -- and I know there's a lot of 
 9   people here from Bank of America and I hope they take this 
10   message back that I want to be their partner, and I want to 
11   be their partner so strongly that I'm willing to come down 
12   here to talk to you to tell you how to -- how do we work 
13   together?  How do we make this partnership work?  
14           My name is Frank Ballesteros.  I work with PPEP 
15   Microbusiness & Housing Development Corporation.  Thank you 
16   very much for hearing me.  I've got to leave.  
17           MS. DOLORES SMITH:  Thank you.  
18           Ms. Morris.  
19           MS. BETSY MORRIS:  Thank you very much.  My name is 
20   Betsy Morris and I'm the Director of Housing and Economic 
21   Development for the May Fair Improvement Initiative in East 
22   San Jose.  We are actually the home of Caesar Chavez.  It was 
23   his neighborhood and the first boycott started there.  
24           So I put that forward because we're a community that 
25   has since the late 1990's channeled more than $15 million 
0175
 1   into the community and partnered with a variety of 
 2   stakeholders, including the city and the redevelopment 
 3   agency, to really say how can we build community?  How can we 
 4   sustain this neighborhood and the people in it?  We're -- 
 5   it's a working poor neighborhood, 80 percent Latino, 60 
 6   percent immigrant.  There are thousands of communities like 
 7   this across the state of California.  
 8           I want to second this gentleman's message.  The 
 9   questions that I have are how are we going to build 
10   relationships with Bank of America?  Because from my 
11   experience in several neighborhoods, Bank of America, I don't 
12   see them at the table.  I don't see their local branch at the 
13   table.  
14           Let me give you some example.  In May Fair we have 
15   one bank, Bank of America.  We are very fortunate that they 
16   are still there.  And we have 12 check-cashing 
17   establishments.  That means money is flowing through that 
18   neighborhood.  But that also means, according to the Fannie 
19   Mae, that thousands -- hundreds if not thousands of dollars 
20   of money is going into fees that don't have to be -- that 
21   could be used, that the families could be using to save money 
22   for a home, to pay for their children's education.  We want 
23   our neighbors to be able to put down roots, take care of 
24   their children, and grow.  
25           So in our community as -- we have financed -- we 
0176
 1   have put together a bank fair.  Bank of America was not 
 2   involved.  There was a predatory lending meeting that was 
 3   held, not by our group but city-wide.  Bank of America was 
 4   not in attendance.  This is in the last year.  We have a 
 5   redevelopment plan.  The city is investing quite a bit of 
 6   money into housing and commercial redevelopment.  Bank of 
 7   America is not at the table in the sense of we have a 
 8   neighborhood branch and their city and regional 
 9   representatives.  They're not in discussions with us about 
10   the opportunities here.  We're running financial literacy 
11   workshops.  We have not gotten interest from Bank of America.  
12           So what I want to put forward here, you all know 
13   better what's really happening state-wide and regional-wide 
14   and you have a responsibility to really say what's best for 
15   the economy, how do we make the economy work for as many 
16   people as possible.  
17           The view that I want to put forward is kind of the 
18   view on the street, the neighborhood, where the branches are 
19   located.  Question:  How can Bank of America grow 
20   relationships at the local level where they have branches?  
21   Are they growing those relationships?  I do know they support 
22   quite a few groups at the state level and large -- they have 
23   partnerships going back years.  But is that increasing?  Are 
24   they really committed?  Is that growing?  How can we grow 
25   those?  
0177
 1           Our Bank of America branch is good neighbors in the 
 2   communities where they're located.  How can these local 
 3   branches be helped to become players and stakeholders and 
 4   good neighbors when there's opportunities around?  
 5           So thank you very much.  And I really look forward 
 6   to hearing your decisions.  
 7           MS. DOLORES SMITH:  Thank you.  
 8           Mr. McDaniel.  
 9           MR. GEORGE McDANIEL:  Thank you.  I almost don't 
10   need to speak after this.  But I don't have the courage of 
11   the previous two speakers to not read my notes.  
12           Good afternoon.  I'm George McDaniel.  I'm here 
13   today in my capacity as a board member of Business Resources 
14   Group of Los Angeles.  BRG has a relatively unique 
15   perspective.  All small business in the state of California 
16   has generated over $200 million in loans to small businesses 
17   throughout the state over the last couple of years.  
18           I've spent the last 30 years providing financial 
19   services to small businesses, large and small businesses, 
20   over the nation.  And the last 20 years of that have been 
21   spent investing in and lending to small businesses in 
22   California, both north and south.  And most recently was the 
23   CEO of a community development bank here in the Bay Area.  
24   That was able to create 1,400 jobs that generated like 130 
25   million in wages.  And the point of that is that it doesn't 
0178
 1   take a lot to impact communities.  It takes the right amount 
 2   of capital at the right time.  Bank of America is not a bad 
 3   institution.  
 4           My first job in banking was with North Carolina 
 5   National Bank 33 years ago.  Now, it was the first and only 
 6   job I could get upon returning from Vietnam.  I'm eternally 
 7   grateful to them for that opportunity.  The spirit of that 
 8   bank lives on.  More is needed than has been done, though.  
 9           Approximately three years ago, four years ago, I 
10   stood in a reception and asked Liam Nissen, president of the 
11   bank for the state, for more resources for their community 
12   development folks in Northern California so that they could 
13   continue to do the same job and more of the same job that 
14   they had been doing.  They have been given fewer resources 
15   and I -- they appear to be doing all that they can with that.  
16           But it is very important that when you're going to 
17   have the sort of commanding market share that the bank is 
18   going to have post-merger here on a national basis that they 
19   understand the old proverbial saying, "To whom much is given, 
20   much is expected."  My wife is a minister.  She reminded me 
21   of that.  Reminds me of that periodically.  
22           Much has been given to Bank of America, which they 
23   have earned, and much is expected.  They owe an obligation to 
24   this nation, to the communities involved, especially the 
25   underserved who need their assistance greatly to provide the 
0179
 1   resources in a planful and meaningful way, but to provide the 
 2   resources that allow the communities to be able to do the 
 3   things that we're talking about here.  
 4           Thank you very much.  And I think I did it in less 
 5   than three minutes.  
 6           MS. DOLORES SMITH:  You did great.  Thank you.  
 7           Ms. McNulty.
 8           MS. JENNY McNULTY:  My name is Jenny McNulty and I 
 9   am Deputy Director of Urban Solutions.  We are an economic 
10   development nonprofit organization based here in San 
11   Francisco.  And one of our main activities is to offer 
12   technical assistance to low-income small business owners and 
13   entrepreneurs to help them get loans.  I have three comments 
14   that I would like to make about Bank of America's community 
15   participation and lending.  
16           The first is that in the past, Bank of America 
17   provided substantial charitable contributions to support 
18   organizations like ours that offer technical assistance to 
19   small business owners who need a little bit of help in doing 
20   their business plan, sorting out credit problems, getting 
21   organized, and this assistance leads to the startup of new 
22   businesses, expansion of existing businesses, and creation of 
23   jobs.  Lately Bank of America hasn't been supporting this 
24   kind of activity, any sort of economic development work in 
25   the Bay Area, and I want to encourage the bank to resume that 
0180
 1   sort of support and would eagerly work with the bank on that.  
 2           My second point is in regard to certain 
 3   inflexibility of Bank of America in lending to young 
 4   businesses.  Over the past year, the bank has had a policy 
 5   that for banks that have been in -- excuse me, for businesses 
 6   that have been operating for under 18 months, the maximum 
 7   small business loan they can get is $10,000.  I think this 
 8   cap is a little extreme.  It's quite inflexible and it is not 
 9   matched by other banks in the area.  
10           My last comment is that I would like to see Bank of 
11   America participate in the SBA's Community Express Program.  
12   This is a program to promote lending to women and 
13   minority-owned businesses.  Wells Fargo and Innovative Bank 
14   have really taken the lead on this.  The SBA offers a higher 
15   guarantee and borrowers receive technical assistance such 
16   that the bank can underwrite slightly riskier loans to these 
17   borrowers.  B of A being such an important bank in this 
18   region I think should be taking the lead on this program.  
19           So in summary, I would look to the bank to increase 
20   its charitable contributions and to become more flexible in 
21   its small business lending.  
22           Thank you.  
23           MS. DOLORES SMITH:  Thank you.  
24           Any questions?  
25           MS. PAT ROBINSON:  I actually had a -- I had a 
0181
 1   question for Ms. Morris.  You can stand up and give the 
 2   answer.  In your community, when you were conducting the bank 
 3   fair and the other activities, city-wide activities that you 
 4   mentioned, was the local branch affirmably contacted?  And if 
 5   so, what was their response?  
 6           MS. DOLORES SMITH:  Do you want to come up so that 
 7   you can -- so that we can record you in some fashion.  
 8           MS. PAT ROBINSON:  Sorry for the --
 9           MS. BETSY MORRIS:  I can speak from secondhand 
10   knowledge about the bank fair because I wasn't directly 
11   involved in planning it.  My executive director -- that's an 
12   excellent question.  I speak from secondhand knowledge about 
13   the bank fair.  My executive director, who has been there for 
14   seven years, reported to me that they had been unable to 
15   establish a relationship with the Bank of America and to 
16   engage them in previous activities.  So I can't speak 
17   firsthand to what they actually did.  I also know that just 
18   in conversations with people and that -- that Bank of America 
19   hasn't been -- they have not felt that Bank of America has 
20   been receptive to them.  
21           Now, you point your finger.  I need to go over there 
22   and see if I can build that personal relationship.  But I 
23   will speak from experience in another neighborhood, West 
24   Berkeley where there's also a Bank of America branch that 
25   since '98 the local manager, who is very, very cordial, 
0182
 1   really hasn't been able to support local projects.  You know, 
 2   we've applied -- another organization I'm involved in.  
 3           So I think it is about relationship building 
 4   personal, but it's also about to what extent is there 
 5   top-down support in domains of discretion for local branches 
 6   to become involved.  Other banks I know have people at the 
 7   table.  
 8           I hope that's helpful.  
 9           MS. PAT ROBINSON:  Yeah.  Thank you.  
10           MS. DOLORES SMITH:  Thank you very much.  
11           And we will move on to Panel No. 8.  Okay.  You have 
12   three minutes each and you will receive your signals from our 
13   timekeeper here, when you have one minute remaining and when 
14   your time is up.  So we'll start with Ms. Hansen.  
15           MS. JENNIE CHIN HANSEN:  Thank you.  Good afternoon.  
16   My name is Jennie Chin Hansen.  I'm Executive Director of a 
17   not-for-profit here in San Francisco and have been associated 
18   with not-for-profit for about 25 years.  
19           Our connection with the bank has been on -- in 
20   multiple capacities, and I really want to acknowledge that of 
21   all the corporate support that we have received here over 
22   these many years, the Bank of America has been actually the 
23   most significant from the standpoint of its admission for 
24   helping with capital housing.  
25           We are a health care system that focuses on frail, 
0183
 1   elderly individuals who come from diverse communities in San 
 2   Francisco.  And the bank has always had a real presence in 
 3   our community's diversity and has funded certainly not only 
 4   us but -- which historically has started out greatly in the 
 5   San Francisco Chinatown community.  But we, ourselves, have 
 6   expanded throughout the entire city as well as across the 
 7   bay.  And the bank has continued to support our efforts in 
 8   our expansion.  
 9           So not only has it been for the housing and the 
10   clinics that we've developed, they also have done pro bono 
11   type of production work with us for some of our tools of 
12   communicating what our not-for-profit work is, so much so 
13   with the excellence that we won two national awards for those 
14   videos.  
15           And then finally, in the area of leadership, the 
16   bank has always groups of staff who go throughout the 
17   community during the course of the year, whether it's through 
18   United Way or through their own organized efforts in terms of 
19   providing direct community service to our projects.  They 
20   have always taken a lead role in San Francisco.  I know with 
21   United Way, we were one of the first participating agencies.  
22   And so their leadership in terms of their staff is acutely 
23   felt.  
24           Finally, probably quite significantly from the 
25   leadership perspective, at -- the highest ranking staff 
0184
 1   person for the Bank of America is Regina Leong Wolhauser.  
