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Public Meeting Transcripts

Public Meeting Regarding Banc One and First Chicago

Thursday, August 13, 1998

Transcript of Panel Fifteen

 
          5       MR. RUF:  My name is Fritz Ruf.  I'm the
 
          6   Executive Director of Wisconsin Housing And
 
          7   Economic Development Authority and here to testify
 
          8   in support of the merger of Banc One and First
 
          9   Chicago NBD.
 
         10            Wisconsin Housing and Economic Development
 
         11   Authority is a State Housing Finance Authority
 
         12   created in 1973.
 
         13            Our mission is to serve Wisconsin
 
         14   residents and communities by working with others to
 
         15   provide creative financing and technical resources
 
         16   to stimulate and preserve affordable housing, small
 
         17   business and agriculture.
 
         18            One of our oldest and most reliable
 
         19   partners has been Banc One and its predecessor,
 
         20   Marine National Exchange Bank.  Together, we have
 
         21   provided millions of dollars of affordable
 
         22   financial resources to Wisconsin home buyers,
 
         23   farmers and small business owners.
 
         24            Consider the following track record
 
 
 
 
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          1   established by WHEDA and Banc One.  And incidently,
 
          2   these numbers are not included in the HMDA data
 
          3   that has been referred to previously because we are
 
          4   still in the process of working with the Federal
 
          5   Reserve Bank of Chicago to determine a method to
 
          6   permit this information to be accumulated as the --
 
          7   in the HMDA data to give a more accurate reflection
 
          8   of low to moderate income lending in Wisconsin.
 
          9            1,539 home purchase loans totaling
 
         10   $72,765,867; 41 home improvement loans totaling
 
         11   $350,000; 2 beginning farmer loans totaling
 
         12   $288,000; 133 agricultural production loan
 
         13   guarantees totaling $1,758,000; 10 small business
 
         14   loan guarantees totaling $1,055,000; and 23 small
 
         15   business loan subsidies totaling $683,000.
 
         16            Moreover, Banc One is the first
 
         17   corporation to invest in Wisconsin whole
 
         18   income housing credit development.  Today, Banc One
 
         19   has debt or equity investments in 35 Wisconsin
 
         20   communities.
 
         21            While we are pleased with this record,
 
         22   we continue to seek opportunities to do more.
 
         23   Recently, Wisconsin Housing and Economic
 
         24   Development Authority talked to numerous investment
 
 
 
 
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          1   bankers, underwriters, insurance companies and
 
          2   banks in an effort to find some parties interested
 
          3   in providing financial assistance for the
 
          4   development of low-income, multi-family housing in
 
          5   rural areas in Wisconsin where the need is very
 
          6   acute and the ability to meet that need has been
 
          7   very limited by the size of the loans and the
 
          8   inability to acquire adequate capital to be -- who
 
          9   would be attracted to this market.
 
         10            Banc One was the first and only
 
         11   institution to respond to this search of ours.  And
 
         12   we have developed with them a corporation known as
 
         13   the Wisconsin Affordable Housing Alliance, LLC.
 
         14            The purpose of the alliance is to provide
 
         15   a permanent loan product for financing of small,
 
         16   nonmetropolitan, multifamily developments that
 
         17   use low-income housing tax credits, to leverage
 
         18   private capital for multifamily development, to
 
         19   fill a market need with a product not otherwise
 
         20   available in Wisconsin, and to create quality
 
         21   rental housing for low to moderate income
 
         22   Wisconsinites in small income markets.
 
         23            Until the alliance, Wisconsin tax credit
 
         24   developers had difficulty accessing long-term
 
 
 
 
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          1   credit.  Many relied on short-term organizations
 
          2   with uncertain and unknown future terms.  This
 
          3   mismatch of resources to purpose was limited to
 
          4   production of smaller-scale developments that are
 
          5   badly needed in many Wisconsin communities.
 
          6            Through the alliance, developers can now
 
          7   plan their projects with more confidence and also
 
          8   readily assess equity from investors who favor such
 
          9   long-term financing.
 
