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Public Meeting Transcripts

Public Meeting Regarding Norwest Corporation and Wells Fargo & Company

Thursday, September 17, 1998

Transcript of Panel Three

                                                                   64

          1                  CHAIRPERSON SMITH:  Thank you.  Any         10:19:16

          2        questions?  If not, we had tentatively scheduled a    10:19:18

          3        break, but if we have the witnesses for the next      10:19:20

          4        panel, then I'd like to go forward with Panel No. 3.  10:19:26

          5        We're going to start with Ms. Erickson.               10:20:48

          6        

          7                  MS. ERICKSON:  Thank you.  I appreciate     10:20:54

          8        the opportunity to speak with you today.  I think     10:20:54

          9        it's unfortunate that the meeting is only a daytime   10:20:58

         10        meeting.  We do have an awful lot of low income       10:21:02

         11        people who are affected by banking activities and     10:21:04

         12        mergers such as this.  It would have been nice if we  10:21:08

         13        could have had potentially more participation from    10:21:12

         14        them with later hours.                                10:21:14

         15             This merger will create the seventh largest      10:21:18

         16        bank in the country.  They will have banking          10:21:22

         17        operations in 21 states, and yet this is the only     10:21:24

         18        hearing.  I frankly wonder, where are the anti-trust  10:21:30

         19        forces in this?  I see a terrible, terrible trend in  10:21:34

         20        this country of mergers in the consolidation of       10:21:38

         21        power over all sorts of very basic needs for people,  10:21:42

         22        banking being only one of them.  Medicine, food,      10:21:46

         23        communications, everything is becoming very           10:21:48

         24        consolidated and it's to the detriment of the         10:21:52

         25        people.                                               10:21:54



     
     



                                                                     65

          1             We have a number of members who are not able to  10:21:56

          2        be with us here today, representatives from Chicago,  10:21:58

          3        from Denver, Colorado, our national president Maude   10:22:02

          4        Hearn, from Boston.  The airline pilots' strike has   10:22:10

          5        prevented their making it here; however, I would      10:22:14

          6        like to say that we support the airline pilots'       10:22:16

          7        strike in their principles of having their            10:22:20

          8        concessions made back and compensated for now that    10:22:22

          9        the company is thriving.                              10:22:26

         10             Mega-mergers destroy competition and foster      10:22:28

         11        collusion and price fixing in an endless spiral       10:22:30

         12        upwards.  This is great for greedy shareholders       10:22:32

         13        salivating over stock market gains.  Their gains are  10:22:38

         14        consumers' losses.  Is this rewardable behavior?      10:22:40

         15             Someone mentioned earlier competitive fees.      10:22:46

         16        That's kind of an odd phrase, I think.  What is a     10:22:50

         17        competitive fee?  Now to me as a consumer, a person   10:22:52

         18        who has to pay fees, I think a competitive fee is a   10:22:56

         19        low fee, and when a bounced check costs $2.68 for     10:23:00

         20        the bank, I think a competitive fee for bounced       10:23:06

         21        checks would be five bucks -- that's a hundred        10:23:08

         22        percent almost profit -- but the bounced check fees   10:23:10

         23        keep going up and up.  What's this competitive        10:23:16

         24        market for, is it consumers or is it shareholders?    10:23:20

         25        Who profits from these activities?                    10:23:24



     
     