 2   And she happens to be on our board of directors and has been 
 3   on our various boards for the course of 14 years.  And during 
 4   that time we've grown to serve more -- more than double the 
 5   population in the past seven years under her leadership.  And 
 6   it's because of her commitment to us that -- that has really 
 7   helped us continue to grow the program, not only locally but 
 8   we have passed federal legislation under her stewardship and 
 9   we serve communities as diverse as Portland, Milwaukee, 
10   Boston, South Carolina, Texas.  And so the whole concept of 
11   service I think is embodied through the bank.  
12           Thank you.  
13           MS. DOLORES SMITH:  Thank you.  
14           Mr. Scott.  
15           MR. TOM SCOTT:  Good afternoon.  My name is Tom 
16   Scott.  I'm Executive Director of the San Diego Housing 
17   Federation.  The Housing Federation is a coalition of 
18   affordable housing developers, lenders, including the Bank of 
19   America, local governments, social service agencies, and 
20   individuals who support the development of affordable housing 
21   in San Diego, California.  
22           The Bank of America has been -- we were formed in 
23   1990 by a small handful of nonprofit affordable housing 
24   developers and community development corporations.  And Bank 
25   of America has had -- had a board member on our board ever 
0185
 1   since that date.  
 2           The bank has always supported us, both financially 
 3   as well as with manpower, that the staff at the community 
 4   development banking office never say no when we have a 
 5   request for volunteers, that we need some door prizes, 
 6   raffles.  We do an annual awards banquet where we produce a 
 7   video that their staff has contributed to and been the 
 8   production crew on.  And it's always great fun.  
 9           But more importantly, we think in San Diego that 
10   Bank of America is a model for how they should be doing 
11   community development banking throughout their service area.  
12   We have a -- they're the only national bank in San Diego 
13   that has a staff of four loan underwriters in the office plus 
14   a vice president of community development banking and support 
15   from their -- the banking office there that -- that is able 
16   to provide the service that Anne Wilson from Community 
17   Housing Works spoke about earlier.  
18           All the other banks, we have to go to Orange County, 
19   L.A. to get for a loan underwriting and it makes life 
20   miserable.  But in San Diego, the staff -- they know the CDCs 
21   and the nonprofits.  They work well.  It's a locally-based 
22   operation and they have provided excellent service in the 
23   construction financing of affordable housing development.  
24   And our hope that with this merger that it will give the 
25   community development banking throughout their service area 
0186
 1   the ability to provide that same level of service.  
 2           And again, they've also been strong financial 
 3   supporters of both the Federation, which really is a -- we do 
 4   the -- we're the kind of the glue that keeps the community -- 
 5   the housing developers together.  We provide information, a 
 6   conference, and keep everybody informed, as well as advocate 
 7   for the community.  And the bank has always been extremely 
 8   supportive of that.  
 9           So I would hope that with this merger that it would 
10   provide even more resources for the lending, to expand the 
11   lending product to a permanent financing as well, and to be 
12   able to support our nonprofit developers who not only build 
13   housing and operate it, but they provide resident support 
14   services, financial literacy training, after-school programs 
15   for the kids.  And those things can't be financed out of the 
16   revenue from the rents.  They have to be financed from grants 
17   and donations, and this is an opportunity that the bank 
18   should be able to increase their efforts there in -- should 
19   this merger go through.  
20           Thank you very much.  
21           MS. DOLORES SMITH:  Thank you.  
22           Mr. Nixon.  
23           MR. JAMES NIXON:  My name is James Nixon and I am 
24   Chair of the Board of Directors of Sustainable Systems and 
25   also Vice President of the Alliance for Community 
0187
 1   Development.  And I'm speaking in favor of the merger, and 
 2   I'm doing that on the basis of my experience with Bank of 
 3   America's involvement with its investment -- equity 
 4   investment program.  
 5           The Community Capital Investment Initiative is a 
 6   regional effort to encourage market forces to address poverty 
 7   reduction and smart growth in the -- in neighborhoods 
 8   throughout the Bay Area that have high levels of poverty.  
 9   And the Family of Funds is three investment funds, a real 
10   estate fund, a community equity fund, and a Brownfield 
11   cleanup fund that are the investment vehicle whereby the 
12   Community Capital Investment Initiative is attempting to 
13   accomplish its objectives.  And $160 million have been raised 
14   as part of this initiative to make these investments.  
15           And with that as background, I just want to go 
16   through a brief description of the role Bank of America 
17   played in the establishment of this initiative, which is now 
18   being looked at as a national model for community regional 
19   economic development.  
20           First of all, Barry Smith, who was in charge of CRA 
21   in California at the time of the establishment of this 
22   initiative in 1999, actually made the first proposal that the 
23   Family of Funds ought to be created as a way to integrate 
24   three independent fund building efforts.  
25           Secondly, Bank of America provided a 50 million -- a 
0188
 1   $50,000 grant and then another $150,000 grant for a total of 
 2   $200,000 to help fund the fund building process.  
 3           Thirdly, Lindy Hahn of Community Development Banking 
 4   for Bank of America represented the bank on the selection 
 5   committee for the investment manager for the Smart Growth 
 6   Fund, the real estate fund, and she also played a crucial 
 7   role in the negotiations that led to the creation of the 
 8   social equity criteria that are built into the formation 
 9   papers for the Smart Growth Fund.  
10           Bank of America invested $7.5 million in the Smart 
11   Growth Fund and $11 million in the environmental cleanup fund 
12   and now Bank of America is participating in the Community 
13   Capital Investment Initiative Business Council and also in 
14   the Bay Area Community Investment Network.  
15           And I just want to conclude by referring to one 
16   example of an investment that's being made through this 
17   program.  The Marin City Community Land Corporation is a 
18   community-based nonprofit that owns the Gateway retail 
19   shopping center.  It was in a conflict with the for-profit 
20   developer and the Smart Growth Fund made a $7.9 million 
21   investment which allowed the land trust to buy the shopping 
22   center.  It will be refinanced in 2008.  The Smart Growth 
23   Fund will get a market rate of return.  The land corporation 
24   will get $1,400,000 in profit.  And the Community Capital 
25   Investment Initiative is in the process of helping a variety 
0189
 1   of ancillary businesses develop to provide services to the 
 2   shopping center.  
 3           So that's an -- that development is having a 
 4   transformative effect in Marin City.  Is an example of the 
 5   kind of thing the Community Capital Investment Initiative is 
 6   doing, and we wouldn't have been able to do it without Bank 
 7   of America's significant involvement.  
 8           Thank you.  
 9           MS. DOLORES SMITH:  Thank you.  
10           Sir, I won't try to pronounce your name.  
11           MR. SOL KAHO'OHALAHALA:  I'll help you.  
12           MS. DOLORES SMITH:  Okay.  
13           MR. SOL KAHO'OHALAHALA:  Aloha.  (Speaks in 
14   Hawaiian.)  I'll translate it for you.  Hello.  My name is 
15   Sol Kaho'ohalahala.  I'm a native Hawaiian and I'm a native 
16   of the island Lanai.  I'm an elected state official, 
17   currently serving Hawaii's House of Representatives.  I serve 
18   on the board of directors of Hawaiian Community Assets, a 
19   community-based native Hawaiian nonprofit community 
20   development financial institution based on the island of 
21   Maui.  
22           It is in my capacity as director of HCA that I am 
23   testifying here today to ensure that Bank of America's 
24   efforts to achieve through HCA its $150 million commitment in 
25   Hawaii is accurately reflected during the proceedings.  
0190
 1           HCA was formed two years ago in -- I'm sorry, HCA 
 2   was formed in the year 2000 by Na Po'e Kokua, a grassroots 
 3   native Hawaiian organization on Maui focused on helping 
 4   families overcome financial and administrative barriers to 
 5   settling on Hawaiian homelands, which is a trust lands set 
 6   aside for native Hawaiians by the federal government in 1920.  
 7           To further the mission, HCA provides comprehensive 
 8   services that include home ownership and financial literacy 
 9   workshops, counseling in debt reduction, for debt reduction, 
10   credit repair and saving, as well as access to mortgage 
11   credit through its own mortgage broker arm.  
12           To date, more than 500 native Hawaiians have 
13   completed our training, 114 are currently in counseling, over 
14   700 families have been served by our community lending staff.  
15   Furthermore, HCA leverages its resources by working with 
16   other nonprofit throughout the state of Hawaii.  
17           For its accomplishments in the short time since the 
18   formation, HCA has received wide recognition and a number of 
19   commendations and awards from local, state, and national 
20   sources.  The most prestigious is the Ford Foundation's 
21   Leadership for a Changing World for extraordinary leadership 
22   in the field of social justice.  
23           Bank of America's investment in HCA began in 1998 
24   after it agreed with Na Po'e Kokua to invest in a native 
25   Hawaiian CDFI.  Investments were consistent with terms set by 
0191
 1   State of Hawaii's Department of Hawaiian Homelands, allowing 
 2   HCA loans to count toward Bank of America's commitment to 
 3   lend $150 million on Hawaiian homelands.  The Bank of 
 4   America's investment in HCA now totals $1 million.  
 5           So what is the result of the investments?  As HCA 
 6   emerges from its startup period, $7 million in loans have 
 7   already been originated on Hawaii homelands, and based on our 
 8   existing pipeline, we expect that figure to surpass 25 
 9   million by the end of this year.  
10           HCA's current business plan projects 65 million in 
11   loans, accountable for Bank of America over the next three 
12   years, not including Bank of America's $6 million commitment 
13   on a Maui project and other potential developer loans.  
14           We disagree with those who would suggest that Bank 
15   of America's $150 million is not achievable and could be 
16   better used outside Hawaii.  It would be a tragedy for native 
17   Hawaiian families to lose resources Bank of America brings 
18   for home ownership, especially at a time when the state is 
19   preparing to significantly accelerate homestead leases on 
20   Hawaiian homelands and more Hawaiian -- native Hawaiians than 
21   ever will have an opportunity to own a home.  So achievement 
22   of the commitment in Hawaii should be continued to be 
23   required.  
24           In summary, Bank of America's investment and its 
25   results are substantial.  Without Bank of America's 
0192
 1   investment in HCA, we could not have even begun to offer the 
 2   services needed by most native Hawaiians to achieve and 
 3   sustain home ownership.  
 4           So based on our experience with Bank of America, HCA 
 5   does not oppose the merger of Bank of America and FleetBoston 
 6   Financial Corporation.  
 7           Thank you.  
 8           MS. DOLORES SMITH:  Thank you.  
 9           Any questions from the panel?  Thank you very much 
10   for coming this afternoon.  
11           You see only three people on the panel, but we have 
12   five presentations because two of our -- two of our witnesses 
13   will be presenting statements on behalf of other people who 
14   were scheduled to be here but are not.  
15           So we are going to start, I understand, first with 
16   the statements being presented on behalf of other people and 
17   then we'll come back to you for your own statements, if that 
18   is my understanding.  
19           MS. JOANNE YUKIMURA:  I have a statement for myself.  
20   Is that all right?  
21           MS. DOLORES SMITH:  Certainly.  It really doesn't 
22   matter the order as long as we know when someone is 
23   presenting on behalf of himself or somebody else.  So thank 
24   you.  Please start with your name and affiliation.  
25           MS. JOANNE YUKIMURA:  Thank you.  My name is Joanne 
0193
 1   Yukimura.  I am a member of the Kauai County Council, which 
 2   is the legislative body of the County of Kauai.  The County 
 3   of Kauai encompasses the Hawaiian islands of Kauai and 
 4   Niihau.  
 5           I'm here because the county council last night at 
 6   7:30 p.m. made the decision to send me to this hearing.  I'm 
 7   here because the council wants to indicate that this is very 
 8   important to the people of Kauai and that we, the council 
 9   members, want to make sure we fulfill our fiduciary 
10   responsibility to them.  
11           While I do not speak for the mayor, the council is 
12   in agreement with the position statement submitted by Lani 
13   Nakazawa, County Attorney, on behalf of the mayor and the 
14   county.  
15           The council neither supports nor opposes the 
16   proposed merger but asks that in reviewing the application 
17   the Federal Reserve Board ascertain, that is, make a factual 
18   determination as to whether Bank of America has fully 
19   discharged its 1994 commitment to Kauai County to provide $30 
20   million to the county's efforts to build affordable housing 
21   for low- and very-low-income families through project loans 
22   at below market rate loans.  
