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Public Meeting Transcripts

Public Meeting Regarding Norwest Corporation and Wells Fargo & Company

Thursday, September 17, 1998

Transcript of Panel Twelve

                                                            228
 
 
 
         15                  MR. JENSEN:  Thank you.  Thank you for
 
         16        allowing me to be here today.  I'm here to just
 
         17        talk about our involvement with Norwest over the
 
         18        past 13 years with the Anoka County Economic
 
         19        Development Partnership and the Anoka Sherburne
 
         20        County Capital Fund.  I'm the director of the
 
         21        partnership, the Anoka County Economic
 
         22        Development Partnership, which is a 501C3
 
         23        nonprofit corporation that does economic
 
         24        development work in the 21-community Anoka
 
         25        County area.  And I'm also the President of the
 
 
 
 
 

 
 
                                                              229
 
          1        Anoka Sherburne County Capital Fund, which is
 
          2        a -- which is the State of Minnesota's first
 
          3        multibank, multiinvestor community development
 
          4        corporation that makes investments in emerging
 
          5        technology-based companies.
 
          6             First, a little bit about the partnership.
 
          7        We were formed in 1985.  And I've been Director
 
          8        since we started.  Norwest has been involved
 
          9        with us from the beginning.  Dave Raider of
 
         10        Norwest Service and our Board of Directors
 
         11        and -- and they have also not only committed
 
         12        their time and their expertise, but also they
 
         13        have contributed financially to the nonprofit,
 
         14        which is -- I'm obviously greatful for.  And
 
         15        it's something that, of course, you need that
 
         16        capital.
 
         17             The partnership has focused a little --
 
         18        they've taken a different approach to economic
 
         19        development.  And we've focused primarily on
 
         20        emerging technology-based businesses.  We don't
 
         21        chase existing companies around as a way of
 
         22        doing economic development, but we look at
 
         23        working with emerging technology-based
 
         24        businesses because they are not just moving
 
         25        companies around.  They are new jobs and,
 
 
 
 
 

 
 
                                                              230
 
          1        second, that they are -- also pay the best.  And
 
          2        I think that's important to the State.
 
          3             So we decided that we were going to -- if
 
          4        we were going to do that, we found out that
 
          5        entrepreneurs in emerging companies need one
 
          6        thing more than other things, and that was they
 
          7        needed access to capital.  Access to capital for
 
          8        the emerging companies is difficult today.  Even
 
          9        though we have record stock market activity and
 
         10        there is a lot of dollars and the economy is
 
         11        good, the one area that -- that there is not a
 
         12        lot of money for is emerging companies that are
 
         13        looking for, like, 250,000 to a million
 
         14        dollars.  The venture capitalists have so much
 
         15        money under management that they go for the five
 
         16        million dollar and up deals.  And so they're --
 
         17        that's a real void, which is a problem because
 
         18        we're also setting records these days for new
 
         19        company startups.  So with that background set,
 
         20        we decided that we were going to create our own
 
         21        equity fund to address that need.  And so we
 
         22        started, like I said, the multibank,
 
         23        multiinvesting Community Development
 
         24        Corporation.  So you can imagine me walking into
 
         25        Norwest and saying, "Have I got a deal for you.
 
 
 
 
 

 
 
                                                              231
 
          1        We're going to -- we're kind of a quasi public
 
          2        sector" -- even though we're not public sector,
 
          3        but we have money coming in from the public
 
          4        sector -- "economic development group.  And
 
          5        we're going to invest in high-risk dried up
 
          6        companies."  But I guess the reason I was
 
          7        interested in talking to you today is because we
 
          8        had selected Norwest as a bank with a large
 
          9        presence in our area.  And even though they
 
         10        didn't grasp this right away, they did think
 
         11        about it.  And after awhile, they decided this
 
         12        was a unique way of approaching economic
 
         13        development.  So they became our lead investor
 
         14        and took our -- our CDC through the offices that
 
         15        control the currency, made the initial
 
         16        investment.  And today we now have 22 investors,
 
         17        ten of which are banks.  We have NSP,
 
         18        Minnegasco, Minnesota Power.  All the major
 
         19        utility companies are involved.  The State of
 
         20        Minnesota has made an investment in our fund.
 
         21        And we've made 22 -- 24 investments to date.  A
 
         22        lot of those are in the Urban Initiative Fund
 
         23        target area with our business incubator in
 
         24        Columbia Heights.  We have created well over 100
 
         25        very high-paying jobs in this area.  We have --
 
 
 
