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Public Meeting Transcripts

Public Meeting Regarding Fleet Financial Group, Inc., and BankBoston Corporation

Wednesday, July 7, 1999

Transcript of Panel Twelve

        4            MS. ALLEYNE:  My name is Sonia Alleyne.  
          5   I'm the director of community investment for the 
          6   Massachusetts Affordable Housing Alliance. 
          7            Our question for you today isn't should the 
          8   Federal Reserve Board approve the merger of 
          9   BankBoston and Fleet.  Everyone in this auditorium 
         10   knows that the Fed will approve this merger.  The 
         11   Fed almost always approves mergers whether or not 
         12   they benefit consumers, so let us suggest a 
         13   different question:  
         14            Will the Fed use its power to require an 
         15   aggressive, detailed Community Reinvestment Act 
         16   agreement from Fleet and BankBoston?  Will the Fed 
         17   insist that low-income communities be better served 
         18   after this merger than they are now? 
         19            The Massachusetts Affordable Housing 
         20   Alliance is a statewide nonprofit organization 
         21   working to increase public and private sector 
         22   investment in affordable housing.  Our campaigns 
         23   since 1985 have resulted in over $2.2 billion in 
         24   commitments to lower-income neighborhoods throughout 
         25   the Commonwealth.  Our Grass-Roots Home Buyers Union 
  0306
          1   based in Dorchester negotiated CRA agreement with 
          2   ten area banks, including Fleet and BankBoston, for 
          3   over $500 million in below-market mortgages, 
          4   mortgage commitments, since 1990. 
          5            Fleet and BankBoston have a tremendous 
          6   opportunity to create the best urban community bank 
          7   in the country, and the Federal Reserve can help 
          8   them get there.  In Massachusetts, Fleet has a 
          9   chance to go much further in developing a model for 
         10   a true bank-community partnership. 
         11            Fleet's history in Massachusetts has been 
         12   decidedly mixed.  Fleet has demonstrated an ability 
         13   to pump out low-cost mortgages to lower-income, 
         14   first-time home buyers.  Indeed, Fleet and 
         15   BankBoston have been the leading lenders in the 
         16   state's most affordable mortgage program, the soft 
         17   second, first-time home buyers program. 
         18            On May 12 of this year, Fleet and 
         19   BankBoston pledged to make 1100 of these mortgages 
         20   in Boston before 1200 people, community residents at 
         21   a MAHA meeting in the athletic center in Roxbury.  
         22   But yet, as UMass Professor Jim Campen points out in 
         23   his recent study, Fleet has fallen far short of 
         24   meeting the goal of one plus one equals two in 
         25   mortgage lending to minority and low- and 
  0307
          1   moderate-income borrowers after their merger with 
          2   Shawmut Bank in 1995. 
          3            We have asked Fleet to commit another 1500 
          4   soft second mortgages outside of Boston over the 
          5   next five years.  If they do this, one plus one will 
          6   be greater than two in this program, which has both 
          7   lower than normal delinquency rates and saves home 
          8   buyers up to $200 a month. 
          9            Fleet should build on the success of 
         10   BankBoston, which has shown the country how to make 
         11   an urban branch network profitable through its First 
         12   Community Bank.  Fleet must challenge all of its 
         13   executives to add innovation and flexibility to 
         14   their game plan in urban neighborhoods. 
         15            BankBoston, during its merger with BayBank, 
         16   made an impressive statement about innovation when 
         17   they agreed to convert the $90 million loan 
         18   commitment to the Massachusetts Housing Partnership 
         19   to $10 million in equity contribution. 
         20            For the past year and a half, Fleet has 
         21   looked at this possibility but ultimately rejected 
         22   it.  Now Fleet has another chance.  This merger will 
         23   result in a loan commitment of somewhere between 
         24   $300 million and $600 million to MHP.  In today's 
         25   market, developers need more equity.  Fleet can help 
  0308
          1   solve the equity gap, and the Federal Reserve can 
          2   help them get there.  Fleet and BankBoston can 
          3   welcome lower-income customers instead of driving 
          4   them into the greedy arms of check cashers. 
          5            The Massachusetts Community and Banking 
          6   Council has developed a Basic Banking for 
          7   Massachusetts Program which established minimum 
          8   criteria for qualifying low-cost checking and 
          9   savings accounts.  Both Fleet and BankBoston 
         10   participate in the program, but more needs to be 
         11   done.  It is not just enough to have an account; you 
         12   must market it. 
         13            Fleet should build on the success of the 
         14   marketing campaign done by BayBank in 1994 and 1995 
         15   and make a commitment to open 42,000 new basic 
         16   banking accounts for low-income consumers in 
         17   Massachusetts over the next two years.  Fleet can do 
         18   this, and the Federal Reserve can help them get 
         19   there.  Fleet and BankBoston can create a new model 
         20   for megamergers. 