         10            This program has allowed us to put forth
 
         11   $1,975,000 in three developments containing 92
 
         12   units.  Presently, the alliance is committed -- has
 
         13   committed to additional loans of up to $5,124,000,
 
         14   this from a corporation in which we have
 
         15   contributed $1 million of equity, Banc One CDC
 
         16   contributed a million dollars in equity and a line
 
         17   of credit of up to $10 million.
 
         18            We feel very strongly that Banc One has
 
         19   been and will continue to be a very aggressive
 
         20   provider of lending product to low to moderate
 
         21   income families in Wisconsin.  And we'd urge the
 
         22   Federal Reserve Bank to favorably consider the
 
         23   merger that is before them today.  Thank you.
 
         24       MS. SMITH:  Thank you very much.  We'll go to
 
 
 
 
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          1   Mr. Barbash.
 
          2       MR. BARBASH:  Good afternoon.  I appreciate
 
          3   your allowing me to move up.  It allows me to get
 
          4   back to Columbus and not miss the Savage Garden
 
          5   concert, which my 15-year old daughter has insisted
 
          6   I be back for.
 
          7       MR. ALVAREZ:  Lucky for you.
 
          8       MR. BARBASH:  Yeah, lucky me.
 
          9            My name is Mark Barbash.  I'm Executive
 
         10   Director of Columbus Countywide Development
 
         11   Corporation.  We are what's called a certified
 
         12   development company.
 
         13            We've been in existence since 1981.  And
 
         14   our mission in life is to create jobs.  We do this
 
         15   by filling the capital access gap for small
 
         16   businesses by providing financing which takes
 
         17   substantially greater risk than conventional bank
 
         18   financing and which may involve substantial
 
         19   technical assistance to entrepreneurs.
 
         20            The purpose of my appearance here today is
 
         21   to strongly support the merger of Banc One and NBD
 
         22   First Chicago.
 
         23            And I do this primarily based upon the
 
         24   record of practical day-to-day partnership that
 
 
 
 
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          1   exists in Columbus between Banc One, and not just
 
          2   Columbus Countrywide, which is the primary
 
          3   small business lender in the area, but a whole
 
          4   range of other economic development, social
 
          5   service organizations, the Ohio State University,
 
          6   and so on.
 
          7            Let me give you four specific examples of
 
          8   Banc One's involvement.
 
          9            The first is their involvement in regular
 
         10   standard small business lending through the SBA 504
 
         11   program.  In our business, we make loans -- second
 
         12   mortgage loans to small businesses for real estate
 
         13   expansions so they can grow and hire people.
 
         14            Since 1981, Banc One has financed
 
         15   $60 million in SBA 504 financing in essentially
 
         16   three counties of central Ohio.  This is about
 
         17   14 percent of the total investment that our
 
         18   certified development company has made in SBA 504
 
         19   financing.  They are the lead bank in this area.
 
         20            Second is the area of microenterprise
 
         21   financing.  In 1993, we established a central Ohio
 
         22   microloan program.  We did this by using funding
 
         23   from the Small Business Administration, but it
 
         24   required contributions of area lenders to establish
 
 
 
 
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          1   a loan loss reserve fund.
 
          2            Banc One was the first in the gate.  They
 
          3   contributed $14,000 to this program.  It was a
 
          4   small amount, but since then we've put out just
 
          5   under a million dollars in financing to 150
 
          6   start-up small businesses primarily in the inner
 
          7   city of Columbus.  30 percent of this has gone to
 
          8   minority-owned businesses, 49 percent to
 
          9   women-owned businesses and 40 percent to low-income
 
         10   business owners.
 
         11            The third area is microenterprise
 
         12   training, which you discover when you make loans to
 
         13   start-up small businesses is it's not just the
 
         14   money, it's the ability to run the business.
 
         15            Banc One was the lead founder of a program
 
         16   in Columbus called Fast Track, which was set up by
 
         17   a group called the Ohio Foundation for
 
         18   Entrepreneurial Education, which is a practical
 
         19   day-to-day training program to help entrepreneurs
 
         20   become better entrepreneurs.
 