                                                                     66

          1             The Federal Reserve has a responsibility to      10:23:26

          2        protect the American people, to stop the unchecked    10:23:30

          3        and unconditional urge to merge.  While HR-10 is      10:23:32

          4        giving banks the freedom to diversify and therefore   10:23:38

          5        control even more of our economic activities,         10:23:40

          6        mergers at the same time remove diversity of choice   10:23:44

          7        from consumers.  If that's not enough, they also      10:23:48

          8        have attacked credit unions, trying to regain what    10:23:52

          9        paltry six percent of the market they control.        10:23:56

         10             We demand that their performance improve in our  10:24:00

         11        neighborhoods.  Norwest is the largest mortgage       10:24:04

         12        company in the United States, and yet they are        10:24:06

         13        behind the national average in their loans to people  10:24:08

         14        of color.  To African-Americans, Asians, Latinos,     10:24:10

         15        and Native Americans, Norwest made a smaller          10:24:14

         16        percentage of its loans than the national averages.   10:24:18

         17        Almost 16 percent of all home loans made by all       10:24:22

         18        lenders in the country were made to people of color,  10:24:24

         19        but Norwest made only 10.5 percent of their loans to  10:24:26

         20        people of color, way below the national average.      10:24:32

         21        Even in the Twin Cities, where Norwest Corporation's  10:24:34

         22        headquartered and where they are by far the largest   10:24:36

         23        mortgage lender, they are below the average of all    10:24:40

         24        lenders.  Norwest made a similar percentage of loans  10:24:44

         25        to people of color than the average of all other      10:24:48



     
     



                                                                     67

          1        lenders in the cities.                                10:24:50

          2             When we look at where Norwest made their loans,  10:24:52

          3        they are once again below the average of all Twin     10:24:54

          4        Cities lenders in the percentages of their loans      10:24:58

          5        made to low to moderate income neighborhoods, and     10:25:00

          6        the percentages of their loans made in integrated     10:25:02

          7        and minority neighborhoods.                           10:25:06

          8             A representative earlier said something to the   10:25:08

          9        effect that banks will not be healthy when            10:25:10

         10        communities are struggling.  Isn't this a little bit  10:25:12

         11        of a cart before the horse argument?  Is this why     10:25:14

         12        it's hard for us to get banks to be operating in      10:25:16

         13        neighborhoods like Phillips?  When it comes to        10:25:20

         14        rejecting minorities, Norwest is way above other      10:25:22

         15        lenders in the Twin Cities.  Norwest rejected         10:25:26

         16        African-Americans almost three and a half times as    10:25:30

         17        often as they rejected whites.                        10:25:32

         18             In the Twin Cities Norwest is especially bad     10:25:34

         19        compared to other major banks here.  US Bank,         10:25:36

         20        formerly First Bank, and Twin City Federal.  US Bank  10:25:40

         21        and TCF each made more 5.5 percent of their home      10:25:44

         22        purchase loans to African-Americans, while Norwest    10:25:48

         23        made only two percent of their loans to               10:25:50

         24        African-Americans.  US Bank and TCF each made more    10:25:54

         25        than 13 percent of their home purchase loans to       10:25:58



     
     



                                                                     68

          1        people of color, but Norwest only made six percent    10:26:00

          2        of their loans to people of color.  US Bank and TCF   10:26:02

          3        each made more than -- each made more, about 18       10:26:06

          4        percent of their home purchase loans, to low and      10:26:12

          5        moderate income neighborhoods, but Norwest made only  10:26:14

          6        nine percent of its loans in these neighborhoods.     10:26:16

          7             Why reward this racist, classist performance?    10:26:20

          8        Is no one accountable?  What is exactly your          10:26:24

          9        responsibility toward the American people?  Have you  10:26:26

         10        any?                                                  10:26:36

         11        

         12                  CHAIRPERSON SMITH:  Thank you very much.    10:26:38

         13        We will go to Ms. Whitfield.                          10:26:38

         14        

         15                  MS. WHITFIELD:  My name is Marilyn          10:26:42

         16        Whitfield.  I'm a board member of Minnesota ACORN,    10:26:44

         17        and the co-chair for North Minneapolis Chapter of     10:26:46

         18        ACORN.                                                10:26:48

         19             In city after city we find the same pattern      10:26:48

         20        that Norwest, the largest mortgage company in the     10:26:52

         21        country, is below other lenders in their loans to     10:26:54

         22        minorities and in low income neighborhoods, but       10:26:58

         23        above other lenders in their denials of               10:27:00

         24        African-Americans, Latinos, and Asians, in Austin,    10:27:02

         25        Texas, Albuquerque, Atlanta, Chicago, Dallas,         10:27:08



     
     



