skip to main navigation skip to secondary navigation skip to content
Board of Governors of the Federal Reserve System
skip to content

Public Meeting Transcripts

Public Meeting Regarding Norwest Corporation and Wells Fargo & Company

Thursday, September 17, 1998

Transcript of Panel Seven

                                                            145
 
          1                  (Hearing resumed after lunch break.)
 
          2
 
          3                  CHAIRPERSON SMITH:  Okay.  We are
 
          4        ready with Panel Number 7.  And we are going to
 
          5        start with Dana Wise.
 
          6
 
          7                  MR. WISE:  Thank you, Miss Smith and
 
          8        the Federal Reserve.
 
          9             My name is Dana Wise, and I do bank
 
         10        research for the Strategic Projects Department
 
         11        of the United Steelworkers of America.  I'm also
 
         12        a member of a community-based coalition of
 
         13        nonprofit housing and community developers in
 
         14        New Mexico.  And as part of that coalition, I
 
         15        was party to the development of a 1.3 billion
 
         16        dollar community lending initiative recently
 
         17        announced by Norwest and Wells Fargo for New
 
         18        Mexico.  The Steelworkers Union praises this and
 
         19        the recent California commitment for increased
 
         20        lending to working families and their
 
         21        communities.  The Wells Fargo has questioned our
 
         22        motives and involvement in pushing for this
 
         23        review of their treatment of working families in
 
         24        their communities.  Wells Fargo should not
 
         25        underestimate the union's commitment to defend
 
 
 
 
 

 
 
                                                              146
 
          1        the interests and needs of its members, their
 
          2        families and their neighborhoods.  The
 
          3        Steelworkers Union has more than 700,000 members
 
          4        nationwide.  Our members are a part of families,
 
          5        and these families are a part of their
 
          6        communities.  These communities pay taxes.  They
 
          7        support our country's financial system.  And our
 
          8        members are also part of communities that make
 
          9        deposits at Well Fargo.  It is the union's duty
 
         10        to insure that these resources are used in a
 
         11        manner that promotes decent living-wage jobs,
 
         12        affordable housing and community economic
 
         13        development.  The union will continue to work
 
         14        hard to support the efforts of allies here in
 
         15        Minnesota, in Iowa, in Wisconsin, in Texas, in
 
         16        Washington and Los Angeles to improve the
 
         17        performance of Wells Fargo in serving the best
 
         18        interests of working families and their
 
         19        neighborhoods.
 
         20             Last month we published research on the
 
         21        recent community lending performance of Wells
 
         22        Fargo.  We've shared this research broadly with
 
         23        CRA advocates, local government officials and
 
         24        the media.  The research on Wells Fargo's CRA
 
         25        performance showed a bank hungry for fees from
 
 
 
 
 

 
 
                                                              147
 
          1        retail customers, a bank that was especially
 
          2        unfocused on serving the needs of its primary
 
          3        service area, especially low-income areas and
 
          4        rural areas, and a bank that promotes high-tech
 
          5        marketing over traditional banking, even when it
 
          6        appears that these methods make the bank less
 
          7        able to serve low-income and minority
 
          8        communities.
 
          9             I'm speaking here about Wells Fargo's
 
         10        published commitments that it is leading world
 
         11        communities, its heavy reliance on borrow or
 
         12        profarming data bases for its small business
 
         13        lending and small farm lending and its heavy
 
         14        reliance on the Internet and high technology for
 
         15        the delivery of financial services.
 
         16             Among the principal findings of our study
 
         17        were over the past three years following the
 
         18        takeover of First Interstate by Wells Fargo, in
 
         19        the majority of cities and towns where Wells
 
         20        Fargo pursued its branch consolidation and
 
         21        restructuring, these changes negatively affected
 
         22        low-income Spano and other minority
 
         23        communities.  Also, Wells Fargo closed a
 
         24        disproportionate number of branches in
 
         25        nonmetropolitan areas.  And in 70 percent of
 
 
 
 
 

 
 
                                                              148
 
          1        counties where Wells Fargo made small business
 
          2        and small farm loans, the bank failed to match
 
          3        its competitors in its relative level of service
 
          4        to low-income communities.  Wells Fargo's
 
          5        primary response to our research has been to
 
          6        question the appropriateness of a union showing
 
          7        concern about a bank's lending to low-income and
 
          8        minority families.  Predictably, Wells Fargo
 
          9        also challenges the study's methodology.  But
 
         10        it's clear from their response that they never
 
         11        bothered to read past the executive summary.
 
