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Public Meeting Transcripts

Public Meeting Regarding NationsBank and BankAmerica

Friday, July 10, 1998

Transcript of Panel Twenty-Two

                                                                   481



        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.

        23            Okay, I think we're ready to start.  And we'll

        24   start with Mr. Herald.

        25            MR. HAROLD:  Mr. Harold is still out here.

        26            MS. SMITH:  Oh.  Is there a chair for him?
 .

                                                                   482


         1            MR. HAROLD:  I suppose you would like me to begin

         2   now.  Thank you.

         3            MS. SMITH:  Yes, if you would pull the mike

         4   toward you.

         5            MR. HERALD:  My name is Michael Herald and I'm

         6   the Executive Director of Housing California.  We are a

         7   statewide coalition of affordable housing advocates,

         8   particularly nonprofit housing institutions, homeless

         9   advocates and those who advocate for the poor and for

        10   adequate public benefits.

        11            We are, as I said, a statewide organization.  We

        12   operate out of Sacramento, we represent the nonprofit

        13   trade associations, housing trade associations, that are

        14   around the state.  Our organization does a number of

        15   things that are important to the field of nonprofit

        16   housing.

        17            First of all, we advocate in the state

        18   legislature for additional subsidy dollars for affordable

        19   housing.  This year, we were successful in increasing the

        20   state low-income housing tax credit by $15 million pushing

        21   that figure up to $50 million.  We have an additional $35

        22   million in the state budget for affordable housing

        23   programs, the first new funding for housing this decade.

        24   And we've also been the principal sponsors and advocates

        25   for making sure the national guard armories are kept open

        26   in the winter months for homeless persons.
 .

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         1            We also sponsor the lowest largest low-income

         2   housing conference that we're aware of in the country, it

         3   draws over a thousand people annually to Sacramento to

         4   hear over -- to attend over 48 workshops during a lobbying

         5   visit to the state capitol.  We have several major keynote

         6   speakers who always come in.  We provide over 200

         7   scholarships to low-income persons and people of color so

         8   that they can come from far distances and attend our

         9   conference.  We pay all their costs.  In 1996, we

        10   conducted a voter registration drive that registered over

        11   32,000 low-income and homeless persons on sites all over

        12   the state.

        13            Lastly, we have been one of the principal

        14   advocates in the state over the last five years for

        15   increasing community investment by corporate -- by

        16   corporations.  Specifically, we have been very active in

        17   organizing and encouraging more community investment by

        18   insurance companies and we helped to create the California

        19   Organized Investment Network which is a pilot project

        20   operating out of the State Department of Insurance which

        21   has already generated over $40 million in new investment

        22   in California, and we are working closely with them to

        23   establish an intermediary called Impact Capital which will

        24   actually generate even more, up to $400 million over the

        25   next several years for affordable housing and community

        26   economic development.
 .

                                                                   484


         1            The members of our organization are very

         2   concerned about the merger of Bank of America and

         3   NationsBank.  While we don't come here today to

         4   specifically oppose the merger, we do want to share with

         5   you our concerns.

         6            The bank has been -- the CRA bank in California

         7   has been an absolutely crucial player to the development

         8   of nonprofit organizations in California.  They have

         9   funded and promoted and provide investment dollars for a

        10   number of activities.  I'll just touch on a few just to

        11   give you an example of some of the things they have worked

        12   on and have helped with.

        13            The Nonprofit Housing Association of Northern

        14   California located here in San Francisco has been the

        15   recipient of several grants, one of which was a major

        16   project to help which the bank assisted in funding which

        17   has been a very big project on NIMBE, the Not In My

        18   Backyard Experts, assisting community groups and nonprofit

        19   housing developers to overcome barriers and opposition the

        20   neighbors have and they've developed a lot of really

        21   profound materials that are being used all over the state.

        22            The bank has also been very helpful in promoting

        23   diversity in the nonprofit housing community.  They have

        24   funded grants to both the Nonprofit Housing Association

        25   and the California Coalition for Rural Housing, that I'm

        26   aware of, that have promoted diversity in the nonprofit
 .

