Home > Banking Information & Regulation > Public Meeting Transcripts > PMT - Agendas July 9-10, 1998
Public Meeting Transcripts
Public Meeting Regarding NationsBank and BankAmerica
Friday, July 10, 1998
Transcript of Panel Twenty
449 14 MS. SMITH: We'll go ahead and start with 15 Ms. Supinski substituting for Mr. Lee. 16 MS. SUPINSKI: Yes, thank you. 17 Good morning, Ms. Smith and members of the 18 panel. This is the testimony of Matthew Lee, Executive 19 Director of Inner City Press Community on the Move and 20 of the Inner City Public Interest Law Center, together 21 known as ICP, which the California Reinvestment 22 Committee has been kind enough to present. 23 ICP on May 6th filed a 54-page protest to 24 this application along with the Black Citizen for 25 Justice Law and Order of Dallas, Texas and the New 26 Mexico Alliance, two of its whose members, Gilbert 450 1 Sanchez and Robert Wells, you heard from yesterday. 2 We are opposed to this proposed merger 3 primarily due to NationsBank's continued predatory and 4 discriminatory practices through its finance companies, 5 NationsCredit and EquiCredit, and due to the 6 anti-competitive and branch-closing effects the proposed 7 merger would have in New Mexico and in Dallas, Texas. 8 NationsBank's ill-defined community 9 reinvestment pledge does nothing to address these 10 issues. In fact, as explained in a moment, 11 NationsBank's failure to live up to its commitment with 12 regard to NationsCredit, calls into question whether the 13 board could rely on NationsBank's press release pledge. 14 In 1996, when NationsBank announced its 15 proposal to acquire Boatmen's Bank shares, including its 16 subsidiary Sunwest, the larger bank in New Mexico, ICP 17 and the New Mexico Alliance filed comments with the 18 Federal Reserve Board. We critiqued the lending of 19 NationsBank and its higher than normal interest rate 20 finance company, NationsCredit, and documented that 21 NationsBank was referring applicants who were 22 disproportionately African Americans and Hispanics from 23 its banks to NationsCredit which offers higher than 24 normal interest rate credit, but that NationsCredit had 25 no policy or program to refer up to NationsBank 26 applicants who were entitled to normal interest rate 451 1 credit. 2 We showed that NationsBank has been closing 3 branches in low-income communities of color and has been 4 opening NationsCredit offices in these communities. 5 The board has refused to conduct an 6 examination of NationsCredit but did ask NationsBank how 7 many lawsuits were pending against NationsCredit. 8 NationsBank submitted a skeletal list of 119 lawsuits 9 then pending against NationsCredit. We showed that the 10 list was incomplete, but, even if it were not, it would 11 seem that volume of litigation would trigger some 12 examination by the Federal Reserve. 13 During that protest, NationsBank CRA officer 14 was quoted in U.S. News and World Report to the effect 15 that NationsCredit would institute a practice referring 16 applicants who were entitled to normal interest rate 17 loans up to NationsBank banks from NationsCredit and 18 that this would be done by February of 1997. 19 NationsBank refused thereafter to provide 20 information about NationsCredit or this promise to 21 change. In January of this year, we were informed by 22 the Office of the Comptroller of the Currency that 23 NationsCredit still has not instituted any referral-up 24 program. NationsBank has since confirmed this, 25 proffering as its excuse that there has been a lot of 26 turnover at NationsCredit. 452 1 Most recently, the Federal Reserve itself 2 asked NationsBank to describe all current and planned 3 referral programs between its banks, mortgage company 4 and finance companies. NationsBank's response has been 5 that everything is in flux. 6 Simply put, NationsBank's 350 billion 7 community reinvestment commitment is not credible since 8 NationsBank has not lived up to its previous 9 commitments. It is also important to note that 10 NationsBank has refused to make any more specific 11 geographic commitments even at the state, much less the 12 county, level. But the key point to us is that 13 NationsBank promises of future improvements do not in 14 fact take place. 15 After NationsBank bought Boatmen's and 16 Sunwest, NationsBank quickly closed eight branches in 17 New Mexico, even though there was not overlap between 18 NationsBank and Sunwest. 19 The Federal Reserve has said in its 20 NationsBank/Boatmen's conditional approval order that it 21 would monitor NationsBank's branch closing, but this has 22 had little to no effect. 23 More recently, after gaining approval to 24 acquire Barnett Banks of Florida, NationsBank has moved 25 to close over 200 branches in Florida. 26 In this proposal NationsBank and Bank of 453 1 America overlap in Mexico -- in New Mexico and in 2 Dallas. NationsBank has refused to disclose how many or 3 which branches it would close. It has also put forth a 4 laughable low divestiture proposal that would allow them 5 to predominate and raise prices in Dallas and a number 6 of New Mexico markets. 