Public Meeting Transcripts
Public Meeting Regarding Fleet Financial Group, Inc., and BankBoston Corporation
Wednesday, July 7, 1999
Transcript of Panel Seven
18 MS. FEINGOLD: My name is Ellen Feingold, 19 and I'm president of Citizens' Housing and Planning 20 Association. Thank you for providing us with the 21 opportunity to testify today. I'm also here as the 22 developer and manager of a large nonprofit 23 organization that provides housing for very 24 low-income elderly and another that provides housing 25 for homeless elderly. I am on the ground as well as 0182 1 being representing a large organization. 2 CHAPA was established in 1967. It's a 3 nonprofit organization that advocates for the 4 production and preservation of affordable housing 5 for low-income people. Our membership of 1500 is 6 made up of a broad range of interests, including 7 housing providers and developers, tenants, advocacy 8 organizations, government officials, local planners, 9 lenders, and many others. We are one of the largest 10 and most diverse housing coalitions in the area. 11 The proposed merger between Fleet and 12 BankBoston is especially important to the affordable 13 housing community for three reasons: 14 Number one, to date we are facing an 15 enormous and growing housing crisis. Low- and 16 middle-income residents in New England are being 17 priced out of home ownership and rental markets in 18 record numbers. 19 Number two, government cutbacks at the 20 state and federal levels have meant that affordable 21 housing developers must rely on private financial 22 institutions like BankBoston and Fleet to a much 23 greater extent than ever before. 24 Third, in recent years the housing 25 community has worked closely with both Fleet and 0183 1 BankBoston to craft solutions to the housing 2 affordability problem. This merger provides an 3 important opportunity to build and expand on this 4 recent progress. But, on the other hand, without 5 certain specific lending commitments that will 6 directly benefit low and moderate income people, 7 this merger poses a real danger because community 8 investment could fall dramatically in the areas that 9 need it the most. 10 We take the banks' commitments to make one 11 plus one equal more than two as genuine, but there 12 need to be details behind that commitment. Since 13 the merger was announced, Fleet and BankBoston have 14 submitted a general proposal to commit $4 billion in 15 affordable housing mortgages and $2 billion in 16 community development lending over the next five 17 years. As part of your consideration of this 18 merger, the Federal Reserve should require that 19 Fleet and BankBoston do the following: 20 Number one, provide details, details on how 21 this overall commitment compares with the combined 22 lending of the two banks over the past three years 23 with a breakdown for each New England state. Their 24 proposed level of commitment can't be evaluated with 25 that information. 0184 1 Number two, provide specific programmatic 2 details for each lending area. For example, it's 3 not enough to say that a certain amount of money 4 will go towards rental housing development. The 5 proposal must specify what will be the terms, how 6 will it be achieved, what are the delivery systems, 7 and, most important, what income groups will be 8 served. 9 Third and finally, Fleet and BankBoston 10 should enter into a written agreement with the 11 appropriate housing and community development 12 organizations similar to previous CRA agreements 13 that both banks have entered into. It is absolutely 14 essential that a sound mechanism be developed to 15 ensure that these commitments will be upheld and 16 monitored, and the Federal Reserve must assure 17 continuing performance under these commitments. 18 In order for the banks to fulfill these 19 requirements, we ask that the Federal Reserve extend 20 its public comment period for an additional two 21 weeks after the banks submit a revised and more 22 detailed community investment proposal. 23 Now, CHAPA's particular focus is on 24 affordable housing, and we therefore would like to 25 see the following five priorities addressed as a 0185 1 condition of the merger: 2 Number one, Fleet and BankBoston should 3 expand their commitment to the Soft Second Mortgage 4 Program statewide. The Soft Second Program has been 5 one of the most effective programs for helping low- 6 income families become homeowners. A statewide 7 expansion is necessary. 8 Second, the banks should convert their 9 required Massachusetts Housing Partnership Fund 10 commitment to equity, similar to that which 11 BankBoston did during the merger between BankBoston 12 and BayBanks. While there are many sources of 13 permanent financing to build rental housing, it's 14 very difficult to obtain the equity so that 15 developers of low-income housing can provide more 16 affordable apartments. 