         21            Fleet did not use its press conference on 
         22   March 14, 1999, to hype a multibillion dollar CRA 
         23   plan that would have been meaningless and hopelessly 
         24   short on details as other banks have done.  Fleet 
         25   then decided to meet with 125 groups in 30 days to 
  0309
          1   listen to suggestions from community banks and 
          2   organizations. 
          3            Last week, however, Fleet unveiled to the 
          4   community groups a $14.6 billion plan that was short 
          5   on details.  Yesterday, Fleet filled in some but not 
          6   all of these details.  It is still a work in 
          7   progress.  Fleet has listened to some of our 
          8   concerns, but Fleet's work is not done. 
          9            We join other groups throughout the 
         10   Northeast in asking the Federal Reserve Bank to 
         11   extend the comment period for a period of two weeks, 
         12   or as Congressman Capuano says, for 30 days, fine 
         13   with us, from the date on which Fleet delivers its 
         14   final plan to the community groups.  Fleet needs to 
         15   made make a statement to the community and others 
         16   that bigger can be better. 
         17            This agreement should push Fleet to do 
         18   more.  Fleet should assure that one plus one is 
         19   greater than two, as stated by Terry Murray and Chad 
         20   Gifford when they announced the megamerger.  And 
         21   Fleet and the community groups should demand and 
         22   expect mutual accountability, and you can help us 
         23   get there. 
         24            Do not approve this merger until or unless 
         25   Fleet agrees to sign a detailed, verifiable CRA 
  0310
          1   agreement that meets the needs identified by 
          2   community organizations throughout the Northeast.  
          3   And with your help, we can get there. 
          4            Thank you. 
          5            MR. CALLAHAN:  Thank you.  My name is 
          6   Thomas Callahan.  I'm from the Mass. Affordable 
          7   Housing Alliance.  I will be very brief. 
          8            Fleet has told us -- Fleet and BankBoston 
          9   told us this morning a lot about the merger, what 
         10   will happen after this merger, but there is a lot 
         11   more that we don't know about this merger. 
         12            Some of the questions we still have are:  
         13   What is Fleet's commitment?  What will Fleet's 
         14   commitment to the statewide soft second mortgage 
         15   program that Sonia talked about, what will it be?  
         16   Will they convert the MHP loan commitment to an 
         17   equity commitment as is needed by rental housing 
         18   developers?  How many basic banking accounts will 
         19   Fleet open in Massachusetts over the next two years? 
         20            Will Fleet continue to fund post-purchase 
         21   homeowner counseling and foreclosure prevention that 
         22   is so needed in this era of trying to create 
         23   sustainable home ownership?  How many loans and 
         24   housing tax credits in Massachusetts will Fleet 
         25   invest in?  Will they be members of the Federal Home 
  0311
          1   Loan Bank? 
          2            I could go on and on.  There are too many 
          3   unanswered questions for the Federal Reserve Board 
          4   to approve this measure at this time. 
          5            One last comment I would have is we have 
          6   seen a couple of large panels with one minute each 
          7   talking about supporting this merger.  It is 
          8   interesting to watch those panels as they come up 
          9   and speak.  By my observation, most of those folks 
         10   talked about grants and charitable contributions. 
         11            In 1977, CRA was not passed because 
         12   community groups complained they couldn't get a 
         13   grant from a bank.  I respectfully submit to those 
         14   organizations that this is not about charity, this 
         15   is not about grants.  This is about investments, and 
         16   we should keep the focus, and hopefully the Federal 
         17   Reserve will keep the focus, on loans and 
         18   investments that the banks can make, not about 
         19   charitable contributions. 
         20            HEARING OFFICER SMITH:  Thank you very 
         21   much. 
         22            Mr. Lozada.
         23            MR. LOZADA:  Thank you for your 
         24   consideration and having me speak today.  Good 
         25   afternoon.  My name is John Lozada, and I'm an 
  0312
          1   attorney in private practice with a law firm called 
          2   Sessa Glick Quiroga & Hibbard in Boston, 
          3   Massachusetts, where I serve clients on small 
          4   business matters, employment discrimination, 
          5   education law, real estate law, and general legal 
          6   concerns. 
          7            My focus as an attorney has been to use the 
          8   legal profession to help build infrastructure  
          9   principally within the Latino community in 
         10   Massachusetts.  And I have been fortunate to join a 
         11   law firm that both respects my career choices and 
         12   plays a major role in community economic development 
         13   in the field of affordable housing.  
         14            By way of background, I was raised in 
         15   public housing in East Harlem, New York, by a 
         16   single-parent mother.  I'm of Puerto Rican and 
         17   Mexican heritage and reflect the third generation of 
         18   my family to live in the United States.  I have 
         19   studied, worked and lived in eastern and western 
         20   Massachusetts for over 24 years, during which time 
         21   I've come to know much of the infrastructure of 
         22   Massachusetts and the Latino community of this 
         23   Commonwealth. 
         24            I have been president of the Massachusetts 
         25   Association of Hispanic Attorneys and have served on 
  0313
          1   the Board of the Massachusetts Chapter of the 
          2   National Congress of Puerto Rican Rights, a 
          3   statewide grass-roots network.  My experience has 
          4   taught me to value, respect and encourage diversity, 
          5   achievement, and ethics across dimensions of 
          6   difference, poverty, wealth, power, humility and 
          7   integrity.  
