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

Public Meeting Transcripts

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

Wednesday, July 7, 1999

Transcript of Panel Eight

        3            MR. MARKS:  I wonder if there are others 
          4   who oppose this merger and if you'd be willing to 
          5   stand up at this time in the room.  (People stand)
          6            PRESIDING OFFICER SMITH:  We're going to 
          7   start with Mr. Anderson. 
          8            MR. MARKS:  We would like to start only 
          9   because there have been a lot of people waiting here 
         10   for the half hour.
         11            PRESIDING OFFICER SMITH:  That will be 
         12   fine, Mr. Marks.  We'll start.  And we have a total 
         13   of 10 minutes for Mr. Marks's speakers total, 10 
         14   minutes among the three people who I understand will 
         15   be speaking.  So you may start. 
         16            MR. MARKS:  We are going to translate what 
         17   we're saying into Spanish.  
         18            My name is Bruce Marks, I am the executive 
         19   director of the Neighborhood Assistance Corporation 
         20   of America.  (Remarks translated into Spanish)
         21            And with me are some of the homeowners and 
         22   some of the people who are in the process who have 
         23   taken advantage of the best mortgage product in the 
         24   country.  Because what was happening, over five 
         25   years ago, we said that people work hard, people 
  0214
          1   here work hard.  It's tough to save.  People should 
          2   be able to buy with no downpayment with no closing 
          3   costs. 
          4            What I would like to start off with is to 
          5   have Reverend Hagler, who is the development 
          6   director of NATCA, he is going to say a few words, 
          7   and then we're going to make some other comments 
          8   about Fleet's acquisition of the Bank of Boston. 
          9            REV. HAGLER:  I am Reverend Grayland Scott 
         10   Hagler.  And I want to just start off by saying, 
         11   like was said, in 1991 Fleet was ripping off the 
         12   poor and elderly communities, stealing homes, and 
         13   destroying neighbors.  And every single soul in the 
         14   communities knew this to be true, and yet, and yet, 
         15   basically the Federal Reserve shirked in their 
         16   duties and disregarded the law and expeditiously 
         17   approved Fleet's acquisition of the Bank of New 
         18   England.  And NATCA had to spend the next four years 
         19   doing the job which should have been done here, 
         20   monitoring Fleet and holding it accountable to its 
         21   predatory and discriminatory lending practices. 
         22            In 1994 it was the Neighborhood Assistance 
         23   Corporation of America, and unfortunately not the 
         24   Federal Reserve, that paved the way for the new and 
         25   innovative mortgage products that have helped to 
  0215
          1   create thousands of new homeowners in previously 
          2   destabilized communities and therefore is a major 
          3   participant in revitalizing inner cities like Boston 
          4   and Lawrence, Massachusetts.  Fleet's community 
          5   initiatives moved from an institution which had a 
          6   total disregard for low- and moderate-income 
          7   communities to one with a satisfactory lending 
          8   record. 
          9            Now we have before us the Fleet acquisition 
         10   of Bank of Boston.  We are at the crossroads again.  
         11   On one hand, we have Fleet, with a better community 
         12   lending record than it had five years ago, only 
         13   because of community pressure, and the Bank of 
         14   Boston, with a much better institutionalized 
         15   community lending program.  But the differences, 
         16   they are very significant. 
         17            Fleet categorizes its branches as tier one, 
         18   two, or three.  The tier three branches are the 
         19   least staffed and with the fewest resources.  The 
         20   Fleet branch, for example, on Gallivan Boulevard 
         21   with $40 million in assets has four staff people.  
         22   It used to have nine when it was a Shawmut branch.  
         23   A similarly sized branch of U.S. Trust also located 
         24   in Dorchester has nine staff members. 
         25            Why is it that the majority of the tier 
  0216
          1   three branches are in low- and moderate-income 
          2   communities serving a primarily of color base?  
          3   Isn't this discriminatory on the surface?  Surely 
          4   when you look at the numbers, it is. 
          5            Fleet still sees community lending as a 
          6   necessary evil.  This is what is reflected in the 
          7   current community proposals.  They have made the 
          8   absolute minimum commitment.  They have taken each 
          9   bank's community lending commitment, downsized it, 
         10   and combined the two.  This does not demonstrate a 
         11   genuine commitment to community lending, and we 
         12   cannot afford, and you cannot afford, to allow Fleet 
         13   to backslide into their previous posture of over 
         14   five years ago. 