                                                                     69

          1        Denver, Des Moines, Duluth, Minnesota, Houston, Las   10:27:12

          2        Vegas, Los Angeles, Milwaukee, Newark, New Orleans,   10:27:18

          3        Oakland, Philadelphia, Phoenix, St. Louis, and in     10:27:22

          4        Washington, D.C.  What is Norwest going to do about   10:27:28

          5        this?                                                 10:27:30

          6             Wells Fargo just announced that if the merger    10:27:32

          7        is approved, it is going to lend $5 billion a year    10:27:34

          8        in California to minorities and low income customers  10:27:38

          9        for small businesses, mortgages and community         10:27:42

         10        development.  Why can't Norwest do the same thing in  10:27:44

         11        Minnesota and other states?  Other communities need   10:27:48

         12        to be developed just as in California.  People in     10:27:50

         13        Minnesota also need help with small businesses and    10:27:54

         14        community development.                                10:27:58

         15             In another recent merger, Nations Bank/Bank of   10:28:00

         16        America committed to lend $35 billion a year to       10:28:02

         17        minority and low income customers.  Why can't         10:28:06

         18        Norwest do the same thing?                            10:28:10

         19             After all these years of being here, Norwest is  10:28:10

         20        moving their headquarters to California.  They're     10:28:14

         21        going to lay off a lot of employees and pocket huge   10:28:16

         22        savings.  What do the people of Minnesota get out of  10:28:22

         23        it?  We want Norwest to put some money back into the  10:28:24

         24        community.                                            10:28:28

         25        



     
     



                                                                     70

          1                  MR. ASH:  Thank you.  My name is Jordan 

          2        Ash, the loan counseling director for ACORN.  I       10:28:34

          3        apologize, my testimony is sitting on my kitchen      10:28:34

          4        table, so I frantically was trying to reconstruct     10:28:36

          5        it.  I apologize if I stumble a little bit.           10:28:40

          6             I'm the director of the loan counseling program  10:28:46

          7        for Minnesota ACORN.  The home buyer education        10:28:46

          8        counseling program, there's a couple components to    10:28:52

          9        it.  One is that we work with banks to help them      10:28:52

         10        improve their lending records by developing loan      10:28:56

         11        products that are more realistic to help low and      10:28:58

         12        moderate income people buy a house, such as lower     10:29:02

         13        down payment closing costs, more flexible credit      10:29:04

         14        guidelines, using alternative credit, counting --     10:29:08

         15        being more flexible in counting income.  We also      10:29:10

         16        promote home ownership by going out every day into    10:29:14

         17        low income neighborhoods and talking to renters       10:29:16

         18        about the benefits of home ownership, and that it is  10:29:18

         19        possible.  And, finally, that we have provided        10:29:20

         20        one-on-one counseling to people to help them qualify  10:29:24

         21        for loans, address credit problems, help them         10:29:26

         22        understand that -- the process, and also have some    10:29:30

         23        seminars and classes to help people understand the    10:29:32

         24        general process of buying a house.                    10:29:36

         25             Because it's known in the community that         10:29:36



     
     



                                                                     71

          1        through ACORN and the programs that we work with and  10:29:38

          2        the banks that we work with, which is four of the     10:29:42

          3        five major banks in the Twin Cities, except for       10:29:44

          4        Norwest, because it's known that you can buy a house  10:29:46

          5        through ACORN with a thousand to $15 hundred total    10:29:50

          6        for your down payment and closing costs, people call  10:29:52

          7        us up a few times a week and say don't you help with  10:29:54

          8        down payment and closing costs?  I'm closing next     10:29:58

          9        week; I need $3,000 to buy a house.  I heard that     10:30:00

         10        you help with that.  We say no, we don't help with    10:30:04

         11        it.  We've negotiated with banks, developed programs  10:30:04

         12        where the banks provide the assistance.  And in       10:30:06

         13        talking and trying to figure out about their          10:30:08

         14        situation, you might ask, well, who are you going     10:30:10

         15        through?  And invariably they'll say, Norwest.        10:30:14

         16             As was said earlier, Norwest is the largest      10:30:16

         17        mortgage company in the country.  They're the         10:30:18

         18        largest in the Twin Cities with 20 percent of all     10:30:20

         19        loans.  So most people are going through Norwest,     10:30:24

         20        but they're calling us saying can you help with the   10:30:26

         21        down payment?  And why is that?  Because Norwest      10:30:28

         22        provides less assistance for down payment and         10:30:30

         23        closing costs than all the other major banks in the   10:30:34

         24        Twin Cities.  TCF, US Bank, Firstar, and Marquette    10:30:36

         25        all provide much more assistance than Norwest.        10:30:40



     
     