                                                                   485


         1   housing community.  Each year they provide funding and

         2   those organizations place people of color at nonprofit

         3   organizations and really encourage their development in

         4   the nonprofit world.

         5            Other organizations like the Southern California

         6   Association of Nonprofit Housing have also benefited in

         7   similar ways.  The bank has been very supportive of them

         8   over the years.  They have been a very big player in

         9   marshaling more resources, subsidies, if you will, to

        10   build more affordable housing in Los Angeles.  The same is

        11   true with the Federation for Nonprofit Housing in

        12   San Diego, the bank has been there and has been a partner

        13   in this work with them.

        14            The California Coalition for Economic

        15   Development, likewise, they've been our partners in

        16   working to increase investment by insureds and they have

        17   also been benefited by the bank and have been constantly

        18   supported and helped through working on the issues that

        19   folks in the economic development world are concerned

        20   about.

        21            And I guess the way we would capture this whole

        22   thing is that the CRA bank has been critical, it's helped

        23   us to create partnerships.  We talked for many years about

        24   how we could create public-private partnerships.  In the

        25   last decade, the CRA bank has been the master of doing

        26   that.  They have been in every one of our conferences,
 .

                                                                   486


         1   they are virtually ubiquitous, you cannot turn around

         2   without seeing a BofA CRA person at the conferences

         3   working with nonprofit organizations.  They have deep and

         4   strong relationships built on real business relationships.

         5            Lately, we have even seen them increasingly hire

         6   out of the nonprofit world and hire to the bank.  And so

         7   there's such a cross-fertilization now going on between

         8   what the CRA bank does and what our nonprofit

         9   organizations in California do, that in some respects, I

        10   mean, when I go and meet people in the CRA bank, I knew

        11   them for years when they were with nonprofit

        12   organizations.  We all speak the same language.

        13            Just to sum up, three things that we're asking

        14   the Federal Reserve to do.  One is we're very concerned

        15   that NationsBank will not have the same relationship with

        16   our California nonprofits that we've experienced and

        17   enjoyed to date.  Particularly worried that there's not a

        18   long-term commitment and a firm commitment to funding

        19   multi-family housing.  And we really want the Federal

        20   Reserve to closely examine and make sure that NationsBank

        21   continues the work that the CRA bank has done and build on

        22   the trust that we have.

        23            Second, we are discouraged and concerned that

        24   there's not a greater level of charitable giving going to

        25   nonprofit organization that sponsor activities.  Likewise,

        26   we are concerned that there's not enough charitable giving
 .

                                                                   487


         1   going to the state and regional organizations which are

         2   sponsoring the activities that I described above.

         3            And then, lastly, I just wanted to say that

         4   California's needs, housing needs, are profound.  We have

         5   seen a series of recent studies that have come out

         6   recently that are describing -- that we have the worst

         7   rental market in the county.  Nine of the twelve worst

         8   homeownership markets.  And we would strongly encourage

         9   the bank to deepen their commitment beyond the $70 billion

        10   that they've committed to California.  NationsBank coming

        11   in and promoting the same thing, even though the size of

        12   the bank has doubled, is not appropriate.  Thank you.

        13            MS. SMITH:  Thank you very much.  Ms. Raucher.

        14            MS. RAUCHER:  Thank you very much.  My name is

        15   Deborah Raucher, and I'm with East Bay Housing

        16   Organizations.

        17            East Bay Housing Organizations is a coalition of

        18   affordable housing advocates in Alameda County.  Our

        19   membership of over 130 individuals and organizations

        20   represents nonprofit developers who create affordable

        21   housing and others in the affordable housing fields.

        22            My organization provides advocacy and education

        23   around the issue of affordable housing, including a

        24   campaign to educate people about the benefits of

        25   affordable housing.

        26            It is no secret that in the Bay Area housing
 .

                                                                   488


         1   costs are skyrocketing and affordable housing is becoming

         2   more and more difficult to find.  At developments in

         3   Alameda County, families must wait years in order to get

         4   access to affordable housing.  And as the federal

         5   government shrinks from its role in providing affordable

         6   housing, many seniors, families and people with

         7   disabilities are at risk of losing their housing,

         8   exacerbating the already existing crisis.