         15            The Federal Reserve must not sit back and 
         16   ignore its obligations in this case and its 
         17   obligations under the law.  Surely the Neighborhood 
         18   Assistance Corporation of America will not sit back 
         19   and allow Fleet to backslide.  And the Federal 
         20   Reserve cannot do anything less than this.  It must 
         21   hold them accountable, it must hold their feet to 
         22   the fire, and as Reverend Al Sharpton said, "Don't 
         23   let Fleet fleece the community."  (Remarks 
         24   translated into Spanish)
         25            MR. MARKS:  Let me add a few more comments.  
  0217
          1   That we're not just concerned about Fleet's low- and 
          2   moderate-income community lending.  Fleet is loved 
          3   by Wall Street.  The stockholders, the investors 
          4   love Fleet because of the low cost of doing 
          5   business.  But the consequence of that is some of 
          6   the worst services of any lending institution in the 
          7   country. 
          8            So what we've done is we've taken the name 
          9   and address and gotten the information on every 
         10   customer within New England, within Rhode Island, 
         11   Massachusetts, Connecticut, who has gotten a 
         12   mortgage from Fleet, from '94 forward, over 74,000 
         13   people.  And we commit to the record the names of 
         14   the 74,000 people, names and addresses of those 
         15   people, and expect that to be put into the 
         16   Congressional record -- into the record. 
         17            Those 74,000 people are going to receive a 
         18   Fleet customer service questionnaire to ask what 
         19   type of business they've done with Fleet.  How would 
         20   they rate their services with Fleet?  Where one is 
         21   excellent; two, good; three, satisfactory; four, 
         22   poor; or five, very poor; or six, not applicable. 
         23            We constantly, because we've been known to 
         24   have some issues with Fleet, get calls from people 
         25   who are fed up with doing business with Fleet.  And 
  0218
          1   those people come from throughout New England.  They 
          2   cross geographic/racial/income barriers.  It seems 
          3   like everybody hates working with Fleet.  But maybe 
          4   that's just anecdotal, but we need a comprehensive 
          5   survey.  So we want to know from people, and we want 
          6   to know from other people who bank at the branches 
          7   who might not have a mortgage, what they think of 
          8   Fleet. 
          9            So we're requesting that the Federal 
         10   Reserve open up the process, to keep it open, to 
         11   take those 74,000 names, so that they can submit 
         12   their comments, so you're hearing more than just 
         13   from the activists, from the politicians, from the 
         14   union leaders, you're hearing from people who have 
         15   an everyday experience with Fleet.  So you can judge 
         16   whether Fleet, as the feudal landlord, because 
         17   they're going to be the one institution within New 
         18   England, whether they're going to be the feudal 
         19   landlord that's going to be held accountable or the 
         20   feudal landlord that's going to stamp on the 
         21   customer needs for everybody. 
         22            So we think that this is fundamental.  
         23   These are the names.  We would like that to be put 
         24   into the record.  (Documents submitted to Board) 
         25   (Remarks translated into Spanish)
  0219
          1            MR. MARKS:  And now as part of the survey, 
          2   we are going to ask people to give us the authority, 
          3   to give NATCA the authority, to submit all their 
          4   complaints to the appropriate bank -- to the 
          5   appropriate bank regulators.  So as an ex-Federal 
          6   Reserve employee, I understand I had to spend, and a 
          7   lot of the Federal Reserve staff has to spend, a lot 
          8   of time investigating every one of the complaints 
          9   that someone sends in. 
         10            So we hope and expect that you're going to 
         11   take all those 74,000 names there and do your own 
         12   output, but we're doing ours just to make sure you 
         13   don't do the same thing you did in 1991.  When Fleet 
         14   Finance was documented as being a predatory loan- 
         15   sharking operation, you ignored that, and you 
         16   approved Fleet's acquisition of the Bank of New 
         17   England, even though they used blood money to do 
         18   that, because 55 percent of the profits were from 
         19   Fleet Bank. 
         20            So we hope you're going to take it more 
         21   seriously.  We don't have a lot of confidence you're 
         22   going to do that, so we're going to be out there 
         23   doing that, to get these surveys to submit the 
         24   information and expect that you're going to 
         25   investigation every one of what we anticipate being 
  0220
          1   thousands of people who have had concerns but no 
          2   vehicle to address their issues about Fleet.  
          3   (Remarks translated into Spanish)
          4           We hope that you're going to join us with 
          5   the Fleet accountability project.  Let me make two 
          6   more comments, two things that should be responded 
          7   to. 
