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Public Meeting Transcripts

Public Meeting Regarding Banc One and First Chicago

Thursday, August 13, 1998

Transcript of Panel Four

          5       MS. COLEMAN:  Good morning.  My name is Cora
 
          6   Coleman, and I am a Board member of Local 880 of
 
          7   the Service Employees International Union.
 
          8            I am here to talk about what things could
 
          9   be like for minorities here in Chicago when
 
         10   Banc One takes over the local control of
 
         11   First Chicago.
 
         12            If it's anything like what went on in
 
         13   Akron, Ohio, it could get ugly.  In the early 90s,
 
         14   Banc One took over the Local Central Trust in
 
         15   Akron.  Soon after, minority job applicants filed
 
         16   employment discrimination complaints with the
 
         17   Department of Labor.
 
         18            After a two-year investigation, the
 
         19   Department found that 31 qualified minority job
 
         20   applicants were unfairly turned down for jobs at
 
         21   Banc One, a clear-cut case of employment
 
         22   discrimination.
 
         23            For five years, Banc One fought the
 
         24   Department of Labor's attempts to reform the bank's
 
 
 
 
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          1   hiring practices.
 
          2            Finally, just last year, the bank was
 
          3   forced to hire 12 of the complainants and to
 
          4   provide financial compensation to those minority
 
          5   applicants it had refused to hire.
 
          6            First Chicago NBD is a larger operation
 
          7   than Central Trust.  And squeezing the two
 
          8   companies together is going to involve all sorts of
 
          9   job changes, all sorts of chances for Banc One's
 
         10   record in the lending office of turning down
 
         11   minority applicants to come shining out in the job
 
         12   interview.
 
         13            We know the Federal Reserve is not
 
         14   sympathetic to this issue since they themselves are
 
         15   facing a large class action lawsuit from its
 
         16   minority employees, but Banc One should be careful
 
         17   because we will be watching with our trial
 
         18   lawyers.
 
         19            Banc One also has violated lending
 
         20   discrimination laws.  In March of this year,
 
         21   Banc One Mortgage Corporation signed a lending
 
         22   discrimination settlement with HUD after their Fort
 
         23   Worth Humans Relation Commission filed their
 
         24   lending complaints.  They found that Banc One
 
 
 
 
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          1   offered African Americans and Latinos loans at
 
          2   worse terms than offered to whites by steering them
 
          3   to inferior and more expensive products than their
 
          4   conventional loan product.
 
          5            As a result of this case, Banc One
 
          6   Mortgage committed to provide 10 million in
 
          7   mortgages to low and moderate income and minority
 
          8   borrowers.
 
          9            This pattern of discrimination continued
 
         10   in Arizona where Banc One recently settled a case
 
         11   with the Attorney General by agreeing to provide
 
         12   5 million in mortgages to low and moderate income
 
         13   residents of Yuma County.  This agreement came only
 
         14   after the state investigated complaints from five
 
         15   Latino families who claimed they were denied
 
         16   mortgages because of their ethnicity.  Banc One
 
         17   denied these claims, citing internal processing
 
         18   problems.
 
         19            One family said they received the run
 
         20   around from Banc One Mortgage until their
 
         21   application was delayed long enough that they lost
 
         22   their house to another buyer.
 
         23            When a second attempt with Banc One
 
         24   mortgage met similar delays, they took their
 
 
 
 
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          1   application to another bank and were approved
 
          2   within a week.
 
          3            In another instance that is strikingly
 
          4   similar to the Phoenix example, a Dallas homeowner
 
          5   who applied for a Banc One home improvement loan in
 
          6   1996 cannot get his loan processed or even his
 
          7   application rejection.
 
          8            This practice of deterring applications of
 
          9   prospective minority borrowers at the outset helps
 
         10   understate the minority rejection rates.
 
         11            These cases indicate a pattern of
 
         12   discrimination through a series of delays and
 
         13   deceptions that help Banc One pad their humble
 
         14   reporting.
 
         15            They also show us that under the threat of
 
         16   a lawsuit, Banc One seems able to provide
 
         17   alternative financing to meet the needs of low
 
         18   income and minority borrowers.
 