23           This came two years after Hurricane Iniki caused $2 
24   billion in damages to our island.  Based on the information 
25   we have, it does not appear that that commitment was met.  We 
0194
 1   do not believe that the board intended that Bank of America 
 2   simply create a program on paper, meet with county officials, 
 3   and pass out fliers to potential developers.  
 4           I listened in wonderment to the impressive testimony 
 5   presented by Panel 2 this morning as I heard about the 
 6   tangible results that Bank of America supported programs 
 7   accomplished.  That is what Bank of America's commitment to 
 8   Kauai County should have resulted in also and that is how we 
 9   feel the bank's efforts should be evaluated, by results.  
10           To date, we have found no information showing that 
11   Bank of America actually loaned a penny to developers of low- 
12   and moderate-income housing on Kauai in the aftermath of 
13   Hurricane Iniki.  
14           As Ms. Nakazawa's testimony indicates, if the bank 
15   can demonstrate that the commitment has been met, the county 
16   will withdraw its comments.  
17           All we have seen is correspondence between bank 
18   officials and county officials during the first six months of 
19   the program.  For the record, about that time there was a 
20   change in administrations and the succeeding housing director 
21   has no recollection that she was ever approached by bank 
22   officials after she and the new mayor took office.  And that 
23   was within six months of the program.  
24           Based on discussions with those in the housing 
25   office -- well, I'm going to just -- we did locate one 
0195
 1   recipient of the county's Pokui housing program on which the 
 2   bank tried to piggyback its efforts, which was a reasonable 
 3   idea.  The director of that nonprofit agency stated that they 
 4   worked with a local representative of the bank, provided 
 5   information that he was very enthusiastic, but in the end, in 
 6   a move which nearly jeopardized the project, the decision by 
 7   bank officials in San Francisco was to offer 60 percent 
 8   financing only, which meant the nonprofit had to find other 
 9   financing.  And although this was the conventional approach, 
10   it gave no break to this nonprofit builder.  Another bank had 
11   to be found at the last minute.  Gave 100 percent financing 
12   plus and the project was finished successfully.  
13           Given that Bank of America is no longer in Hawaii, 
14   I'm sure they must not want to go back into time, but the 
15   fact remains that a commitment was made to Kauai and was a 
16   condition of the Federal Reserve Board's approval in the 
17   acquisition of Liberty Bank in 1994.  So if the board 
18   determines that the commitment has not been met, Kauai County 
19   respectfully -- well, the council respectfully requests that 
20   the board require the bank to fulfill that commitment or to 
21   impose a remedy deemed appropriate by the board.  
22           MS. DOLORES SMITH:  Thank you.  We'll go to one of 
23   the Mr. Hodges.  
24           MR. TONY HODGES:  I'm going to change personalities.  
25           MS. DOLORES SMITH:  All right.  Okay.
0196
 1           MR. TONY HODGES:  I'm Sandra Perez Schwartz.  And 
 2   she's a former vice president of Bank of America, community 
 3   investment officer.  
 4           MS. DOLORES SMITH:  And she will similarly be held 
 5   at three minutes.  
 6           MR. TONY HODGES:  If I can get ahold of her I'll 
 7   tell her.  And I'm going to read as quickly as I can, and 
 8   what I can't get, then I'll give you in writing.  
 9           MS. DOLORES SMITH:  Yes.  And don't read as quickly 
10   as you can because the stenographer will -- the court 
11   reporter will miss it and won't be able to get it for the 
12   record.  So just --
13           MR. TONY HODGES:  Or I can give this as a cheat 
14   sheet.  
15           MS. DOLORES SMITH:  Start.  
16           MR. TONY HODGES:  So as former vice president, 
17   community investment officer, Bank of America, here we are 
18   again, probably in the same room, at no doubt the same faces 
19   in attendance as the 1998 Bank of America/Nations Bank 
20   merger.  I'm not only opposed to the proposed transaction, 
21   but I'm also opposed to the hearing and the way in which it's 
22   being conducted.  
23           Five years ago I worked for Bank of America and 
24   assisted at and attended the public hearings for the Bank of 
25   America/Nations Bank merger in 1998.  What I witnessed was 
0197
 1   immoral, unethical, and possibly illegal conduct by the Bank 
 2   of America.  I'm speaking today because so many people have 
 3   risked so much to have their voices heard, I feel the need to 
 4   speak out today.  
 5           Prior to the 1998 hearing, Bank of America community 
 6   reinvestment officers and those that work closely with the 
 7   bank's community partners were asked to solicit testimonies 
 8   from individuals in support of the 1998 merger.  Of course, 
 9   it wasn't openly stated but was certainly implied that there 
10   would be positive as well as negative consequences for the 
11   testimony given by these groups at the 1998 public hearing on 
12   the Bank of America/Nations Bank merger.  
13           As one of the Bank of America Community Development 
14   Department staff, Vice President Community Investment 
15   Officer, I followed our instructions and spoke with nonprofit 
16   organizations, agencies, and groups from rural native 
17   Hawaiian and native American groups to assure them that the 
18   Bank of America's previous Federal Reserve Board orders, Bank 
19   of America board resolutions, commitments, and CRA goals 
20   would be honored this time, and I was reassured by Bank of 
21   America and Nations Bank top management this would be so.  
22           In return for these promises, reassurance, et 
23   cetera, that were delivered by myself and other Bank of 
24   America staff, most of the MPOs decided not to oppose the 
25   merger.  A few would take a wait and see position and others 
0198
 1   were neutral.  Still some MPOs still opposed the merger.  
 2           This forum and process requires the MPOs publicly 
 3   confront this financial and powerful Goliath, the same giant 
 4   that provides some of the giant grants and loans to their 
 5   MPOs or to their constituencies and on which these MPOs are 
 6   dependent.  
 7           A giant such as the Bank of America can and did 
 8   retaliate against these MPOs and there is a risk -- this is a 
 9   risk few are willing to take.  I know for a fact that Bank of 
10   America took names and noted which MPOs testified for the 
11   bank and those that testified against it and later, after the 
12   second day's hearing, we all debriefed about the various 
13   testimony.  
14           I was applauded for a company and a man from Hawaii 
15   who had a video he wanted to share, a video that would show 
16   illegal conduct by Bank of America during the Liberty 
17   Bank/Bank of America hearings in 1994.  That person decided 
18   not to show the video and I was given kudos for that.  
19           It's the old story of David and Goliath except that 
20   in the world of banking and the Federal Reserve Board or 
21   Bank, it's Goliath that wins every time.  In fact -- okay.  I 
22   guess my time is up.  But it goes on to talk about the 
23   foundation has been used as slush funds to get through 
24   processing such as this.  Also they have hush money.  
25           And I think this is a person that you probably want 
0199
 1   to talk to further.  I will give to you what she has in 
 2   writing.  She indicated to me, too, she's not here because 
 3   she's six and a half months pregnant and she has a real small 
 4   child.  But she said she would be happy to meet with you in a 
 5   separate session, but she believes that the board should know 
 6   and she speaks from inside the giant basically.  
 7           MS. DOLORES SMITH:  We will accept the written 
 8   testimony that you were unable to present as a comment that 
 9   will be made part of the record on this application.  
10           MR. TONY HODGES:  Okay.  
11           MR. IAN CHAN HODGES:  Good afternoon.  I'm going to 
12   be speaking first on behalf of Dennis Kanahele, who cannot be 
13   here because there's a storm in Hawaii this week and his roof 
14   actually blew off, so he's taking care of that.  
15           And also this is -- what he asked me to present is a 
16   document that was filed -- I'll just summarize it.  Document 
17   was filed with the U.S. Attorney's Office in Honolulu on 
18   September 12, 2003 on behalf of -- that he filed on behalf of 
19   a group of nakapuna or Hawaiian elders.  And I'll just 
20   briefly read the first section of it.  And I believe he's 
21   going to be submitting the full text as part of his comments.  
22   And the comments are due the 21st?  
23           MS. DOLORES SMITH:  Any supplemental comments by 
24   next Friday.  
25           MS. PAT ROBINSON:  Friday, the 23rd.  
0200
 1           MS. DOLORES SMITH:  The 23rd.  
 2           MR. IAN CHAN HODGES:  The 23rd.  Okay.  Thank you.  
 3           And this is -- I'll just read from this.  This is 
 4   from the U.S. Attorney's manual of how to actually file a 
 5   complaint under the 2403 Hobbs Act, extortion by force, 
 6   violence, or fear.  
 7           And first question is did the defendant induce or 
 8   attempt to induce the victim to give up property or property 
 9   rights?  Answer, yes, property rights.  Bank of America is 
10   attempting -- has attempted and is attempting to induce the 
11   law of first in nakapuna on Hawaii as traditional 
12   representatives and the native Hawaiian people to -- to forgo 
13   Hawaiian property rights until the $120 million outstanding 
14   balance and $150 million in FHA 247 financing that Bank of 
15   America was ordered by the Federal Reserve Board to complete 
16   by 1998.  And it quotes what that order was.  Property has 
17   been held to be in, quote, any valuable right considered as a 
18   source of wealth, the United States versus Tropiano.  And 
19   you'll see the citations when you get this whole thing.  
20           And the $150 million federally-mandated equipment to 
21   finance mortgages on Hawaiian homelands is certainly a 
22   valuable right and a source of wealth.  On behalf of the 
23   native Hawaiian community and members of nakapuna on Hawaii 
24   and the nation of Poi as frontline participants and actions 
25   for the lending coalition obtained this valuable property 
0201
 1   right back in 1994 after engaging in activities which are 
 2   protected under Section 818 of the Fair Housing Act.  These 
 3   protected actions delayed Bank of America's acquisition of 
 4   Liberty Bank but for months and ultimately resulted in 
 5   $150 million -- 
 6           MS. DOLORES SMITH:  (Speaking to the Reporter.)  
 7   You're going to get the written statements.  So just do the 
 8   best you can and then we will continue.  
 9           MR. IAN CHAN HODGES:  Thanks, Dolores -- ultimately 
10   resulted in $150 million federally-mandated commitment by 
11   Bank of America to Hawaiians seeking mortgages under the FHA 
12   247 program.
13           In late 2002 these parties -- these parties to the 
14   coalition action began seeking to fully secure this valuable 
15   right and to seek compensation for years of delay and loss of 
16   a source of wealth which cost the Hawaiian community tens of 
17   millions of dollars.  
18           If Bank of America's $150 million commitment was 
19   completed by 1998 as ordered, it would have resulted in an 
20   increase to date and the net worth of native Hawaiian 
21   families in excess of $20 million from accrual of home equity 
22   loan.  
23           In addition -- again, this is written in September 
24   12, 2003.  In addition, it is believed that there is reason 
25   to fear that without the consent of the majority's 
0202
 1   commissioners, the State Department of Hawaiian Homelands may 
 2   be acting in collusion with Bank of America or acting in 
 3   inducement from Bank of America in an attempt to take the 
 4   Hawaiian property right to Bank of America's commitment and 
 5   make a property of the state while forgoing to secure this 
 6   value right as a source of wealth for the Hawaiian community.  
 7           Thank you.  
 8           MS. DOLORES SMITH:  All right, then.  We'll go back 
 9   to Mr. Tony Hodges for your own statement.  
10           MR. TONY HODGES:  I'll give you in writing, too, 
11   what I can.  One is I wanted to have the record note that 
12   there are no members of the actual board, members of the 
13   board, of the Federal Reserve Board here and that these 
14   people here are representing them.  
15           MS. DOLORES SMITH:  Right.  
16           MR. TONY HODGES:  But there are no board members 
17   present, right?  
18           MS. DOLORES SMITH:  That's true.  
19           MR. TONY HODGES:  Also I'd like to have the record 
20   reflect that this should be a contested case.  I believe 
21   there's no controversy to have it not be an informal hearing 
22   but it to be a contested case.  And I'm going to go through 
23   that process.  I discussed that briefly with Mr. Farias, who 
24   is in Washington, D.C., who works for the board.  
