Home > Banking Information & Regulation > Public Meeting Transcripts > PMT - Agendas July 9-10, 1998
Public Meeting Transcripts
Public Meeting Regarding NationsBank and BankAmerica
Thursday, July 9, 1998
Transcript of Panel Four
113 5 MR. MOSLEY: First of all, I'd like to thank 6 the Federal Reserve for allowing me to come and submit 7 testimony on behalf of Congresswoman Maxine Waters who 8 would have loved to be here. However, other business has 9 taken her away. I'd like to read her statement into the 10 record if I might. Once again, my name is Kevin Mosley 11 and I represent Maxine Waters, chair of the Congressional 12 Black Caucus. 13 "Good morning. As a member of congress 14 representing the 35th Congressional District and as the 15 chair of the 39-member Congressional Black Caucus, I am 16 pleased to have the opportunity to submit testimony to 17 you today regarding the proposed merger between 18 NationsBank Corporation and Bank of America Corporation. 19 I believe this merger will have a significant effect on 20 the people I represent. 21 "I testify today as one of many individuals who 22 will be raising questions about this merger. Many 23 consumer groups, community activists, and business 24 persons are worried about the inevitable closure of bank 25 branches, layoffs, the proliferation of evermore costly 26 bank fees, and a basic inability to have direct contact . 114 1 with local bankers. 2 "I have been struggling with these issues for 3 quite some time. I am even considered to be an irritant 4 to many CEO's and top bank managers in this country. I 5 believe, however, that my first responsibility is to 6 represent consumers who expect their elected officials to 7 protect them from public policies that create hardships 8 in their lives and have constantly challenged the banking 9 community to pay attention to inner cities and rural 10 communities. 11 "In January of this year, I took the 12 extraordinary step of hosting Chairman Alan Greenspan, 13 former comptroller of the currency, Eugene Ludwig, and 14 director of the Office of Thrift Supervision, Ellen 15 Seidman, in my district to interact with members of 16 congress, senior bank officials, community bankers, 17 community-based organizations, and small business 18 owners. This occasion afforded the captains of the 19 industry and the regulators the opportunity to interact 20 with people of my community who are desperate to 21 strengthen ties to the banks in order to grow and help 22 our communities. 23 "I believe that those in attendance got the 24 message I constantly irritate them about. We need 25 capital, we need investment that will eliminate blight, 26 create businesses, create ownership, create a new . 115 1 generation of entrepreneurs, and create a better life for 2 those who have been denied access to comprehensive 3 banking services. 4 "In 1995, the Federal Reserve paid the national 5 average of banking officers per 10,000 residents at 3.4. 6 The average in South Central was only 0.3 offices per 7 10,000 residents or one branch for every 41,700 8 residents. In 1996, Federal Reserve data showed South 9 Central Los Angeles received only 1.6 percent of loan 10 dollars for small business lending but represented 2.5 11 percent of small businesses. White-owned businesses 12 still received three times more loan dollars per dollar 13 of equity than do African-American businesses with 14 identical borrowing characteristics. In the construction 15 industry, this disparity increases from 3.1 to 15.1. 16 "As we participate in the hearing today, the 17 federal government is implementing a new system of 18 payment for welfare and social security recipients. 19 These citizens will be receiving their grants and 20 payments via electronic transfer. Many of these citizens 21 have never had a bank account or access to any banking 22 services. In addition, we're discovering many banks do 23 not provide them with the services they need to receive 24 their electronic transfers. 25 "There are banks that also have arrangements 26 with check cashers to keep citizens, many of whom are new . 116 1 citizens to this country, out of their banks. These 2 people who lack access to banking services must resort to 3 check cashers, who charge absorbent fees for cashing 4 checks and often do not provide other needed services. 5 "Although branches have been closing down 6 everywhere as a result of other mergers, branch banking 7 has never adequately served urban and rural communities. 8 When we add to all these concerns the lack of capital to 9 deal with deteriorated and underdeveloped inner cities 10 and rural communities, you can then understand why we 11 question all mergers. 12 "We do not oppose mergers for the sake of 13 opposing mergers. We have real issues. Although there 14 have been some improvements in home lending and the 15 provision of home mortgages -- in fact, total home 16 lending in South Central actually increased 28 percent 17 from 1995 to 1996 -- it has not been enough to allow many 18 families in low-income communities to achieve the dream 19 of home ownership. 20 "Are we to expect this colossal merger is going 21 to correct any of the concerns I've delineated here 22 today? The conventional wisdom in my community is as 23 banks become bigger, a greater distance is created 24 between the institutions and the communities they're 25 supposed to serve. In other words, they'll truly be too 26 big to be bothered. . 117 1 "My question today is what will this merger do 2 to ensure the communities will not be worse off? What 3 can we do to insure CRA will be honored, that capital 4 will be made available, and access to banking services 5 will be made more likely. 6 "Perhaps these questions can be answered. 7 Perhaps mergers can be used to bridge the gap between 8 banks and communities. But what plans are banks placing 9 before our communities that will inure to our benefit? 10 We're very much aware of so-called commitments that have 11 been made in the past. We're aware of the 45 billion 12 dollar commitment from Wells Fargo, their 140 billion 13 dollar commitment originally committed by Bank of 14 America, and the $75 billion committed my Washington 15 Mutual. 16 "I now understand this new merger between 17 NationsBank and Bank of America has created a 350 billion 18 dollar commitment. We have not seen the results of 19 earlier commitments, which makes us suspicious of the 20 present commitments. We don't see tracking systems in 21 place that will tell us where, when, how, and to whom 22 this money goes. 23 "Perhaps there is a plan that's worthy of my 24 support and the support of others who will testify 25 today. If there is, then it's time for the banks to roll 26 it out. It is time for the banks to create and implement . 118 1 a concrete, straightforward, verifiable plan with 2 specific commitments that will deal with all aspects of 3 the problems that I've repeatedly identified. 4 "I'm not here today asking for a gift from the 5 banks. We expect banks to get a reasonable return on 6 their loans and investments. We believe that banks that 7 lend money in our communities can make a profit on those 8 loans and do it safely and soundly. 9 "I testify as a public policy maker and support 10 federal deposit insurance for banks to have a continued 11 safety net. I testify as a member of congress who has 12 witnessed the federal government bail out both savings 13 and loans and banks with taxpayer money, and I'm here to 14 insure that taxpayers receive the support and respect of 15 the banks that we insure and protect. 16 "How can we work together to increase home loans 17 and introduce new products and investments that help the 18 average wage earner own a home? I conclude my testimony 19 by making an appeal to the banks in this merger to 20 respond to all the issues that I and others have and will 21 discuss today and to work with elected officials, 22 community organizations, community lenders, and consumers 23 in ways that will help to develop well-rounded 24 communities with decent housing, commercial enterprises, 25 and entrepreneurial opportunities. Thank you. 26 MS. SMITH: Thank you very much. . 119 1 MR. GNAIZDA: Thank you very much for this 2 opportunity. Before I begin and we take our time, I just 3 want to let you know we have approximately ten speakers 4 who will be taking about approximately three minutes each 5 and then we have approximately 12 others who will try to 6 keep their remarks to approximately a minute. And we'll 7 try to be within the 50 minutes. 8 And before I use my time, I just want to express 9 a sentiment that many panelists have expressed, and that 10 is where are the CEO's to hear us? Where are they? 11 I'm only going to respond to the largest 12 absentee landlord statements, and I'll restrict myself to 13 that. And these are concerns expressed by three 14 congresspersons today, Waters, Alford, and Lee. And I 15 preface it with this: There's no data. There are no 16 goals. The achievements are modest and particularly 17 modest in comparison to their competitors, Wells Fargo, 18 Union Bank, and WaMu. 19 And one thing has been lost here by Mr. McColl 20 and Mr. Coulter. They intend to be the largest bank in 21 the world. They can't just be average. They must be the 22 best, the best. And they're not. 23 First, McColl says they're great on charity. 24 Why doesn't he tell you they have the lowest percentage 25 of pre-tax earnings directed to charity of any of the 26 major banks, just under one percent? Wells has two . 