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Public Meeting Transcripts

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

Wednesday, July 7, 1999

Transcript

0001
                                            Volume I     
                                            Pages 1 to 543
                                            
              
              
              
              
              
              
              
                            Public Meeting Regarding the Proposed 
                            Merger of Fleet Financial Group, Inc. 
                                and BankBoston Corporation
              
              
              
              
              
              PRESIDING:  Dolores Smith, Director, Division of 
                          Consumer and Community Affairs, 
                          Federal Reserve Board
                                        
                                        
                                        
                                        
                             Held at:  Federal Reserve Bank, 
                 600 Atlantic Avenue, Boston, Massachuetts, on 
                      Wednesday, July 7, 1999, at 9:00 a.m.
              
              
                             (Anne H. Bohan and 
                             Carol H. Kusinitz, 
                             Court Reporters)
              
              
              
                                     * * * *
                            
              
              
              
              
              
                            
                                        
              
              
  0002
                                    I N D E X
              
              SPEAKER                                        PAGE
              
              Dolores Smith                                    10
              
              Terrence Murray                                  15
              
              Chad Gifford                                     24
              
              Gail Snowden                                     30
              
              Agnes Bundy Scanlan                              38
              
              Terrence Murray                                  42
              
              Mayor Thomas Menino                              45
              
              Congressman Michael Capuano                      50
              
              Senator Dianne Wilkerson                         54
              
              Jeanette Boone (for Sen. John Kerry)             64
              
              Larry Ferguson (for Congressman 
                              Patrick Kennedy)                 72
              
              Attorney General Thomas Reilly                   79
              
              Attorney General Richard Blumenthal              84
              
              Denise L. Nappier                                90
              
              Joyce Campbell (for Maude Hurd)                 102
              
              Angie Wilkerson (for Matthew Christian)         107
              
              Lunita Mustafa (for Elnora Thompson)            108
              
              Jennifer Carter                                 110
              
              Gwendolyn Jacobs                                113
              
              Lori Brown                                      118
              
              Eddie Collazo (for Lucy Mateo)                  122
              
              Karen Miller (for Rose Blain)                   124
              
  0003
                                    I N D E X
              
              SPEAKER                                        PAGE
              
              Reverend Norvel Goff                            127
              
              Margo Strom                                     129
              
              Nancy Korman                                    131
              
              Tandeka Guilderson                              132
              
              Deborah Deceatis                                134
              
              Greg Williams                                   136
              
              Romney Resney                                   139
              
              Richard Lord                                    141
              
              Martha Jones                                    142
              
              William Gillison                                145
              
              Ruth Scott                                      147
              
              Peter Cuenca                                    149
              
              Lyndia Downie                                   151 
              
              Susan Rodgerson                                 152
              
              Robert Regan                                    153
              
              Rosa Minayo Durado                              155
              
              Lynn Swann                                      156
              
              Tripp Jones                                     158
              
              Michael Brown                                   160
              
              Manuel Mirabal                                  163
              
              Frank Moy                                       165
              
              Stephen Dickerman                               166
              
              Reverend Al Sharpton                            168
              
  0004
                                    I N D E X
              
              SPEAKER                                        PAGE
              
              Martha Yager (for Matthew Lee)                  172
              
              Abdul Jabbar Muhammad                           176
              
              Ellen Feingold                                  181
              
              Ken Guscott                                     186
              
              Ruhi Maker                                      190
              
              Ruhi Maker (for Rashmi Rangan)                  194
              
              Joan Wallace-Benjamin                           199
              
              Martha Yager                                    205
              
              Mr. Albert                                      207
              
              Bruce Marks                                     213
              
              John C. Anderson                                221
              
              Carol Aranjo                                    227
              
              Marc Draisen                                    230
              
              Jeanne DuBois                                   234
              
              Andrew Morehouse                                238
              
              Michael Westgate                                243
              
              Susan Worgaftik                                 246
              
              David Young                                     250
              
              Elizabeth Webster                               258
              
              Denise Flynn                                    259
              
              Linda Whitlock                                  260
              
              Jane Smith                                      262
              
              Paul Guzzi                                      263
              
  0005
                                    I N D E X
              
              SPEAKER                                        PAGE
              
              Peter Meade                                     264
              
              Alan Macdonald                                  265
              
              Robert Justis                                   266
              
              James Brett                                     268
              
              Ron Machtley                                    269
              
              Felix Soto                                      271
              
              Felix Torres                                    272
              
              Douglas Johnson                                 273
              
              Dennis Langley                                  274
              
              Cherylyn Satterwhite                            275
              
              Jeff Campbell                                   277
              
              Eric Schwartz                                   278
              
              Aaron Lieberman                                 279
                  
              Carl Axelrod                                    281
              
              Michael Widmer                                  282
              
              Edward Lane Reicker                             283
              
              David Brown                                     284
              
              William Farrell                                 285
              
              Congressman Barney Frank                        286
              
              Congressman William Delahunt                    295 
              
              Sonia Alleyne                                   305 
              
              Thomas Callahan                                 310
              
              John Lozada                                     311
              
  0006
                                    I N D E X
              
              SPEAKER                                        PAGE
              
              Rita Gonzales Levine                            317
              
              Mossik Hacobian                                 321
              
              Ozell Hudson, Jr.                               323
              
              Cathy Malmstrom                                 327
              
              Susan Pearson                                   332
              
              Susan Bodington                                 337
              
              Brenda Clement                                  342
              
              Reverend Joseph Washington                      345
              
              Ray Neirinckx                                   352
              
              Mayor Michael Albano                            357
              
              Representative Jarrett Thomas Barrios           360
              
              Vermelle Parks                                  365
              
              Councilor Gareth Saunders                       369
              
              John Wilson                                     377
              
              Samuel C. Hamilton                              378
              
              Henry Thomas                                    380
              
              Sol Soskin                                      382
              
              Peter A. Gagliardi                              385
              
              Richard Kumro                                   386
              
              Christopher Sikes                               388
              
              F. Carlisle Towery                              390
              
              Jim Morgo                                       392
              
              Karen Phillips                                  394
              
  0007
                                    I N D E X
              
              SPEAKER                                        PAGE
              
              Phillip Morrow                                  396
              
              Timothy Marshall                                397
              
              Keith W. Stokes                                 400
              
              Jeffrey Pollock                                 402 
              
              David Crowley                                   404
              
              Anne S. Habiby                                  405
              
              Jose Champagne                                  407
              
              Fernando Comulada                               408
              
              Peter Fellenz                                   409
              
              Hierberto Flores                                410
              
              Juan Cofield                                    411
              
              Reverend Frank Kelly                            417
              
              Drew Astolfi                                    421 
              
              James T. Haskell                                424
              
              Wayne M. Burton                                 428
              
              Marcia Peters                                   430
              
              Gail Pisacane                                   433
              
              Leo Sarkissian                                  440
              
              Robert Van Meter                                445
              
              Andrew Grainger                                 450
              
              John O'Connor                                   455
              
              Ned Brown                                       461
              
              Larry Raff                                      465
              
  0008
                                    I N D E X
              
              SPEAKER                                        PAGE
              
              James Campen                                    469
              
              Robert Davis                                    477
              
              Donald Glass                                    480
              
              Frank Carvalho                                  487
              
              Roger Colton                                    491
              
              Pat Cusick                                      496
              
              David Harris                                    500
              
              Reverend William Barnwell                       506
              
              Bruce Bolling                                   509
              
              Alvin Porter                                    513
              
              Luz Santana                                     515
              
              Greg Vickers                                    517
              
              Roger Garvin                                    522
              
              Vickie Hurewitz                                 524
              
              Greg Timilty                                    529
              
              R. K. Schwartz                                  533
              
              Dennis Flynn                                    538
              
              
              
              
              
              
              
  0009
          1                   P R O C E E D I N G S
          2            MR. WALKER:  Good morning, ladies and 
          3   gentlemen.  If you'll be seated, we'll try to get 
          4   these proceedings started.  My name is Richard 
          5   Walker.  I'm the Vice President for Public and 
          6   Community Affairs here at the bank.  Just a few 
          7   announcements.  If you are a speaker, please 
          8   register at the speaker's desk if you want to give 
          9   remarks today.  
         10            Also if you're a member of the press, 
         11   please register at the press table.  Once you've 
         12   registered as speakers, please be in the speaker 
         13   assembly area at least 15 minutes before you are 
         14   about to come on.  
         15            Also, the use of cellular or portable 
         16   phones in the auditorium is prohibited.  We want to 
         17   have these proceedings move as quickly as possible 
         18   without the distractions of the cellular phones.  
         19   Thank you. 
         20            In terms of the restrooms, they're out the 
         21   door and to your left, and if you have any 
         22   questions, please see me or any of the staff with 
         23   the tags on them during the course of the day. 
         24            Now I will turn the proceedings over to the 
         25   Presiding Officer, Dolores Smith, who is the 
  0010
          1   Director of Consumer and Community Affairs at the 
          2   Federal Reserve Board of Governors.  Dolores. 
          3            PRESIDING OFFICER SMITH:  Thank you, 
          4   Richard.  I am pleased to welcome you to this 
          5   important public meeting on the application by Fleet 
          6   Financial Group to acquire BankBoston Corporation.  
          7   Richard has already done so, but for the record I'll 
          8   go ahead and introduce myself.  I am Dolores Smith, 
          9   Director of the Division of Consumer and Community 
         10   Affairs at the Federal Reserve Board in Washington, 
         11   D.C.  I'll be the Presiding Officer for this 
         12   meeting.  
         13            Other members of our panel include two from 
         14   the Federal Reserve Bank of Boston and two from the 
         15   Board.  First, Boston, we have Bill McDonough on my 
         16   extreme right, the bank's General Counsel.  Then at 
         17   my extreme left Lynn Browne, Senior Vice President, 
         18   Research and Statistics.  
         19            From the Board on my left, Myron Kwast, who 
         20   is the Associate Director for the Division of 
         21   Research and Statistics, and to my right Scott 
         22   Alvarez, who is the Associate General Counsel. 
         23            We are here today because Fleet Financial 
         24   Group, Boston, Massachusetts, has applied for 
         25   approval to acquire BankBoston Corporation, Boston, 
  0011
          1   Massachusetts.  When the Federal Reserve considers 
          2   one of these applications, we look at a number of 
          3   factors under the Bank Holding Company Act.  These 
          4   include financial issues, managerial issues, 
          5   competitive issues, and the convenience and needs of 
          6   the communities affected.  In doing so, we 
          7   particularly look at the record of performance of 
          8   the parties under the Community Reinvestment Act.  
          9            The Community Reinvestment Act requires the 
         10   Board to take into account an institution's record 
         11   of meeting the credit needs of its entire community.  
         12            The Fleet-BankBoston application also 
         13   involves the proposed acquisition or retention of 
         14   nonbanking companies engaged in activities 
         15   permissible for bank holding companies.  The Federal 
         16   Reserve Board must determine whether the proposed 
         17   nonbanking activities can reasonably be expected to 
         18   produce benefits to the public that outweigh 
         19   possible adverse effects such as undue concentration 
         20   of resources, decreased or unfair competition, 
         21   conflicts of interest or unsound banking practices.  
         22            The purpose of the public meeting today is 
         23   to receive information regarding these factors.  We 
         24   will be seeking to elicit this information and to 
         25   clarify factual issues related to the application.  
  0012
          1            We are very pleased that so many people 
          2   have been willing to come and testify at the public 
          3   meeting today.  We expect to have more than 160 
          4   groups and individuals represented during the course 
          5   of the meeting.  
          6            And I want to tell you a little bit about 
          7   the procedures.  This is what is called an informal 
          8   public meeting.  Members of this panel may ask those 
          9   who are testifying about their testimony.  This is 
         10   not a formal administrative hearing, so we are not 
         11   bound by rules regarding evidence, 
         12   cross-examination, and some of the formal trappings 
         13   of that kind of proceeding.  
         14            As you can see from the agenda, we have a 
         15   very long day ahead of us and we will need to stick 
         16   to the schedule closely so that everyone who has 
         17   asked to offer oral testimony will have a chance to 
         18   do so at the appointed time.  We ask the witnesses 
         19   to be mindful of the needs of others and to help us 
         20   stay on schedule.  
         21            The witnesses on each panel will be 
         22   expected to stay within their allotted times.  We 
         23   have a signal system that we will be using.  We have 
         24   two timers seated at -- two timekeepers seated at 
         25   the table, and we will also have panels that are of 
  0013
          1   varying sizes, so that for most of the panels the 
          2   witnesses will have between three and five minutes 
          3   to present their oral statements.  In a few 
          4   instances the witnesses have been allotted slightly 
          5   longer times.  The timekeeper will give you a signal 
          6   generally when there is one minute remaining to 
          7   speak and another -- do you want to hold that up in 
          8   both directions so that the people in back can see 
          9   you.  And then there is a second card that they will 
         10   hold up when the time is up.  
         11            And sometimes it's hard for the witnesses 
         12   to be looking at the panel, the Federal Reserve 
         13   panel, and also to be minding the timekeeper, so 
         14   there may be times when the witness doesn't notice 
         15   that the "Please Finish" sign has been held up, in 
         16   which case the timekeeper will give an audio signal, 
         17   and we'll try to call your attention to that. 
         18            You will also see from the schedule that we 
         19   in several cases do have a rather large number of 
         20   persons on a given panel, and they will each have 
         21   about one minute at the microphone.  This we have 
         22   done so that we can provide an opportunity for all 
         23   of these persons individually to have their say 
         24   before this public meeting.  
         25            Finally, there may be some persons who were 
  0014
          1   unable to sign up in advance, so to the extent 
          2   possible we want to give them a chance to speak as 
          3   well.  We have scheduled toward the end of today's 
          4   meeting an open-mike period when we will make the 
          5   microphone available to any member of the public who 
          6   wants to make an oral presentation, time permitting.  
          7            Witnesses at this public meeting also may 
          8   submit a written supplement to their oral testimony, 
          9   but they must do so by next Wednesday, July 14th, 
         10   and then the record will be closed.  Any written 
         11   supplements should be directed to Jennifer J. 
         12   Johnson, Secretary of the Board, Federal Reserve 
         13   Board, Washington, D.C. 20551.  They must be 
         14   received by 5:00 p.m. Eastern Daylight Time on the 
         15   14th.  Submissions also could be faxed to Area Code 
         16   202-452-3462.  
         17            Witnesses, if you have not turned in copies 
         18   of your written testimony or if you have any other 
         19   written statement to put into the record, please 
         20   leave it with the Federal Reserve staff at the 
         21   registration table.  It is important that we get 
         22   this information for the record.  A transcript of 
         23   the meeting will be available by probably Monday, 
         24   July the 12th, through the Federal Reserve Bank of 
         25   Boston and through the Federal Reserve Board.  
  0015
          1            In addition, the official transcript will 
          2   be available by the close of business July the 14th 
          3   on the Board's public Web site at 
          4   www.bog.frb.fed.us.  
          5            And with that, let's begin the proceedings 
          6   and have members of our first panel. 
          7            In the interest of time, what I'll ask is 
          8   that you each state your name, organization, and 
          9   then we'll start with that. 
         10            MR. MURRAY:  I'm Terry Murray, Chairman of 
         11   Fleet Bank Group. 
         12            MR. GIFFORD:  I'm Chad Gifford, Chairman, 
         13   BankBoston.
         14            MS. SNOWDEN:  Gail Snowden, Managing 
         15   Director, BankBoston.
         16            MS. SCANLAN:  Agnes Bundy Scanlan, Managing 
         17   Director of Fleet Financial Group.
         18            PRESIDING OFFICER SMITH:  Mr. Murray.
         19            MR. MURRAY:  Thank you.  I'd like to begin 
         20   by thanking the Federal Reserve Board for inviting 
         21   me to speak on behalf of Fleet on our proposed 
         22   merger.  Since the months since we announced our 
         23   proposal, it has been a very proud and challenging 
         24   time for all of us at Fleet and Bank of Boston.  I 
         25   would particularly like to thank our employees, many 
  0016
          1   of whom have been working very hard this summer to 
          2   ensure that our company gets off on the right foot.  
          3            I know there are many questions and 
          4   concerns about this merger and we hope to address 
          5   them today.  All of us, employees and citizens 
          6   alike, are on the verge of ensuring that New England 
          7   will enter the 21st century with a hometown bank, 
          8   headquartered in this city, committed to serving our 
          9   customers and our community.  
         10            Four years ago when I testified before this 
         11   Board about Fleet's merger with Shawmut, I spoke 
         12   about the banking industry's trend towards 
         13   consolidation and how it affected our relations with 
         14   our customers and our communities.  Chad talked 
         15   about the same issues when it came time to discuss 
         16   BankBoston's merger with BayBanks.  We took steps 
         17   then to keep our institutions strong and 
         18   independent.  Neither of us expected to be here 
         19   today talking about a merger between our banks, but 
         20   we recognize that this merger is another necessary 
         21   step to ensure that New England continues to have a 
         22   major locally-based banking presence.  
         23            In the past few years we've seen a number 
         24   of bank megamergers like NationsBank and Bank 
         25   America, First Chicago and Bank One.  The number of 
  0017
          1   commercial banks in the U.S. decreased by a third 
          2   between 1987 and 1997.  The number of bank branches 
          3   increased by a third over the same period, as fewer 
          4   banks worked to expand access to service.  
          5            We've seen consolidation spill across 
          6   national borders as Deutsche Bank acquired Bankers 
          7   Trust, and we've seen it in France with Banque 
          8   Nationale de Paris' attempt to take over Sogen 
          9   Paribas to create a bank with a trillion dollars in 
         10   assets.  
         11            Already in Europe there are far fewer banks 
         12   than in the U.S., possessing far greater assets and 
         13   ability with which to compete in the global 
         14   financial markets.  In the U.S. we've also seen 
         15   interindustry mergers between Citicorp and 
         16   Travelers, and E-trade and Telebank, as new 
         17   technologies help to break down archaic barriers 
         18   between banking and other financial service 
         19   providers.  
         20            By increasing in size, banks achieve 
         21   economies of scale that allow us to invest more in 
         22   technology and in people so that we can develop 
         23   superior products and services like banking, 
         24   brokerage and investment services.  With products 
         25   such as these, we can match the increasingly 
  0018
          1   sophisticated needs of both the businesses and 
          2   consumers we serve.  
          3            Our merger also addresses the challenges 
          4   offered by new kinds of competitors.  We no longer 
          5   compete with just other banks.  We now compete with 
          6   institutions such as Fidelity, Merrill Lynch and 
          7   more recently with on-line banks.  More importantly, 
          8   this is a merger that seeks to strengthen our 
          9   national and international competitiveness while 
         10   making a deep local commitment.  
         11            Fleet-Boston brings together two of 
         12   America's oldest and most prestigious banks to 
         13   create one of the world's premier financial 
         14   institutions and financial providers right here in 
         15   the City of Boston.  
         16            When we announced the merger in mid-March, 
         17   our slides used the tag line, "One Plus One Equals 
         18   Greater Than Two."  This slide illustrated the idea 
         19   that our combined institution could do more in total 
         20   for our customers, communities and stockholders than 
         21   what the two premerger banks have done separately.  
         22   This was not a statistical assertion, but rather a 
         23   broad statement about how the new bank's synergies 
         24   would make Fleet-Boston more competitive than either 
         25   bank would be by itself.  The merger would enhance 
  0019
          1   our geographic diversification and our role as the 
          2   premier financial service provider from Bangor to 
          3   Brazil and from Cape May to Cape Cod.  
          4            This diversification will help reduce our 
          5   vulnerability to economic downturns.  Those of us 
          6   who went through the regional banking crisis of the 
          7   early '90s understand how important both geographic 
          8   and operating diversity are, and we don't want to be 
          9   at risk in the event of another economic downturn in 
         10   a particular region or industry sector.  
         11            This is indeed a very important time for 
         12   all of us who live in New England.  It is the time 
         13   for us to secure our economic future by responding 
         14   to the competitive challenge raised by world-wide 
         15   banking financial services, consolidation and 
         16   mergers.  
         17            While there are many opportunities and 
         18   benefits to this merger, at the same time there are 
         19   many concerns being voiced, and I'd like to address 
         20   them right now. 
         21            One of the compelling reasons for this 
         22   merger and why we know it will work is that each 
         23   company brings certain strengths to the table.  
         24   Right from the beginning Chad and I understood that 
         25   we must leverage the advantages of each company.  In 
  0020
          1   that spirit we will have BankBoston lead the way in 
          2   the area of community development.  They've done a 
          3   great job in this area for which they have been 
          4   rightly recognized.  
          5            Maintaining our outstanding CRA ratings 
          6   will continue to be a corporate goal for 
          7   Fleet-Boston.  We will use the BankBoston community 
          8   development approach, including First Community Bank 
          9   and the BankBoston Development Corporation.  
         10   Together we look forward to setting a new standard 
         11   of community development.  
         12            We have an outstanding CRA rating in 
         13   Massachusetts.  We have enormous successes and 
         14   successful partnerships that have worked to create 
         15   thousands of new homeowners that have invigorated 
         16   communities.  Moving forward, we plan to continue 
         17   these efforts.  
         18            We will also sustain our support of 
         19   neighborhood-oriented banking services, community 
         20   development programs and the charitable giving that 
         21   makes this commitment a reality.  
         22            Gail will speak about these initiatives in 
         23   detail, but I wanted to state that we strongly 
         24   believe that our recently announced commitment of 
         25   14.6 billion dollars is a realistic and achievable 
  0021
          1   plan and one that will increase affordable housing, 
          2   strengthen small business, and stabilize 
          3   neighborhoods in our footprint.  
          4            Moving forward with the new commitment, 
          5   we'll have an oversight board that will measure our 
          6   progress in serving community needs, a board with 
          7   representatives from many of the 125 community 
          8   groups we consulted when developing this plan.  
          9            Addressing antitrust concerns, it is 
         10   important to realize that the proposed merger is 
         11   more about combining the complementary businesses of 
         12   Fleet and BankBoston and not about combining 
         13   competing businesses.  In this regard Fleet's retail 
         14   branch operations extend to many Northeastern states 
         15   in which BankBoston has no branches, whereas, 
         16   BankBoston's large corporate banking business 
         17   extends across the nation, in 23 foreign countries 
         18   where Fleet has no presence.  
         19            The merger will also bring together 
         20   complementary nonbanking lines of businesses such as 
         21   Fleet's Quick & Reilly retail brokerage franchise 
         22   and BankBoston's Robertson Stephens, an investment 
         23   banking business.  Where the two banks do overlap, 
         24   we have proposed a divestiture plan that was 
         25   intended to preempt any conceivable competitive 
  0022
          1   concerns.  With more than 290 branches and 
          2   approximately 12-1/2 billion dollars in deposits, 
          3   the proposed divestitures are far and away the 
          4   largest ever made in the history of U.S. bank 
          5   mergers.  As a stand-alone entity, the divestiture 
          6   would rank among the top 50 bank holding companies 
          7   in the nation in terms of small business loans and 
          8   total assets. 
          9            Chad and I both grew up with banks 
         10   headquartered here in our home region, banks managed 
         11   by people who cared about New England and its 
         12   people.  I don't want my children or my 
         13   grandchildren living in a New England whose economic 
         14   fate is dictated from outside the region.  I want 
         15   them to have local institutions that are strong and 
         16   sophisticated, but that make decisions locally with 
         17   New Englanders in mind.  So many American cities 
         18   have lost that.  There's no longer a major 
         19   indigenous bank in Los Angeles, none in Miami, 
         20   Denver, Dallas, Philadelphia or Houston. 
         21            Panelists, I mentioned at the outset how 
         22   excited all of us at Fleet and BankBoston are about 
         23   this merger.  I'd like to finish by telling you how 
         24   much this merger means to me personally.  I grew up 
         25   in New England, went to school here, and I've worked 
  0023
          1   in banking here for almost four decades.  This is my 
          2   home and this is home to Fleet and BankBoston and 
          3   our tens of thousands of dedicated employees.  Our 
          4   legacy will be a large global institution domiciled 
          5   in New England with deep community commitments.  
          6            The financial system that is now taking 
          7   shape in which the Federal Reserve Board has done so 
          8   much to make possible is one that reflects the 
          9   vision and innovation that has made our nation the 
         10   world's financial leader.  
         11            I'm also pleased that the House of 
         12   Representatives last week passed the Financial 
         13   Services Act of 1999.  With the House and Senate 
         14   both voting to appeal the outdated Glass-Steagal 
         15   Act, we're a step closer to ensuring that this 
         16   nation's financial institutions can thrive and 
         17   compete in the next century.  
         18            Thank you for the opportunity to speak, and 
         19   let me also thank the concerned citizens of all 
         20   viewpoints who cared enough to join us today and 
         21   share their thoughts.  
         22            PRESIDING OFFICER SMITH:  Thank you.  I'd 
         23   like to remind witnesses that they can submit their 
         24   full written statement for the record, so that to 
         25   the extent you can abbreviate your comments, that 
  0024
          1   would be helpful and help us stay within the 
          2   allotted time for the panel. 
          3            Mr. Gifford?
          4            MR. GIFFORD:  That's one heck of an 
          5   introduction.  Thank you.  I'll move quickly in my 
          6   mind.  But thank you, Terry.  Thanks all for 
          7   participating with us.  I, too, welcome this 
          8   opportunity to discuss some of the reasons behind 
          9   and benefits of BankBoston's proposed merger with 
         10   Fleet.  I feel strongly, strongly that this merger 
         11   is in the best interests of all our stakeholders, 
         12   our employees, our customers, our communities, not 
         13   just shareholders.  I do not want to pick out any 
         14   one of those as being more important than any other, 
         15   but it's no secret -- and we said this in March when 
         16   we announced it -- the opportunity to preserve a 
         17   financial service powerhouse in New England was 
         18   important, and you heard Terry comment on that.  I 
         19   clearly share his passion for preserving the 
         20   hometown banks in the region, serving the individual 
         21   cities and communities that make up this great 
         22   fabric.  
         23            I, too, am a New Englander.  I'm a son of a 
         24   former New England bank chairman, so the importance 
         25   of a strong, locally-based banking organization has 
  0025
          1   been with me for a long, long time, and surely, as 
          2   Terry also referenced, all of us learned a very 
          3   painful lesson about the importance of a strong 
          4   banking organization about a decade ago.  
          5            As Terry has described, the consolidation 
          6   and convergence are the hallmarks, the realities of 
          7   financial services today.  BankBoston is no stranger 
          8   to that tradition, having participated in the 
          9   purchase of BayBanks in '95, Robertson Stephens, an 
         10   investment bank, in 1998 as part of a continued 
         11   consolidation in convergence of financial services.  
         12            I'm moving faster now, Madam Chairwoman.  
         13   But our proposed merger is not just about size and 
         14   strength, of course, but quality and commitment.  
         15   Our first principle from our first conversation has 
         16   been to preserve the best of Fleet and the best of 
         17   BankBoston, to build a new company that leverages on 
         18   respective strengths as well as honors and reaffirms 
         19   our shared commitments.  
         20            We will take the best talent and best 
         21   practices and make them one of everyday standards 
         22   and go on to build one of the premier financial 
         23   service organizations in the world and surely one 
         24   this region will be proud of.  
         25            The new Fleet-Boston will be one of the top 
  0026
          1   two employers in the region.  After the merger, 
          2   divestitures and consolidations, we will employ some 
          3   25,000 New Englanders and infuse into this company 
          4   no less than a billion-five in purchasing power and 
          5   tax dollars.  
          6            Acknowledging the painful impact of job 
          7   loss on some employees, we have pledged to treat 
          8   affected employees fairly and compassionately.  We 
          9   will provide a generous severance program and a 
         10   cutting-edge transition assistance program of 
         11   support for career retraining, starting a business, 
         12   or doing bank-subsidized community work.  At the 
         13   same time, and I think very importantly, we envision 
         14   career opportunities for tens of thousands of local 
         15   residents in a dynamic growth company.  
         16            The new Fleet-Boston will be a leader in 
         17   many markets around the world, able to meet the full 
         18   financial service needs of consumers, businesses of 
         19   all sizes, large and small, public sector entities 
         20   and nonprofit organizations.  We will be the premier 
         21   banking franchise in the Northeast, serving eight 
         22   million households through nearly 6,000 branches and 
         23   ATMs.  Nationwide the new company will serve more 
         24   than 20 million consumers and will have 450,000 
         25   small business customers and more than 100 billion 
  0027
          1   dollars in assets under management.  
          2            When our wholesale banking capabilities are 
          3   combined, the results will be equally valuable for 
          4   commercial customers.  We're talking about a bank in 
          5   CNI lending in the top three, the number one bank in 
          6   commercial field, premier investment bank, top five 
          7   in cash management provider, the top tier leader in 
          8   private equity, a strong company based here in 
          9   Boston.  
         10            BankBoston's unique Latin America 
         11   franchise, formed more than 80 years ago, of the 
         12   commercial needs of New England merchants will 
         13   continue to put Boston on the world map, helping to 
         14   forge links between businesses and nations in our 
         15   hemisphere.  The new Fleet-Boston will be able to 
         16   leverage this connection even further.  
         17            Finally, Fleet-Boston will have the 
         18   resources that Terry also referenced to be a major 
         19   player in E-banking, leveraging, for example, 
         20   BankBoston's base of a half million on-line banking 
         21   customers and Fleet's quarter million electronic 
         22   sure trade customers, again assuring that Boston 
         23   will participate in this very important growth 
         24   industry. 
         25            In short, a local financial service 
  0028
          1   company, competitive across the country and around 
          2   the world, will be a valuable asset to individuals 
          3   and communities and an invaluable partner to New 
          4   England businesses seeking to operate in today's and 
          5   tomorrow's global economy.  
          6            But again, this is not about size alone.  
          7   It's ironic, just as we're on the verge of an 
          8   industry that will conduct more and more of its 
          9   business electronically, without walls and without 
         10   boundaries, without bricks and mortar, without paper 
         11   or passbooks.  Our determination also to be grounded 
         12   in our local communities is greater than ever.  
         13            For me, this merger would not be effective, 
         14   would not be right if we were only able to build a 
         15   powerful regional, national, global business, if we 
         16   were only a large and strong employer, and if we 
         17   left behind the communities that have nurtured both 
         18   companies for a few centuries.  As we are poised to 
         19   become one of the leading financial institutions, we 
         20   have also pledged to remain a local partner and one 
         21   that will -- he took all the time.  (Laughter)  I'm 
         22   not sure how the system works.   
         23            I want to emphasize we remain a local 
         24   partner, continuing the development of our 
         25   communities.  We look at community development very 
  0029
          1   broadly as a strategic -- as a business opportunity.  
          2   We see as part of it the access by minority and 
          3   women-owned businesses, to the purchasing power of 
          4   Fleet-Boston.  We intend to continue and strengthen 
          5   our minority vendor programs.  
          6            We see as part of community development the 
          7   support we offer employee volunteers.  Between Team 
          8   Fleet and Eagle Core almost 20,000 of our employees 
          9   devote 150,000 hours making our community stronger 
         10   and healthier.  We see as part of community 
         11   development the embracing of individuals of all 
         12   races, genders, sexual orientations, customers and 
         13   employees.  
         14            Diversity will be an integral part of the 
         15   management of Fleet-Boston reporting directly to me.  
         16   We will continue to add to the very strong record we 
         17   are trying to achieve.  
         18            Terry has been explicit about the intention 
         19   to proceed with the BankBoston model for community 
         20   investment and very complimentary about our record.  
         21   To say that I am proud of First Community Bank and 
         22   BankBoston Development Company is an understatement, 
         23   but it is very important that we will continue to 
         24   play a leadership role in our new company.  
         25            Therefore, I ask you all to look at these 
  0030
          1   pledges in light of the very strong community 
          2   leadership records of Fleet and BankBoston, and 
          3   driven by our shared New England values, operating 
          4   in a global economy, grounded in the local 
          5   community, Terry and I will be supported and aided 