         19            Banc One clearly has a problem when it
 
         20   comes to serving the banking and employment needs
 
         21   of African Americans and Latinos.  They don't seem
 
         22   to understand that discrimination is against the
 
         23   law.
 
         24            The burning issue of today is does the
 
 
 
 
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          1   Federal Reserve Board understand that
 
          2   discrimination is against the law, does the Federal
 
          3   Reserve Board have the guts to finally say no to a
 
          4   renegade like Banc One.
 
          5            On behalf of my union's 10,000 members, I
 
          6   implore you to do the right thing.
 
          7            Thank you.
 
          8       MS. SMITH:  Thank you very much.
 
          9            Mr. Shea.
 
         10       MR. SHEA:  Ted Thomas is going to speak next.
 
         11       MS. SMITH:  Okay.
 
         12       MR. THOMAS:  Good morning.  My name is Ted
 
         13   Thomas.  I'm the president of Illinois ACORN.
 
         14            Banc One has a history of refusing to
 
         15   negotiate lending agreements to meet the needs of
 
         16   the low income communities.  The only time Banc One
 
         17   has quantifably made a lending commitment to a city
 
         18   was when it was forced to do so by Michael White,
 
         19   the Mayor of Cleveland.
 
         20            Mayor White was so disturbed by Banc One's
 
         21   unwillingness to help him rebuild the central city,
 
         22   he actually filed a CRA protest against the bank
 
         23   and forced the bank to set CRA lending goals for
 
         24   his city.
 
 
 
 
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          1            ACORN has negotiated lending agreements
 
          2   and partnership with scores of banks throughout the
 
          3   nation.  For example, we worked with Nations Bank
 
          4   in 12 cities and with Chase Bank in ten cities.
 
          5            Our partnerships have a proven track
 
          6   record of performance.  Since 1987, we have helped
 
          7   over 10,000 low income families, mostly African
 
          8   American and Latino heritage, achieve the American
 
          9   dream of home ownership.
 
         10            We were amazed at Banc One's flat-out
 
         11   refusal to even discuss the formation of a
 
         12   partnership or a corporate-wide CRA lending
 
         13   commitment.
 
         14            Banc One's Senior Vice President, Julie
 
         15   Johnson, sent a rejection letter to several ACORN
 
         16   officers.  She said we do not believe in negotiated
 
         17   CRA programs.
 
         18            In Denver, Banc One officials have
 
         19   canceled and postponed every meeting that has been
 
         20   scheduled with ACORN members.  To this day,
 
         21   Banc One has not set CRA lending goals or made
 
         22   commitments to Denver.
 
         23            In Milwaukee, Banc One's met with ACORN
 
         24   members.  They said that they were unwilling to
 
 
 
 
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          1   negotiate a lending agreement and pulled out
 
          2   Mrs. Johnson's letter to justify their position.
 
          3   They told the same thing to the city's Fair Lending
 
          4   Coalition.  Today, Banc One has not set CRA lending
 
          5   goals or made a commitment to Milwaukee.
 
          6            In Louisiana, Banc One officials have also
 
          7   refused to enter into a partnership discussion.
 
          8   Instead, they sent a letter saying that they
 
          9   already do enough.  To this day, Banc One has not
 
         10   set CRA lending goals of any kind in New Orleans,
 
         11   Baton Rouge, Shreveport or anywhere else in the
 
         12   State of Louisiana even though they are by far the
 
         13   largest bank in the state.
 
         14            Unlike other bigger mergers this year,
 
         15   Banc One has refused to make corporate-wide lending
 
         16   CRA commitments.  What Banc One has done is allow
 
         17   the First Chicago NBD CRA team to promise a lot of
 
         18   grants to non-profits here in Chicago and in
 
         19   Detroit.
 
         20            Four weeks ago, ACORN thought it had a
 
         21   commitment from First Chicago NBD.  This commitment
 
         22   was personally given to me by the CEO of
 
         23   First Chicago, Mr. Verne Istock.  He looked me
 
         24   right in the eye and said Ted, we value the
 
 
 
 
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          1   partnership with ACORN.  He said that they wanted
 
          2   to keep it going in Detroit and Chicago and
 
          3   possibly expand it to other cities.
 
