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Public Meeting Transcripts

Public Meeting Regarding Norwest Corporation and Wells Fargo & Company

Thursday, September 17, 1998

Transcript of Panel Nine

                                                            190
 
 
          7                  MR. FINN:   Good afternoon.  It's a
 
          8        pleasure to be here.  I will not say that
 
          9        it's -- I appreciate being here or thank you for
 
         10        being here because, frankly, it's my right to be
 
         11        here.  And under the laws for citizens of this
 
         12        country and as a member of the community that is
 
         13        affected by these banks -- and the unfortunate
 
         14        piece is that there are not enough public
 
         15        hearings on the public good and public policy
 
         16        regarding these mega mergers that are going on
 
         17        of which we are going to talk about today.
 
         18             I'm going to keep my remarks more in the
 
         19        area of industry concentration and market
 
         20        concentration, which is part and parcel to what
 
         21        is going on with this bank merger.  In
 
         22        particular, I'd like to talk about vertical and
 
         23        horizontal integration or conglomeration, the
 
         24        first one being the vertical piece, which is a
 
         25        policy trend that's going on in the banking
 
 
 
 
 

 
 
                                                              191
 
          1        industry which is allowing, for example,
 
          2        insurance and stocks and market portfolios to be
 
          3        integrated with lending and deposits.  And while
 
          4        the -- it's been a cautious road for the last
 
          5        two years, it appears that we're going to be
 
          6        making some wholesale decisions regarding this
 
          7        in the next few years which will make a bank to
 
          8        all instances for a community a one-stop
 
          9        shopping center for financial products.  This --
 
         10        this vertical integration or conglomeration on
 
         11        policy seems to be going on as a course in the
 
         12        banking industry, which it's basically being
 
         13        ignored in terms of the concept of regional
 
         14        markets and community markets and how that
 
         15        affects it.
 
         16             I'm going to include with that, though, the
 
         17        common measure of integration, which is the HH
 
         18        index, which you are all familiar with.  And for
 
         19        this part of my testimony I would like included
 
         20        in my previous testimony on record with the
 
         21        First Bank Marquette merger.  So I would like
 
         22        that included, which speaks to this integration
 
         23        problem regarding the HH index and the problems
 
         24        with the index, which I won't talk about today.
 
         25             The HH index, for example, for Norwest and
 
 
 
 
 

 
 
                                                              192
 
          1        First Bank, which is now Bank One in the
 
          2        Minneapolis area, has been basically ignored.
 
          3        And we now have essentially two banks owning
 
          4        more than 70 percent of the market in deposits
 
          5        in the Minneapolis area.  We'd also note from
 
          6        testimony that's out there that in certain areas
 
          7        of Nevada and other places where Wells Fargo and
 
          8        Norwest are coming together, they are actually
 
          9        going to be at market percentages well above
 
         10        that, including one community where they are
 
         11        going to own virtually 100 percent of the
 
         12        market.
 
         13             I would like to speak more to this about
 
         14        this, but the bank at this time has agreed with
 
         15        the Norwest argument that they will not disclose
 
         16        divestiture information.  And, frankly, I think
 
         17        that's unconscionable.  I think -- I think it's
 
         18        illegal.  It's unprecedented.  And for that
 
         19        reason alone, this decision should be -- should
 
         20        be stopped until that divestiture information
 
         21        can be brought out into the public in a public
 
         22        debate and can happen on it.  So in that
 
         23        particular instance, I think -- I think this
 
         24        hearing is important that it raises those
 
         25        critical issues.  And that decision of -- a
 
 
 
 
 

 
 
                                                              193
 
          1        major public policy decision like this on
 
          2        divestiture cannot happen in the dark.
 
          3             But in terms of these indexes, we need to
 
          4        be very careful because the HH index has always
 
          5        been used to measure the concentration -- the
 
          6        market concentration of banks in one community.
 
          7        But what is happening with the trends, which I
 
          8        think Wells and Norwest are probably the best
 
          9        example in the country at this time, after the
 
         10        various mergers that they've already brought
 
         11        about is the fact that they are not -- we need
 
         12        to develop a new measure which looks at market
 
         13        concentration across regions.  Because, indeed,
 
         14        I don't think it's too hard -- I don't think I'm
 
         15        really overstating myself when I say that the
 
         16        new Wells Fargo will be a market almost
 
         17        monopolist in the midwest, western regions.  And
 
         18        particularly, that's true in some markets where
 
         19        I don't think you can quibble about a monopoly
 
         20        when they own 100 percent of the business in
 
         21        those communities.
 