          6   by the 25,000 employees who, like us and our 
          7   company, call this region home.  We will preserve 
          8   and enhance the best of our two approaches and 
          9   records.  We will commit our honor and we will honor 
         10   our commitments.  
         11            Two months ago I was privileged to 
         12   represent BankBoston at a White House ceremony where 
         13   we were given the Ron Brown award for corporate 
         14   leadership.  BankBoston was cited for its community 
         15   banking group which has successfully served the 
         16   urban population as an emerging market.  I was 
         17   joined on that day, as I have been joined throughout 
         18   this effort, by the woman who is most singly  
         19   responsible for the success of our community banking 
         20   efforts at BankBoston and who will become the leader 
         21   of Fleet-Boston's community banking investment 
         22   initiatives, a daughter of a community activist, a 
         23   product of the community, a 30-year veteran of 
         24   BankBoston and by friend, Gail Snowden. 
         25            MS. SNOWDEN:  Thank you, Chad, and thank 
  0031
          1   you to the Board for the opportunity to present our 
          2   viewpoints and vision for the new bank now taking 
          3   shape.  It's extremely gratifying to me to have 
          4   heard from both Terry and Chad on the strong 
          5   position that community investment and in particular 
          6   BankBoston's model of development will take in the 
          7   new entity.  
          8            Nine years ago BankBoston began to redefine 
          9   the mission and objectives of its retail business in 
         10   the inner city.  By taking a more holistic approach 
         11   to economic development, we acknowledged that 
         12   economic growth must evolve from job creation to 
         13   wealth creation if sustainable growth was to happen.  
         14   We knew we had to prove we were willing to take 
         15   risks and to truly invest in community growth in a 
         16   more direct way.  
         17            We have learned much along the way, 
         18   receiving national recognition for our efforts in 
         19   urban banking through First Community Bank and the 
         20   BankBoston Development Company, both of which will 
         21   become part of the new company.  
         22            Like BankBoston, Fleet has been a leader in 
         23   small business and mortgage lending, helping to 
         24   revitalize entire neighborhoods and create new 
         25   enterprises, particularly those owned by minorities 
  0032
          1   and women.  Continuing these records going forward, 
          2   Fleet-Boston Corp. intends to be the number one 
          3   small business bank in New England, maintaining its 
          4   strong ties to keep partnerships with organizations 
          5   such as the SBA.  
          6            We believe the key to our success has been 
          7   our commitment to strong partnerships in the 
          8   community, whether with individuals, community 
          9   groups, governments or private organizations.  They 
         10   provide us with essential ties to the fabric of the 
         11   community.  These relationships have helped Fleet 
         12   and BankBoston to be more responsive to the unique 
         13   needs of our diverse communities by providing the 
         14   customer focus that did not exist before.  
         15            Over these last few months I have joined 
         16   with my colleagues at both banks in listening to the 
         17   frank discussions that took place with 
         18   representatives from over 125 community 
         19   organizations throughout New England.  Our goal was 
         20   to gain maximum insight into the needs of emerging 
         21   low to moderate income markets and to develop a 
         22   comprehensive investment plan that was both business 
         23   minded and community minded.  These discussions have 
         24   underscored the tremendous gains that our banks have 
         25   made in helping to revitalize entire neighborhoods 
  0033
          1   within our New England communities such as Codman 
          2   Square and Egleston Square.  
          3            The key themes that surfaced provided the 
          4   framework for our community investment commitment.  
          5   The result is a 14.6 billion dollar commitment over 
          6   five years which incorporates the best of our banks' 
          7   programs while establishing a leadership role of 
          8   continuing to earn an outstanding CRA rating.  This 
          9   dollar commitment represents a continuation and in 
         10   most cases an enhancement of LMI lending activities 
         11   by Fleet and BankBoston when adjusted for divested 
         12   branches and deposits.  We view the plan as 
         13   responsive and affirmative and continuing to enhance 
         14   those programs that support wealth creation and 
         15   economic development.  
         16            In the past, particularly during merger 
         17   discussions, various banks have reached agreements 
         18   with community organizations that may have been too 
         19   narrowly focused with regard to issues or geography.  
         20   Fleet-Boston has chosen to create a broad-based plan 
         21   for its entire marketplace that effectively responds 
         22   to critical community issues and will offer 
         23   significant opportunities for multi-state 
         24   partnerships with organizations as committed as we 
         25   are to the revitalization of urban and rural areas.  
  0034
          1            I would now like to spend some time 
          2   outlining the five-year 14.6 billion dollar 
          3   strategy.  Because we believe entrepreneurs are the 
          4   engine for growth creation and job creation that 
          5   transform entire communities, over half of this 
          6   entire commitment, 17.5 billion, is earmarked for 
          7   the support of small business lending.  We will 
          8   continue our strong support of small business 
          9   development in LMI communities, with special 
         10   consideration given to minority and women-owned 
         11   businesses.  
         12            In addition, we will go beyond the 
         13   traditional role of lending to small businesses by 
         14   providing 100 million in equity investment over five 
         15   years to help new business development.  We also 
         16   foresee an enhanced SDA partnership in addition to 
         17   our conventional loan activity.  With affordable 
         18   housing in the forefront of community concerns, we 
         19   are committing four billion over the next five years 
         20   to provide additional options for low and moderate 
         21   income homebuyers in need of home purchase mortgages 
         22   and refinancing.  
         23            Additionally, it provides sufficient 
         24   product flexibility to continue our existing 
         25   mortgage program partnerships such as the soft 
  0035
          1   second mortgage program to first-time home buyers in 
          2   Massachusetts.  
          3            The bank will continue its leadership in 
          4   community development lending, including at a 
          5   minimum 1.5 billion in CRA-eligible loans in LMI 
          6   areas.  In addition, the bank will invest 500 
          7   million in low-income housing tax credit investments 
          8   in support of the development of much needed 
          9   affordable housing.  
         10            We will continue to meet basic consumer 
         11   borrowing needs with the commitment of one billion 
         12   for consumer lending in LMI areas.  
         13            Finally, the bank will expand its technical 
         14   assistance and support with the commitment of 15 
         15   million.  Interwoven throughout this commitment is 
         16   what I view as a precedent-setting partnership that 
         17   we are announcing between Fleet-Boston and Fannie 
         18   Mae over the next five years.  The 
         19   Fleet-Boston/Fannie Mae communities initiative will 
         20   commit much needed resources to home ownership and 
         21   affordable housing and is projected to create 
         22   affordable housing options for tens of thousands of 
         23   families in the communities we serve.  
         24            Affordable home ownership, loans to LMI 
         25   home borrowers through a variety of innovative and 
  0036
          1   flexible programs such as a new women head of 
          2   household mortgage initiative, affordable 
          3   multifamily rental housing, a comprehensive plan to 
          4   preserve and accelerate the production of affordable 
          5   rented housing units.  We heard this so many times 
          6   from community groups.  
          7            And finally, neighborhood revitalization.  
          8   Fleet-Boston and Fannie Mae will stimulate new 
          9   housing and community development activity through 
         10   an innovative, comprehensive, strategic neighborhood 
         11   investment initiative. 
         12            What I have presented is a framework of the 
         13   partnership with Fannie Mae, and we will be 
         14   announcing more details in the next month or so. 
         15            Accountability.  We see community 
         16   organizations as critical partners in implementing 
         17   our commitment for capital access, outreach and 
         18   education.  Key to this approach is the issue of 
         19   accountability, and we are prepared to be held 
         20   publicly accountable for meeting all the commitments 
         21   laid out today.  An oversight board comprised of 
         22   community leaders will be formed and will meet twice 
         23   a year to receive information and to give us 
         24   feedback.  A community investment subcommittee of 
         25   the Fleet-Boston board will meet regularly during 
  0037
          1   the year to monitor the corporation's accountability 
          2   for community initiatives.  And in addition, a 
          3   business line steering committee will meet regularly 
          4   to monitor business line performance against our 
          5   commitments and our goals.  
          6            In conclusion, I look upon this new 
          7   organization, Fleet-Boston, with the same enthusiasm 
          8   and excitement as when we undertook the challenge of 
          9   building a profitable business in New England's 
         10   underserved urban markets nine years ago.  We enter 
         11   our alliance with Fleet Financial Group with a 
         12   blueprint for success in this emerging market in 
         13   which everyone benefits:  Our shareholders, our 
         14   customers and the communities we serve.  
         15            My colleagues at BankBoston and I are 
         16   gratified by this opportunity that Terry and Chad 
         17   are giving us to continue our work within a larger, 
         18   stronger community.  I believe in their commitment 
         19   to community investment and neighborhood 
         20   revitalization and that's why I'm sitting here today 
         21   committed to realizing upon this initiative.  
         22            At this point I would like to pass the 
         23   microphone to my colleague, Agnes Bundy Scanlan, who 
         24   has been instrumental in developing and managing 
         25   Fleet's community development program since 1994 and 
  0038
          1   who has worked tirelessly over the past few months 
          2   in meeting with community groups to help develop 
          3   this community investment commitment. 
          4            MS. SCANLAN:  Thank you, Gail.  Good 
          5   morning.  I'm pleased to be here today speaking on 
          6   behalf of the Fleet-BankBoston merger.  Fleet and 
          7   BankBoston are committed to working toward improving 
          8   the quality of life and the overall vitality of our 
          9   communities.  I would like to reiterate the pledge 
         10   expressed  by Terry, Chad and Gail.  We stand 
         11   committed to continue to meet the needs of 
         12   communities we serve through a wide range of 
         13   financial services and products.  
         14            We enthusiastically embrace our role in 
         15   fostering job creation, promoting home ownership, 
         16   enhancing economic growth and providing education 
         17   and support to individuals and businesses in urban, 
         18   rural and suburban communities.  This is without 
         19   question the most rewarding part of my job.   
         20            Understandably there have been concerns 
         21   expressed about this merger in terms of its effect 
         22   upon communities, businesses, and consumers.  Terry, 
         23   Chad, Gail and I have addressed some of them here 
         24   and in other meetings with concerned parties.  
         25   Nonetheless, apprehension and misapprehensions 
  0039
          1   remain, fueled in part by incomplete and in some 
          2   instances incorrect information.  
          3            In fact, we have some very good stories to 
          4   tell which have not been noted to date.  Affordable 
          5   housing.  In our 125 community meetings, and indeed 
          6   in everyday conversations, it becomes clear that 
          7   affordable housing is of great importance to all of 
          8   us.  When Professor James Campen released his study 
          9   on mortgage lending, it garnered a great deal of 
         10   attention.  He noted that Fleet cut back on its 
         11   lending following the Shawmut merger and concluded 
         12   that bank mergers mean less mortgage lending for LMI 
         13   and minority borrowers.  
         14            Fleet did experience a decline in mortgage 
         15   lending overall.  It is important to note that Fleet 
         16   did not intentionally cut back on its loan volume or 
         17   cede market share willingly.  Rather, several 
         18   factors contributed to reductions in overall 
         19   mortgage lending, including increased competition 
         20   within the marketplaces, particularly from 
         21   non-banks, merger-related branch divestitures and 
         22   significant management turnover and operational 
         23   changes at Fleet Mortgage.  
         24            Despite these developments, Fleet has 
         25   remained the leader in affordable housing.  For the 
  0040
          1   six-state region cited in the study, Fleet held the 
          2   number one market share for home purchase loans to 
          3   LMI borrowers in 1995 and 1996, and held the number 
          4   two market share to these borrowers in 1997, 
          5   exceeding industry averages.  
          6            In Massachusetts, a primary area 
          7   highlighted in the Campen study, Fleet held the 
          8   number one market share for LMI black and Hispanic 
          9   borrowers for the period 1995 through 1997.  In this 
         10   regard, even though our combined bank will only be 
         11   65 percent of its predivestiture size in 
         12   Massachusetts, today we have announced a commitment 
         13   commensurate with 100 percent of our predivestiture 
         14   size for affordable housing lending in this state.  
         15            In the City of Boston Fleet also held the 
         16   number one market share for LMI and minority 
         17   borrowers for the three-year period 1995 through 
         18   1997.  I believe these statistics confirm our 
         19   commitment to LMI minority borrowers.  Fleet and 
         20   BankBoston are doing the heavy lifting here.  
         21            Perhaps we should consider the point that 
         22   as other lenders increase market share, they have an 
         23   obligation to increase their share of lending to 
         24   these traditionally underserved markets.  Even if 
         25   they do not have CRA requirements as the banks do, 
  0041
          1   the combined voices of community groups, opinion 
          2   leaders and the public generally can raise this 
          3   imperative.  
          4            Small business lending.  In the course of 
          5   our meetings we heard concerns about the 
          6   availability of credit to small business.  But I 
          7   think one should consider the fine record of both 
          8   companies in working with small businesses as an 
          9   indication of our commitment moving forward.  In 
         10   fact, the largest component of our commitment to 
         11   small businesses at 7.5 billion over five years, 
         12   coupled with technical assistance support, is large.  
         13   At Fleet we serve more than 320,000 small business 
         14   customers in eight states.  
         15            Today Fleet is the largest provider of 
         16   financial services to small businesses in New 
         17   England.  According to the latest industry data, as 
         18   of June 1998, Fleet is ranked 10th among bank 
         19   holding companies for small businesses.  We are a 
         20   leading SBA lender.  In 1997 Fleet was the top SBA 
         21   lender in New England with more than 70 million in 
         22   total SBA volume.  
         23            I have some more remarks that I would like 
         24   to submit for the record, but in deference to time 
         25   I'd like to submit my time and yield to Terry Murray 
  0042
          1   to close. 
          2            MR. MURRAY:  Thank you, Agnes.  And that 
          3   concludes our remarks.  We'll be happy to respond to 
          4   the panel. 
          5            PRESIDING OFFICER SMITH:  Thank you.  
          6   Questions from the panel? 
          7            MR. ALVAREZ:  I have a question.  There are 
          8   a number of commenters who have referred to the 
          9   study that Ms. Scanlan discussed, suggesting that 
         10   Fleet's lending in LMI areas in particular, in home 
         11   mortgage lending in particular, has declined after 
         12   each of the last two major mergers Fleet has been 
         13   involved in, and that has caused some folks to be 
         14   concerned that one plus one does not equal greater 
         15   than two in low and moderate income neighborhoods.  
         16            I understand that the program that you have 
         17   discussed, the CRA plan, is going forward.  I was 
         18   interested in how the 14.6 billion dollar plan 
         19   compares to the amount of lending that the two 
         20   organizations are doing now and whether there are 
         21   any special steps that Fleet proposes to take to 
         22   ensure that lending will not decline after this 
         23   merger if this is approved. 
         24            MS. SNOWDEN:  I'll take that one.  In terms 
         25   of how we got to the number, particularly on 
  0043
          1   affordable mortgage lending, we took a look at the 
          2   past three years, and the projected combined annual 
          3   average amount was 820 million dollars a year.  We 
          4   then took an 80 percent divestiture factor, which 
          5   would give you a number of 736 million.  
          6            However, our plan commits on an average 
          7   annual amount of 800 million.  So we feel that we 
          8   are maintaining the same level, and in fact this one 
          9   is an enhanced level.  How you make sure you meet 
         10   your goals, you have goals, you have tracking at the 
         11   line of business level.  You have the oversight 
         12   committee, you have the CRA Council that reports to 
         13   Chad.  And so we'll be monitoring this initiative, 
         14   as we do most business initiatives, to make sure 
         15   that we stay on track.
         16            PRESIDING OFFICER SMITH:  Other questions? 
         17            MR. KWAST:  I have a question regarding 
         18   proposed divestitures.  As I think Mr. Murray 
         19   pointed out, you are proposing to divest a large 
         20   amount of offices and dollars of deposits.  My 
         21   question is, when considering who to divest your 
         22   offices to, what are the major factors that you 
         23   consider in deciding who the winning bidders are.   
         24            MR. MURRAY:  Well, to a large degree 
         25   Justice has certain ground rules.  They are 
  0044
          1   obviously looking for a major new competitor in this 
          2   marketplace.  Subject to that, however, we've been 
          3   fortunate in that there's been a great deal of 
          4   interest in the pieces as well as the whole of the 
          5   divested package.  And we have received enormous 
          6   amounts of interest.  And I guess from an ideal 
          7   point of view we can address Justice's concerns in 
          8   terms of viable competitors as well as some of the 
          9   local concerns, and that is something the community 
         10   banks and local banks participated in these 
         11   purchases.  
         12            Over the next two or three weeks we 
         13   collectively will be looking at the various bids.  
         14   Obviously it is an auction, and price is a 
         15   consideration, but not the sole consideration.  And 
         16   I think it's a balance.  It's balancing factors 
         17   between community bank expansion possibilities as 
         18   well as satisfying Justice's issues of viable 
         19   competition.  
         20            The major divestiture is in the State of 
         21   Massachusetts, which is 8 to $9 billion of the 12 
         22   billion dollar package; the others being in Rhode 
         23   Island and Connecticut.  But there have been dozens 
         24   of bids on the packages. 
         25            PRESIDING OFFICER SMITH:  Other questions?  
  0045
          1   If not, thank you very much for coming this morning.  
          2   And we'll go on to panel number two.  
          3            Thank you very much.  
          4            (At this point there was a chant from some 
          5   members of the audience, saying "Shame on you")
          6            PRESIDING OFFICER SMITH:  We're going to 
          7   call on the panelists in the order in which they are 
          8   listed.  So we'll start with Mayor Menino. 
          9            MAYOR MENINO:  Thank you very much and 
         10   thank you for allowing me to testify this morning.  
         11   In my remarks I want to focus on the impact that the 
         12   proposed merger would have on my city and ask you to 
         13   consider that impact in your deliberations.  
         14            This merger comes at a time when the local 
         15   and national economies are on a roll.  The 
         16   consolidation of firms into larger institutions is 
         17   happening in many industries.  This evolution is not 
         18   only fueling the stock market, it's also changing 
         19   the way we do business and the way companies can 
         20   grow within a region and even across international 
         21   borders.  
         22            Boston's banks can't hide from this trend.  
         23   They must go out and compete in these expanding 
         24   markets like any others.  But the consolidation of 
         25   capital in this merger will take Fleet to a position 
  0046
          1   where the banking needs of ordinary citizens will 
          2   seem insignificant compared to the attraction of 
          3   foreign markets and bigger deals, including 
          4   additional mergers.  
          5            As fewer banks survive and grow into bigger 
          6   players on the national and international stage, the 
          7   fundamental question we face is this:  Who will care 
          8   whether a community grows or dies?  The number of 
          9   banks whose fates are tied to the fate of Boston is 
         10   shrinking.  The Bank of New England is gone.  
         11   Shawmut Bank is gone.  BayBank is gone.  With this 
         12   merger BankBoston will also be gone.  Gone, too, 
         13   will be more local jobs and BankBoston's spirit of 
         14   dedication to every segment of our community.  
         15            In banking, the idea of fair service to all 
         16   is a result of the Community Investment Act.  It was 
         17   written into law because Americans saw what happened 
         18   when banks ignored some of our neighborhoods and 
         19   wrote off credit-worthy neighborhoods.  The 
         20   Community Reinvestment Act has brought people on the 
         21   margins into the mainstream of American life.  
         22   Without it, Boston would not be a city of come-back 
         23   neighborhoods.  It would see fewer first-time home 
         24   buyers, more abandoned houses, and whole 
         25   neighborhoods rotting from disinvestment.  
  0047
          1            Take Blue Hill Avenue, for example.  For 
          2   years it was little more than a depressing 
          3   collection of vacant lots and boarded-up buildings.  
          4   Since I became mayor we've invested over $65 million 
          5   up and down the avenue.  By building new homes and 
          6   businesses, we're rebuilding a whole community.  And 
          7   soon we'll start construction on the Grove Hall 
          8   Mall.  And some people said that would never happen.  
          9   A new shopping center with a supermarket, a 
         10   drugstore, a Dunkin' Donuts and other shops.  