         12        The union stands by the findings of its study.
 
         13        And we ask that this document be included as
 
         14        part of the written record of this testimony.
 
         15             Furthermore, we urge Wells Fargo to get to
 
         16        work with community-based fair lending and CRA
 
         17        coalitions in the 19 other states that will be
 
         18        impacted by this merger.  Wells Fargo must agree
 
         19        to address the charges that the bank's practices
 
         20        hurt the working families and their
 
         21        communities.  The union will join its resources
 
         22        with those of its allies in the community
 
         23        development movement.  And those are the 13.2
 
         24        million member AFL/CIO to bring Wells Fargo to
 
         25        justice.  Until that happens, the AFL/CIO has
 
 
 
 
 

 
 
                                                              149
 
          1        asked its 73 international unions, their 30,000
 
          2        local unions and individual members in every
 
          3        state to close any institutional or personal
 
          4        accounts that they have with Wells Fargo.
 
          5        AFL/CIO President John Sweeny said, "Our resolve
 
          6        in this matter will send a clear signal not only
 
          7        to Wells Fargo, but to other banks that would
 
          8        use our own deposits against working families
 
          9        and our unions."
 
         10             Thank you.
 
         11                  CHAIRPERSON SMITH:  Thank you.
 
         12             Miss Gallardo?
 
         13
 
         14                  MS. GALLARDO:  Hello.  I'm Joyce
 
         15        Gallardo.  And I'm here from Pueblo, Colorado on
 
         16        behalf of the United Steelworkers of America and
 
         17        our local union, 3267.  I appreciate the
 
         18        opportunity to testify today.
 
         19             And I would like to voice my objection to
 
         20        the merger of Norwest and Wells Fargo and
 
         21        introduce you in a personal manner to my
 
         22        struggle and personal nature in which my union
 
         23        brothers and sisters are being affected by the
 
         24        refusal of Oregon Steel Mill to bargain in good
 
         25        faith with our union and allow us to return to
 
 
 
 
 

 
 
                                                              150
 
          1        work.
 
          2             A few months prior to staff forcing us out
 
          3        on strike, October 3rd, 1997, I purchased a
 
          4        small hotel in a town 35 miles west of Pueblo.
 
          5        I planned to refurbish it and have it ready to
 
          6        open by December of 1997.  The main purpose in
 
          7        undergoing this project was a means of
 
          8        supplementing what would be a very meager
 
          9        retirement income and to get it up and running
 
         10        and well-established before my retirement.  The
 
         11        building now sits empty except for one room in
 
         12        the back of the hotel that I occupy.  Because of
 
         13        the mortgage payments on this empty building, I
 
         14        am forced to live in extreme uncomfortable
 
         15        conditions.  And after 32 years with one
 
         16        company, I'm only one step above the homeless.
 
         17             The winter of 1977 began with a strike of
 
         18        October 3rd and a denial of unemployment
 
         19        compensation.  After being out of work a month
 
         20        and a half, I accepted a position with a
 
         21        telemarketing firm where I earned a whopping $6
 
         22        per hour.  Working for this wage, I knew I could
 
         23        make the mortgage payment, put gas in my car and
 
         24        drive the 35 miles back and forth to work, but
 
         25        all other expenses would have to be kept to a
 
 
 
 
 

 
 
                                                              151
 
          1        minimum.  I knew I could not afford to fire up
 
          2        the boiler in this 6,000 square foot building,
 
          3        so I attempted to survive the winter using two
 
          4        space heaters.  And once a week, I would turn on
 
          5        the convection oven in the kitchen -- quotes --
 
          6        and prepare enough food for an entire week, then
 
          7        just reheating in the microwave as I wanted to
 
          8        eat, all in an attempt to keep my expenses
 
          9        down.  I thought I was home free.  I thought I'd
 
         10        made it through the winter with my space heaters
 
         11        when one night in late February I arrived home
 
         12        after dark.  And when I opened the door, I
 
         13        stepped into water up to my ankles.  I thought I
 
         14        had all the pipes upstairs turned off and
 
         15        draining, but the old plumbing had played a
 
         16        terrible trick on me.  Water was pouring through
 
         17        the ceiling in the lobby.  Now I had more to do
 
         18        to the building, no money, no hope of being able
 
         19        to qualify for another loan to do any
 
         20        construction, no place to turn.  Another
 
         21        winter's coming up, and I'm going to be in the
 
         22        same predicament that I was last year; no money
 
         23        to fire up the boiler, no way to get out of this
 
         24        situation that I am in.  Even though interest
 
         25        rates have dropped almost two percent below what
 
 
 
 
 

 
 
                                                              152
 
          1        my mortgage is set at, I can't qualify to
 
          2        refinance my loan, which, if I could, would drop
 
          3        my payments considerably.
 