         9            In the East Bay, as in many other regions,

        10   nonprofit community-based developers have been at the

        11   forefront of addressing this need.  Nonprofit developers

        12   have created and maintained thousands of affordable units

        13   in Alameda County.  During the past five years, over 2500

        14   new affordable rental units have been created throughout

        15   the county.

        16            These developments are a vital asset to our

        17   community and house our senior citizens, people with

        18   disabilities, low-income working families, including our

        19   teachers, day-care workers, retail workers and, of course,

        20   our children.  Such developments are crucial, as well, to

        21   neighborhood revitalization efforts and stabilizing

        22   neighborhoods.

        23            For example, in East Oakland we've seen

        24   affordable housing developments revitalize neighborhoods

        25   and provide needed services, such as child care, health

        26   services and employment training.
 .

                                                                   489


         1            Time and time again, I've heard stories of

         2   families who are able to improve their employment

         3   situation, save money for the purchase of a home, see

         4   their children's performance in school improving as a

         5   result of having access to safe, decent and affordable

         6   housing.

         7            A tremendous need, however, still exists and more

         8   affordable housing is vitally important.  And this cannot

         9   happen without the participation of financial

        10   institutions.

        11            Bank of America, as one of the largest financial

        12   institutions in the region, has been an absolutely vital

        13   component in this equation in our communities and the loss

        14   of the resources provided by Bank of America for these

        15   purposes would be devastating to the creation of more

        16   affordable housing.

        17            The reason that I'm here today is that I'm very

        18   concerned about the lack of specificity and targeting in

        19   NationsBank's recently announced commitment to CRA, as

        20   well as their lack of a written commitment.  And I would

        21   like to urge you to consider requiring NationsBank to make

        22   a more specific and written commitment to their CRA

        23   requirements as a condition of the merger.

        24            Some of the examples of things which Bank of

        25   America has provided in this community has been their

        26   Community Development Bank where people have developed an
 .

                                                                   490


         1   expertise about the needs of California's communities.

         2   I'm concerned that a bank coming from outside the region

         3   won't have the same expertise about the issue of

         4   affordable housing and the specific needs of California

         5   communities.

         6            In addition, the Community Development Bank has

         7   been a vehicle for many developers in our county to access

         8   money through the Affordable Housing Program operated by

         9   the Federal Home Loan Bank.  There's been no commitment by

        10   NationsBank to continue this program.

        11            Other important programs that Bank of America

        12   operates that are at risk for being lost is the At Risk

        13   HUD Preservation Housing Projects.  Expiring HUD projects

        14   present an extremely serious threat to our communities'

        15   affordable housing stock and a loss of this resource could

        16   have broad negative impacts on our communities.

        17            In addition, there's been no commitment by

        18   NationsBank to prioritize nonprofit housing developers.

        19   In Alameda County, nonprofit developers have a level of

        20   expertise and commitment to providing affordable housing,

        21   and we would hope that NationsBank would make a commitment

        22   to utilize this resource.

        23            Another concern that I have is the potential for

        24   NationsBank to bring their own Community Development

        25   Corporation into our communities which will conflict with

        26   our already highly successful nonprofit development
 .

                                                                   491


         1   community and which will not be able to understand and

         2   address the needs of our communities as our local CDCs are

         3   able to do.

         4            Another major concern that I have is the risk of

         5   losing Bank of America's corporate giving program.

         6   Nonprofits in my community are doing vital and important

         7   work to help low-income communities, and a lot of these

         8   organizations, my own included, are dependent on

         9   charitable contributions.

        10            My own organization receives funding from Bank of

        11   America Corporate Charitable Giving Program for our

        12   operations to educate the general public about the need

        13   for affordable housing and the benefits for which

        14   affordable housing provides to communities.  And as

        15   resources for our work become more and more scarce, the

        16   loss of this would be devastating to nonprofit

        17   organizations in Alameda County.

        18            California's communities are unique and there

        19   needs to be a specific commitment which addresses the

        20   particular needs of our communities.  I urge you to

        21   consider not allowing this merger unless specific

        22   commitments are made by NationsBank.  Not only in the area

        23   of affordable housing finance and corporate contributions

        24   but in targeted home purchase lending, small business

        25   lending, community economic development, and consumer

        26   issues which affect low-income and minority communities.
 .