         11            Our partner on this deal is BankBoston.  We 
         12   ended up with BankBoston because they could handle 
         13   the financing.  The bank wants to do this deal.  
         14   Chad Gifford knew this was important to the city, so 
         15   he put a good team on it, and today we have a deal.  
         16            Some banks are better than others.  In 
         17   spite of generous ratings from regulators, Fleet has 
         18   a troubled lending history in our community and 
         19   Fleet's approach to this merger leads me to believe 
         20   it will adopt a take-it-or-leave-it approach to 
         21   lending in our neighborhoods.  That troubles me, and 
         22   it should trouble every business leader in Greater 
         23   Boston, because the health of a city sets the tone 
         24   for investing throughout the wider region.  
         25            Some big banks believe the Community 
  0048
          1   Reinvestment Act gets in the way of their growth 
          2   strategy.  They see it as a nuisance.  They have 
          3   enlisted the help of their friends in Congress to do 
          4   away with it, people like Senator Phil Gramm of 
          5   Texas, who is no friend of the people in America's 
          6   cities.  For years Phil Gramm has been telling 
          7   government to get out of the business of rebuilding 
          8   communities.  Now he's telling business to get out 
          9   of that business, too.  
         10            Here in Boston the two banks have told us 
         11   their merger would mean a 20 percent reduction in 
         12   combined lending to our community.  If you want to 
         13   know what happens to a community when lending 
         14   disappears, try to remember the conditions of our 
         15   neighborhoods in the early 1970s.  Or follow 
         16   President Clinton's trip across the country with 
         17   business leaders this week.  Whether in Boston or 
         18   East St. Louis or Los Angeles, one stubborn fact 
         19   remains the same:  Capitalism does not work in a 
         20   community when that community is denied access to 
         21   capital.  
         22            As the mayor of this city I am concerned by 
         23   any merger that would deny my capital city in favor 
         24   of expanding markets somewhere else.  I am concerned 
         25   about a reduction in home mortgage loans, a 
  0049
          1   reduction in community development loans and small 
          2   business loans, and I'm concerned that the new bank 
          3   will not act as if it's life depended on the health 
          4   of our neighborhoods.  
          5            I ask you, how can any bank call itself a 
          6   local bank with pride if the bank is less than fully 
          7   committed to the local economy?  
          8            I am sorry to say that I have yet to hear 
          9   why this merger is a forward step for my community.  
         10   So until the Federal Reserve Board can convince me 
         11   otherwise, I cannot offer the City of Boston's 
         12   support for this merger.  
         13            You as regulators hold great power over the 
         14   future of banking in America.  You hold great power 
         15   over the economy of our communities and you have a 
         16   responsibility to protect the public interest.  So I 
         17   respectfully request that you remember the interests 
         18   of my constituents whose banking needs rest upon 
         19   your shoulders while you deliberate and decide the 
         20   merits of this merger. 
         21            In closing, let me say, my office would be 
         22   happy to supply you with some of the facts of my 
         23   detailed statement.  Also -- let me just finish up.  
         24   This might be a good deal for the stockholders, but 
         25   I don't believe this is a good deal for the 
  0050
          1   stakeholders.  Thank you very much. 
          2            (Applause)
          3            PRESIDING OFFICER SMITH:  And we will not 
          4   exactly follow the order.  We'll go next to 
          5   Congressman Capuano. 
          6            CONGRESSMAN CAPUANO:  Thank you.  First of 
          7   all, I'd like to thank the Federal Reserve for 
          8   having this hearing because it wasn't on the 
          9   original schedule when this merger was announced, 
         10   and I know that the Federal Reserve listened to the 
         11   requests of many people in this community to have 
         12   this.  I also know you have a very long day ahead of 
         13   you and I respectfully send my regrets for that, but 
         14   my thanks for having me here nonetheless. 
         15            As each of you know, the Congressional 
         16   delegation of Massachusetts has sent several letters 
         17   on this matter to the Federal Reserve and to others.  
         18   We have another one in the record today that 
         19   basically reiterates what we have said in the past, 
         20   naming four points that we've tried to focus on.  
         21   The fact that we want our community banks to have a 
         22   fair opportunity to bid and then purchase a fair 
         23   portion of the divested parts of this merger if and 
         24   when it happens; that we want both the remaining 
         25   bank of this particular item and whoever wins the 
  0051
          1   divestitures to continue and to expand their 
          2   neighborhood investment.  
          3            We want the Federal Reserve to make sure 
          4   that all employees are fairly treated and honestly 
          5   treated, and, of course, we want local charities to 
          6   continue the relationship they've had with the banks 
          7   in the past.  That's what the delegation has said. 
          8            For myself, for the last four months as a 
          9   member of the banking community and a new member of 
         10   Congress I've actually worked a little harder on 
         11   this than most because I've had a lot of catching up 
         12   to do on these kinds of matters.  And when this 
         13   merger was announced, right from the beginning I 
         14   asked for several pieces of information -- I think 
         15   pretty easy pieces of information -- such as the 
         16   details of charitable giving, some statistics on low 
         17   and moderate income loans, things like that.  
         18            Since then we've had a study done by a 
         19   professor at UMass-Boston that's come out that's 
         20   raised some serious questions on the lending 
         21   practices of these institutions.  We've had comments 
         22   from a group called Inner City which has raised 
         23   serious questions.  We've had the bank itself come 
         24   out with a 14.6 billion dollar community investment 
         25   proposal that has virtually no detail to it.  
  0052
          1            Those are serious issues and I believe they 
          2   have been seriously presented.  However, not until 
          3   yesterday at three o'clock in the afternoon did any 
          4   representative from the bank have anything to say 
          5   about any of those matters.  
          6            Now, I'll tell you that I do think that 
          7   both Fleet and the Bank of Boston have done a good 
          8   job going out and listening and I do think it's 
          9   important to maintain a strong regional bank in 
         10   Boston.  I think that's fine.  And I congratulate 
         11   the banks for going out to listen.  But listening is 
         12   only one half of the equation.  The second half of 
         13   the equation is then responding to what you have 
         14   heard.  Not necessarily agreeing with it, not 
         15   necessarily disagreeing with it, but simply 
         16   responding.  Do you agree?  Don't you agree?  Let's 
         17   work this out.  There has been none of that until 
         18   three o'clock yesterday.  
         19            Today has been an extended period of time 
         20   for public comment.  I don't think that less than 24 
         21   hours for people to respond or to react to the 
         22   response is a fair amount of time.  I think it's an 
         23   inappropriate amount of time.  (Applause)  And I 
         24   think it could raise any number of questions.  I 
         25   know that this is a difficult merger.  I understand 
  0053
          1   that and I respect the fact that the bank has been 
          2   busy.  If that's the case, okay; great.  It also 
          3   raises potential questions that the bank is being 
          4   insensitive to community input.  If that's the case, 
          5   that's the worst possible scenario.  
          6            The whole reason we're doing this is to 
          7   make sure that the successful bidders and the merged 
          8   entity are responsive to community needs.  If there 
          9   wasn't a community component to that, we wouldn't be 
         10   here.  If it was simply banking, bottom-line 
         11   banking, you wouldn't do this, you wouldn't need our 
         12   input, we wouldn't have a whole lot to offer.  
         13            We're not bankers.  We're here representing 
         14   the community, and if the community is not listened 
         15   to, not necessarily agree with them on every point, 
         16   what have we done?  You're wasting your entire day.  
         17   I'm wasting an awful lot of time and most of the 
         18   people in this audience have wasted an awful lot of 
         19   time.  (Applause)  
         20            To my way of thinking, I want this merger 
         21   to end up in one plus one is greater than two.  I 
         22   really do.  Not just for the shareholders; also for 
         23   the communities and, as the mayor put it, for the 
         24   stakeholders.  That's why today the written 
         25   testimony that I've given, which is a little bit 
  0054
          1   more detailed than the verbal comments, I'm asking 
          2   for a couple of things:  
          3            If the Federal Reserve finds it in the 
          4   interest of the community, which I think it is 
          5   obviously, I ask that the Federal Reserve delay any 
          6   decision-making and extend the public comment period 
          7   of time to at least 30 days after these responses 
          8   have been given by the bank, because we need a fair 
          9   amount of time to see whether their responses are 
         10   fair or not fair, reasonable or not reasonable.  
         11   Absent that extension of time, then I have to 
         12   strongly oppose this merger at this time.  
         13   (Applause)  And I have to oppose it not because I 
         14   have made a final decision in my own mind as to 
         15   whether this merger serves the needs of the 
         16   community, but because I haven't been allowed the 
         17   time to do that.  So I respectfully ask the Federal 
         18   Reserve to extend the period of time to 30 days 
         19   after receipt of responses by the banks, and if they 
         20   can't do that, then I have to oppose this merger.  
         21   Thank you.  
         22            (Applause)
         23            PRESIDING OFFICER SMITH:  Senator 
         24   Wilkerson.
         25            SENATOR WILKERSON:  Good morning to you, 
  0055
          1   Presiding Officer, members of the Board.  For the 
          2   record, my name is Dianne Wilkerson and I currently 
          3   serve as State Senator in Massachusetts and I have 
          4   done so for seven years.  Prior to that I practiced 
          5   law in Massachusetts and was a member of the 
          6   Community Investment Coalition which negotiated with 
          7   Fleet Bank in 1990 when it took over the Bank of New 
          8   England.  The CIC also negotiated again in 1994 the 
          9   Shawmut-Fleet merger, and I represented as a lawyer 
         10   over 600 individuals who were victims of the 
         11   infamous second mortgage scam, one of the most 
         12   devastating financial scandals that destabilized 
         13   both the Boston and Springfield Afro-American home 
         14   ownership communities.  
         15            I also was a member of the team that 
         16   negotiated the second mortgage scam settlement with 
         17   BayBank, the former BayBank and the former Shawmut 
         18   Bank.  And I have previously testified before this 
         19   Board where I have raised serious issues and 
         20   concerns to this body.  
         21            However, I have never testified in 
         22   opposition to a merger until now, and I do so with 
         23   sadness and disappointment.  (Applause)  Since April 
         24   of this year I have served as the convener of what 
         25   is called the Community Advisory Committee for the 
  0056
          1   Fleet Bank-BankBoston merger.  The committee is a 
          2   40-plus member group comprised of racial, gender and 
          3   professional, university, government and religious 
          4   areas from across the Commonwealth who came together 
          5   to solicit comments and concerns from interested and 
          6   impacted parties across the state.  The committee 
          7   hosted a statewide town meeting in May.  Over 200 
          8   persons turned out to offer testimony, and we have 
          9   provided the videotape of that meeting to the banks 
         10   and to this Board.  
         11            The committee met with members of our 
         12   Congressional delegation.  We met with officials 
         13   from the Department of Justice Antitrust Division, 
         14   the Federal Reserve Bank of Boston, the Attorney 
         15   General of the Commonwealth of Massachusetts, and 
         16   the Massachusetts Division of Banks.  We've had the 
         17   unprecedented support and collegiality from our 
         18   entire Congressional delegation from the mayor of 
         19   our City of Boston and it's never happened before, 
         20   and I think that that unified position ought to tell 
         21   you something, because this is different. 
         22            We also met with the bank principals early 
         23   in June and at that meeting we transmitted to them a 
         24   lengthy written document in addition to other 
         25   information that the committee had gathered.  It was 
  0057
          1   our hope and expectation that those concerns would 
          2   be taken into account as the proposal was developed.  
          3   The committee waited for some time to offer public 
          4   comment because we were optimistic that the 
          5   committee would be able to engage in a productive 
          6   dialogue with bank principals to ensure that the 
          7   banking needs and the needs of the Massachusetts 
          8   communities, in particular women and people of color 
          9   in low and moderate income communities would be met.  
         10   I'm sorry to say that that June 4th communication 
         11   and the detailed concerns and issues that have been 
         12   raised have never had the courtesy of a response.  
         13            On June 24th we received the bank's 
         14   proposal and have spent a considerable amount of 
         15   energy reviewing this plan.  In sum, the proposal 
         16   does not meet the regulatory standards that the 
         17   Federal Reserve Bank must have satisfied in order to 
         18   approve this merger application.  There is much that 
         19   I could offer, but I will focus my testimony on two 
         20   pieces of the criteria of review for this Board 
         21   under the Bank Holding Company Act.  That is, 
         22   competition and convenience and needs of the 
         23   community.  
         24            As to competition, among other things, this 
         25   application would involve the largest branch 
  0058
          1   divestiture in the history of the United States.  
          2   However, even if a large bank were to purchase all 
          3   the branches, the most it could represent would be 
          4   six percent of the Massachusetts market share.  The 
          5   merged institution would be at least 30 percent, 
          6   leaving its next closest competitor about five times 
          7   smaller, hardly an encouraging picture for 
          8   competition.  
          9            The divestment discussion to date has 
         10   ignored an important and serious issue for the 
         11   communities which I represent, and that is that many 
         12   of the branches on the divestment list were cited 
         13   specifically to fill a void in urban and rural 
         14   markets which until the last five years were 
         15   woefully underserved by banks and saturated with 
         16   check-cashing stores.  The citing of many of the 
         17   branches on the sale list were negotiated in the 
         18   aftermath of the last two mergers.  Several of the 
         19   branches were cited based on an acknowledgment and a 
         20   determination that the convenience and needs of a 
         21   certain segment of our community were not being met.  
         22            Special care must be taken by this Board to 
         23   ensure that we don't go backwards.  It would be our 
         24   position that no grant cited in an urban market to 
         25   fill a void should be sold to anyone who does not 
  0059
          1   intend at least to keep the branch open.  Who gets 
          2   these branches is also of critical importance to us.  
          3   We have been fortunate in the Greater Boston 
          4   community of color to have a bank that is certified 
          5   with the United States Treasury as the only bank 
          6   community development finance institution in the 
          7   state and whose focus market is urban, the urban and 
          8   LMI communities, and especially people of color, 
          9   African-American, Latino.  
         10            Local and community banks should be 
         11   strengthened by this merger, not weakened.  You must 
         12   pay special attention to the Boston Bank of Commerce 
         13   and the market that they serve.  
         14            Lastly, much has been made about the 
         15   expectation of the applicant banks that there would 
         16   be competition in the market to pick up market share 
         17   in areas where the applicant will decrease lending 
         18   and spending; for example, in mortgage lending.  It 
         19   is our contention that there is simply no basis for 
         20   such an assumption, and in fact history tells us 
         21   different.  With the slim pickings to be left in the 
         22   bank market for mortgage seekers, there is no 
         23   rational expectation that the purchasing bank or the 
         24   remaining Massachusetts banks soon to be but one, if 
         25   the next merger is approved, could pick up the slack 
  0060
          1   with the merged bank to continue the double-digit 
          2   decreases in mortgages that have been made to 
          3   African-Americans and Latinos that we have been 
          4   sustaining every year for the past four years.  
          5            Oddly enough, the biggest hits have come 
          6   post merger of BankBoston and BayBank and even 
          7   bigger decreases in the post Fleet-Shawmut Bank 
          8   merger, and unless the Federal Reserve takes special 
          9   consideration of the need to ensure contingent 
         10   competition for the low and moderate income market, 
         11   there will be little or none available.  
         12            And please note that we do not consider 
         13   second-mortgage companies charging 20-plus percent 
         14   interest competition for the LMI and minority income 
         15   market.  
         16            I know that Professor Campen is going to be 
         17   testifying later, but I think that the analysis that 
         18   he has done is uncontroverted and would hope that 
         19   this Board would take some special note to look at 
         20   those numbers, and not only the numbers for Boston, 
         21   but for the Commonwealth of Massachusetts as a 
         22   whole.  The loans to black borrowers decreased 52 
         23   percent.  From 1997, 1998, the loan to 
         24   Latin-American, Latino borrowers decreased 49 
         25   percent and the loan to LMI borrowers decreased by 
  0061
          1   fifty percent as a result of both the BayBank- 
          2   BankBoston merger and the Fleet-Shawmut merger.  And 
          3   we accept this concept that there would be some 
          4   decrease, but the double-digit decreases that we 
          5   have sustained in these two particular communities 
          6   are irrational, inexplicable, and can only be 
          7   explained by racial factors.  And even the 
          8   Massachusetts Banking Council has supported that 
          9   position.  
         10            This Federal Reserve did a study which set 
         11   off a whole litany of similar studies across this 
         12   country, and I think that it's important to note 
         13   that the Federal Reserve Bank of Boston led the way 
         14   nationally on what became a higher standard and 
         15   reported for tons of data.  
         16            Given what we understand to be the standard 
         17   of review for the Federal Reserve in assessing 
         18   merger applications, we believe in order for the 
         19   Federal Reserve to recommend approval of this 
         20   merger, the bank would have to find that the bank's 
         21   proposal of June 24th which provides for a 14.6 
         22   billion dollar commitment for six states over five 
         23   years meets the convenience and needs of the 
         24   community, although the figure represents less 
         25   resources from the combined bank than the two banks 
  0062
          1   provided separately in 1998.  
          2            For the record, I never expected one plus 
          3   one to equal greater than two.  I was prepared to 
          4   declare victory of one plus one equal to one and a 
          5   half.  It doesn't.  Apparently the comments from 
          6   Fleet-BankBoston suggest even they acknowledge that 
          7   the formula has changed.  On July 1st there were two 
          8   statements issued that said, one, it was never our 
          9   intention when we made that statement in March to 
         10   suggest that between us we would be greater than the 
         11   two.  What we really meant was that the divestiture 
         12   bank would be responsible with us and we would hold 
         13   them accountable to the community.  
         14            Also, this proposal represents 80 percent 
         15   of what we have been doing because we are divesting 
         16   20 percent of our branches, so we're going to be 
         17   smaller.  In some categories it's more than 80 
         18   percent.  We haven't found them yet.  
         19            Various members of the committee have run 
         20   the numbers in different variations and we all keep 
         21   getting the same results.  The numbers simply don't 
         22   support the bank's representation of this equaling 
         23   even 80 percent, the current activity, let alone 
         24   100.  
         25            Meeting the needs of the convenience and 
  0063
          1   needs of the community is not just about CRA.  One 
          2   of the best indicators of future performance is past 
          3   history.  That being the measure, the Federal 
          4   Reserve Bank must look very carefully not only at 
          5   the recent data it studied on the bank's 
          6   performance, but also on the compliance or lack 
          7   thereof to prior commitments and agreements.  The 
          8   history is substantial.  I have included some 
          9   information that attests to this history, which we 
         10   will submit to you for the record, including the 
         11   committee's June 4th letter to the bank, which never 
         12   received the courtesy of a response.  
         13            We believe there's at least a segment of 
         14   the community; namely, the LMI urban and rural 
         15   communities and women whose needs are not being 
         16   adequately served.  There is a fear that with 
         17   another merger history suggests these communities 
         18   will sustain yet another decrease. 
         19            PRESIDING OFFICER SMITH:  Thank you very 
         20   much, and we'll be glad to have your full statement 
         21   for the record.
         22            SENATOR WILKERSON:  If I could end by 
         23   making a request to you, as the Congressman and the 
         24   Mayor have done, and that would be that you would 
         25   use your regulatory powers to do the right thing by 
  0064
          1   the communities who depend on the regulatory 
          2   authority for protection.  Whatever this proposal 
          3   is, it's not complete.  Even the bank principals 
          4   referred to it yesterday afternoon as a work in 
          5   progress.  You can say no.  You can say go back to 
          6   the drawing board.  You can say you need more 
          7   information.  You can say to the banks, respond to 
          8   the questions that have been asked.  But whatever 
          9   you say, don't say that this is enough to meet the 
         10   standard, because it's not, and the community has 
         11   nowhere else to go but to you. 