17 Third, the merged bank should expand its 18 commitment to funding and sustaining home buyer 19 education and counseling throughout the region. As 20 banks move towards more flexible underwriting, it's 21 critical to support the network of homebuyer 22 counseling agencies for both pre-purchase, post- 23 purchase, and foreclosure prevention. 24 Four, the merged bank should continue its 25 membership in the Federal Home Loan Bank of Boston 0186 1 over the long term -- now, Fleet is a member now; 2 BankBoston is not -- to ensure access to the Federal 3 Home Loan Bank's affordable housing and community 4 investment programs. 5 Five, the combined bank should expand its 6 commitment to foundation giving. Many groups which 7 receive funds from both banks believe that they will 8 see reduced foundation funding as a result of this 9 merger. We heard in Panel Five many groups who are 10 supported by both banks. This kind of support must 11 continue at at least this level, and the Federal 12 Reserve needs to ensure that no reduction in 13 foundation-giving occurs. 14 We look forward to receiving more details 15 on the ways in which the merged bank will maintain 16 and expand its commitment to investing in low and 17 moderate income neighborhoods. Thank you very much. 18 I appreciate the opportunity to testify. (Applause) 19 PRESIDING OFFICER SMITH: You may stay 20 seated at the table. You just pull the mike close 21 to you. 22 MR. GUSCOTT: My name is Ken Guscott, I am 23 president of the Minority Developers Association of 24 Boston. This is an association that consists of 35 25 minority builders, contractors, and developers, and 0187 1 we're the ones that supply and can find minority 2 people to build the houses, whether they're low 3 income or commercial houses, within the Greater 4 Boston area. And that's what I'm going to speak 5 about today. 6 We thank you for this public opportunity to 7 express our views on the impact of the proposed 8 merger of BankBoston and Fleet Bank upon our 9 community's minority and women-owned businesses. 10 As you know, small businesses employ over 11 53 percent of this nation's work force, and they 12 produce over half of the nation's gross domestic 13 product, and they provide virtually all of the new 14 Net jobs added to the economy. 15 Financial institutions have an obligation 16 to provide vital financial services to the 17 communities which they are located in. In today's 18 growing economy, we have an opportunity to grow 19 productive, stable businesses, particularly within 20 the minority-owned business sector, that will 21 continue to provide job opportunities for community 22 residents. 23 Consolidation within the banking and real 24 estate industries makes access to capital for small 25 and midsized real estate companies difficult. 0188 1 Smaller sized and mixed-use projects cannot be 2 financed through the public capital markets and 3 often rely on federal, state, and local programs 4 combined with creative, flexible, and innovative 5 bank financing in order to be successfully 6 completed. 7 Companies and customers located in inner- 8 city neighborhoods know that the untapped market 9 potential in their neighborhoods is enormous. The 10 challenges for these businesses are also great. 11 Having a relationship with a bank which knows the 12 market and is experienced with the technical aspects 13 of public/private partnership financing enables 14 companies to spend less time trying to find capital 15 and more time growing their business. 16 BankBoston Development Corporation LLC, a 17 part of the BankBoston Community Banking Group, has 18 pioneered in meeting the financial needs of the 19 minority and women-owned business enterprises by 20 providing just such vital financial service: equity 21 investments that grow minority businesses. 22 As part of the regulatory and community 23 review and approval of the proposed merger of 24 BankBoston and Fleet Bank, it is vital that an 25 equity investment fund, consisting initially of $500 0189 1 million, be dedicated to continue providing 2 substantial equity investments in viable minority 3 and women-owned businesses. 4 I bring to your attention that yesterday 5 the President of the United States and the Chairman 6 of the Bank of America pledged that they would put 7 $500 to $600 million to serve these communities 8 because it's good business. 