25           Also I'd like to ask -- state that the entire 
0203
 1   proceedings of the 1994 Bank of America/Liberty Bank merger 
 2   application and hearings, of the entire proceedings of the 
 3   1998 Bank of America/Nations Bank merger application and 
 4   hearings are to be incorporated and by reference and to my 
 5   testimony.  All the records from '98 and '94, I attach them 
 6   by reference to my testimony.  And that they be -- that this 
 7   material be considered relevant to the current proceedings, 
 8   and it's relevant because this is how Bank of America and 
 9   Nations Bank got to where they are now, through those two 
10   previous mergers.  And they need to check -- the board needs 
11   to check to see if, in fact, did they do what they said they 
12   were going to do and did they do also what the board ordered 
13   them to do.  And we maintain that they did not.  
14           Another thing, too, is I wanted to reference the 
15   board, the members of the board, that they are subject to the 
16   criminal of civil penalties that are allowed for in the 
17   federal statutes, the FDIC bank holding company, and that the 
18   statutes actually apply to the members of the board, all 
19   staff, and also staff and directors of the Federal Reserve 
20   system itself and the Federal Reserve Bank, banks.  And 
21   that's basically USC 1847 A, B, and C and D and E. 
22           And I'd like the record to reflect that.  And I'd 
23   like the board to reflect on that before they do something.  
24   And I'd like to ensure that what you hear is, in fact, read 
25   and understood by all members of the board before taking 
0204
 1   action on this.  
 2           Another thing real quickly is that I'm asking, too, 
 3   that we're going to be submitting --
 4           MS. DOLORES SMITH:  Speak into the mic.  
 5           MR. TONY HODGES:  Sorry.  We're going to be 
 6   submitting a film that was kept secret.  Ms. Perez referred 
 7   to it in her testimony.  It was kept secret from the board, 
 8   its examiners at the 1998 hearings.  And we have that film.  
 9   We can submit it to you.  And it actually shows hired -- I 
10   could say thugs.  We'll say hired people, people hired by the 
11   Bank of America assaulting, and I believe criminally so, my 
12   son, Mark Hodges, who was actually a witness before a federal 
13   panel.  And this was recorded by the TV stations there.  And 
14   this is something that we objected to and this shows how Bank 
15   of America sometimes behaves.  
16           The other thing that I would like to have the board 
17   consider before they do this is that back in 1994, at those 
18   hearings, it was brought out -- and I think the record will 
19   reflect this -- that Bank of America owned approximately 60 
20   percent -- 60 percent of the employees of BCCI were Bank of 
21   America employees, that BCCI was involved in massive money 
22   laundering and weapons -- weapons dealing.  And, in fact, 
23   BCCI was one of the major conduits for weapons to Saddam 
24   Hussein.  Bank of America -- 60 percent of all personnel 
25   involved at BCCI, if my recollection is correct, for the 
0205
 1   record, were employees, former employees of Bank of America.  
 2   And I think the board should look into this given what has 
 3   gone on recently.  
 4           MS. DOLORES SMITH:  Thank you very much.  
 5           Mr. Hodges.  
 6           MR. IAN CHAN HODGES:  I'm going to read my final 
 7   testimony.  On behalf of --
 8           MS. DOLORES SMITH:  Say your own name so that we 
 9   don't get it confused.
10           MR. IAN CHAN HODGES:  My name is Ian Chan Hodges and 
11   I'm speaking on behalf of the Hawaiian Fair Lending 
12   Coalition.
13           MS. DOLORES SMITH:  Do you have written testimony?  
14           MR. IAN CHAN HODGES:  Yes.  It will be submitted.  
15           MS. DOLORES SMITH:  Yes.  
16           MR. IAN CHAN HODGES:  On behalf of the Hawaii Fair 
17   Lending Coalition, I'm speaking to comment on Bank of America 
18   Corporation's application to acquire Fleet Financial 
19   Corporation.  We urge the Federal Reserve not to approve the 
20   application until Bank of America settles its $150 million 
21   Hawaiian commitment to the FHA 247 program which was ordered 
22   by the Federal Reserve to complete by 1998.  
23           This $150 million commitment to the Hawaiian FHA 247 
24   mortgages was also the only specifics here related to -- 
25   commitment that was made as a condition the Federal Reserve 
0206
 1   Board order which approved the merger of Bank of 
 2   America/Nations Bank in August of 1998.  
 3           Therefore, because the approval by the board of the 
 4   mergers of Bank of America with Liberty Bank and Bank 
 5   of America with Nations Bank were both specifically 
 6   conditioned upon compliance with the $150 million commitment, 
 7   we ask the board to look into this very carefully.  
 8           And I'd also like to point out that we will be 
 9   submitting written testimony regarding some issues that the 
10   board is required to look at under managerial resources, and 
11   one of those conditions is the record of the applicant and 
12   its affiliates of fulfilling any commitments to and any 
13   conditions imposed by the board in connection with prior 
14   applications.  
15           And also I'd like to say that, in conclusion -- and 
16   you'll be able to read this in the written testimony.  But 
17   based on conversations with the Federal Reserve Board and 
18   bank employees and also conversations with other individuals, 
19   we don't really have any reason to believe at this point that 
20   the Federal Reserve Board will actually, in fact, enforce its 
21   order, so this week we're now retaining counsel and our 
22   counsel has informed us yesterday that we're ready to move 
23   forward.  
24           I'm not a lawyer, but it's my understanding from 
25   counsel that we will be starting by seeking an injunctive 
0207
 1   relief in federal court.  It's also my understanding that 
 2   we'll be taking legal action to ensure that Bank of America 
 3   is levied the full fines it owes under the Federal Reserve 
 4   regulations for violation of Federal Reserve Board orders.  
 5           Thank you very much.  
 6           MS. DOLORES SMITH:  Thank you.  
 7           Any questions?  
 8           MR. MICHAEL JOHNSON:  I had a clarification question 
 9   for Ms. Yukimura.  And I hope I said that right.  The $30 
10   million commitment that you reference -- I'm sorry, I just 
11   did not hear you that well -- that was in relation to the 
12   Liberty Bank acquisition?  
13           MS. JOANNE YUKIMURA:  Yes, it was.  
14           MR. MICHAEL JOHNSON:  Okay.  Thank you.  
15           MS. PAT ROBINSON:  I just want to make one 
16   statement.  And as Mr. -- as the secretary's office has 
17   explained to you repeatedly, the commitment was not a 
18   commitment to the board.  The commitment was not a condition 
19   of the orders in the past cases.  The commitments, however, 
20   were commitments with, you know, two community groups which 
21   often times banks do enter into.  That's been explained to 
22   you repeatedly.  
23           MR. TONY HODGES:  You're talking about the 
24   commitment?  You're talking about the commitment to $150 
25   million?  
0208
 1           MS. PAT ROBINSON:  I'm talking about the 150 
 2   million, right.  
 3           MR. TONY HODGES:  Are you an advocate for Bank of 
 4   America?  
 5           MS. PAT ROBINSON:  No.  
 6           MR. TONY HODGES:  That's what you're behaving like.
 7           MS. PAT ROBINSON:  I will be glad to talk to you 
 8   after.  
 9           MR. IAN CHAN HODGES:  And I state for the record 
10   that we definitely disagree with that and we -- we definitely 
11   disagree with that and we have a lot of documentation to show 
12   that there actually were orders from the Federal Reserve 
13   Board.  
14           MS. DOLORES SMITH:  It's fine to state your opinion 
15   and we welcome your statement of opinion.  We're just trying 
16   to make -- 
17           MR. TONY HODGES:  I apologize for being short with 
18   you.  I don't mean it that way.  
19           MS. PAT ROBINSON:  Okay.  
20           MS. DOLORES SMITH:  There is a difference of 
21   opinion.  
22           MR. TONY HODGES:  Actually, the order reads -- said 
23   the federal register.  Go read it.  It's there.  It says 
24   ordered.  Okay?  And if that's not an order, then why even 
25   have hearings like this?  Why give orders if they won't obey 
0209
 1   them?  Or if you say that they weren't -- kind of like 
 2   Britney Spears.  You know, she got married and then two days 
 3   later she said she didn't.  
 4           MS. DOLORES SMITH:  On that note, I think that is -- 
 5   that we're ready for the next panel.  Thank you very much.  
 6           Okay.  I believe we have five members on this panel.  
 7   Each has three minutes.  And we'll start with Mr. Feckner.  
 8           MR. ROB FECKNER:  Thank you.  My name is Rob 
 9   Feckner.  I'm on the board of directors of California School 
10   Employees Association as well as being an elected official 
11   and the elected vice president of the California Public 
12   Employees Retirement System, the CalPERS Board of 
13   Administration.  
14           Wearing my hat as the board of directors for the 
15   California School Employees, we have some concerns about this 
16   proposed merger that we'd like to raise and have considered, 
17   one being we represent 220,000 classified school employees 
18   state-wide, both in urban and rural areas, the majority of 
19   which being the lowest paid members of the school system and 
20   in some areas the lowest paid members of the community.  
21   Ninety-five percent of our members live and work in the same 
22   area near their jobs and their homes, within about ten to 15 
23   miles of each other, so they raise their families there and 
24   everything else in that small community.  
25           We've noticed an erosion over time of the charitable 
0210
 1   work that's been done on behalf of Bank of America and we'd 
 2   like to have that issue addressed and perhaps, you know, more 
 3   along the lines of contributions made in the local 
 4   communities where especially the low-income families can have 
 5   some access.  
 6           We do have concerns about predatory lending.  We not 
 7   only, again, like I say, represent low-income families but we 
 8   represent retirees and seniors.  We have a large population 
 9   of retired folks and we hear time and time again of some of 
10   these practices that go on where folks are called and asked 
11   to participate in the lending, et cetera, and they end up 
12   getting in situations that they can no longer handle or get 
13   out of.  
14           We have a large number of low-income families that 
15   are looking due to the high increase in rents to obtain their 
16   first home, and at some point, without having a lot of income 
17   in the bank as a down payment, they will take that promise on 
18   faith of getting into the first opportunity they can find and 
19   then they end up seeing that it's not anything that they can 
20   handle and they lose out altogether.  
21           Our last concern that I would like to address is 
22   again with the low-income side of the house.  When you have a 
23   bank that is offering checking accounts and checking, our 
24   folks would need to have more opportunity to have access to 
25   money orders versus checks.  It could be an issue that could 
0211
 1   save them a lot of heartache in the long run.  We represent a 
 2   lot of folks that are in the minority category.  Some of them 
 3   speak very little English, they understand little English, 
 4   and trying to manage a checkbook is something that takes time 
 5   and experience.  And to be able to just go in and do a money 
 6   order would be much more beneficial to them, which would, in 
 7   turn, be more beneficial to the community.  
 8           And on behalf of our association, I thank you for 
 9   your time.  
10           MS. DOLORES SMITH:  Thank you.  
11           Ms. Wilson.  
12           MS. ANNE WILSON:  Thank you.  I'm Anne Wilson, the 
13   Chief Executive Officer of United Way, the Bay Area, 
14   headquartered here in San Francisco.  It's my pleasure to be 
15   here and privilege to be here to support the proposal before 
16   the Federal Reserve.  
17           Bank of America is the second largest supporter of 
18   United Ways across this country.  I'm confident that I speak 
19   on behalf of hundreds of local communities and hundreds of 
20   local United Ways that, in turn, support tens of thousands of 
21   nonprofit organizations who know Bank of America to be an 
22   outstanding corporate citizen whose philanthropy, 
23   volunteerism, and civic leadership impacts all of our local 
24   communities.  
25           Here -- nationally, as I've said, between corporate 
0212
 1   giving as well as employee giving, they are the second 
 2   largest corporate supporter of United Ways collectively 
 3   across this country.  Here it's the San Francisco Bay Area.  
 4   They have been, as long as anyone's local memory, the first 
 5   or second largest campaign and the first and largest 
 6   corporate giver to the United Way here in the Bay Area.  
