Home > Banking Information & Regulation > Public Meeting Transcripts > PMT - Agendas August 13, 1998
Public Meeting Transcripts
Public Meeting Regarding Banc One and First Chicago
Thursday, August 13, 1998
Transcript of Panel Ten
17 MS. RANGAN: Good afternoon. My name is Rashmi 18 Rangan. I'm the Executive Director of Delaware 19 Community Reinvestment Action Council. I am also a 20 board member of the National Community Reinvestment 21 Coalition, which is a great association of 650 plus 22 organizations. I am also a member of Inner City 23 Press Community on the move. 24 And I am here today to testify against 172 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 this merger. And this is the second time I'm 2 testifying against Banc One acquiring another 3 bank. 4 And the last time, we had brought selfish 5 use before the Federal Reserve Board and many of 6 them have been justified in today's testimony. 7 Every concern that we raised earlier has been 8 spoken today. 9 The treatment of the consumers, the 10 customers at Banc One's hands, the fair lending 11 concerns that we have had, the predatory lending 12 concerns that we have had about Banc One have been 13 attested to today. 14 Before I address my concerns with Banc 15 One, let me address my concerns with this 16 particular process today. 17 It is probably appropriate that you have 18 renamed public hearings by calling it public 19 meetings. Apparently you're no longer willing to 20 hear what we have to say, but we do have a lot to 21 say, particularly about Banc One's record. 22 Based on the factors that the Board must 23 consider in approving this application and the 24 managerial issues, many, many concerns have already 173 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 been addressed, but I will refer you to a few. 2 The first one, Dr. Kenneth Thomas has 3 already commented on in his July 27th, 1998, 4 communication to you regarding the management's 5 apparent violation of confidentiality of individual 6 examination ratings on Y2K. 7 In Arizona, the Attorney General's case, 8 and in Texas the HUD's apparent acceptance that 9 there is discrimination, Banc One has been charged 10 with discrimination, and this after the Fed's own 11 conditional approval in recent application by Banc 12 One where Banc One acquired First USA, a Delaware 13 bank. 14 Apparently, Banc One failed to meet the 15 Fed's condition. On these grounds alone, this 16 application should be denied. 17 Banc One, we charged previously -- we'll 18 repeat this charge today -- is a predatory lender 19 through its finance company. And while we have 20 raised this issue many times, we sense that the 21 Feds really do not understand the full import of 22 our accusations. Therefore, attached as Exhibit A 23 to my testimony today is a catalogue of predatory 24 mortgage lending abusive practices prepared by 174 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 Mr. Bill Brenan of Atlanta Legal Aid Society. 2 Please review that very carefully. 3 We have asked the Feds previously to 4 review the finance company's subsidiary of the bank 5 holding company and its lending record. We repeat 6 again today, we and others have presented ample 7 evidence of the existence of predatory and 8 discriminatory lending practices practiced by Banc 9 One finance companies. 10 In 1995 through the finance company, it 11 approved 7,805 loans. 1996, 32,712. So it has 12 actually grown in size, a 319 percent increase of 13 lending through its finance company. 14 You have seen many HMDA analyses all point 15 to the very same concern that we have for the 16 second time presented today. 17 On convenience and needs issues, how can 18 the convenience and needs of my community be served 19 when the acquirer, Banc One, has shown a remarkable 20 disdain for Delaware? 21 May I remind the Board of concerns we 22 raised when Banc One applied to acquire First USA? 23 First USA, a limited purpose bank, cited its 24 inability to meet its CRA obligations and, hence, 175 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 established First USA, FSB. 2 When Banc One acquired First USA, the 3 thrift was gone. Relative to Banc One/First USA, 4 after the merger, meeting the convenience and needs 5 of my community, it is abysmal. 6 In comparison, FCC and its CRA officer, 7 Mr. Roland Ridgeway, have not let the standard 8 excuse that. The limited purpose bank status nor 9 the Delaware Financial Center Development Act 10 restrictions get in the way of meeting these 11 obligations under the CRA. 12 At issue here is not -- I'll take only 13 half a minute. At issue is not who, where and how 14 much each bank does or gives individually or 15 collectively. At issue here today is the who from, 16 the where from and the how much does Banc One take 17 away from the community through its predatory 18 lending practices. On these grounds alone, this 19 application must be denied. 20 Thank you. 21 MS. SMITH: Thank you very much. 22 Mr. Reynolds. 23 MR. REYNOLDS: Thank you. Greetings. My name 24 is Jerry Reynolds. I will be delivering the 176 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 remarks of Rebecca Adamson, President of First 2 Nations Development Institute, a Native American 3 economic development organization of 18 years 4 standing headquartered in Fredericksburg, 5 Virginia. 6 Ms. Adamson could not be here today, but 7 from our Information Services Department, I monitor 8 Community Reinvestment Act issues as they pertain 9 to our country. I'm a board member of the National 10 Community Reinvestment Coalition. 