          8            All this stuff how Fleet is so thrilled to 
          9   deal with Fannie Mae, well, certainly they are, 
         10   because Fannie Mae will buy the loans, Fleet has no 
         11   risks.  That's just another pullback from the 
         12   community.  They have to take some responsibility, 
         13   they have to assume some of the risk, not just push 
         14   that off on Fannie Mae. 
         15            The argument that says the combined 
         16   Fleet-BankBoston is going to be good for New 
         17   England, we're going to have a New England-based 
         18   institution here, I'm sure the First Unions, the 
         19   Bank of Americas, the Bank Ones, the Wells Fargos 
         20   are all looking there and saying, "We can't wait for 
         21   you to lay off 5,000 people to make this institution 
         22   so that we can come back in a year or two and 
         23   swallow the new Fleet up."  So that idea that 
         24   somehow we're creating a New England-based 
         25   institution for the long term just doesn't carry 
  0221
          1   water, just is not real.  And we all know it but no 
          2   one will say that publicly. 
          3            So with that, the fact of the matter is, 
          4   Fleet should be better than these two single parts 
          5   of BankBoston and Fleet and try to backslide to 
          6   where they were, become the old Fleet.  The Fleet 
          7   accountability project will ensure the people here, 
          8   and with the thousands of people who have benefitted 
          9   from the NATCA program and others involved in the 
         10   NATCA program, to help keep Fleet's feet to the fire 
         11   so Fleet cannot fleece our community.  (Applause)
         12            If you have any questions before we leave.
         13            PRESIDING OFFICER SMITH:  Yes?  I don't 
         14   think so, but thank you very much. 
         15            (Applause)
         16            PRESIDING OFFICER SMITH:  Now we will go to 
         17   Mr. Anderson. 
         18            MR. ANDERSON:  What's the line in 
         19   vaudeville?  I have to follow them?  I find it 
         20   ironic that Bruce uses the analogy about holding 
         21   Fleet's feet to the fire.  When we tried doing that 
         22   back in '96, Bruce and NATCA protested us. 
         23            I sat down and started preparing about 15 
         24   different drafts of what I wanted to do today, none 
         25   of which I liked, so I threw them away and figured 
  0222
          1   I'd come in here and wing it.  So I'll apologize in 
          2   advance if I'm redundant and if I ramble.
          3            PRESIDING OFFICER SMITH:  Just so you do it 
          4   in four and a half minutes.
          5            MR. ANDERSON:  I sat on this very stage 
          6   during the Fleet-Shawmut merger hearings and tried 
          7   to summarize the work of myself and Adam Moser at 
          8   the time at the Codman Square Development 
          9   Corporation on work that we had done in revealing 
         10   mortgage irregularities involving first-time 
         11   homebuyers -- the First-Time Homebuyer Program at 
         12   Fleet Bank.  And there was reference made to my 
         13   comments, and Fleet said that they'd address the 
         14   situation, and the Federal Reserve Board made them 
         15   promise to work with community groups to fix the 
         16   problems. 
         17            Unfortunately the problems were never 
         18   fixed.  I handed federal -- I handed the Board on 
         19   that day in August a list of 100 properties flipped 
         20   by two people, two individuals in Dorchester, using 
         21   Fleet's financing.  The sales of the properties was 
         22   financed by Fleet.  The Codman Square group gave 
         23   them a list of 29.  Fleet conveniently ignored my 
         24   list of 100 and decided to work with the Codman 
         25   Square group's list of 29. 
  0223
          1            According to Kimberly Boyaton, a reporter 
          2   at the Boston Globe, Fleet will admit to having 
          3   fixed three of those loans.  There were seven 
          4   condominiums that were mentioned in that list, Hale 
          5   Terrace and East Street and Capen Street.  I've 
          6   included them in some of the information that I've 
          7   given you.  Of those seven that were included, four 
          8   were foreclosed.  So, in other words, Fleet fixed 
          9   them by foreclosing on more than they say that they 
         10   fixed. 
         11            The other argument at the time was that 
         12   these speculators were flipping properties and 
         13   charging grossly more than the market value of the 
         14   properties.  Unfortunately, we had to wait for what 
         15   we were warned were going to be the foreclosures, 
         16   and the foreclosures are happening, to determine 
         17   what the value of the properties is.  And one of 
         18   those condominiums on Hale Terrace, Unit No. 4, just 
         19   was foreclosed about a month ago, Unit 4. 