         22             This -- this is disturbing.  I like to
 
         23        think about this -- this type of thing as --
 
         24        using a metaphor of -- in Africa, the elephants
 
         25        where they are protected, which all of us
 
 
 
 
 

 
 
                                                              194
 
          1        believe is important and in some communities are
 
          2        actually sacred.  But for the villagers in those
 
          3        protected areas where elephants cannot be
 
          4        controlled, an elephant can walk into the
 
          5        village and can eat it or decimate it.  And they
 
          6        can be without home or livelihood or whatever.
 
          7             In the same way, Wells Fargo is going to be
 
          8        able to move across the midwest protected by
 
          9        essentially the staking out in communities with
 
         10        ATMs, protected by the fact that their deep
 
         11        pockets make it almost impossible for other
 
         12        banks to compute -- or compete in terms of
 
         13        deposit wars or to cause a competition.  And
 
         14        this is -- this is going to be devastating.
 
         15             I'm going to continue because there are
 
         16        only two of us.
 
         17                  CHAIRPERSON SMITH:  Well, we do
 
         18        have --
 
         19                  MR. FINN:  Okay.  I'll be short,
 
         20        then.
 
         21                  CHAIRPERSON SMITH:  All right.
 
         22
 
         23                  MR. FINN:  I'm very concerned that the
 
         24        Federal Reserve is abdicating its responsibility
 
         25        in this area and that it hasn't actually -- as a
 
 
 
 
 

 
 
                                                              195
 
          1        protector of the nation's banking as it's formed
 
          2        under our country's laws, has not been out there
 
          3        in the forefront wondering about these things.
 
          4        And the people from the community have to bring
 
          5        them up to them.  I think at the very least,
 
          6        given these trends that are now part of the
 
          7        public testimony, I think we have to look at
 
          8        this model and say, well, a safe course is
 
          9        something like what happened with Nations Bank.
 
         10        I think the people here that are talking about
 
         11        indexes being at a minimal level across and
 
         12        guidelines put into the Wells Fargo agreement
 
         13        that says that Wells Fargo will not essentially
 
         14        breach on the HH index in any of their
 
         15        communities above a certain minimal level is
 
         16        something important and prudent to put into this
 
         17        agreement.
 
         18             And last, I'd like to suggest that while
 
         19        everybody here that has been here today and
 
         20        testified on this has been well-intentioned and
 
         21        has told great stories.  I think you should take
 
         22        into account the people who have come here and
 
         23        told the other side, the dark side of banking
 
         24        business, the dark side of Norwest and in the
 
         25        histories, because there are courageous acts
 
 
 
 
 

 
 
                                                              196
 
          1        here.  And it's those type of things that you
 
          2        are charged to insure do not happen.  And union
 
          3        busting is something that is happening.  And I
 
          4        don't think we can turn our backs on them.
 
          5             Thank you.
 
          6                  CHAIRPERSON SMITH:  Thank you.
 
          7        Ms. Mendoza will be speaking on behalf of her
 
          8        own organization and then also of the Rapid City
 
          9        Housing Coalition.  I don't know what order.
 
         10
 
         11                  MS. MENDOZA:  Thank you.  My name is
 
         12        Lilly Mendoza and I'm the CEO of of Earth
 
         13        Walker, which is a consulting business.  And
 
         14        what I'm doing today is representing them
 
         15        organizations from Rapid City, South Dakota.
 
         16        And one of the things I'd like to share with
 
         17        you, in listening today, you hear the good and
 
         18        the bad of both.  But what I can share with you
 
         19        is what -- what we're -- what's going on in
 
         20        Rapid City and the feelings that are there of
 
         21        the people that I'm representing.  Rapid City
 
         22        has a population of 54,000 people.  Of that
 
         23        54,000 people, 9,000 are American Indian
 
         24        people.  At any one time throughout the year,
 
         25        Rapid City deals with and serves 22,000 Native
 
 
 
 
 

 
 
                                                              197
 
          1        American people.  And those individuals are
 
          2        coming in from the surrounding reservations.
 
          3        There is an Indian Health Service there that
 
          4        serves American Indian people.  And so that's
 
          5        where we draw that number from.  So the American
 
          6        Indian people really do bring a lot of revenue
 
          7        into the Rapid City area.
 
          8             One of the concerns that the people have is
 
          9        their treatment when they walk into banks and
 
         10        the feelings that they get and not feeling
 
         11        comfortable being there, as well with the 60
 
         12        percent denial in loans within the Rapid City
 
         13        area and the surrounding reservations.  So
 
         14        that's an issue as well.
 
         15             The organizations that I'm working with are
 
         16        the Rapid City Housing Coalition and an
 
         17        organization that serves young women between the
 
         18        ages of 10 and 24.  What's interesting and
 
         19        exciting and what's going on in Rapid City is
 
         20        that this organization -- these two
 
         21        organizations -- the oldest person working
 
         22        within those organizations is 27 years old.  And
 
         23        it's real exciting to me to see these young
 
         24        people that are coming out.  And they are
 
         25        sharing their concerns about their community
 
 
 
 
 

 
 
                                                              198
 
          1        because they care about their community.  And
 
          2        these individuals that work within these
 
          3        organizations come from low-income families and
 
          4        know the barriers and struggles that they need
 
          5        to get through.  And so they are willing to take
 
          6        the lead and work hard to make a difference.
 