          4            Following that meeting, his staff told us
 
          5   that we could expand our partnerships to Milwaukee
 
          6   and perhaps to a couple of the bank's other
 
          7   cities.  They told us that they would value the
 
          8   ACORN mortgage counseling program because it helped
 
          9   them to make mortgages in places like Ingallwood,
 
         10   North Lawndale, places where for years, banks had
 
         11   not been able to make a single loan on its own.
 
         12            I left the meeting feeling like things
 
         13   were going to work out.  After all, I had received
 
         14   the word of the top dog, so I thought.  Can you
 
         15   imagine to my surprise just three days later,
 
         16   Banc One suddenly terminated our negotiation with
 
         17   no notice or explanation of any kind.
 
         18            The First Chicago CRA team were very
 
         19   apologetic and said that they would still be
 
         20   willing to continue our program in Detroit and
 
         21   Chicago but that they were not allowed to form CRA
 
         22   partnerships in any additional cities.
 
         23            When we asked what had happened to the
 
         24   commitment from Verne Istock, they sheepishly
 
 
 
 
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          1   explained that Mr. Istock had been overruled by
 
          2   John McCoy, the CEO of Banc One.  They reminded us
 
          3   John McCoy, and not Verne Istock, was going to be
 
          4   the CEO, the new top dog.
 
          5            Thank you.
 
          6       MS. SMITH:  Thank you very much.
 
          7       MR. SOZA:  Hello.  Good morning.
 
          8            My name is Nelson Soza.  I'm an organizer
 
          9   with Chicago ACORN, and I want to thank the Federal
 
         10   Reserve Bank for having reopened this comment
 
         11   period.  I think it's key for our community such as
 
         12   the one I work in.  I also want to thank the
 
         13   members of ACORN and Local 880 that come from
 
         14   everywhere.
 
         15            There is justice to be made, and we think
 
         16   that this is one of those cases, red lining.
 
         17   People in our community understand it that way so I
 
         18   thank everybody for being here today.
 
         19            I proceed to read the statement.
 
         20            The merger between Banc One and
 
         21   First Chicago NBD poses very serious issues for the
 
         22   residents of Chicago.  It represents a loss of one
 
         23   of the last local major banks in Chicago, one of
 
         24   the last major banks rooted in our communities.
 
 
 
 
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          1            Not that there isn't room for improvement
 
          2   at First Chicago.  Banks in Chicago reject African
 
          3   Americans and Latinos for home loans more
 
          4   frequently than banks in other cities, and
 
          5   First Chicago is worse than the rest of the banks
 
          6   here.
 
          7            First Chicago NBD rejected African
 
          8   Americans nearly four times as frequently as whites
 
          9   for home loans, and Latinos were denied home loans
 
         10   more than twice often as whites.  This is far
 
         11   higher than the citywide averages for all lenders.
 
         12            This performance is unacceptable from a
 
         13   bank that touts its hometown image.  Incredibly,
 
         14   even the wealthiest African Americans and Latinos
 
         15   are rejected at the same high rates.
 
         16            The Woodstock Institute found similar
 
         17   patterns when looking at lower income borrowers.
 
         18   First Chicago has much larger shares of the Chicago
 
         19   small business and mortgage lending market for
 
         20   wealthy borrowers than lower income borrowers.
 
         21            Yes, First Chicago has some cracks in
 
         22   their record, but they are nothing compared to the
 
         23   problems of Banc One.  They seem small.
 
         24            Banc One is already in the Chicagoland
 
 
 
 
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          1   area, but as you can see from the map behind me or
 
          2   on the side over there if you look in the corner,
 
          3   there is a map.  If you look at the map there, as
 
          4   you can see, it just isn't in Chicago.
 
          5            Banc One isn't in Chicago really in fact
 
          6   with exception of its branch on LaSalle Street in
 
          7   the Loop across the street, Banc One has avoided
 
          8   the City of Chicago as if it were the plague.
 
          9            Its branches are located in wealthier
 
         10   suburban neighborhoods like Schaumburg, Winnetka
 
         11   and Highland Park.  So if people from the West Side
 
         12   want to open an account, they have to go all the
 
         13   way there, for instance.
 