                                                                     72

          1             There's some other problems with Norwest's       10:30:44

          2        underwriting guidelines, which are -- to the problem  10:30:46

          3        when they're, again, the biggest mortgage company in  10:30:48

          4        the country and in the Twin Cities.  Their debt       10:30:50

          5        ratio is only 34 percent when all the other programs  10:30:52

          6        are 41 percent.  If you have what they count as       10:30:56

          7        long-term debt, if you have a car payment, in order   10:31:00

          8        to look at it and you're qualifying, they count       10:31:02

          9        long-term debt as anything less than two months.      10:31:06

         10        All the other programs count long-term debt as        10:31:08

         11        anything less than ten months.  It's ironic that      10:31:12

         12        Norwest would penalize people that have large debts   10:31:14

         13        because one of the reasons that they have these       10:31:16

         14        large debts is because they've got car payments,      10:31:18

         15        very high interest car payments through Norwest       10:31:22

         16        subsidiaries.                                         10:31:24

         17             It was mentioned earlier about Norwest's         10:31:26

         18        helping -- working and helping people fix their       10:31:28

         19        credit.  Well, we believe that Norwest actually       10:31:30

         20        profits more from people's bad credit and does more   10:31:32

         21        damage to people's credit than any of the seminars    10:31:36

         22        that they can hold.  Norwest has contributed to the   10:31:38

         23        existence in the United States of two separate and    10:31:42

         24        very unequal financial systems: one for the rich and  10:31:46

         25        one for the poor.  As mainstream banks shut out low   10:31:48



     
     



                                                                     73

          1        income blue collar and minority customers, a fringe   10:31:52

          2        economy has emerged of pawn shops, check cashing      10:31:54

          3        stores and finance companies to fill the credit       10:31:58

          4        void.  With their high interest rates and             10:32:00

          5        unnecessary credit insurance fees, these shadow       10:32:02

          6        banks have generated greater profit margins than      10:32:04

          7        even the largest banks.                               10:32:06

          8             In 1994, Norwest purchased a company called      10:32:10

          9        Community Credit, so don't confuse it with Consumer   10:32:14

         10        Credit Counseling, which is a very fine               10:32:16

         11        organization.  Community Credit is exactly the        10:32:18

         12        opposite.  It's a consumer loan company that targets  10:32:22

         13        people with low incomes or bad credit.  Community     10:32:24

         14        Credit has 79 offices in 15 states.  Soon after they  10:32:26

         15        bought Community Credit, Norwest acquired two other   10:32:30

         16        companies: City Side Savings, which doesn't help      10:32:32

         17        people save any money, and Fidelity Acceptance, 

         18        which is not at all loyal, doesn't have any fidelity 

         19        to its customers. 

         20             According to a St. Paul Pioneer Press article    10:32:40

         21        last year, Norwest is no stranger to the boom in big  10:32:42

         22        risk, big reward consumer lending.  It's Norwest's    10:32:46

         23        financial unit, of which Fidelity will soon be a 

         24        part, was doing sub-prime net lending long before 

         25        Wall Street and several big banks bet on it in        10:32:54



     
     



                                                                     74

          1        recent years.  So Norwest saw it, they saw the money  10:32:56

          2        that could be made from taking advantage of people's  10:32:58

          3        bad credit, and they jumped on it.  They're smart.    10:33:02

          4        That's why they make over a billion dollars' profit   10:33:04

          5        a year.                                               10:33:04

          6             According to -- again to quote the article,      10:33:06

          7        they discovered what Norwest has known for years:     10:33:10

          8        lending money to riskier borrowers can yield big      10:33:10

          9        profits.  Norwest Financial is consistently           10:33:14

         10        Norwest's most profitable unit without suffering      10:33:16

         11        ugly buildup of bad loans.  It's a myth that there's  10:33:20

         12        a higher risk in lending to -- that they are losing   10:33:22

         13        money.  They routinely, these consumer finance        10:33:26

         14        companies that Norwest owns, routinely make more      10:33:28

         15        profits and have a larger return on their assets      10:33:32

         16        than the banks do.  The average rate on Norwest       10:33:34

         17        Financial's consumer loans was 21.22 percent in       10:33:38

         18        1996.  Compare this to what it would cost you if you  10:33:40

         19        had a loan from Norwest Bank, which is right now      10:33:44

         20        around 8 percent, can be more than double from just   10:33:46

         21        another Norwest subsidiary.                           10:33:50

         22             And when Norwest turns someone down for a car    10:33:50

         23        loan, they don't refer them to Consumer Credit        10:33:54

         24        Counseling, they don't tell them about a seminar on   10:33:56

         25        debt management or on money management.  What they    10:34:00



     
     



