skip to main navigation skip to secondary navigation skip to content
Board of Governors of the Federal Reserve System
skip to content

Public Meeting Transcripts

Public Meeting Regarding NationsBank and BankAmerica

Friday, July 10, 1998

Transcript of Panel Twenty-One

                                                                  469


         1            MS. SMITH:  I think we're ready for Panel 20.

         2   And my notes say that I should start with -- is it

         3   Mr. Serpan?

         4            MR. SERPAN:  Yes.  You want me to start?

         5            MS. SMITH:  Please.

         6            MR. SERPAN:  My name is Rhea Serpan and I'm the

         7   President and CEO of the San Francisco Chamber of

         8   Commerce.  And I appreciate this opportunity to speak on

         9   behalf of the Chamber regarding the merger of BankAmerica

        10   and NationsBank.

        11            Since its founding in 1904 in the city here,

        12   BankAmerica has been integral to the development of the

        13   business community in San Francisco.  The Bank has been a

        14   long-standing member of the San Francisco Chamber of

        15   Commerce.  In fact, A.P. Giannini was on its board and

        16   that involvement continues to this day.  BankAmerica has

        17   generously supported the Chamber's many activities,

        18   including providing resources to our business development

        19   programs and contributing both expertise and funding.  For

        20   instance, BankAmerica has contributed $250,000 over three

        21   years to SF Works, the welfare-to-work initiative created

        22   by the Chamber and the Committee on Jobs and United Way

        23   here in the city.

        24            BankAmerica has been a generous contributor to

        25   economic development projects, including a multi-year

        26   commitment to investment in the San Francisco Partnership,
 .

                                                                   470


         1   a public-private partnership launched by the Chamber to

         2   attract and retain business and jobs in San Francisco.

         3   And BankAmerica has been a strong supporter and

         4   contributor to the Bay Area Sports Hall of Fame Youth

         5   Fund, Business Arts Council, Business Volenteers for the

         6   Arts and Leadership San Francisco, all chamber programs.

         7            And throughout its history, BankAmerica has been

         8   involved and a responsible corporate participant in the

         9   San Francisco community.  BankAmerica recognizes that

        10   small businesses are the job creation engine here in our

        11   city and drive the economy and has made a substantial

        12   investment in San Francisco area firms, and currently the

        13   bank has small business loan commitments in the Bay Area

        14   that total $708 million.  And since 1990, the Bank has

        15   loaned 235 and a half million dollars to support the

        16   construction of 4,500 affordable housing units in the

        17   region.  And the bank has contributed 14 million in the

        18   past three years to arts, education and health and human

        19   services, including a $5 million commitment to the United

        20   Way.

        21            The Chamber fully expects BankAmerica to continue

        22   to play an important leadership role in our community.  We

        23   believe that as their business grows, and it will, that

        24   their corporate involvement will also expand.

        25            BankAmerica's merger with NationsBank along with

        26   the announced merger of Wells Fargo and Northwest Bank
 .

                                                                   471


         1   will reaffirm San Francisco as a national and global

         2   banking center.  BankAmerica is expected to take advantage

         3   of and fully participate in our region's growth and to

         4   benefit from the strategic advantages of doing business in

         5   San Francisco.  San Francisco is the center of a strong

         6   and growing Bay Area economy, and is the gateway to the

         7   Asian marketplace and the place where Silicon Valley does

         8   its banking.

         9            While there will undoubtedly be some job

        10   dislocation, new job opportunities are going to be created

        11   as a result of this merger.  And, of course, it's too

        12   early to tell and estimate with any accuracy exactly what

        13   the net effect might be on jobs, but I'm convinced that

        14   the combined strengths of the two institutions as they

        15   come together creates the potential for job growth that

        16   may not have otherwise been possible.  It is significant,

        17   I think, that the banks' combined corporate and investment

        18   banking headquarters are going to be here in

        19   San Francisco, that's an important part of the banking

        20   institution.

        21            The Chamber is proud of the strengths of our

        22   community and we're confident in the continued growth of

        23   our economy and we strongly believe that BankAmerica will

        24   continue to be a major contributor to both.  Thank you.