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         1   Thank you very much.

         2            MS. SMITH:  Thank you.  Ms. Haws.

         3            MS. HAWS:  Good morning.  This testimony is

         4   submitted on behalf of Sally Gallegos, Executive Director

         5   for United Indian Nations which is a job training and

         6   placement program that serves Native Americans, young

         7   adults 18 and over in the East Bay.

         8            United Indian Nations also has a community

         9   development corporation which is a nonprofit developer of

        10   housing and employment opportunities that are true to

        11   Native American cultures and values to promote the

        12   economic and social well-being for Native Americans in the

        13   San Francisco Bay Area.

        14            United Indian Nations has created an urban Indian

        15   initiative to acquire and develop property on closing

        16   military bases and other surplus federal lands that

        17   directly connects low-income communities to housing,

        18   employment and revenue generating opportunities.

        19            This initiative is a model development mechanism

        20   that can be replicated by urban and rural and Native

        21   American organizations to mitigate negative impacts on our

        22   community from historical federal policies.

        23            The Bureau of Indian Affairs Relocation Program

        24   initiated in the early 1950s and continued until the early

        25   '70s created dramatic changes in the number and character

        26   of American Indian populations in urban centers.  As a
 .

                                                                   493


         1   direct result of these federal programs, more than 85,000

         2   American Indians moved from reservations to urban areas

         3   and many others followed to join their extended families

         4   or find better employment or educational opportunities.

         5            According to the 1990 U.S. Census, which

         6   undercounts Indian people overall, more than 65 percent of

         7   American Indians now live in urban areas.  In addition,

         8   the urban Indian populations have historically been

         9   excluded from federal, state and foundation funding

        10   targeted for Native American projects located on or linked

        11   to -- excuse me, linked to the provision of service or

        12   products to reservations rural communities or tribal

        13   governments.

        14            The San Francisco Bay Area Native American

        15   community is one of the largest and fastest growing in

        16   Indian populations in the country today.  The 1990 census

        17   reported more than 40,000 Indians in the Bay Area,

        18   although we realize this number is closer to 60,000.

        19   Although it's one of the smallest ethnic minority groups

        20   in the area, it's the third largest concentration of urban

        21   Indians in the United States.  The demographic and

        22   socioeconomic stresses of the Bay Area Indian community

        23   reflects the history that brought Indians to this area.

        24   These conditions are exasperated and the following

        25   socioeconomic and psychological problems face our

        26   community.
 .

                                                                   494


         1            It is the fastest growing urban Indian population

         2   in the country today.  The population has increased more

         3   than 600 percent since 1960.  Following from this, the Bay

         4   Area has a disproportionate number of young people,

         5   approximately 40 percent of our population are under the

         6   age of 25.  Considering that suicide is the second leading

         7   cause of death for Indian adolescents, the need to

         8   meaningfully engage this growing population in moving

         9   towards family self-sufficiency is our highest priority.

        10   In order to engage these individuals, we have to raise

        11   educational levels.

        12            Bay Area Indians have considerably lower

        13   educational attainments than the general population.  In

        14   1990, nearly one in four American Indians had not earned

        15   their high school diploma.  Unemployment rates for

        16   American Indians are higher than those of other Bay Area

        17   residents.  In 1990, nine percent of the community was

        18   unemployed, as opposed to five percent for the general

        19   population.  Employed Bay Area American Indians, about

        20   20,000 in 1990, tended to occupy blue-collar positions and

        21   very few were managers.  Overall, the Bay Area American

        22   Indian population has a dramatically low average income.

        23   The per capita income in 1990 was $14,000, compared with

        24   19,600 for the area as a whole.  The proportion of

        25   American Indian families living in poverty is 11 percent,

        26   was nearly twice as high for all Bay Area families at six
 .

                                                                   495


         1   percent.  Additionally, more than one-third of Indian

         2   households headed by women were living in poverty, 35

         3   percent, compared to less than 20 percent for the total

         4   population.