7 NationsBank has apparently paid numerous 8 group to come and testify in its support at this public 9 meeting, but the facts, as they say, are the facts. 10 NationsBank said it would institute a 11 referral-up program from NationsCredit to its banks by 12 February of 1997, and NationsBank did not do so. This 13 proposed merger would be anti-competitive in Dallas and 14 numerous New Mexico markets and NationsBank's 15 divestiture proposal is sorely insufficient. 16 NationsBank has refused to disclose what the 17 actual effects of the merger would be, including branch 18 closings. 19 There are other adverse issues including the 20 foreseeable loss of various Bank of America programs 21 ably raised by the California Reinvestment Committee and 22 others. For all reasons stated, this proposed merger 23 should be denied. 24 Thank you for your attention and we will be 25 submitting further written comments. Thank you. 26 MS. SMITH: Thank you very much. 454 1 Ms. Kurudisha. 2 MS. KURUDISHA: Thank you for the opportunity 3 to testify. 4 I am Program Director of the West Contra 5 Costa Business Development Center. I'm also owner of a 6 small business called Associates for Community Change 7 and Development. In the two capacities, I have worked 8 with the West Contra Costa Community for the last nine 9 years. 10 The president, the current president of the 11 board of the West Contra Costa Business Development 12 Center is Mr. Robert Leet, who is Executive Vice 13 President of the Mechanics Bank and the chief lending 14 officer of that bank. 15 The West Contra Costa Business Development 16 Center is a result of years of effort by the West Contra 17 Costa community to work with the banking community to 18 develop an approach to economic development and 19 community development in the West Contra Costa 20 community. 21 We have worked with all of the regulatory 22 agencies and as many as 22 banks in our effort to put 23 together a community reinvestment plan for our 24 community. The years of effort have resulted in the 25 development of the West Contra Costa Business 26 Development Center as an intermediary for community 455 1 development and economic development in the West Contra 2 Costa community. 3 When we look at our efforts to work with Bank 4 of America, we applaud their participation in the 5 community meetings that have been held on banking in 6 West Contra Costa. We also applaud their contribution 7 to the West Contra Costa Business Development Center 8 which has been $25,000. 9 We, however, point out that, while this has 10 supported our effort, it has not matched the request for 11 a five-year commitment on the part of the bank to the 12 community development effort of the West Contra Costa 13 Business Development Center. 14 We would like an opportunity to develop, as 15 an intermediary for our community and give the small 16 cities that we represent an opportunity to develop an 17 urban core process and strategy that allows us to 18 resolve some of the problems that are centered in the 19 low-income and moderate-income communities that we 20 represent. 21 The community bank, which is Mechanics Bank, 22 strongly endorses and calls for additional banking 23 meetings to be held in West Contra Costa where large 24 banks, like BofA, make real contributions to community 25 reinvestment. 26 When the bank sees in the inner core, urban 456 1 inner core of our community, lines that extend out the 2 door of minorities who come in to do checking and other 3 banking services, and downsize their branch so that 4 those lines now extend out into the rain, we do not 5 believe that they are responding to the interests of the 6 community. 7 When they downsize their branch so that 8 merchants in the inner core cannot have change to 9 continue business, we do not view that as contributing 10 to economic development or listening to the needs of the 11 community. 12 We have had Bank of America at the table with 13 us over the last eight years and we applaud the things 14 that they have done in the large urban areas of 15 California. However, most of America is not large urban 16 areas. It is small cities that often, like West Contra 17 Costa, have urban problems to resolve that are growing. 18 We would like an opportunity to take 19 advantage of the open land that remains in our area to 20 develop small businesses that include indigenous 21 population. We call on the Federal Reserve Board to 22 develop a fair and open process for community planning 23 that includes the interest of small cities and economic 24 development and small business development. 25 MS. SMITH: Thank you very much. 26 Mr. Thompson. 457 1 MR. THOMPSON: Yes. Thank you very much. 2 My name is David Thompson. I am the City of 3 Richmond Redevelopment Director. 4 Our Mayor, Rosemary Corbin gave most of the 5 testimony that I would like to give this morning, so I'm 6 not going to burden you with repeating that. A number 7 of the comments that Ms. Kurudisha has provided are also 8 my thoughts. 