9 The emerging market, minority, and 10 women-owned businesses is the fastest-growing 11 segment of the business community. These businesses 12 are also a tremendous growing business opportunity 13 for the new bank. By building upon the successful 14 track record of BankBoston Development Corporation 15 and by expanding its capacity for direct equity 16 investment in minority and women-owned businesses, 17 this new financial institution will make a great and 18 lasting contribution to our community. 19 With substantial financial equity 20 investment focused on our community's MBE and WBE 21 businesses, the new bank will empower the 22 productive, economic capacity of our community's 23 businesses. The hard work, long hours, and personal 24 sacrifices of the owners of these MBE/WBE 25 businesses, properly capitalized, will then generate 0190 1 new jobs, security for the working families of our 2 community, and successful role models for our 3 children. 4 I thank you for the opportunity to appear 5 before you. (Applause) 6 PRESIDING OFFICER SMITH: Thank you very 7 much. Ms. Maker, speaking on behalf of Rashmi 8 Rangan and yourself? 9 MS. MAKER: Right. I'm going to be myself. 10 I have overheads. Is this on now? 11 I am Ruhi Maker, and I'm coconvenor of the 12 Greater Rochester Community Reinvestment Coalition 13 and a senior attorney with the Public Interest Law 14 Office of Rochester. 15 I am a data freak, I have to confess to 16 that, and therefore I will spare you some of the 17 anecdotes and share some data with you. We've been 18 analyzing data since 1993. I just released my fifth 19 lending analysis which is included as part of these 20 comments. And I think really the data says many of 21 the points I want to make. I'll turn this on and 22 hope you people can see. 23 Essentially -- and this is included in my 24 comments -- essentially what's happened with Fleet 25 in the last three years and really in the last five 0191 1 years is lending has declined. You know, in the MSA 2 they're down 20 percent. In the city they're down 3 53 percent. Black/Hispanic households they're down 4 66 percent. They only made 41 loans in 1997, and 5 the trend continues. 6 Earlier there was an indication that, well, 7 of course we all know that market share has changed 8 really dramatically in the last five years, much of 9 my report speaks to that, and we go into great 10 detail as to who is doing the lending now. 11 Unfortunately, some of that lending has gone to some 12 primes. 13 But we need to put the context of Fleet 14 along with their peers, and I think that's extremely 15 important. And I'm going to do that for a minute 16 and show you what some of the other banks have done, 17 because we have been working very closely with a 18 number of other banks, and we have commitments from 19 them and, for one reason or another, they have 20 managed to do a better job than Fleet. And this is 21 just comparing the top eight banks, and I'll show 22 you a market share in a minute. 23 When you look at 3 percent of Fleet's total 24 loans were to Black/Hispanic households, when you 25 compare their total MSA lending, whereas looking at 0192 1 their competitors, the top eight area banks, 7 2 percent was to Black and Hispanic households. 3 Going on, 26 percent low-moderate income 4 households in the MSA, that's Fleet, everyone else, 5 their peers were doing better, 30 percent. It 6 continues. I think particularly the minority census 7 tracts, 1 percent of Rochester MSA loans Fleet were 8 minority tracts compared with 4 percent of the top 9 eight area banks. 10 I know this is a lot of data, I asked for 11 20 minutes, but I'll try and condense it into five. 12 Bear with me. And I think this little market share 13 chart, it really is all in there, so you don't have 14 to try and absorb it all. I don't know how well you 15 can see, but if you look down Fleet's column, and if 16 you look at the middle column where it says "Market 17 Share," 5 percent of the market share in Rochester, 18 and the market share in all its other communities, 19 communities we care about, the city, Black/Hispanic, 20 low-mod household, is less than its MSA market 21 share. And that is only true for Fleet. All of the 22 other competitors do at least as well in the 23 underserved communities as they do in the MSA, and 24 Fleet is the only bank that shows that. 25 To lighten things up a little bit and show 0193 1 you a little color map of small business lending -- 2 I'll trying to wake you guys up since it's 3 lunchtime, and I know I've been up since 5:30. 4 There we go. This I think -- I'll show you the rest 5 of the map. 6 As you know, small business loans, we don't 7 know which census tracts, the data isn't available 8 by census tract. However, we do know where a bank 9 made no loan at all. And the little blue map in the 10 corner shows the minority neighborhoods, and the 11 little Fleet map up there shows that they had 12 absolutely no small business loans in predominant 13 areas of the City of Rochester and a large 14 correlation with the minority. 