         5            A low proportion of Bay Area American Indian

         6   families own property and the denial rates for American

         7   Indian mortgage lending has risen steadily.  Only 40

         8   percent of American Indian households owned homes in 1990,

         9   compared to 57 percent of all Bay Area households.

        10            United Indian Nations Community Development

        11   Corporation currently has three exciting projects in the

        12   Bay Area.  Transitional housing at the Alameda Naval Air

        13   Station.  We have an American Indian Museum and Cultural

        14   Center which is a regional educational museum at the Oak

        15   Knoll Naval Hospital.  And the United Oakland Eco Parks, a

        16   community driven redevelopment project for 220 acres at

        17   the Oakland Army Base.

        18            We are not here to oppose the merger between Bank

        19   of America and NationsBank.  But in order for United

        20   Indian Nations to continue to revitalize our community and

        21   our neighbors in the East Bay, we need to have continued

        22   access to Bank of America's level and range of

        23   contributions for nonprofit infrastructure and continued

        24   support for projects that target very low-income urban

        25   communities.

        26            The Bank of America has been a positive CRA force
 .

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         1   in California institutionalizing community reinvestment as

         2   a business through the Community Development Bank.

         3   Considerable expertise about community reinvestment as a

         4   business and about the needs of the California community

         5   has come to be housed at the Community Development Bank.

         6   Bank of America's Rural Initiative 2000 has targeted

         7   funding to reservations and rural American Indian projects

         8   bringing significant new benefits to those underserved

         9   communities.

        10            A merger with NationsBank should augment the

        11   current benefits to low-income communities in California

        12   and bring additional funding and range of services for

        13   urban initiatives without reducing the current grassroots

        14   service provided by Bank of America.  Thank you.

        15            MS. SMITH:  Thank you.  Ms. Hill.

        16            MS. HILL:  Good morning.  I'm Reverend Terry

        17   McCray-Hill and I'm the pastor of a parish community that

        18   has felt the pressures of the closure of a branch of Bank

        19   of America that has been in their community for over 75

        20   years.

        21            The significance of my testimony today is neither

        22   pro nor con but is merely a statement from one through a

        23   continuum of ministry in that community has heard the

        24   complaints of people from low to middle income within a

        25   distressed neighborhood that are anguished by the lack of

        26   an insured depository institution providing full-scale
 .

                                                                   497


         1   financial transactions after 75 years of continued

         2   services.

         3            Just for a brief synopsis of what our community

         4   looks like, you've probably heard testimony regarding this

         5   neighborhood over your course of proceedings, but it is

         6   the OMI, which stands for Oceanview Merced Heights in

         7   Ingleside.  This community is a potpourri of over 20,000

         8   low and middle class residents and has traditionally been

         9   underserved due, in part, to being included in the

        10   community immediately adjacent to them which is

        11   comparatively wealthy in proportion.

        12            Based on the 1990 census, our data indicates that

        13   OMI residents are 41 percent African American, 26 percent

        14   Asian-Pacific Islanders, 16 percent Caucasian, 11 percent

        15   Latino, and 6 percent others.  If we look at that in terms

        16   of the children and youth in that community, one out of

        17   every four persons is a child under the age of 18.

        18            Many of the residents and merchants located

        19   within this community were severely inconvenienced by the

        20   closure of the Ocean Avenue/Faxon branch of BofA.

        21   Discussions ranging from the disadvantages of a

        22   full-service financial institution in the life of the

        23   community, even to those discussions concerning life after

        24   closure, have persisted since the announcement of a

        25   possible closure in 1997.

        26            My purpose for being here today is merely to say
 .

                                                                   498


         1   that, though distressed, this community has found unity

         2   and hope within its diverse ethnic and socioeconomic

         3   mixture and would benefit greatly from programs sponsored

         4   by BofA that provide stress, economic, development and

         5   other ways of mitigating any perceived differences in risk

         6   and return between low income, minority and distressed

         7   neighborhoods and other neighborhoods as referenced in the

         8   Community Reinvestment Act of 1997.

         9            What can we do and what shall we look forward to

        10   Bank of America continuing to provide?  We look forward to

        11   programs that stress investment for low income, that

        12   stress how to save so that we now see capital gains, as

        13   opposed to just merely looking for a financial institution

        14   as a place for the cash and return of checks.

