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Public Meeting Transcripts

Public Meeting Regarding NationsBank and BankAmerica

Thursday, July 9, 1998

Transcript of Panel Eight

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      14                 MS. LeBLANC:  My name is Brenda LeBlanc. 
           
      15   I am here representing Citizens for Community
           
      16   Improvement of DeMoines, specifically their Reinvestment
           
      17   Task Force which was initiated in 1977 to work on the
           
      18   problem of getting home loans in areas that had been
           
      19   redlined. 
           
      20                 After 20 years we have developed working
           
      21   agreements for special CRA programs with ten financial
           
      22   institutions.  We work with each bank to help them
           
      23   improve their lending record, and we also provide
           
      24   services, such as a Home Buyers Club, which helps
           
      25   prepare people not ready to buy.  We also produce Credit
           
      26   & Home Buying seminars that provide a day-long session
           



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       1   of information about the process of home buying and
           
       2   introduce the various bank programs. More than 300
           
       3   people attended our last seminar.  
           
       4                 But we've had some problems in the last
           
       5   several years with bank mergers.  Hawkeye Bank, a
           
       6   State-wide holding company was bought out by Mercantile. 
           
       7   Hawkeye had a branch in a low-mod neighborhood.  But,
           
       8   when Mercantile took over, they attempted to close
           
       9   it.  We fought this move and succeeded in keeping the
           
      10   branch open. 
           
      11                 But, while we had a good relationship with
           
      12   Hawkeye, we find we do not now have the same kind of
           
      13   relationship with Mercantile. 
           
      14                 First Interstate Bank was another we had
           
      15   an agreement with since 1978.  They were out after a few
           
      16   years by Boatmen's Bank.  A new president came to
           
      17   DeMoines from St. Louis and he told our task force that
           
      18   we didn't need an agreement with them, because Boatmen's
           
      19   had a great record of CRA lending, they had done great
           
      20   things in 
           
      21   St. Louis, he told us, therefore, they knew all about
           
      22   what was needed to be done.  
           
      23                 We pointed out that DeMoines is not St.
           
      24   Louis and what works there may not necessarily work
           
      25   here.  We pointed out we had developed expertise in our
           
      26   situation and our needs, therefore, they needed to work
           



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       1   with us for a CRA program in DeMoines to be successful. 
           
       2   They eventually agreed and after that we had a signed
           
       3   agreement with Boatmen's
           
       4                 Then a year ago Boatmen's was bought out
           
       5   by NationsBank.  We started out through the whole
           
       6   familiar process again.  Since last December we have
           
       7   been debating back and forth about an agreement with no
           
       8   success. 
           
       9                 In dealing with the local banks after they
           
      10   are bought out we are for the most part dealing with the
           
      11   same people locally we have dealt with all along.  The
           
      12   problem is they are now getting directives from people
           
      13   above, from people far aware we can not talk to and
           
      14   people who seem not to care about whether CRA programs
           
      15   work or not in our neighborhoods. 
           
      16                 When we learned at our national NPA
           
      17   conference that other cities were having the same kinds
           
      18   of problems with mergers, we agreed that the time had
           
      19   come to develop a national agreement that would give
           
      20   official sanctions to our locally developed programs. 
           
      21                 It was with high hopes that I attended the
           
      22   meeting in St. Louis with NPA and executives from
           
      23   Nations and Bank of America.  If we could get an
           
      24   agreement at the national level, we could move forward
           
      25   at the local level then with assurance that we have
           
      26   support from the top.  And this would set a precedent. 
           



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       1   With one such national agreement, we could move on to
           
       2   others and all of us in our local communities could then
           
       3   keep working with local branches to get loans moving
           
       4   into our neighborhoods. 
           
       5                 It was a big and important step for us,
           
       6   but it was disastrous.  That conversation reminded me of
           
       7   the very first conversation we had with local banks who
           
       8   back then had no idea what we were talking about,
           
       9   confused reinvestment with charity and thought that
           
      10   people in our neighborhoods couldn't afford to buy homes
           
      11   and were all poor risks. 
           