15 And their small business lending, by the 16 way, it is just about the only bank that managed to 17 decrease its small business lending and lost to some 18 of its competitors, who I know I've been critical of 19 in the past. If you look at Marine and M&T, a 20 pretty good spread. Fleet's small business lending 21 goes down. I know a colleague of mine -- well, a 22 colleague of somebody's earlier spoke about how well 23 they do in Rochester, New York. 24 I had a coalition member come and tell me 25 when I was here in Boston last fall talking to some 0194 1 of the CRA corporate officers, and we were trying to 2 get, you know, some investments, and essentially I 3 was told, "Well, Fleet doesn't have a CRA problem in 4 New York, why should we do anything for you?" And 5 I'm here to say, "Hey, guys. Fleet does have a CRA 6 program in New York, a big problem." 7 This is my eighth merger in about five 8 years. I testified last year at City Group. And 9 essentially City Group went through -- maybe I'm 10 being cynical, I assume this will go through, but 11 what can you do? 12 What you can do, what we have found works 13 is, when you have written commitments, you can 14 condition this merger on specific lending 15 commitments by region. So what are they going to do 16 in Rochester? What are they going to do in New 17 York, not just Massachusetts? Much was said of New 18 England and we care about New York. (Applause) So 19 I conclude now. 20 PRESIDING OFFICER SMITH: Ms. Yager, will 21 you be speaking? 22 MS. MAKER: I'm doing Rashmi's. 23 So now let's pretend we're in sci-fi, I 24 don't know, whatever, 21st century, and I'm now 25 Rashmi Rangan, into a quick switch. Actually, she 0195 1 is the same size as me in brown, I think, slightly 2 different accent. 3 My name is Rashmi Rangan, I'm the executive 4 director of the Delaware Community Reinvestment 5 Action Council, or DCRAC. For over 12 years our 6 organization has advocated for fair and equal access 7 to credit and capital for the underserved 8 Delawareans. 9 We are opposed to the merger proposal of 10 Fleet Financial Group (Fleet) and BankBoston Corp. 11 (BankBoston). This application should be denied. 12 The merger proposal does not serve the convenience 13 and needs of the community, nor does the merger 14 proposal have a positive market impact. 15 The Federal Reserve cannot approve any 16 proposal under Section 3 of the Bank Holding Company 17 Act which would substantially lessen competition in 18 any banking market, unless the anti-competitive 19 effects are clearly outweighed in the public 20 interest by the convenience and needs of the 21 community. This propose merged merger is 22 anti-competitive. Public convenience and needs are 23 not served through this merger. The Federal Reserve 24 Board should deny this application. By reference, 25 DCRAC introduces the June 6, 1999, comments of Inner 0196 1 City Press and its analysis of the anti-competitive 2 effects of this merger. 3 Again, DCRAC submits, by reference, ICP's 4 analysis on the same Fleet's Troubling Fair Lending 5 Record Calls for Denial. Fleet acquired Shawmut in 6 1995, and NatWest in 1996. Fleet's combined 7 entities' lending volume declined 70 percent between 8 '95 and '97. The decline is greater in lending to 9 minorities and in LMI census tracts. Fleet's past 10 mergers have not only hurt communities, but an 11 adverse factor under the CRA, they have 12 disproportionately harmed low and moderate income 13 communities. 14 Fleet's Predatory Lending Abuses Call for a 15 Denial. In May 1996, Fleet settled discrimination 16 charges with the U.S. Department of Justice, charges 17 that it systematically overcharged minorities from 18 its two New York City area mortgage offices. In 19 1999, Fleet continues abusive lending practices. 20 By reference I enter the Boston Globe 21 article "Easy Loan Program Nothing but a Headache 22 for Some Consumers" by Patricia Wen and Bruce Mohl, 23 June 6, 1999. The article reports that Fleet's 24 "fast-loan check" program delivered an easy-to-cash 25 check of $10,000 to a 74-year-old mentally impaired 0197 1 man whose sole residence and mailing address in the 2 past 18 years was a veterans' hospital in Bedford. 3 Fleet sees no shame in it. 4 Fleet's Poor Record of Serving the 5 Convenience and Needs of the Community calls for a 6 Denial. A bank which treats its long-term customers 7 the way Fleet treats its elderly says much about the 8 bank's efforts at not meeting the convenience and 9 needs of its community. By reference, I enter the 10 Providence Journal article of May 29, 1999, "A 11 Really Big Bank Leaves Little Room for the Small 12 Stuff," by Bob Kerr, who reports that the elderly 13 customer, slapped with fines for insufficient funds, 14 was told he could get $25 back, but only if he 15 purchased overdraft protection for $24. Then he 16 "was told he could get $37.50 back, but only if he 17 purchased overdraft protection and signed up for 18 direct deposit of Social Security checks." 