 
 

 
 
                                                              232
 
          1        and with the pro -- you know, the prognosis of
 
          2        many hundreds more as these companies grow and
 
          3        mature.  They have also -- Norwest is our
 
          4        largest investor.  They jut made a follow-up
 
          5        investment of $50,000.  Actually, they
 
          6        approached us on the Banking Enterprise Zone.
 
          7        We happen to be a certified Community
 
          8        Development Financial Institution.  Muffy Gabler
 
          9        and -- one day and said, "Hey, we've -- we got a
 
         10        way for us to participate even in a greater
 
         11        extent."  And so they've -- they've done that.
 
         12             So I just wanted to be here today to talk
 
         13        about the great experiences that we've had with
 
         14        Norwest and share those with you.
 
         15             Thank you.
 
         16                  CHAIRPERSON SMITH:  Thank you.
 
         17             Mr. McLean, you're next.
 
         18
 
         19                  MR. McLEAN:  Excuse me.  My name is
 
         20        Warren McLean, and I am the President and CEO of
 
         21        the Metropolitan Economic Development
 
         22        Association.
 
         23             First of all, I want to say thank you for
 
         24        giving me the opportunity to testify at this
 
         25        public meeting about MEDAs relationship with
 
 
 
 
 

 
 
                                                              233
 
          1        Norwest Corporation.  For the benefit of the
 
          2        committee, MEDA is a private nonprofit minority
 
          3        business development organization.  We provide
 
          4        small business consulting, financing and sales
 
          5        development services to nearly 600 minority
 
          6        entrepreneurs each year.  We have been in
 
          7        operation for nearly 27 years.  For the record,
 
          8        MEDA's relationship with Norwest has been
 
          9        outstanding.  First, Norwest Corporation and its
 
         10        CEO at the time, Phil Harris, was one of four
 
         11        executives who helped start MEDA 27 years ago.
 
         12        An original founder and funder, Norwest remains
 
         13        a leading contributor to MEDA, having
 
         14        contributed over $667,000 in operating funds
 
         15        alone since 1971.  In 1989 MEDA spun off a
 
         16        minority venture capital fund called Milestone
 
         17        Growth Fund.  Norwest helped capitalize the fund
 
         18        by providing $200,000 in capital.  In addition,
 
         19        I consulted regularly with Norwest Venture
 
         20        Capital staff for help in designing, developing
 
         21        and implementing the fund.  Norwest Venture
 
         22        Capital President, Dan Haggerty, was one of
 
         23        Milestone Growth Fund's original board members.
 
         24             Further, in 1995 MEDA established a MEDA
 
         25        loan program.  It's a 5.3 million dollar working
 
 
 
 
 

 
 
                                                              234
 
          1        capital fund for minority-owned businesses.  The
 
          2        fund is a collaboration of six banks, the
 
          3        McKnight Foundation and the State of Minnesota.
 
          4        The banks comprise a consortium.  And together
 
          5        they agreed to provide 3.3 million dollars in
 
          6        loanable funds.  And Norwest Corporation was one
 
          7        of two banks that agreed to provide one million
 
          8        dollars of that loan fund.  Moreover, Wally
 
          9        Drogenmueller, who is Norwest's Vice President
 
         10        and Deputy -- Deputy Senior Credit Officer, took
 
         11        the lead in determining the mechanics of the
 
         12        program.  Wally developed the overall lending
 
         13        criteria.  He also reviewed and tested the
 
         14        various lending scenarios.  Wally crafted a
 
         15        design that was acceptable to all six banks.
 
         16        And for Wally's efforts, he was selected MEDA
 
         17        volunteer of the year.
 
         18             To Norwest Corporation's credit, they have
 
         19        remained vigorous supporters of the program.
 