11 I spoke with a consultant to a tribal 12 council some weeks ago. In the midst of our 13 conversation, he made the statement: The tribe is 14 isolated. It's a 200-mile round trip for 15 necessities like cash. 16 More than three-quarters of one million 17 Native Americans and tribes reside in the market 18 area that would be created in the proposed 19 acquisition of First Chicago NBD Corporation by 20 Banc One. Many of them are as remote to the 21 nearest banking services, and some more so. 22 Sadly, a First Nations Development 23 Institute survey, which is attached to our written 24 testimony, of Native American banking needs within 177 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 the merged entities' market area found that much 2 less remote tribes, tribes within a 20 to 40-mile 3 range of Banc One branches, have been regularly 4 neglected by Banc One. 5 My point is that geography is a major 6 hurdle to the provision of banking and financial 7 services to Native Americans. The proposed merger, 8 if approved, would provide the new entity with the 9 resources to get over this geographic hurdle. With 10 these resources, the bank should be able to absorb 11 the development cost of products and services that 12 would enable it to surmount some of the geographic 13 challenges to lending in Indian Country. 14 Given that Banc One's record of services 15 to Native American communities according to our 16 survey findings is characterized by a concentration 17 on a cream of the crop, on those native communities 18 whose more evolved economies translate to lower 19 risk for banking activities, the Board's approval 20 of the merger should be contingent upon substantial 21 improvements in Banc One's outreach and deliverable 22 services to native communities, including urban 23 native populations who starve for credit in cities 24 with an abundance of Banc One branches. 178 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 Again, the augmented resources of the 2 merged entities should provide the incentive for 3 business initiatives. 4 Further, the new Banc One should be 5 required to develop plans for native specific loan 6 products in coordination with the diversity of 7 Native American groups, an approach recommended 8 toward other community groups by First Chicago 9 chairman Verne Istock. This would contribute in 10 future to sidetracking such avoidable debacles as 11 Banc One's disaster and with mobile unit banks. 12 When the initiative first began to bring 13 credibility Banc One's way through newspaper 14 articles and conference presentations, First 15 Nations was reluctant to criticize a financial 16 institution that was at least trying to make credit 17 available in Indian Country. 18 Still, we had strong doubts about an 19 initiative that amounted to little more than 20 rolling out 20th Century technology, the 21 automobile, to serve 19th Century needs, personal 22 and consumer loans. 23 Now that Banc One having reaped a windfall 24 of publicity but no profit has garaged this 179 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 antiquated road show and left Indian Country to 2 overcome its failure, we can assert with certainty 3 that sustained collaboration with the diversity of 4 native groups has been the missing ingredient in 5 Banc One's limited approaches to Indian Country. 6 For starters, mobile units in the 21st 7 century must be fully operational banks securitized 8 through satellite communications technology. No 9 one will have to ride shotgun. 10 In the event the merger is approved, we 11 trust the Federal Reserve to urge the updated 12 approach to mobile unit banking on Banc One's 13 attention. 14 I want to digress briefly from my prepared 15 remarks to say that I was in a major meeting in 16 banking in Indian Country, and already, some Native 17 Americans are saying that they can't see mobile 18 unit banking as a way to serve Indian Country. . 19 I believe that Banc One's failure in this 20 regard has a chance to make mobile unit banking a 21 nonstarter in Indian Country. That would be a 22 great misfortune. 23 First Nations also wishes to acknowledge 24 some of the outstanding lending services that Banc 180 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 One does provide in some native communities. 2 Some of these include a recent grant to a 3 North American Native Bankers Association. They 4 recently went on a site visit to Wisconsin to visit 5 some of the tribes there and their lending needs -- 6 of course this happened while the merger process 7 was in full swing -- Gila and Camp Verde Yavapai 8 Apache Nation in Arizona as well as an internal 9 appointment of a team to familiarize Banc One 10 Mortgage Corporation with HUD Section 184 loan 11 guarantee programs show a flexibility and 12 consideration worthy of the merged entity. 13 Give me half a minute here. 14 Such commitments are considerable in 15 themselves, not to be minimized. But on this 16 momentous occasion, First Nations can affirm the 17 proposed merger only on the understanding that all 18 of Banc One's efforts in Indian Country to date 19 amount to a modest beginning. 20 We call upon bank regulators to ride herd 21 on their post-merger follow-through and upon Banc 22 One to establish a collaborative task force on 23 Native American lending and services as merging -- 24 as other merging entities have done. 181 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 Thank you. 2 MS. SMITH: Thank you very much. 3 Mr. VanTol. 4 MR. VANTOL: Good afternoon, Members of the 5 Panel. I am Hubert VanTol. I am the Cochair of 6 the Legislative Committee of the National Community 7 Reinvestment Coalition. I'm testifying this 8 afternoon on behalf of John Taylor, our President 9 and CEO, who is unavoidably unable to be here 10 today. 