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 Fourteen
16 MR. BELLAMY: Thank you. 17 My name is Paul Bellamy, and I'm with the 18 Coalition for Reinvestment in Lorain County. 19 Lorain County is due west of Cuyahoga County, which 20 is Cleveland, Ohio. 21 I've been asked to read on behalf of some 22 coalition members short portions of testimony which 23 they wanted to enter into the record. I will 24 confine these to two rather short versions and then 266 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 get on to my own summarized version of the facts 2 and figures that we feel compel us to come out 3 against the merger with Banc One. 4 The first statement I want to read is from 5 the Board of Commissioners for Lorain County, and 6 in summary, it goes like this. 7 The Board of Lorain County Commissioners 8 supports the Coalition for Reinvestment in Lorain 9 County's efforts to ensure that the results of the 10 above-referenced bank merger are advantageous to 11 Lorain County residents, organizations and 12 political subdivisions. The Board further 13 acknowledges the right and obligation of banks to 14 make sound financial business decisions. 15 However, the Board of Commissioners does 16 not feel that Banc One is committed to serving the 17 low and moderate income communities unless it is to 18 lend money on credit cards or on real estate at 19 higher interest rates to borrowers with credit 20 problems. 21 While this may serve stockholders, as a 22 bank, they are chartered to serve the communities 23 where they do business. 24 It appears that Banc One has been cutting 267 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 back on their commitments to the service of our 2 county while refusing to agree to specific goals to 3 improve their performance under CRA. 4 Please encourage Banc One to address those 5 issues prior to approving any merger. 6 And that is, of course, addressed to the 7 Federal Reserve board. 8 I'd also like to read a short portion of a 9 statement from Rebecca Siegal, who is representing 10 or had hoped to represent the Catholic Action 11 Commission of Lorain County. It's a social action 12 office for the Diocese of Cleveland in the state of 13 Ohio. 14 We have some major concerns regarding the 15 increase in mega mergers of our banking 16 institutions and the effects these mergers have on 17 our local communities. 18 When these mega mergers occur, these are 19 local communities urban and rural alike and 20 particularly the areas that are most populated by 21 minorities and low and moderate income families who 22 suffer the most. Branches close, banking services 23 decrease, service fees increase, jobs are lost. 24 It is the stockholders of the banks who 268 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 most often have no vested interest in our local 2 communities that make the decisions and the 3 profits, yet in the case of Banc One, depositors, 4 not stockholders, make up 70 percent of the 5 assets. Stockholders make up only about 15 percent 6 on average. It is the stockholders and senior 7 management who walk away with gilded pockets while 8 the depositors receive little or no return on their 9 money. 10 We are scraping the bottom of the pyramid 11 with no return and placing it on the top, and if 12 this trend is allowed to continue, the pyramid will 13 be inverted and most likely tumble because there 14 will no longer be support from the solid bottom. 15 The principal difficulty that the Lorain 16 County Coalition has with Banc One's record is not 17 with actual dollar amounts that have gone into low 18 and moderate income neighborhoods. 19 In fact, I don't know if this is true in 20 other areas, but certainly in Lorain County, 21 there's been a great deal of money proportionately 22 put into the low and moderate income 23 neighborhoods. 24 The difficulty we have is what kind of 269 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 money it is and does it, in fact, serve the needs 2 of Lorain County? 3 Lorain County is a Midwestern urban 4 center. Single-family homes are the norm. Home 5 ownership is the way in which a community 6 development strategy would work in these 7 neighborhoods. 8 Now, let's break out all of the money that 9 Banc One claims to be using to meet its CRA 10 commitments. 11 One is the purchase mortgage product, 12 which we herald and we want to encourage them to do 13 more of. Unfortunately, they don't seem committed 14 staying in that market and they don't do 15 proportionately very much of that lending. 16 Where we do see a heavy emphasis on their 17 real estate lending is in refinancing. Refinancing 18 may serve the interest of the particular homeowner, 19 but it does absolutely nothing to increase the 20 value of the homes or to raise the wealth within 21 the neighborhood. In fact, it only inserts a lot 22 more debt on what you might call the neighborhood 23 balance sheet. 