          7             We have met with Norwest Bank.  We had an
 
          8        initial meeting August 14th at which time we
 
          9        began to discuss some possible solutions.  We
 
         10        requested some information -- some information
 
         11        from the individual and actually didn't get back
 
         12        to those organizations for about a month.  And
 
         13        we had to call the meeting again.  At that time
 
         14        then, the organizations met with the president
 
         15        of the bank.  And I was the mediator.  What's
 
         16        interesting is that when I said the word
 
         17        "mediator," he became very angry because he
 
         18        said, "We are both on the same side."  And I
 
         19        said, "That may be, but we both live on
 
         20        different sides of the tracks."  And that's the
 
         21        whole issue is that we are -- Rapid City is a
 
         22        city that is divided.  There is a west side and
 
         23        there is a north side.  And if you travel
 
         24        through our town, you can really tell the
 
         25        difference.  You can see where the low-income
 
 
 
 
 

 
 
                                                              199
 
          1        people live.  And you can tell the difference in
 
          2        parks.  So what we are saying is -- to Norwest
 
          3        is that we would like a commitment from
 
          4        Norwest.  And the merger with Wells Fargo, you
 
          5        know, if it's going to happen, it's going to
 
          6        happen and we'll be in support of that.  But
 
          7        what we're saying is that we need a commitment
 
          8        from the bank that individuals in the bank
 
          9        serving American Indian people need to really
 
         10        walk their talk and help people as far as going
 
         11        in and getting loans, because there is different
 
         12        circumstances and people deal with different
 
         13        issues coming from different walks of life.  So
 
         14        what it's really -- what it's really coming down
 
         15        to is the broken promises and making sure that
 
         16        there is follow-through.
 
         17             We have already discussed putting together
 
         18        a steering committee to work with Norwest Bank.
 
         19        Norwest Bank has stated to the organizations
 
         20        that they will take the lead in this.  We've yet
 
         21        to hear from them within the last couple weeks.
 
         22        They were supposed to call a news conference and
 
         23        they haven't done that.  So what we need is a
 
         24        commitment to our community.  Right now in the
 
         25        community they're doing, you know, a big press
 
 
 
 
 

 
 
                                                              200
 
          1        release and public relations kinds of things and
 
          2        there are billboards and there are TV ads.  And
 
          3        it's a really huge show.  Okay.  And -- but what
 
          4        we really want is commitment.  So those are the
 
          5        concerns that the organizations have from Rapid
 
          6        City.
 
          7             Thank you very much.
 
          8                  CHAIRPERSON SMITH:  Okay.  Thank you.
 
          9        And we're going -- we have other members of the
 
         10        panel who have just arrived so we will stay put
 
         11        for a while.  We have Ms. Seals from the
 
         12        Minneapolis NAACP.
 
         13
 
         14                  MS. SEALS:  Good afternoon.  Leola
 
         15        Seals, Minneapolis Branch, NAACP President.  And
 
         16        I would just like to briefly address that in the
 
         17        bank end with Norwest Bank, we have not been
 
         18        getting the loans from Northwest to the African
 
         19        American communities as we should.  Northwest
 
         20        Bank, we are asking that you support this status
 
         21        quo and not the people in poverty.  We are not
 
         22        asking for you to continue to do this.  We
 
         23        challenged this institution to step up to the
 
         24        plate and meet its community development goals
 
         25        by financially supporting the NAACP and
 
 
 
 
 

 
 
                                                              201
 
          1        endorsing a self-sufficient initiative where we
 
          2        take the lead in solving our own issues.  We are
 
          3        fed up with responses that we get that affect
 
          4        our communities.  No one knows the struggle,
 
          5        plight and solutions for our community better
 
          6        than we do.  No one deserves an opportunity to
 
          7        serve our community more than we do, since we
 
          8        live here.  We need solid commitment from the
 
          9        bank to work with us.  Remember, in most
 
         10        instances it is not the cash that we are
 
         11        speaking but mortgage commitments.  Our office
 
         12        has a large overflow of people in poverty being
 
         13        turned down for loans.  We would like for the
 
         14        bank to engage and become a partner with us and
 
         15        the NAACP.
 
         16             Thank you.
 
         17                  MS. SMITH:  Thank you very much.  If
 
         18        there are no questions, then we are going to
 
         19        take a 15-minute break.  And so we will see you
 
         20        at a little after 2:45.
 
         21
 
         22                  (Whereupon a break was taken.)


	
Last update: December 3, 2010