         21            To date, they've put $65,000 in
 
         22   operational funding in and have funded $15,000 in
 
         23   scholarships.  In 18 months, we've basically
 
         24   trained 150 small businesses.
 
 
 
 
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          1            Fourth, recently Banc One participated in
 
          2   the establishment of the Columbus Growth Fund,
 
          3   which is a Mezzanine Financing Fund between debt
 
          4   and equity targeted at minority women-owned
 
          5   businesses in the city of Columbus.
 
          6            Banc One's specific involvement has been
 
          7   $545,000 towards this project.  Banc One's
 
          8   involvement is not just money.  It's day-to-day
 
          9   involvement by their officers, both line lenders,
 
         10   by senior managers and loan review committees,
 
         11   evaluations of applications.  They really put in
 
         12   thousands of hours.
 
         13            Let me stress a couple of points.  The
 
         14   first one is our organization, as I've said, is not
 
         15   the only game in town.  I represent but one facet
 
         16   of Banc One's involvement in Columbus economic
 
         17   development activities.
 
         18            Second thing is that there's been some
 
         19   concern about the impact of Banc One's local
 
         20   economic development activities by the impact of
 
         21   the merger.
 
         22            In another role, I am the President of an
 
         23   organization called the National Association of
 
         24   Development Companies, which is an association of
 
 
 
 
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          1   groups like ours around the country.
 
          2            And when Banc One would buy a local bank,
 
          3   I would get calls from local certified development
 
          4   companies around the country saying, you're from
 
          5   Columbus, tell us about Banc One.  I tell them
 
          6   about my good experience.
 
          7            And with almost universal response, six
 
          8   to twelve months later these certified development
 
          9   companies call back and say, you know, you were
 
         10   right, it took them a little while, but, in fact,
 
         11   they're very active in local economic development.
 
         12   Around the country, they seem to be having this
 
         13   effect.
 
         14            A lot has been said here about the
 
         15   desirability of having special agreements.  I want
 
         16   to finish by saying that we don't have a special
 
         17   agreement with Banc One.  We don't have a written
 
         18   piece of paper.
 
         19            What we have is a practical, day-to-day
 
         20   working relationship with the bank that caused --
 
         21   has obligations on our part to do our job,
 
         22   obligations on Banc One's part to help do this.
 
         23   And we strongly support the merger.
 
         24       MS. SMITH:  Thank you very much.
 
 
 
 
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          1       MR. BARBASH:  Thank you.
 
          2       MS. SMITH:  Ms. Carlstedt.
 
          3       MS. CARLSTEDT:  Is this --
 
          4       MS. SMITH:  I'm not sure that that -- here,
 
          5   just use that one.
 
          6       MS. CARLSTEDT:  Thank you for this opportunity
 
          7   to address the Federal Reserve Panel.  My name is
 
          8   Moria Carlstedt, and I am the President of the
 
          9   Indianapolis Neighborhood Housing Partnership.
 
         10            The partnership was formed in 1988 and is
 
         11   a catalyst and intermediary to support the
 
         12   creation of affordable housing opportunities in
 
         13   Indianapolis, as well as just to support the
 
         14   sustaining of our current affordable housing
 
         15   stock.
 
         16            Through partnerships with Federal, State
 
         17   and local governments, as well as our philanthropic
 
         18   institutions, community development corporations
 
         19   and the financial institutions, the Indianapolis
 
         20   Neighborhood Housing Partnership has been involved
 
         21   in counselling, credit counselling, home ownership
 
         22   training and direct lending through loan pools.
 
         23            Since 1988, we have counselled
 
         24   approximately 5,000 customers.  We have conducted
 
 
 
 
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          1   150 classes.  And we've been involved in
 
          2   approximately 2,000 units of home ownership
 
          3   opportunity and/or quality rental opportunities.
 
          4            The Housing Partnership has had a
 
          5   long-standing relationship with Banc One and First
 
          6   Chicago NBD.  They have been with us since the
 
          7   beginning.  Both institutions have participated in
 
          8   two single-family loan pool opportunities, as well
 
          9   as one multi-family loan pool.
 