24 The positive side of Banc One has to be 270 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 mentioned, and that is that they have a strong home 2 improvement product, and in these older 70 to 3 50-year-old houses, that's a very important tool, 4 but it must be recognized that this is a half 5 measure at best when there is a refusal to do the 6 hard work included in a meaningful community 7 redevelopment purchase 30-year mortgage product 8 that requires meeting cost value gaps and doing the 9 difficult work of underwriting loans to first time 10 home buyers who are most often attracted to these 11 neighborhoods. 12 The other problem with the home 13 improvement product is most of it is sold through 14 their branch network. In Lorain County in the last 15 three years, Banc One has gone from 19 to 4 16 branches. 17 In closing, I just want to mention one 18 last development which we find very difficult, and 19 that is the subprime lending. It has increased 20 from three percent in the low to moderate 21 neighborhoods in '93 up to 15 percent of the total 22 lending going on in the low to moderate 23 neighborhoods now. 24 Thank you. 271 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 MS. SMITH: Ms. Jones. 2 MS. JONES: Good afternoon. My name is Rebecca 3 Jones. 4 I guess I need a microphone. 5 My name is Rebecca Jones. I'm a resident 6 of Wellington, Ohio, which is the southern part of 7 Lorain County and is a rural area. 8 My remarks at first were intended to be 9 addressed to the Wellington area, however, I'm also 10 the Director of a nonprofit CDC in the City of 11 Lorain, and the Mayor of Lorain has asked me to 12 make some remarks on his behalf today, so my 13 comments will really be coming from the Mayor's 14 testimony or letter to you, which is attached to my 15 comments. 16 The City of Lorain is about 25 miles west 17 of Cleveland on Lake Erie. It is a Rust Belt 18 city. It's a city of 71,000 people, 30 percent of 19 whom are minorities, and they break down 13 percent 20 African Americans, 17 percent Hispanic. 21 The citizens of Lorain, Ohio, which is a 22 community of mostly low to moderate income 23 families, have traditionally supported homegrown 24 financial institutions such as Lorain National 272 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 Bank, Central Trust Bank, First Federal Savings and 2 Loan, Citibank, EST and Lorain County Savings and 3 Trust. 4 Mergers and acquisitions of the 80s and 5 90s have introduced a new banking trend, the 6 establishment of regional banking organizations in 7 the City of Lorain. 8 This trend was substantiated by the 9 following mergers and acquisitions: Elyria Savings 10 and Trust being acquired by First National Bank of 11 Akron which created First Merit bank. Central 12 Trust Bank being bought by Banc One. Citibank 13 closing all branches. Lorain County Savings and 14 Trust Bank acquiring a number of Central Trust Bank 15 locations and changing their name to Premier Bank 16 and Trust. 17 Most recently, in May of 1998, First Merit 18 and Premier Bank merged, closing 17 branches, 19 including two in the City of Lorain, and laying off 20 approximately 200 people. 21 You should be aware that the City of 22 Lorain has lost additional banking service 23 facilities and their related jobs. Banc One has 24 just closed two branches serving the low to 273 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 moderate income neighborhoods of South Lorain, and 2 the Cityview, Sheffield areas. They were closed in 3 late Spring and early Summer, 1998, and these 4 closures parallel the proposed merger of Banc One 5 and First Chicago NBD. 6 The significance of these closings is 7 monumental, as they send a strong signal to the 8 city's low income population that even with Banc 9 One deposits at branches serving Lorain exceeding 10 $85 million, their business is not important. 11 Since the branches closed serve many low 12 to moderate income families who do not have 13 adequate transportation, many people will have 14 trouble getting to the remaining Banc One 15 branches. 16 According to Community Reinvestment Act 17 regulations, banks are supposed to reinvest in 18 communities like Lorain where they obtain their 19 deposits. 20 Banc One bought approximately 15 Central 21 Trust Bank branches in the 1980s, and today, they 22 have eliminated numerous jobs and closed or sold 12 23 branch locations, leaving three branches serving 24 Lorain. This appears to be disinvestment rather 274 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 than investment. 