         14            We know if past track record is any
 
         15   indicator, then it is very likely that once
 
         16   Banc One takes over First Chicago, it will close
 
         17   the few First Chicago NBD branches that are in our
 
         18   neighborhoods.
 
         19            Banc One has always closed branches
 
         20   following mergers no matter what the overlap in the
 
         21   merging bank's service areas.  In fact, Banc One
 
         22   has recently announced that it will close between
 
         23   200 and 500 branches, and somehow, I don't think
 
         24   that it would be the branches in Winnetka and
 
 
 
 
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          1   DuPage County that will be closed.
 
          2            Banc One is planning on replacing the
 
          3   branches with ATMs in regional outlets and
 
          4   convenience stores where Banc One already charges
 
          5   its own customers one dollar for each use.  Compare
 
          6   this to First Chicago, which provides unlimited ATM
 
          7   use to its own customers for free.
 
          8            Banc One is also teaming up with
 
          9   Texas-based Mr. Payroll to install check cashing
 
         10   stores across the country.  These operations will
 
         11   cash a check for you but only if you submit to
 
         12   video identification or fingerprinting.  After
 
         13   treating you as if you were a common criminal, they
 
         14   will then charge you one percent for payroll and
 
         15   government checks, two percent for money orders and
 
         16   three percent for personal checks.
 
         17            Sadly enough, even these high rates may be
 
         18   cheaper than the flat $8 fee Banc One charges to
 
         19   cash a government check at its own branches, $8 for
 
         20   a government check.
 
         21            Again, compare this to First Chicago where
 
         22   government checks are oftentimes cashed for free by
 
         23   tellers who get to know their customers who have
 
         24   government checks, many of whom are older and
 
 
 
 
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          1   disabled.
 
          2            Given the choice between locally-based
 
          3   First Chicago and notoriously customer unfriendly
 
          4   Banc One, we'll keep what we've got.
 
          5            I urge you to reject this merger and the
 
          6   high cost, low volume customer services that come
 
          7   with it.
 
          8            Thank you very much.
 
          9       MS. SMITH:  Ms. Vargas.
 
         10       MR. VARGAS:  Good morning.  My name is Shirley
 
         11   Vargas.  I live in Pleasant Grove, Dallas, Texas.
 
         12            Me and my fiancee went to Banc One to get
 
         13   a home loan, and when we went in there, my fiancee
 
         14   had worked for his job -- he started in '91 and the
 
         15   company changed over.  He was a regular employee,
 
         16   and they changed over to independent contractors so
 
         17   he had already filed for that independent
 
         18   contractor, and we hadn't been there -- he hadn't
 
         19   filed very long.
 
         20            After that, we went there, and they said
 
         21   that he had to have at least four years tax returns
 
         22   for an independent contractor before we could even
 
         23   consider a loan.
 
         24            The money I was making, he said that I
 
 
 
 
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          1   didn't qualify for the $65,000 home that we wanted
 
          2   to purchase.  We had $4,200 to put down on it, and
 
          3   they didn't even consider that.  They said that I
 
          4   didn't make enough money and that for us to come
 
          5   back in two years for us to get a loan.  And that
 
          6   was just unfair.
 
          7            We didn't go anywhere else after that
 
          8   because we thought we couldn't get a loan, we
 
          9   couldn't get a loan from any other bank.
 
         10            Because I had an account there, I thought
 
         11   that Banc One would be able to help me out, and
 
         12   they didn't.  They said no, and that was it, and I
 
         13   think it was very unfair.
 
         14            And they didn't even look at our
 
         15   application, they didn't even do a credit check.
 
         16   They just said no, that we needed to come back in
 
         17   two years after we had tax returns, we had all the
 
         18   information that they asked us for.
 
         19            They didn't even consider it.  They just
 
         20   said no, you need to come back.  And I just think
 
         21   that's really unfair.
 
         22       MS. SMITH:  Thank you very much.  Mr. Shea.
 
         23       MR. SHEA:  Good morning.  My name's Mike Shea
 
         24   I'm Executive Director of ACORN Housing
 
 
 
 
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          1   Corporation.
 