          4             Many of my union brothers and sisters are
 
          5        going through at least as desperate a situation
 
          6        as I am, and some have it much worse.  One of
 
          7        our union brothers took his own life at the
 
          8        beginning of summer.  This rocked all of us,
 
          9        thinking that we saw this brother several times
 
         10        a week and didn't realize what pain he was in.
 
         11        He had lost his wife to cancer ten months
 
         12        earlier.  And that is when we worried about
 
         13        him.  He was in his early middle years, had no
 
         14        children at home, and his whole life revolved
 
         15        around his wife.  But he made it through those
 
         16        months and now we lost him to this.  I know of
 
         17        at least four couples personally that are going
 
         18        through a divorce even though before this work
 
         19        stoppage they seemed to have a very stable
 
         20        marriage.  Quite a few of our brothers and
 
         21        sisters have had to find work in other cities
 
         22        and are now trying to support two households on
 
         23        top of being separated from their families at
 
         24        least during the week.  And many of them are not
 
         25        even close enough to come home on weekends.
 
 
 
 
 

 
 
                                                              153
 
          1        This has been a few of the many problems brought
 
          2        on by this company's refusal to bargain in good
 
          3        faith.  And although the company has suffered a
 
          4        tremendous loss and continues to lose money
 
          5        daily, much to our dismay, Wells Fargo Bank and
 
          6        some other smaller banks continue to bankroll
 
          7        CF&I.  They've now changed their name to Rocky
 
          8        Mountain Steel, and I'm not sure of the real
 
          9        purpose in that.  But as long as this practice
 
         10        continues of Wells Fargo bankrolling CF&I, the
 
         11        longer CF&I will remain in a position to keep us
 
         12        off of our jobs.  This is a union town.  The
 
         13        economy of Pueblo was built around CF&I and the
 
         14        steelworkers.
 
         15             When we began this strike, our local banks
 
         16        worked with our union brothers and sisters on
 
         17        their personal loans and mortgages, allowing
 
         18        them to pay only the interest in some instances
 
         19        and giving them deferred payments in other
 
         20        cases.  As far as I can determine, Norwest Bank
 
         21        did not offer any leniency for any type of
 
         22        payments.  A bank has an obligation to help the
 
         23        communities they move into.  And I cannot even
 
         24        imagine Wells Fargo being a part of this
 
         25        community after turning their backs on the union
 
 
 
 
 

 
 
                                                              154
 
          1        workers to help finance CF&I in their efforts to
 
          2        break our union.  And what is worse, even though
 
          3        they know how it's affecting our people, they
 
          4        continue this practice.
 
          5             On behalf of the membership of Locals 2102
 
          6        and 3267, I want to thank you all for listening
 
          7        to me.  I appreciate the opportunity.
 
          8                  CHAIRPERSON SMITH:  Thank you.  And
 
          9        would you make sure that our -- that our Federal
 
         10        Reserve staff have a copy of your statements?  I
 
         11        know yours is in writing so --
 
         12                  MR. WISE:  Okay.
 
         13                  CHAIRPERSON SMITH:  -- if we can make
 
         14        a copy?  And then we'll go to Miss Pacheco.
 
         15                  MS. GALLARDO:  Certainly.  Whatever
 
         16        works.
 
         17
 
         18                  MR. PACHECO:  My name is Howard
 
         19        Pacheco.  I would like to thank this board for
 
         20        allowing me this opportunity to speak on behalf
 
         21        of my Local 2102 and 3267.
 
         22             For 31 years I worked as a steelworker.
 
         23        Working in the steel mill is not easy work.
 
         24        It's hot, it's dirty, and it's dangerous.  It
 
         25        takes teamwork.  Because of this, your fellow
 
 
 
 
 

 
 
                                                              155
 
          1        employees become family.  My extended family and
 
          2        I have been through a lot.  In order to keep the
 
          3        Pueblo plant productive, we made sacrifices.  We
 
          4        took wage cuts, combined jobs, gave up our
 
          5        incentive rate, which was one-third of our pay,
 
          6        increased health care premiums and much more.
 