         10            Banc One and First Chicago represented --
 
         11   First Chicago NBD, excuse me, represented
 
         12   approximately 46 percent of our first loan pool,
 
         13   they represent 40 percent of our existing loan
 
         14   pool and about 66 of our multi-family lending
 
         15   loan pool.
 
         16            The pools have been the primary source
 
         17   of funds dedicated to creating affordable and
 
         18   low-income housing opportunities in Indianapolis.
 
         19            Additionally, among the financial
 
         20   institutions, since 1988 Banc One and First Chicago
 
         21   NBD have been the single largest donating -- they
 
         22   have donated more money to our partnership and
 
         23   supported our operations.
 
         24            They also have membership on our Board of
 
 
 
 
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          1   Directors and have been actively involved in our
 
          2   community in the -- supporting the affordable
 
          3   housing delivery system.
 
          4            The Housing Partnership has been working
 
          5   with Banc One and we have been in communications
 
          6   with Banc One to ensure that the momentum and
 
          7   significant community -- the significant community
 
          8   development activity that has taken place over the
 
          9   years remains at a pace that will meet the needs of
 
         10   our citizens.
 
         11            The Housing Partnership recognizes and
 
         12   respects the business activities or the business
 
         13   reasons for the merger.  And we believe that
 
         14   Banc One will, in fact, remain a strong community
 
         15   partner.
 
         16            We are always there in communication with
 
         17   Banc One to remind them that the post-merger bank
 
         18   will need to remain committed to our organization
 
         19   and other organizations such as ours, like the
 
         20   Community Development Corporations and other
 
         21   partners and stakeholders.
 
         22            It is imperative that Banc One remain
 
         23   involved in order to enable us to sustain the pace
 
         24   at which we are developing affordable housing
 
 
 
 
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          1   opportunities.
 
          2            We are communicating with Banc One on a
 
          3   regular basis to remind them of the tremendous
 
          4   financial investment that has taken place in
 
          5   Indianapolis over the years.
 
          6            Our philanthropic institutions and our
 
          7   community development corporations, the government
 
          8   and the private sector, have worked well together
 
          9   and we have made tremendous accomplishments.  And
 
         10   Banc One and First National and NBD have been there
 
         11   primarily in the form of the loan pools and by
 
         12   supporting the partnership.
 
         13            We are always reminding Banc One of the
 
         14   need for them to continue to play a significant
 
         15   role.  Our community has just completed a task
 
         16   force which will guide our growth and our community
 
         17   in the form of its housing policy for the next ten
 
         18   years.  And it is clear that Banc One and all of
 
         19   the financial institutions will be imperative -- it
 
         20   will be imperative that they participate in our
 
         21   growth in the next ten years.
 
         22            Finally, we don't hesitate to remind Banc
 
         23   One and the other banks in our community about the
 
         24   profitable business opportunities in remaining in
 
 
 
 
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          1   partnership and remaining actively engaged in the
 
          2   community development movement.
 
          3            Through our counselling, we refer
 
          4   hundreds, hundreds of citizens to Banc One and
 
          5   other banks in our community who and then -- who
 
          6   then are able to access traditional mortgage
 
          7   products.
 
          8            Banc One and the Indianapolis Neighborhood
 
          9   Housing Partnership have communicated throughout
 
         10   this entire process.  And we are optimistic that
 
         11   that communication will continue to the benefit of
 
         12   the community.
 
         13            Therefore, based on the significant level
 
         14   of participation of Banc One and the history of the
 
         15   Community Development Corporation of the community
 
         16   development movement and in their commitment to the
 
         17   partnership, as well as assurances that we have
 
         18   received during this process and a belief that
 
         19   local bank management will, in fact, be making
 
         20   decisions for the local community, the Housing
 
         21   Partnership is encouraged about the future.
 
         22            And we believe that Banc One will remain
 
         23   committed to the Indianapolis community, to the
 
         24   partnership and to community development.  Thank
 
 
 
 
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          1   you for this opportunity.
 