11 NCRC is the nation's CRA trade association 12 of over 680 community reinvestment organizations 13 from inner city neighborhoods and rural areas. 14 NCRC's members are dedicated to revitalizing low 15 income and minority communities. 16 As a trade association, we do not 17 regularly comment on applications to the Federal 18 Reserve Bank. We usually provide the research and 19 other support to our members who do the commenting 20 during the application process. 21 However, we have recently decided that we 22 do need to comment on the applications that present 23 significant public policy issues. 24 I am addressing two main issues this 182 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 afternoon: Community reinvestment performance and 2 fair lending. 3 On the topic of community reinvestment 4 performance, simply put, mega mergers are harmful 5 for low income and minority communities if they 6 result in massive branch closures and drastic 7 decreases in lending and investing. This is why 8 NCRC has asked the Federal Reserve to require banks 9 to submit community reinvestment plans to the Board 10 and the reserve banks as part of their application 11 process. 12 These plans would outline how the merging 13 banks plan to maintain and increase the number of 14 loans, investments and services in lower income and 15 minority communities after mergers. 16 The community reinvestment plans would be 17 developed for each urban and rural community the 18 bank serves. Moreover, they would not be 19 unilateral like the mega pledges recently announced 20 by other large banks. 21 Instead, they would be responsive to 22 specific credit needs in various communities 23 because they would be developed with the input of 24 community organizations. 183 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 The community reinvestment plans would 2 explain how lenders would preserve their CRA 3 performance in all of their major markets in the 4 wake of post-merger institutional changes. 5 For example, the CRA performance of Banc 6 One and First Chicago could deteriorate 7 substantially in the state of Indiana due to the 8 branch closures and divestiture requirements. 9 And you know, the State of Indiana is the 10 market where the bank's operations substantially 11 overlap, yet despite the looming changes 12 confronting Indiana's traditionally underserved 13 communities, Banc One has neither negotiated a CRA 14 agreement with the community organizations in 15 Indiana, nor has it submitted a community 16 reinvestment plan to the Federal Reserve explaining 17 how CRA performance will be maintained in the 18 state. 19 NCRC is pleased that First Chicago and NBD 20 have worked out CRA agreements with NCRC members in 21 Chicago and Detroit, however, these agreements 22 address CRA performances in two of Banc One's 23 markets. 24 In order for community reinvestment 184 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 performance to be preserved in all of the bank's 2 markets, NCRC believes it is the responsibility of 3 the Federal Reserve Board to require the bank to 4 offer in detail the community reinvestment plan 5 explaining how it will maintain and improve its 6 post-merger CRA performance. 7 These plans would also be a starting point 8 for negotiations leading to CRA agreements with 9 community organizations. 10 In addition, the Federal Reserve Board 11 should issue conditional approvals in instances 12 where the applying banks do not satisfactorily 13 outline how CRA performance will be maintained in 14 places like Indiana and many others that are likely 15 to be affected by the merger. 16 On the topic of fair lending, over a year 17 ago, the Federal Reserve Board approved Banc One's 18 acquisition of First USA, a credit card lender, 19 despite unresolved fair lending issues. 20 In its approval order, the Federal Reserve 21 stated that it would impose conditions at a later 22 date if its investigation revealed fair lending 23 violations. NCRC and its members strongly believe 24 that this was an indication -- that this was an 185 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 abdication of the Federal Reserve's responsibility 2 to enforce the nation's fair lending laws. 3 Fair lending problems will intensify if 4 the Federal Reserve does not complete fair lending 5 investigations and issue the necessary conditions 6 before acting on these latest Banc One 7 applications -- this latest Banc One application. 8 We ask the Federal Reserve to follow the 9 lead of its regulatory counterparts in seriously 10 investigating and issuing fair lending and CRA 11 conditional approvals when necessary. The Federal 12 Reserve should be leading its counterparts, but it 13 should at least follow them. 14 The OTS approval order of the Travelers 15 application is an example, likewise, the Office of 16 the Comptroller of The Currency's recent 17 conditional approval of First Union/Money Store 18 merger, which would require access for all 19 applicants to both prime and subprime lending 20 products. 21 We appreciate this opportunity to express 22 these significant reinvestment issues before you 23 that are associated with this merger. 24 We hope that the Federal Reserve Board 186 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 does everything in its power to ensure fair lending 2 and continued progress in community reinvestment. 3 MS. SMITH: Thank you very much. 4 Ms. Wilkins. Wilmington good evening. 5 Can you hear? Is the mic on? 6 MS. SMITH: Yes, that's good. Wilmington can 7 you hear me? 8 MS. SMITH: Bring it a little closer. 9 Wilmington okay. I know I'm the short one in the 10 bunch. 