          7        We as a family thought the worst was behind us.
 
          8        We were forced out on strike because of unfair
 
          9        labor practices by the company, Oregon Steel
 
         10        Mill.  October 3rd, 1997, we offered to return
 
         11        to our jobs.  The company said no to 1,100 and
 
         12        took back only 27 employees.  Wells Fargo bailed
 
         13        out the company twice, possibly three times.
 
         14        This is not the first time Wells Fargo has lent
 
         15        money to a company in the mist of -- in the
 
         16        midst of a labor dispute.  The undue hardships
 
         17        caused by Wells Fargo can never be mended.  We
 
         18        have had numerous divorces and separations, and
 
         19        one of the other brothers committed suicide.
 
         20        Many of my fellow brothers and sisters have
 
         21        cashed in their 401K plans to sustain themselves
 
         22        and their families.  Some have had their autos
 
         23        repossessed.  The list of hardships goes on and
 
         24        on.
 
         25             I have been on the picket line and seen
 
 
 
 
 

 
 
                                                              156
 
          1        replacement workers flash $100 bills or their
 
          2        paychecks and then flip us off as they drive by
 
          3        with their new cars.  Let me tell you, it hurts
 
          4        when you know it's Wells Fargo who is financing
 
          5        all this misery.  Heaven only knows what it
 
          6        would be like if Wells Fargo were allowed to
 
          7        merge with Norwest Bank.  There are no Wells
 
          8        Fargo Banks in Pueblo, but there are Norwest
 
          9        Banks in our town.  I have seen with my own eyes
 
         10        what Wells Fargo has done to my family and from
 
         11        a thousand miles away and heard with my own ears
 
         12        what they have done to the people in
 
         13        San Francisco.  I'm afraid of what they might do
 
         14        to my family next.
 
         15             Thank you.
 
         16                  CHAIRPERSON SMITH:  Go ahead.
 
         17
 
         18                  MS. PACHECO:  I'd like to thank the
 
         19        board for allowing me to testify today.  My name
 
         20        is Jan Pacheco.  I'm the wife of Howard
 
         21        Pacheco.  We're here today representing the
 
         22        Unites Steelworkers of America and 1,100
 
         23        families in Pueblo, Colorado.
 
         24             Have you ever attended a church service and
 
         25        seen the hostility in the eyes of one toward
 
 
 
 
 

 
 
                                                              157
 
          1        another or have you ever been the playground
 
          2        monitor for your son's or daughter's elementary
 
          3        school and heard "I can't play with you.  You're
 
          4        daddy's a scab."  Or even worse, close knit
 
          5        families being destroyed because one in the
 
          6        family chose to not cross the picket line and
 
          7        another did.  I have, and it's happening in
 
          8        Pueblo, Colorado.  It's happening because Wells
 
          9        Fargo Bank is the key lender to a company my
 
         10        husband works for, Oregon Steel Mill, a company
 
         11        who has illegally replaced him and 1,100 other
 
         12        workers in Pueblo, Colorado, a company who is
 
         13        hell bent on destroying our families and our
 
         14        community.
 
         15             The bank is just as guilty because they are
 
         16        lending the company money to sustain them during
 
         17        this struggle, a bank which has extended the
 
         18        company's credit line twice and just recently a
 
         19        third time, a bank who claims they are not
 
         20        involved in our struggle.
 
         21             During the last year, I have had the honor
 
         22        of standing beside my husband talking to
 
         23        churches, organizations, politicians, union and
 
         24        union members about our struggle.  Most
 
         25        recently, Howard and I have been in the City of
 
 
 
 
 

 
 
                                                              158
 
          1        San Francisco, the home base of Wells Fargo
 
          2        Bank.  We placed an ad in the "Bay Guardian"
 
          3        newspaper.  The ad read, "We're unhappy with
 
          4        Wells Fargo.  Are you?  Have you had problems
 
          5        with poor customer service or hidden fees?
 
          6        We're conducting a study of dissatisfied
 
          7        customers.  Tell us your story."
 
          8             We were shocked at the number of responses
 
          9        we received.  Hundreds of complaints came in.
 