        25            MS. SMITH:  Thank you very much.  We'll go to

        26   Ms. Ferniza.
 .

                                                                   472


         1            MS. FERNIZA:  Thank you.  Good morning, my name

         2   is Sandra Ferniza and I'm President and CEO of the Arizona

         3   Hispanic Chamber of Commerce located in Phoenix, Arizona.

         4            The Chamber of Commerce is pleased to have the

         5   opportunity to testify on behalf of the proposed Bank of

         6   America and NationsBank merger.  In an era of decreasing

         7   public assistance to individuals of low and moderate

         8   income and small, women or minority-owned businesses,

         9   banks, with the encouragment of the Community Reinvestment

        10   Act and the conscious of its board members, are a major

        11   source of hope to those who dream of home or small

        12   business ownership.

        13            Institutions such as Bank of America have been a

        14   source, both directly and indirectly, of credit and

        15   capital to those who lack access to conventional financial

        16   services through innovative projects and community

        17   partnerships.  The current industry trend of bank

        18   consolidation poses serious questions for those of us who

        19   work with financial institutions in an effort to encourage

        20   investment, leveraging, financing and creation or

        21   preservation of jobs in less affluent communities.

        22   However, our experience with Bank of America has led us to

        23   include that the proposed merger will result in a

        24   continuation and/or expansion of the bank's commitment to

        25   serving poor and diverse communities.

        26            Bank of America has been an active member and
 .

                                                                   473


         1   strong corporate partner of the Arizona Hispanic Chamber

         2   of Commerce since 1980.  In addition, it was a founding

         3   member of Los Amigos de AHCC, a corporate advisory group

         4   that provides both financial and business value to the

         5   chamber and its small business members.  Bank of America's

         6   recognition and understanding and commitment to the

         7   growing Hispanic market is borne out in two key areas for

         8   our chamber.  One, in a publication known as DATOS, Focus

         9   on Arizona's Hispanic Market, of which the bank is a

        10   premier sponsor, and has reached an audience of

        11   non-believers about the potential Hispanic market, we are

        12   extremely grateful for that opportunity.  And, two,

        13   through our Minority Businesses Development Center which

        14   the bank has provided both financial and technical

        15   assistance to the mission of the greater Phoenix Minority

        16   Business Development Center which the chamber operates.

        17   Also, a member of the bank staff serves on our board of

        18   directors and its bank officers and staff regularly

        19   participate in chamber business seminars, host networking

        20   mixers to highlight procurement opportunities and serve as

        21   speakers and instructors in our business education series

        22   known as NxLevel and Su Plan de Negocio.  So they've put

        23   their money where their mouth is, not only in terms of

        24   dollars, but in terms of active participation with the

        25   chamber and its memberships.

        26            Bank of America has also demonstrated a
 .

                                                                   474


         1   commitment to diversity in the board room at all levels of

         2   management and in a unique bilingual customer service that

         3   has thrived in our valley called CuentaTel.  Through

         4   partnerships with organizations like others and ours, it

         5   supports training to consumers, business owners and others

         6   who play a promising and important role in developing the

         7   social and economic fabric of America.

         8            Most importantly to the chamber, the merger

         9   presents new opportunities for the local business

        10   community.  A nationwide network that has greater access

        11   to global financial markets is consistent with the growing

        12   presence of mutual customers seeking to retain and expand

        13   their business success and it is particularly important in

        14   Arizona as a border state.  It also presents greater ease

        15   of service for individual consumers whose mobility is a

        16   vital part of an expanding commodity and economy.

        17            The chamber expects the activities previously

        18   mentioned to continue after the merger of the two

        19   institutions.  I want to reiterate that, based on

        20   experience, we feel confident that the bank will not only

        21   continue its outstanding community service but also seek

        22   new ways to efficiently and effectively serve the needs of

        23   a diverse customer base, both large and small.  That

        24   commitment we feel has been assured through the pledge of

        25   the $350 billion to serve communities most in need.

        26            In addition, let me add that personally my
 .

                                                                   475


         1   husband and I have been Bank of America customers since it

         2   assumed responsibility for the former Western Savings &

         3   Loan Association and its Security Pacific institutions.

         4   That transaction convinced me that it's possible to

         5   survive and thrive from a change at Bank of America while

         6   maintaining a high level of customer service.  We are all

         7   of us resistant to change but we must look for the new

         8   opportunities that change brings us.  Thank you for your

         9   attention.