        15            We hope that the token and pledge made by Bank of

        16   America will be carried out invisible in this community

        17   should the merger occur between NationsBank Corporation.

        18            I thank you for your time and I look forward to

        19   seeing the fruits of your labor in collaboration with

        20   community, not only across California and this nation but,

        21   in particularly, in OMI.  Thank you.

        22            MS. SMITH:  Thank you very much.  Mr. Bivens.

        23            MR. BIVENS:  Good morning.  Presiding officer and

        24   members of the panel, my name is Bob Bivens and I am a

        25   member of the National Board of Directors and President of

        26   the Stockton, California branch of the National
 .

                                                                   499


         1   Association for the Advancement of Colored People.

         2   Generally known as the NAACP.

         3            I appreciate the opportunity to come before this

         4   body today to give testimony expressing concern and

         5   opposition for the public record regarding the proposed

         6   acquisition of Bank of America Corporation by NationsBank

         7   Corporation.  And to quote our chairman of the Board of

         8   Directors, the Honorable Julian Bond, bank mergers need to

         9   be opposed when banks do not address the specific needs of

        10   minorities and the poor.

        11            The NAACP was founded in 1909 and we are the

        12   oldest civil rights organization in America with over 200

        13   units in California and over 1700 units across this nation

        14   and in several countries abroad.  The NAACP has a long

        15   history of fighting for civil rights, economic and

        16   community development and self-sufficiency for African

        17   Americans and other ethnic minority groups and all

        18   disenfranchised people in America.

        19            While we remain focused on our founding

        20   principles, we have in recent years taken a more

        21   aggressive and proactive approach to achieving economic

        22   and community empowerment.

        23            Some of our concerns are the $350 billion

        24   announcement, while is an impressive sum of money,

        25   nonetheless, it lacks the specificity and targeted lending

        26   service and investment components needed in a full
 .

                                                                   500


         1   community reinvestment commitment.  More specifically, it

         2   does not address the critical needs of the California

         3   communities.

         4            The banks have refused to make specific and

         5   meaningful written commitment to California.  They have

         6   verbally told me and the national board -- as a national

         7   board member representing the NAACP for the State of

         8   California and the Stockton branch and members of the CRC

         9   in meetings that they are allocating approximately $70

        10   billion to California, the same 70 billion already

        11   allocated to this state under the 1997 Bank of America

        12   $140 billion lending goal.  In other words, the banks have

        13   not committed one additional penny to California and that

        14   will be the state that's most impacted by this merger,

        15   that will lose the headquarters of the largest bank and

        16   will see the state's -- Bank's successful community

        17   reinvestment program dismantled.

        18            No written commitment to provide specific

        19   products and services targeted at the unique needs and

        20   priorities of California's diverse regions and people.

        21            There is no written commitment to establish a

        22   floor goal, or targeting, for lending in this area and

        23   specifically the Central Valley of California for small

        24   businesses nor any commitment to target loans or lines of

        25   credit of 50,000 or less to small minority-owned

        26   businesses.
 .

                                                                   501


         1            There is no written commitment to prioritize

         2   nonprofit housing developments which will keep housing

         3   developments at the greatest level of affordability for

         4   the longest period of time.

         5            NationsBank has a CDC which develops its own

         6   housing developments.  The California branches of the

         7   NAACP are concerned that, were it to function in a similar

         8   manner here in California, it would conflict directly with

         9   the state's thriving infrastructure of nonprofit housing

        10   developments.  In negotiating meetings with the banks, the

        11   California State Conference of the NAACP and CRC members

        12   have requested that NationsBank only do investment and

        13   lending but no development in California.  NationsBank has

        14   categorically refused to make such a commitment.  Although

        15   the NAACP has an ongoing relationship with NationsBank

        16   with our Community Development Resource Centers, this has

        17   no bearing on California and Bank of America has not been

        18   agreeable to establish a similar type program.

        19            There's no written commitment to continue Bank of

        20   America's program of appointing a liaison on community and

        21   fair housing issues.