120 1 percent. Why don't they tell you that only ten to 20 2 percent is directed at the community? Wells Fargo last 3 year directed 85 percent or more than eight times more as 4 a percentage. And why don't they tell you that their 5 executive compensation every year for the top officers 6 exceeds their total charitable contributions? And why 7 don't they tell you about their Golden Parachutes? They 8 will exceed by five-fold the total amount of charitable 9 contributions that the B of A will make. Compare that 10 with their competition. 11 On diversity, they're high on diversity, but 12 they won't release their data and they won't set any 13 goals. Washington Mutual has set goals and is releasing 14 its data. Their goals are to reflect this panel and this 15 audience, not an all white male panel. Minority 16 contracts, they won't release their data. They can't 17 it's so low. 18 The real statistic for NationsBank if you look 19 at all contracts just for minorities, not minorities and 20 white women, is just about four percent, meaning a little 21 over one and a half percent for each of the minorities. 22 B of A it's two percent for African-Americans. Compare 23 this with Washington Mutual's goal of 40 percent for 24 minorities. 25 Minority business loans, this is what they fear 26 the most. And they have every reason to. The moment . 121 1 Alan Greenspan says, "I want the Federal Reserve to 2 scrutinize the business loans," this merger cannot be 3 approved. 4 Considerably less than one percent of the dollar 5 volume of all business loans made by NationsBank in any 6 year in its history or B of A in its history went to 7 African-American-owned businesses. Similarly for Latino 8 and Asian-American businesses. Why don't they produce 9 that data? 10 And they talked about two billion in lending in 11 low-income areas. Why doesn't the Federal Reserve look 12 at that data and see that 90 percent want to white-owned 13 businesses, including a huge amount around the World 14 Trade Center. 15 Lastly, they say they got the best goal in 16 America. That's untrue. Adjusted for size, Washington 17 Mutual has easily beaten them. They've committed six 18 percent of their assets. Washington Mutual has committed 19 eight and they're specific. The OTS will be able to 20 effectively scrutinize them. 21 Lastly, one comment by CEO Coulter, whom we have 22 great respect for and we're very sad that he will be 23 departing. Because that is the feeling, he will be 24 departing. That's why Greenlining and other groups from 25 all other the country serenaded him yesterday with a 26 Mariachis band. We're sorry he's going. . 122 1 But, Mr. Coulter, we have to tell you this: 2 That B of A has lent far more in South Korea than it lent 3 in South Central in the last 50 years. And it's lost far 4 more in South Korea, 3.1 billion, than it ever lost in 5 the black community, the inner city, the Hispanic 6 community, and the Asian community. 7 Gail Smith from our coalition presented a letter 8 earlier to Mr. McColl and Coulter as they fleed the 9 scene. It asked for a community meeting today so that 10 they can hear these concerns. We invite all of you if 11 the B of A will respond. Thank you. 12 We now have our guest from the furthest away, 13 from Texas, if she'd begin. 14 MS. CAMPBELL: Thank you. Thank you for the 15 opportunity to appear today. I am Angelique Campbell, 16 and I'm from the Texas Office of Consumers Union and I 17 represent the Texas Community Reinvestment Coalition. 18 And I come today on behalf of TCRC to discuss our 19 concerns about the merger's impact on low-income 20 consumers and persons of color in Texas. 21 We believe our position in this merger is unique 22 since NationsBank and Bank of America are two of our 23 state's largest financial institutions, NationsBank being 24 the largest in Texas. If the merger is approved, the new 25 bank will control an even larger share of the Texas 26 market. . 123 1 As the only statewide community reinvestment 2 group in Texas, TCRC's interest is ensuring that the 3 credit needs of our local communities in Texas are not 4 ignored. But unfortunately, our most recent HMDA study, 5 which is "Access to the Dream, Home Mortgage Lending in 6 Texas," which you all have a copy of, shows that there 7 are problems with NationsBanks and Bank of America's 8 lending performance in low-income communities and 9 communities of color in Texas. 10 If the merge bank is to lead the financial 11 industry in community lending as it asserts that it will, 12 then the board should delay this merger for two reasons, 13 to address unresolved questions about the bank's current 14 performance and to require conditions prior to approval 15 to assure that all communities credit needs are met. 16 Without a detailed plan, the 350 billion pledge 17 is hollow. And based on the two banks' performance in 18 under-served communities in Texas, TCRC questions the new 19 bank's ability to meet this pledge. 20 The bank needs to make firm, binding geographic 21 income and ethnic specific commitments, and the 22 regulators need to monitor and enforce those commitments 23 in the following areas: We ask that no branch closings 24 occur in low-income communities and communities of 25 color. In Texas, when we suffered from 40 percent of the 26 NationsBank failures in the 1980's, it was our low-income . 124 1 neighborhoods that were affected most by the bank 2 closures. As banks moved out of those neighborhoods, 3 higher cost non-bank institutions moved in. 4 It concerns our coalition that of the total 5 number of NationsBank branch openings and closings that 6 occurred in 1996, upper and middle income areas received 7 40 new branches while low and moderate income communities 8 only received ten. 9 We are also asking for improved lending 10 performance to persons of color. In Texas, according to 11 our study, African-American and Latino borrowers are two 12 to three times as likely to be denied for a home loan by 13 NationsBank than a white borrower. Data also shows 14 NationsBank disproportionately loaned 86 percent of their 15 dollars for home loans to white borrowers. 16 In some Texas cities, the disparity is worse. 17 In the Beaumont-Port Arthur MSA, two majority 18 Africa-American cities, NationsBank made only four loans 19 to black families, and only one of them in a black tract 20 census area, yet NationsBank holds nine percent of the 21 deposits in that particular MSA. 22 In San Antonio, NationsBank holds 14.5 percent 23 of all deposits in the city while Bank of America 24 controls another 5.5 percent, yet NationsBank made only 25 1.7 percent of San Antonio's home loans. 26 And in the Fort Worth-Arlington MSA, another . 125 1 majority African-American city, NationsBank made only two 2 loans in a black census tract area, yet its depository 3 share in that city is 15.1 percent. 4 We are also asking for the development of 5 desirable affordable housing products. The most recent 6 HMDA data shows Bank of America disproportionately 7 targets Texas low-income consumers and persons of color 8 with manufactured housing loans. The interest rates on 9 these home loans have ranged as high as 13.25 percent, 10 substantially higher than the average seven percent rate 11 for a 30-year conventional loan. 12 Since Bank of America's recent decision to sell 13 its manufactured housing unit, Bank of America has not 14 offered an alternative affordable housing plan which 15 meets their community reinvestment obligation, 16 particularly in Texas. 17 We watch these changes in the banking industry 18 with deep anxiety for the effects the mergers will have 19 on our communities. Loss of competition, higher fees, an 20 erosion of CRA come to mind. The single most important 21 step that must be taken in the wake of these bank mergers 22 is to increase accountability of our lenders to our 23 communities' un-met banking and credit needs. And it is 24 not only the right thing to do. It is the law. 25 We trust that the board will do what is 26 necessary to ensure that our -- that the banks remain in . 126 1 compliance with our fair housing and fair lending laws 2 and accountable to our credit needs. Thank you. 3 MR. OBLEDO: My name is Mario Obledo. I'm the 4 president of the California Coalition of Hispanic 5 Organizations. And I'm also representing the League of 6 United Latin American Citizens, otherwise known as 7 LULAC. 8 We feel that the merger has been approved. 9 Without any disrespect whatever, if it had not been 10 approved, Alan Greenspan would have been here chairing 11 the meeting at the headquarter cities of Bank of 12 America. Instead, they have sent a lower level 13 bureaucrat to conduct this very, very important meeting. 14 NationsBank is fully aware of the request of the 15 Greenlining Coalition. Whether they will respond or not 16 is up to them. Our quarrel is not with the Federal 17 Reserve Bank. Our quarrel is with NationsBank and Bank 18 of America. If they do not meet their commitment to the 19 people of color of the state of California -- and, by the 20 way, the Greenlining Coalition represents the majority of 21 the people of the state of California -- we are going to 22 demurrage the merger. We will act as our own Federal 23 Reserve board. We will close down the branches and we'll 24 ensure their failure in California. 25 We're not going to stand for any disrespect by 26 corporate America. The people of color are people of . 