        10            MS. SMITH:  Thank you very much.  Mr. Tierney.

        11            MR. TIERNEY:  Presiding Officer Smith and panel

        12   members, thank you for this opportunity to provide

        13   testimony at this hearing.  My name is James Tierney and I

        14   have asked for this time to describe my very positive

        15   working experience with Bank of America staff in Portland,

        16   Oregon.  I'm the Deputy Director of Community Action Team

        17   in charge of community development.  We're a community

        18   based nonprofit anti-poverty agency serving three rural

        19   counties in northwest Oregon.  Like many community action

        20   agencies around the country, we provide a number of

        21   coordinated anti-poverty programs such as Head Start,

        22   child and family development programs, Low Income Energy

        23   Assistance and homeless assistance.  In the area of

        24   community development, we also assist our communities with

        25   the development and rehabilitation of affordable housing,

        26   affordable homeownership programs, single-family
 .

                                                                   476


         1   rehabilitation and community facilities development.

         2            My understanding of the Community Reinvestment

         3   Act is that a lender is expected to actively seek ways to

         4   meet the credit needs of its community.  As a community

         5   organizer working in a rural area, I find the communities

         6   to find themselves usually at populations no larger than

         7   10,000 persons.  In our three county service area, two of

         8   our communities are served by one bank based in the three

         9   county area.  All other commercial banking is done with

        10   banks which serve all or most of the state, usually many

        11   states.  Given the realities of the commercial banking

        12   industry in the 1990s, each of our communities must look

        13   outside the community for some or all of its banking

        14   needs.

        15            While working in our communities have been

        16   approached by local bankers representing several banks,

        17   with one exception, these bank officials have understood

        18   very little about community development.  Rather than

        19   offering useful partnerships, they have sought information

        20   and offered referral services.  Bank of America has been

        21   different.  In our community development work, no bank,

        22   local or otherwise, has supported our community

        23   development efforts like Bank of America.

        24            In the last eight years, I've arranged three

        25   loans with the help of Bank of America staff.  I've also

        26   arranged one with a statewide nonprofit bank consortium
 .

                                                                   477


         1   and one with a government agency.  The difference in

         2   support service is marked.  For me, the irony of these

         3   experiences is breathtaking.  I feel that I have had to

         4   fight tooth and nail with the nonprofit government agency

         5   to simply get good loans underwritten.  In these cases I

         6   felt that my lending partner was seeking to underwtie the

         7   transaction in a way that reduced my agency's development

         8   and operating cushions to such low levels that it would

         9   deny us sufficient capacity to continue our work.

        10            Working with the Portland Bank of America staff

        11   is an entirely different experience.  They appear to be

        12   actively planning for our future.  The bank staff has

        13   encouraged us to take on new roles increasing our

        14   efficiency and effectiveness.  During our campaign to

        15   organize and develop the capacity of other nonprofits

        16   working in our three county service area, we received bank

        17   support in the form of time, expertise and money.  The

        18   bank staff has taken a personal interest in the

        19   development and capacity of my agency and me personally.

        20   This has taken the form of scholarships, supportive

        21   information and advice.

        22            I cannot speak about any of the Bank of America

        23   CRA work except that which I've seen in Portland nor do I

        24   have any experience with NationsBank.  However, I can say

        25   the Bank of America and its Portland's staff has made a

        26   huge difference in our ability for us to do our work.
 .

                                                                   478


         1   Thank you.

         2            MS. SMITH:  Thank you.  I don't know how to

         3   pronounce your name.

         4            MS. HAUGER:  It's Hauger.

         5            MS. SMITH:  Ms. Hauger.

         6            MS. HAUGER:  Thank you.  Thank you for the

         7   opportunity to allow me testify for the Community Housing

         8   Resources of Arizona located in Phoenix on behalf of our

         9   experience with Bank of America, Arizona.  I'm Executive

        10   Director of Community Housing Resources of Arizona.  We're

        11   a small HUD approved housing counseling agency established

        12   in 1987 to promote fair housing and equal housing

        13   opportunity for residents of Phoenix.