        22            There's no written commitment to develop a

        23   program to provide venture capital to minority-owned

        24   businesses, especially those located in the distressed and

        25   rural areas of California.

        26            There's no evidence to adopt a commitment to any
 .

                                                                   502


         1   written goals or purchasing a certain percentage of goods

         2   and services consumed in California's minority-owned

         3   vendors in California.

         4            I'm going to skip over a lot of this, I'll be

         5   submitting it to the record.  Regarding the proposed

         6   acquisition of Bank of America Corporation, the NAACP

         7   California State Conference of Branches and myself as an

         8   elected member of the board of directors from California

         9   stand ready as resources to ensure that certain goals are

        10   met and matters are not overlooked if a merger of the two

        11   institutions goes forward.

        12            We are extremely concerned about the consumer

        13   protection, competition and economic expansion.

        14   Successful and effective mergers are to lower costs,

        15   improve product quality or enhance efficiencies.  The

        16   proposed new bank's commitment of 350 billion in community

        17   development lending and investment over the next ten years

        18   is an indication of an expected enhanced delivery of

        19   services resulting from a merger.

        20            350 billion represents the largest community

        21   development commitment ever announced by a financial

        22   institution.  This is an opportunity for organizations

        23   like the NAACP to challenge this bank and an opportunity

        24   for the new bank to live up to the bank's chartered role

        25   as an economic leader in the communities.  Again, thank

        26   you for the opportunity to appear before you today.
 .

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         1            MS. SMITH:  Thank you very much.  Mr. Prince.

         2            MR. PRINCE:  Chairperson Smith, members of the

         3   board, thank you for the opportunity to testify today.

         4            My name is Chuck Prince, I'm the Executive

         5   Director of the Southeast Idaho Council of Governments.

         6   I'm not from California -- actually, I was raised in

         7   California but I'm one of the few members of the panel

         8   today that are here that isn't from a California

         9   organization.  I'm here today representing the National

        10   Association of Development Organizations, NADO.

        11            I'm here to express NADO's conditional support

        12   for the proposed merger.  NADO is a national association

        13   of regional development organizations serving rural and

        14   small metropolitan communities throughout America.  The

        15   association, a public interest group founded in 1967,

        16   provides its members with training, information and

        17   representation and has been a leader in promoting the

        18   interests of America's frequently forgotten small towns

        19   and rural regions.

        20            Regional development organizations are

        21   multi-county service delivery providers that pool

        22   otherwise thin local resources across a region and are

        23   catalysts for cooperation between citizens and the public

        24   and private sectors.  Most of America's rural towns --

        25   rural areas and small towns which are home to over 77

        26   million people are sreved by regional development
 .

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         1   organizations.  One of the most important functions of

         2   these organizations is capitalizing and managing revolving

         3   loan funds that serve the credit needs of small high risk

         4   businesses unable to obtain loans on their own for private

         5   commercial lenders.  Often, these revolving loan funds are

         6   the only available non-commercial source of credit, so

         7   they play an important role in local economic development.

         8            This brings me to the focus of our concerns and

         9   our conditioned support for the proposed merger.  The most

        10   compelling reason we feel this merger should be approved

        11   is the $350 billion ten year commitment to community

        12   development lending made by NationsBank/Bank of America on

        13   May 20, 1998.  Simply put, this commitment is

        14   extraordinary and will have a long-reaching impact both in

        15   the community served by the merged bank and in

        16   establishing a benchmark for future bank mergers.

        17   However, even with the $350 billion commitment, we feel

        18   the merger should be approved with very specific

        19   conditions.

        20            First, that the Bank of America Community

        21   Development Bank be retained and expanded in both mission

        22   and function.  The Community Development Bank is unique.

        23   Its vision statement which reads, in part, to support

        24   community growth and prosperity by being the catalyst for

        25   or by forming public/private partnerships for funding, has

        26   led directly to a work program which loaned over $560
 .

                                                                   505


         1   billion -- excuse me, $560 million for affordable housing

         2   in 1997.  The Community Development Bank's great success

         3   is attributable to its outreach to nonprofit housing

         4   development network as a pool of partners and borrowers.