127 1 pride and honor and courage, and we will teach them a 2 lesson. This is going to be a street fight and we're 3 prepared to engage in it. Thank you. 4 MR. NGUYEN: Good morning. My name is Philip 5 Nguyen. I'm the executive director of the Southeast 6 Asian Community Center. 7 Now, we all agree that the American has 8 experienced an unprecedented booming economy. The good 9 thing is that the rich become richer and the poor -- the 10 bad thing is the poor become poorer. The gap between the 11 rich and the poor is greater than ever. 12 Now, as the greatest nation at work, as the 13 people, and we so suggested we cannot afford it. Now, 14 that isn't why the congress enact the 1977 CIA. 15 Now, many people here believe that the deal has 16 been cut. The merger will be approved regardless of what 17 we're going to say. I tried not to believe so. I tried 18 to believe that the merger will be approved with certain 19 condition. 20 Now, one of the conditions is that the CIA. 21 The merger, the NationsBank, and the Bank of America 22 promise to have $350 billion for the CIA, but it don't 23 say anything. As my colleagues point out, these are 24 hollow commitment. When they don't have any specific on 25 how much they help the poor, how much they help the 26 minority, and how much they have the women and the . 128 1 low-income, the low area. We would love very much that 2 the NationsBank and the Bank of America spell out 3 specifically what they want to help, the poor, the 4 minority, the women, and how to improve the low-income 5 minority. 6 The second condition -- and I'd like to point 7 out is if there's a merger, it should be tried to have 8 the minimum branch go out, the minimum -- I mean, 9 employee be laid off. The better is nobody would be laid 10 off, no branch be closed down. 11 Now, these are the two minimum requirement and 12 we would like the NationsBank and Bank of America to 13 commit to this one. They should follow the example of 14 the Western Mutual. They may be even better, therefore, 15 because they're bigger bank. 16 Now, if these minimum requirement has not been 17 met, they choose to ignore it, please convey our message 18 to Mr. Greenspan stop the merger. Thank you. 19 MR. GLOVER: Good morning. My name is David 20 Glover. I'm the executive director of the Oakland 21 Citizens Committee for Urban Renewal and board member of 22 the Greenlining Institute. 23 Unlike many who may feel that this is an 24 absolute fait accompli, I would hope that the review 25 panel and others are receiving the appropriate education 26 and the appropriate facts this morning that may be . 129 1 opening some eyes. 2 I stood alongside members of the Gionini family 3 just a couple months ago at a founders day at an East 4 Oakland outlet at Eastmont Mall celebrating the remaining 5 branch of 30 years in that community, and I only wonder 6 in light of this proposed merger what will happen to that 7 branch and certainly what that symbolizes in terms of the 8 original principals of the Bank of Italy and lending in 9 the alternative way and serving the under-served as the 10 institution believed. 11 We are clear on the fact that even though the 12 film "It's a Wonderful Life" may have been financed by 13 the bank, it is not a wonderful life in Oakland. It is 14 not a wonderful life in San Francisco, LA, Richmond, and 15 a number of other communities in the California area. 16 Urban centers are suffering from the lack of lending, 17 credit, branches, access, et cetera. We have to deal 18 with the critical issues that face California in light of 19 the loss of this partner, this community lender. Feels a 20 little bit like the Cleveland Browns. You know, even 21 they received compensation when Art Modell pulled out of 22 town. 23 We are looking at the testimony from Florida, 24 from Texas, from North Carolina, and we see that we are 25 not inviting a good neighbor into this marriage. And we 26 can't really call it a marriage. It's really an . 130 1 acquisition. There are things about this 350 billion 2 dollar pledge that, as Stella said earlier, are scatter 3 gun and we like to call it hollow. In many ways it's 4 regressive. 5 The Greenlining Institute has set alongside many 6 CEO's and negotiated agreements that really 7 quantitatively speak to the goals for California and the 8 goals for the low-income community, the goals for 9 minority lenders, the goals for those who have to survive 10 at management level and at line staff level. And we 11 don't see any of that disclosure here. We see none of 12 that good faith. 13 It is important to talk about California 14 compensation, it is important to talk about the 15 principals by which we have to survive in this community 16 and other inner cities around the country. 17 I'm not encouraged by what I hear from Nations 18 as a partner. I think it's important to look at welfare 19 reform and the impact it's having on this community. 20 It's important to look at 209 and the impact it's having 21 on this community and bring it back to lending and talk 22 about a partnership that has to be either approved or 23 disapproved based on its quantitative delivery for a 24 community that has no place to turn. 25 And I appeal to not only the process being 26 broadened on a public hearing level but to you to not . 131 1 just consider this to be, as Kevin said, a golf course 2 deal that's already sealed. Let's look at this list. 3 Let's open it up and let's examine it for all that it has 4 to be in order for citizens to be adequately served in 5 this community. Thank you very much. 6 MR. HEAD: My name is James Head, and I'm the 7 president of the National Economic Development and Law 8 Center, which is based in Oakland, California. 9 The center is a national nonprofit public 10 interest community and economic development technical 11 assistance provider. I'm also on the board of the 12 California Reinvestment Committee here in California and 13 a board member of the California Economic Development 14 Lending Initiative, as well as a former member and 15 chairman of California Advisory Council of the Federal 16 Reserve. And it's good to see you, Dolores, again after 17 so many years. 18 MS. SMITH: Good to see you. 19 MR. HEAD: This week I received a telephone 20 call from a reporter with the American Banker Newspaper 21 in Washington D.C., and he wanted to know why I was going 22 to testify at this hearing. And I found this question a 23 little odd, so I asked him sort of what was the basis of 24 the question. And he explained to me that in light of 25 the fact that opportunities to present written comments 26 were available and that many people had done so, what . 132 1 would be accomplished by appearing in person and 2 testifying? 3 I responded to him that it is important for 4 those making decisions in matters like this to attach 5 faces and descriptive facts and antidotes to the issues 6 to be decided. This gives context and hopefully some 7 grounding to the issues. It's also important for those 8 who are making these unique decisions to understand that 9 there are a lot of issues related to unique states like 10 California and others who will be impacted by the 11 merger. 12 So my feeling is that a part of this process is 13 to help those who are deciding this matter shape the 14 information that they have, to look at it from the 15 standpoint of how this may impact the communities either 16 positively or negatively by the decisions that are made. 17 My remarks are not going to focus on whether -- 18 whether this merger should or shouldn't be approved. My 19 remarks will focus on a couple of key issues that I think 20 are critical to a decision about the merger. 21 One of them is loans to minorities. And you've 22 heard a lot about the facts and issues related to loans 23 to minorities. I think there continues to be a continued 24 perception, if not reality, to the fact that, in general, 25 minorities are not getting loans in the same volume or at 26 the same levels as their white counterparts. While these . 133 1 perceptions are very difficult to either verify or 2 dismiss, there is information either antidotal or factual 3 that continue to support it. 4 I would point you back to a Wall Street Journal 5 poll that was done a number of years ago of several 6 hundred black business owners who found that 92 percent 7 of them said that they had been turned down by banks 8 while trying to finance their firms. They stated that 9 lack of collateral, a paucity of black lenders and loan 10 officers, and a public perception that blacks lacked 11 business acumen was among the major reasons they felt 12 that they were not able to get this collateral. 13 For all of those complaints, however, banks 14 are -- over 73 percent of these same firms indicated they 15 ultimately obtained their collateral. When asked what 16 would be their preferred source or sources of capital, 63 17 percent responded that banks were their preferred 18 source. 19 Does this mean that NationsBank and Bank of 20 America are not lending equitably? While I can't speak 21 to NationsBank's record of lending to minorities, my 22 experience with Bank of America is that they have made 23 great efforts and with a lot of success in expanding 24 their lending to minorities. But if you hear from others 25 that this is an issue of concern and you accept the fact 26 that the generally perceptions continue to exist, you . 134 1 should closely examine the records of these two 2 institutions regarding minority lending and should 3 determine whether the merger increases their capacity to 4 be responsive. 