          8            I am here today to speak against the 
          9   proposed measure of the Fleet Bank and BankBoston as 
         10   it is currently before the Federal Reserve Bank.  My 
         11   reasons for opposing this merger are fourfold. 
         12            First, I am deeply troubled by the overall 
         13   lack of cultural competency and commitment of Fleet 
         14   Bank and of the proposed merged bank and the Fleet 
         15   Bank's lack of vision into the multicultural 
         16   character, potential, and needs of the Latino 
         17   community. 
         18            Second, based on my experience and the 
         19   experience my law firm, the lack of lending done by 
         20   Fleet Bank in the area of affordable housing 
         21   development causes grave concern for the future.  
         22   And, frankly, billion dollar promises without 
         23   substantive written commitments should not suffice 
         24   for the Fed to approve this merger, based on Fleet 
         25   Bank's track record on similar promises, which are 
  0314
          1   well documented. 
          2            Third, based on my experience and belief, 
          3   Fleet Bank and BankBoston must be challenged by the 
          4   Federal Reserve Bank to quantify and revise their 
          5   proposed $15 million investment towards technical 
          6   assistance in low- and moderate-income areas, 
          7   because that figure, spread across the states 
          8   Fleet-Boston will serve, will not meet the needs of 
          9   the Latino community to sustain technical support in 
         10   the area of business development. 
         11            Fundamentally, it is the lack of 
         12   understanding about how businesses function in this 
         13   country which poses the most daunting challenge to 
         14   the development of effective Latino businesses and 
         15   communities in Massachusetts. 
         16            Fourth, it is my perception and belief that 
         17   Fleet Bank and BankBoston have presented no position 
         18   on how their commitment to community reinvestment 
         19   will help to combat the reluctance of Latinos to use 
         20   commercial banking services and reduce our 
         21   communities' excessive reliance on check-cashing 
         22   institutions.
         23            Finally, while I am in opposition to the 
         24   proposed merger of Fleet Bank and BankBoston as 
         25   currently presented, I see great potential for this 
  0315
          1   merger to make a major positive difference for many 
          2   citizens and residents in Massachusetts, 
          3   particularly among Latinos, who have the gift of 
          4   their multiculturalism but have been most left out 
          5   of the economic boom that is shaping Massachusetts 
          6   and this nation. 
          7            Unfortunately, it is certain that the Fleet 
          8   Bank and BankBoston merger seeks, in Fleet Chairman 
          9   Terry Murray's words today, to be able to meet the 
         10   sophisticated needs of consumers.  How does CEO 
         11   Murray respond to the question of the needs of 
         12   Latino borrowers who may not be as sophisticated as 
         13   he might like, but who are in dire need of access to 
         14   the resources that his megabank has to offer? 
         15            How many Latinos own a computer, how many 
         16   have achieved high school or college educations, and 
         17   how many have dared to dream of careers or 
         18   professions?  In Massachusetts, a state with an 
         19   estimated 500,000 Latino population, the Latino 
         20   community is the largest minority population in this 
         21   Commonwealth. 
         22            Our numbers are explosive, as is our need 
         23   for education, leadership development, mentorship, 
         24   and finances.  These are the needs that must be met 
         25   for the Latino community to become self-reliant, 
  0316
          1   visionary and successful in this society, and the 
          2   Fleet Bank-BankBoston merger fails to address any of 
          3   these questions. 
          4            What has Fleet Bank done with respect to 
          5   the Latino community along the lines I have 
          6   mentioned?  It is hard to say.  I know that they 
          7   have supported parties and cultural events, as have 
          8   many other banks and institution in this state.  I 
          9   know that they have promised $25 million in 
         10   charitable contributions upon the merger.  And this 
         11   appears to be a large figure, but based on what 
         12   economy of scale? 
         13            The Latino community needs service, 
         14   assistance and meaningful access to resources, not 
         15   simply charity.  How many small business loans has 
         16   Fleet Bank made within the Latino community?  What 
         17   is the experience of Latino borrowers in seeking 
         18   loans from Fleet Bank?  How difficult is it for 
         19   Latino businesspeople to meet the lending 
         20   requirements of Fleet Bank?  What flexibility 
         21   commitment has Fleet demonstrated in its lending 
         22   practices?  How many among the 500,000 Latinos in 
         23   this Commonwealth even realize that this merger is 
         24   pending, and what has Fleet Bank's outreach to the 
         25   Latino community been?
  0317
          1            There was apparently an outreach to 125 
          2   community groups.  How many of those groups were 
          3   within the Latino community and how many Latino 
          4   leaders are reflected in these hearings today? 