      12                 This morning I had this charitable thing
           
      13   brought up again.  The Mayor of Houston talked about
           
      14   their volunteerism and philanthropy.  That's commendable
           
      15   and very good, but it's not reinvestment.  We're talking
           
      16   about -- we not talking about giving money to folks in
           
      17   neighborhood, they're talking doing business with them. 
           
      18   We're talking about bringing us into the capitalist
           
      19   system so that we also can do what people in the suburbs
           
      20   can do, buy homes and start businesses. 
           
      21                 Our local bankers now understand that with
           
      22   smaller loans and relaxed guidelines our residents can
           
      23   buy homes they can afford.  These loans are improving
           
      24   our neighborhoods and it's providing banks with a whole
           
      25   new source of business, good business, but they cannot
           
      26   do it without working with local people. 
           



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       1                 The main problem is one of marketing,
           
       2   letting people know their options, and this is something
           
       3   we constantly work on.  
           
       4                 We were treated at that meeting in St.
           
       5   Louis with contempt.  Our decades of effort in our
           
       6   communities were dismissed as, quote, petty politics,
           
       7   unquote.  And this from a person who is a chief CRA
           
       8   officer for Nations. 
           
       9                 When the person who is in charge of CRA
           
      10   for a whole national bank's operation displays such
           
      11   appalling ignorance, how can we expect CRA to survive as
           
      12   mergers progress?  
           
      13                 After we had the meeting in St. Louis, we
           
      14   held a meeting in DeMoines with our local NationsBank
           
      15   president and our chief CRA officer.  The CRA officer is
           
      16   the same person we have been dealing with for ten years
           
      17   through three different ownerships of the bank.  We know
           
      18   the local personnel support our working agreement, and,
           
      19   when we challenged them the problem is with upper
           
      20   management, they did not deny it.  The explanation was
           
      21   the same it was in 
           
      22   St. Louis a lame, "We just don't do agreements." 
           
      23                 Mr. McColl this morning said, and I quote,
           
      24   I wrote this down verbatim, he said, "We will keep
           
      25   decisions in the hands of local bankers who know how to
           
      26   serve their communities.  But in DeMoines, since
           



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       1   December, they have been trying to kill our local
           
       2   agreement and the relationship that we've had for a
           
       3   decade. 
           
       4                 They have a cookie cutter program that's
           
       5   national that they're trying to foist off on us.  The
           
       6   reason we can't accept it, the program is fine except
           
       7   for one aspect, this program is targeted to low-income
           
       8   people and not to low-income neighborhoods.  Ironically
           
       9   it was the same bank that ten years said to us, "We'd
           
      10   like to do it differently."  
           
      11                 We had other banks targeting to our
           
      12   neighborhoods because redlining was the problem and
           
      13   still is the problem.  They said, "We'd like to target
           
      14   instead to people below 80 percent of median income.  We
           
      15   said, "Okay.  Chances are most of those people live in
           
      16   our neighborhoods, so it would still have the same
           
      17   effect." 
           
      18                 But, after two years, we looked at the
           
      19   figures.  Not the same effect at all.  They were making
           
      20   lots of loans to people below 80 percent of median
           
      21   income, but none of them were going in our neighborhood. 
           
      22   We said this isn't working, and they said, no, it isn't. 
           
      23   They went to targeting.  
           
      24                 So now, eight years later, we've got
           
      25   NationsBank telling us this is our program and you have
           
      26   to accept this and ignoring our local people that have a
           



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       1   different history.  Maybe it works other places, it
           
       2   doesn't work in DeMoines. 
           