 7           Specifically their philanthropy and their 
 8   volunteerism has been strategic and creative, focused on 
 9   communities of need and in providing leaders -- leading by 
10   example.  Most recently, in the last couple of years, they 
11   have provided a million dollar challenge grant to the United 
12   Way of the Bay Area to inspire others to give at a leadership 
13   level.  And their challenge grant last year, as an example, 
14   created 730 new leadership givers in the San Francisco Bay 
15   Area, that is, people who give $1,000 or more.  
16           In addition, nation-wide they've provided leadership 
17   in the area of early childhood education and development.  
18   They invested $50 million nationally over a five-year period 
19   that increased what we call Success By Six programs, focused 
20   on early childhood education, from 175 to 300.  Ten thousand 
21   volunteer hours nation-wide are a part of United Way's Week 
22   of Caring across this country.  Here in the Bay Area, most 
23   recently they have sponsored the translation of our web site 
24   into Spanish and Chinese so that we're the only United Way in 
25   the country to have our web site available to these important 
0213
 1   communities as a result of their commitment to all 
 2   communities.  
 3           I would also say that their leadership, the United 
 4   Way and many civic organizations here in the Bay Area, as 
 5   well as across the country, benefit from the leadership of 
 6   senior executives as serving as volunteers in the governance 
 7   of our organization and many organizations here and across 
 8   this country.  
 9           So it is a privilege to be here to support this 
10   extraordinary corporate citizen in their proposal to you.  
11           MS. DOLORES SMITH:  Thank you.  
12           Mr. Griffin.  
13           MR. MORRIS GRIFFIN:  Good afternoon on this 16th day 
14   of January, 2004, three days before Dr. Martin Luther King's 
15   birthday.  First I'd like to give thanks to Almighty God for 
16   preparing me for this memorable occasion and one of America's 
17   reparations testimony.  
18           MS. DOLORES SMITH:  If I could interrupt, would you 
19   start with your full name and affiliation.  
20           MR. MORRIS GRIFFIN:  Yeah.  I'm Morris Griffin.  I'm 
21   the coordinator and founder of a group called N'CREW, which 
22   is the National Coalition for Reparations and Economic 
23   Wealth.  And we are a nonprofit organization out of Los 
24   Angeles, California.  The members of N'CREW and myself would 
25   like to thank the Federal Reserve Bank of San Francisco for 
0214
 1   providing a forum to be heard on the merging of FleetBoston 
 2   Finance Company with Bank of America.  
 3           FleetBoston, Lehman Brothers, Brown Brothers, 
 4   Harringman, JP Morgan, Chase were the leading finance 
 5   companies in the American slave trade while it was illegal in 
 6   America.  FleetBoston knew America was bankrupt after a 
 7   result of America separating from British colonies and north 
 8   and south war during the 1800's.  FleetBoston knew labor is 
 9   prior to and independent of capital.  FleetBoston knew 
10   capital is only the first of labor and could never have 
11   existed if labor had not first existed.  FleetBoston knew 
12   labor was superior of capital.  That's why FleetBoston helped 
13   finance the Black-American slave trade because black 
14   African-Americans could work from sun up to sun down, not to 
15   get sunburned or to get heat exhaustion.  
16           FleetBoston and other companies that are named in a 
17   class action lawsuit took advantage of the docile, loving, 
18   caring, protective black African-American race of people 
19   while it was wrong, in violation of the Union's federal and 
20   state land laws.  
21           The members of N'CREW did not send me here to take 
22   sides.  I'm here to caution Bank of America of the wrongs of 
23   its FleetBoston partnership and that if there is not any 
24   language in the contract, Bank of America will incur the debt 
25   from slavery.  FleetBoston profited off the backs of my black 
0215
 1   African ancestors' backs from free labor and, in turn, 
 2   black -- my black ancestors made America the richest country 
 3   in the world.  We, the descendents, inherited discrimination 
 4   from past to present on the color of our skin.  
 5           So I just want to say that I would like to encourage 
 6   you to encourage FleetBoston -- as Bank of America, I would 
 7   like to encourage you to encourage FleetBoston to do what is 
 8   right, and that is to take care of the business that we're 
 9   discussing, get rid of this wrong.  
10           Thank you.  
11           MS. DOLORES SMITH:  Thank you.  
12           We'll go to Mr. Lee.  
13           MR. DAVID LEE:  Good afternoon.  I'm David Lee, 
14   Executive Director of the Chinese-American Voters Education 
15   Committee, a 30-year-old organization serving the 
16   Asian-American community in San Francisco and the Bay Area.  
17           In the ten years that I've been executive director 
18   of this organization, Bank of America employees, particularly 
19   leaders in the Asian-American Employees Association, have 
20   been tremendous partners in the work that we do, which is 
21   voter registration, civic education, and work to enfranchise 
22   largely immigrant and historically disenfranchised population 
23   in San Francisco, which today comprises some third of the -- 
24   of the total city population and one fifth of the Bay Area 
25   population.  
0216
 1           B of A employees, particularly leaders in the 
 2   Chinatown branch, have been at every event that we've ever 
 3   sponsored since I've been there in ten years.  They've 
 4   volunteered their time and their -- the resources of the bank 
 5   for rallies, for education, for public education programs, 
 6   lectures and so forth to educate the largely immigrant and 
 7   low-income populations of Chinatown about the importance of 
 8   registering to vote and voting.  
 9           Bank of America, in addition, as a corporate entity 
10   has been very supportive to our programs in terms of training 
11   new leaders for greater public service roles, in helping 
12   inspire volunteerism in young people, and in supporting 
13   programs in general in the Asian-American community that 
14   benefit the low-income and social service agencies.  
15           In my experience, we've never had a grant or a 
16   proposal turned away.  We've never been -- we've never left 
17   empty handed when we've turned to Bank of America for help, 
18   and that's because of the strong advocacy of the 
19   Asian-American employees who are in our communities, who are 
20   at our events, and who participate at every level of the work 
21   that we do.  
22           And I'm honored to have been asked to testify in 
23   front of this panel and to tell you a little bit about the 
24   tremendous support that we've been getting.  
25           Thank you.
0217
 1           MS. DOLORES SMITH:  Thank you very much, Mr. Lee.  
 2           Ms. Waxman.  
 3           MS. ILANA WAXMAN:  Hi.  My name is Ilana Waxman and 
 4   I'm a first-year law student at Hastings College of the Law 
 5   here.  And I'm here because I'm very concerned with racial 
 6   and economic inequality in this country.  
 7           And I'm involved at Hastings at a journal called The 
 8   Race and Poverty Law Journal.  And one very major issue in 
 9   terms of racial and economic inequality is access to capital 
10   and access to loans.  And there is still a lot of 
11   discrimination that goes on in this country in terms of 
12   access to capital for low-income and for ethic minorities.  
13   And right now I'm actually taking a course on employment 
14   discrimination.  
15           And we started out by talking today about civil 
16   rights legislation and about the legislative process and how 
17   the -- there's the process of making the laws and then 
18   there's a process of enforcing the laws and how very often 
19   that's where the process breaks down, is we have these 
20   excellent laws on the books and there aren't necessarily the 
21   resources, there aren't necessarily the mechanisms out there 
22   to enforce them the way they need to be enforced.  
23           And I'm originally from Hawaii and I remember the 
24   events that were referenced in the last panel when Bank of 
25   America merged with Liberty Bank and it was found that there 
0218
 1   was a pattern of discrimination in Hawaii against native 
 2   Hawaiian and Filipino communities, particularly native 
 3   Hawaiian communities.  And what came out of that was an order 
 4   that Bank of America, from the Federal Reserve, that Bank of 
 5   America would actually set up programs that would be 
 6   specifically targeting native Hawaiian communities and these 
 7   underserved communities who weren't able to get home loans, 
 8   you know, some of the same problems that Mr. Feckner I think 
 9   it was was discussing here in California.  And unfortunately 
10   Bank of America left Hawaii and the orders were never 
11   enforced.  
12           And so I guess when I see this process here, the 
13   reason that I'm coming to talk here is that you at the 
14   Federal Reserve in deciding whether to approve this merger, 
15   you have the opportunity to look at some of these, some of 
16   these commitments that have been made by Bank of America, 
17   some of these discrimination problems that are being raised 
18   by some of the panelists here and really say, hey, you need 
19   to take care of these problems before we allow this merger to 
20   go forward.  Because this is actually a mechanism where some 
21   of this law enforcement can happen.  
22           And so I would just urge you to really look at that 
23   and think about that and think about your role in, you know, 
24   trying to make sure that some of our good anti-discrimination 
25   laws, you know, really are taken seriously and enforced.  
0219
 1           MS. DOLORES SMITH:  Thank you.  
 2           Any questions from the panel?  All right.  Well, 
 3   thank you very much for coming this afternoon.  
 4           We have one more panel?  Before the open mic.  Okay.  
 5   This is Panel No. 11.  And we'll start with Mr. Mingey.  
 6           MR. JAMES MINGEY:  My name is Jim Mingey and I'm 
 7   currently -- my name is Jim Mingey and I'm currently Managing 
 8   Director of the National Economic Opportunity Fund.  I'm a 
 9   resident of Houston, Texas and also work on community 
10   development financial institutions that are located in 
11   Houston, Texas and Memphis, Tennessee.  
12           Our concerns after reviewing the merger application 
13   and reading the comments from previous presenters, it seems 
14   obvious that this application is extremely short on details 
15   as to how this merger would improve service and bank policy 
16   in our own specific neighborhoods.  To date, Bank of America 
17   has been nonresponsive to our written requests to discuss our 
18   own issues.  
19           Our own experience with Bank of America:  Over the 
20   course of the last 15 years, our firm developed over 200 
21   million in community-sponsored equity funds, focused on 
22   affordable housing and venture capital, receiving several 
23   million in investments by Bank of America prior to 1998.  
24   These investments have met objectives and market standards.  
25           However, I believe it's very important to point out 
0220
 1   an example of what went wrong when the post-1998 Bank of 
 2   America did not use a consistent or honest approach to 
 3   community development.  
 4           In 1998, while the Federal Reserve was still 
 5   reviewing the last merger for Bank of America, we approached 
 6   Nations Bank in Houston, Texas.  We asked them to support 
 7   what we believe would be a cutting-edge social venture equity 
 8   fund.  They were nonresponsive.  In 1999, after the merger, 
 9   we approached Bank of America again for another similar 
10   social venture in Delaware.  Once again they were 
11   nonresponsive.  
12           However, incredulously one of their officers decided 
13   to forward our CDFI business plan and funding request to 
14   senior management at the Enron Corporation, suggesting to 
15   Enron they could collaborate on a similar fund in Texas but 
16   only if our CDFI were not included in the process.  
17           Enron did just that, creating a special purpose 
18   entity, which included Bank of America as a partner, but also 
19   lured other banking institutions into the scheme.  The 
20   results of this ill-conceived venture were disastrous, 
21   effectively wasting tens of millions of bank capital which 
22   could have been used to improve our communities.  
23           In addition, this same SPE, now managed by a Bank of 
24   America picked successor entity, has even reneged on payments 
25   due to a nonprofit.  This continuing default is impacting 
0221
 1   CDFI financial literacy goals in Houston.  To our knowledge, 
 2   Bank of America has not funded any CDFI equity for job 
 3   creation initiatives in Texas since this Enron debacle.  I'm 
 4   certain none of it has occurred in my census track in the 
 5   Fifth Ward or in Memphis, Tennessee.  
 6           Although the above experience was decidedly 
 7   inconvenient for our firm and other community organizations 
 8   we support, our own community-sponsored ventures served as -- 
 9   managed to survive and also create hundreds of living wage 
10   jobs in the communities we served.  We hope to continue our 
11   efforts but need to know we can trust that the surviving bank 
12   institution would seriously evaluate all CDFI proposals.  
13           Suggested provisions to be included in any merger 
14   conditions should include:  One, require any merged entity to 
15   document collaboration with local/regional CDFIs and also 
16   review and comment in writing on publicly-posted 
17   local/regional CDFI business plans; two, require real-time 
18   posting of all CDFI equity investments broken down by 
19   community-sponsored, category, risk class, incremental annual 
20   increases or decreases, and geographical and industry focus.  
21           Thank you for your attention.  I'll be happy to 
22   answer any questions.  