19 Fleet in Delaware. It has been our 20 practice to approach Delaware's non-profit status 21 providing community such small business lenders and 22 counselors and home ownership counseling agencies to 23 learn about a bank's direct involvement in our 24 community. Consistently, each agency maintained 25 with Fleet's acquisition of NatWest in 1996, Fleet 0198 1 has done nothing in Delaware. They do not even have 2 a CRA officer? Vindicating charges of Fleet's bad 3 performance after each of its past acquisitions. 4 Fleet's HMDA Analysis for Delaware. The 5 following Fleet entities conducted mortgage lending 6 business: Fleet Funding Corp. and Fleet Home Equity 7 USA. Between the two, they received 63 applications 8 for mortgage, home improvement, and refinance loans. 9 Fleet did not collect data by race for 40 10 of these applications, or 63.4. This is a violation 11 of the Home Mortgage Disclosure Act (HMDA). HMDA 12 was enacted with the goal of assessing who is and 13 who is not having access to the credit system. By 14 eliminating fully 64 percent of data from review, 15 Fleet violates the intent and spirit of the law. 16 Fleet's approval rate for whites was 65 17 percent compared with 50 percent for African 18 Americans. Fleet's denial rate for whites was 23 19 percent compared with 25 percent for African 20 Americans. Fleet received 18 applications from 21 white applicants and three from African Americans. 22 Relative to applicant incomes, from 23 applicants with median incomes below 50 percent, 24 Fleet received two applications and denied both, a 25 denial rate of 100 percent. From applicants with 0199 1 median incomes 50 to 79 percent, there's a little 2 more, they basically conclude, you know, it says 3 what we've been saying, that there's a problem, and 4 let's try and do something about it. Thank you. 5 PRESIDING OFFICER SMITH: Fine. We'll have 6 the complete statement. Ms. Wallace. 7 MS. WALLACE: Good morning. My name is 8 Joan Wallace-Benjamin, and I am the president and 9 CEO of the Urban League of Eastern Massachusetts. 10 The Urban League of Eastern Massachusetts an 11 82-year-old civil rights, direct service, and 12 advocacy organization in the City of Boston. We are 13 part of a large national organization of 114 Urban 14 League affiliates across the country. 15 On behalf of the Urban League and the 16 communities we serve, I am here to express our 17 concerns about and make recommendations about the 18 proposed merger and the accompanying bank branch 19 divestiture. I am also here to speak to Fleet 20 Boston's proposed Community Investment Plan as well 21 as its likely negative impact, if care is not taken, 22 on minority, low and moderate income people, small 23 businesses, and community development programs. 24 Before I begin my comments, I would like to 25 take a moment to thank you for granting me this 0200 1 opportunity to testify before you. 2 The proposed merger is a clear example that 3 "the big are getting bigger." Currently Fleet and 4 BankBoston are the number one and number two largest 5 banks in New England. If they merge, the newly 6 combined Fleet-Boston Bank will not only be the 7 dominant lender in the New England region, it will 8 be the eighth largest bank in the United States. In 9 other words, Fleet Boston is about to become a 10 megabank. 11 As we enter the new millennium, banks 12 should be expanding access to credit/capital and 13 affordable investment opportunities to minorities 14 and women and in low- and moderate-income 15 communities. We are not asking Fleet-Boston to do 16 this alone. We are asking, however, as a leading 17 lending institution and increasingly powerful bank 18 that it do its reasonable and fair share. This 19 includes, at the very least, maintaining its 20 premerger lending level. Such an institution would 21 have a widely disseminated community investment 22 strategy, with accountability features built in, 23 that incorporates specific written standards to 24 document and measure progress and success. 25 Under the circumstances, Fleet-Boston's 0201 1 proposed community commitment to set aside $14.6 2 billion over five years for low-income borrowers, 3 small businesses, and community development programs 4 is woefully inadequate. No community investment 5 plan with measurable and verifiable indices of 6 progress and success has been disseminated for 7 review and/or comment. 