       3                 We had no choice but to protest the
           
       4   merger.  It is our request that you disallow any bank
           
       5   merges without a national agreement that will assure
           
       6   that local banks be allowed to develop working
           
       7   relationships with the local organizations.  If this
           
       8   cannot be done, then CRA will surely die.  It is
           
       9   survived only through the determination of people like
           
      10   us in cities all over the country.  If these big mergers
           
      11   keep going on, it will eventually be beyond our ability
           
      12   to deal with our local problems. 
           
      13                 You, as regulators, can keep this from
           
      14   happening if you will require that bank mergers only be
           
      15   allowed with national CRA agreements that will allow and
           
      16   honor local agreements.  
           
      17                 MS. REICHER:  What she said.  
           
      18                 My name is Leslie Reicher, and I am the
           
      19   second representative of the Pittsburgh Community
           
      20   Reinvestment Group.  As I traveled here to San
           
      21   Francisco, I was wondering whether it was worth it given
           
      22   that these institutions have really a very minuscule
           
      23   presence in our city. 
           
      24                 Because it was clearly quite an expense
           
      25   for us to come here both for PCRG, the organization I'm
           
      26   representing, and my own community organization that I
           



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       1   work for. 
           
       2                 But, based on our research, at PCRG and
           
       3   the very limited experience we've had with Nations and
           
       4   Bank of America and what I've heard here today, I'm glad
           
       5   I'm here, mostly to voice our opposition.  
           
       6                 I was trying to place myself in your
           
       7   position, because my head is kind of swimming, I'm
           
       8   hearing all these stories about what Nations isn't doing
           
       9   and I'm hearing stories about some of the wonderful
           
      10   things they are doing. 
           
      11                 But, as Brenda said, that's charity,
           
      12   that's relationship building and it's not lending.  I
           
      13   think what we're here to talk about today is lending. 
           
      14   We're talking about the regular course of doing
           
      15   business.  And I think we need more assurances than some
           
      16   individual relationship to have that assurance going
           
      17   forward in this age of mega mergers and acquisitions. 
           
      18   So I'm really concerned about it.                
           
      19                 I know today the impact on such an
           
      20   acquisition in a San Francisco, in cities, in Illinois,
           
      21   in Iowa and all the places we've heard of today, I have
           
      22   no doubt that tomorrow it's going to be Pittsburgh. 
           
      23   We've already experienced an acquisition with National
           
      24   Citibank buying one of our local Pittsburgh banks.  We
           
      25   were very worried about it because the -- we were not
           
      26   going to have the home office, the corporate office
           



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       1   being in Pittsburgh. 
           
       2                 And they resisted an agreement and flew us
           
       3   up to Cleveland to talk us out of insisting on the
           
       4   agreement, but eventually understood, because we're
           
       5   going to be gone tomorrow, those bankers are going to be
           
       6   gone tomorrow and we'll have nothing left.  
           
       7                 We cannot go just on good will.  They say,
           
       8   "Trust us," and we say, "We don't know you, we can't
           
       9   trust you."  Who we trust are the people we have been
           
      10   working with and they may not be here tomorrow, so we
           
      11   need some way institutionalizing this. 
           
      12                 I have prepared remarks and I will give
           
      13   them to you.  I mean, this booklet here is our protest
           
      14   and it's probably bigger than the number of applications
           
      15   received in Pittsburgh from either Nations or
           
      16   BankAmerica.  
           
      17                 We have mortgage corporation subsidiaries
           
      18   in Pittsburgh for both banks.  They do very little
           
      19   lending, hardly any lending, like two loans to African
           
      20   Americans, two loans in the whole city of Pittsburgh in
           
      21   1996, none in 1997 for NationsBank. 
           
      22                 BankAmerica had a little bit more
           
      23   activity.  I'm not going to bore you with that.  It's in
           
      24   here, our letters of protest are in here from 13
           
      25   organizations in addition to Pittsburgh Community
           
      26   Reinvestment Group, which is a 29-member coalition in
           



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       1   the city. 
           