         20            In 1994, Fleet told everybody it was worth 
         21   $90,000, and the Fed certainly didn't make them fix 
         22   the problem, because they foreclosed.  I think they 
         23   got $44,000 at the auction.  None of the properties 
         24   in these condominiums that Fleet said were worth 
         25   $90,000 have gone for anything more than $75,000, 
  0224
          1   despite a booming real estate market, the market in 
          2   Dorchester is up 60 percent. 
          3            These properties just didn't lose value, 
          4   they were grossly overpriced at the time, and the 
          5   Federal Reserve Bank did not make Fleet fix them, 
          6   and Fleet did not fix them.  And these are low- 
          7   income, almost overwhelming blank homeowners who 
          8   were screwed in the process. 
          9            On this stage I mentioned when Fleet under 
         10   pressure cut off certain developers, they turned 
         11   around and they started flipping properties through 
         12   Shawmut.  We had Shawmut foreclosures on these same 
         13   properties, one on Speedwell Street, in which I 
         14   asked the woman, "Did you have the downpayment?"  
         15   "No, I didn't have the downpayment."  "How did you 
         16   get the downpayment?"  "Well, this church I didn't 
         17   belong to, that I never heard of before, gave me 
         18   part of the downpayment."  Who?  "Well, did you have 
         19   the rest of the downpayment?"  "No, we didn't have 
         20   the downpayment." 
         21            In this particular loan program, a family 
         22   member is able to give up to $2,000 to the 
         23   homebuyer.  The homebuyer -- the seller gave the 
         24   homebuyer's sister the $2,000, who then gave it to 
         25   her. 
  0225
          1            So we have lots of examples -- and we have 
          2   four examples of this -- of outright fraud going on 
          3   in these mortgage programs, and nothing has been 
          4   done about them.  Now, this isn't just old news, 
          5   this continues to happen.  And I'll be quick. 
          6            These are flips that took place in the last 
          7   year, financed by Fleet Bank:  2 Wyoming Street in 
          8   Roxbury which was foreclosed on for $103,000.  It 
          9   was flipped a couple of months later for $180,000, a 
         10   $77,000 profit.  There's no work permits listed in 
         11   the Inspectional Services for any work having been 
         12   done.  58 Leyland Way in Dorchester was foreclosed 
         13   for $123,000 by Fleet Bank.  It was flipped a couple 
         14   of months later for $190,000 financed by Fleet Bank.  
         15   And 11 Vesta Road in Dorchester, which Fleet 
         16   foreclosed for $80,000, flipped it a couple of 
         17   months later for $187,000.  Now, this one had about 
         18   $8,000 worth of work done.  So, in other words, a 
         19   quick $100,000 profit. 
         20            I'll finish very quickly.  But we also 
         21   discovered more irregularities.  We have discovered 
         22   a series of non-owner-occupied investors using Fleet 
         23   loans -- ironically by NATCA; I informed Bruce of 
         24   this -- all of which we would not have noticed, 
         25   because they looked pretty normal, but they're all 
  0226
          1   being foreclosed by Fleet. 
          2            Before you approve of the merger, which 
          3   you're going to do anyway, find out what is going on 
          4   in these programs.  We had a woman speak eloquently 
          5   earlier about getting a mortgage through ACORN, and 
          6   how she has stability and how her kids are doing 
          7   well.  That's wonderful.  This is the other side of 
          8   the equation. 
          9            This isn't old news.  This continues to 
         10   happen, as we speak, and the Federal Reserve Board 
         11   has not addressed it.  The blood, the financial 
         12   blood of low-income homeowners is on the hands of 
         13   these speculators who prey on them.  It's also on 
         14   the hands of the Fleet executives who finance them.  
         15   And unfortunately, it's increasingly on the hands of 
         16   the Federal Reserve Board who refuses to make the 
         17   banks accountable.  (Applause)
         18            PRESIDING OFFICER SMITH:  Thank you very 
         19   much for coming.  We're going to take our lunch 
         20   break now, and we'll reconvene in 30 minutes. 
         21                  (Whereupon, at 2:00 p.m. the hearing
         22                  was adjourned for luncheon recess)
         23   
         24   
         25   
  0227
          1                     AFTERNOON SESSION
          2            HEARING OFFICER SMITH:  We'll go ahead and 
          3   start.  On our next panel, the witnesses have four 
          4   minutes each, and we truly would appreciate it if 
          5   you would keep an eye on the timekeeper and get the 
          6   signal for the one minute remaining, and when your 
          7   time's up, please close. 
          8            So we'll start with Ms. Aranjo. 

	
Last update: December 3, 2010