23           MS. DOLORES SMITH:  Thank you.  
24           Ms. Ferguson.  
25           MS. ELIZABETH FERGUSON:  Good afternoon.  I am 
0222
 1   Elizabeth Ferguson, Executive Vice President of the Bay Area 
 2   Council and Managing Director of the Bay Area Family of 
 3   Funds.  I am here today to testify in favor of the Bank of 
 4   America merger with FleetBoston Financial Corporation.  
 5           The Bay Area Council is a public policy group 
 6   established in 1945.  We address challenges that affect 
 7   economic well-being and quality of life in the Bay Area.  
 8   Bank of America is one of the Bay Area Council's founding 
 9   members.  They have consistently worked with us over the 
10   decades to promote economic prosperity in the region.  Bank 
11   of America has committed senior management to our executive 
12   committee and officers to be involved in our programs.  Bank 
13   of America is an excellent partner and leader with us at the 
14   Bay Area Council.  
15           One of our most important initiatives at the Bay 
16   Area Council is the Community Capital Investment Initiative.  
17   This is a regional effort to attract private investment in 
18   low- and moderate-income neighborhoods, to promote smart 
19   growth, address poverty, support local businesses by using 
20   market-based solutions.  Bank of America took a leadership 
21   role in supporting us in this very important initiative.  
22   They did this by providing a very early grant showing their 
23   leadership and also rallying support among banks and other 
24   corporates.  
25           CCII mobilizes Bay Area business leadership in 
0223
 1   partnership with community environmentalists and government 
 2   leaders.  In concert with CCII is the establishment of the 
 3   Bay Area Family of Funds.  These are investment tools to 
 4   accomplish the double bottom line, market financial returns 
 5   and at the same time social and environmental returns.  
 6           Three funds -- these three funds are sponsored by 
 7   the Bay Area Council, the Smart Growth Fund, real estate, the 
 8   California Environmental Redevelopment Fund, which is a 
 9   Brownfield cleanup fund, which is also co-sponsored with the 
10   Federal Reserve Bank of San Francisco, and the Community 
11   Equity Fund.  
12           Again, Bank of America played a leadership role, 
13   investing early on in Smart Growth, in CERF, and also 
14   providing a very important investment in the very beginning 
15   to start the Equity Fund.  
16           Bank of America's consistent actions and commitment 
17   to transform low- and moderate-income communities is clear.  
18   Further, this is underscored by Bank of America's outstanding 
19   CRA rating in April 2003.  This is the highest rating that is 
20   provided by the OCC, the Office of the Controller of the 
21   Currency.  
22           Bank of America's commitment to the communities they 
23   serve include, as you all know, lending investments, 
24   foundation grants, and very importantly it also includes the 
25   personal involvement of Bank of America's executives, 
0224
 1   managers, and employees volunteering in the community.  The 
 2   bank regularly encourages this and we believe this makes a 
 3   big difference.  
 4           Thank you very much for the opportunity to speak in 
 5   favor of this merger.  
 6           MS. DOLORES SMITH:  Thank you.  
 7           Mr. Kimble.  
 8           MR. JOHN KIMBLE:  I'm John Kimble.  I'm affiliated 
 9   with Princeton University and the Compton Foundation.  I'd 
10   like to request the Federal Reserve to delay Bank of 
11   America's acquisition of FleetBoston until the Fed has 
12   subjected Bank of America's lending performance in low-income 
13   and minority communities to further scrutiny in light of 
14   information that I'm presenting in this testimony.  
15           I currently have a research fellowship from 
16   Princeton and the Compton Foundation to study access to 
17   capital and financial services in low-income, minority, urban 
18   communities vis-a-vis wealthier, white, suburban communities.  
19   I chose to focus my study on residential lending in Oakland 
20   and the surrounding communities of Alameda County, and in 
21   particular I've collected a substantial amount of data on 
22   foreclosures in these communities and geo-coded the data to 
23   correlate it with available census and HMDA data.  
24           Bank of America emerged as producing the largest 
25   number of foreclosures in Alameda County.  I haven't yet 
0225
 1   compared this with their market share, but regardless of 
 2   whether or not its loans are performing better or worse than 
 3   other lenders in the market, Bank of America's prominence as 
 4   a lender in this community merited increased scrutiny from me 
 5   as a researcher and certainly from the Federal Reserve as a 
 6   regulator, since this is just one community in one state in 
 7   the country.  
 8           In mapping these foreclosures, I discovered that 
 9   they were densely concentrated in urban neighborhoods with 
10   predominantly low-income, minority residents.  You might 
11   conclude that this is simply because these are riskier 
12   borrowers, but, in fact, further investigation reveals that 
13   these are the most sought out markets by lenders in the area.  
14   And they have some of the highest levels of refinance and 
15   home purchase lending in the county.  However, these are also 
16   the neighborhoods that have the fewest bank branches.  In 
17   fact, most of them have none.  
18           I'm including these maps as an appendix to my 
19   testimony.  They're worth taking a look at.  They're fairly 
20   dramatic, the patterns.  
21           So my research led me to investigate the role of the 
22   recent growth of the secondary market for home loans and the 
23   changing lending patterns in underwriting standards.  And 
24   what's become clear to me and what most lenders that I've 
25   interviewed will actually privately admit is that residential 
0226
 1   lending in low-income, minority communities is designed 
 2   entirely to serve the needs of the investors that buy the 
 3   loans rather than the consumers that receive them.  Lenders 
 4   design the terms of their loans, particularly interest rates 
 5   and features like prepayment penalties, to conform to the 
 6   demands of securities into which they will be pooled, not to 
 7   meet the needs of and address the risk posed by individual 
 8   borrowers.  
 9           And because these lenders make the bulk of their 
10   profits in transaction fees, their incentive is to offer as 
11   many loans as possible and sell them as quickly as possible 
12   to the secondary markets.  Investors can tolerate relatively 
13   high levels of failure in the loans as long as the pools are 
14   designed to insulate them from this loss, which they are.  
15   And the problem is that the failed loans are concentrated 
16   geographically and demographically, so that while the system 
17   insulates lenders and investors from loss, it amplifies these 
18   losses in already distressed communities.  
19           And returning specifically to Bank of America's 
20   activities in these communities -- I'm almost finished -- 
21   because national studies have demonstrated that predatory 
22   lending is most virulent to the re-fi market, I focused 
23   specifically on scrutinizing the actual data set, which 
24   contains information about each foreclosure.  And I quickly 
25   discovered very suspicious patterns in which Bank of America 
0227
 1   loans resulted in multiple foreclosures on the same property, 
 2   sometimes involving the same borrower and sometimes involving 
 3   a succession of different borrowers.  
 4           I pulled more extensive property histories just to 
 5   make sure this wasn't a reporting error.  And when I was sure 
 6   it wasn't, I brought it to chief title officers and lenders 
 7   and I had research from the corporation from which I acquired 
 8   the data and none of them could come up with a satisfactory 
 9   explanation for these foreclosures.  And, in fact, all of 
10   them raise the possibility of predatory lending as an 
11   explanation.  I'm including an excerpt from the data set as 
12   an appendix to my testimony.
13           And just to conclude, I think the big picture here 
14   is the complete absence of mainstream financial services and 
15   products in low-income and minority communities.  This 
16   drastically limits consumers' choices and the information 
17   available to them, skewing the market to favor lenders and 
18   investors and resulting in enormous damage to the financial 
19   and social well-being of the communities.  
20           The distortion of this market allows practices like 
21   predatory lending to flourish, and it's the responsibility of 
22   federal oversight bodies to punish such unethical practices 
23   and to get the market back on track so that it serves 
24   consumers as it's supposed to.  
25           And I'd add that I wrote my undergraduate thesis for 
0228
 1   Princeton on the role of the Federal Housing Administration 
 2   in creating and institutionalizing the practice of redlining 
 3   these very same communities during the 1930's, 40's, and 50's 
 4   from national archives of Federal Housing Administration 
 5   data.  And the embarrassing role that our government has in 
 6   creating the inequality of these markets, it adds particular 
 7   urgency and poignancy to the federal government's 
 8   responsibility to restore these communities today.  
 9           And in light of this, I again urge the Federal 
10   Reserve to delay the merger in order to further investigate 
11   Bank of America's activity in low-income and minority, urban 
12   communities.  
13           Thank you.  
14           MS. DOLORES SMITH:  Thank you.  
15           Any questions from the --
16           MS. PAT ROBINSON:  Yeah.  Mr. Kimble, do you have 
17   extra sets of your colored maps?  Because they don't 
18   photocopy very well, so it would be helpful for us -- or if 
19   you could send them --
20           MR. JOHN KIMBLE:  I could send them to you.
21           MS. PAT ROBINSON:  Send additional sets if you don't 
22   mind.  Yeah, that would be very helpful.  
23           I do have a question for Mr. Mingey.  
24           MR. JAMES MINGEY:  Yes, ma'am.  
25           MS. PAT ROBINSON:  We don't have the name of your 
0229
 1   organization.  Could you explain again -- are you going to 
 2   submit written -- your written testimony?  
 3           MR. JAMES MINGEY:  I thought you already had these.  
 4   But yes, I am.  
 5           MS. PAT ROBINSON:  Okay.  Fine.  
 6           MR. JAMES MINGEY:  My organization is the National 
 7   Economic Opportunity Fund.  
 8           MS. PAT ROBINSON:  National Economic Opportunity 
 9   Fund.
10           MR. JAMES MINGEY:  And the address and the web site 
11   and everything are on the material.  We've been in the 
12   community development finance industry for 17 years.  
13           MS. PAT ROBINSON:  And could you just elaborate a 
14   little bit, too, just the -- the alleged incident with the 
15   Enron -- what I'm most interested in, too, is just the 
16   outfall of that.  In other words, you had indicated that -- 
17   how it's damaged community -- CDFIs' activities afterward.  
18   Could you explain that a little bit more, if you don't mind.
19           MR. JAMES MINGEY:  Well, how it's damaged it is that 
20   when you have a situation where the project doesn't work 
21   out -- this was a bank, Enron controlled fund that had a face 
22   on it that was supposed to be for the community and for 
23   minority lending, et cetera, but it really wasn't very well 
24   managed.  And, of course, the other corporation is disastrous 
25   right now.  
0230
 1           But what happens when you have a disaster like that 
 2   is then everyone else basically says, well, all CDFIs are bad 
 3   or all equity investments are bad.  And if a Bank of America 
 4   or an institution this large is the leader and it backs away, 
 5   then it's -- then you create a void.  And then you or -- 
 6   you're three, four years before you can start to get any 
 7   momentum again.  
 8           And in this particular case, what they did is 
 9   instead of working actively with the CDFI, they worked 
10   essentially with window dressing and suggested to a nonprofit 
11   in Houston that they would give them fees for improving an 
12   IDA and financial literacy program and unbelievably they 
13   stuck them, didn't pay them.  They owed them $97,000, unpaid.  
14           So they can do one thing today.  They can pay the 
15   nonprofit and let them do the financial literacy.  But 
16   that's -- these things have been asked for and we have 
17   communicated with Bank of America.  I sent a certified letter 
18   to the chairman, who has not responded.  
19           So I'm here today not so much about that.  I'm 
20   here -- there's two conditions that I talked about to help -- 
21   CFIs will improve and help our communities get better and 
22   create a framework for large banks to work with financial 
23   institutions and the communities.  
24           On their own they look very good on paper and they 
25   have a lot of great programs and they can point to all their 
0231
 1   success stories, but the bigger they are, the smaller amount 
 2   of that collective success is.  
 3           So until you put some conditions on this, I'm not in 
 4   favor of doing it.  Although I think a collaboration could 
 5   work if you do put some conditions on it.  
 6           MR. MICHAEL JOHNSON:  Just a quick question for 
 7   Mr. Kimble.  I assume we'll see this in the information that 
 8   you submit for the record, but just to clarify, the data that 
 9   you were using, is that -- it was HMDA data 2000?  
10           MR. JOHN KIMBLE:  It's actually -- there's three 
11   sets of data.  There's HMDA data and census data which I used 
12   to correlate foreclosure data.  And the foreclosure data is 
13   compiled from Alameda County records by a corporation called 
14   Data Quick Information Systems that I worked with to collect 
15   the data and to sort it.  