          2       MS. SMITH:  Thank you.  Ms. Jones-Kibby.
 
          3       MS. JONES-KIBBY:  Hello.  I want to thank
 
          4   you -- I need a microphone.
 
          5            Good afternoon.  I want to thank you for
 
          6   the opportunity to speak out in support of the
 
          7   merger between Banc One and First Chicago NBD.
 
          8            My name is Denise Jones-Kibby, and I'm the
 
          9   Policy Director at Women's Self-Employment Project,
 
         10   as well as the Chair of Illinois State
 
         11   Microenterprise Initiative, also known as ISMI.
 
         12            Women's Self-employment Project founded
 
         13   ISMI in the fall of 1995.  ISMI is a coalition of
 
         14   service providers, financial institutions, State,
 
         15   local and private agencies.
 
         16            Our mission is to provide an organized
 
         17   voice to advocate for community economic
 
         18   empowerment and to create growth opportunities
 
         19   for microenterprise development throughout the
 
         20   state of Illinois.
 
         21            Microenterprise are defined as very small
 
         22   businesses having fewer than five employees,
 
         23   limited access to the commercial banking sector,
 
         24   are able to utilize a loan under $15,000 and are
 
 
 
 
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          1   generally sole proprietors.
 
          2            A study by the Aspen Institute found that
 
          3   entrepreneurs served by microenterprise development
 
          4   programs are predominantly women, people of color
 
          5   and low to moderate income.
 
          6            Many microenterprise businesses are
 
          7   located in residential communities.  By providing
 
          8   business services in residential communities,
 
          9   microenterprise affords economic fabric that is
 
         10   critical to maintaining economically viable
 
         11   neighborhoods.
 
         12            There are over 200,000 microenterprise
 
         13   businesses in Chicago.  Microenterprise is growing
 
         14   at an annual rate of 7 to 8 percent.  The number of
 
         15   microenterprise businesses is expected to reach
 
         16   27.8 million nationwide by the year 2001.
 
         17            66 percent of the new jobs created
 
         18   in Illinois between 1992 and 1996 were
 
         19   microenterprises compared with the net loss of
 
         20   jobs in firms over 100 employees.
 
         21            As a number of microenterprise businesses
 
         22   increase in Illinois, it is imperative that the
 
         23   government and private sector leaders recognize and
 
         24   support microenterprise as an essential component
 
 
 
 
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          1   of economic development and welfare-to-work
 
          2   strategies that result in job creation and
 
          3   self-sufficiency.
 
          4            I am testifying today to inform you that
 
          5   Banc One Illinois has been very supportive of
 
          6   ISMI's efforts to promote microenterprise in
 
          7   Illinois.  Banc One was one of the first financial
 
          8   institutions to join ISMI and has taken a
 
          9   leadership role in several of its initiatives.
 
         10            In March of 1998, ISMI held its first
 
         11   statewide microenterprise conference in
 
         12   Springfield, Illinois.  Banc One financially
 
         13   sponsored the conference, assisted in the planning
 
         14   and facilitated discussions.
 
         15            Banc One has also taken a leadership role
 
         16   in the development of a database and a directory of
 
         17   microenterprise organizations in Illinois.  We
 
         18   anticipate that both items will be accessible
 
         19   through the Internet in the near future.
 
         20            Access to information is often cited as an
 
         21   impediment to microenterprise development.  And
 
         22   ISMI anticipates that this second edition of the
 
         23   directory will be as popular and useful statewide
 
         24   as the first.
 
 
 
 
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          1            Banc One is working with other ISMI
 
          2   members to research and develop a report
 
          3   identifying the barriers faced by
 
          4   microentrepreneurs in Illinois.
 
          5            We will use this report to increase our
 
          6   advocacy for creating a public and private sector
 
          7   environment in Illinois that fosters
 
          8   microenterprise development in fund-raising.
 
          9            As ISMI works towards its goals of
 
         10   developing a comprehensive public policy agenda
 
         11   that promotes microenterprise as a viable economic
 
         12   development alternative, especially for communities
 
         13   with limited access to resources, addressing the
 
         14   needs of microenterprise development programs and
 
         15   building a network to exchange information between
 
         16   microenterprise organizations in Illinois, ISMI
 
         17   believes that Banc One will continue to be a
 
         18   valuable partner and, therefore, ISMI supports this
 
         19   merger application.  Thank you.
 