8 $14.6 billion sounds like a lot of money; 9 however, a closer look clearly demonstrates that it 10 is not so much. In fact, this amount is 11 significantly less than Fleet Bank and BankBoston's 12 premerger combined lending in the small business, 13 affordable housing/mortgages to low and moderate 14 income borrowers, and the community development 15 investment categories. 16 More specifically, the analysis of 17 Fleet-Boston's proposed commitments regarding 18 Fleet's and BankBoston's current lending levels by 19 Inner City Press, for example -- and that analysis 20 was presented by Inner City press to the Federal 21 Reserve as part of its June 7th protest -- using 22 Fleet's proposed methodology shows large shortfalls 23 in the aforementioned small business, affordable 24 housing/mortgages to low- and moderate-income 25 borrowers, and the community development lending/ 0202 1 investment categories. 2 Rather than creating a lending shortfall, 3 we believe that, at the very least, the overall 4 volume of business currently done by the banks 5 should also be maintained after the merger. 6 The banks do business in eight states. The 7 Community Investment Plan, as currently designed, is 8 to be dispersed in those states. The fairness or 9 the unfairness of the proposed set aside cannot be 10 adequately judged because the banks have failed to 11 date to provide sufficient or detailed information 12 as to how they came up with this $14.6 billion 13 figure or how it would be dispersed among or between 14 the eight states in which it will operate. Simple 15 mathematical averaging, however, demonstrates that 16 $14.6 billion spread over six categories: small 17 business lending; affordable housing/mortgages to 18 low- and moderate-income borrowers; community 19 development lending/investment; community lending in 20 LMI areas; equity investments; and technical 21 assistance and support, divided by eight over five 22 years will not go very far. 23 On the issue of the 250-bank branch 24 divestiture, we are opposed to one or more large 25 banks being allowed to purchase all of the divested 0203 1 bank branches. Fair competition and community 2 service concerns demand that small to midsized 3 community and minority banks should be allowed to 4 purchase the divested branches. In fact, we 5 strongly suggest that, as a minority-owned and 6 -managed community bank in the City of Boston, the 7 only bank that is a Community Development Financial 8 Institution (CFDI) in New England, the Boston Bank 9 of Commerce receive a sufficient base of branches to 10 secure its position as a primary lender and a major 11 minority business. 12 No divestiture of a bank branch in a 13 low-income or minority community should be made to a 14 bank that does not intend to keep the bank branches' 15 doors open. People who live or work in these 16 communities should not have to travel long distances 17 or be forced to go into unfamiliar or unwelcoming 18 communities. We need banks that will aggressively 19 market their products in low- and moderate-income 20 minority communities. This reality is compounded by 21 the fact that past and present patterns of 22 discrimination have created an environment where 23 members of these communities have not been well 24 served. We need to ensure that women, low- and 25 moderate-income people are not left post-merger with 0204 1 less access to fulfill individual and community 2 specialized banking needs. 3 In our view, in spite of the fact that 4 Fleet-BankBoston representatives have indicated 5 their CEO's goal of having this new "big" 6 divestiture buyer pick up the 20 percent share of 7 community investment obligations that Fleet Boston 8 plans to relinquish, we want to ensure that this 9 buyer is obligated to meet CRA goals. We know that 10 the Fleet-Boston divestiture plan is not altruistic. 11 It is being done to make the bank more profitable 12 and to increase shareholder and senior officer 13 wealth. 14 Therefore, as stated earlier, they must as 15 a combined entity maintain the investment level each 16 bank has currently achieved. Knowing that they will 17 be successful, as their asset size grows, a 18 proportionate share of those increases must be 19 committed to the community into the future and make 20 achieving these goals a part of their CRA rating. 21 PRESIDING OFFICER SMITH: Thank you very 22 much. 23 MS. WALLACE: We hope you carefully 24 consider these recommendations. Thank you. 25 PRESIDING OFFICER SMITH: Thank you very 0205 1 much. (Applause) 2 MS. YAGER: My name is Martha Yager, I am 3 program coordinator for the Granite State Community 4 Reinvestment Association in New Hampshire, which is 5 a project of the New Hampshire program American 6 Friends Services Committee. Appearing with me is 7 Arnold Albert, chair of GSCRA. 