16           MR. MICHAEL JOHNSON:  Thank you.  
17           MR. JOHN KIMBLE:  And it is the 2000 HMDA.  
18           MS. DOLORES SMITH:  Thank you.  That concludes this 
19   panel's presentation.  
20           Do we have people for the open mic?  Great.  We're 
21   going to do a very short ten-minute break and then we'll come 
22   back to some presenters for the open mic.  
23              (Whereupon a short recess was taken)
24           MS. DOLORES SMITH:  We're about ready to start the 
25   open mic session.  First of all, I'm pleased that we have 
0232
 1   people who were patient enough to both sign up and stick 
 2   around for the open mic session.  And so with that, we will 
 3   start.  And we will start with Mr. Firger.  Or do we start at 
 4   the other end?  Fine, Mr. Romero.  You each have three 
 5   minutes.  
 6           MR. CARLOS ROMERO:  Thank you very much.  Carlos 
 7   Romero.  I'm the Executive Director of Mission Housing 
 8   Development Corporation.  However, I am speaking as someone 
 9   who is I believe fairly well versed in affordable housing 
10   issues.  I do work and am the executive director of a 
11   nonprofit housing development corporation working here in San 
12   Francisco and will specifically speak to my experience with 
13   Bank of America, really in comparison to other banks that are 
14   in the area that are working in the community development 
15   field.  
16           We've been developing here for 32 years and it is 
17   somewhat of a shame that I actually do not have a 
18   relationship with Bank of America.  So actually coming here 
19   and speaking about the problems with Bank of America, what's 
20   interesting is I don't fear losing any business from them 
21   because I have no business with them.  
22           Actually, over the last six years, since the last 
23   merger, the community development bank has all but vanished 
24   from most of the projects that we're doing, and it is really 
25   a shame because I believe in robust competition in the 
0233
 1   marketplace.  I want to see Bank of America coming up with 
 2   deals that are as competitive with U.S. Bank and Citibank and 
 3   the other groups, Wells Fargo.  
 4           We don't see that happening.  And either they don't 
 5   have the interest in pursuing this very what I believe 
 6   lucrative market for them or they don't have the commitment.  
 7   And we would like to see that commitment.  We would like to 
 8   see them target low- and very-low-income developments that 
 9   are 100 percent low- and very-low-income.  They're not doing 
10   that to the extent that they were in the past.  
11           Secondly, on the donation side, certainly most of 
12   the other banks out there have indeed been contributing 
13   significantly more to the nonprofit developers and the 
14   community development groups in San Francisco than B of A. 
15   Again, prior to the last merger, they were doing much more of 
16   that throughout California.  
17           Keep in mind that right now B of A's business I 
18   believe is about one -- one third of its business is here in 
19   San Francisco.  It is probably going to go to a quarter now 
20   that they do the merger.  
21           If we lost the attention of Nations Bank when the 
22   merger occurred back then, we're going to be a smaller share 
23   of that -- of their market share.  I am very concerned that 
24   they're completely going to fall off the face of the earth.  
25           Now, we have met with them.  They talked about very 
0234
 1   good intentions.  I don't believe that they've stepped up to 
 2   the plate with any programs that indeed are going to be at 
 3   this point, you know, fully developed and designed to meet 
 4   some of these needs.  
 5           Again, I do work in the multi-family affordable 
 6   housing area.  I do believe that nonprofit corporations, 
 7   community-based corporations play a major role in providing 
 8   affordable housing for the very-low-income and low-income 
 9   persons in California, and at this point I don't believe the 
10   Bank of America has stepped up to the plate and is certainly 
11   is kind of lacking in their attention to these areas.  
12           Thank you very much.  
13           MS. DOLORES SMITH:  Thank you.  
14           Ms. Hogue.  
15           MS. ILYSE HOGUE:  Hello.  My name is Ilyse Hogue and 
16   I'm the Global Finance Campaign Director for the Rainforest 
17   Action Network.  I am here today to express my support for 
18   all of my colleagues who have spoke on behalf of the very 
19   important community issues that face us in San Francisco and 
20   in California.  And I'm also here to speak on behalf of a 
21   different contingent of communities around the world.  
22           At Rainforest Action Network, we're deeply concerned 
23   about the state of the world's forests which are being 
24   decimated on a daily basis, global climate changes emerging 
25   as one of the determinate factors in the decimation of the 
0235
 1   forest and the threatening of ecosystems upon which we all 
 2   depend.  
 3           In light of this evidence, many financial 
 4   institutions around the world have chosen to enact 
 5   environmental and social policies that protect old growth 
 6   forests, stave off climate change, and support the rights of 
 7   indigenous local communities depending on these ecosystems 
 8   around the world.  Sadly, we have not seen such action from 
 9   Bank of America.  Bank of America while priding themselves on 
10   being environmental leaders have been all talk and no action 
11   over the last decade.  
12           The merger between Bank of America and Nations Bank 
13   in 1995 found the headquarters moving to North Carolina while 
14   the environmental affairs department was left here in San 
15   Francisco with their voices dimming and their initiatives 
16   being left to -- by the wayside.  
17           Nineteen of the world's largest banks have made the 
18   first environmental and social commitments, commitments that 
19   are an investment in the long-term future of generations to 
20   come, investments that will pay off economically and 
21   environmentally in the next 100, 200, 500 years.  Fleet Bank 
22   had started to take those baby steps.  They've established a 
23   strong environmental affairs department.  They took some 
24   initiatives to save some tracks of land that they had control 
25   over the destiny of.  
0236
 1           At the same time, Bank of America has continued to 
 2   lend to some of the worst polluters in the industry, some of 
 3   the biggest loggers that we know of that have decimated 
 4   forests here at home, in California, done away with the jobs 
 5   associated with those forests as well as forests abroad.  
 6           The increased power of Bank of America with this 
 7   merger deeply concerns me.  They're going to inherit a very 
 8   large operation from Fleet Bank in Latin America with 
 9   absolutely no protections for some of those fragile 
10   ecosystems in the Amazon basin and the communities that are 
11   dependent on those ecosystems for their life and livelihood.  
12           Until we see action, strong action in the form of 
13   commitments to extract investment from these destructive 
14   industries and put them towards sustainable alternatives and 
15   renewable energy, I think that Bank of America increasing 
16   with this merger poses a long-term threat to the world.  
17           Thank you.  
18           MS. DOLORES SMITH:  Mr. Olson.  
19           MR. BRANT OLSON:  Thank you.  I appreciate you 
20   providing a platform for us to speak today.  I know that you 
21   all have gone through a very long day, so I'll keep my 
22   comments to as brief as I'm allowed.  
23           I also am with Rainforest Action Network.  My name 
24   is Brant Olson.  I want to talk just briefly about some of 
25   the 400 or more companies who have committed to adopting 
0237
 1   policies that will protect endangered forests around the 
 2   world.  
 3           From home improvement retailers like The Home Depot 
 4   to forest products producers like Boise Cascade to major 
 5   office products retailers like Staples and Kinko's, the 
 6   corporate America is starting to wake up to reality that 
 7   endangered forests are indeed threatened and are necessary 
 8   for the survival of a healthy planet.  Unfortunately there's 
 9   an entire sector of the economy that hasn't got the message.  
10           While producers and consumers certainly are 
11   beginning to understand why sustainable forest industry is 
12   essential to the survival of their business, the investment 
13   community is only, again, to repeat the words of my 
14   colleagues, taking baby steps.  She mentioned the equator 
15   principles which were a good first step towards laying 
16   investment criteria.  It was a good first step towards 
17   bringing lending investment criteria into line with modern 
18   public values and increasingly urgent needs of the planet.  
19           And it couldn't come at a better time.  Illegal 
20   logging is writhe in countries like Indonesia, which faces 
21   the complete elimination of their tropical rainforests within 
22   the next two decades.  The government estimates that over 80 
23   percent of logging in the country is illegal.  There's an 
24   installed capacity that far exceeds -- an installed 
25   production capacity that far exceeds the legal amount of 
0238
 1   harvest that can happen in the country every year and yet 
 2   these -- the Indonesian logging industry continues to receive 
 3   huge infusions of capital from U.S. banks.  It's time for the 
 4   U.S. banking industry to wake up to the fact that it's their 
 5   investments that are going to come back and get them in the 
 6   end.  
 7           Insurance companies like Swissray and other European 
 8   actors have started to understand just why the major 
 9   catastrophes that are now happening around the world as a 
10   result of global warming do have implications for the 
11   financial world.  
12           And I hope that as this merger proceeds, as I'm sure 
13   it will, that Bank of America heeds the good first steps that 
14   FleetBoston Bank has made in the Valdivian rainforest and 
15   elsewhere that was alluded to by my colleague.  
16           So again, just to conclude, now is the time to take 
17   quick and decisive action as these two banks come together, 
18   and to the extent that that message can be delivered here 
19   today, that's how we'll leave it, that the forests need to be 
20   protected, we need to maintain a healthy climate, and we need 
21   to ensure that the rights of indigenous and other impacted 
22   communities around the world are protected.  And it's the 
23   responsibility of Fleet Bank Boston and Bank of America to 
24   make sure that that happens.  
25           Thank you.  
0239
 1           MS. DOLORES SMITH:  Thank you very much.  
 2           MR. DANIEL FIRGER:  Thank you everyone.  My name is 
 3   Dan Firger.  I also work with Rainforest Action Network and 
 4   my colleagues, Mr. Olson and Ms. Hogue.  
 5           In the interest of time, I don't want to reiterate 
 6   too much of what both of these folks have just said.  I do 
 7   want to talk a bit about accountability and what I see as 
 8   Bank of America's opportunity today with its merger with 
 9   FleetBoston Financial to really again talk the talk and walk 
10   the walk in terms of accountability.  
11           I want to honor all the people who have spoken today 
12   from community investment perspectives and from a whole range 
13   of constituencies that are concerned about Bank of America's 
14   lack of accountability to low-income communities, to 
15   communities of color here in California and across the 
16   country.  I'd also like to extend that concern to communities 
17   internationally as well, as well as to the community of youth 
18   here in this country.  
19           I do a lot of work with students and young people 
20   here in this country and our organization also works very 
21   closely with organizations of indigenous communities around 
22   the world, lower income communities that are struggling as a 
23   result of development projects funded by banks such as Bank 
24   of America and Fleet.  
25           It's all well and good to talk about investment in 
0240
 1   community and the $750 billion commitment to community 
 2   investment here in this country, but until Bank of America 
 3   takes seriously the need of future generations to have a 
 4   planet that's inhabitable for people here in the United 
 5   States and elsewhere, I think, as my colleague Mr. Olson 
 6   said, this lack of commitment will come back and haunt the 
 7   company in the future as well as injure and harm all of us.  
 8           So I would really like to urge the bank today to 
 9   think long and hard about what steps it can take immediately 
10   to make a commitment to the future, to lower income people 
11   here in this country, to people who don't have the kinds of 
12   opportunities we do in this country to enjoy and reap the 
13   benefits of a healthy environment, people in Ecuador and 
14   Indonesia and Brazil and elsewhere where Bank of America is 
15   indiscriminately funding environmentally destructive 
16   projects.  
17           As my colleague alluded to, a number of other banks 
18   around the world and both here -- and also here in this 
19   country are taking steps to solve these problems and make 
20   commitments to protect the last remaining old growth forest 
21   and to protect our climate and to protect the rights of 
22   indigenous communities around the world.  Bank of America has 
23   yet to do that.  And until they do, our organization and 
24   organizations around the world are going to be forced to 
25   continue to dialogue and pressure the bank to do what's right 
0241
 1   for communities here and abroad.  
 2           So that's where I'll leave it.  Thank you for taking 
 3   the time.  
 4           MS. DOLORES SMITH:  Thank you very much.  
 5           Ms. Clayton.  
 6           MS. EMILY CLAYTON:  I'd like to thank the governors 
 7   for the opportunity to come here and comment.  My name is 
 8   Emily Clayton and I'm a consumer advocate with CalPIRG, the 
 9   California Public Interest Research Group.  We are a 
10   state-wide nonprofit, nonpartisan consumer group.
11           And I'd like to focus my comments today on two 
12   concerns that we have about banks becoming bigger in general 
13   in that the documented effects of bigger banks resulting in 
14   bigger fees for consumers and less financial privacy for 
15   them.  