         20       MS. SMITH:  Thank you very much.  Mr. Kudek.
 
         21       MR. KUDEK:  Thank you.
 
         22            My name is Ken Kudek.  I'm Assistant
 
         23   Director and Vice President of Focus Hope in
 
         24   Detroit.  Focus Hope is a human and civil rights
 
 
 
 
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          1   organization.  And we are this year celebrating our
 
          2   30th anniversary.
 
          3            I think it's fair to say, up front, that
 
          4   First Chicago NBD is one of three major banks that
 
          5   we do a lot of business with in Detroit.  We have
 
          6   an operating budget of $60.2 million and usually
 
          7   have a capital devolvement budget of $20 million a
 
          8   year operating, okay?  At least two of those banks
 
          9   probably wish I wasn't here testifying in favor of
 
         10   this merger today.
 
         11            The programs that we run, let me start
 
         12   with the key program, the Food Prescription
 
         13   Program.  It's a Federal Commodities Supplemental
 
         14   Food Program for low-income pregnant women,
 
         15   postpartum women, infants and children to six years
 
         16   of age and senior citizens in Detroit.
 
         17            During the first Reagan administration, we
 
         18   actually got it introduced as a pilot legislation
 
         19   when every other program -- social program in the
 
         20   United States was coming under jeopardy.
 
         21            The Food Prescription Program in the last
 
         22   depression that we had in Detroit, which was in
 
         23   1991, fed 90,000 people a year.  It's that
 
         24   experience that drives us as a civil and human
 
 
 
 
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          1   rights organization to community and economic
 
          2   development.
 
          3            We chose human skill development as the
 
          4   primary driver, the one thing that could not be
 
          5   relocated easily and the kind of thing that put
 
          6   us into technical training in the deals that
 
          7   we're in.
 
          8            Effectively, those technical training
 
          9   programs are viewed as breakthrough.  They're
 
         10   copied in the United States from Los Angeles
 
         11   through St. Louis to Philadelphia.  And we now have
 
         12   a clone coming up in Port Elizabeth, South Africa.
 
         13            In those programs, high school graduates,
 
         14   who in the United States come out with Sixth Grade
 
         15   math and Eighth Grade reading functionally, can end
 
         16   up with a Bachelor's of Manufacturing Engineering
 
         17   and human experience time.
 
         18            We take people from Eighth Grade math and
 
         19   Eighth Grade reading in seven weeks to be able to
 
         20   do technical training; that is, Eleventh Grade math
 
         21   and about Tenth Grade reading in the seven weeks,
 
         22   all in human time.
 
         23            These are all poor folks.  80 percent of
 
         24   the population is African American, 45 percent in
 
 
 
 
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          1   a nontraditional field of manufacturing and
 
          2   machining and engineering are female, 80 percent
 
          3   are low income.
 
          4            The place in which we live is
 
          5   a low-income section of Detroit.  We see poverty
 
          6   day in and day out.  We don't like it.  We want to
 
          7   change it.  That is our mission, to eliminate
 
          8   poverty, racism and adjust it.
 
          9            To -- I've heard a number of concerns
 
         10   about housing care.  By the way, our bias on that
 
         11   is, if you create the human skills so that people
 
         12   are productive, you draw jobs.  Jobs create money.
 
         13   Money creates housing.  I don't need Federal
 
         14   Legislation to create housing.  I need jobs, okay?
 
         15            We have had, for the last 20 years -- we
 
         16   looked at it last year -- fiduciary responsibility
 
         17   for over one-half billion of Federal dollars alone,
 
         18   500 million Federal dollars.  The departments that
 
         19   have put their confidence in us are Agriculture,
 
         20   HHS, DOD, DOL, DOE, DOC, HUD, to name a few.  Okay?
 
         21            I say all this because bona
 
         22   fese (phonetic) are important.  And I've
 
         23   listened in the audience for a while to my brother
 
         24   and sister colleagues who are in community and
 
 
 
 
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          1   economic development who are on the other side of
 
          2   this issue.
 