8 GSCRA was formed six years ago in response 9 to the Shawmut and Dartmouth merger. Our mission is 10 to assist local community groups, especially low 11 income and minority groups, in assessing local and 12 credit service needs and to promote public 13 involvement to influence the policies and practices 14 of financial institutions that are practicing in New 15 Hampshire. The association includes religious 16 groups, civil rights, and social justice advocacy 17 organizations and is staffed by the American Friends 18 Services Committee. 19 The Fleet-BankBoston merger does not serve 20 the convenience and needs of the communities of New 21 Hampshire and poses significant potential loss of 22 lending and services. In April we met with Fleet 23 and BankBoston community development teams. We 24 followed that with a letter reiterating the need for 25 the bank to make specific commitments to lending for 0206 1 affordable housing, small business, and community 2 development. We also asked for an explanation of 3 the unusually high denial rates by Fleet Bank in its 4 mortgage lending. We have had no response to these 5 matters from Fleet other than form letters saying 6 that it will make no local commitments. 7 Community development lending does not 8 happen easily at Fleet. The bank prefers large 9 deals with big customers, cookie-utter loans that 10 require little or no human interaction, and 11 guaranteed loan programs. Fleet's highly 12 centralized structure makes it a difficult partner 13 in putting together deals. This is not behavior 14 that lends itself to building community trust that 15 the bank will create a functional community 16 development lending strategy. Quite the contrary. 17 This lack of performance has been documented by 18 federal regulators in the steadily decreasing CRA 19 ratings throughout the Fleet system outside of 20 Massachusetts. 21 One plus one was to equal at least two. 22 The nation market area has paid a high price for 23 bank consolidation. We have documented dramatic 24 decline in mortgage lending in this area in other 25 documents and will not repeat that information here. 0207 1 Since banks are the source of many of the loan 2 products designed for lower-income borrowers, this 3 decline has been particularly punishing for low- 4 income people wanting to buy their own home. 5 Community groups across the region have 6 harped on the theme of one plus one is at least 7 equal to two, meaning simple arithmetic, in loan 8 volumes for affordable housing, community 9 development, small business lending, and charitable 10 giving. And yet Fleet doesn't get it. In a letter 11 dated June 8th over the signature of Agnes Bundy 12 Scanlan and Gail Snowden, the bank says that they 13 understand, quote, that "one plus one equals two 14 means retaining the best of both institutions and 15 improving on them." 16 No. That's not what we mean. We are 17 talking simple arithmetic as well as programs. 18 Since Fleet's mortgage lending is below its market 19 share relative to other banks in the area, one plus 20 one is an absolute minimum. Please see our 21 correspondence from the Federal Reserve for those 22 details. 23 MR. ALBERT: One of the problems with this 24 merger the way it's been handled has been the 25 divestiture aspect. You've heard today references 0208 1 to there being three states from which Fleet will 2 have to divest. Actually there are four. The 3 fourth state is New Hampshire. New Hampshire is a 4 separate state. It has its own unique tax system, 5 different levels of state support for affordable 6 housing and economic development, different local 7 economic profile and, for better or worse, its own 8 political climate. 9 Now, Terry Murray when he started out this 10 morning, he said something, I don't have the exact 11 quote, but I believe he said he wants children and 12 grandchildren to have local institutions. And he 13 said that so many of our nation's cities have lost 14 that. He talked about the need for a hometown bank. 15 Well, in Nashua, as Martha has mentioned, there is 16 no longer such a thing as the hometown bank. The 17 hometown bank, NFS, was lost to BayBanks, which was 18 lost to BankBoston. Indian Head became part of 19 Fleet. 