16           For years national reports issued by the state 
17   PIRGs, including CalPIRG, as well as reports from the Federal 
18   Reserve Board itself have documented the trend in rising bank 
19   fees since congress enabled bank account deregulation in the 
20   1980's.  And further rulings from the Controller of Currency 
21   and other agencies have restricted the ability of states and 
22   cities to impose reasonable limits on these fees.  Our data 
23   not only proved that these fees are increasing generally but 
24   that the bigger a bank is, the more their fees are 
25   increasing.  
0242
 1           And our latest report, Bigger Banks, Bigger Fees, 
 2   2001, which has been entered into the record, found that the 
 3   fee gap between large and small banks and -- excuse me, and 
 4   credit unions was more than $75 per year, meaning that 
 5   consumers who had the option to choose a smaller bank or a 
 6   credit union could save that much money every single year.  
 7   But the bigger the banks become, the fewer those options are 
 8   for people.  
 9           Indeed, as a consumer group, we're also concerned by 
10   the fact that the larger a banking institution becomes, the 
11   less financial privacy individuals can enjoy.  The recent 
12   reauthorization of the Fair Credit Reporting Act means that a 
13   sharing between affiliates is still permitted.  If this 
14   merger proceeds, that means that the -- excuse me, the 545 
15   affiliated companies of Fleet as well as the 1,305 affiliated 
16   companies of Bank of America could exchange that information 
17   freely.  In an age of rampant consumer privacy violations as 
18   well as identity theft, we think it's of serious concern for 
19   consumers that their information could be exchanged without 
20   their knowledge or their permission between more than 1,800 
21   affiliates.  We cannot simply ignore the risks posed to 
22   consumers through the unfettered exchange of this 
23   information.  
24           CalPIRG and the state PIRG stand in opposition to 
25   this merger because of the threat of increased fees and the 
0243
 1   decreased privacy protection for American consumers.  If this 
 2   goes through, consumers will see fewer banking choices, 
 3   increased fees, and increased invasions of privacy.  
 4           I'd also like to draw your attention to the more 
 5   than 1,400 public comments from our members which have been 
 6   submitted into the record, all in opposition to this.  
 7           Thank you.  
 8           MS. DOLORES SMITH:  Mr. Logan.  
 9           MR. WILLIE LOGAN:  Thank you very much and good 
10   afternoon.  My name is Willie Logan and I'm CEO of a 
11   community development corporation as well as a board member 
12   of the Board of Federation of CDCs.  
13           I'm not in a position to speak for or against the 
14   merger.  There's empirical data that demonstrates that larger 
15   sometimes is better, more efficient, more quality service, 
16   and is also data and studies that support just the opposite.  
17   What I am here to speak to is what I think ensures that 
18   larger is better, more efficient, and provides more services 
19   to communities, and that is to ensure that the deregulatory 
20   process as well as the commitment of the entity is real and 
21   does take place.  
22           It is my hope given the testimony that we heard from 
23   the three executives from Bank of America today that they're 
24   successful in their desire to merge with Fleet Bank, but I 
25   would like to put on the record that there is some concerns 
0244
 1   that I've been asked to speak to from the perspective of the 
 2   Federation of CDCs in Florida.  
 3           Bank of America holds 15 percent of the banking 
 4   market in Florida, which makes it the largest bank in 
 5   Florida.  Yet within the communities that the CDCs -- 
 6   Federation of CDCs represent, and that is generally the 
 7   African-American communities in Florida, which composes about 
 8   two million citizens, there are only a handful of branches of 
 9   Bank of America within those communities.  There are only a 
10   couple dozen of ATM machines within those communities.  
11           Though my organization enjoys a wonderful and 
12   productive relationship with Bank of America and the 
13   development of affordable housing, services to its residents, 
14   particularly after-school programs to children and summer 
15   programs, as well as capacity building, philanthropic grants, 
16   we're not -- it is not the case for many of the other 
17   organizations across the state.  And so, therefore, we would 
18   like to see a larger commitment on behalf of Bank of America 
19   to do as they've done with us, to provide opportunity for 
20   both growth and development as well as capacity building 
21   through the community development corporations that is 
22   serving the African-American communities in the state of 
23   Florida.  
24           We think that there's lots of opportunity for this 
25   to accomplish given the increased assets and the increased 
0245
 1   efficiency that would be brought about through this merger, 
 2   and we hope that the commitment that Bank of America has put 
 3   on the record today is shared with the people and the 
 4   consumers in the state of Florida because they are the 
 5   largest bank in the state of Florida.  
 6           So it is our hope that as a condition of this merger 
 7   that we're ensured in Florida that we benefit just as New 
 8   England and North Carolina has and certainly as California 
 9   has in the past and seems to be doing in the future.  
10           Thank you very much.  
11           MS. DOLORES SMITH:  Thank you.  
12           Mr. Moss.  
13           MR. ANDREW MOSS:  Thank you.  Andrew Moss, Senior 
14   Vice President with the National Community Reinvestment 
15   Coalition.  I want to thank the Federal Reserve Board, Board 
16   of Governors for the opportunity of hosting this forum and 
17   giving community groups an opportunity to express themselves.  
18           First and foremost, I just want to briefly let you 
19   know that I'm going to reiterate some of the concerns that 
20   our membership and our president, John Taylor, actually spoke 
21   of at the Boston hearing.  
22           While the National Community of Reinvestment 
23   Coalition applauds the incredible commitment recently 
24   announced by Bank of America, we would like to present some 
25   of the concerns raised by a membership of over 500 
0246
 1   community-based organizations nation-wide.  
 2           We would hope that before the Federal Reserve Board 
 3   considers a decision on this merger that it would, one, have 
 4   Bank of America outline a substantial CRA plan for all state, 
 5   cities, and rural areas served by Bank of America.  
 6   Therefore, all servants of low- to moderate-income 
 7   communities would see the availability of resources towards 
 8   building healthy neighborhoods.  
 9           And two, have Bank of America provide safeguards in 
10   purchasing of subprime loans to further discourage predatory 
11   lending.  Although Bank of America sold its prime lender 
12   affiliates, the bank is a major purchaser of subprime loans.  
13   Secondary market activities can enable predatory lending if 
14   the financial institution does not have rigorous due 
15   diligence mechanisms for screening out abusive loans.  
16           To date, Bank of America has not responded to 
17   community groups' concerns about its secondary subprime 
18   activities.  We believe that Bank of America should agree to 
19   at least the same safeguards that Fannie Mae and Freddie Mac 
20   have instituted.  Bank of America would be showing leadership 
21   if it went beyond the safeguards of Fannie Mae and Freddie 
22   Mac and the Federal Reserve would likewise -- excuse me, 
23   would likewise be demonstrating leadership if it required 
24   reforms in Bank of America's secondary subprime activities.  
25           Thank you.  
0247
 1           MS. DOLORES SMITH:  Thank you very much.  
 2           Did we have anyone else for the open mic, anyone in 
 3   the audience?  
 4           MR. MORRIS GRIFFIN:  Again, I'm Morris Griffin.  
 5   Just to read into the record, for the record, so the record 
 6   could reflect, I neglected to state that I had 200 and some 
 7   odd letters that I had handed to FleetBoston representative 
 8   that's here.  I don't see him now.  But I wanted to read into 
 9   the record so the record could reflect for those that are 
10   going to be watching this tape when I get back to Los 
11   Angeles.  
12           So this was the letters that we had -- it wasn't a 
13   fundraiser but a Malcolm X festival.  We had a festival in 
14   Los Angeles and I had people -- our group had people signing 
15   letters.  And this is the way the letters read:
16           FleetBoston:  As a potential customer, your history 
17   shows illegal transatlantic slave trading voyages, along with 
18   collecting customs duties and fee that was a violation to New 
19   York City, Rhode Island, and federal laws.  FleetBoston 
20   profited from illegal slave trade.  In addition, over 41,369 
21   of my African ancestors were enslaved by FleetBoston.  After 
22   1865 you allowed ships to dock at New York, Rhode Island.  Do 
23   you admit a wrong was committed by FleetBoston?  Yes or no.  
24           And we had over 200 letters that had been signed.  
25   And I give them to the representative that was here.  So for 
0248
 1   the record, let the record reflect that that's what I gave 
 2   them.  And it looked something like in this order.  
 3           Thank you for allowing me to read it into the 
 4   record.  
 5           MS. DOLORES SMITH:  Thank you very much.  
 6           If there is no one else offering -- we do have -- 
 7   okay.  We do have one more person.
 8           MR. TONY HODGES:  I want to thank you for listening 
 9   to me.  
10           MS. DOLORES SMITH:  Identify yourself again.
11           MR. TONY HODGES:  My name is Tony Hodges.  And I 
12   wanted to say one other thing that I wasn't able to do in the 
13   testimony from Ms. Perez.  She said, too, that the Bank of 
14   America Foundation was used as such an enforcer to 
15   essentially be good to those who testified in favor and 
16   grants could be depended on how you testified.  And that's in 
17   her testimony that you will see.  
18           Should I say it again?  Okay.  Ms. Perez said to me, 
19   and it's in her testimony, but that the Bank of America 
20   Foundation, to her knowledge, had been used, was being used 
21   to essentially reward those who testified for them and to 
22   punish those who testify against them.  And that is reflected 
23   and you can talk further with her.  
24           The other item that I wanted the board to hear that 
25   I mentioned to the board's attorney in halftime here is that 
0249
 1   in the 1994 hearings in Hawaii, which was Bank of 
 2   America/Liberty Bank, at that time, to the best of my 
 3   recollection, to the best of my recollection at that time in 
 4   1994, there was submitted into the record the fact that Bank 
 5   of America had admitted to 4,000 -- a minimum of 4,000 
 6   felonies, federal felonies, for money laundering.  
 7           And the issue also was brought up at that time about 
 8   PCCI, as I mentioned to you, and the use of PCCI for money 
 9   laundering, for drugs and also for weapons.  And I want to 
10   reiterate I think the board has to bring this up.  You have 
11   to actually seek the facts -- I don't know the facts on 
12   this -- but to see if that was true.  Were 60 percent of the 
13   employees of PCCI Bank of America employees, former employees 
14   of Bank of America, and what was Bank of America's role in 
15   arming Saddam Hussein, if that is actually what went on I 
16   believe?  
17           Thanks.  Do you have questions?  
18           MS. DOLORES SMITH:  No questions.  
19           MR. MICHAEL JOHNSON:  Not at this time.  
20           MS. DOLORES SMITH:  Thank you very much.  Anyone 
21   else?  If not, I want to remind people that supplements to 
22   the oral testimony are due by close of business a week from 
23   today, January the 21st.  They should be sent to Mr. Gill at 
24   the Federal Reserve Bank of Richmond.  And the address is 
25   given on the blue sheet that was being distributed by Reserve 
0250
 1   Bank staff.  
 2           MS. JOY HOFFMANN:  It's Friday, the 23rd.  
 3           MS. DOLORES SMITH:  Okay.  It should be -- okay.  It 
 4   should be Friday, the 23rd, a week from today.  
 5           So with that, again, thank you very much for your 
 6   presentations and your interest in this public meeting.  And 
 7   with that we are adjourned.  
 8       (Whereupon the proceedings concluded at 3:55 p.m.)
 9                           ---oOo---
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0251
 1                         CERTIFICATION
 2   
 3            I, the undersigned, a Certified Shorthand Reporter 
 4   of the State of California, hereby certify that the foregoing 
 5   Public Meeting was held at the time and place herein stated; 
 6   that the Public Meeting was reported by me, a Certified 
 7   Shorthand Reporter and a disinterested person, and was 
 8   thereafter transcribed under my direction into typewriting; 
 9   and that the foregoing is a full, complete, and true record 
10   of said Public Meeting.  
11            I further certify that I am not of counsel or 
12   attorney for any of the parties in the foregoing matter, nor 
13   in any way interested in the outcome of the cause names in 
14   said action.
15            IN WITNESS WHEREOF, I have hereunto set my hand 
16   this ______ day of ________________, 20____.
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18   ______________________________  _____________________________
19   KRISTIE L. HUBKA, CSR NO. 5974  LAURA A. REDING, CSR NO. 9711
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