11 My name is Betty Wilkins, and I would 12 like, first of all, to thank you for the 13 opportunity to testify on Banc One's unfair and 14 ugly lending record in Colorado, and I am the board 15 member of Colorado ACORN. It's an organization of 16 over 1,300 low and moderate income families in my 17 community who is working and trying to make a 18 decent place to live and to increase hope -- 19 hopefully that we can increase the community 20 reinvestment and increase jobs and city services in 21 our community. 22 And the members of the Colorado ACORN 23 urges the Federal Reserve Board not to allow this 24 merger because of Banc One is not making loans to 187 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 low and moderate income and minority people in the 2 City of Denver. 3 You have heard some of the statistics, and 4 when I heard that, I -- it was unbelievable. 5 First of all, when Banc One opened up in 6 my community, it was a beautiful and a welcome 7 sight because we really did need a bank that was 8 close where we don't have to hop on a bus every 9 time we want to go to the bank. 10 But within the past two and a half years 11 since I have been banking and trying to help my 12 community bank with Banc One, we have received 13 absolutely nothing as far as a community 14 reinvestment by -- put back into our community, and 15 I think this is very unfair and it's a very ugly 16 thing. 17 I took it on myself to do some 18 investigating on Banc One. I went by the bank last 19 Saturday morning about 9:00 o'clock. That's what 20 time the banks open. And there was a line there of 21 Afro and Latinos waiting to get in the bank to 22 deposit their money. 23 My thought was then -- I didn't say that 24 to the clients, but I thought to myself, where is 188 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 this money going to go today, it definitely is not 2 going to my community because Banc One is not that 3 kind of bank to low and moderate income 4 neighborhoods. 5 And I can say it truthfully today because 6 I live it. And then I asked myself, I said, well, 7 now, how can this be? I'm not going to give you 8 any statistics at this point. I'm going to give 9 you some stories as to how this happened. 10 It seemed impossible, but it is not. And 11 I got permission from the community to do this to 12 give you some stories of what really happens. 13 One of our members, Betty Fortenberry, who 14 is African American, heard an advertisement on the 15 radio and said that she could get approved over the 16 phone for a mortgage loan. 17 She proceeded to call the number and was 18 switched over to three different people and holding 19 for a very long time. And that never did come -- 20 there never did come an answer. And then after she 21 called back, she went through the same procedure, 22 except she was transferred to a fourth person and 23 then she was disconnected. 24 And she called back. And she was 189 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 transferred to two different people. And finally, 2 one -- she spoke with the person who acted like she 3 knew what she was talking about. The woman asked 4 her a few questions which included name, address, 5 zip code and her annual monthly income. 6 The woman proceeded to tell her. And then 7 she said, well, I'll tell you now, you will not be 8 approved because you will have to have $10,000 of 9 your own money saved to proceed with just getting 10 the application. 11 It seemed to me that Banc One basically 12 told her she need to not apply. Mrs. Fortenberry 13 certainly could pay because she pays $800 a month 14 in rent. 15 A second story, Sandra Neville, who is 16 African American, another one of our members, saw 17 an ad on TV. And being able to be approved in 24 18 hours over the phone for a home improvement loan? 19 She called and gave them the information they asked 20 for. It took 72 hours for her to hear back, and 21 she was told that she was being denied because of a 22 problem of her credit report. And about a month 23 later, Ms. Neville was approved for the same loan 24 from her credit union. 190 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 Another Latino member which did not want 2 me to use her name, but she is a member of our 3 organization who at this time wants to disclose 4 recently what happened to her. Okay. 5 What she did and -- she went to the ACORN 6 Housing Corporation where she had them to pull up 7 her savings and checking account number to check on 8 what had gone wrong with her credit. Come to find 9 out, it was Banc One that has caused this problem 10 and caused this flaw on her credit. They said that 11 she owed Banc One the whole amount of $5. And just 12 because of this, they did not take her 13 application. 14 Now, will you tell me, is this bank worthy 15 of a merger with -- to get any bigger and able to 16 treat more people as they've been doing in the 17 past? 18 I would urge you today, please, that you 19 can do this. Please take a closer look at what 20 we're telling you. It is true. Please don't have 21 this merger take place until they have their CRA 22 practices in place where me, my community, Latino 23 community or any other community can receive 24 services just like anyone else. Even though we 191 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 live in a certain zone, we do work, and we do pay 2 our bills, and we're worthy of credit. 3 Thank you. 4 MS. SMITH: Thank you very much. 5 Any questions? 6 Okay. Thank you very much for coming this 7 afternoon. 8 And we'll move on to Panel 11. All 9 right. We'll start with Reverend Anthony. 10 MR. ANTHONY: We're together. Mr. Parker's 11 going to go first. 12 MS. SMITH: All right.
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