          2            The merger of First Chicago NBD and
 
          3   Banc One is not a merger of equals, so let's get
 
          4   that straight, it's an acquisition.
 
          5            We are losing First Chicago and a more
 
          6   open and efficient cosmopolitan culture that it has
 
          7   developed.  It has been replaced by the arrogant
 
          8   big fish in a small pond approach by Banc One, an
 
          9   approach that is both inefficient and racially
 
         10   prejudiced.
 
         11            And in case anyone here still has any
 
         12   doubts about which bank's culture will survive,
 
         13   consider the remarks made by John McCoy to the
 
         14   Arkansas Business Journal during another merger.
 
         15   He he said, "I don't believe in a merger of
 
         16   equals.  We want to be sure it is the Banc One
 
         17   culture that survives."
 
         18            And what happened with the golden
 
         19   parachutes recently provided to First Chicago's
 
         20   senior management?  They are very unusual in that
 
         21   Verne Istock, David Pitalle and others must leave
 
         22   the new bank in order to get the money.  If they
 
         23   stay, they get nothing.
 
         24            And finally, why wasn't the outstanding
 
 
 
 
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          1   First Chicago CRA team headed by Mary Decker and Ed
 
          2   Jacob appointed to be the national CRA directors
 
          3   for the new bank?  We like Mary.  She understands
 
          4   our communities and how to make workable
 
          5   partnerships with the community.
 
          6            We have supported other candidates for
 
          7   appointment to the Board of Governors of the
 
          8   Federal Reserve.  Why is it that McCoy has hired
 
          9   someone who has never negotiated a single CRA
 
         10   agreement in his life to hold this key position?
 
         11            So let's look at the Banc One culture
 
         12   starting with politics.  So Banc One is one bad
 
         13   bank unless you are a right-wing Republican trying
 
         14   to kill the CRA, cut the guts out of federal
 
         15   programs that feed children and women and house the
 
         16   poor.  Then Banc One is your friend and will reward
 
         17   you with lots of campaign money.  But if you are a
 
         18   Democrat, then this merger is very bad news
 
         19   indeed.
 
         20            First Chicago has always divided its
 
         21   political contributions fairly evenly between
 
         22   Democrats and Republicans, for example, they hosted
 
         23   a dinner to help U.S. Senator Carol Mosely-Brown
 
         24   retire her campaign debt from the last election,
 
 
 
 
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          1   but not so with Banc One.
 
          2            The Banc One PAC gives four times more
 
          3   campaign money to Republicans than the Democrats.
 
          4   Banc One is buying First Chicago.  Guess which
 
          5   political party stands to gain.  Banc One PAC's
 
          6   largest political donations just don't go to
 
          7   Republicans, they go to the most extreme
 
          8   Republicans who are trying to cut the CRA, for
 
          9   example, Exhibit A, Representative Bill McCullom of
 
         10   Florida received $17,000 from Banc One.
 
         11   Representative McCullom is the guy that supported
 
         12   the amendment that passed the House Subcommittee
 
         13   this week that would exempt 85 percent of all banks
 
         14   in the Community Reinvestment Act.
 
         15            Exhibit B, Senator Lloyd Faircloth, Jesse
 
         16   Helms, heir apparent in North Carolina, gets
 
         17   $15,000 from Banc One, Exhibit C.  Congressman
 
         18   Casich, Chair of the House Budget Committee and
 
         19   architect of many of the Republicans Urban
 
         20   Transportation and Children's Nutrition Programs,
 
         21   he gets $17,000.
 
         22            The Banc One PAC is very large.  This is a
 
         23   very politically active bank.  In the 1996 election
 
         24   cycle, Banc One PAC was the seventh largest PAC
 
 
 
 
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          1   contributing more money than the American Medical
 
          2   Association, American Bankers Association or
 
          3   Phillip Morris.  In the '98 cycle, they have
 
          4   already given more $535,000 with reactionary
 
          5   Republicans again enjoying a four-to-one edge in
 
          6   contributions over Democrats.  So when Banc One
 
          7   grows, so does the Republican Party.
 