5 The next issue is equity capital for startup and 6 expansion businesses. In an presentation at a community 7 investment and access to credit meeting in Los Angeles in 8 January of this year, Chairman Alan Greenspan suggested 9 that additional debt through loans might not be the most 10 effective solution to meeting the needs of communities 11 like South Central. He suggested that equity investments 12 might prove to be more effective and key to immediate and 13 long-term economic revival. 14 For a number of years now, California advocates 15 have been discussing and educating Bank of America staff 16 on the need for loan products that provide equity or 17 patient capital for new and expanding businesses. This 18 need can serve the merging nonprofit sector that are 19 developing successful for-profit businesses to bring jobs 20 and goods to low-income communities, the emerging 21 entrepreneurs like, welfare recipients, youth, and 22 skilled, unemployed, and underemployed workers that are 23 identifying small business niches that can help them 24 become economically self-sufficient, and emerging and 25 expanding small businesses that are trying to continue 26 the creation of employment and economic stability in . 135 1 low-income communities. 2 Our discussion with Bank of America has been 3 around strategies and mechanisms for developing loan 4 products that will address the credit needs of these 5 constituencies and also will allow the bank to make 6 money. 7 We hope that you will question NationsBank and 8 Bank of America on their willingness and commitment to 9 continue to work towards addressing these critical 10 needs. At the very least, we believe that the merged 11 bank should commit to being the leader in the development 12 of loan products that provide the kind of patient capital 13 that's needed. This is cutting edge work, and it should 14 not be abandoned or delayed because of the application 15 for merger. 16 The last issue is one that is dear to me because 17 we put a lot of time in it. During the first quarter of 18 '98, Community Economic Development leaders and Bank of 19 America staff collaborated to development an innovative 20 community economic development philanthropic initiative 21 called readiness for the 21st century to promote economic 22 readiness for individuals, communities, and 23 community-based organizations. 24 We put a great deal of time into the development 25 of this initiative, which was tied to the bank's 140 26 billion dollar community lending commitment. We would . 136 1 hate to see this initiative either delayed or either 2 forgotten in the process of this merger. We feel that 3 this is an appropriate approach to putting some meat to 4 the NationsBank 350 billion dollar commitment and hope 5 that you will consider it. 6 I've been told that my time is up, and I will 7 conclude with this by turning back to where I started. 8 Initially I'm convinced that it is important to 9 communicate these issues in person. The various opinions 10 I've heard this morning only reconfirms to me that 11 opinion. In business as in life, you gain more by direct 12 dialogue and debate than by indirect prose and 13 avoidance. Also, words alone can sometimes lack impact 14 and emotion. Imagine if we only had Dr. King's "I Have a 15 Dream Speech" in a written version rather than the 16 powerful presentation he delivered in Washington or 17 President Kennedy's promise of a man on the moon had been 18 only in an editorial in the Washington Post rather than 19 the inspired delivery we have all seen. 20 Lastly, even in the face of advancing technology 21 like the Internet, some of us are still more comfortable 22 making our point in a face-to-face discussion than 23 those -- with those responsible for making the final 24 decisions. That is why I'm here to speak today and why I 25 hope you will create opportunities for us to have 26 continued face-to-face discussions with NationsBank and . 137 1 Bank of America. Thank you. 2 MR. WILLIAMS: Good morning. My name is 3 Clarence Williams, and I am here on behalf of the 4 Sacramento Black Chamber of Commerce and California 5 Capital Small Business Development Corporation and as 6 much as I serve in the capacity of president of both 7 organizations. In addition, I am a founding and current 8 member of the Bank of America Community Development Bank, 9 Community Development Bank Advisory Board. 10 The Sacramento Black Chamber of Commerce is a 11 501C6 membership organization established more than 12 12 years ago for the purpose of mitigating and eliminating 13 arbitrary and discriminatory barriers which preclude 14 African-American-owned businesses from fully 15 participating in the marketplace. 16 California Capital is a Northern California 17 based 501C3 corporation under contracts with the State of 18 California and the Sacramento Municipal Utility District 19 to provide loan guarantees on bank loans. In addition, 20 we are contracted with the Solano County Organizing 21 Committee and with the Federal U.S. Department of 22 Agriculture and Rural Development Administration to 23 administer loans, several in rural areas of Northern 24 California. 25 The purpose of my testimony is to support the 26 cause of the Federal Reserve Bank and its continuing . 138 1 obligations to the community development and 2 revitalization and to emphasize that as a condition of 3 the merger of these institutions, a specific negotiated 4 overall written commitment of dollars, products, and 5 services must be required for California and its 6 respective regions, with my concern focusing on the 7 Sacramento Valley. 8 To date, these institutions have been unwilling 9 to make a specific written commitment to California. 10 Without such a commitment, under-served inner city and 11 rural communities must rely on a "trust us" commitment. 12 Consequently, we are being asked to acquiesce to 13 this merger on the basis of blind faith. These 14 institutions are profit motivated, and their primary 15 concern is return on investment for shareholders. 16 Creating jobs, and community reinvestment is not 17 necessarily perceived as being in their primary economic 18 interest. 19 However, our communities cannot remain silent 20 and inert as the number of financial institutions 21 continue to contract from as many as 25,000 to a 22 projected eight, six, or 4,000. This contraction and a 23 debate thereof should not be restricted to an analysis 24 that only pursues the goals of increased efficiency and 25 global competitiveness if these goals are at the expense 26 of inner city and rural communities. . 139 1 We cannot accept costs such as increase in 2 unemployment and investment being shifted from the 3 balance sheets of banks to the banks of our communities. 4 If financial institutions and their shareholders are the 5 beneficiaries of consolidation, then our communities 6 should also realize substantive benefits and not only be 7 required to absorb the costs of this proposed 8 consolidation. 9 Furthermore, it is obvious that these financial 10 institutions view negotiated written commitments as 11 mitigation to transfer negative cost impacts resulting 12 from consolidation. If accepted as mitigation by the 13 community, we must assure that these scarce dollars and 14 resources are firmly committed in writing and reinvested 15 for the purpose of community growth and sustainability. 16 I am certain that my testimony at these hearings 17 will identify numerous -- I am certain that the testimony 18 at these hearings will identify numerous and specific 19 instances where the principals of this merger have been 20 unwilling to specify in writing the commitments necessary 21 for the approval of this application. However, I shall 22 note for the record their failure to increase Bank of 23 America's 1997 70 billion dollar allocation to 24 California, to support nonprofit technical assistance 25 providers who assist small businesses, to make equity 26 investments and CDC's and SBIC's, to provide venture . 140 1 capital to minority and women-owned businesses located in 2 distressed areas, to purchase at least 25 percent of its 3 goods and services from minority and disabled-owned 4 businesses, and to make a written commitment maintaining 5 Bank of America Community Development Bank, along with 6 its institutional expertise with regard to community 7 reinvestment. 8 In closing, I am aware of the Federal Reserve's 9 specified authority to enforce and negotiate a 10 commitment. Nothing precludes this panel from verifying 11 whether agreements made by the participants of this 12 merger represent either billions of dollars, smoke and 13 mirrors, or a substantive written covenant of commitments 14 involving long-term partnerships and relationships to 15 revitalize and to sustain inner city and rural 16 communities. Thank you. 17 MR. CORRALEJO: My name is Jorge Corralejo. 18 I'm on the board of directors of the Latin Business 19 Association. The Latin Business Association is one of 20 the largest chambers of commerce in the United States. 21 We represent part of the largest or the faster growing 22 entrepreneurial segments in America. 23 We know that any financial institution should be 24 interested in conducting business with us. I think we 25 all know that all of us that represent all of the 26 organizations that are here today. But what we see . 