         12            PRESIDING OFFICER SMITH:  Thank you very 
         13   much.  (Applause)   Now we have Ms. Boone on behalf 
         14   of Senator Kerry.  
         15            MS. BOONE:  My name is Jeanette Boone, and 
         16   I currently serve as senior issues manager in the 
         17   Boston office of Senator John Kerry.  On behalf of 
         18   Senator John Kerry I want to thank you for the 
         19   opportunity to express the Senator's views on the 
         20   Fleet-BankBoston merger.  While Senator Kerry is 
         21   unable to give this testimony in person, I want to 
         22   thank you for the opportunity to place his full 
         23   testimony in the record today.  
         24            As a member of the Senate Banking 
         25   Committee, I have witnessed an unprecedented amount 
  0065
          1   of consolidation in the banking and financial 
          2   services industry.  The Fleet-BankBoston merger is 
          3   further proof that the continued consolidation of 
          4   financial services markets is one of the 
          5   inevitabilities of the new global economy.  
          6            Today there are 30 percent fewer banks in 
          7   the United States than there were just 10 years ago.  
          8   Our banks are competing beyond city limits and 
          9   neighborhood borders, competing against banks across 
         10   the country and literally across the world.  To do 
         11   so effectively they must have the strength, the 
         12   market share and the ability to deliver high-quality 
         13   service.  
         14            This proposed merger will make the planned 
         15   Fleet-Boston Corporation the eighth largest bank in 
         16   the country and one of the most significant 
         17   financial presence in New England.  I believe it is 
         18   imperative to maintain a strong and robust financial 
         19   services industry based in New England.  To this 
         20   end, it is critical that we take the appropriate 
         21   steps to ensure that Boston remains a hub of 
         22   financial services in the new century and that New 
         23   England-based banks will continue to be available to 
         24   depositors in New England.  
         25            We must move forward in that process in a 
  0066
          1   careful and measured way with government, business, 
          2   and community leaders working together to ensure 
          3   that high standards of customer service and 
          4   corporate community engagement are maintained.  
          5            Corporate citizenship should be a part of a 
          6   redefined bottom line in banking.  Everyone 
          7   understands the importance of capital in developing 
          8   our low-income neighborhoods.  Access to credit, 
          9   along with education, healthcare and decent housing, 
         10   is one of the most important tools working Americans 
         11   need to compete successfully in this country.  
         12            Massachusetts banks, large and small, have 
         13   the responsibility, the very real responsibility of 
         14   providing access to capital to our underserved 
         15   communities.  They are integral partners in our 
         16   effort to lead the transition to a new economy where 
         17   no one is left behind.  Through the Community 
         18   Reinvestment Act, Congress set standards for the 
         19   private sector in building an economy in which we 
         20   can all participate.  CRA has been extremely 
         21   successful in Massachusetts where financial 
         22   institutions have made more than 1.6 billion in 
         23   commitments to assist low-income neighborhoods.  
         24   It's making a difference in Boston's inner city 
         25   neighborhoods from Roxbury and Jamaica Plain to the 
  0067
          1   South End and has increased home ownership, 
          2   affordable housing development and minority small- 
          3   business lending across Massachusetts.  
          4            However, even at this time of record 
          5   economic growth, there is much work left to be done.  
          6   The Boston Federal Reserve showed conclusively that 
          7   African-Americans get turned down on mortgage 
          8   applications 1.6 times more often than whites, even 
          9   after taking into account many economic, income and 
         10   creditworthiness differences.  
         11            More than 35 million Americans still live 
         12   in poverty.  Almost one in five children lives in 
         13   poverty.  We must continue to expand the winner's 
         14   circle to empower every community to participate in 
         15   this economic expansion.  We must not allow any 
         16   community to be denied access to credit or new 
         17   banking facilities and services.  It is with these 
         18   principles in mind that together with the entire 
         19   Mass. Congressional delegation I signed a letter to 
         20   the new Fleet-Boston Corporation to stress the 
         21   importance of maintaining a vigorous community 
         22   reinvestment effort.  
         23            I am pleased that the new Fleet-Boston 
         24   Corporation has begun a dialogue with the major 
         25   organizations in Massachusetts that are dedicated to 
  0068
          1   housing and community reinvestment.  I am hopeful 
          2   that this dialogue will continue and that this 
          3   merger will result in progress toward the goals of 
          4   the Community Reinvestment Act and not an 
          5   opportunity to pass this responsibility to others.  
          6            I have also sent a letter with Senator 
          7   Kennedy to Assistant Attorney General Joel Klein 
          8   requesting that the Justice Department consider 
          9   allowing a small portion of the new Fleet-Boston 
         10   Corporation's assets to be sold to a Massachusetts 
         11   minority-owned community development financial 
         12   institution that has been providing access to 
         13   capital to many of our low-income neighborhoods and 
         14   working families.  With your approval I would like 
         15   to make both letters part of the record.  
         16            We have other responsibilities as well, 
         17   particularly the responsibility of meeting the 
         18   immediate challenges of work force dislocations 
         19   caused by this merger.  Any time two large firms are 
         20   combined, restructuring can be expected.  Layoffs 
         21   seem to be an inevitability in the reshuffling to 
         22   maximize cost efficiencies.  The Boston Globe has 
         23   estimated we expect to see the loss of 4,000 to 
         24   5,000 jobs as a result of this latest decision.  
         25   Every effort must be taken to minimize job loss and 
  0069
          1   provide sufficient retraining and job placement 
          2   assistance to workers displaced by this decision.  
          3            I believe the best way to minimize the 
          4   anticipated job loss resulting from this merger is 
          5   to see that the required divested deposits, branches 
          6   and ATMs of the Fleet-Boston Corporation are sold to 
          7   banks based in New England.  Back in April I wrote 
          8   to Assistant Attorney General Joel Klein to express 
          9   my opposition to any decision to sell all divested 
         10   funds to a single financial institution based 
         11   outside of Massachusetts.  Any divestiture related 
         12   to this merger must encourage local competition and 
         13   expand consumer choice.  
         14            In that letter I also asked that every bank 
         15   in Massachusetts be given the opportunity to bid on 
         16   the assets that the merged banks will be required to 
         17   divest.  I am pleased that the Justice Department 
         18   has taken my advice and will not insist that all 
         19   assets be acquired by a single buyer, so long as 
         20   there is a buyer in the mix that will preserve 
         21   competitive conditions in middle-market lending.  
         22            I am hopeful that the new Fleet-Boston 
         23   Corporation will seriously consider any competitive 
         24   bids from all New England-based banks.  Small, 
         25   medium sized and independent banks have been an 
  0070
          1   important source for financial services to small 
          2   businesses and low-income communities in 
          3   Massachusetts.  This will also help ensure that 
          4   Boston remains a hub of financial services in the 
          5   next century and that Boston-based banks will 
          6   continue to be available to depositors in New 
          7   England.  
          8            Finally, it is the best way to minimize the 
          9   job loss related to the merger.  Over the last years 
         10   in the Senate Banking Committee I have come to 
         11   realize that economic change, particularly in the 
         12   financial service industry, is an inevitability that 
         13   must be wisely managed.  We cannot lull ourselves 
         14   into believing that we are powerless to shape the 
         15   contours of this new economy.  We know the New 
         16   England banking industry can provide economic 
         17   leadership, but we also expect and demand that our 
         18   banks demonstrate leadership in customer service and 
         19   corporate citizenship as well.  
         20            I know that from our efforts on the Banking 
         21   Committee to your work here, we will be watching to 
         22   ensure that those goals are merged into one unifying 
         23   vision of banking in New England.  
         24            Over the past several months I have worked 
         25   with the Community Advisory Committee and a large 
  0071
          1   number of groups involved with housing and economic 
          2   development from across Massachusetts.  It is my 
          3   strong hope that you will listen carefully to the 
          4   testimony that representatives from these groups 
          5   will be making today and give serious consideration 
          6   to the level of need in the community.  This merger 
          7   cannot deal a devastating blow to underserved 
          8   communities by undercutting the current programs by 
          9   BankBoston and Fleet, especially those in the areas 
         10   of small business lending, affordable housing and 
         11   mortgage lending to low and moderate income 
         12   homeowners, community development and consumer 
         13   lending and equity investment and technical 
         14   assistance and support.  
         15            I urge you to weigh and evaluate this 
         16   testimony as you reach decisions regarding this 
         17   proposed merger.  Ultimately it will be our 
         18   responsibility to ensure that this process moves 
         19   forward with a fair and competitive merger and 
         20   divestiture process that encourages local 
         21   competition and investment while expanding consumer 
         22   choice. 
         23            PRESIDING OFFICER SMITH:  Thank you very 
         24   much, Ms. Boone.  We'll take it all and put it all 
         25   into the record. 
  0072
          1            Mr. Ferguson on behalf of Congressman 
          2   Kennedy.
          3            MR. FERGUSON:  Thank you, Madam Presiding 
          4   Officer and members of the Board.  For the record my 
          5   name is Larry Ferguson.  I'm the District Director 
          6   for Congressman Patrick Kennedy of Rhode Island, and 
          7   I'm here today on his behalf.
          8            Congressman Kennedy has a strong interest 
          9   in the financial industry of New England and most 
         10   notably his concern that integrity and competition 
         11   is upheld in the everchanging marketplace.  He feels 
         12   strongly that the upcoming merger of Fleet Bank and 
         13   BankBoston will uphold the goals of integrity and 
         14   consumer choice through competition.  
         15            What I would like to do now is to read into 
         16   the record a letter that he sent to the Board dated 
         17   June 29th.  "Dear Mr. Johnson:  I write in support 
         18   of the proposed merger between Fleet Financial Group 
         19   and BankBoston and urge that the Board move 
         20   expeditiously to approve the merger.  To comply with 
         21   the requisite regulatory and antitrust aspect of 
         22   this transaction, the two institutions have done an 
         23   excellent job in reaching out to a large number of 
         24   community-based organizations throughout its market 
         25   area.  They have also reached out to elected 
  0073
          1   officials on the state and local level and those of 
          2   us in Congress.  As a consequence I believe that an 
          3   effective job has been done in explaining the 
          4   rational behind the merger, the plans for 
          5   restructuring the combined organizations in a most 
          6   efficient and effective way possible and in 
          7   anticipating and dealing with the impact of the 
          8   merger on customers of the institutions and the 
          9   communities impacted.  
         10            I am very pleased to learn that an issue of 
         11   major concern to me that local and regional 
         12   institutions be allowed to bid on some or all of the 
         13   assets being divested was clarified recently by the 
         14   Department of Justice.  Furthermore, it is 
         15   reassuring to learn Fleet and BankBoston will soon 
         16   announce a major community reinvestment program 
         17   valued at more than fourteen million dollars over 
         18   the next five years.  This plan will be designed to 
         19   deal with affordable housing, small business 
         20   lending, urban renewal and consumer education 
         21   programming.  
         22            I believe that the successful bidders on 
         23   the Fleet and BankBoston branches to be divested 
         24   will provide effective competition and enhanced 
         25   choices for consumers.  I therefore urge the Board 
  0074
          1   to approve this merger which should produce both 
          2   substantial short- and long-term public benefits.  
          3   Sincerely, Patrick Kennedy, member of Congress." 
          4            Again, I want to thank you for allowing me 
          5   the opportunity to submit this letter for the record 
          6   and allowing me to testify here today.
          7            PRESIDING OFFICER SMITH:  Thank you very 
          8   much.  Questions from the panel? 
          9            MS. BROWNE:  I have a question for Mayor 
         10   Menino.  You expressed some deep concern about the 
         11   loss of BankBoston.  Perhaps you might elaborate a 
         12   little bit more about what makes BankBoston special 
         13   from your perspective, what distinguishes it perhaps 
         14   from other institutions.  
         15            MAYOR MENINO:  Well, my dealings in the 
         16   last six years with BankBoston have been on a 
         17   continual basis. We had an issue in the 
         18   neighborhoods that we developed a neighborhood or 
         19   needed money for housing, they were there.  They 
         20   were the first ones out willing to work with us to 
         21   fashion different programs to our needs, and they 
         22   were very helpful to what we did on the 
         23   revitalization of a lot of the neighborhoods of the 
         24   City of Boston. 
         25            MR. KWAST:  I have a question for Mayor 
  0075
          1   Menino and Senator Wilkerson.  Could you explain a 
          2   little bit more whether you think a bank 
          3   headquartered out of Boston could or could not enter 
          4   the Boston market and become an effective competitor 
          5   for the banks that are already in Boston? 
          6            SENATOR WILKERSON:  I don't believe I ever 
          7   said I didn't believe that they could.  I suggested 
          8   that if a large bank bought all the branches, the 
          9   best they could do is 6 percent of the market and 
         10   that I don't consider that competition in the 
         11   literal sense of the word because this resulting 
         12   merged bank would be 30 percent, and they're going 
         13   to be the eighth largest in the country, not just in 
         14   Massachusetts.  So it depends on what your 
         15   definition of "competition" is.  
         16            Our concern is that there will be no one 
         17   competing for the business of my constituents unless 
         18   this Board takes a special look at that and looks at 
         19   banks who have had track records in doing business 
         20   and believe that our communities are about business.  
         21   It's not about charity, and that's a very -- it's an 
         22   offensive discussion.  We always get to that.  We're 
         23   not asking for people to give us money, you know.  
         24   This is about mortgages.  This is about if I present 
         25   the same kind of indicators as everyone else, that I 
  0076
          1   shouldn't be denied.  And the records are just 
          2   overwhelmingly supportive of the notion that that's 
          3   what's happening, and we don't think there's any 
          4   other competition outside of large banks like this 
          5   that are going to be picking up that market unless 
          6   you take that into consideration and are looking at 
          7   our small and local banks who see us as business and 
          8   are making money in ways.  
          9            So if you just talk about selling to a big 
         10   bank, we don't think that that particular sector and 
         11   segment of our community's banking needs are going 
         12   to be met.  But I have no opposition to an outside 
         13   bank.  I actually for the record also want to say, I 
         14   think we'd be better off having a bank that -- you 
         15   know, I want to keep Fleet-BankBoston here.  We're 
         16   not opposed to that.  Given the choice, I'd rather 
         17   have a Massachusetts headquartered bank.  But that 
         18   doesn't mean I don't then get to raise questions 
         19   about this proposal and the plan that they put on 
         20   the table, because I don't think it's going to 
         21   satisfy what I understand to be your regulatory 
         22   standards in its present form.  We could get there 
         23   with your help, but we're not there. 
         24            MAYOR MENINO:  I agree with the Senator on 
         25   the fact that Fleet-BankBoston merged.  No big 
  0077
          1   problem.  But what's the commitment?  What's the 
          2   future?  We can't talk about the past.  I think 
          3   we're talking about the past.  I'm talking about the 
          4   future.  When this merger happens, what does the 
          5   future look like for the community that I represent 
          6   as Mayor of Boston, Senator Wilkerson, Congressman 
          7   Capuano.  And sometimes, I'll tell you, having a 
          8   homegrown institution headquarters doesn't mean a 
          9   lot to you, but sometimes a foreign bank who might 
         10   have an office or an operation in the city will do 
         11   more for you.  I have several world headquarters in 
         12   our city, and I get more out of some other 
         13   corporations that aren't home based.  
         14            So it's the attitude, and it's the attitude 
         15   of the folks.  Do they really want to get involved 
         16   in the community or are they saying we're Boston 
         17   based.  You have to love us.  We don't have to love 
         18   you.  We have to tolerate you, but you have to love 
         19   us.
         20            CONGRESSMAN CAPUANO:  I want to make it 
         21   clear that the delegation as a whole has opposed 
         22   bringing in someone from the outside.  We feel that 
         23   bank competition is good.  We understand what the 
         24   general goal is, but bank competition doesn't have 
         25   to be from the outside.  There has been nothing that 
  0078
          1   has stopped an outside bank from coming in for 
          2   several years now.  You know as well as I do -- in 
          3   fact, better than I do -- Citicorp already had 
          4   several hundred people in Boston for years, for 
          5   years.  It's not new.  Most of the large banks do 
          6   business in Boston right now.  Right now.  It's not 
          7   new.  Nothing could stop them at all -- well, not 
          8   nothing.  You could.  But theoretically you wouldn't 
          9   stop them from buying small branches today over the 
         10   last several years.  
         11            That's not the issue.  The issue is what do 
         12   you want to do with the divested branches if this 
         13   merger is allowed now, and our argument has been, 
         14   build from the inside.  Help your own family to get 
         15   stronger as opposed to giving it away to the 
         16   outside.  The outside is going to come in.  There's 
         17   nobody here trying to create a Chinese wall along 
         18   the borders of New England.  They're here now.  They 
         19   will continue to grow.  When they grow, where's the 
         20   competition going to be?  
         21            And I just want to go back historically.  
         22   It strikes me that many of you were probably around 
         23   the last time, well before Tom Menino was mayor, 
         24   when Boston was in serious trouble back in the late 
         25   '70s.  No bank in the world should have loaned them 
  0079
          1   a nickel, but the Bank of Boston did because they 
          2   understood the benefits of having a strong City of 
          3   Boston instead of having the City of Boston go 
          4   bankrupt.  That is the benefit of a regional -- 
          5   strong, locally based regional bank.  And that's 
          6   what we're trying to keep and that's what we're 
          7   trying to grow.  (Applause)
          8            PRESIDING OFFICER SMITH:  Thank you very 
          9   much.  We'll go on to Panel Three.  We will start 
         10   with Mr. Reilly. 
         11            MR. REILLY:  Good morning.  My name is Tom 
         12   Reilly.  I'm the Attorney General for Massachusetts.  
         13   I want to thank you for the opportunity to offer 
         14   comments to this panel today on the proposed merger.  
         15   I know you have a long day ahead of you and I will 
         16   certainly do my best to not make that day any 
         17   longer.  
         18            There are a number of important issues that 
         19   you have to consider.  We've heard a lot about CRA 
         20   issues.  They certainly are important.  I have 
         21   submitted a letter, and I would ask with your 
         22   permission on those issues to have that letter be 
         23   made part of the record.  
         24            I would like to focus my attention and my 
         25   comments on competition, the need to replace the 
  0080
          1   competition that will be caused by this merger.  
          2            By way of background, my office has done an 
          3   extensive investigation that is not yet complete on 
          4   this proposed merger.  We've done it along with the 
          5   Department of Justice.  We've administered several 
          6   investigative demands, market surveys, retained the 
          7   services of a respected economist, Dr. Kalamaris, 
          8   from Columbia University.  We've conducted scores of 
          9   interviews with all the affected communities and 
         10   businesses and people that are involved in this 
         11   process.  Now, that investigation, as I said, is 
         12   still ongoing, but we have identified certain 
         13   problems and certain major concerns that I would 
         14   like to share with you today.  
         15            First, as you well know, this is 
         16   unprecedented in terms of this merger.  The one and 
         17   two major players for key sectors of our economy are 
         18   merging, and the key sector I want to focus on today 
         19   is the middle market.  And that creates problems 
         20   whenever that competition is lost.  
         21            Secondly, this merger has national 
         22   implications, because there are other markets 
         23   throughout this country that are looking at this in 
         24   order to determine and foresee what the rules are 
         25   going to be.  So I think this is important that we 
  0081
          1   take the time in terms of doing it right. 
          2            Now, the problem, and the major problem 
          3   that we have identified, is the problem that this 
          4   merger creates risk, and I believe that risk is 
          5   unnecessary and I believe that that risk can be 
          6   avoided and perhaps prevented if this is done right.  
          7            Now, the major area that is at risk as a 
          8   result of this merger is the middle market, the 
          9   so-called middle market, and that's not some elusive 
         10   term.  I mean, these are real companies.  These are 
         11   real people.  A textile manufacturer in Fall River, 
         12   maybe 30 million in revenues, maybe 250 employees.  
         13   Real people that depend upon the success of this 
         14   company.  Metal fabrications plant maybe in the 