20 From the beginning of this process, public 21 statements have indicated that the Massachusetts 22 divestiture would go to a single large bidder in the 23 effort to create a strong competitor for Fleet in 24 the Boston area. The problem with this is that New 25 Hampshire in need of small banks in this affected 0209 1 market was listed as part of the Massachusetts sale. 2 When it began to appear that small banks could apply 3 in the bidding process, there was nowhere near 4 enough time for small banks to put together a bid. 5 Small banks don't have a mergers department that's 6 doing this all the time. 7 The complete disregard for the market needs 8 of an entire metropolitan area is unacceptable. If 9 this application is to proceed toward approval, we 10 request that the bidding process be reopened for 90 11 days allowing small banks to bid on individual 12 branches. Governor Jean Shaheen and the New 13 Hampshire Banking Commissioner will be making a 14 similar request which you will receive by letter 15 today. 16 There are a host of reasons why this merger 17 should not be approved. It's a classic case of 18 business done solely for the benefit of the 19 stockholders at the expense of the rest of the 20 stakeholders. It is anti-competitive even with the 21 divestiture. A bank with a steadily declining CRA 22 record is buying a bank that does a better job of 23 listening to and responding to community credit and 24 service needs. That performance should not be 25 rewarded. A bank that has redlined rural markets, 0210 1 as was the case with Fleet in New Hampshire, should 2 not be rewarded with its next merger request. 3 There is no specific plan for how the bank 4 will meet community development needs addressing the 5 needs of different markets. Given the dismal record 6 of decreased lending following other mergers 7 involving these banks, simplistic plans are simply 8 not enough. We urge the Board of Governors to deny 9 this application. Thank you. (Applause) 10 PRESIDING OFFICER SMITH: Thank you very 11 much. 12 Please be sure your statements have been 13 submitted for the record. And do we have any 14 questions? 15 MS. BROWNE: I guess I have a question. 16 Perhaps several of the panelists might want to 17 respond. The attorneys general from Massachusetts 18 and Connecticut made the case that they were very 19 eager to see a large player enter the market because 20 of the concerns of middle market businesses. Yet 21 several of you emphasize the importance of smaller 22 banks having a role here. Are you concerned about 23 the entry of a large player? You would like to see 24 small entities, smaller banks as well, or perhaps 25 you could clarify? Is this a conflict, or is it you 0211 1 would just like to see an opportunity for smaller 2 banks as well? Or do you feel the middle market 3 issue is not a real one? 4 MR. GUSCOTT: I'd be glad to take a stab at 5 that question. We have met with the Attorney 6 General and discussed his point of view. And as we 7 explained to the Attorney General of Massachusetts, 8 you have an emerging local market of MBEs and WBEs, 9 minorities and women, and it takes a special type of 10 structure to deal with them. You have to be very 11 sensitive to what their needs are. And it's our 12 feeling that you should have a local smaller bank 13 that understands the community that they're in to 14 provide services to this need -- for this group of 15 people. 16 That's why -- he understood what we 17 requested. But that's our reason why we wanted to 18 see not just one big bank but some local banks 19 involved in this, to better service the community. 20 MS. WALLACE: We made special reference to 21 the Boston Bank of Commerce, because we believe 22 this is an opportunity to build and strengthen a 23 historically owned, African-American-owned 24 and -operated financial institution. When you do 25 that, like you do that with other minorities/small 0212 1 business, you build the security and stability of 2 the community, as well as the customer service 3 affinity that a bank like BBOC would have. 4 And so I think that if there were a large 5 player, which would not be our preference, there are 6 some real preconditions that must exist in the way 7 they interact with the community in order for that 8 to be possible. But our preference would be that it 9 would be small and community-based financial 10 institutions. 11 MS. YAGER: The New Hampshire situation is 12 a little bit different. In this particular market 13 area it has proven the theory wrong. When 14 interstate banking was being passed about five years 15 ago, there was almost a mantra, there will always be 16 small community banks around. Well, in this area 17 there are no small community banks remaining. There 18 are none serving an area of over 150,000 people. 19 That's a very different situation than you have in 20 Massachusetts. There are community banks around in 21 many of the towns there. We have a need to have 22 some of these branches broken out and sold to the 23 very small little banks that are in the area that 24 could move into that market, if given the amount of 25 time they need to put a bid together. 0213 1 PRESIDING OFFICER SMITH: Thank you very 2 much for coming.
Last update: December 3, 2010