141 1 developing here is a battle brewing. And being a 2 business person, it's not in my interest to see this kind 3 of development occur. I think that it's important that 4 we take a look at who is here, the depth, the depth and 5 the breadth of the people that are here expressing these 6 strong, strong concerns regarding this acquisition. 7 I have just a copy of an article from American 8 Banker, NationsBank making overtures towards Hispanics. 9 In this article, it states that, "Hispanic groups have 10 not formally protested the merger but they do have 11 concerns." Well, this is wrong. We are formally 12 protesting the merger. Not just the LBA, but we're 13 working in concert with several other organizations, 14 statewide and nationally, including -- I'll give some of 15 the names -- American G.I. Forum, California Coalition of 16 Hispanic Organizations, California Hispanic Chambers of 17 Commerce, Chicano Federation of San Diego, Mexicana 18 National, ourselves, Latino Issues Forum, 19 Mexican-American Growers Association, and Los Angeles 20 Community Union. That's just a small sampling of some of 21 the people who are organized in protest of this merger, 22 this acquisition. 23 So I want you to take to heart the level of the 24 concern that is expressed here. We understand that we 25 represent the majority of people and will become the 26 majority of businesses in the State of California. How . 142 1 can you approve the acceptance of a monopoly situation 2 without any kind of working agreement? We in California 3 have a history over the last several years of working 4 with a majority if not almost all of the financial 5 institutions and have developed successful and profitable 6 businesses at our end, as well as their end. 7 And I think that's a critical impact here, is 8 that we're looking to develop wealth in all of our 9 communities over a period of time. And I think without 10 the kind of working relationship that we're seeking, 11 we're certainly requesting that you take some time. And 12 I hate this discussions -- the discussions about this 13 being a done deal. I hope that's really not the 14 situation. That you postpone a decision to enable other 15 organizations to continue to express their concerns with 16 what is at hand here. 17 And, also, to take a look at perhaps proposing 18 the idea that they do, in fact, continue to work with us 19 to work on some goals. We're not talking about enormous 20 goals that don't make sense. We're talking about goals 21 over time. Especially in our situation where we're 22 dealing again with a majority of Californians. So we ask 23 at least that much, if not much more. But please take it 24 from us. 25 And like I said earlier, we are in concert with 26 several other organizations in protesting this merger. . 143 1 So contrary to other evidence, let it be on record that 2 this is, in fact, the case. Thank you very much. 3 MS. SMITH: Thank you. 4 MR. RICHARDSON: My name is Carlos Richardson. 5 I'm with Neighborhoods First Alliance. I'm from San 6 Antonio, Texas. I'd like to give special thanks to 7 Angelique Campbell and Consumers Reports. 8 What I have to offer this morning are simple 9 facts. Based on the most recent HMDA data, it is 10 reflected NationsBank has redlined eastern San Antonio 11 community. There were three loans made in our 12 neighborhood. One loan was made to one Hispanic for 13 $14,000, another to one African-American $21,000, and one 14 undisclosed ethnic group for $26,000. 15 NationsBank began negotiations with 16 Neighborhoods First Alliance with this statement: "We do 17 not sign agreements with neighborhood groups." This is a 18 clear demonstration of the lack of will in making a 19 commitment. NationsBank also refused to agree to any 20 measurable goal or timetable to rectify problems, thus 21 refusing to be held accountable for its performance due 22 to such institutional policies as redlining the eastern 23 sectors economically deprived. 24 The neighborhood is populated by the elderly and 25 working poor and has not been a participant under the 26 economic growth of San Antonio. The area is besieged by . 144 1 warehouses, encroachment, tank farms, and hazardous 2 waste, and lack of mortgage and lending and is denying 3 the residents of the neighborhood, the type of investment 4 that -- this is the type of investment that destroys 5 living environment and ultimately the neighborhood 6 itself. 7 After the Neighborhoods First Alliance requested 8 NationsBank incriminating HMDA data, an executive of the 9 bank discovered one of the members was employed by The 10 United Way. The executive called United Way and the 11 leader involved was ultimately put on job probation. 12 This attempt to cripple our neighborhood leadership 13 demonstrates this corporation's arrogance and willingness 14 to use its power to step on the poor communities. 15 I'm also a member of the Housing Trust. And 16 although I can't speak for them now, it is part of the 17 research I've done in that capacity that has shown that 18 this organization has been lying, nursing at the tip of 19 government while our elderly have burned to death in 20 their homes. 21 We're opposing this merger and we hope that we 22 can seek help from our federal government to see that it 23 doesn't happen. That's all I have to say. And thank 24 you. 25 MR. DILLARD: Good morning. First let me thank 26 you for the opportunity to address this vital and . 145 1 important issue concerning the merger of Bank of America 2 and NationsBank. 3 My name is Eddie Dillard, and I'm president of 4 the Oakland Black Board of Trade and Commerce, an 5 organization of small and midsize Oakland-based black 6 business owners. 7 The Oakland Black Board of Trade and Commerce is 8 an advocate for small business growth and development. 9 We create employment opportunities in our communities and 10 contribute to a tax base of the city of Oakland. 11 I'm also a member of the Economic Development 12 Advisory Commission for the City of Richmond and an 13 Oakland-based small business owner. 14 With me today are four members of the Oakland 15 Black Board of Trade and Commerce, Mr. Bill Matthews, 16 owners of Uniform America, a clothing manufacturing 17 company, Mrs. TJ Robinson, owner of the Gingerbread House 18 and Restaurant, Mr. Garfield White, president of Select 19 Communications, a telecommunications company, and Mr. Ron 20 Carter, owner of FARC Construction Company and a member 21 of the board of directors of the Bay Area Black 22 Contractors Association. 23 Each of these Oakland-based black business 24 owners were denied financing by Bank of America. Not 25 only have these worthy small black business owners been 26 denied access to capital, but the honorable mayor of the . 146 1 city of San Francisco, Willie Brown, and the honorable 2 mayor of the city of Oakland, Mayor Elihu Harris, were 3 denied a loan from Bank of America in an attempt to 4 purchase a radio station in the city of Oakland. 5 Over the past ten years, we've witnessed a 6 dramatic decline in the availability of access to capital 7 in the city of Oakland and the San Francisco-Oakland Bay 8 Area in general. There are approximately 554 banks in 9 the state of California. Only two of these banks are 10 African-American banks. 11 The recent mergers of large banks is threatening 12 to create less competition and more Monopoly control of 13 the availability of credit to the black community. Bank 14 of America's recent public relations campaign slogan, 15 "let's be neighbors," flies in the face of reality. The 16 lack of small business growth in the black community can 17 be directly attributed to the downsizing of Bank of 18 America in the black community. 19 The black community contributes substantial 20 revenues to Bank of America's bottom line. For example, 21 of the 340 black churches in Oakland, 40 percent bank 22 with Bank of America. That means that every Monday, 23 approximately 136 black churches deposit $400,000 into 24 Bank of America's system. This represents approximately 25 $20 million annually. Yet we've seen Bank of America 26 abandon our community, forcing our church members, small . 147 1 black business owners, nonprofit organizations, and 2 citizens to travel outside of our community for banking 3 services. 4 Bank of America's market shares is approximately 5 40 percent of the 379 black individuals who reside in the 6 nine Bay Area counties. Bank of America has been 7 unresponsive to the credit needs of the black community 8 while providing lip service to the black community 9 through sponsorships of high profile and special events. 10 We've seen Bank of America and other financial 11 institutions spend billions of dollars to reconstruct 12 countries like West Germany, Indonesia, Korea, and even 13 Russia at the expense of American blacks. Charity 14 begins at home. 15 For the past 50 years, we've seen a 16 deterioration of our communities to the point where today 17 many of our neighborhoods look like boarded out war zones 18 with boarded up commercial stores and severely 19 dilapidated housing. In the past decade, we've watched 20 Bank of America expand in the suburbs and shopping malls 21 and grocery stores outside the inner city and provide a 22 wide range of financial services to the white communities 23 that remain unavailable to the inner city black 24 community. 25 For example, in West Oakland, an area of 26 approximately 27,000 residents, Bank of America at one . 148 1 time had four branches. Today there are none. As a 2 direct result of this wholesale denial of credit, this 3 community has no pharmacy, no grocery store, and no 4 bank. Has the wholesale withdrawal of Bank of America 5 affected this community? 