         20        Either Tom Burke, Terri Banizuski or Lori Powell
 
         21        have attended all the credit committee meetings
 
         22        since the program's inception in 1995.  And they
 
         23        meet monthly.  They also close and personally
 
         24        administrate each Norwest consortium loan.
 
         25             In 1996 MEDA launched a Vision 2000, which
 
 
 
 
 

 
 
                                                              235
 
          1        is a major expansion of our services.  To
 
          2        achieve this expansion, we asked several of our
 
          3        funders to double their financial support.  And
 
          4        Norwest Corporation was the first to literally
 
          5        double its support, which they did that very
 
          6        year.  Norwest Corporation has also funded and
 
          7        provided training to MEDA clients.  Jeff Judy,
 
          8        one of Norwest's top internal trainers, has
 
          9        conducted training sessions for MEDA clients on
 
         10        several occasions.  Jerry Gray, who was our
 
         11        Norwest Executive Vice President, continues a
 
         12        long tradition of proactive board leadership on
 
         13        the MEDA board.  And he recently proposed a 10
 
         14        million dollar expansion to the MEDA loan
 
         15        program.
 
         16             Finally, Norwest Chairman and CEO, Dick
 
         17        Cobosovich, is a member of the MEDA Advisory
 
         18        Board.  And he was the keynote speaker at MEDA's
 
         19        1997 annual meeting.  And he's hosted a few MEDA
 
         20        client lunches.
 
         21             This concludes my remarks.  And again, I
 
         22        thank you for the opportunity to provide
 
         23        testimony.
 
         24                  CHAIRPERSON SMITH:  Thank you very
 
         25        much.
 
 
 
 
 

 
 
                                                              236
 
          1             Mr. Milburn?
 
          2
 
          3
 
          4                  MR. MILBURN:  I have handouts, so you
 
          5        can't hit that button yet because my speech is
 
          6        exactly five minutes long.  But if I could pass
 
          7        these around for the group.  Thank you.
 
          8             Now, my name is Curt Milburn, and I'm the
 
          9        Project Director of the Phalen Corridor
 
         10        Initiative.  I'm also the Executive Director of
 
         11        the East Side Area Business Association in
 
         12        St. Paul, Minnesota.
 
         13             It makes good -- good sense -- good
 
         14        business sense and common sense to help rebuild
 
         15        the inner city.  And Norwest Bank, through its
 
         16        house and lending programs, continues to
 
         17        contribute to the urban revitalization of
 
         18        St. Paul.  But I think that's a story best told
 
         19        by some of these gentlemen, some other folks.  I
 
         20        feel compelled today to give you some background
 
         21        about the community where I work and Norwest
 
         22        Bank's participation with that community.
 
         23             The East Side of St. Paul, once a
 
         24        manufacturing powerhouse, has lost 2,500 jobs in
 
         25        the last 30 years.  There are areas of the East
 
 
 
 
 

 
 
                                                              237
 
          1        Side with as high as 17 percent unemployment.
 
          2        Since the 1970's companies like Whirlpool closed
 
          3        plants, throwing hundreds of people out of
 
          4        work.  Just last year, Stroh Brewery and Can &
 
          5        Conveyor closed their -- closed their doors with
 
          6        a loss of 500 additional jobs.
 
          7             There has been a number of dreams to
 
          8        redevelop this community, but it wasn't until
 
          9        the City Parks Department brought together
 
         10        business and community members to give input on
 
         11        a proposed bike path that a spark took hold.
 
         12        The community responded with envisioning much
 
         13        more than a bikeway.  Craig Johnson, the Branch
 
         14        Manager of two Norwest Banks on the East Side,
 
         15        volunteered to chair a comprehensive initiative,
 
         16        the likes of which -- which had never been tried
 
         17        in the City of St. Paul.
 