                                                                     75

          1        do is refer them to Community Credit, and they've     10:34:02

          2        acknowledged that they do this.  They give customers  10:34:04

          3        the number for Community Credit to get a car loan at  10:34:06

          4        21 percent.  We've even had instances where somebody  10:34:08

          5        got a call at home, unsolicited, from Community       10:34:12

          6        Credit, saying I heard you need a loan.  Do you have  10:34:16

          7        any collateral that you could use for it?             10:34:18

          8             While Norwest has acknowledged this is a common  10:34:22

          9        practice, they have failed to reply to our requests   10:34:26

         10        about if there is a reciprocal relation; that is,     10:34:28

         11        why can't customers be referred from Community        10:34:30

         12        Credit to Norwest?  They're the same company.  If it  10:34:32

         13        works one way, why can't it work the other?           10:34:36

         14        Especially if they pay their car loan on time, why    10:34:38

         15        can't it be refinanced through Norwest?  Why can't    10:34:40

         16        there be a program set up like that?                  10:34:42

         17             Well, Norwest actually keeps people trapped in   10:34:44

         18        the fringe economy by thwarting customers' efforts    10:34:48

         19        to re-establish their credit.  As a general policy,   10:34:50

         20        Community Credit does not report its loans to a       10:34:52

         21        credit bureau.  So even if a customer is making       10:34:54

         22        their payments on time on that car, thinking well, I  10:34:58

         23        need a car to get to work, I'll take the 21 percent   10:35:00

         24        interest, I'll pay it on time, and eventually I will  10:35:02

         25        be able to build up my credit better, they're not     10:35:04



     
     



                                                                     76

          1        building the new credit that they think they are,     10:35:06

          2        which would allow them to eventually refinance or     10:35:08

          3        receive a more favorable interest rate from a bank.   10:35:12

          4        And Community Credit is, however -- it's not that     10:35:14

          5        they don't work with the credit bureaus ever,         10:35:16

          6        because they're very quick to report it to the        10:35:18

          7        credit bureau if you default on a loan.  The only     10:35:20

          8        explanation for this that we can think of is that     10:35:22

          9        the companies, Community Credit and other companies   10:35:24

         10        in Norwest Financial, want to keep a captive          10:35:28

         11        customer base.  They don't want people to be able to  10:35:30

         12        get lower interest rates, they don't want people to   10:35:32

         13        be able to pay off their balance early, and they      10:35:34

         14        want them to have to return to them again and again   10:35:38

         15        for financing, repeat customers.  And, in fact, when  10:35:38

         16        Norwest acquired City Side Savings just last year,    10:35:42

         17        which did report customers' on-time payments to the   10:35:44

         18        credit bureau, they merged it into Community Credit,  10:35:48

         19        and all of a sudden, the reporting of City Side's     10:35:50

         20        customers' on-time payments abruptly stopped.         10:35:52

         21             When we are doing our loan counseling and we     10:35:54

         22        meet with somebody and we do their credit report,     10:35:56

         23        we'll see they have a loan from City Side Savings,    10:35:58

         24        and all of a sudden it says 10-97, and that's just a  10:36:02

         25        date of last activity -- what are we now, 8-98 --     10:36:06



     
     



                                                                     77

          1        just ends.  All of a sudden on the credit report it   10:36:08

          2        just ends.  Thank you very much.                      10:36:10

          3        

          4                   CHAIRPERSON SMITH:  Mr. Bennett.           10:36:16

          5        

          6                  MR. ASH:  We have a transparency, first of  10:36:22

          7        all, to this.  