          5            The fundamental reality is that the Latino 
          6   community must be included as a player.  If we are 
          7   ignored, if we are not brought into these decisions 
          8   and processes that affect our lives, then as a 
          9   community, we will never be a fully contributing 
         10   member of this society.  Fleet Bank and BankBoston 
         11   have the power, if not the will, to accomplish 150 
         12   billion times what I could ever achieve in my 
         13   lifetime. 
         14            I respectfully implore the Federal Reserve 
         15   Bank, please delay your approval.  Make these banks 
         16   account to my community.  Make them answer to the 
         17   questions I have posed.  And make them put their 
         18   commitment into writing. 
         19            Thank you.
         20            HEARING OFFICER SMITH:  Now, Mr. Hacobian, 
         21   Ms. Gonzales Levine, are you sharing your time, or 
         22   is just one of you speaking?
         23            MR. HACOBIAN:  We're sharing our time. 
         24            MS. GONZALES LEVINE:  Good afternoon.  My 
         25   name is Rita Gonzales Levine.  I'm the chairman of 
  0318
          1   Urban Edge Housing Corporation, a nonprofit housing 
          2   development and economic development corporation in 
          3   Jamaica Plain and Roxbury sections of Boston.  Thank 
          4   you for the opportunity to testify regarding the 
          5   proposed merger. 
          6            This testimony is informed by recent 
          7   meetings and conversations with representatives of 
          8   the two banks and includes our initial reactions to 
          9   a document entitled "Community Commitment:  A 
         10   Proposal for the Fleet Boston Transaction," dated 
         11   June 22, 1999. 
         12            As we will detail later, both Fleet and 
         13   BankBoston have been strong partners for Urban Edge 
         14   during the past several years.  In fact, Urban 
         15   Edge's history goes back nearly 25 years with both 
         16   banks, if we include banks that have merged with or 
         17   been acquired by Fleet and BankBoston.  Urban Edge's 
         18   success of the past 10 to 15 years would have been 
         19   impossible without the strong partnership with Fleet 
         20   and BankBoston. 
         21            We ask you for your support for the 
         22   following four requests that we have already made to 
         23   Fleet and BankBoston in our recent meetings with 
         24   their representatives. 
         25            No. 1:  We must monitor the impact of the 
  0319
          1   Fleet-Boston merger on Boston's neighborhoods and 
          2   ensure that the City and its neighborhoods gain and 
          3   not lose ground.  We must work together to determine 
          4   the best indicators for this effort, and we must 
          5   have a way of measuring and reporting the impact 
          6   credibly and consistently over time. 
          7            We urge, secondly, that there be a written 
          8   agreement between Fleet Boston and coalitions of 
          9   community groups and public sector entities.  Urban 
         10   Edge is a signatory to the proposal submitted to 
         11   Fleet and BankBoston by the MACDC, the Massachusetts 
         12   Affordable Housing Alliance, and the Organization 
         13   for a New Equality. 
         14            An agreement or comparable written 
         15   statement is important for several reasons.  First, 
         16   an agreement will clearly articulate the commitments 
         17   being made by the banks.  Second, it will provide 
         18   details to be monitored and, if necessary, adjusted 
         19   over time.  Third, with the possibility that the new 
         20   bank may itself merge with another bank in the 
         21   future, commitments contained in a written agreement 
         22   have a greater likelihood of surviving future bank 
         23   consolidations. 
         24            We urge that the commitment of the merged 
         25   bank to the Mass. Housing Partnership Fund be 
  0320
          1   converted to equity.  There is a critical need for 
          2   resources to produce and preserve affordable rental 
          3   housing in Boston and throughout Massachusetts.  
          4   With reductions in federal and state rent subsidies, 
          5   we find it difficult to use loan capital for 
          6   affordable rental housing production.  The estimated 
          7   $30 million to $50 million in equity that the 
          8   proposed merger could yield would go a long way to 
          9   help meet the urgent affordable housing needs of 
         10   Boston and its neighborhoods. 
         11            Lastly, we ask that the Eggleston Square 
         12   branch of Fleet Bank remain with Fleet-Boston and be 
         13   exempt from divestiture.  We urge that Fleet and 
         14   BankBoston branches that were established as a 
         15   result of negotiations with the Community Investment 
         16   Coalition be considered in a special category of 
         17   branches.  Two of these branches are located in the 
         18   Urban Edge service area.  We are pleased that the 
         19   BankBoston branch in Hyde Square will continue to 
         20   operate as part of the Fleet-Boston system. 
         21            The Fleet branch in Eggleston Square is the 
         22   first bank branch ever in this neighborhood and was 
         23   opened as part of the commitment to take over Bank 
         24   of New England.  The Eggleston Center development 
         25   was made possible by the Fleet commitment to open 
  0321
          1   this branch and led to considerable economic 
          2   development in the Eggleston Square area. 