          3            We've known NBD -- and I'll refer to them
 
          4   as NBD because it's the old name.  I don't change
 
          5   that easily.
 
          6            We've known NBD since we had $110.48 to
 
          7   put in the bank.  In the 30 years of history, one
 
          8   sees both good times and bad times as a civil human
 
          9   rights organization.  NBD was always there.
 
         10            As I said, we had a fiduciary
 
         11   responsibility for a lot of Federal money, State
 
         12   money, local money, foundation money all over the
 
         13   place.  And in each of those cases, particularly on
 
         14   the Federal Government, the State side and the
 
         15   local governmental side, it is extremely, extremely
 
         16   slow pay.  NBD has been there with a line of
 
         17   credit.
 
         18            I only have one minute left, so I'll take
 
         19   on the two objections.  One is Banc One, who I
 
         20   don't know, has a bad history of lending, possibly
 
         21   discriminatory.  You guys need to look into that.
 
         22   I'm a civil and human rights guy.  You need to look
 
         23   into that.
 
         24            The second is that consolidation may lead
 
 
 
 
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          1   to disinvestment.  I don't believe that's true.  My
 
          2   experience with NBD and Bank -- First of Chicago
 
          3   NBD since the merger is that there has been more
 
          4   re-investment and not less re-investment in
 
          5   Detroit.  And thank you for your time.
 
          6       MS. SMITH:  Thank you.  Ms. Ratner.
 
          7       MS. RATNER:  I'm Hedy Ratner, and I'm
 
          8   Co-President of the Women's Business Development
 
          9   Center.
 
         10            Thank you for the opportunity to present
 
         11   my response to the proposed merger of Banc One with
 
         12   First Chicago NBD in support for Chicago NBD and
 
         13   Banc One's merger and commitment to both the letter
 
         14   and spirit of the Community Reinvestment Act.
 
         15            Representing thousands of women and
 
         16   minority business owners in the Chicagoland area,
 
         17   the WBDC is involved in First Chicago NBD's
 
         18   continuing investment into low and moderate income
 
         19   families, business and neighborhoods and
 
         20   specifically in its efforts to provide access to
 
         21   credit in those communities.
 
         22            The Women's Business Development Center
 
         23   has a positive first-time experience with First
 
         24   Chicago NBD since the inception of our organization
 
 
 
 
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          1   in 1986.
 
          2            The WBDC provides counselling,
 
          3   entrepreneurial training, financial assistance,
 
          4   business and strategic planning, marketing and
 
          5   procurement assistance and assistance with loans to
 
          6   start-up, emerging and mature businesses.
 
          7            Our organization is now the oldest and one
 
          8   of the largest and most comprehensive women's
 
          9   business assistance centers in the United States.
 
         10            First Chicago has been our partner in
 
         11   economic development providing support for our
 
         12   organization, loans to our client, funds for our
 
         13   collateral pool to collateralize small business
 
         14   loans, program-related investments for microlending
 
         15   to women and minority start-up businesses, involved
 
         16   with our Board of Directors, participation as a
 
         17   lender in our women's business bank loan program
 
         18   and participation in our annual events at
 
         19   conferences and marts, and is committed to vendor
 
         20   development and purchasing from minority and women
 
         21   business owners, one of our major missions.
 
         22            Recently, the Women's Business Development
 
         23   Center and First Chicago NBD began a wonderful new
 
         24   partnership to provide business development,
 
 
 
 
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          1   financial assistance and banking services to low
 
          2   and moderate income communities.
 
          3            First Chicago NBD and the WBDC are taking
 
          4   our programs and services on the road with the
 
          5   Wheels of Business mobile van to make our programs
 
          6   and services more available and accessible in
 
          7   low-income communities.
 
          8            This innovative new business program will
 
          9   bring information and services, counselling and
 
         10   entrepreneurial training, banking services, credit
 
         11   advice and counselling, financial assistance,
 
         12   Internet training and access to that technology, as
 
         13   well as self-employment opportunities to
 
         14   economically disadvantaged communities.
 