          8        

          9                  CHAIRPERSON SMITH:  Thank you.

         10        

         11                  MR. ASH:  Where do we do that?              10:36:24

         12        

         13                  CHAIRPERSON SMITH:  If you'll hand it to    10:36:26

         14        Cassandra, and we'll put it into the record.          10:36:28

         15        Mr. Bennett, if you'll start.                         10:36:36

         16        

         17                  MR. BENNETT:  My name is Alton Bennett,     10:36:38

         18        and I'm the chair of the Banking and Housing Chapter  10:36:40

         19        of Minnesota ACORN.  I'm also a member of Minnesota   10:36:42

         20        ACORN Board, I'm association board member, and I'm    10:36:44

         21        the national treasurer.                               10:36:50

         22             A couple occasions Congress has expressed its    10:36:52

         23        concern about the credit needs of low and moderate    10:36:56

         24        income people in low and moderate income              10:36:58

         25        neighborhoods.  As a matter of fact, they've even     10:37:02



     
     



                                                                     78

          1        gone as far as to say that banking services are       10:37:04

          2        essential for these types of neighborhoods to         10:37:06

          3        survive.  That is generally what leads the spirit of  10:37:06

          4        CRA, the Community Reinvestment Act, that says that   10:37:12

          5        banks must meet the credit needs of their entire      10:37:14

          6        service area, specifically low and moderate income    10:37:18

          7        people, not just the wealthy.                         10:37:20

          8             I wonder about products that take advantage of   10:37:22

          9        low and moderate income people, and one of those      10:37:24

         10        things is the checking accounts.  I think everybody   10:37:26

         11        can understand the importance of having a checking    10:37:30

         12        account in your day-to-day activities, but we have    10:37:32

         13        an example here that really truly brings the          10:37:34

         14        experience of most of the people that we have dealt   10:37:38

         15        with when it comes to Norwest.  Norwest has raised    10:37:40

         16        its bounced check fees twice -- at twice the rate of  10:37:46

         17        inflation.  In 1996, Norwest charged $12 for a        10:37:50

         18        bounced check.  In 1995, it had gone up to $21, and   10:37:52

         19        this summer Norwest increased the fee again up to     10:37:58

         20        $25, making it the highest bounced check fee in the   10:38:00

         21        Twin Cities.                                          10:38:04

         22             We have figures from the banking industry that   10:38:04

         23        show that the real cost of a bounced check is about   10:38:06

         24        $2.68.  Norwest has denied this figure.  They say     10:38:10

         25        they have no idea how much it costs, but I wonder,    10:38:12



     
     



                                                                     79

          1        since they've raised it from 21 to 25 and they have   10:38:16

          2        no idea how much it costs, how do they make the       10:38:20

          3        decision to determine whether it should go up from    10:38:22

          4        21 to 25?  That's just always been curious.  But,     10:38:24

          5        anyway, they don't know how much it costs.            10:38:28

          6             With us they can make so much money from         10:38:30

          7        bounced checks, Norwest does things to get people to  10:38:34

          8        bounce even more checks.  They're the only major      10:38:36

          9        bank in the Twin Cities that clears customers'        10:38:40

         10        largest checks first.  We have an article here that   10:38:42

         11        shows that this is a practice among banks designed    10:38:44

         12        solely to increase profit.  Norwest says that they    10:38:48

         13        do it because the customers' preference in a survey.  10:38:52

         14        But Norwest refused to show us the survey.  How was   10:38:54

         15        the questions asked?  Who were the customers that     10:38:58

         16        they surveyed?  I find it very difficult that they    10:39:00

         17        would -- to believe that they would ask a customer    10:39:04

         18        would you rather us charge you much more money to     10:39:06

         19        process your largest check so that we can make a lot  10:39:10

         20        more money off of it in order -- than do it the       10:39:14

         21        other way in processing things as they come in?  I    10:39:18

         22        just can't believe that that would be the case.  I'd  10:39:22

         23        like to see a real-life example of a Norwest          10:39:26

         24        customer who was affected by the policy clearing the  10:39:28

         25        largest check first.                                  10:39:30



     
     