2 Further, the City of Lorain has learned 3 from Kathleen Kaufin, the CRA Vice President of 4 Banc One, that branch locations ideally need to 5 have 35 to $40 million in deposits to meet Banc One 6 guidelines for profitability. 7 If Banc One continues to follow this rule 8 after the merger, it is likely that another branch 9 in Lorain will be closed. This would leave only 10 two locations in the city and only one of those 11 serving a low to moderate income area. 12 The City of Lorain has joined the 13 Coalition for Reinvestment in Lorain County and 14 other community groups from across the nation to 15 closely examine this merger which will result in 16 disinvestment in central cities and urban areas 17 across America, lost jobs, vacant and abandoned 18 buildings and an inaccessibility to convenient 19 banking services and products. 20 Ultimately, if uncontested and not 21 addressed by the Federal Reserve Bank, this mega 22 merger and acquisition progress will lead to the 23 erosion of high-quality, competitive banking 24 services only to be replaced by nonpersonal, 275 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 high-cost electronic banking services provided by a 2 few large banks with almost no competition. 3 Working class families and individuals 4 such as the citizens of Lorain do not need to have 5 their disposable income further eroded due to 6 higher banking fees and costs. 7 Without a commitment to future 8 participation in our community along the lines 9 outlined above and as previously detailed in our 10 meeting with Banc One, it is not in the best 11 interest of the City of Lorain to endorse a mega 12 merger such as that being proposed by Banc One and 13 First Chicago NBD. 14 Thank you. 15 MS. SMITH: Thank you. 16 And we'll go to Ms. Rangan, who is 17 speaking on behalf of Inner City Press Community. 18 MS. RANGAN: Good afternoon. 19 My name is Rashmi Rangan, and I'm reading 20 the written testimony prepared by Matthew Lee, 21 Executive Director of Inner City Press Community on 22 the Move and of the Inner City Public Interest Law 23 Center, together, ICP. 24 ICP on April 28th filed a 38-page protest 276 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 to this application along with Black Citizens for 2 Justice, Law and Order of Dallas, Texas and the 3 Delaware Community Interaction Council. 4 We are opposed to this proposed merger 5 primarily due to Banc One's continued predatory and 6 discriminatory practices through its Banc One 7 Financial Services subsidiary and due to the 8 anticompetitive and branch closing effects the 9 proposed merger will have, particularly in Indiana. 10 The commitments that First Chicago has 11 made in Detroit and Chicago do nothing to address 12 these issues, nor is Banc One's divestiture 13 proposal to sell off certain branches in Indiana 14 sufficient. 15 The proposed merger would also result in 16 substantial branch closings, making all the worse 17 Banc One's cynical manipulation of the target First 18 Chicago to make lending pledges in Chicago and 19 Detroit but not in the communities that would be 20 most affected by this merger, including through 21 branch closings. 22 In 1997, the Federal Reserve Board stated 23 in an order that it had unresolved questions about 24 the fair lending compliance of Banc One Mortgage 277 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 Company and that its approvals were explicitly 2 conditioned on Banc One taking such actions as the 3 Federal Reserve might require. 4 Since then, the Arizona Attorney General 5 has charged Banc One with discrimination as 6 implicitly has HUD in Texas. The Fed has made no 7 disclosure of how or if this important issue has 8 been resolved, but 40 days ago, on July 2nd, we 9 made a request for this under the Freedom of 10 Information Act. The Fed has yet to provide the 11 documents. 12 The written comments we have submitted 13 show that in market after market, Banc One's normal 14 interest rate lenders disproportionately exclude 15 African Americans and Hispanics from credit, while 16 Banc One Financial Services, a high interest rate 17 lender, targets these communities for higher-priced 18 credit. 19 For example, in the Akron, Ohio MSA in 20 1996, Banc One Mortgage Company denied 55 percent 21 of mortgage applications from African Americans and 22 only 17 percent of applications from whites, a 23 denial disparity of 3.24. 24 The mortgage company originated 164 loans 278 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 to whites and only seven to African Americans. 2 ICP's comments calls loans to African 3 Americans divided by loans to whites the index. 4 The ratio between BOMC's index and BOFS's index 5 calculated for each market can be viewed as the 6 targeting index. 