          3            With the sale of this branch, Fleet-Boston 
          4   risks sending a message to the community that its 
          5   needs are not as important anymore.  We believe this 
          6   is not the intention of either bank.  We are told 
          7   that it is a regulatory requirement. 
          8            If the branch must be sold, we urge that 
          9   the purchasing bank be required to commit to 
         10   continue to operate the branch and continue the 
         11   important position the Fleet branch has gained in 
         12   the community during the past seven years.
         13            HEARING OFFICER SMITH:  Would you take 
         14   about a minute. 
         15            MR. HACOBIAN:  Yes.  I'll wrap up.
         16            I'm Mossik Hacobian, also from Urban Edge. 
         17            In response to the package that we received 
         18   a couple of weeks ago, we understand there's a new 
         19   interpretation of the initial statement of one plus 
         20   one equals greater than two. 
         21            As we understand, we are to measure that by 
         22   the performance of the BankBoston-Fleet merger, the 
         23   merged entity, plus the incoming bank.  This is a 
         24   more practical, perhaps, interpretation of what was 
         25   initially announced, but it requires a much more 
  0322
          1   complicated monitoring process and implementation, 
          2   which we urge the Fed to require both the merging 
          3   banks and the incoming bank to commit to monitor and 
          4   implement. 
          5            I would like to stress that, as Rita said 
          6   earlier, a great deal of success has been achieved 
          7   in our neighborhood with Fleet and BankBoston's 
          8   commitments.  The Eggleston branch -- the Fleet Bank 
          9   branch in Eggleston Square started the whole 
         10   revitalization effort that continues. 
         11            BankBoston was the major contributor to the 
         12   CDC Tax Rate Collaborative Fund with a $625,000 
         13   grant, which with Fleet's $200,000 grant and the 
         14   former BayBank $200,000 loan together make up more 
         15   than half of this $2 million fund which we're using 
         16   to invest in the growth of existing businesses and 
         17   incoming new businesses.  Both banks have 
         18   contributed to production of thousands of units of 
         19   affordable housing. 
         20            We think all of this can continue, but it 
         21   can be achieved better and monitored more 
         22   effectively with a written agreement that we can all 
         23   follow over the years to come. 
         24            Thank you.
         25            HEARING OFFICER SMITH:  Thank you very 
  0323
          1   much. 
          2            Staying with the order on the agenda, I 
          3   would like to go to Mr. Hudson. 
          4            MR. HUDSON:  Good afternoon.  My name is 
          5   Ozell Hudson, Jr.  I am the executive director of 
          6   the Boston Lawyers Committee for Civil Rights.  I am 
          7   here on behalf of my client, the client of the 
          8   Lawyers Committee, the Fair Housing Center of 
          9   Greater Boston. 
         10            Fist of all, I want to thank you for this 
         11   opportunity and thank many of the other panelists 
         12   who spoke earlier, especially those who urged some 
         13   study, some conditions be considered by the Federal 
         14   Reserve Board before approving this merger. 
         15            I want to specifically adopt and affirm 
         16   both the prior oral and written comments that were 
         17   offered by Senator Dianne Wilkerson, as well as the 
         18   written objections of the inner city press regarding 
         19   Fleet's diminished lending, mortgage lending, 
         20   especially to communities of color. 
         21            Now, basically, my theme is this, and we 
         22   don't have a lot of time:  It's basically that due 
         23   to Fleet's predatory and racially discriminatory 
         24   mortgage lending practices and history, it is 
         25   imperative that the Federal Reserve Bank use its 
  0324
          1   regulatory authority under the Community 
          2   Reinvestment Act to establish the parameters by 
          3   which the Fleet-BankBoston merger may be approved.  
          4   I most certainly think that it will probably be 
          5   approved, but I think that there should be some 
          6   strong conditions. 
          7            Now, I'm not here to bury Fleet.  I can't 
          8   do that; it's too big a behemoth.  But I am here to 
          9   praise it.  I want to praise it for all its 
         10   charitable contributions, and I want to give it all 
         11   the recognition it deserves for its long history and 
         12   pattern of racial discrimination in communities of 
         13   color across the Commonwealth, in New England, and 
         14   in my home state of Georgia. 
         15            Because I know that in the early '90s, I 
         16   personally directed attorney friends of mine to 
         17   proceed with negotiating with Michael Bowers, the 
         18   Attorney General in Georgia, to take up the case 
         19   against Fleet, to solicit Michael Bowers' help.  And 
         20   sure enough, as reported right here in the Federal 
         21   Reserve's own publication, Fleet settled the case, 
         22   home improvement fraud of what, $120 million, 18,000 
         23   borrowers. 
         24            That was just only one case.  There was 
         25   another case in Augusta.  Then later on, they 
  0325
          1   settled one with the Department of Justice for 
          2   multimillion dollars, and that's how Bruce Marks got 
          3   his money.  I was surprised to see him standing up 
          4   here this morning, but welcome on board the 
          5   struggle. 