         18             I turn your attention to the first article
 
         19        inside the sleeve, which is about Craig Johnson
 
         20        from the "East Side Review."  Craig was raised
 
         21        on the East Side and remembered it as a place of
 
         22        opportunity, not a place of despair.  The Phalen
 
         23        Corridor Initiative is about reclaiming polluted
 
         24        lands called brown fields to attract
 
         25        manufacturing companies.  It's about workforce
 
 
 
 
 

 
 
                                                              238
 
          1        development striving to get East Siders in the
 
          2        jobs we attract.  It's about green space.  It
 
          3        has the nation's first project that's taking an
 
          4        abandoned shopping center and turning it back
 
          5        into the wetland that it once was.  It's also
 
          6        about building a road to get access to these
 
          7        community assets.
 
          8             And I turn your attention to the "City
 
          9        Business" article as well as the sleeve, which
 
         10        is the "PCI Today," that gives you some general
 
         11        background about our project.
 
         12             On his own time, Craig led the initiative,
 
         13        even flying to Washington to secure funding from
 
         14        the federal government to begin construction of
 
         15        this road.  But Norwest is not just one banker.
 
         16        The East Side is changing, and our initiative
 
         17        reflects those changes.  When Craig was promoted
 
         18        to a new position, Norwest had the foresight to
 
         19        replace him with the first Hmong banker in the
 
         20        country.
 
         21             And I turn your attention to an article in
 
         22        there as well on Kou Vang.
 
         23             Kou Vang is the first Hmong branch manager
 
         24        and bank vice president in the United States.
 
         25        The cash machine at his bank reads in English
 
 
 
 
 

 
 
                                                              239
 
          1        and in Hmong, probably the only one in the
 
          2        country.  A visit to that bank is like visiting
 
          3        the world.  African Americans, Latino, Hmong and
 
          4        Whites are not only customers, but they are
 
          5        employees as well.  I'm proud to report that Kou
 
          6        has been recently made the Vice Chair of the
 
          7        Phalen Corridor Initiative, a position that
 
          8        leads directly to the position of chair of the
 
          9        project.
 
         10             It's not just on the neighborhood level
 
         11        that Norwest has integrated itself with the
 
         12        community, either.  Norwest has backed us with
 
         13        this commitment with joining nine other
 
         14        community funders to support the initiative.
 
         15        Also, Larry Hague, a media relations expert with
 
         16        the bank, has provided three separate media
 
         17        trainings for us.
 
         18             Now, you folks should remember the Phalen
 
         19        Corridor Initiative is about community members,
 
         20        local business people, residents, local
 
         21        officials, not slick PR professionals.  Most of
 
         22        us had rarely talked to a news person,
 
         23        nonetheless been confronted with the lens of a
 
         24        television camera.  Larry helped us communicate
 
         25        our vision.  And that's a vision that has
 
 
 
 
 

 
 
                                                              240
 
          1        captured the imagination of national and local
 
          2        leaders.
 
          3             Joan Germinski, President and District
 
          4        Manager of Norwest, sits on what we call our
 
          5        advisory committee.  Along with our Mayor,
 
          6        Congressmen and others, Joan helps chart our
 
          7        course, strongly stressing the use of Norwest
 
          8        programs for inner city residents.
 
          9             Another community leader is Pat Donovan.
 
         10        Mr. Donovan is the Norwest Regional President.
 
         11        And he acted as co-chair of the Citywide
 
         12        Community Development Agenda.  Pat helped devise
 
         13        the blueprint of how a city can compassionately
 
         14        build its members and its institutions.
 
         15        Mr. Donovan continues to honor us and the
 
         16        employees of Norwest who works with -- who work
 
         17        with us by citing the Phalen Corridor as
 
         18        St. Paul's best example of comprehensive
 
         19        community development.  Without the commitment
 
         20        of Norwest Bank and its employees, we would not
 
         21        have the success we have today.  Our wetland
 
         22        project is underway.  It's actually being
 
         23        built.  Our first industrial park has three
 
         24        confirmed tenants, bringing hundreds of jobs to
 
         25        the East Side.  And the first funding for our
 
 
 
 
 

 
 
                                                              241
 
          1        roadway is in place.  Without the contribution
 
          2        of Norwest Bank in the future, I fear we may not
 
          3        realize our vision of rebuilding the East Side.
 
          4        We have been assured that their commitment will
 
          5        continue.  And we've never been misled by this
 
          6        institution or its dedicated employees.
 