7 In this particular MSA, for the mortgage 8 company, it was .043, and for the finance arm, it 9 was .193, 4.49 times higher than the mortgage 10 company. In Cleveland, Ohio, 4.47 times higher 11 than the mortgage company. In Dallas, 17.86 times 12 higher than the mortgage company. In Detroit, 5.61 13 times higher. In Gary, Indiana, 5.52 times 14 higher. Milwaukee, 8.53 times higher. These are 15 just examples of what the difference between the 16 two is. 17 The above analysis makes out a prima facie 18 case or red flag that Banc One Corp through its 19 normal interest rate lenders, including Banc One 20 Mortgage, and through its higher interest rate 21 lender, Banc One Financial Services, are engaged in 22 lending discrimination, including pricing 23 discrimination. 24 On this record, the Federal Reserve Board 279 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 must conduct on-site fair lending examinations of 2 Banc One financial services. 3 On the current record, this mega merger 4 proposal which would expand Banc One's practices 5 could not legitimately be approved. 6 There are other adverse issues, including 7 the foreseeable loss of various First Chicago 8 programs and Banc One's record in its existing 9 states have been raised by Ohio and others. 10 For all the reasons stated, this proposed 11 merger should be denied. 12 Thank you. 13 And we will submit additional comments by 14 August 20th, 1998. 15 MS. SMITH: Thank you very much. 16 Ms. Sharpley. 17 MS. SHARPLEY: Hello. My name is Adenike 18 Sharpley. I'm a board member of the Zion Community 19 Development Corporation of Oberlin, Ohio. 20 Our target area is the southeast 21 quadrangle of Oberlin, which is a semi-rural area. 22 I am going to talk about the effects of 23 the Banc One merger on Oberlin, Ohio as a resident, 24 from a customer and employee point of view. 280 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 The Oberlin Bank Building at 5 South Main 2 Street, Oberlin, Ohio, until the mid 1980s, was 3 primarily one bank. The Oberlin Bank Company 4 founded in 1889 would in 1904 combine with the 5 State Savings Bank and move to 5 South Main 6 Street. That same year, it would be renamed The 7 Oberlin Savings Bank. So for 76 years, the 8 community of Oberlin has had pretty much the same 9 bank. 10 In the mid-1980s, the musical bank 11 management began at 5 South Main Street. This 12 included in 1990 Central Trust, in 1996 Banc One, 13 in 1998 Premier Bank and the Merit transfer on 14 Labor Day of this year. 15 In 15 years, two local banks were lost, 16 Oberlin Savings Bank and People's Bank, with a host 17 of players to become one mega bank, one small local 18 bank, one savings and loan bank which is located or 19 comes its home out of Cleveland and one credit 20 union which is also based in Cleveland. 21 The staff working in these banks feel 22 intense stress from both bank officials, management 23 and customers. 24 The customer does not understand the 281 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 changes in rules and regulations. The employee 2 must learn changes from old to new systems, 3 learning new rules and regs from the new bank and 4 absorb job shifts, moving from new offices to 5 maintain jobs while branches are closing. 6 These changes also include shifts in pay 7 scale which would be from lower to higher or vice 8 versa. 9 Most of the people absorbing these changes 10 are at the bottom of the chain, tellers, clerks, et 11 cetera, and most of these are women, head of 12 households or who are major bread winners in their 13 family. 14 From the customers' point of view, 15 customers have to deal with new hours, new staff, 16 new rules, new regulations and usually new banking 17 and service products. 18 The control of these banks are moved 19 further away from the customer. Their bank 20 managers are usually there a few days per week 21 along with what I call the roving loan officer. 22 Usually the new staff is less familiar 23 with the new branch and its customers are not 24 usually hired locally, therefore, do not know the 282 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 community. 2 The new staff do not have a connection to 3 the community they serve. They are less willing to 4 cash checks for those without ID because they don't 5 know the customer. And in turn, the staff asks for 6 ID each time they see the customer, no matter how 7 many times they see them. 8 For the customer, this means fewer what I 9 call service value for their dollar, and this is 10 especially true for the low and moderate income 11 individual. This results in a transfer of wealth 12 aware from the community, benefitting the 13 stockholders, as I say, upstairs. 