          6            I'm here to praise Fleet for its long 
          7   history of doing it in very legal ways, doing it in 
          8   ways through its subsidiary, Fleet Investment 
          9   Mortgage Company -- I'll get it right eventually in 
         10   terms of the name, but they know who I'm talking 
         11   about -- and after Fleet made billions of dollars 
         12   through this company, then they sold it off, got rid 
         13   of that dirty laundry.  They made billions of 
         14   dollars.  They settled those cases.  What's the 
         15   price of doing discrimination in America today?  
         16   What's the risk? 
         17            In other words, Fleet made a conscious 
         18   choice, I believe, that is, how much can we get away 
         19   with, and how much are we willing to pay for it?  
         20   And then it got to the point that they felt they 
         21   paid enough, they unloaded that baggage, and that 
         22   was that subsidiary. 
         23            So let's not be here to bury Fleet.  No, 
         24   we're here to praise them for all their racially 
         25   discriminatory practices. 
  0326
          1            Now, moving forward, where we need to get 
          2   to on this thing is the Federal Reserve Board 
          3   definitely needs to set some parameters, not only to 
          4   guide this merger, but any of the other megamergers 
          5   that are going to come forward in the future that 
          6   will speak to mergers in this area. 
          7            So, basically, my theme is that, and I want 
          8   to say this:  Not only was it the mortgage lending  
          9   discrimination, it was the home improvement fraud, 
         10   because Fleet is saying, "Let the mortgage companies 
         11   take up the slack." 
         12            But these mortgage companies are predators.  
         13   They wouldn't stay in business unless they were 
         14   getting lines of credit from the banks.  And we have 
         15   dealt with the cases where there was one mortgage 
         16   company -- well, it was nine of them, Resource, 
         17   Incorporated, each one of them set up to get a 
         18   different line of credit from a specific bank.  And 
         19   Fleet settled cases in that regard as well. 
         20            Also more importantly, why we need this 
         21   written agreement, Fleet, when it acquired the Bank 
         22   of New England, the Bank of New England had $100 
         23   million offered to the community to resolve the 
         24   Community Reinvestment Act services.  Fleet acquired 
         25   it.  It rejected that $100 million commitment, 
  0327
          1   walked away from it, had a side deal with Mayor 
          2   Flynn over some $11 million. 
          3            Yes, we need a written, enforceable, 
          4   specific agreement broken down by geographical area, 
          5   types of financial services that will be offered, 
          6   who is to benefit, what is to be the vehicle for the 
          7   delivery of those services, how it's to be 
          8   structured.  And that's the important theme in order 
          9   to bring this matter to some type of wholesome, 
         10   conclusive end. 
         11            Thank you very much.
         12            HEARING OFFICER SMITH:  Ms. Malmstrom.
         13            MS. MALMSTROM:  Tough act to follow. 
         14            My name is Cathy Malmstrom.  I'm the 
         15   banking and housing organizer for New Jersey Citizen 
         16   Action, which is New Jersey's largest consumer 
         17   watchdog coalition with 90 affiliate organizations 
         18   and 60,000 individual and family members.  A 
         19   sampling of the names of our organizations is 
         20   included in the written testimony.  I won't list 
         21   them here. 
         22            In the last 13 years, Citizen Action has 
         23   negotiated written CRA agreements with 28 banks 
         24   across the state, including the largest and smallest 
         25   institutions.  As a result of these agreements, more 
  0328
          1   than $8 billion has been set aside for below-market 
          2   interest mortgages and home improvement loans for 
          3   low- and moderate-income families, loans to 
          4   nonprofit developers for construction and permanent 
          5   financing, and loans to small businesses owned by 
          6   women and minorities in low- and moderate-income 
          7   areas. 
          8            Through 16 loan counseling offices located 
          9   in urban areas throughout New Jersey, Citizen Action 
         10   offers free loan counseling to low- and 
         11   moderate-income, first-time home buyers, as well as 
         12   home improvement counseling.  Two of these offices, 
         13   by the way, are cosponsored by Fleet Bank. 
         14            In order to help banks reach targeted 
         15   populations, Citizen Action has worked to develop 
         16   and help market special products such as loans for 
         17   lead abatement and disabilities access remodeling. 
         18            Because Fleet Bank has not been 
         19   particularly forthcoming with regard to its overall 
         20   CRA pledge, and has given absolutely no indication 
         21   of what portion of its overall pledge will be 
         22   allocated to the State of New Jersey, Citizen Action 
         23   is requesting that the public comment period on this 
         24   merger be extended at least two weeks from the day 
         25   that Fleet submits a final and specific pledge. 
  0329
          1            Moreover, we request that the merger 
          2   approval be denied unless the CRA loan and 
          3   investment commitment of the merged bank is greater 
          4   than the current level of CRA loans and investments 
          5   of the two separate banks. 
          6            When two powerful banks merge, the 
          7   resulting synergy creates an entity more powerful 
          8   than the sum of its parts.  Nevertheless, the record 
          9   has shown that big bank mergers often result in 
         10   lower levels of lending to low- and moderate-income 
         11   communities than before a merger. 