         15   central part of the state, Worcester, with 200 
         16   people, $60 million in revenues, does business in 
         17   the Far East, needs sophisticated banking services, 
         18   international letters of credit.  A paper 
         19   manufacturer in the western part of the state or the 
         20   trucking companies throughout the state.  
         21            This is a major part of our economy.  
         22   Perhaps at least 1,000 companies that are affected 
         23   by this merger.  A hundred thousand people that are 
         24   impacted.  They have a stake in this, too, and they 
         25   need to be heard as well. 
  0082
          1            Right now in the current state of our 
          2   economy, they're doing well.  They're benefitting 
          3   because of the competition between BankBoston and 
          4   Fleet.  They have a demand for credit.  As I said, 
          5   letters of credit, international letters of credit, 
          6   currency centers.  They're getting all that and 
          7   they're getting it at a price that they can afford, 
          8   a competitive price, and certainly we are all the 
          9   better for that.  And I just want that to continue 
         10   and I want a major competitor to come in and replace 
         11   this competition.  
         12            Now, it's going well now, but what happens, 
         13   even in good times, if the price of credit goes up  
         14   and the price of borrowing goes up?  I don't care 
         15   whether it's a quarter or a half a point or a full 
         16   point.  What happens?  It effects an increase in the 
         17   cost of doing business in this state and this 
         18   region.  We don't need any more of that.  We want to 
         19   keep competitive pricing.  
         20            What happens in a downturn?  What are the 
         21   protections there?  What about the loss of jobs if 
         22   there's a credit squeeze and a tightening of credit 
         23   and the job growth is lost?  What's the impact that 
         24   has?  What is the impact of putting all our eggs in 
         25   one basket?  There's no other competitor.  What 
  0083
          1   happens to our economy?  Certainly these are good 
          2   institutions and strong institutions and wise 
          3   institutions, but if there's only one of them and a 
          4   series of mistakes happens, what happens next?  
          5            I believe that all this can be avoided.  I 
          6   believe that this merger can be done, and it can be 
          7   done right.  It can be done by playing by the rules.  
          8   In my opinion, the way to do that is to bring in -- 
          9   that all of the assets that are going to be divested 
         10   go to one buyer for the entire region.  One buyer 
         11   comes in and picks up this package, it ensures 
         12   competition.  It ensures that there's going to be 
         13   regional competition in Massachusetts and throughout 
         14   this region.  That is what I believe should happen.  
         15            Now, there are those -- and certainly I 
         16   respect their opinions and I value their opinions -- 
         17   that we should carve out for some community banks.  
         18   I support community banks.  Everyone supports 
         19   community banks.  They don't service the middle 
         20   market.  And they won't service the middle market 
         21   when this is all said and done.  
         22            If a major competitor picks up this piece 
         23   and someone with the size and scope and scale and 
         24   the expertise to service this middle market, it is 
         25   my opinion they will divest.  They will not need all 
  0084
          1   these branches, particularly some of the smaller 
          2   branches, and that divestiture will occur in an 
          3   orderly fashion and they'll be making good business 
          4   decisions as to what they can divest, and that is 
          5   the way that I certainly would urge and recommend 
          6   that the Board adopt the direction that I think we 
          7   should go. 
          8            In the end this is about preserving 
          9   competition and maintaining the competition that 
         10   exists and filling that gap and filling that void 
         11   that is in that middle market.  If we do that, and 
         12   we do it right, we'll set the standard to make sure 
         13   the flow of affordable credit and competitive credit 
         14   flows to the businesses of Massachusetts and this 
         15   region that depend upon them for their survival and 
         16   the economic future and health of this region.  
         17   Thank you very much.
         18            My colleague Richard Blumenthal from 
         19   Connecticut is next.  (Applause)
         20            PRESIDING OFFICER SMITH:  Mr. Blumenthal?
         21            MR. BLUMENTHAL:  Thank you very much.  I 
         22   want to join my colleague, Attorney General Tom 
         23   Reilly, in thanking you for this opportunity and say 
         24   that I also join in sympathizing with the arduous 
         25   day you're devoting to this subject.  I want to make 
  0085
          1   it clear I think you need to devote another day, if 
          2   you choose to do so, in Hartford, which we've asked 
          3   you to do, and you're always welcome, as you were 
          4   some years ago. 
          5            I want to say that my comments have been 
          6   submitted formally in writing, and I will just 
          7   briefly summarize them.  And I want to say that 
          8   we've appreciated the cooperation and the help that 
          9   we've received from the Commonwealth of 
         10   Massachusetts, General Reilly and his staff, who 
         11   have done excellent work.  We've done much the same 
         12   kind of investigation and ours, too, is ongoing 
         13   involving documents that we've subpoenaed from the 
         14   banks, which are in confidential form and submitted 
         15   to you in excerpt.  
         16            We've also spoken to customers, 
         17   competitors, other banks that will be affected.  We 
         18   have reviewed the complaints that we've received 
         19   over the years, not only in my office, but the 
         20   banking department, and we have benefitted from the 
         21   economic analysis done by Charles Cavanaros. 
         22            And today's situation brings me to somewhat 
         23   different conclusions than my colleague, General 
         24   Reilly, but we share a similar view of the enormous 
         25   peril and threat to competition and consumer 
  0086
          1   interests that are inherent in this merger.  
          2            You will remember that four years ago I 
          3   spoke to you in Hartford regarding the proposed 
          4   merger of the Fleet Financial Group and the Shawmut 
          5   National Corporation, and we had high expectations 
          6   at that time that Fleet Bank would provide superior 
          7   services to consumers and small businesses as well 
          8   as to larger customers and that its community 
          9   investment commitment would be a model to the 
         10   nation.  In fact, we negotiated a package of 
         11   divestiture and community commitments that we 
         12   believed offered tremendous promise for our region 
         13   and for the nation.  
         14            The record since 1995, I say regrettably, 
         15   offers warning for grave caution.  The record has 
         16   been at best mixed.  I expressed concern then that 
         17   large banks often do not give sufficient priority to 
         18   smaller customers, and we've seen throughout the 
         19   industry a limitation in competition, unceasing ATM 
         20   litigation and voluminous consumer complaints.  
         21            At least in 1995 one of the reassuring 
         22   thoughts was that Fleet would still face meaningful 
         23   competition and BankBoston was a viable remaining 
         24   rival.  Now Fleet is again before this Board seeking 
         25   approval to acquire its largest New England 
  0087
          1   competitor, BankBoston.  And this proposed merger 
          2   would create a behemoth of more than 200 billion 
          3   dollars in assets, dwarfing its next largest New 
          4   England competitor by more than ten fold.  
          5            To counter this economic and competitive 
          6   threat, Fleet offers to sell less than one half of 
          7   BankBoston's Connecticut presence; really an offer 
          8   that would create a mere shadow of the competitive 
          9   force that premerger BankBoston offered.  
         10            Essentially talking about the rules as 
         11   General Reilly did, talking about the antitrust 
         12   rules that I am bound to enforce as Connecticut's 
         13   chief antitrust official, Fleet and BankBoston have 
         14   attempted to justify this result with an antitrust 
         15   argument that is simply out of touch with those 
         16   rules and with economic reality.  They divided New 
         17   England into numerous artificial municipal and 
         18   metropolitan markets and they have argued that even 
         19   the smallest of banks and credit unions compete on 
         20   an equal footing, despite the fact that they have 
         21   recognized themselves in other contexts, the 
         22   importance of size and scale in economies that drive 
         23   down costs.  
         24            The key flaw in this case is that it 
         25   persists in mistakenly using the same incorrect 
  0088
          1   formula in antitrust terms to determine that 
          2   competition won't be harmed.  Artificially defining 
          3   those markets with municipal boundaries rather than 
          4   seeing them as statewide or regional. 
          5            I urge that there be a package of larger, 
          6   more extensive divestiture, a more satisfactory sale 
          7   of assets that is necessary to counter the 
          8   anti-competitive effects of this merger.  In a sense 
          9   that kind of larger-scale divestiture would enable 
         10   various kinds of purchasers to use those assets to 
         11   increase themselves as competitive, pro consumer 
         12   forces in the marketplace.  
         13            A sufficient number of branch banks, 
         14   deposits, ATMs, other assets must be made available 
         15   to our growing regional financial institutions, 
         16   including the community bank, so that they will grow 
         17   from the ground up.  
         18            At the same time I urge that a substantial 
         19   block of assets -- not all, but a block -- from all 
         20   three states that are affected be sold on a combined 
         21   basis to a strong major purchaser that has economies 
         22   of scale and scope to directly and immediately 
         23   compete with Fleet-Boston.  
         24            In contrast to this approach, what Fleet 
         25   offers is what it has called a clean sweep of 
  0089
          1   BankBoston assets.  But their broom, it seems to us, 
          2   is really a worn-out brush applied to one or two 
          3   cities; not to the relevant market as a whole.  
          4   BankBoston doesn't operate out of Hartford alone or 
          5   out of Torrington alone in the State of Connecticut.  
          6   It has a statewide presence.  The mid market is key 
          7   and will be the victim of less competition, tighter 
          8   credit, higher rates and lower quality service if 
          9   this merger is permitted to go forward as it is 
         10   structured now.  
         11            And as General Reilly has said so well, 
         12   this mid market really is the engine that fuels our 
         13   economic growth in the State of Connecticut and 
         14   throughout the region.  These are small and middle- 
         15   sized businesses that employ tens of thousands of 
         16   our citizens and, most importantly, most critically, 
         17   even in good times, they are the economic forces 
         18   that employ new workers and create new jobs. 
         19            Let me just say finally that I urge the 
         20   Board to require Fleet-Boston to make good on the 
         21   commitments that it has articulated more 
         22   specifically this morning by further defining them, 
         23   by stating them even more specifically, but most 
         24   important, saying explicitly what it will do to make 
         25   sure that the community investment commitments are 
  0090
          1   actually realized.  What we found in the last 
          2   go-around on community investment is that they are 
          3   completely dependent on community outreach and 
          4   promoting aggressively the kind of opportunities 
          5   that are made available.  The numbers mean nothing 
          6   unless they are backed by a solid, aggressive 
          7   program of community outreach.  (Applause)  And that 
          8   is what I urge the Federal Reserve Board to require.  
          9            I very much appreciate this opportunity to 
         10   be with you this morning and for you to give me this 
         11   chance to talk to you.
         12            PRESIDING OFFICER SMITH:  Thank you very 
         13   much.  Ms. Nappier. 
         14            MS. NAPPIER:  Good morning.  My name is 
         15   Denise Nappier and I am treasurer of the State of 
         16   Connecticut.  I am pleased to join with Attorney 
         17   General Richard Blumenthal from my State of 
         18   Connecticut and his counterpart here in 
         19   Massachusetts to share with you some serious 
         20   concerns about the proposed merger as it stands 
         21   today.  I would also like to thank you for the 
         22   opportunity to testify, although I must express my 
         23   disappointment in your decision not to hold a 
         24   hearing in Connecticut on a matter that will 
         25   effectively remake the financial landscape in 
  0091
          1   Connecticut.  
          2            The Connecticut State Treasurer's interest 
          3   in the proposed merger are substantial.  We are a 
          4   shareholder and a major customer of both banks.  The 
          5   combined shares of both banks held by the state 
          6   treasury is in excess of 630,000.  For the past two 
          7   years the state treasury has spent nearly $6 million 
          8   on banking service fees, of which 90 percent has 
          9   been spent or paid to Fleet and BankBoston, Fleet 
         10   representing the lion's share of roughly 77 percent 
         11   of all fees paid, and BankBoston 15 percent. 
         12            I believe that a sense of responsibility 
         13   for the well-being of the citizens of Connecticut 
         14   can and must go hand in hand with the fiduciary 
         15   responsibilities of the state treasurer's office, 
         16   and it's within that context that I express my 
         17   concern.  
         18            Let me say from the onset that I believe 
         19   that this merger could be a tremendous opportunity 
         20   for Connecticut and New England.  There could be 
         21   great promise in the establishment of a strong 
         22   regional bank, a great player on the national stage, 
         23   but that's not the blueprint we see today.  
         24            My office is taking a look at Fleet's track 
         25   record in lending in the communities, and I am 
  0092
          1   concerned.  Fleet has claimed that the merger will 
          2   generate greater capacity for the bank to provide 
          3   superior services to customers.  It sounds good, but 
          4   I believe in checking the record, and so far the 
          5   record tells a different story. 
          6            For example, Fleet's history of post-merger 
          7   performance demonstrates a declining level of 
          8   commitment in providing better access to banking 
          9   services, home mortgage and small business loans, as 
         10   well as other forms of community investments.  
         11            (Applause)  Now, I do understand the art of 
         12   statistics, but the facts speak for themselves and 
         13   as a fiduciary, I don't typically engage in those 
         14   forms of tactics.  So I am here to say to you that 
         15   in Connecticut we know that the amount of loans to 
         16   low and moderate income households before the merger 
         17   of Fleet and Shawmut was twice the level it is 
         18   today.  (Applause)  I understand that the CEO of 
         19   Fleet was recently quoted as saying that the merged 
         20   bank will be for everyone.  Well, my concern is over 
         21   just who is being left out here.  (Applause)  I am 
         22   generally concerned that the big losers in the 
         23   merger, the people being left out, may be the 
         24   consumers and businesses of Connecticut.  That is, 
         25   people who are trying to get a small business up and 
  0093
          1   running or expand a growing business and need a 
          2   reasonable loan.  Or the low or moderate income 
          3   family living in our rural communities or in the 
          4   inner city trying to afford their first home and 
          5   need a mortgage at an affordable rate.  And 
          6   consumers depend on reasonable rates, healthy 
          7   competition and banking parties that respond to 
          8   their needs.
          9            Let me briefly highlight nine critical 
         10   areas of concern.  First, due in large part to the 
         11   competition for business between Fleet and 
         12   BankBoston, the state treasurer's office here in 
         13   Connecticut has saved nearly $1 million reduction in 
         14   banking service fees from 1994 to 1998.  While I can 
         15   speak only for the business relationship of the 
         16   state treasury, it would not be unreasonable to 
         17   assume that Fleet may possess substantial 
         18   competitive control over other business 
         19   relationships in our state.  
         20            We are concerned that the savings achieved 
         21   by my office may well be eroded as competition is 
         22   eliminated.  Adequate capital is frequently cited as 
         23   the major barrier to growth and development of small 
         24   businesses.  Undercapitalization is the largest 
         25   contributor to business venture failure.  Therefore, 
  0094
          1   the economic stability and well-being of small 
          2   businesses in our state is directly tied to the 
          3   availability of choices of banking services and the 
          4   fair lending practices of the financial institutions 
          5   serving our state.  That's why reduction in 
          6   competition is of concern here.  (Unintelligible) 
          7   bank is a program that helps small Connecticut 
          8   businesses that are unable to obtain conventional 
          9   financing with an emphasis on minority and women- 
         10   owned businesses.  
         11            As part of the Fleet-Shawmut merger Fleet 
         12   was required three years ago to maintain a high 
         13   level of urban loans.  Once meeting its obligations, 
         14   under the agreement Fleet's participation with  
         15   (unintelligible) dwindled considerably, from 1.2 
         16   million in fiscal 1998 to 295,000 in fiscal 1999.  
         17   That track record is cause for serious concern.  
         18            The Community Reinvestment Act has fought 
         19   discrimination in lending practices and increased 
         20   access to capital for home mortgages and business 
         21   start-up for more than two decades.  Any entity 
         22   emerging from a merger between Fleet and BankBoston 
         23   should be a leader obligated to formulate, promote 
         24   and implement unfolding principles of community 
         25   investment.  
  0095
          1            We have seen just the opposite.  For 
          2   example, the 1998 CRA rating report showed that 
          3   Fleet made nine community development loans totaling 
          4   just over $16 million in Connecticut while they made 
          5   19 community development loans totaling nearly 157 
          6   million dollars in Massachusetts.  Of the 200 
          7   million in community development loans, 
          8   Massachusetts received 72 percent of the loans to 
          9   Connecticut's 7.5 percent, even though Connecticut 
         10   has 25 percent of the bank's branches to 
         11   Massachusetts' 33 percent.  
         12            Obviously every potential borrower in 
         13   Connecticut is concerned about those stats.  In 
         14   Connecticut we understand the value of community 
         15   banking, where the bankers know all the 
         16   businesspeople and are aware of potential business 
         17   problems before they become critical.  BankBoston 
         18   has developed an internationally recognized model 
         19   for community banking.  Fleet has not.  And even the 
         20   BankBoston model has worked more effectively in 
         21   Massachusetts than in Connecticut.  
         22            Any approved merger plan should include the 
         23   preservation of the banking relationships developed 
         24   by First Community Bank and a commitment to the 
         25   continued success of the First Community Bank.  Now, 
  0096
          1   we're concerned that won't happen.  Connecticut's 
          2   urban and rural communities have traditionally been 
          3   underserved by financial institutions.  Yet nearly 
          4   half of the branches targeted for sale in connection 
          5   with the proposed merger are located in the rural or 
          6   urban areas of our state.  Location is particularly 
          7   important to low and moderate income families where 
          8   transportation is frequently limited.  We're 
          9   concerned that service to these communities will be 
         10   disrupted at best and perhaps in some cases will be 
         11   eliminated.  
         12            Fleet and BankBoston have recently 
         13   announced a $14.6 billion commitment for 
         14   lower-income borrowers, small businesses, community 
         15   development programs over a five-year period of 
         16   time.  Our internal analysis indicates this is only 
         17   a slight increase from the current lending patterns 
         18   and we have no idea from Fleet how this will affect 
         19   our state.  Given the uneven distribution of Fleet's 
         20   attention to community development efforts in the 
         21   past, it would not be unreasonable to assume that 
         22   Connecticut would not fare as well as Massachusetts.  
         23   We remain concerned about that and would much prefer 
         24   that Fleet show leadership in all jurisdictions in 
         25   which it operates.  Thank you very much.  (Applause)
  0097
          1            PRESIDING OFFICER SMITH:  Thank you.  
          2   Questions from the panel?     
          3            MR. McDONOUGH:  I have a question for Mr. 
          4   Reilly.  Your remarks today have centered around the 
          5   antitrust implications of this merger, particularly 
          6   your concern about middle market lending, and you're 
          7   advocating a solution where a large institution 
          8   would come in and acquire all the assets in all 
          9   three states?
         10            MR. REILLY:  Yes.
         11            MR. McDONOUGH:  Whereas, Mr. Blumenthal was 
         12   suggesting that maybe a large institution could 
         13   acquire some assets, a sufficient number, toehold or 
         14   whatever, to meet the middle market.  Is that a 
         15   potential solution to this issue or do you still 
         16   believe -- obviously you believe -- but would it be 
         17   sufficient if a large institution acquired 
         18   sufficient assets in the three states rather than 
         19   acquiring everything? 
         20            MR. REILLY:  I think the key for me would 
         21   be whether or not the bank that acquired the new 
         22   buyer was sufficient in size and scope and expertise 
         23   to meet the competitive demands or competitive needs 
         24   of that middle market.  That's the focus.  Once that 
         25   was satisfied, certainly I'm open to other 
  0098
          1   considerations.  But that's the main focus.  That's 
          2   the main consideration.  And I am concerned about in 
          3   terms of carving out a piece, who's going to do the 
          4   carving out?  Is it going to be Fleet-Boston?  Isn't 
          5   that a conflict?  What about the inevitable 
          6   cherrypicking that's going to go on?  It's going to 
          7   make it all the more difficult for a new, viable, 
          8   strong competitor that I'm looking for to come in 
          9   here and be willing to come in here under those 
         10   circumstances, if there are going to be carveouts in 
         11   the first stage regionally or carveouts individually 
         12   within the states.  
         13            I think it makes it more complex.  It makes 
         14   it more difficult.  Is it impossible?  No, but I 
         15   think it's a real challenge to put on the table.  
         16   It's a problem that I think can be solved by the 