         10        And here are some direct quotes from those phone
 
         11        calls.  These are only a few of the quotes that
 
         12        I have for you today.
 
         13             Number one, "I got the $25 miskeyed entry
 
         14        fee for accidentally putting the wrong amount in
 
         15        the ATM and was absolutely shocked.  I can
 
         16        hardly -- I had hardly ever checked my bank
 
         17        statement, but I went back through them and
 
         18        started finding all these ridiculous fees."
 
         19             A second one said, "They closed down the
 
         20        branch in my neighborhood and left ATMs there so
 
         21        that no other bank can move in.  They're
 
         22        clearly -- they've clearly cut down their
 
         23        employee staff, increased the amount of time you
 
         24        have to wait, increased their fees.  They have
 
         25        done just about everything wrong so far as
 
 
 
 
 

 
 
                                                              159
 
          1        keeping up good employees and customer
 
          2        relations, trying to increase their profit
 
          3        margin as much as possible without worrying
 
          4        about customer service."
 
          5             Number three, "In the last four months,
 
          6        Wells Fargo has reneged on their promise of free
 
          7        lifetime checking.  Suddenly they are going to
 
          8        charge me $7 a month.  They're real sorry about
 
          9        it.  And I've written them a letter telling them
 
         10        where to stick their stagecoaches."
 
         11             Number four, "There are fees for just about
 
         12        everything.  There are fees to get my checks
 
         13        back.  There are fees to keep my checks.  There
 
         14        are fees to go into the branch rather than the
 
         15        ATM.  There's fees to go to the other ATMs."
 
         16        The list goes on.
 
         17             Our seniors also spoke out.  "I was a First
 
         18        Interstate customer before Wells Fargo merged
 
         19        with First Interstate and was grandfathered in
 
         20        on free checking.  They changed the rules
 
         21        several times, charging me fees and finally went
 
         22        back on their promise totally."
 
         23             And number six, "I was mistakenly charged a
 
         24        fee for a bounced check.  I was supposed to call
 
         25        every day to see what happened to my money, so I
 
 
 
 
 

 
 
                                                              160
 
          1        called.  They charged me for those calls.  I had
 
          2        to take off work three times to be able to speak
 
          3        with the representative.  It took me months to
 
          4        get this fee off my account even though they
 
          5        were responsible."
 
          6             If Wells Fargo and Norwest Bank merge, our
 
          7        fear is, what is going to happen next given
 
          8        Wells Fargo's track record?
 
          9             Thank you.
 
         10                  CHAIRPERSON SMITH:  Thank you.
 
         11             Miss Rosenthal?
 
         12
 
         13                  MS. ROSENTHAL:  Good afternoon.  My
 
         14        name is Mary Rosenthal.  And I am the Minnesota
 
         15        State Director for the National AFL/CIO.  Thank
 
         16        you very much for this opportunity to testify.
 
         17        The AFL/CIO's member unions represent 400,000
 
         18        working people here in Minnesota and hundreds of
 
         19        thousands more within Northwest -- Norwest's
 
         20        service area.  This is a region of farms and
 
         21        small towns, highly vulnerable to capital
 
         22        draining by distant financial institutions.  The
 
         23        Wells Fargo/Norwest merger is the takeover of a
 
         24        regional giant with a poor record of serving
 
         25        working people by a giant national bank with a
 
 
 
 
 

 
 
                                                              161
 
          1        worse record.  Wells Fargo's merger with Norwest
 
          2        will pass control of our region's largest
 
          3        financial institution to a West Coast bank that
 
          4        by its nature and as a result of the business
 
          5        strategies it has chosen to pursue cannot be
 
          6        focused on the financial service needs of our
 
          7        communities.  Wells Fargo is 181st out of the
 
          8        top 200 financial institutions in its
 
          9        reinvestment rate in the primary service area
 
         10        communities from which it takes deposits.  A
 
         11        study by our affiliate, the United Steelworkers
 
         12        of America, has shown that Wells Fargo's
 
         13        definition of its service areas in the southwest
 
         14        has excluded lower income census tracks.  Wells
 
         15        Fargo's loan origination and management programs
 
         16        is data based and Internet driven with a
 
         17        decreasing emphasis on loan officers who know
 
         18        the communities in which they lend.
 