14 Along with no services such as utility 15 bill payment, no product for those who maintain 16 small balances in checking and savings accounts 17 without incurring charges against their account 18 each month, these charges will sometimes result in 19 customers finding that their account has been 20 closed by the end of the month. These customers 21 are usually low and moderate income people, seniors 22 on fixed incomes or those due to disabilities and 23 minorities. 24 At times, the above-mentioned group would 283 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 receive unfriendly and discriminating treatment by 2 tellers, adding insult to injury, this classist and 3 racist behavior by tellers who treat their 4 constituency as if they have little or no money. 5 This leads to fewer service values for the elderly, 6 the disenfranchised and the people of color in the 7 Oberlin community. 8 Thank you. 9 MS. SMITH: Thank you very much. 10 And we'll go next to Ms. Tyler. 11 MS. TYLER: Why is it that Banc One has made no 12 commitment to Ohio but they have made commitments 13 in Michigan and Illinois? 14 Why is it that Banc One Financial Services 15 which offers higher interest rate loans has a more 16 aggressive marketing strategy in low income and 17 minority communities? 18 And how is it that the largest Midwest 19 bank can decide to get out of the home purchase 20 business? 21 These are questions on which I would like 22 to focus your attention for the nest few minutes. 23 I am Dawn Tyler representing the Ohio 24 Community Reinvestment Project, a project of the 284 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 Coalition on Homelessness and Housing in Ohio. 2 OCRP's mission is to promote investment in 3 Ohio's low income communities and communities of 4 color. 5 Members of OCRP met with Banc One for 6 several months. Constructive dialogue took place 7 with representatives of the bank. 8 On numerous occasions, the bank gave us 9 every indication that they were willing to enter 10 into a community action agreement that would 11 ultimately increase lending, service and investment 12 opportunities within Banc One's service areas. 13 Some areas we were willing to set 14 reasonable benchmarks include home purchase loans, 15 small business lending, multi-family housing 16 investments and lending and community development 17 grants. 18 At the eleventh hour, however, about less 19 than a week before the end of the comment period, 20 the bank decided they did not want to move forward 21 with negotiations, and for those of you that were 22 here this morning, it sounds very similar to a 23 story told by Ted Thomas from ACORN. 24 Banc One's refusal to negotiate a 285 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 meaningful community action plan for Ohio raises 2 questions about their commitment to Ohio 3 post-merger. The bank did not operate in good 4 faith. 5 Our primary concern is that this proposed 6 merger could have dramatic consequences for 7 financial services consumers throughout the State 8 of Ohio since the corporate headquarters of Banc 9 One currently based in Columbus will move to 10 Chicago. This merger could result in substantial 11 disinvestment in Ohio communities. 12 My second point is the disparate treatment 13 of African Americans in accessing credit for 14 mortgage loans from Banc One and its mortgage 15 company. 16 Low and moderate income consumers are 17 denied access to mortgage loans more frequently 18 than by other lenders, and Banc One lacks 19 aggressive marketing efforts to African American 20 and low and moderate income applicants, 21 particularly by the bank's affiliates and Banc One 22 Mortgage Company. 23 Rashmi has done a sufficient job of 24 sharing some statistics from Akron and Cleveland, 286 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 so I will not repeat those details, but Banc One 2 Mortgage Company does not have an aggressive 3 lending record to minorities and low and moderate 4 income applicants. 5 Banc One Financial Services, the BNC 6 lender, charges customers higher interest rate 7 loans compared to rates offered by Banc One 8 Mortgage Company and is engaged in extremely 9 aggressive marketing practices through direct mail 10 and phone solicitation which targets low and 11 moderate income people in minority census tracts. 12 This is a clear illustration of the 13 predatory lending practices of Banc One Financial 14 Services which disproportionately targets African 15 Americans for higher interest rate credit, 16 originates loans at a higher rate than the mortgage 17 company. 18 The bank should offer A loans to all 19 applicants who qualify, regardless if they come 20 into the bank, the mortgage company or financial 21 services. 