9 I would, though, like to comment on some of 10 the issues that I see as the Redevelopment Director with 11 regard to relationship with banking institutions 12 generally and with the Bank of America and the possible 13 merger with NationsBank and the acquisition by 14 NationsBank in terms of its impact in our community. 15 The most effective relationships that we have 16 had have been ones where we have been able to develop a 17 personal relationship working with banking officers and 18 where there is a corporate commitment to doing that and 19 to making things happen in communities. Our concern is 20 that through this merger the decision-makers are going 21 to be remote and that the products are going to be more 22 generic and are going to be more difficult to work with. 23 In many cases in our community it is going to 24 take a combination of financing to make projects work 25 including our redevelopment agency and other public 26 funding. Our needs are for revitalizing our older 458 1 commercial neighborhoods. 2 We know that in many cases the bank by itself 3 cannot do that. We have to have a vehicle for sitting 4 down with somebody and saying, "This is the program that 5 we need for this community and we're prepared to do this 6 much, can you do the other?" 7 Let me say that the example that Mayor Corbin 8 noted with regard to Rubicon programs was in fact a 9 situation like that that happened with the bank. Out of 10 the Community Development Bank, it was a very aggressive 11 senior loan officer who came to the city and said, 12 "We're interested in doing business in your city," and 13 we put together a deal with Rubicon programs that 14 involved our city and involved the Bank of America. 15 Our concern, quite frankly, is that with this 16 merger we are not going to be able to have that kind of 17 relationship. So, whether it goes through or doesn't go 18 through, we want to preserve a relationship here in 19 California, particularly in Northern California, so that 20 we can continue that kind of relationship. 21 Earlier the question of the independent banks 22 and the case, this case, the Mechanics Bank, which 23 started in 1906 in Richmond, and it's role in the 24 relationship. I point out over the last -- well, from 25 1994 to 1996, they had a significant growth in their 26 deposit base from the household business sector, while, 459 1 in fact, in West Contra Costa County the Bank of 2 America's deposit base declined. 3 I am concerned about that because, while the 4 community bank has ability to do certain kind of 5 lending, and, quite frankly, they're reasonably 6 effective on the small business side of things, when it 7 comes to the larger transactions, such as the Ford 8 Building, which will be a $70 million project in the 9 City of Richmond, a 500,000 square foot Ford assembly 10 building, that Mechanics Bank is not going to be able to 11 be a serious player in that kind of a project. We've 12 talked with them about it. 13 There are other real estate transactions like 14 that where it is going to be more appropriate for a 15 larger bank. 16 Our concern is, again, as this goes forward, 17 that we preserve the ability to be able to have a 18 relationship and to enter into a real process of 19 discussing West Contra Costa County's community 20 development reinvestment needs. 21 Again, I want to thank you for the 22 opportunity to present here. This is unusual and we 23 appreciate it. 24 MS. SMITH: Thank you very much. Mr. Henry. 25 MR. HENRY: Good morning. Excuse me, I've 26 got a small cold, on my way down here, by the way. 460 1 Thank you once again for allowing me to come 2 before you to state the problem that we have with Bank 3 of America in our area. It's called OMI. Ocean 4 View/Merced/Ingelside District. It's in the southern 5 part of the city where most of everybody that goes 6 through there goes right through our area; however, if 7 you go down the main street over there, which is called 8 Ocean Avenue, you'll find that it also runs, Ocean 9 Avenue, runs all the way out to the ocean. 10 But, when you look at the businesses that's 11 in that corridor, you'll find that for years, years, 12 many, many years, that there was only one bank on that 13 corridor and that was Bank of America. Everything that 14 Bank of America got out of that neighborhood came from 15 that corridor. 16 Now, what I'm alluding to right here right 17 now is Bank of America up and pulled out. We contacted 18 them on many occasions to try to get them to keep that 19 branch open. Why? For the simple reason, this area is 20 an area where most of low-income families are retired. 21 We have many, many seniors that has medical problems, 22 and they closed the bank. They don't have access to a 23 bank in that area within a half a mile. That would be 24 the closest. 25 Now, in this area also, transportation is 26 fairly good, I wouldn't say excellent, but the seniors 461 1 can't use the bank to get to the AMT [sic] machines. 