          8            Secondly, Banc One is one bad bank for
 
          9   Chicago shareholders.  Banc One's market value has
 
         10   collapsed since the merger was announced in April,
 
         11   and it's pulled down First Chicago with it.
 
         12            The stock price on the date of the merger
 
         13   announcement in April, First Chicago closed at
 
         14   96.25.  Banc One closed unchanged at 61.70.  At the
 
         15   close of trading on August 11th, First Chicago was
 
         16   at $72, a decrease of 25 percent.  Banc One was
 
         17   also a decrease of 26 percent.
 
         18            Compare this to Citibank.  Citibank's
 
         19   stock has actually increased one percent since the
 
         20   announcement of their deal with Travelers in spite
 
         21   of the downturn in financial stocks.
 
         22            With this merger, we have an extremely
 
         23   efficient bank being bought out by an extremely
 
         24   inefficient one.  According to the Wall Street
 
 
 
 
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          1   Journal two weeks ago, First Chicago is the most
 
          2   efficient bank in the country.  Banc One, on of the
 
          3   top ten, was rated eighth or ninth.
 
          4            The track of Banc One's other mergers
 
          5   reflects the fact that they are not efficient.
 
          6   They have had tremendous cost overruns in every
 
          7   other merger.
 
          8            So to wrap up, I would say that our
 
          9   opposition of Banc One will not stop this merger.
 
         10   Make no mistake about it, we know that the Fed is
 
         11   going to approve this merger like they have every
 
         12   other single merger.  Doesn't matter how bad the
 
         13   bank is, we know the Fed's going to approve it.
 
         14   However, we're just putting Banc One on notice at
 
         15   this meeting that we will take our case to other
 
         16   more impartial venues, we will take our case to
 
         17   shareholders, take our case to the labor movement,
 
         18   we will take our case to the community, and we will
 
         19   take our case to the courts.  We will not stop
 
         20   until we have forced this bank to change.
 
         21            Thank you.
 
         22       MS. SMITH:  Mr. Williams.
 
         23       MR. WILLIAMS:  Madam Chairperson and
 
         24   distinguished members of the Federal Reserve Panel,
 
 
 
 
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          1   the Coalition of Neighborhoods is a non-profit
 
          2   coalition of six racially and economically
 
          3   integrated communities.
 
          4            The Coalition, in keeping with our mission
 
          5   to maintain, expand and promote healthy, integrated
 
          6   communities, have trained our leadership to
 
          7   integrate the compliance requirements of HMDA, CRA,
 
          8   ECOA, RESPA, EEO and the Fair Housing Act.
 
          9            It is our belief that the Federal Reserve
 
         10   System which has contributed significantly to the
 
         11   establishment of these laws and regulations must
 
         12   now contribute more significantly to their
 
         13   enforcement.
 
         14            The coalition stands behind all of the
 
         15   statements in our July 13th, 1998 challenge of this
 
         16   merger.  Banc One's July 22nd, 1998 response to our
 
         17   challenge may have some slightly different numbers
 
         18   than we submitted, but the conclusions are the
 
         19   same.
 
         20            Their weak mortgage loan production is not
 
         21   responsive to the need of a 38 percent home
 
         22   ownership rate in Cincinnati.  The unresponsive
 
         23   business lending speaks for itself, but I have
 
         24   attached to this testimony a couple of antidotal
 
 
 
 
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          1   situations that we believe illuminate what some
 
          2   black and white businesses experienced with
 
          3   Banc One Cincinnati.
 
          4            We believe that a public hearing at the
 
          5   Cincinnati Federal Reserve Bank, comparison of the
 
          6   '96, '97 HMDA data and residential mortgage and
 
          7   business loan file review will support what we have
 
          8   alleged.
 
          9            Our challenge and the bank's responses
 
         10   adequately describes a needs to improve performance
 
         11   based or our prospective of the lack of innovation,
 
         12   no complexities solved and the unresponsiveness of
 
         13   Banc One relative to the overall needs in the
 
         14   Cincinnati area.
 
         15            This hearing today and the subsequent
 
         16   merger decision has more to do with the credibility
 
         17   of the regulatory agencies than that of the two
 
         18   banks involved.
 