6 Most assuredly. Another example is East 7 Oakland, an consisting of 48,000 residents. Bank of 8 America at one time had seven branches. Today there are 9 three. Not only has this abandonment of our community 10 forced blacks to travel on average four miles for banking 11 services, but the reduction in employment has caused 12 undue hardship to many black families and the community 13 at large. 14 One black church member told me that for 50 15 years, she had a checking account and a savings account 16 with Bank of America. When she retired from two 17 full-time careers, she decided to remodel her home, which 18 was estimated to cost $23,000. With annual retirement 19 income of over $3,000 a month, she was denied a 20 refinancing loan by Bank of America. Three weeks later 21 she qualified for a larger loan from another institution 22 with a more favorable interest rate and a payment 23 schedule that fit within her budget. 24 This is but one example of how Bank of America 25 has consistently denied blacks access to capital. Bank 26 of America has raped the black community of our resources . 149 1 and transferred our savings and deposits to communities 2 that have no direct or indirect impact on the quality of 3 life in the black community in Oakland. 4 For example, Bank of America provided the 5 financing for the Shorenstein Development Company to 6 purchase the city center project in downtown Oakland and 7 the amount estimated to be $23 million and reported this 8 financing under CRA as a loan to a minority. Well, the 9 truth of the matter is the Shorenstein Company is one of 10 the largest white-owned office and shopping center 11 developers in the country, and how the financing can be 12 designated as fulfilling its CRA objectives is not only 13 misleading but boarders on fraud. 14 I'll close with saying that Bank of America has 15 not been loyal to the black community and it does not 16 advertise effectively or in any meaningful way. The 17 withdrawal of bank services in our community has created 18 pockets of poverty, pockets which breed hopelessness, 19 anger, and despair. Only when organizations such as Bank 20 of America and NationsBank fully realize and actively 21 partner with black institutions and organizations to 22 address these issues can we say we're building bridges to 23 the new millennium. Thank you. 24 MR. HOBBS: Good morning. My name is Greg 25 Hobbs. I'm the vice president of the National White 26 Business Council and I'd also like to recognize my . 150 1 chairperson of the National Black Business Council 2 sitting at the end of the table to show her support. We 3 have 75,000 businesses across the country which we're in 4 contact with electronically. 5 Today specifically I'm representing one of our 6 affiliates from the state of Florida, the Coalition of 7 Black Businesses. The Coalition of Black Businesses from 8 the state of Florida have concluded that an approval of 9 this acquisition without specific commitments to build 10 capacity for black-owned businesses will retard or 11 reverse the gains and capital access by black-owned 12 businesses in every state the bank operates. 13 Florida, we think, presents the ideal case study 14 for accessing the impact of the economic well-being of a 15 state such as California which stands to lose a major 16 heritage bank to decision makers outside the state. As 17 you know, Florida just lost its major headquarter bank, 18 Barnett Bank, to NationsBank through an acquisition. For 19 this reason, the coalition feels it is essential in 20 assessing the impact of this acquisition that the Federal 21 Reserve hold a hearing in the state of Florida. 22 Upon information and belief, NationsBank has not 23 adequately provided capital for black-owned businesses in 24 the state of Florida. Further, although reports -- 25 NationsBank reports not to track race data on business 26 loans, it is our belief that less than one percent of . 151 1 NationsBank's Florida business loans are made to 2 black-owned businesses. 3 We've requested the OCC do a random study of the 4 bank's loan portfolio as part of the CRA performance 5 evaluation to adequately determine what that number is. 6 However, there's a preponderance of evidence which 7 supports the coalition's claim. 8 In 1985, Florida lawmakers created a unique 9 network to provide access to capital for black-owned 10 businesses in the state of Florida. NationsBank, 11 previously NCNB, was one of the initial members of this 12 investor bank network. The network via loan guarantees 13 and direct loans has been a primary source of capital for 14 black-owned businesses in the state of Florida, providing 15 more than 40 million in capital since inception. 16 Prior to the acquisition of Barnett Bank, 17 NationsBank was the third largest member investor in this 18 network behind Barnett and First Union. But over the 19 past 12 years, NationsBank has provided only ten loans 20 guaranteed by this network as compared to Barnett, which 21 has made 117 and Sun Trust, which has made 120, and First 22 Union, who's made 75. 23 NationsBanks guaranteed loans amount to, over 24 the 12-year period, to $268,000 to black-owned businesses 25 as compared to Barnett Bank at 10.8 million, as compared 26 to Sun Trust of 9.3 million and First Union of 5.5 . 152 1 million. 2 The network guaranteed loans by NationsBank 3 through the system represents seven-tenths or one percent 4 of the total funding provided through this network. We 5 can go even further and take a look at SBA guaranteed 6 loans. According to SBA guaranteed loan volume reported 7 by state and race, SBA guaranteed loans by NationsBank 8 for African-Americans in the state totaled zero in 1993 9 and 465,000 in 1994. This number is important because 10 it's in our belief that 90 percent of the commercial bank 11 loans to black-owned businesses in the state of Florida 12 are provided with SBA guarantees. Therefore, SBA 13 guarantees are a major reflection of the bank's loan 14 portfolio, particularly as it relates to black-owned 15 businesses. 16 NationsBank SBA guaranteed loans for 17 African-Americans in 1994 would have represented 18 three-tenths of one percent of its small business loans 19 in the state of Florida as reported in its 1995 CRA 20 performance evaluation. Total small business loans in 21 Florida for 1995, 1996, and 1997 were not available for 22 analysis. However, it is our belief that this 23 insubstantial performance continued in these years as 24 well. 25 There's a significant group of black-owned 26 business owners, black business organizations, and black . 153 1 professionals in the state of Florida which have 2 expressed concern in NationsBank delivery of credit. 3 Moreover, of the seven institutions that make up this 4 unique network in the state of Florida, after being 5 requested to submit letters of support by NationsBank, 6 only one submitted a letter of support. And it's 7 interesting to note that the one submitting that letter 8 of support for this acquisition, the president of that 9 institution is a member of the board and the chairman is 10 an area president of NationsBank. 11 The bank's insubstantial delivery of capital 12 black-owned businesses in the state of Florida is not due 13 to any lack of demand, just an extremely conservative 14 lending policy that lacks an understanding and innovation 15 in meeting the capital needs of black-owned businesses in 16 the state of Florida. 17 A lot has been said and I'm going to cut my 18 comments short by concluding that we, like many people 19 who have spoken earlier, strongly would like to express 20 that the Federal Reserve hold more hearings, particularly 21 in the state of Florida, but also that the Federal 22 Reserve compel NationsBank to sit down with community 23 groups to work out specific commitments for their CRA 24 investment within the very states which it serves. Thank 25 you. 26 MR. NEREE: Good morning, members of the board . 154 1 of governors and proactive community leaders. My name is 2 Dufirstson Neree. I'm here representing The Credit is 3 Due Project, a community development financial 4 institution in Miami, Florida, and the Little Haiti 5 Community Alliance, a coalition of 24 community-based 6 organizations and 1,028 residents united to fight 7 redlining in the city of Miami. 8 I got here early this morning, 1:00 precisely. 9 The tickets was bought with the pooled savings of ten 10 local residents, each making solely $10,000 for the 11 entire year. I'm sure if a public hearing was advertised 12 in the state of Florida, many other community groups 13 would have made the same type of effort. 14 Not knowing the specifics of this public 15 hearing, I have prepared a 15-minute and a 30-minute 16 presentation, but out of respect for your time and 17 respect for local groups in San Francisco, I can 18 succinctly limit my presentation and just summarize 19 NationsBank record of poor lending, poor community 20 outreach, and failure to comply with the CRA and with the 21 following censuses. 22 Two years ago, we had six different banks 23 operating in our community. In the past, when our 24 residents faced local bank discrimination, we could take 25 our money elsewhere or we could use the CRA to protest 26 the poor services that we received. Last year, with the . 