2 That's what they left there, they left the AMT machines, 3 and they expect those people to go there and use those 4 machines. I tell you, that's not a very good idea, 5 because those machines and that bank that they left 6 there was ripped off. The machines was ripped off. So 7 it's not safe for seniors to be in that area at that 8 machine. 9 Now, I would also like to say I disagree with 10 this merger simply because the first of next year all 11 government checks will automatically be electronically 12 transmitted. Now, what does that mean to a senior 13 citizen that has to use an AMT machine? Can't speak to 14 anyone, most of them are afraid to use the machines. I 15 don't like to use them myself and I'm much younger than 16 they are. 17 I'll give you a little example of what 18 happened to me. I used AMT machine, put in the amount 19 of money that I wanted to withdraw, it went through the 20 transaction, I'm looking for my money to come out, lo 21 and behold, no money. So, it was the weekend. So what 22 happened? I had no one to talk to, had no place to go. 23 So, finally, Monday morning came around, I 24 went to the bank and I told them what happened. Well, 25 these things happen. There is no one there to talk to. 26 We need a bank in our area, we need tellers, so that the 462 1 senior citizens can talk to and get service through. 2 I would only ask that this merger not be 3 accepted. Thank you. 4 MS. SMITH: Thank you very much. 5 Ms. Blosser. 6 MS. BLOSSER: Yes. I'm Regina Blosser, and 7 I'm from the Ocean View Merced Heights Neighbors in 8 Action. Ceasar and I are both members of this public 9 safety and neighborhood improvement organization in the 10 Ocean View District of San Francisco. 11 The Federal Reserve sent me a copy of the 12 Bank of America closure policy adopted by the Social 13 Policy Committee of BofA on September 14th, 1993. I 14 wish to read it to you in as much time as I am allowed 15 item by item and then tell you how we believe that the 16 BofA did not follow its own closure policy when it 17 closed our bank on Ocean Avenue. 18 Item, bit by bit, every sentence, "Bank of 19 America is committed to providing access to banking 20 services to all members." Well, obviously it's not 21 committed to providing access to banking to us, because 22 it closed our branch. 23 Number two, "Furthermore, the bank will 24 reasonably strive to minimize any negative impact on the 25 community." BofA didn't strive to minimize any negative 26 impact on our community, in fact, when we make phone 463 1 calls to community development department that wrote 2 this little document, they are never returned. We call, 3 they don't call back. We leave an answer on the 4 answering machine. 5 Number three, "Review and concurrence by 6 corporate community development must be an integral part 7 of the California retail banking branch closure decision 8 process." Well, we would like to see this review 9 because we have not received any justification for 10 closing our branch through any sort of document. We 11 would like to see the review of this policy when it had 12 to do with closing our bank. 13 Number four -- again, we wish to see a review 14 of these closure recommendations. 15 Number four states, "Once a bank has been 16 identified for potential closure, a representative from 17 Corporate Community Development will review corporate 18 recommendations to be sure any negative impacts on the 19 community and its serving area are identified and 20 included in subsequent considerations." Well, we 21 certainly wrote them a lot of letters stating the 22 negative impact we knew would be created in our 23 commercial district. 24 Merchants can't make change anymore, they 25 depend on this. They have to have a secure place to put 26 their deposits. They no longer have this because the 464 1 branch closed. Business has gone down. They have to 2 spend their time going to another bank by car. They 3 cannot simply walk down the street to use banking 4 services that merchants need. 5 These things you would think would have to do 6 with potential negative impacts. The decision was 7 already made to close our bank before any of these 8 impacts were considered. On and on and on. 9 I'll submit the rest to you on a point-by- 10 point basis. This is their own branch closure policy. 11 I don't know how beholden they are to follow this 12 policy. I'll tell you item by item they did not follow 13 it. You can ask anyone of our residents in the OMI if 14 they realize or know they followed this closure policy. 15 This is their own document. 16 This is a map. I put a half-mile circle 17 around every branch in San Francisco that I could find 18 listed in the phone book. You can see it's all covered 19 in green. This obviously is downtown where a lot of 20 branches are needed to serve people. This is industrial 21 district. This is residential -- this little blank spot 22 here is residential area where there are no commercial 23 corridors to locate a bank. It's hilly country with 24 sparsely located houses. All of this is green in the 25 city. This red is our neighborhood. Do you see any 26 green half-mile radius circles going to our 465 1 neighborhood? 