         5   And recognizing that the affordable housing lending

         6   process requires specialized skills, many of the Community

         7   Development Bank's 300 staff were recruited from this

         8   nonprofit network.  The NationsBank/Bank of America

         9   Corporation $350 billion commitment includes $115 billion

        10   for affordable housing.  The only logical steward and

        11   conduit for these funds is the Bank of America Community

        12   Development Bank.

        13            Two, using the Bank of America Community

        14   Development Bank's affordable housing development

        15   activities as a template, the merged bank should create an

        16   entity dedicated solely to community economic development.

        17   Just as the Community Development Bank has reached out to

        18   the nonprofit housing development corporations for

        19   affordable housing partnerships, this new entity should

        20   reach out to the community economic developing network,

        21   including regional development organizations, for business

        22   and job creation ventures.  Only by making an

        23   organizational and structural commitment to the community

        24   economic development will the merged banks' actual lending

        25   and investments come close to matching the promises of its

        26   May 20th, 1998 press release.
 .

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         1            Three, we commend the NationsBank/Bank of America

         2   $10 billion commitment to rural America.  We ask that the

         3   purposes of this rural pool be sufficiently broad to

         4   include financing for community facility and

         5   infrastructure improvements.  Many small cities, special

         6   districts and counties often find it difficult to finance

         7   city halls, jails, water and sewer systems, community

         8   centers and streets.  Participation of the new BankAmerica

         9   in meeting these credits needs would be a valued

        10   contribution in efforts to better rural America.

        11            Four, the merged bank has also pledged $180

        12   billion for small business lending and $25 billion for

        13   economic development.  To say that these are substantial

        14   amounts of needed capital is a gross understatement.

        15   However, we're greatly concerned that the lion's share of

        16   these funds will be used for government insured loans.

        17   While these loans are an important tool in job creation

        18   efforts, they truly represent little risk to the bank and

        19   only serve a very narrow spectrum of the needs of the

        20   small business credit continuum.

        21            In order for these funds to have greatest impact,

        22   we believe a large portion of these funds should be

        23   targeted towards direct loans to higher risk borrowers

        24   including business start-ups, investments in and grants to

        25   revolving loan funds of regional development

        26   organizations, creation of an accessible secondary market
 .

                                                                   507


         1   for loans made by development organizations through the

         2   revolving loan funds, creation of a set-aside for small

         3   business lending and investment in rural and small

         4   metropolitan communities for ventures of any size.

         5            A recent NationsBank/Bank of America publication

         6   calls for only making loans to ventures creating more than

         7   25 jobs in rural or lower and moderate income communities.

         8   This limitation is artificial and simply doesn't reflect

         9   the job creation activities in rural America where three

        10   and four employee ventures are the rule and 25 employee

        11   ventures the major exception.

        12            And four, the development of venture capital

        13   pools at regional development organizations and other

        14   regional multi-state intermediaries.

        15            Only by adding these higher risk activities in

        16   with the safety of government insured loans will the

        17   merged bank begin to approach meeting the credit needs of

        18   small world businesses.

        19            In conclusion, Chairperson Smith, NADO

        20   conditionally supports this merger.  As stated at the

        21   outset, a $350 billion commitment to community development

        22   lending and investment is unprecedented.  However,

        23   translating funding commitment to real impact requires a

        24   focused plan of action.

        25            This plan should contain, one, retention of the

        26   Bank of America Community Development Bank.  Two, creation
 .

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         1   of an equivalent to the Community Development Bank

         2   focusing on community economic development.  Three, a

         3   vision of the community development needs of rural

         4   America's broad enough to include infrastructure finance.

         5   And four, an approach to small business and economic

         6   development lending that features a rural set-aside and a

         7   mix of both government insured and non-traditional higher

         8   risk loans and investments.

         9            Thank you for the opportunity to testify today.

        10            MS. SMITH:  Thank you very much.  Questions?

        11            MR. FRIERSON:  I'd like to thank all the

        12   panelists for coming here and giving us this very

        13   important information, and to remind you that if you do

        14   have written statements you can submit them for the record

        15   at the table outside , and we'll make sure they're

        16   included as part of the record, it will be reviewed in

        17   this application.  Thank you very much.


Last update: December 3, 2010