         17   solution that I'm proposing.  Are there other 
         18   solutions?  Perhaps, but we need to be very, very 
         19   careful here and proceed with caution.  This can be 
         20   done I believe, but it has to be done right and I 
         21   believe that complicates it the more layers of 
         22   carving out that there are.  But it could be solved.  
         23   If there is one strong competitor, wherever that 
         24   competitor comes from or evolves that can meet the 
         25   competitive needs of have middle market, I'll be 
  0099
          1   satisfied, and I think this merger would ultimately 
          2   be a good thing for this region and for the state. 
          3            MR. McDONOUGH:  Thank you.
          4            MR. ALVAREZ:  I have a question for Mr. 
          5   Blumenthal and Mr. Reilly.  Do you find, in looking 
          6   at the middle market, that there is much competition 
          7   from banks or other lenders outside the market in 
          8   the contiguous area?  The middle market tends to be 
          9   a larger geographic market than some retail markets, 
         10   and I'm wondering what kind of competition you're 
         11   finding outside the particular State of Connecticut 
         12   or the State of Massachusetts.  
         13            MR. REILLY:  In Massachusetts we're finding 
         14   that there is some competition, but there is no 
         15   question that the two major competitors are 
         16   BankBoston and Fleet.  At the lower end of that 
         17   middle market you'll find some competition at the 
         18   very higher ends.  Obviously there are already more 
         19   options.  But right smack in the middle there, these 
         20   are the two major competitors, and essentially the 
         21   only major competitors, and that's the void that 
         22   certainly I'm very concerned about.  There's a 
         23   little bit of competition, but these are the primary 
         24   players here, and they're competing, and it's a good 
         25   thing.  I just want to keep it going. 
  0100
          1            MR. BLUMENTHAL:  Much the same is true in 
          2   Connecticut.  There is now competition, we find, 
          3   talking to customers, between BankBoston and Fleet 
          4   for mid-market business, and one of the key 
          5   differences, disagreement between ourselves and 
          6   Fleet-BankBoston, is on precisely that point.  They 
          7   have in essence said they are doing enough now in 
          8   terms of divestiture, and going to the first 
          9   question that was asked, I think the focus ought to 
         10   be on the clean sweep.  Let's really use a broom.  
         11   Let's sell more of those assets so that they can be 
         12   made available not only to a major purchaser who can 
         13   offer competition in the mid market, but also to 
         14   community banks and regional financial institutions 
         15   that are grown from the ground up and can also begin 
         16   to offer competition for that mid market.  
         17            These solutions are by no means mutually 
         18   exclusive.  If the broom sweeps clean and hard 
         19   enough and assets are really made available, both 
         20   can be done.  But the competition that now exists is 
         21   very much on a regional and statewide basis, and 
         22   ought not to be defined artificially and 
         23   unrealistically and inaccurately by municipal 
         24   boundaries or metropolitan areas, as the submission 
         25   from Fleet-BankBoston essentially does. 
  0101
          1            PRESIDING OFFICER SMITH:  Other questions? 
          2            MR. KWAST:  A follow-up with Attorney 
          3   General Blumenthal for a moment.  Do you have a feel 
          4   for how large a bank needs to be to serve 
          5   effectively the middle market in Connecticut or the 
          6   rest of New England? 
          7            MR. BLUMENTHAL:  I can't put a precise 
          8   number on its assets.  I would be glad to get back 
          9   to the Board with that kind of estimate.  Part of 
         10   what we're doing now essentially is working with our 
         11   economist on exactly that question, which obviously 
         12   is an core one for you as it is for all of us.  But 
         13   our feeling is that the sale of assets can be done 
         14   realistically and aggressively so as to enable a 
         15   major competitor, a large purchaser and at the same 
         16   time the community banks to both be involved.  And 
         17   what exactly the size is I would be happy to submit 
         18   in further written testimony if the Board will 
         19   permit me to do so. 
         20            MR. REILLY:  I thought a little bit about 
         21   that, and I don't have a hard figure, but the 
         22   starting point is that this merged bank is going to 
         23   have what?  170 billion dollars in terms of assets, 
         24   and certainly the closer you get to that figure, the 
         25   better off you're going to be.  I don't know whether 
  0102
          1   it's 30, 40, 80, 100, but the closer you get to that 
          2   figure, certainly the more comfortable I think we're 
          3   all going to be if we reach that kind of competitive 
          4   size and dimension that's going to provide real deep 
          5   pockets, real competition.
          6            PRESIDING OFFICER SMITH:  Thank you very 
          7   much for coming this morning.
          8            MR. BLUMENTHAL:  Thank you. 
          9            PRESIDING OFFICER SMITH:  We'll move on to 
         10   Panel Four.  We're ready to start and we have Ms. 
         11   Campbell reading a part of the statement from Ms. 
         12   Hurd, and I have assured her that the entire 
         13   statement will be part of the record.  
         14            MS. CAMPBELL:  My name is Joyce Campbell.  
         15   I am going to be reading Maude's testimony.  As you 
         16   know, Maude Hurd is the National President of the 
         17   community organization ACORN.  She couldn't be here 
         18   today because she had to work, as does a lot of our 
         19   members.  She had asked, though, that maybe in the 
         20   future we could have this in the evening so that we 
         21   could better represent our membership.  
         22            Anyway, as you know, ACORN members have 
         23   fought redlining and mortgage discrimination all 
         24   across the country.  We use the Home Mortgage 
         25   Disclosure Act and Community Reinvestment Act to 
  0103
          1   negotiate innovative agreements with banks that 
          2   remedy past discrimination.  Since we signed the 
          3   first of these agreements in 1985, the ACORN Housing 
          4   Program has worked with banks to put over 21,000 
          5   families into their own homes, valued at 1.53 
          6   billion dollars.  ACORN's program has also generated 
          7   an additional $4 billion in low-income community 
          8   investment.  
          9            ACORN's housing program has won awards for 
         10   its success in helping low-income minority borrowers 
         11   successfully get and pay their mortgages.  Our 
         12   agreements with banks include progressive 
         13   underwriting standards, intensive one-on-one housing 
         14   counseling and, whenever possible, below-market 
         15   interest rates.  
         16            Fleet signed an agreement to participate in 
         17   the ACORN Housing Program in 1995 when it bought 
         18   Shawmut Bank.  The agreement covered Massachusetts 
         19   and Connecticut and has produced over 1,000 
         20   successful home buyers and more than $120 million in 
         21   mortgages.  The program has also increased access to 
         22   home ownership for single parents, recent 
         23   immigrants, lower-income buyers and people who don't 
         24   qualify for traditional mortgage underwriting, 
         25   although they still pay their bills and they pay 
  0104
          1   them on time.  
          2            The Fleet-ACORN partnership program and 
          3   programs like it have been crucial in bringing 
          4   capital and credit into low-income minority 
          5   neighborhoods.  For most American homeowners it's 
          6   the single biggest source of wealth.  It means the 
          7   difference between living paycheck to paycheck and 
          8   building equity for yourself and your family.  
          9            Home ownership is even more crucial for the 
         10   stability and economic growth of minority 
         11   communities.  Minority homeowners hold 75 percent of 
         12   their wealth in home equity.  The difference between 
         13   owning and renting is staggering for African- 
         14   Americans.  The average black homeowner's net worth 
         15   is $48,300, while for the average renter it's only 
         16   $500.  Home ownership helps the homeowner, but it 
         17   also helps the community.  Homeowners are much more 
         18   likely than renters or landlords to protect and 
         19   improve their property.  There's more stability and 
         20   less crime in neighborhoods of homeowner-occupied 
         21   homes and greater involvement in community and civil 
         22   activities of all kinds.  
         23            With the ACORN-Fleet agreement and others 
         24   like it, we were really starting to see a positive 
         25   shift in the rate of minority home ownership. In 
  0105
          1   early and mid-'90s the percentage of growth of 
          2   minority home buyers was greater than that of whites 
          3   for the first time ever.  These deals were helping 
          4   our Massachusetts and Connecticut neighbors achieve 
          5   the American dream of home ownership, while helping 
          6   Fleet gain significant market share in minority 
          7   lending.  
          8            But as the '90s draw to a close, we are 
          9   starting to see a downward trend in lending to 
         10   minority and low-income census tracts.  As banks 
         11   like Fleet get bigger and less accountable to the 
         12   local communities, they walk away from innovative 
         13   programs and begin to use cookie-cutter formulas 
         14   that try to fit everyone into a white middle-class 
         15   ideal credit situation.  
         16            Sometimes they even get encouragement from 
         17   Washington, like the conservative Congress that's 
         18   trying to dismantle the Community Reinvestment Act.  
         19            If this merger proceeds, Fleet will be the 
         20   biggest mortgage player by far in Boston and 
         21   Bridgeport and many other cities across the 
         22   Northeast.  When they turn their backs on the 
         23   programs that brought in 30 to 80 percent of their 
         24   minority lending business in recent years, they are 
         25   turning their backs on our communities.  And let me 
  0106
          1   tell you, without these kinds of programs, our 
          2   neighborhoods don't stand a chance.  
          3            If Fleet turns their back on the ACORN 
          4   program, their record in Boston is likely to go as 
          5   low as it has in other cities.  Over the last ten 
          6   years Fleet has been showing an alarming trend.  
          7   Each time the bank merges, it decreases its 
          8   community reinvestment work.  Fleet's CRA ratings 
          9   have been going down in recent years, even when the 
         10   banks they have acquired have a grade of 
         11   "Outstanding."  It happened with Northstar in 1991 
         12   and NatWest in 1994.  These banks were high-quality 
         13   community lenders, but since being acquired by 
         14   Fleet, they have gone down to "Satisfactory" to "Low 
         15   Satisfactory" range and slipping.  
         16            Our community cannot afford to have history 
         17   repeat itself, as Fleet swallows up yet another bank 
         18   without making concrete commitments, continue 
         19   lending in low income and minority neighborhoods.  I 
         20   call upon the Federal Reserve to delay this merger 
         21   until Fleet can prove that it will meet its 
         22   investment obligations to our communities.  Thank 
         23   you.  (Applause)  I did it all. 
         24            PRESIDING OFFICER SMITH:  Ms. Wilkerson on 
         25   behalf of Mr. Christian.
  0107
          1            MS. WILKERSON:  Good morning.  My name is 
          2   Angie Wilkerson and I am speaking on behalf of 
          3   Matthew Christian.
          4            PRESIDING OFFICER SMITH:  Can you bring the 
          5   mike closer to you? 
          6            MS. WILKERSON:  Good morning.  I'm speaking 
          7   on behalf of Matthew Christian, and I'd just like to 
          8   put some things into proper perspective for myself.  
          9   As a member of ACORN, as a member of the community, 
         10   we began the program with Fleet many years ago.  We 
         11   were the ones who implemented the lifeline banking.  
         12   We were the first to implement the first-time home 
         13   buyers program, and if Fleet walks away from this 
         14   program, it would be devastating to the community.  
         15            I'm asking Fleet to stand by your 
         16   commitment that you originated with us and step up 
         17   to the plate and do what you're supposed to do.  If 
         18   you walk away, it will be so devastating for our 
         19   community, we will have more homeless people in 
         20   Massachusetts than we ever had.  So please continue 
         21   your commitment and give us the commitment that we 
         22   need in our community.  Thank you.  (Applause)
         23            PRESIDING OFFICER SMITH:  Thank you very 
         24   much.  Then we have Ms. Mustafa on behalf of Ms. 
         25   Thompson. 
  0108
          1            MS. MUSTAFA:  My name is Lunita Mustafa.  
          2   I'm a mother of six children and like Ms. Elnora 
          3   Thompson, I am divorced and I am a single parent.  
          4   I'd like to say on her behalf and on my behalf that 
          5   the struggle of raising children by yourself is not 
          6   easy, as we all know.  But for the past five years 
          7   parents like myself have had ACORN Housing 
          8   Authority.  We have had Massachusetts Affordable 
          9   Housing Alliance.  We have had Mayor Menino.  We 
         10   have had the CRA, Community Reinvestment Act.  
         11            Five years ago parents like myself were 
         12   coming out before people like yourself.  We were 
         13   carrying pictures, and we were crying.  We were 
         14   weeping for the death of our children to gangs, to 
         15   violence in our streets as the result of an unstable 
         16   community, of moving every year from place to place.   
         17            The burden on the children is every other 
         18   year you're the new kid on the block.  Every other 
         19   year there's a new gang or there's a new territory 
         20   that you have to deal with or a new school that you 
         21   have to settle into.  But for the past five years 
         22   we've had a chance to rest.  And today I don't have 
         23   a picture of dead children.  No.  I have a picture 
         24   of my two oldest children out of my six, and I'd 
         25   like to show it to you.  This is my daughter that 
  0109
          1   just graduated from Bentley College.  (Applause)
          2   And this is my son, my 18-year-old that I have been 
          3   in fear when I see other parents bury their children 
          4   on the streets, and he just joined the U.S. Navy and 
          5   he's a medic.  He just graduated boot camp and is 
          6   starting a school, his first year in medical school.  
          7   (Applause)  This is what ACORN Housing, 
          8   Massachusetts Affordable Housing Alliance and Mayor 
          9   Menino have stood by me and supported me to help me 
         10   to bring this about.  
         11            And I am crying today because five years 
         12   ago there was a wild beast in our community and it 
         13   was devouring our children.  And then today I hear 
         14   that they're going to unleash him and send him back 
         15   out there, and I still have four young children.  I 
         16   have my home, I have my CRA home, but what about the 
         17   rest of the people around me?  What if it becomes a 
         18   fast rental area again?  
         19            This is Fleet.  My son is supporting this 
         20   flag.  This is what the investment is bringing about 
         21   for Boston.  This is what house Boston is bringing 
         22   about.  This is the safe Boston.  This is the 
         23   result.  These are live children, and five years ago 
         24   somebody would have been crying for dead children.  
         25            I ask you, the Federal Reserve Board, 
  0110
          1   you're a family.  Please don't release the beast on 
          2   my community, on my children.  That's what the 
          3   merger represents to us.  That's what the merger 
          4   represents to Boston.  Without the support of the 
          5   CRA, without ACORN Housing Corporation, without 
          6   Massachusetts Affordable Housing Alliance and all 
          7   the people that supported us, we don't stand a 
          8   chance.  There is no muzzle for that beast.  Thank 
          9   you.  (Applause)
         10            PRESIDING OFFICER SMITH:  Ms. Carter. 
         11            MS. CARTER:  Can everyone hear me? 
         12            PRESIDING OFFICER SMITH:  Yes. 
         13            MS. CARTER:  I just hope this morning that 
         14   God's will be done in this hearing, and before I 
         15   start, I can ask for his help.  So Lord, let the 
         16   words of my mouth and the meditation of my heart be 
         17   acceptable in your sight, in Jesus' name, amen.  
         18   Praise the Lord.  
         19            My name is Jennifer Carter.  I have been 
         20   banking with BankBoston for many moons, over 20 
         21   years.  I am very concerned about the aftermath of 
         22   the merger between Fleet and BankBoston.  I'm 
         23   worried that they will cancel ACORN.  After meeting 
         24   with them yesterday, they said that they will be 
         25   sitting down again with ACORN.  But I am more 
  0111
          1   concerned that this is just lip service.  And that's 
          2   lip service.  By turning their back on ACORN 
          3   program, Fleet is turning their back on our low- 
          4   income and minority community.  
          5            Have they forgotten that the ACORN Housing 
          6   Corporation borrowers made up over 30 percent of 
          7   Fleet's loans to low and moderate income 
          8   neighborhoods in 1996?  Have they forgotten that 
          9   ACORN Housing helped Fleet increase their lending in 
         10   low-income neighborhoods by almost 90 percent 
         11   between 1995 and 1997?  Have they forgotten ACORN 
         12   Housing is responsible for more than 50 percent of 
         13   BankBoston's loans to black and Latino borrowers in 
         14   1998 and responsible for 20 percent of BankBoston's 
         15   overall lending in that year?  
         16            I think that Fleet has forgotten that ACORN 
         17   has been -- has done -- excuse me.  I think that 
         18   Fleet has forgotten what ACORN has done to help them 
         19   meet their obligation to the low-income and minority 
         20   community.  But I would like to remind them again 
         21   today.  If this merger goes forward and Fleet does 
         22   not renew its lending agreement with ACORN by August 
         23   1st, I, Jennifer Carter, will be closing my account 
         24   at BankBoston, and I will also be encouraging my son 
         25   to close his account at Fleet.  And we, the members 
  0112
          1   of ACORN -- raise your hands, ACORN.  Praise the 
          2   Lord.  And we, the members of ACORN, have already 
          3   collected several dozen letters from other community 
          4   residents in that they are going to close their 
          5   account as well.  We will continue to collect these 
          6   letters throughout the summer.  And I have some 
          7   letters here if you'd like us to submit that to you. 
          8            PRESIDING OFFICER SMITH:  Yes, please do 
          9   so. 
         10            MS. CARTER:  So if Fleet is planning to 
         11   keep taking deposits from our community but stop 
         12   giving us loans, then we are going to cut their 
         13   credit line, too.  (Applause)  This is our way of 
         14   expressing our dissatisfaction with Fleet's 
         15   decision.  They cannot continue to keep profiting 
         16   from our deposits without putting back into our 
         17   community.  So that's why I'm here today, to bring 
         18   to the Federal Reserve's attention the urgency and 
         19   the dire need for this program, because it's all 
         20   about helping the low-income community to accomplish 
         21   the American dream.  
         22            Please do not rush your decision by 
         23   allowing this merger.  I believe extra time is 
         24   needed for Fleet to meet with ACORN again as they 
         25   have promised.  You cannot let this merger go 
  0113
          1   forward if it means that Fleet is allowed to walk 
          2   away from its community reinvestment responsibility.  
          3            I realize that nothing can be accomplished 
          4   unless God allows it, so I'm praying for you that 
          5   the Lord will lead and guide you.  Praise God.  And 
          6   I want to encourage Fleet, gather up the frogmen.  
          7   Let nothing be lost.  (Applause)
          8            PRESIDING OFFICER SMITH:  Ms. Jacobs. 
          9            MS. JACOBS:  Hello.  My name is Gwendolyn 
         10   Jacobs and I am president of ACORN's New York 
         11   chapter.  New York City has every bank there is.  
         12   There are so many corporate headquarters and there 
         13   are so much money changing hands, but not where I 
         14   live in Brownsville in Brooklyn.  Where I live it is 
         15   hard to find a good bank.  There weren't too many to 
         16   start with, and since they all started merging, 
         17   there are even fewer.  Because of this, people in 
         18   neighborhoods like Brownsville don't have checking 
         19   accounts.  They go to check-cashing stores.  There's 
         20   no local branch of a respectable commercial bank to 
         21   ask for a loan, so instead we're prey to B and C 
         22   lenders.  
         23            Fleet has had dialogue with ACORN about the 
         24   banking problems faced by low and moderate income 
         25   people in New York, but they have not helped us 
  0114
          1   address them.  Before we had discussed doing any 
          2   programs with Fleet, we had a valuable relationship 
          3   with NatWest which gave good loans to minority 
          4   residents of New York.  
          5            ACORN had a highly successful underwriting 
          6   program and then we negotiated a mortgage program 
          7   offering loans at 1 percent below the market 
          8   interest rate.  We were helping NatWest target 
          9   populations that were new to them, break into a 
         10   large, underserved Latino community and build 
         11   relationships with other community groups and with 
         12   local minority churches.  
         13            Then Fleet acquired them and it all ended.  
         14   We in the New York office were led on to believe 
         15   that these programs and our relationships would be 
         16   unaffected.  At the time of the merger, they told us 
         17   that all that would change was the stationery.  What 
         18   a lie.  But after the acquisition was complete, we 
         19   were told that they didn't need our product; that 
         20   they were covered.  
         21            Well, we followed Fleet since then, and in 
         22   fact, they don't have coverage that matched the 
         23   NatWest programs that were in place.  Fleet has been 
         24   terrible about providing communities with the 
         25   services prescribed by CRA.  It's hard to provide 
  0115
          1   services to a community when you don't have a branch 
          2   there.  
          3            In New York Fleet has 39 branches and four 
          4   of them are in predominantly Afro-American or Latino 
          5   communities. 
          6            New York State has a law that requires 
          7   banks to offer lifeline or basic banking accounts.  
          8   A few months ago when ACORN members went to these 
          9   four branches to ask about opening accounts, which 
         10   one of them happened to be my branch.  They acquired 
         11   it from NatWest.  When ACORN members went to these 
         12   four branches to ask about opening accounts, none of 
         13   them were told about the lifeline account.  When 
         14   members asked about lifeline accounts, they were met 
         15   with blank stares.  They were instead offered 
         16   accounts with a higher opening balance requirement 
         17   and unreasonable fees.  
         18            So ACORN went to Fleet so we could get this 