         12            To assure that low- and moderate-income 
         13   communities are not harmed by this merger, there 
         14   must be a public pledge to increase the commitment 
         15   to the community by more than the sum of the two 
         16   entities' previous investments.  One plus one must 
         17   equal more than two. 
         18            Fleet Bank rose to prominence in New Jersey 
         19   with the 1996 acquisition of NatWest, a bank with an 
         20   excellent record of commitment to low- and 
         21   moderate-income communities in our state.  Fleet is 
         22   currently the fourth largest bank in the state, but 
         23   has had to struggle to bring up its level of lending 
         24   to low- and moderate-income communities. 
         25            In 1995, Fleet, Shawmut and NatWest were 
  0330
          1   all actively lending to single-family borrowers in 
          2   New Jersey.  Combined, they issued a total of 5,344 
          3   loans.  By the end of 1997, more than a year after 
          4   Fleet had acquired both banks, Fleet Bank made only 
          5   3,572 loans to single families in New Jersey. 
          6   Lending to black and Hispanic households had 
          7   decreased by 32 percent and 29 percent respectively, 
          8   and loans to low- and moderate-income borrowers and 
          9   census tracts had decreased about 40 percent. 
         10            During that time, communication between New 
         11   Jersey and Fleet's home bases in Boston and in 
         12   Providence had more static and was less frequent 
         13   than that between the planet Naboo and the Imperial 
         14   City on the planet Corescat.  We sent out signals 
         15   but got no help. 
         16            Fleet's New Jersey CRA staff had little 
         17   authority of their own, and lines between our 
         18   outpost and home base often seemed to be down.  
         19   Since September 1996, New Jersey Citizen Action has 
         20   had a letter of understanding with Fleet, which we 
         21   considered to be an agreement, as it contains 
         22   specific loan products and lending goals for New 
         23   Jersey. 
         24            Fleet Bank has already indicated to us -- 
         25   and this is at one face-to-face meeting and at least 
  0331
          1   two phone calls -- that it will not renew this 
          2   letter when it expires in September, because the 
          3   expiration would probably occur before the merger is 
          4   completed. 
          5            During the past year, the bank has made 
          6   some progress in meeting goals of this agreement, 
          7   but only with lots of hard work, guidance, and 
          8   direct participation of community organizations.  
          9   The bank put together a new team and seems to be 
         10   moving forward, but it took almost two years to get 
         11   a strong program underway. 
         12            Because there was a New Jersey plan up and 
         13   running, we were finally able to get Fleet to pay 
         14   attention to the people in our state and figure out 
         15   how to serve them.  Considering the history, we are 
         16   very uneasy about Fleet's unwillingness to define 
         17   its pledge to New Jersey before this merger. 
         18            Admittedly, if you look at raw numbers, 
         19   Fleet's 1998 lending throughout the state has almost 
         20   tripled its 1997 record.  We're not going to hide 
         21   that.  But much of this activity may be attributed 
         22   to the flurry of refinancing activity, more than 
         23   four times the level of 1997. 
         24            Let me skip to the end.  We respectfully 
         25   request that the Federal Reserve extend the public 
  0332
          1   period at least two weeks from the time the bank 
          2   makes its detailed CRA pledge public and further 
          3   request that, before any merger is approved, Fleet- 
          4   BankBoston's total commitment be required to exceed 
          5   the sum of the individual banks' previous 
          6   commitments. 
          7            Please keep in mind that each affected 
          8   state must know what the monetary pledge to that 
          9   state will be.  Our Fleet contacts keep telling us 
         10   that the bank will be doing, quote, business as 
         11   usual, unquote.  Considering the troublesome record 
         12   of Fleet's activities in New Jersey, that may not be 
         13   an entirely comforting promise. 
         14            And there are details with regard to some 
         15   things in Jersey City and other figures that are in 
         16   the written testimony. 
         17            HEARING OFFICER SMITH:  Thank you very 
         18   much.  We appreciate it.
         19            Ms. Pearson.  If you can just pull the mike 
         20   to you. 
         21            MS. PEARSON:  My name is Susan Pearson.  
         22   I've worked as a program developer and 
         23   psychotherapist for 25 years, ten of them in the 
         24   Action Center in South Boston. 
         25            In my work, I've been profoundly moved by 
  0333
          1   the courage and generosity of those whom I've known.  
          2   I've seen people struggle to stretch too limited 
          3   funds in the hope that their children might thrive.  
          4   I've seen them conduct these tasks with dignity and 
          5   spirit, despite the undermining messages around them 
          6   which measure worth by wealth and blame them for 
          7   their economic status as being too lazy, too 
          8   unworthy, or too inadequate to pull themselves up by 
          9   their presumably accessible bootstraps. 
         10            I am here today to advocate for affordable 
         11   housing, and more precisely, I am here to advocate 
         12   for affordable housing which is affordable for 
         13   people of low income.  Much affordable housing 
         14   requires an income of at least $30,000 to $60,000.  