         15            Women, and specifically those in
 
         16   low-income communities, have been left out of
 
         17   economic opportunities.  Women face numerous
 
         18   barriers to economic self-sufficiency because of
 
         19   lack of affordable child care and access to
 
         20   transportations, quality education and jobs.
 
         21            The First Chicago NBD Worlds -- Wheels
 
         22   of Business -- First Chicago NBD-WBDC-Wheels of
 
         23   Business approach helps us provide resources,
 
         24   information and support to those who need --
 
 
 
 
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          1   most need help.
 
          2            The WBDC is also a partner with Banc One.
 
          3   It has been part of the Women's Business Bank Loan
 
          4   Program, participated in our annual conferences and
 
          5   supports the WBDC and provides loans to our
 
          6   clients.
 
          7            WBDC is also partnering with ACCION, a
 
          8   neighborhood microlender which has received
 
          9   considerable support and encouragement from First
 
         10   Chicago NBD.
 
         11            With ACCION providing loans and WBDC
 
         12   providing business assistance, the small businesses
 
         13   in economically disadvantaged neighborhoods have a
 
         14   better chance for success in the communities and
 
         15   increased opportunities neighborhood
 
         16   revitalization.
 
         17            CANDO, a microlender and a neighborhood
 
         18   development organization, has also been our partner
 
         19   and a partner of First Chicago NBD for many years,
 
         20   lending, developing and supporting Chicago's
 
         21   economic strength.
 
         22            The partnership of private and public
 
         23   sector, nonprofit and for-profit entities is
 
         24   also evident in First Chicago's involvement with
 
 
 
 
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          1   the Illinois Capital Access Program, a
 
          2   state-based small business loan initiative begun
 
          3   in early 1997.  CAP is now one of the most
 
          4   successful programs for access to capitals for
 
          5   small businesses.
 
          6            First Chicago NBD is the most active
 
          7   lender in this successful program.  CAP's incentive
 
          8   program provides more ways for First Chicago to
 
          9   approve loans for small business.
 
         10            For the WBDC and other community
 
         11   development organizations, to truly understand the
 
         12   issues of small business lending in low and
 
         13   moderate income communities, gender and race based
 
         14   lender data that has been available for housing is
 
         15   not available for small business.
 
         16            With good research, gender and race based
 
         17   data, we can develop the successful policies and
 
         18   programs for small business lending in the next
 
         19   century.  We, therefore, look to First Chicago with
 
         20   Banc One to be the precedent-setter and to lead
 
         21   national efforts in changing Regulation B.
 
         22            This is a tiny window of opportunity.
 
         23   The Federal agencies are requesting comment and
 
         24   recommendations on Reg B from the general public.
 
 
 
 
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          1            Although our organization and hundreds
 
          2   of community and economic development organizations
 
          3   agree that the requirement of gender and race
 
          4   based commercial lending data is necessary for
 
          5   policy and appropriate development, we would like
 
          6   to see the participation of major banks in this
 
          7   effort as well.
 
          8            The WBDC and many of our colleagues across
 
          9   the nation are also very concerned about the effect
 
         10   bank mergers will have on small business lending.
 
         11            The standardization of underwriting
 
         12   criteria, the removal of lending decision-making
 
         13   from the first-line banker, which is the continuing
 
         14   trend in larger and merged banks, is detrimental
 
         15   to the growth of small businesses in the inner
 
         16   cities.
 
         17            Although intermediaries like ours -- oops,
 
         18   am I off?  I'm off.  Well, I'm done, I guess.
 
         19       MS. SMITH:  Thank you very much.  We will
 
         20   keep -- we will put your entire statement into the
 
         21   record.
 
         22       MS. RATNER:  Thank you.
 
         23       MS. SMITH:  Any questions?  All right.  We're
 
         24   ready for Panel 16.
 
 
 
 
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          1            All right.  We're going to start with
 
          2   Mr. Ellis, if someone will give him the mike.
Last update: December 3, 2010