         19            Renowned HMDA, CRA and financial experts
 
         20   from all over the country in independent
 
         21   assessments of Banc One's performance have
 
         22   condcluded that the bank's approval and patterns in
 
         23   Black, Hispanic and LMI census tracts suggest
 
         24   violation of fair lending and consumer protection
 
 
 
 
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          1   laws, and therefore, non-compliance with CRA.
 
          2            And First Chicago NBD's 1996 data shows
 
          3   that the bank only originated a total of 29 loans
 
          4   in MSA 1640.  All 29 went to white borrowers.
 
          5            We find it odd that as the government,
 
          6   regulatory and financial industries move to
 
          7   implement direct deposit programs under the EFT 99
 
          8   that Banc One would close one of only three
 
          9   branches it has in Cincinnati's Black community,
 
         10   thereby reducing access.
 
         11            The Roselawn branch closure which is in a
 
         12   middle class Black neighborhood closed and reduced
 
         13   competition which may lead to overpricing of loans
 
         14   and services by the one remaining bank in that
 
         15   community.
 
         16            We also find it odd that the OCC nor the
 
         17   Federal Reserve found issue with the isolated North
 
         18   Fairmount location and the fact that it has no ATM
 
         19   or drive-through window.  How does this meet the
 
         20   convenience and needs of that community?
 
         21            Banc One's poor record in the appointment
 
         22   of Blacks its Board and officer positions and its
 
         23   poor record in procuresment of services from Black
 
         24   providers in comparison to whites, especially in
 
 
 
 
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          1   the area of marketing and advertisement was ignored
 
          2   on the basis that they don't fall under CRA.
 
          3            This is a form of unsophisticated denial
 
          4   and a sense of certainty that the Federal Reserve
 
          5   won't integrate the analyses of these concepts in
 
          6   context of their relationship to discriminatory
 
          7   lending.
 
          8            We strongly believe that a mentality and
 
          9   culture that refuses to properly serve Blacks in
 
         10   the areas above will have no problem in
 
         11   rationalizing away the indications of underserving
 
         12   and discrimination.
 
         13            In addition, you cannot penetrate a market
 
         14   if you don't advertise and through it and to it.
 
         15   Since Banc One does very little in this area, the
 
         16   low number of Black applications to Banc One from
 
         17   Black borrowers is the result.
 
         18            Finally, with respect to partnership, we
 
         19   know that many NDC/CDC type organizations have and
 
         20   will provide honest testimony as to how Banc One
 
         21   partnered to help them achieve certain projects,
 
         22   but projects should not substitute for a broader
 
         23   economic substitute for a broader economic
 
         24   development strategy and plan to address
 
 
 
 
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          1   comprehensive reinvestment needs.
 
          2            Banc One has a business plan with a
 
          3   budget.  The Federal Reserve is deeply involved in
 
          4   the development of its year 2000 plan and the
 
          5   budget to get it done.
 
          6            Given this insight, we encourage the
 
          7   Federal Reserve to push the envelope on performance
 
          8   and partnerships by giving the proposed Banc One/
 
          9   First Chicago merger a conditional approval until
 
         10   market level negotiated agreements substitute
 
         11   agreements similar to the agreement between
 
         12   First Chicago NBD and the Chicago CRA Coalition
 
         13   have been established with budgets.
 
         14            Finally, Madam Chair, I bring this
 
         15   testimony that was handed to me on my way out of
 
         16   town by Ms. Lavera Kosin, a businesswoman, and we
 
         17   will resubmit it in a typed form.
 
         18       MS. SMITH:  We will be glad to have it for the
 
         19   record.
 
         20            I also wanted to ask Mr. Soza, are those
 
         21   exhibits we saw part of our testimony?  Did you
 
         22   include that in your testimony?
 
         23       MR. SOZA:  We can get copies before the end of
 
         24   the hearings today.
 
 
 
 
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          1       MS. SMITH:  That would be great, and then we
 
          2   will incorporate them.
 
          3            Any questions?
 
          4            Thank you very much for coming this
 
          5   morning.  We appreciate your comments.
 
          6            We're up to Panel 5, and we're going to
 
          7   start with Mr. Bush.
Last update: December 3, 2010