       2                 So I would just would like to say that I
           
       3   really hope that you will postpone your decision until
           
       4   some specific agreements with the local -- with local
           
       5   cities can be worked out.  
           
       6                 I hope that you, as a regulator, can
           
       7   develop a system that kind of matches this age of
           
       8   national mergers.  We need a better system to have 
           
       9   these hearings be more accessible to people. 
           
      10                 It's really -- I mean, I can't get over
           
      11   how many people actually were able to come. 
           
      12                 So, thank you for having it and I hope 
           
      13   you have more and I hope you have them in more 
           
      14   places. 
           
      15                 MS. SMITH:  Thank you. 
           
      16                 MR. GOODWIN:  My name is Gordon Goodwin. 
           
      17   I am with Rural Development and Finance Corporation. 
           
      18   I'll read a short, prepared statement. 
           
      19                 Rural Development and Finance Corporation
           
      20   is a development finance intermediary headquartered in
           
      21   San Antonio, Texas.  We provide technical assistance and
           
      22   loans to entrepreneurs and community development
           
      23   corporations that are building enterprises, affordable
           
      24   housing and community facilities in our countries most
           
      25   severely poverty impacted areas. 
           
      26                 To date we have invested over $12 million
           



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       1   in 21 states, created or retained 2500 jobs and financed
           
       2   the construction of over 500 units of affordable
           
       3   housing.  With more people working primarily along the
           
       4   Texas/Mexico border.  In the past we've worked in
           
       5   California as well as in North Carolina, Florida, New
           
       6   Mexico. 
           
       7                 Like other financial intermediaries, we
           
       8   rely on partnerships with financial institutions such as
           
       9   banks, corporations, religious orders and foundations to
           
      10   make the low market rate investments in our loan fund so
           
      11   that we can obtain flexible, affordable capital that we
           
      12   can re-lend. 
           
      13                 Because a large part of our work is
           
      14   providing problem-solving assistance to rural
           
      15   entrepreneurs and housers, we turn to these same sources
           
      16   to underwrite some portion of our cost to provide that
           
      17   help. 
           
      18                 Bank of America has been an important
           
      19   partner with us in doing our work and the work in the
           
      20   development field at large in general, and has been
           
      21   important as a grantor and as an investor.  It's the
           
      22   only large-scale bank that has institutionalized its
           
      23   community development lending mission by capitalizing a
           
      24   separate institution, the Bank of America Community
           
      25   Development Bank. 
           
      26                 Over the last five years, the development
           



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       1   bank has financed some $2 billion of multi-family
           
       2   housing and small business development in low income
           
       3   communities.  It has also made well over $500 million in
           
       4   equity investments. 
           
       5                 In 1997, Bank of America committed to
           
       6   invest $500 million over the next two-and-a-half 
           
       7   years to rural communities.  This investment 
           
       8   commitment is backed with a pledge to make $5 million in
           
       9   grants to support innovative and meaningful
           
      10   partnerships.  This is the most significant commitment
           
      11   ever made to the credit needed of rural areas by a
           
      12   banking institution. 
           
      13                 This level of commitment is critical to
           
      14   our work, and we urge both Bank of America and
           
      15   NationsBank to uphold and even to expand this commitment
           
      16   to match the breadth and scope of the new market area
           
      17   the merger may encompass.  
           
      18                 Thank you. 
           
      19                 MS. SMITH:  Thank you.  Questions?  
           
      20                 MS. REICHER:  Ah, come on. 
           
      21                 MS. SMITH:  Thank you very much. 
           
      22                 MR. FRIERSON:  I would like to thank you
           
      23   all for the panelists, to thank you for coming the
           
      24   distances.  Your information has been very helpful 
           
      25   and useful, and we will consider it carefully.  
           
      26   We will also consider it carefully.  
           



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       1                 Thank you very much.  
           
       2                 (Pause in proceedings.) 
           
Last update: December 3, 2010