         15   Very few of those I know in South Boston earn this 
         16   much money. 
         17            The circumstance of poverty makes 
         18   everything more difficult.  Neighborhood grocery 
         19   stores, often the only option for those without a 
         20   car or cab fare, charge more money for food.  Public 
         21   transportation can be slow and unpredictable, and 
         22   often child care, schools, workplaces, and homes are 
         23   located far from one another.  And now rent is 
         24   becoming more costly than people can even consider 
         25   paying.  There is no way that careful budgeting or 
  0334
          1   fiscal counseling can alter the fact that there is 
          2   not enough money to cover a family's needs for food 
          3   and shelter. 
          4            I hear that we in this country are in the 
          5   midst of an exceptional economic surge.  Business 
          6   Week reports that the annual salary of top U.S. 
          7   executives is now 419 times the annual wages of 
          8   their company's lowest paid workers.  I do not see 
          9   this income trickling down as has been anticipated. 
         10            I can assure you that our country's lowest 
         11   paid workers do not work 400 times less hard, nor do 
         12   they perform functions which are 400 times less 
         13   valuable, nor do they love and want to provide their 
         14   children 400 times less than do the highest paid 
         15   workers. 
         16            According to National Low-Income Housing 
         17   Coalition figures, the hourly wage necessary for a 
         18   two-bedroom apartment in Boston is $16.82.  This is 
         19   326 percent of the federal minimum wage.  At minimum 
         20   wage, a worker would have to work 130 hours per week 
         21   to afford the 1998 fair market rent of $822.  
         22   Assuming a person worked seven days per week, that 
         23   would leave five hours per day to divide among such 
         24   activities as sleep, quality time with children, 
         25   errands, appointments, and transportation. 
  0335
          1            If we are the most prosperous country in 
          2   the world, experiencing one of the most prosperous 
          3   times in our history, what does it say about us as a 
          4   people that so many of our citizens are being forced 
          5   into homelessness or abysmally substandard housing, 
          6   not only despite that prosperity but to a large 
          7   extent because of it. 
          8            Money is flowing into South Boston as 
          9   waterfront development plans progress.  Three-family 
         10   houses are being purchased for $300,000, broken up 
         11   into condominiums, and sold for $300,000 for each 
         12   condominium.  This will ultimately eliminate 
         13   middle-income residents as tax rates soar. 
         14            And now those with the lowest incomes are 
         15   facing homelessness.  Apartments in the lowest 
         16   rental sections of town are listed for such rents as 
         17   $1200 per month for a one-bedroom apartment.  Most 
         18   people in this area do not bring home that amount in 
         19   a month, and many are in need of more than one 
         20   bedroom.  People who have lived in their apartments 
         21   for decades are being advised by landlords that 
         22   their rents will double. 
         23            Many public housing residences already 
         24   underfunded, and, as a consequence, in great 
         25   disrepair, are vacant and await demolition.  Some of 
  0336
          1   the remaining public housing buildings are scheduled 
          2   to become mixed-income residences, again, decreasing 
          3   the number of available low-income residences 
          4   available. 
          5            Not only are people despairing at the 
          6   fragmentation of their communities brought on by 
          7   this phenomenon, but those who resign themselves to 
          8   relocating to another area are discovering a similar 
          9   upsurge in rental prices elsewhere. 
         10            I cannot imagine where people are going to 
         11   live.  For those in our culture who cannot afford 
         12   affordable housing, I am asking for equity so they 
         13   might create homes which are safe, healthy, and 
         14   nurturant sources of strength for meeting their 
         15   tasks in the larger world. 
         16            Over the past several months, organizations 
         17   have tried to develop plans for community investment 
         18   with banks, and the banks have refused to spell out 
         19   their intentions.  I urge you to require banks to 
         20   develop precise plans and to do so in close 
         21   consultation with community organizations.  I am 
         22   asking that if this merger is approved, that the 
         23   Federal Reserve require a dollar commitment per city 
         24   for low-cost housing and mortgages before it 
         25   approves the merger. 
  0337
          1            In the long term, such investment is good 
          2   for the bottom line.  Beyond the bottom line and the  
          3   self-interest, it is our caring and our generosity 
          4   which will create a world we want to live in and 
          5   model the image of humanity our children will 
          6   follow. 
          7            In South Boston, the same people --
          8            HEARING OFFICER SMITH:  Wrap up, Ms. 
          9   Pearson. 
         10            MS. PEARSON:  I'll stop there. 
         11            HEARING OFFICER SMITH:  Thank you very 
         12   much.
         13             Thank you very much for coming to share 
         14   your views with us.  We appreciate it.  And make 
         15   sure that we have your written statements for the 
         16   record.
         17            On this next panel, we have five minutes 
         18   with each organization.  Are we starting with Ms.  
         19   Bodington?


	
Last update: December 3, 2010