        14            In 1990, we expanded our services to include

        15   pre-purchase counseling and affordable homeownership

        16   programs.  In the eight years since then, over 2100 low

        17   and moderate income families have completed our one-on-one

        18   counseling program and become homeowners.  And over 600

        19   have received downpayment closing cost grants.  On

        20   average, 27 families per month become homeowners taking

        21   part in our services.

        22            In order to make the dream of homeownership a

        23   reality for lower income and minority households,

        24   Community Housing Resources relies heavily on the support

        25   of financial institutions.  Over the last six years, Bank

        26   of America Arizona has been instrumental in our success by
 .

                                                                   479


         1   providing significant funding and management support.  We

         2   sincerely hope that the mutually beneficial partnership

         3   with the bank will continue after the merger is completed.

         4   Bank of America has recognized the value of pre-purchase

         5   counseling in preparing lower income households for

         6   homeownership by contracting with our agency to provide

         7   pre-purchase counseling for low income first-time home

         8   buyers.

         9            BofA has provided first mortgages for our

        10   clients, have given us generous grants to support our

        11   counseling program.  These grants not only have provided

        12   operating funds for us but they've also provided the very

        13   necessary matching funds needed to secure government

        14   grants for downpayment assistance programs and

        15   homeownership counseling.

        16            In addition to this generous financial support,

        17   BofA Arizona employees James Rayburn, Juan Salgado and

        18   Darryl Tenenbaum has unselfishly helped and guided our

        19   small agency by providing hundreds of hours of management

        20   service.  They have also served on our board of directors

        21   and provided technical assistance which has ensured that

        22   we have been able to meet our goals and missions.

        23            In addition, as a director since 1990, James

        24   Rayburn has saved our organization thousands of dollars by

        25   providing countless hours of pro bono legal advice.

        26            Community Housing Resources strives to provide
 .

                                                                   480


         1   homeownership opportunities for underserved populations,

         2   including persons with disabilities and ethnic minority

         3   households.  Over 60 percent of the clients that we serve

         4   are Hispanic and more than one-third of all of our

         5   one-on-one counseling sessions are conducted in Spanish.

         6            Our main concern with the proposed merger is that

         7   our low-income and minority clients will be underserved by

         8   the creation of such a large bank.  We are, however,

         9   encouraged by recent articles describing Nationsbank's

        10   increased efforts to serve the growing Hispanic community

        11   and we trust that those efforts will extend to all

        12   traditionally underserved communities in Arizona.

        13            We support the merger with the expectation that

        14   the current level of support for our organization,

        15   including the employee involvement from the bank, will

        16   continue and that the new bank will provide increased

        17   homeownership opportunities for the low-income and

        18   minority communities we serve.  Thank you.

        19            MS. SMITH:  Thank you very much.  I have a

        20   question for you on the homeownership counseling.  Does

        21   your organization participate in the application process

        22   or is that handled by bank personnel?

        23            MS. HAUGER:  That is handled by bank personnel.

        24            MS. SMITH:  So how does your operation work,

        25   then, on the counseling side?

        26            MS. HAUGER:  What we do is act as though we are a
 .

                                                                   481


         1   lender as far as looking at all the information on the

         2   income, debt, credit and cash resources of our clients.

         3   We look at that, we advise them on their ability to

         4   qualify for a mortgage, whether we think that they can

         5   meet minimum lender requirements.  We give them

         6   information on a number of types of loans that are

         7   available showing them what it would cost them, what they

         8   can afford getting that type of loan.  And also, you know,

         9   what the benefits might be from one type of loan to

        10   another.  Based on that, then our clients make their

        11   decision on the type of loan they would like.  And we

        12   prepare all the information for them to take to the

        13   lender.

        14            MS. SMITH:  And you direct them to several

        15   lenders or --

        16            MS. HAUGER:  Yes.  So they, basically, make the

        17   choice on what type of product they want and what lender

        18   they would like to go to.

        19            MS. SMITH:  Thank you.  Question?  Any other

        20   questions?  Well, thank you very much for coming this

        21   morning.  And it looks as if we're ready for the next

        22   panel.

Last update: December 3, 2010