                                                                     80

          1             In this case, on April 30th -- and that          10:39:32

          2        transparency is up there -- there were four checks    10:39:36

          3        that come through.  By putting the biggest check      10:39:38

          4        through first, the one for $20.72, Norwest caused     10:39:40

          5        three smaller checks to bounce.  The customer was     10:39:44

          6        then charged $63 for the overdraft -- for             10:39:48

          7        overdrafts, each of which was under $10.  If Norwest  10:39:50

          8        had cleared them by check number or from smallest to  10:39:54

          9        largest, the three smaller checks which totaled       10:39:58

         10        $19.73, would have been paid instead, and only the 

         11        largest check would have bounced.                     10:40:02

         12             It is also worth noting that on May 1st, the     10:40:04

         13        same day that she was charged $63, the customer had   10:40:08

         14        two SSI checks directly deposited in her accounts     10:40:12

         15        that regularly happened at the first of the month.    10:40:14

         16             Now, Norwest says that people can avoid those    10:40:18

         17        charges simply by getting overdraft protection.       10:40:22

         18        Well, there's two problems with that.  Number one,    10:40:26

         19        people don't know about the overdraft protection      10:40:28

         20        because Norwest doesn't advertise it, and when they   10:40:30

         21        do apply for it, if they know about it, they get      10:40:32

         22        turned down.  The woman in this example had just 

         23        been turned down for overdraft protection the same    10:40:36

         24        month that she was approved by our housing            10:40:38

         25        counseling program for a loan.  I think that's        10:40:44



     
     



                                                                     81

          1        pretty particularly interesting.                      10:40:48

          2             Two years ago we met with Norwest about this     10:40:50

          3        problem.  We proposed a program that would make it    10:40:52

          4        easier for low income people to qualify for           10:40:54

          5        overdraft protection.  Norwest refused to do          10:40:58

          6        anything about it.  We have found that when people    10:41:00

          7        bounce a check, it is not something that they did     10:41:02

          8        deliberately.  Most of the time it is an honest       10:41:04

          9        mistake or it happened in a narrow period of time     10:41:06

         10        between when the person's -- when people deposit a    10:41:10

         11        check and when they credit that deposit to that       10:41:12

         12        account.  So there is no real overdraft protection.   10:41:16

         13             Norwest has said that the customers shouldn't    10:41:20

         14        be surprised when they have bounced checks because    10:41:22

         15        customers are told about these fees and policies.     10:41:26

         16        In fact, the federal law requires the bank to give    10:41:28

         17        new customers information about bank fees and funds   10:41:30

         18        available policy, but that is not the case in         10:41:32

         19        Norwest.  Last summer we did a testing program.  We   10:41:36

         20        sent in 28 people to open checking accounts at        10:41:38

         21        Norwest.  Of those 28 people, six people were given   10:41:42

         22        the information required by law, six were given some  10:41:44

         23        but not all the information, and a larger majority,   10:41:48

         24        16, were given nothing at all.  We currently have a   10:41:52

         25        lawsuit against Norwest over these violations.        10:41:54



     
     



                                                                     82

          1             There are other bank fees that are of concern    10:41:58

          2        to us.  One thing -- one of these things we want to   10:42:00

          3        know is what happens to Norwest's checking account    10:42:04

          4        and savings account, what will happen to them this    10:42:06

          5        summer?  Wells Fargo stopped honoring checks, free    10:42:10

          6        checking accounts for senior citizens who have been   10:42:14

          7        customers at First Interstate, Wells Fargo's last     10:42:16

          8        merger.  Now these seniors must either use Wells      10:42:22

          9        Fargo basic ATM checking account, which has a         10:42:24

         10        five-fifty a month fee and requires customers to do   10:42:28

         11        all their banking at ATM, or Wells Fargo's            10:42:30

         12        Stagecoach checking account, which costs $9 a         10:42:34

         13        monthly fee.  What protection will there be for       10:42:36

         14        senior citizens in the future?                        10:42:40

         15        

         16                  CHAIRPERSON SMITH:  Thank you very much.    10:42:42

         17        Are there any questions from the panel?  If not,      10:42:44

         18        thank you very much for coming this morning.  We are  10:42:48

         19        scheduled for a ten-minute break, and I would remind  10:42:52

         20        attendees that if you happen to go outside the        10:42:58

         21        building, you will need your badge to get back        10:43:02

         22        inside and will need to go through the security       10:43:06

         23        check-in once more.  So we'll see you in about ten    10:43:08

         24        minutes.                                              10:43:14

         25                             
	
Last update: December 3, 2010