          7             I thank you for this opportunity to talk
 
          8        about one of our community partners.  And I'm
 
          9        free to answer any questions you might have.
 
         10             Thank you.
 
         11                  CHAIRPERSON SMITH:  Thank you
 
         12        Mr. Shreffler?
 
         13
 
         14                  MR. SHREFFLER:  Very good.  Thanks.
 
         15        I, too, appreciate the opportunity to speak with
 
         16        you.  I also appreciate that there's this
 
         17        process that allows for community input.  As --
 
         18        as a member -- or as a part of Northeast
 
         19        Minnesota and living in the Duluth area, I
 
         20        really want to stress that the community
 
         21        involvement really depends on leadership of
 
         22        large agencies and organizations like Norwest
 
         23        Bank to make that community happen.  My
 
         24        experience with Norwest is why I'm here.  I want
 
         25        to share that with you briefly.  The LSS Loan
 
 
 
 
 

 
 
                                                              242
 
          1        Fund is a loan fund that was created eight years
 
          2        ago.  We loan money to low-income families to
 
          3        purchase vehicles or repair vehicles so they can
 
          4        go to work, continue work and kind of maintain
 
          5        that family stability, really, is the essence of
 
          6        it.  Self-sufficiency, family stability is what
 
          7        we're about.  We partnered with Norwest Bank
 
          8        eight years ago.  It was a unique partnership.
 
          9        No one else that we knew of in the country was
 
         10        doing anything like that.  They joined with us
 
         11        to loan money to low-income families to get them
 
         12        to work.  In eight years, we've loaned 1.4
 
         13        million dollars to a little -- a little over 800
 
         14        families in the northeast region of Minnesota.
 
         15        Norwest was instrumental in creating the process
 
         16        that we're able to use to loan money to people.
 
         17             The -- five years ago, the loan fund went
 
         18        statewide.  The McKnight Foundation supported
 
         19        the loan funds and expanded the concept of the
 
         20        loan funds to a statewide program.  The Twin
 
         21        Cities had programs that did not use banks.
 
         22        Northeast Minnesota was the first to use a bank
 
         23        involvement -- Norwest's involvement.  And then
 
         24        when they went statewide, McKnight said, "We
 
         25        want the bank process to be a part of that
 
 
 
 
 

 
 
                                                              243
 
          1        initiative.  So five years ago three other
 
          2        Norwest Banks in the state, southeast, southwest
 
          3        and then west central, got involved in the loan
 
          4        fund, as well, and are -- are currently joining
 
          5        or partnering, as we do with -- as Norwest does
 
          6        in northeast Minnesota, they also do throughout
 
          7        those other three areas of the state.  So almost
 
          8        half the state is covered by Norwest's
 
          9        involvement in these loan funds.
 
         10             The other thing that happened about three
 
         11        years ago is that the Family Service America and
 
         12        the McKnight Foundation went nationwide with the
 
         13        loan fund program.  One of the things that they
 
         14        stressed was the involvement of the bank in that
 
         15        partnership process so that the banks can do
 
         16        what they do best and that social service
 
         17        agencies can do what they do best.  And, really,
 
         18        that's loaning money to people to get them back
 
         19        to work.  That program has gone nationwide.
 
         20        It's in ten cities now.  It will be in 20 cities
 
         21        as soon as those programs are up and running.
 
         22             What I'm -- my intent and what I'm
 
         23        stressing, really, is that the -- what was
 
         24        created in northeast Minnesota eight years ago
 
         25        has become a model for what banks can do in
 
 
 
 
 

 
 
                                                              244
 
          1        relationship to social service and low-income
 
          2        needs.  And Norwest in northeast Minnesota took
 
          3        the initiative, got involved.  And now it's
 
          4        expanded as a model that's been spread out
 
          5        throughout the nation.
 
          6             So I do expect that with the merger with
 
          7        Wells Fargo, it will help us to move that
 
          8        mission forward and will not hinder us.  It will
 
          9        open doors for us.  It won't close them.  And I
 
         10        certainly expect our relationship in northeast
 
         11        Minnesota to continue to be as strong as it's
 
         12        been.
 
         13             So thank you.


	
Last update: December 3, 2010