2 Now, we've been told that it's only a 3 three-minute drive to the next branch. But every other 4 neighborhood in this city is not required to make -- and 5 it's not a three-minute drive, let me tell you. It's 6 more like 15 or 20 minutes after you've found a parking 7 spot or you've been transferred to another bus to get 8 there. It is certainly not a three-minute ride to the 9 next branch. 10 Anyway, you see my point. I had to show you 11 this in color. This area is the only area that does not 12 have a green half-mile distance to the next nearest 13 branch. A lot of these overlap, lot of branches are 14 less than a half-mile in other neighborhoods, Bank of 15 America branches. 16 The yellow are what we call banker's rows. 17 There is a banker's row here, they passed resolution at 18 the planning department stating they wanted no more 19 banks on their commercial district because all they had 20 were banks and no practical places like grocery markets 21 or shoe stores, nothing but banks. And we can't even 22 find one bank. And we have tried, we have tried to find 23 Sterling. 24 The Mayor's Office of Economic Development 25 asked Sterling Bank to come to our neighborhood. When 26 they met with Bank of America representatives to take 466 1 over the old bank building and to use as a Sterling 2 Bank, Bank of America refused to remove its ATMs. So 3 Sterling did not want to locate there. 4 We have tried looking for, you know, 5 consumers unions, credit unions, that might expand their 6 field of membership. But you might know that the 7 American Bankers Association brought a lawsuit against 8 credit unions and presently credit unions cannot expand 9 its fields of membership to neighborhoods like ours that 10 need some kind of service, banking service. 11 Presently there is a bill in the house, and 12 perhaps it will be passed, and we will be able to find a 13 credit union, but right now we're stymied. We want a 14 bank and we can't get one. 15 Numerous non-profits have come to you to 16 state their satisfaction with these bank's financing of 17 their programs. This is fine, but the only thing our 18 neighbors and merchants want is a bank. We feel no 19 desire for charitable giving. 20 That's what we want, we want to take care of 21 ourselves and we want to be independent, self-sufficient 22 and prosperous, and we need a bank. That has been 23 denied us, and our attempts to get a bank have been 24 sabotaged by the Bank of America by not allowing ATMs 25 for a new bank, by the Bankers Association by not 26 allowing us to pursue a credit union as an alternative. 467 1 We think that we really must talk about this 2 merger and how they comply with the Community 3 Reinvestment Act. 4 MS. SMITH: Thank you very much. Please do 5 submit your complete statement and your map that you 6 have outlined in color as well. 7 Do you have questions? 8 MR. FRIERSON: Mr. Thompson, could I ask you, 9 do you work with both in-state and out-of-state banks as 10 a redevelopment director. 11 MR. THOMPSON: We work primarily with 12 in-state banks. 13 MR. FRIERSON: Could you just elaborate a 14 little bit, contrast your experiences working with 15 in-state versus out of state banks? 16 MS. SMITH: Would you move the mike closer to 17 you? 18 MR. THOMPSON: Sure. We haven't had much 19 experience to out-of-state banks. They don't market to 20 us. Where we do run into -- where we do work with them 21 is a result generally of a developer bringing the 22 out-of-state financing in toW. Sometimes it is banks, 23 sometimes it's insurance companies and other financial 24 institutions. But, for the most part, we rely on 25 working with the institutions that are here that are 26 headquartered here and with whom we can develop 468 1 relationships and with whom our non-profits develop 2 working relationships. 3 I have to tell you a brief story. I was 4 working with Bridge Housing on a housing development 5 project, and we were negotiating and I said, "Well, 6 what's in your commitment letter?" And they said, "What 7 commitment letter? We just call them up and tell them 8 what we need." Now, it would be nice for all of us to 9 have that kind of relationship and Bridge is a very 10 large and experienced housing development group. 11 But what it said was that the corporate 12 relationship that existed between Bridge Housing and 13 that financial institution, it's the other big one in 14 town, was such that they were able to do things to make 15 projects move and get done that you wouldn't be able to 16 do if you didn't have those kinds of senior executive 17 kinds of relationships that are both formal and 18 informal. 19 MS. SMITH: Thank you very much for coming 20 this morning and do submit your complete statements for 21 the record. You have until next Friday to do so, but 22 the sooner you can do it the better. Thank you.
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