155 1 merger of NationsBank/Barnett Bank, our community went 2 from having six local bank branches to having just two. 3 Now what choice do we have in terms of where we 4 decide to do our banking and what choice do we have -- 5 what voice do we have in using the CRA to fight for more 6 access to capital in an area when we know that it's 7 common banking protocol to renege on CRA commitments? 8 In our community, the CRA is virtually useless. 9 The two banks who operate there now, Washington Mutual 10 and NationsBank, are two of the largest institutions in 11 the United States of America. We don't expect a merger 12 anytime soon. If you as our public officials do not 13 force these mega-banks to make enforceable CRA 14 commitments, low-income communities and minority 15 communities like mine will have no option but to become 16 the punching bags for mega-banks like NationsBank, who 17 have in the past showed very poor records of community 18 reinvestment act lending. 19 MS. SMITH: Thank you. I encourage you to 20 submit your 30-minute presentation for the record. 21 MR. WONG: Members of the Federal Reserve, my 22 name is Dennis Wong, and I'm the president of the Asian 23 Business Association, Northern California. We're a 24 nonprofit and we focus on economic development through 25 education. As part of that, we sent nine of our members 26 to the White House conference on small business in 1995 . 156 1 to address many of the issues that you hear before you 2 today. We'd like to also lend our concerns to the 3 proposed merger by saying that without specific 4 commitments from the new NationsBank and without 5 identifiable measurable results, we are very concerned 6 that the effectiveness and the intent of CRA will be 7 greatly diminished. Thank you. 8 MR. GNAIZDA: Members of the panel, we now have 9 a series of one-minute speakers who will be using the 10 mic. 11 MR. BETZ: We promise to be extremely brief. 12 We're representing a number of organizations that wanted 13 to be here today but, because of the cost of getting to 14 San Francisco, were not able to. So we'd like to make 15 brief statements on their behalf. 16 I'm going to start with a statement from Leo 17 Avila, who's a member and former past chair of the 18 American G.I. Forum. And he wants to go down on the 19 record the following statement: "The American G.I. Forum 20 is our nations most prominent and largest Hispanic 21 veterans organization. We oppose any merger that fails 22 to ensure that the Latino community, a community that put 23 America first in every war, fully and specifically 24 benefits from this merger. 25 "We want home loans, we want business loans, and 26 we want the banks to move their charitable dollars from . 157 1 the ballet to the barrio. Until there are specific 2 commitments, we say to Chairman Coulter, McColl, and Alan 3 Greenspan no merger. Remember, the Latino community is 4 the future for California and any bank that operates 5 here. Thank you." 6 UNIDENTIFIED SPEAKER: Good morning. I'm 7 speaking here on behalf of George Dean, the CEO and 8 president of Phoenix Urban League. The Phoenix Urban 9 League has had a very good relationship with the B of A. 10 However, we must, no matter what the risk, set forth our 11 concerns. 12 First, NationsBank may not be as sensitive to 13 the unique minority cultures in Arizona. 14 Second, all the major banks in the west have 15 recognized a multi-billion dollar potential of minority 16 markets and set specific goals. Nations refuses to do 17 so. We ask why. 18 Third, although community groups appreciate 19 grants, it should not be noted -- it should be noted that 20 as a percentage of profits, the record of the new banks 21 is only half of its competitors such as Wells Fargo. 22 Forth, this merger should be modified to require 23 specific minority lending and contract goals and a 24 substantial charitable commitment to the under-served 25 communities. Thank you. 26 MR. GNAIZDA: Members of the board, if you . 158 1 would allow us to make one little exception. Maryann 2 Mitchell has just flown in from Washington. She's the 3 national head of one of the largest black business 4 councils in the country, National Black Business 5 Council. If she could make a brief observation, we'd 6 appreciate it. 7 MS. MITCHELL: Good morning. I think it's 8 still morning. Again, I'm Maryann Mitchell. I'm the 9 president of the National Black Business Council out of 10 Silver Springs, Maryland and a business owner. And I 11 just want to say a couple of things. 12 We absolutely positively as it stands today 13 oppose this merger for the following reasons: The 14 lending practices and policies of Bank of America and 15 NationsBank, the contracting record. I'm a business 16 owner and I get called to the White House all the time 17 for them to tell my success as being one of the most 18 successful African-American business owners in the 19 country. 20 That is just -- it's outrageous that I prefer 21 doing business with the federal government rather than 22 Bank of America because it is absolutely impossible to 23 have access. It is also impossible to do anything with 24 NationsBank as far as contracting because they have a 25 22-page survey on the Internet that requires a business 26 plan for you to do business with them. This is . 159 1 outrageous. It just cannot happen. So you have Bank of 2 America and NationsBank doing business with other Fortune 3 500 companies and not the community businesses. 4 I just want to also say to Bank of America and 5 NationsBank that we will advocate through our 75,000 6 members across the United States that they don't do 7 business with them, plain and simple. We will also 8 advocate to our employees that they just don't have bank 9 accounts with Bank of America and Nations. We will also 10 tell our employees to advocate to their families to just 11 close their accounts and go somewhere else because it 12 makes more sense. We will do business with people who do 13 business with us. 14 MR. CALDERA: Good morning. I'll be reading a 15 statement from Steve Soto, who's the president and CEO of 16 the Mexican-American Growers Association, an organization 17 representing over 7,000 growers in California. And my 18 name is Arquimides Caldera for the record. 19 Our association's success is a harbinger of the 20 future of the state. If we truly want California to be a 21 golden state again, banks must tap all of California's 22 minority resources, as much as Wells Fargo is attempting 23 to do. 24 The B of A/Nations pledge fails to tap this 25 potential. The result is likely to be a lack of lending 26 and economic development funds. We urge NationsBank and . 160 1 Bank of America to develop specific minority lending and 2 contract goals. Until that is done, our support cannot 3 be secured and the new bank will not achieve its profit 4 goals. 5 Our association also protests the lack of 6 hearings in Southern California. Thank you. 7 MS. VENERACIAN: Good morning. My name is 8 April Veneracian for the record, and I will be reading a 9 statement for Alex Esclamado, president of Filipino 10 Political Association. 11 It seems almost incomprehensible, if not 12 ridiculous, for us to testify today on behalf of our 13 communities that Bank of America and NationsBank have 14 been less than forthcoming in their collective intent to 15 engage in a mutually beneficial partnership with our 16 communities. 17 Minorities, including the Filipino-American 18 community, represent a significant potential consumer 19 base for B of A and NationsBank and yet we are here 20 before you to attest that they have not taken a 21 definitive and affirmative stance towards tapping our 22 communities. 23 In studies of businesses discrimination 24 conducted across the country, institutional 25 discrimination has been pinpointed as the primary cause 26 of minority business failure and minority community . 161 1 underdevelopment. Financial institutions in particular 2 are at the heart of those discriminatory practices. 3 We ask and urge the regulators not to allow Bank 4 of America and NationsBank to actively or passively carry 5 on this tragic legacy by not offering specific courses of 6 action for lifting and alleviating such institutional 7 barriers. Thank you. 8 MS. THRASH: Tunua Thrash, for the record, is 9 my name, and I'm reading a statement on behalf of Mark 10 Whitlock, who is executive director of economic 11 development for First AME Church in Los Angeles. It's 12 one of the largest Africa-American churches here in the 13 state. 14 "As the executive director of a major inner city 15 African-American church operating economic development 16 programs with 16,000 family constituents, I have grave 17 misgivings about an absentee landlord. Our community has 18 suffered from generations of an absentee landlord 19 neglect. 20 "You want to think about the fact when all of 21 the banks competitors, including Washington Mutual and 22 Wells Fargo, have made specific minority pledges, one has 23 to wonder as to the motives of the one who refuses. 24 "Third, many members of our church would like to 25 testify but cannot be here today because the hearings are 26 held in San Francisco. Please hold a Los Angeles hearing . 162 1 as we previously requested. 2 "The African-American market nationwide is over 3 $600 billion. Those who ignore us do so at their peril. 4 We come not to the table to beg but with the desire to 5 create civil and a prosperous society. Thank you." 6 MS. DIAZ: Good afternoon. My name is Haydee 7 Diaz, and I am reading a statement from Willis White, 8 California Black Chamber of Commerce. 