         19             On the consumer side, Wells Fargo is a
 
         20        leader in charging high fees for basic banking
 
         21        fees and in closing branches in low-income
 
         22        communities.  Norwest service area includes a
 
         23        variety of communities vulnerable to the
 
         24        withdrawal of financial services.  Large cities
 
         25        with substantial low and moderate-income
 
 
 
 
 

 
 
                                                              162
 
          1        communities like Minneapolis, St. Paul and
 
          2        Denver where Norwest's record has already been
 
          3        poor, smaller towns and rural areas dependent on
 
          4        agriculture that have been repeatedly devastated
 
          5        by commercial banks' withdrawal from the
 
          6        agriculture credit markets and areas of extreme
 
          7        rural poverty, like the Pine Ridge Indian
 
          8        Reservation in South Dakota, Norwest's record in
 
          9        these communities has already been the subject
 
         10        of prior protests by AFL affiliates -- AFL/CIO
 
         11        affiliates to the Board of Governors.  For all
 
         12        these communities, this merger promises more
 
         13        expensive and less accessible financial
 
         14        services.  In fact, even before the merger has
 
         15        been approved, Norwest appears to be raising a
 
         16        variety of fees to match levels at Wells Fargo.
 
         17        This merger also promises to create more towns
 
         18        like Pueblo, Colorado, where Wells Fargo has
 
         19        financed a savage campaign to break the
 
         20        Steelworkers Union at Oregon Steel, a campaign
 
         21        that has illegally denied a thousand people the
 
         22        middle class jobs that were a foundation of that
 
         23        community's economic strength.
 
         24             Wells Fargo claims that this is somehow not
 
         25        an issue affecting its treatment of its service
 
 
 
 
 

 
 
                                                              163
 
          1        area.  We think it exemplifies Wells Fargo's
 
          2        outright hostility to the needs of working
 
          3        families as consumers of financial services and
 
          4        as contributors to the economic well-being of
 
          5        the bank's service.  We oppose this merger
 
          6        because it will not benefit the working families
 
          7        of this region and because we believe Wells
 
          8        Fargo has not complied with the Community
 
          9        Reinvestment Act in its current service area.
 
         10        Finally, we urge the Federal Reserve not to
 
         11        accept empty assurances from Wells Fargo.  Wells
 
         12        Fargo has a history of mischaracterizing the
 
         13        impact of its merger activities on its
 
         14        constituencies.  When Wells Fargo acquired First
 
         15        Interstate, it announced it would destroy
 
         16        only -- in quotes -- 7,200 jobs.  And then after
 
         17        the deal was done, Wells Fargo said it would
 
         18        really be 10,000 jobs.  And then it turned out
 
         19        it was really 14,000 jobs, almost twice what
 
         20        they told regulators and the public when they
 
         21        were getting approval for the merger.  The
 
         22        AFL/CIO would be pleased to work with the
 
         23        Federal Reserve in its further consideration of
 
         24        this merger to insure the Community Investment
 
         25        Act is complied with and that the interests of
 
 
 
 
 

 
 
                                                              164
 
          1        the working families in both bank service areas
 
          2        are protected.
 
          3             Thank you.
 
          4                  CHAIRPERSON SMITH:  Thank you.  We
 
          5        have Mr. Kamp speaking on behalf of Mr. Lee.
 
          6
 
          7                  MR. KAMP:  Okay.  Thank you.  Now, I
 
          8        get to wear two hats today, so -- good
 
          9        afternoon, Ms. Smith, and other members of the
 
         10        Panel.  This is the testimony of Matthew Lee,
 
         11        Executive Director of Inner City Press,
 
         12        Community on the Move of the Inner City Public
 
         13        Interest Law Center.  Together, ICP, which Marv
 
         14        Kamp with the Wisconsin Rural Development Center
 
         15        has been kind enought to present.  ICP on August
 
         16        21st filed a protest to this application based
 
         17        on Norwest's disparate lending record,
 
         18        particularly of its high interest rate,
 
         19        so-called subprime subsidiaries and based on the
 
         20        Federal Reserve Board's withholding of all
 
         21        information about Norwest's divestiture
 
         22        proposal.  The comments that Wells Fargo has
 
         23        made in California -- the commitments that Wells
 
         24        Fargo has made in California does nothing to
 
         25        address this issue.
 
 
 
 
 

 
 
                                                              165
 
          1             Norwest, the applicant here, is one of the
 
          2        largest mortgage lenders in the country.  The
 
          3        disparities in its mortgage lending record are
 
          4        troubling, particularly but not only in the
 
          5        overlap markets.
 
          6             Some examples:  In 1996 Norwest Bank Texas
 
          7        South denied 46 percent of the applications from
 
          8        Hispanics and only 7 percent of the applications
 
          9        from Whites.
 