         19   fixed.  The New York State law was on our side and 
         20   Fleet claimed to be on our side, too.  We met with 
         21   them and asked them about their lifeline account.  
         22   We knew they offered it because it was in their 
         23   pamphlets.  So why didn't the employees working in 
         24   their banks know about it?  Why don't they advertise 
         25   it more, especially in the branches that serve the 
  0116
          1   people who need it, like the law says they have to?  
          2            That was when Fleet told us about their 
          3   merger with BankBoston.  They said they would make 
          4   sure that their employees knew before the basic 
          5   banking accounts and offered it more to customers.  
          6   They also said they would make posters for these 
          7   branches so people would not have to find mention of 
          8   the account in Fleet's pamphlet.  They would know 
          9   about it just from standing in the bank.  
         10            Well, our members went back about one month 
         11   ago, and I went last Thursday, and still they were 
         12   not offering the lifeline account.  Still you don't 
         13   find any posters either.  Fleet has become an 
         14   example of the rich getting richer from the poor 
         15   getting poorer.  With every merger they have made, 
         16   they have lost more interest in serving individuals.  
         17            People like me can't bring Fleet the money 
         18   that its corporate customers can, but we're not 
         19   making them lose money either.  We pay our bills and 
         20   we pay our rent, in the same way we could pay a 
         21   mortgage that we can keep a checkbook.  So I am 
         22   asking the Federal Reserve to carefully consider 
         23   Fleet's current merger.  For every employee they 
         24   will lay off and every bank branch that will be 
         25   closed, there are hundreds of consumers who will 
  0117
          1   have less access to banking services.  In low and 
          2   moderate income neighborhoods we need more banks, 
          3   not richer ones.  
          4            If Fleet -- the only way I believe Fleet 
          5   will do anything, it would have to be memorialized.  
          6   They would have to put it in writing before the 
          7   merger and they would have to put the money where 
          8   their mouth is.  (Applause)  Put the money where 
          9   their mouth is.  Saying it is not doing it, and 
         10   bigger does not necessarily mean better.  Time has 
         11   proven that to me.  
         12            When they took over NatWest, the little 
         13   card they have for the ATM has little things like 
         14   little ships.  Well, their ships are leaving out 
         15   lower and ours is coming back and we're filling them 
         16   up and we're getting poorer and they're sailing off 
         17   into the blue to the twin towers with the money.  
         18   (Applause)  Financial Services Corporation, that's 
         19   where it's going.  We're getting poorer and they're 
         20   getting richer.  
         21            That's unconscionable for them to merge and 
         22   get richer at the expense of the poor.  And we are 
         23   the most underserved, deprived, non-served people 
         24   you ever saw, and they're using -- they talk about 
         25   they don't get anything from our money.  Yes, they 
  0118
          1   do.  They get our money.  They're using our money 
          2   while we're sleeping and we're leaving it in their 
          3   bank.  We are their partners.  They should think of 
          4   us as partners because they're using our money.  
          5   While we sleep our money is in their bank and 
          6   they're doing something with it overnight.  Thank 
          7   you very much.  (Applause)
          8            PRESIDING OFFICER SMITH:  Ms. Brown.
          9            MS. BROWN:  My name is Lori Brown and I 
         10   live in Bridgeport, Connecticut.  I recently 
         11   purchased my home through the Fleet-ACORN program.  
         12   Before that I was living in a small three-room 
         13   apartment as a single mother; couldn't really afford 
         14   to get a larger place with the income that I was 
         15   making, but I knew if I could purchase a two-family 
         16   home I would be able to use the rental income to 
         17   bring down my housing payment to a level I could 
         18   handle.  But since I didn't have perfect credit and 
         19   I had recently become self-employed, even though I 
         20   made decent money, it wasn't possible to get a bank 
         21   to actually look at me seriously at that time. 
         22            The only one who really would look at my 
         23   situation was the Fleet program with ACORN.  Thanks 
         24   to that program my child and I are living together 
         25   in our new home on a quiet street where lots of 
  0119
          1   people are homeowners and really care about keeping 
          2   up their neighborhood.  I own my own home today and 
          3   my daughter has a safe place to grow up because 
          4   Fleet agreed to look at my loan application when no 
          5   one else would.  Through the ACORN Housing Program 
          6   Fleet didn't try to fit me into a cookie-cutter 
          7   pattern of what I was supposed to be.  Fleet took a 
          8   closer look.  
          9            I also used to work for ACORN Housing 
         10   Corporation as a loan counselor and now I work very 
         11   closely with ACORN Housing Corporation as a realtor.  
         12   I have worked with them for several years and I have 
         13   experienced how Fleet takes a closer look.  
         14            Most banks these days are using credit 
         15   scoring to decide if they want to make a loan.  They 
         16   ask everyone the same questions and run the same 
         17   credit report, send all these numbers to someplace 
         18   to compute them and they come back with a yes or no.  
         19   In our low and moderate income neighborhoods, 
         20   especially in Bridgeport, it was mostly no.  But the 
         21   ACORN and Fleet partnership took a closer look.  
         22   They looked at things that don't go into a credit 
         23   score, but that make a world of difference in your 
         24   application.  They looked at my plan to use the 
         25   income for my renting out one apartment in a 
  0120
          1   two-family home to help me pay my mortgage.  They 
          2   looked at how I had a great record of paying my rent 
          3   and paying my other bills on time and how I had 
          4   cleaned up my credit issues.  
          5            Through the ACORN Housing Program Fleet 
          6   took a closer look at why a lot of other people from 
          7   Connecticut in low and moderate-income communities 
          8   weren't able to get loans.  For example, there's a 
          9   lot of people who were paying very high rents.  If 
         10   you can afford to pay your rent and afford to pay 
         11   your bills and put food on the table, but not 
         12   necessarily have a whole lot of money left over to 
         13   put into the bank, and with Fleet they had all types 
         14   of flexibility with how much money you had to come 
         15   up with, and they really took a closer look at 
         16   having non-traditional credit issues, among other 
         17   things.  
         18            And when they worked with the ACORN 
         19   program, Fleet also took a closer look at being a 
         20   team player, which is something you really don't see 
         21   today with a lot of things.  While they're 
         22   processing the mortgage applications and 
         23   underwriting them, the people who are processing 
         24   them will call if there are any problems.  So if it 
         25   looked like a problem with an application, instead 
  0121
          1   of just denying it and not looking further into it, 
          2   they will call ACORN and work with them to work 
          3   through the issues and get people the mortgages that 
          4   they were seeking.  
          5            They took a closer look at my community and 
          6   we needed the help and we were glad to get it.  
          7   That's why ACORN Housing did almost 300 loans with 
          8   Fleet in 1996 in Connecticut.  These loans have 
          9   worked.  I know I am paying my mortgage payment 
         10   every month and on time and almost every one of the 
         11   clients that I counseled during that time period is 
         12   doing the same.  We haven't heard any complaints 
         13   from Fleet about the loans or about our clients.  
         14            So when I heard that Fleet was going to 
         15   walk away from the partnership, I was very 
         16   surprised.  I am asking Fleet to stop and take a 
         17   closer look now.  Fleet's partnership with ACORN 
         18   Housing accounted for more than 66 percent of the 
         19   loans to blacks and Latinos in Bridgeport in 1996 
         20   and almost 80 percent of the loans to blacks and 
         21   Latinos in Stamford and Norwalk.  In other words, 
         22   out of a total of 142 loans to blacks and Latinos in 
         23   Bridgeport in 1996, ACORN Housing's partnership with 
         24   Fleet was responsible for 94 loans.  Once more, 
         25   ACORN Housing accounted for 50 percent of Fleet's 
  0122
          1   conventional loans to all buyers in each of these 
          2   cities, 50 percent of all buyers, and in 1997 ACORN 
          3   Housing Program was responsible for over 60 percent 
          4   of Fleet's lending to blacks and Latinos, again in 
          5   Bridgeport, and 55 percent of lending to blacks and 
          6   Latinos.
          7            PRESIDING OFFICER SMITH:  Could you wrap 
          8   up, Ms. Brown?
          9            MS. BROWN:  Yes.  I would like to wrap up 
         10   by saying, please take a closer look.  Fleet should 
         11   not be allowed to increase their size without 
         12   increasing their community commitment, and I'm 
         13   asking that you oppose the merger.  (Applause)
         14            PRESIDING OFFICER SMITH:  Next we have Mr. 
         15   Collazo on behalf of Ms. Mateo.
         16            MR. COLLAZO:  Yes.  Hi.  How are you doing?  
         17   I'm here on behalf of Mrs. Mateo.  I happen to be 
         18   her counselor.  I worked with her for quite a while 
         19   before she became a homeowner.  Just last week she 
         20   managed to close the deal.  So she's basically a 
         21   homeowner thanks to the Fleet-ACORN Program.  
         22            She always wanted to be a homeowner and she 
         23   worked hard to save the few bucks that she had 
         24   extra.  She budgeted herself and finally she reached 
         25   the point where she managed to save enough money for 
  0123
          1   a downpayment.  Her husband was struggling with 
          2   illness which required surgery.  
          3            Basically what has happened after that, 
          4   after the surgery, other bills started accumulating 
          5   and Ms. Mateo was left with the responsibility of 
          6   paying all the finances and basically paying all the 
          7   bills. 
          8            When Ms. Mateo came to our program I worked 
          9   very hard with her to get her ready for the 
         10   responsibilities of home ownership.  I knew there 
         11   was Fleet available for her, so I started working 
         12   with her to make sure she was ready to meet all the 
         13   criteria.  No other bank would touch this loan by 
         14   looking at all the other issues that took effect 
         15   after the incident with her husband.  So after 
         16   carefully taking care of all the outstanding debts 
         17   and all the bills that were left over from the 
         18   incident, Ms. Mateo managed to basically regain her 
         19   own funds and come up with a downpayment.  
         20            So basically what it comes down to is 
         21   because of Fleet and ACORN Housing, the partnership 
         22   that we had, they managed to become first-time home 
         23   buyers.  You have to keep in mind without this 
         24   program, there will be no more Ms. Mateos around to 
         25   basically take advantage of such a great program 
  0124
          1   like ours.  
          2            I am asking you please do not approve this 
          3   merger without requiring Fleet to come to some 
          4   agreement that they're still going to help these low 
          5   and moderate income people that ordinarily would not 
          6   be able to go elsewhere.  This program was her only 
          7   chance and it was the only chance for many others as 
          8   well.  Thank up  (Applause)
          9            PRESIDING OFFICER SMITH:  Then we have Ms. 
         10   Miller for Ms. Blain. 
         11            MS. MILLER:  Okay.  I'm speaking for Rose 
         12   Blain.  She lives in Mattapan and she says, "I am 
         13   working with ACORN and Fleet to buy my own home in 
         14   Brockton.  For a long time I wanted to buy a house, 
         15   but I didn't believe that I could.  I got 
         16   information about ACORN from a meeting in Fields 
         17   Corner in Dorchester and I decided to participate in 
         18   the program.  The ACORN loan counselor, Robert 
         19   Davis, helped me to check my husband's credit, my 
         20   pay stub, my income tax and my bills.  I work 
         21   full-time and many night shifts as a nursing 
         22   assistant in a hospital pediatric ward.  Even though 
         23   my income is only $22,000 a year, ACORN's program 
         24   with Fleet Bank gave me the flexibility to have a 
         25   low downpayment and a good mortgage rate.  
  0125
          1            I was able to get a prequalifying letter 
          2   for a house based partly on my plan to rent out a 
          3   floor to another family.  The house I am trying to 
          4   buy is in Brockton.  I will be living there with my 
          5   husband and four kids.  It is my dream to own my own 
          6   home and be my own boss.  
          7            Even with ACORN's program it has taken me 
          8   two years to be ready to buy a home.  Without this 
          9   program a lot of people will miss the opportunity to 
         10   have their dream.  To me it is horrible that Fleet 
         11   is hurting so many people who would like to get a 
         12   house.  I want many families to get the same 
         13   opportunity that we did working with ACORN and 
         14   Fleet.  There's an old saying:  If it ain't broke, 
         15   don't fix it.  Well, this program ain't broke, so 
         16   please don't take it away from the people who need 
         17   it.  I urge you to renew the ACORN Housing Program 
         18   because it works and to stop the merger.  
         19            On a personal note, six years ago I lost my 
         20   home due to a bad loan and a bad house; okay?  I had 
         21   no credit.  But a good income, and the original loan 
         22   that I tried to obtain from a regular bank, I got 
         23   turned down, so I had to go to a shyster loan 
         24   company.  My loan was 16 percent interest and my 
         25   note was $2,000 a month.  After a few years I lost 
  0126
          1   everything.  
          2            But a sister program to ACORN helped me to 
          3   rebuild my life and start over again.  Without the 
          4   program and the training to give me the tools that I 
          5   wouldn't run into the same problems again and the 
          6   loan through the CRA Act, I would not have been able 
          7   to get another home for my family for at least 
          8   another 10 or 15 years; okay?  
          9            So ACORN works.  Megamergers do not.  And 
         10   we urge you today to please stop the merger, renew 
         11   ACORN and help us to keep our community going and 
         12   our cities on line.  Thank you.  (Applause)
         13            PRESIDING OFFICER SMITH:  Thank you very 
         14   much.  Any questions from the panel?
         15            MS. BROWNE:  I was a little unclear.  Has 
         16   Fleet said they will not renew their relationship 
         17   with ACORN?  Is it just up in the air?  If they have 
         18   said that they will not renew, have they given any 
         19   indication why?  Is it because BankBoston is sort of 
         20   handling community affairs?  I was a little unclear 
         21   whether this is something that's up in the air or 
         22   you have some reason to believe -- 
         23            MS. CAMPBELL:  No, it's not up the air at 
         24   all.  They said as of July 1st the program ends.  
         25   They walked away from the negotiation table.  They 
  0127
          1   have said since then a week ago at a meeting that 
          2   Marge was at and I was at, they said, oh, yeah, we 
          3   plan on setting up a meeting, you know, we have such 
          4   a good partnership.  But we haven't heard from them.  
          5            They had a meeting yesterday, a community 
          6   meeting that we weren't invited to, but we found out 
          7   about, so we went anyway, and they said, oh, yeah, 
          8   we're going to meet with you next week.  But I doubt 
          9   if that's anything concrete that we can -- you know, 
         10   it's up to you guys to make sure that they sit down 
         11   with us.  I mean, if you just let them say I will 
         12   and wait for them to do it, I don't think it's going 
         13   to happen.  (Applause)
         14            PRESIDING OFFICER SMITH:  Thank you very 
         15   much.  We are going to take a five-minute break 
         16   instead of a ten-minute break.  So I'll see you here 
         17   very soon.
         18            (Short recess)
         19            PRESIDING OFFICER SMITH:  Would you 
         20   identify yourself, please, for the record.
         21            REV. GOFF:  My name is Reverend Norvel 
         22   Goff, Sr., Pastor of Baber African Methodist 
         23   Episcopal Church and president of the Greater 
         24   Rochester NAACP and Chairman of the Black Ministers 
         25   Alliance.  I come here today to support the merger 
  0128
          1   of Fleet-BankBoston, and I'm doing it for a number 
          2   of reasons:  
          3            One, based on their commitment to Western 
          4   New York and other communities in that area. 
          5            Two, because of their commitment to 
          6   faith-based lending institutions, which is inclusive 
          7   of the church. 
          8            Three, the partnership that has been 
          9   developed by Fleet Bank as a leader not only in 
         10   Western New York but New York City and New Jersey 
         11   and other parts of the country, where they have been 
         12   very proactive in committing themselves to improving 
         13   the quality of life. 
         14            In addition to that, I would like to state 
         15   here for the record that Fleet Bank in Upstate New 
         16   York has been a leader in commitment to a program 
         17   that is called Footprints to Home Ownership, which 
         18   has allowed first-time homeowners to own their own 
         19   home and to promote seminars and to teach them the 
         20   value of owning a home and also to pay the mortgage. 
         21   I think the relationship as president of the Greater 
         22   Rochester NAACP, as we look at demographics of the 
         23   employment track record of Fleet Bank, it shows an 
         24   inclusive niche of all colors. 
         25            And finally, let me say this, that Fleet 
  0129
          1   Bank is not about just giving out money, but we have 
          2   developed a partnership, a partnership where the 
          3   black church comes with economic stability to 
          4   provide stability in our various communities.  And 
          5   for that reason, I come on behalf of more than 
          6   several thousand individuals who are participants in 
          7   our various organizations to say we support the 
          8   merger because we think it's good business, good 
          9   business not only for the churches but good business 
         10   for the community in which Fleet Bank finds itself. 
         11            Thank you so much, and I thank my 
         12   colleagues for letting me cut in line, because I 
         13   have a one o'clock flight.  Thank you so much.  
         14   (Applause)
         15            PRESIDING OFFICER SMITH:  Our panelists on 
         16   this panel have about one minute, which isn't a very 
         17   long time, but we welcome you.
         18            MS. STROM:  Thank you.  My name is Margo 
         19   Strom, I am the executive director of Facing History 
         20   and Ourselves, a national nonprofit educational 
         21   organization. 
         22            As you well know, individuals and groups 
         23   and corporations and communities develop character, 
         24   they have identities, and they are defined by the 
         25   choices they make.  These choices shape our 
  0130
          1   democratic space.  The democratic activity that lies 
          2   somewhere between government and business is the 
          3   independent sector, it is the home for nonprofits, 
          4   and it is that that I represent. 
          5            It is also the arena where people volunteer 
          6   and associate, they practice the First Amendment, 
          7   and it is the avenue for advocacy and outrage, as 
          8   you have seen here today.  It is where we educate 
          9   people to be democratic to others.  We teach about 
         10   this sector.  It focuses on the choices individuals 
         11   and groups make in history either to promote social 
         12   justice and tolerance in inclusive democratic 
         13   societies or to destroy them. 
         14            For 20 years we have been reaching students 
         15   across this country, now reaching annually a 
         16   million.  The corporate philanthropy of both 
         17   BankBoston and Fleet Bank represents a deep 
         18   commitment to the nonprofit sector.  We have not 
         19   only been a beneficiary of their leadership but 
         20   witness to the extraordinary impact of their 
         21   stewardship and investment that has been paid off in 
         22   the health and vitality and education of the New 
         23   England community. 
         24            They lend not only financial backing but 
         25   time and advice to help leverage their investments.  
  0131
          1   Their support lends credibility, because their 
          2   reputation as caring corporate partners for 
          3   nonprofits has become legendary.  Our future depends 
          4   on the commitment the corporate community has to the 
          5   partnerships with nonprofits. 
          6            Thank you for this opportunity. 
          7            PRESIDING OFFICER SMITH:  Thank you.  
          8   (Applause).
          9            MS. KORMAN:  My same is Nancy Korman, and I 
         10   chair the Massachusetts Service Alliance.  This year 
         11   we distributed $13 million, $8 million from the 
         12   federal government and $5 million from the state 
         13   government.  However, we do not operate on 
         14   government funds alone.  We are required by law to 
         15   develop partnerships with the corporate community.  
         16   In other words, our success depends upon raising a 
         17   percentage of matching dollars. 
         18            So I have gone knocking on the doors of 
         19   both banks, and if only other corporations were as 
         20   generous and responsive as both BankBoston and Fleet 
         21   Bank have been.  The money that we raise goes to 
         22   programs such as Americorps, Youth Build, Jump 
         23   Start, City Year, ROCA.  These are the programs 
         24   which are the obvious antidote to Littleton, 
         25   Colorado, to alienated youth, to people who are not 
  0132
          1   on teams.  These programs put kids on teams helping 
          2   other kids. 
          3            We as an organization are committed to 
          4   community and the ethic of community service, and we 
          5   have always had equal and generous help from 
          6   BankBoston and Fleet.  After Colin Powell's 
          7   Presidential Summit, the two banks equally funded 
          8   the Massachusetts Summit.  This summit helped the 
          9   Alliance focus attention on the value of community 
         10   service, particularly as impacts on our youth.  I am 
         11   confident that in the future both banks will not 
         12   just strengthen their visibility and their financial 
         13   capabilities but will strengthen their commitment to 
         14   the entire community.  Thank you.  (Applause)
         15            MS. GUILDERSON:  Good morning.  My name is  
         16   Tandeka Guilderson.  I'm the director of the Center 
         17   for Women and Enterprise, Boston office.  I am 
         18   speaking on behalf of Andrea Silbert, the founder 
         19   and chief executive officer of the Center for Women 
         20   and Enterprise who has acute laryngitis. 
         21            The center is a regional nonprofit economic 
         22   development agency which provides education, 