22 We encourage the Feds to follow the lead 23 of the OCC as in the case of First Union Money 24 Store and mandate that Banc One offer prime loan 287 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 products to all who qualify. 2 Thirdly, Banc One has decided to get out 3 of the home purchase business. 4 It was interesting to hear about the new 5 self-help product that was mentioned this morning, 6 however, historically, the bank has ignored the 7 credit needs of LMI communities. This is 8 unacceptable for a bank the size of Banc One. 9 And my fourth issue relates to small 10 business lending which Chuck Bromley, our OCRP 11 Chairperson, has shared on the previous panel. 12 Time does not permit for me to talk about 13 the over 60 branch closures that have taken place 14 in Ohio or the $8 check cashing fee that's imposed 15 on Banc One customers. 16 In closing, we do not dispute the fact 17 that Banc One, especially the CDC, has been active 18 in areas such as tax credit projects and community 19 development grants to nonprofits, however, there 20 are no safeguards in place to ensure that this is 21 continue after the merger. 22 We ask the bank to make some very basic 23 commitments to minimize the potential negative 24 impacts, and after dragging us along for several 288 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 months, they refused, despite the fact that they 2 are planning to honor similar commitments in the 3 communities of Chicago and Detroit. 4 The bank claims that no market will be 5 abandoned and the commitment will continue. If 6 this is the case, why is there such a hesitancy on 7 the part of the bank to put such a commitment in 8 writing? 9 Earlier today, Banc One mentioned one part 10 of their recipe for success is relationships with 11 local partners. How can I as a local partner be 12 part of that recipe for success when I've been 13 kicked out of the kitchen? 14 Please consider carefully the information 15 that has been presented today. I urge the Federal 16 Reserve to postpone the merger until mutually 17 beneficial community action plans have been reached 18 in all of Banc One's markets. 19 Your meaningful intervention can 20 facilitate fair lending, service and investment 21 opportunities in Ohio's low income communities and 22 communities of color that have historically been 23 overlooked and underserved. 24 MS. SMITH: Thank you. 289 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 Ms. Walker. 2 MS. WALKER: I'd like to thank the Federal 3 Reserve to have the freedom to speak today. 4 I am Marge Walker, and I'm a resident of 5 the City of Lorain, 30 miles west of Cleveland, and 6 I'm speaking on behalf of the South Lorain 7 Merchants Association. 8 I have been a hairdresser for a long time, 9 and due to situations, I have been had to be 10 retrained because I can no longer stand for long 11 periods of time. 12 My neighborhood is adjacent to an old 13 steel plant that once employed 7,000 men. It now 14 employs less than 2,000 people. Can you imagine 15 what it does to a community? 16 Once Banc One's retail operations have -- 17 the severe cutback in Lorain County. We are told 18 that the cutback has nothing to do with the 19 merger. In my perspective, it has everything to do 20 with the merger because that is the trend of the 21 country these days. 22 Money loaning and the -- are joining with 23 the money grabbing businesses. Our Banc One branch 24 that just closed, it has five million dollars in 290 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 it. I guess it's not enough money. They says it's 2 nothing personal, but business is business. 3 I would like to talk about trends. The 4 Federal Reserve reports -- own report seems to 5 conclude that small business lending suffers when 6 big banks buy smaller banks. 7 Small bank -- small business lending 8 depends upon relationships with neighborhoods, 9 merchants, and big banks don't look at their 10 operations over the long-term with the investment 11 in the community. 12 We are told that the United States is fast 13 approaching a time when whites will be in the 14 minority. I recently read that the buying power in 15 the Black community has grown recently to 8.2 16 percent in the consumer economy. With this kind of 17 trend underway, how is it that the bottom line, 18 conscientious banks haven't the foresight to 19 actively pursue the growing minority market. 20 If all these bank branches and the lending 21 institutions are, in fact, race neutral, why aren't 22 we seeing fierce competition for the minorities? 23 People forget the depositors contribute 24 more money to the banks than the stockholders, but 291 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 every time I turn around, there are always fewer 2 advantages for depositors and more and more for the 3 stockholders. 