         10             Norwest Bank, Midland, Texas denied 61
 
         11        percent of the applications from Hispanics and
 
         12        only 13 percent of the applications from
 
         13        Whites.  Norwest Bank Texas Kelly Field denied
 
         14        49 percent of the applications from Hispanics
 
         15        and only 14 percent of the applications from
 
         16        Whites.  And only 18 -- okay.
 
         17             Norwest Bank Texas denied 46 percent of the
 
         18        applications from African Americans, 40 percent
 
         19        of the applications from Hispanics and only 19
 
         20        percent of the applications from Whites.
 
         21             When ICP raised these issues in 1996,
 
         22        Norwest was acquiring Prudential Home Mortgage.
 
         23        Norwest responded with a letter dated April
 
         24        30th, 1996 to Mr. James Lyon of this Federal
 
         25        Reserve Bank of Minneapolis in which Norwest
 
 
 
 
 

 
 
                                                              166
 
          1        acknowledged that, quote, "Norwest Mortgage's
 
          2        record of minority lending is below market
 
          3        average in some markets.  To address the needs
 
          4        of the markets with high concentrations of
 
          5        minority populations, Norwest Mortgage has
 
          6        committed to hiring of a community development
 
          7        loan officer to focus on the underserved
 
          8        communities," unquote.
 
          9             Here, however, was Norwest Mortgage's full
 
         10        year 1996 lending record in the New York City
 
         11        MSA.  For full year 1996, Norwest Mortgage had
 
         12        more than twice the market share of loans to
 
         13        Whites than to African Americans, as well as a
 
         14        denial rate disparity for African Americans
 
         15        significantly above the industry average in this
 
         16        MSA.  It cannot be said that Norwest Mortgage
 
         17        denial rate disparity is explained or justified
 
         18        by greater than average outreach to the
 
         19        minorities given the market share numbers.
 
         20             Question.  Did Norwest Mortgage ever take
 
         21        steps it said it would in this April 30th, 1996
 
         22        letter to the Federal Reserve?  Was it ever
 
         23        followed up on?  Neither Norwest's application
 
         24        nor the Federal Reserve's questions to date
 
         25        address this in any detail.  Similarly, were
 
 
 
 
 

 
 
                                                              167
 
          1        Norwest's representations about improving
 
          2        Prudential Home Mortgage's lending disparities
 
          3        ever followed up on?  Our experience is no.
 
          4             Norwest Funding, Incorporated, nationwide
 
          5        in 1996 made 6,521 loans to Whites and only 228
 
          6        loans to African Americans and only 252 loans to
 
          7        Hispanics.  In the New York City MSA in 1996,
 
          8        Norwest funding made 101 loans to Whites, only
 
          9        10 loans to African Americans and eight loans to
 
         10        Hispanics.  Meanwhile, in the predominantly
 
         11        minority South Bronx of New York City, Norwest
 
         12        has opened an office of its high interest rate
 
         13        Island Finance subsidiary.  ICP members have
 
         14        been informed that Norwest's Island Finance
 
         15        office charges virtually all borrowers for
 
         16        personal loans 25 percent interest, the absolute
 
         17        maximum under New York usury prohibitions.
 
         18        Borrowers, virtually all of them protected
 
         19        class, are charged 25 percent regardless of
 
         20        their credit history.
 
         21             The public has also been denied access to
 
         22        information, assessing and commenting on this
 
         23        proposal.  Norwest has sought confidential
 
         24        treatment for all information specifying its
 
         25        divestiture proposal.  The public has a right to
 
 
 
 
 

 
 
                                                              168
 
          1        review and comment on Norwest's actual proposal,
 
          2        including its divestiture proposal.  ICP filed a
 
          3        Freedom of Information Act appeal on August
 
          4        21st, 1998.  The information has yet to be
 
          5        released.
 
          6             On the current record, this mega merger
 
          7        proposal, which would expand Norwest's
 
          8        practices, could not legitimately be approved.
 
          9             There are other adverse issues, including
 
         10        Norwest's record in its existing states, ably
 

         11        raised by the Wisconsin Rural Development Center
 
         12        and the other groups represented here today.
 
         13        For all the reasons stated, this proposed merger
 
         14        should be denied.  Thank you for your
 
         15        attention.  We will be submitting further
 
         16        comments by April -- September 24th, 1998.
 
         17        Thank you.

	
Last update: December 3, 2010