9 "I join with the National Black Chamber, the 10 Black Business Association, and the National Black 11 Business Council in criticizing a merger that abandons 12 the African-American community. We have never shared in 13 either bank's loan pool or contract program, nor in 14 Golden Parachutes for senior, white males worth over $200 15 million, nor have we equitably shared in their economic 16 development projects. 17 "Consider this: Bank of America alone lent more 18 to South Korea, $3.1 billion to be exact, than the total 19 it has lent African-American-owned businesses over the 20 last 50 years. And remember, B of A has lost $3.1 21 billion in South Korea and nothing in the inner city. 22 Until they show us the money and walk the talk, we will 23 criticize this merger." 24 MS. VILLANUEVA: My name is Trina Villanueva, 25 and I will be reading a statement from Mateo Camarillo, 26 who is the vice chair of the Chicano Federation of San . 163 1 Diego. He could not fly up here today. 2 "No bank mega-merger should occur without 3 specific minority and geographical pledges. In San 4 Diego, over 40 percent of the county are minorities and 5 the majority of potential homeowners and small business 6 entrepreneurs are persons of color. 7 "We in San Diego invite CEO McColl to visit us 8 and pledge that the new bank will set specific minority 9 lending and business goals just like Washington Mutual, 10 Wells Fargo, and the Union Bank of California. Until 11 this is done, competition may decide the financial fate 12 of this merger. Why should we do business with a bank 13 that ignores us when Wells and WaMu courts us? Thank 14 you." 15 MS. NGUYEN: Hello. My name is Vy Nguyen, and 16 I'm here to read a statement from Mai Cong, CEO of the 17 Vietnamese Community of Orange County, Incorporated. 18 She writes, "The Vietnamese-American community 19 has been inadequately served by B of A's small business 20 lending and fears an absentee landlord with little 21 knowledge of our culture will do even worse. Frankly, 22 only targeted minority marketing and goals as recently 23 set by B of A's competitors, such as Union Bank, can 24 correct this lack of capital to an emerging U.S. market 25 that is far greater than many overseas markets. 26 "On behalf of Orange County's 160,000 . 164 1 Vietnamese-Americans, I wish to deliver a personal 2 message to Chairman Greenspan with whom I recently met. 3 Don't forsake us. Compel NationsBank to set specific 4 minority goals for small business lending and to promote 5 people of our community into senior management. Thank 6 you." 7 MR. ROMERO: Good morning. I'll be reading a 8 statement on behalf of Reverend James H. Daniel, Jr., 9 chairman and CEO of 21st Century Partnership. 10 "The 21st Century Partnership is a nonprofit 11 community development corporation concerned with many 12 issues pertaining to community development here on the 13 east coast. Among them is the changing face of the 14 financial service industry. As ministers and servants to 15 the community, we believe that mega-mergers must create 16 concrete results for the traditionally under-served. 17 "The CRA record of NationsBank is a concern to 18 us. Its lack of commitments to those who led the 19 struggle for economic justice as represented by Martin 20 Luther King, Jr. is appalling. And we serving in the 21 interests and voicing the concerns of millions of 22 African-Americans decry the Federal Reserve's Board of 23 Governors refusal to grant us in a hearing in each state 24 in which NationsBank and B of A have failed to render 25 adequate financial services to the under-banked among 26 us. Only a lack of funds has prevented us from . 165 1 personally testifying. 2 "Respectfully, Reverend James H. Daniel, Jr." 3 MR. CALDERON: Gene Calderon. And I'll be 4 reading in a statement from Burt Corona, the executive 5 director of the Hermandad Mexicana Nacional. 6 "I offer this testimony on behalf of the nations 7 largest immigrant service center and advocacy 8 institution. We have offices in Washington D.C., New 9 York, Illinois, as well as in California. This merger 10 could be harmful to all communities. It's particularly 11 so for low-income, immigrant, and minority communities. 12 "Over the last six decades, we have witnessed 13 the danger of absentee landlords and those that view the 14 poor from afar. I refuse to testify so that my personal 15 absence is evidence against Chairman Greenspan's decision 16 to prevent low-income persons from voicing their 17 concerns. Unless they live in the San Francisco area or 18 have a rich uncle bank to fund their trip. 19 "I also question the safety and soundness of a 20 bank which lacks the confidence of persons of color. We 21 constitute two-thirds of Los Angeles county's population, 22 a population greater than that of North Carolina. Thank 23 you." 24 MR. FERRAH: My name is Freddie Ferrah. I'm a 25 special project manager with the Greenlining Institute 26 and I wanted to just say with all the respect I can that . 166 1 I am amazed and appalled at the fact that the nations 2 largest two-bank merger -- I don't count Citi and 3 Travelers because Travelers isn't a bank. Well, not yet 4 anyway. It will be as soon as that's complete. But 5 nonetheless, that the largest banking merger, $560 6 billion of capital, only allows -- and the Federal 7 Reserve and Mr. Greenspan should really consider this -- 8 is only having one meeting, one meeting in San Francisco 9 to allow city -- or community members and groups to voice 10 their concern over something of such monumental 11 importance. This bank is going to cover a third of all 12 the states in the nation, yet only one city is going to 13 be the center point for community-based comments. 14 The banks have proven and the testimony here 15 just reinforces the fact that Nations has done about as 16 bad a job at serving the communities it works in as any 17 bank could possibly do. 18 I am here to represent 49 million people with 19 disabilities, people who I hope can understand and 20 realize the negative impact of this kind of merger and 21 will quickly, as I have already done, move the account 22 from Bank of America to a bank that supports our needs. 23 I don't want to take up any more time because 24 the real beef isn't here. Coulter, McColl, and 25 Greenspan, I don't know where they're at, but they're 26 probably unpacking Golden Parachutes or doing what it . 167 1 might be that people of high importance do. I just wish 2 they'd show us more respect because there are a lot of 3 people that are very concerned with this merger. And it 4 certainly isn't taking place in any way that makes me 5 feel any more respected at all. I oppose this merger. 6 Thank you. 7 MR. FREEMAN: My name is David Freeman. I 8 represent the Commission on Disability in Berkeley, 9 California. 10 And to be honest, I really have never heard such 11 a ridiculous statement about a bank such as nations in my 12 life. I think it's pretty depressing pretty much when 13 you look at the future of banking in this country if this 14 merger is allowed to go through, especially with these 15 two banks. 16 There needs to be definite specific arrangements 17 so that the community does get reinvestments back into 18 it. As a disabled person, as an African-American, I know 19 that the system was not built with me in mind, but I 20 definitely intend to partake in it no matter what entity 21 may put itself up against me. 22 NationsBank and Bank of Atrocities needs to be 23 notified that we're entering the year 2000 and the 24 disabled community in particular is not going to stand 25 for the garbage. I think this is all garbage. I don't 26 have any beautiful words to put it into. I'm just going . 168 1 to say it plain and simple. 2 This is nonsense. And if the Fed does not 3 enforce what's already on the books or if the Fed does 4 not make sure that these two banks invest in the 5 communities that they set up ATM's in and they withdraw 6 money from like an endless vacuum, what do you expect to 7 happen? 8 I'm dead against this merger. This merger 9 should not happen. If it does happen, it's just another 10 sign of the times that the Federal Reserve is kind of 11 schizophrenic. Okay? It's not facing reality, and 12 that's just the bottom line. I'm against the merger. 13 Thank you. 14 MR. GNAIZDA: Members of the panel, we want to 15 thank you all very, very much from the approximately 70 16 speakers on the two panels that you arranged with Joy 17 Hoffman's assistance. Although we obviously have 18 expressed displeasure at the lack of hearings, I think 19 all of us owe you a debt of gratitude for being as 20 flexible as you have been and as courteous as you have 21 been and as open. So we thank you very much. 22 MS. SMITH: I, in turn, want to thank everyone 23 who presented testimony this morning. You have provided 24 us with important information, and I want to assure you 25 that as part of the record that the board will have when 26 it makes its decision on this application, the board will . 169 1 review the materials that you have presented and will 2 take into account the concerns that you have expressed. 3 So thank you very much. 4 MR. GNAIZDA: Thank you. 5 MS. SMITH: We will continue with -- we're 6 behind schedule, but we're going to continue with the 7 next panel before taking our lunch break, which may be 8 shorter than the half hour we had allocated. But if the 9 next panel will come on up, then we will proceed 10 immediately.
Last update: December 3, 2010