4 The depositors have fewer banks to go to, 5 fewer hours to get service from and fewer staff who 6 are shifted around in the system so that there is 7 no relationship with the community. Deposits earn 8 less and less interest while fees go up and up. 9 So while some executives get very rich and 10 stockholders look to increase their return on 11 investments and lower returns on their deposits and 12 increased costs. 13 Now banks have made it clear that they 14 don't want to be banks anymore, they want to be 15 stockbrokers, insurance agents, pension advisors, 16 investment specialists, et cetera. They want to 17 cross-sell their customers into every conceivable 18 financial imaginary product except plain, 19 old-fashioned human-oriented service. 20 Just once I would like to see the 21 announcement of another bank merger or acquisition 22 that would conclude with the following sentence: 23 The merger is subject to regulatory and depositor 24 approval. 292 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 If depositors had a voice in these 2 matters, maybe the executives, high fliers and 3 golden parachuters would have to promise them 4 higher interest rates on a deposit, lower fees and 5 more locations and longer hours and better service 6 to people. 7 This regulatory body is all that stands 8 between the voice of depositors and the greedy 9 money grabbing depositors -- at depositors' 10 expense. 11 You are duty bound to look at the 12 competition, convenience and the needs of the 13 communities. 14 On behalf of South Lorain Merchants 15 Association, I want to tell you to deal with 16 this -- tell you this deal does not create 17 competition. We need competition in the 18 community. We have an example right now with BP 19 and Amoco merging. We're losing a thousand jobs in 20 Cleveland and the space that it takes for rental in 21 Cleveland. 22 If you continue along the lines of having 23 less competition, there's going to be no 24 competition. How many banks are going to be left 293 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 when we get through with all this? 2 As somebody earlier had commented about 3 having 9,000 banks at one time and now it's getting 4 down to less and less, what are you going to do 5 when there's no competition, when there's nobody to 6 go to? 7 That's it. 8 MS. SMITH: Thank you very much. 9 Any questions? 10 MS. WILLIAMS: I've got one. 11 MS. SMITH: Okay. We have a question. 12 MS. WILLIAMS: This is for Mr. Bellamy. 13 You mentioned that subprime lending went 14 from 3 to 15 percent. Was this in Lorain County, 15 and over what period, and was this percentage for 16 one institution? 17 MR. BELLAMY: This is for Banc One. This is in 18 Lorain County only. This is for Banc One. 19 And the financial services subprime 20 lending branch of Banc One just came into the 21 county in '93, and at that time, they had, as I 22 say, only three percent of the total investments in 23 the low to mod areas. 24 In 1996, the financial services branch, 294 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 the subprime lender, is up to 15 percent of the 2 residential lending in that same category of low to 3 mod areas. 4 MS. WILLIAMS: Okay. Thank you. 5 MS. SMITH: Thank you very much. 6 I will remind people that you may submit 7 written supplements to your oral testimony by next 8 Thursday, August the 20th. And the information 9 about where to provide them has, I think, been 10 given to you, or you can get them from the 11 registration desk. 12 We're scheduled for a ten-minute break. 13 We're about a half an hour behind schedule. I 14 think we're going to save five minutes by cutting 15 it to a five-minute break, so we'll see you here 16 very soon. And I think the timers are going to 17 time us. 18 (Whereupon, a recess was 19 taken.) 20 (Whereupon, further proceedings 21 were had which are bound under 22 separate cover.) 23 24 295 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 PUBLIC MEETING REGARDING THE PROPOSAL BY 2 BANC ONE CORPORATION, COLUMBUS, OHIO, 3 TO MERGE WITH 4 FIRST CHICAGO NBD CORPORATION, CHICAGO, ILLINOIS 5 6 7 Proceedings had in the above-mentioned 8 cause, on Thursday, the 13th day of August, 9 1998, at The Federal Reserve Bank of Chicago, 10 230 South LaSalle Street, Chicago, Illinois, at 11 9:00 o'clock a.m. 12 13 14 15 VOLUME II 16 17 18 19 20 REPORTED BY: Brenda S. Tannehill, CSR 21 LICENSE NO.: 084-003336 22 -and- 23 REPORTED BY: Jeanette A. Sandei, CSR 24 LICENSE NO.: 084-003685 296 McCORKLE COURT REPORTERS, INC. CHICAGO, ILLINOIS - (312) 263-0052 1 (Whereupon, proceedings were 2 previously had which are bound 3 under separate cover.) 4 MS. SMITH: We're starting with Mr. Ruf.
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