         23   training, technical assistance, and access to debt 
         24   and equity capital to women business owners.  The 
         25   Center For Women and Enterprise is the only women's 
  0133
          1   business development center in the State of 
          2   Massachusetts.  We provide our assistance to women 
          3   from all socioeconomic backgrounds in all stages of 
          4   business development spanning the range of women 
          5   transitioning from public assistance to women who 
          6   are launching and growing high-tech ventures. 
          7            We have been very fortunate to have been 
          8   supported since our founding in 1995 by BankBoston 
          9   and one year later by Fleet.  BankBoston provided 
         10   CWE with a three-year $150,000 seed grant in 1995 to 
         11   open our doors.  They have since increased that 
         12   amount to $75,000 per year to include our Worcester 
         13   office.  In addition, last year at the BankBoston 
         14   Charitable Trust through their new economic 
         15   development initiative provided us with a three-year 
         16   grant of $225,000 to develop a special program 
         17   targeting very low-income women living in Boston's 
         18   inner city environments. 
         19            Finally, BankBoston launched their own 
         20   initiative, the Women Entrepreneurs Connection, to 
         21   serve as a very important and often neglected 
         22   market. 
         23            Fleet has also been a good partner to CWE.  
         24   Two years ago CWE found a gap in the market 
         25   assisting women to access equity capital to launch 
  0134
          1   and expand high growth businesses.  Fleet provided 
          2   us with $50,000 to conduct the research on this 
          3   initiative and then launched the CWE Venture Center 
          4   at a conference held right here at the Federal 
          5   Reserve Bank in November of 1998. 
          6            Since then Fleet has committed another 
          7   $100,000 to the CWE center.  Fleet and BankBoston 
          8   have shown true interest in the women-owned business 
          9   market, they have committed to continuing and 
         10   expanding the Women Entrepreneurs Connection and 
         11   working with WEC to develop more programs and 
         12   products to assist this market.  In particular, we 
         13   are eager to work with them to increase seed equity 
         14   capital and nonconventional loans to women-owned 
         15   businesses. 
         16            It is critical that we keep a super bank 
         17   headquartered in Boston and look forward to working 
         18   with Fleet Boston to see that the needs of the 
         19   community are met once these banks merge.  Thank you 
         20   for your time.  (Applause)
         21            MS. DECEATIS:  I am Deborah Deceatis, I am 
         22   the associate director for Patriots Trail Girl 
         23   Scouts.  Patriots Trail Girl Scouts supports the 
         24   merger of Fleet Bank and BankBoston.  The Girl 
         25   Scouts, who have 65 cities and towns which provide 
  0135
          1   the jurisdiction served by Patriots Trail and serve 
          2   over 30,000 girls yearly with the help of 10,000 
          3   adult volunteers, benefit from a variety of support, 
          4   resources, and funding provided by both Fleet and 
          5   BankBoston. 
          6            Just to mention a few, collaboration and 
          7   development of a Financial Literacy Program for 
          8   young girls five years old to 18, to investigate 
          9   money issues, including savings, investment, loans, 
         10   and basic money management, as well as career 
         11   exploration in the financial world.  We call that 
         12   program Smart About Money. 
         13            Employees of Fleet and BankBoston have been 
         14   encouraged to provide community service as 
         15   volunteers.  The employees serve on our board of 
         16   directors, finance, and fund development committees, 
         17   as well as working directly as positive role models 
         18   to girls serving as troop leaders, trainers, program 
         19   support, and our ever-popular community care days of 
         20   service. 
         21            Fleet has supported our efforts to 
         22   recognize achievements and accomplishments of Boston 
         23   women who serve as positive role models for the 
         24   youth of our communities.  In addition, they have 
         25   served as advocates for girls and youth in the 
  0136
          1   neighborhoods through an ongoing partnership to make 
          2   it possible for girls whose families may not be able 
          3   to afford summer camp, to make it possible for those 
          4   girls to attend one of our day or resident camps by 
          5   funding camper shifts.  Funding from Fleet has 
          6   helped to promote our Girls Eye View Program where 
          7   girls throughout New England were provided with 
          8   tools to express their view and perspective on the 
          9   world, their community, or the neighborhood, through 
         10   photography, poetry, and writing of stories.  
         11   Currently a traveling exhibit is on view throughout 
         12   New England. 
         13            Lastly, but very significantly, there has 
         14   been a strong commitment from Fleet to our 
         15   communities to support our 2500 Girl Scout troops by 
         16   accessing free banking services so that the funds 
         17   earned by these young girls are safeguarded in 
         18   checking accounts. 
         19            We have a strong partnership with Fleet and 
         20   BankBoston, and we look forward to the merger as 
         21   expanding new services, resources, and opportunities 
         22   for the youth in our communities that we serve.  
         23   Thank you.  (Applause)
         24            MR. WILLIAMS:  Good morning.  My name is 
         25   Greg Williams, I'm the president and owner of GW 
  0137
          1   Enterprises, Inc., which is an information 
          2   technology consulting firm.  And I am also the 
          3   president of the Mercer County Business Association, 
          4   which is a not-for-profit organization of more than 
          5   200 small and minority-owned businesses.  We are an 
          6   advocacy group representing the interests of small 
          7   businesses and their owners in Mercer County and 
          8   throughout the State of New Jersey. 
          9            I'm here this morning to speak in favor of 
         10   the proposed merger of Fleet Bank and BankBoston.  
         11   The Mercer County Business Association has worked 
         12   very hard to make sure that small, women, and 
         13   minority-owned businesses are afforded the same 
         14   opportunities to grow and develop as larger 
         15   majority-owned businesses in the State of New Jersey 
         16   and in the country. 
         17            We have found a ready partner towards 
         18   meeting that objective in Fleet Bank, particularly 
         19   since Joyce Harley has become the head of the New 
         20   Jersey Community Development Group.  Fleet and Ms. 
         21   Harley have shown by word and deed that there is a 
         22   real commitment to financing and supporting small 
         23   business in New Jersey.  Fleet has exceeded that 
         24   commitment, the commitment it made when it entered 
         25   the state through its acquisition of NatWest Bank 
  0138
          1   three years ago to put over $200 million in small 
          2   business loans on the books. 
          3            The Mercer County Business Association 
          4   meets with Ms. Harley and her staff on a regular 
          5   basis to monitor the commitment, and we are pleased 
          6   with the results.  The goal has been exceeded by 
          7   more than 73 percent to date.  Fleet has 
          8   particularly reached out to small, women, and 
          9   minority-owned businesses in our urban and poor 
         10   areas, offering training seminars on how to borrow 
         11   money and how to write business plans that, in Ms. 
         12   Harley's own words, tell our story so that bankers 
         13   understand. 
         14            Fleet has been the leading bank in forming 
         15   a partnership with the state's Entrepreneurial 
         16   Training Institute.  That institute is a project of 
         17   the New Jersey Development Authority of which I am a 
         18   board member.  Of the 10 classes offered statewide, 
         19   six were staffed by Fleet Bankers, including the 
         20   entire community development staff.  Fleet has 
         21   worked with the Mercer County Business Association 
         22   to offer small businesses an opportunity to do 
         23   business with Fleet and other large businesses in 
         24   the state, many of whom are Fleet commercial 
         25   customers. 
  0139
          1            In conclusion, the Mercer County Business 
          2   Association supports this merger because we are well 
          3   aware of BankBoston's fine reputation.  We believe 
          4   that their commitment, combined with Fleet's 
          5   actions, will serve the interests of the small and 
          6   minority business community in the State of New 
          7   Jersey even better than it's being served today.  
          8   Thank you.  (Applause)
          9            MS. RESNEY:  Good morning.  I'm Romney 
         10   Resney, director of Mass Insight Education and 
         11   Research Institute.  Since 1989 Mass Insight has 
         12   worked in developing initiatives to create a strong 
         13   and competitive Massachusetts economy for all  
         14   Massachusetts citizens.  More recently, Mass Insight 
         15   Education is working with 47 school districts, 
         16   public school districts throughout Massachusetts on 
         17   raising student achievement. 
         18            It's crucial for Massachusetts community 
         19   groups like Mass Insight to have a strong nationally 
         20   competitive local bank based in New England.  I 
         21   could, like many of my peers here, discuss the many 
         22   contributions BankBoston has made to our efforts, 
         23   but I'd like to spend some time discussing the 
         24   alternatives to the merger. 
         25            Current banking industry trends and recent 
  0140
          1   experience show that it's unrealistic for Fleet and 
          2   BankBoston to remain independent and nationally 
          3   competitive locally based banks.  We need these 
          4   banks in this community.  Banks nationwide are 
          5   facing a rapidly changing competitive environment.  
          6   They're facing the threat of national consolidation.  
          7   We see this all across the country with different 
          8   bank mergers, facing industry convergence where 
          9   nontraditional banking institutions are moving into 
         10   the banking sector.  We're also seeing the threat of 
         11   e-banking and e-commerce which is rapidly increasing 
         12   the speed with which all of this is taking place and 
         13   also reducing some of the implications for the local 
         14   branch office. 
         15            Fleet and BankBoston are facing these 
         16   competitive threats, and I honestly believe they can 
         17   face them stronger together.  In the new banking 
         18   environment there are basically three options on the 
         19   table as I see it: 
         20            First, Fleet-BankBoston remain independent 
         21   and one or both are bought by a large, outside bank.  
         22   This takes away from the resources available to 
         23   community groups like ours. 
         24            Second, Fleet and BankBoston remain 
         25   independent, and if by some small chance they are 
  0141
          1   not bought by an outside bank, they'll lose market 
          2   share to new entrants, national players, and some of 
          3   these other industry players who are moving into the 
          4   banking sector. 
          5            And third, and I believe the best of all 
          6   options, is the Fleet-BankBoston merger will create 
          7   a nationally competitive, locally based bank that 
          8   will continue to invest in the strength of the New 
          9   England economy.  We at Mass Insight support this 
         10   third option and believe in the long-term interest 
         11   of Massachusetts community groups.  Thank you.  
         12   (Applause)
         13            MR. LORD:  For the record my name is 
         14   Richard Lord, I'm executive vice president of 
         15   Legislative Policy for Associated Industries of 
         16   Massachusetts.  Associated Industries is the 
         17   Commonwealth's principal statewide employer 
         18   organization representing 5300 businesses and 
         19   nonprofit entities across Massachusetts engaged in 
         20   virtually every economic sector. 
         21            This merger represents an important, 
         22   positive step to assure that Massachusetts and New 
         23   England businesses will benefit from a banking 
         24   system that offers both  stable financial resources 
         25   and the increasingly sophisticated banking services 
  0142
          1   that are essential to success of the modern economy. 
          2            In the first years of this decade when the 
          3   New England banking system was in turmoil, AIM and a 
          4   number of member companies consistently reported 
          5   serious difficulties in obtaining bank loans.  We 
          6   have heard few, if any, such reports of such lack of 
          7   access to capital for more than five years now.  
          8   BankBoston and Fleet have been the leaders, along 
          9   with a group of outstanding community banks, not 
         10   only in restoring the financial stability of our 
         11   regional banking system but also in re-establishing 
         12   and greatly extending the range of banking services 
         13   available to local companies.  The proposed merger 
         14   is vital because it will safeguard those gains. 
         15            Thank you for the opportunity to testify.  
         16   (Applause)
         17            MS. JONES:  Thank you.  My name is Martha 
         18   Jones, and I'm the executive director of the 
         19   BankBoston Celebrity Series.  The Celebrity Series 
         20   is New England's premier performing arts presenting 
         21   organization who for the past 10 years has enjoyed a 
         22   fruitful partnership with BankBoston; BankBoston, of 
         23   course, which is regarded throughout New England as 
         24   the premier corporate philanthropist of cultural 
         25   organizations. 
  0143
          1            Since 1989, BankBoston has been the 
          2   Celebrity Series title sponsor and has been 
          3   steadfast in its commitment to our growth and 
          4   independence as a non-for-profit organization.  Of 
          5   significance, the Bank's sponsorship has provided 
          6   the resources necessary to enhance our education and 
          7   community service program Project Discovery, which 
          8   this past season served more than 23,000 young 
          9   people in the Greater Boston vicinity through master 
         10   classes, workshops in the schools, performance 
         11   tickets at little or no cost, to over 40 
         12   performances at Symphony Hall, the Wang Center, 
         13   Shubert Theater, all of this as a result of 
         14   BankBoston's continued ongoing sponsorship. 
         15            I am here today to speak in support of the 
         16   merger between BankBoston Corporation and Fleet 
         17   Financial Group.  Both institutions have made public 
         18   their intentions to continue to support community 
         19   cultural and healthcare charitable organizations at 
         20   or above current individual levels of support.  I 
         21   believe this to be an honorable and true statement.  
         22   Through a previous merger with BayBanks, BankBoston 
         23   continued its high level of charitable giving and  
         24   in fact increased their support, not only of the 
         25   Celebrity Series but of other organizations.  
  0144
          1            BankBoston and Fleet Financial Group are 
          2   already woven into the fabric of Boston's cultural 
          3   community, and with a new banking entity based here 
          4   in Boston, I would look forward and expect their 
          5   charitable commitments to play an even greater role 
          6   in strengthening that fabric.  The Celebrity Series 
          7   is pleased to move into the next millennium with 
          8   this new Fleet-BankBoston Corporation.  Thank you 
          9   for your time.  (Applause)
         10            MR. BESSIRE:  Good afternoon, I'm Paul 
         11   Bessire from the Museum of Fine Arts, Boston.  I am 
         12   also pleased to testify on behalf of the museum in 
         13   support of the merger of Fleet Financial Group and 
         14   BankBoston.  Fleet and BankBoston are close partners 
         15   of the MFA, as well as long-time and generous 
         16   supporters.  On an annual basis both companies have 
         17   led the MFA's Corporate Partners Program by giving 
         18   at its highest levels for many years, enabling the 
         19   MFA to enhance its role as a community resource.   
         20   Important senior executives from both banks are 
         21   involved with the MFA in a significant capacity as 
         22   overseers, volunteers, and patrons.  In the past 
         23   several years Fleet and BankBoston have made several 
         24   major acquisitions possible at the MFA.  In addition 
         25   to enriching the city's cultural life, these 
  0145
          1   exhibitions generate significant economic activity 
          2   in the region by attracting large numbers of 
          3   visitors. 
          4            For example, during Monet, The 20th Century 
          5   sponsored by Fleet, more than 40 percent of the 
          6   560,000 visitors came from outside of Boston 
          7   providing an economic impact of over $34 million.  
          8   We were also particularly impressed by Fleet's 
          9   commitment to making Monet accessible to children 
         10   and seniors by creating extensive education 
         11   materials and by providing over 8,000 free tickets 
         12   to community groups. 
         13            BankBoston is also currently sponsoring the 
         14   John Singer Sargent at the MFA.  This is the third 
         15   major exhibition sponsored by BankBoston in the last 
         16   four years.  We have also been impressed by their 
         17   leadership in creating the groundbreaking program 
         18   Museums On Us, an innovative program featuring 21 
         19   New England museums.  Given these track records, we 
         20   have full confidence that the new Fleet-Boston will 
         21   continue to be a good neighborhood and strong 
         22   supporter of Boston's museums and cultural 
         23   organizations.  Thank you.  (Applause)
         24            PASTOR GILLISON:  Good morning.  My name is 
         25   William Gillison, I'm pastor of the Mt. Olive 
  0146
          1   Baptist Church. 
          2            My relationship with Fleet Bank began 
          3   approximately 19 years ago when one of their branch 
          4   managers Mr. Roger Richardson and I served on a 
          5   community board together.  At that time we shared 
          6   with him that Mt. Olive was experiencing growing 
          7   pains, and we were looking for a bank that would 
          8   assist us in seeing that our vision would come to 
          9   fruition.  Even though we had no banking 
         10   relationship with Fleet Bank at the time, Fleet was 
         11   the bank that responded first to our business 
         12   proposal.  And at that time no other lending 
         13   institution would even speak with us. 
         14            Fleet's bank managers -- Fleet assigned a 
         15   vice president to our particular plan, and we are 
         16   glad to say that Fleet was the first in our area to 
         17   lend any African-American bank over a million -- a 
         18   church, that is, over a million and a half dollars 
         19   based upon a fair look at our business plan and our 
         20   record.  We do believe we stand today to ask this  
         21   commission if they would grant Fleet this 
         22   opportunity to continue expressing this type of 
         23   leadership in the industry.  (Applause)
         24            MR. PARROTT:  I'm Charles Parrott, I'm vice 
         25   chairman of the YMCA of Greater Boston.  The YMCA of 
  0147
          1   Greater Boston is the largest childcare provider in 
          2   the Greater Boston area.  It has a number of other 
          3   programs for inner city children.  Those programs 
          4   could not exist without the support of corporate 
          5   Boston.  Over the years BankBoston has been a 
          6   substantial contributor, it goes back as far as the 
          7   YMCA does, and that's almost 150 years. In recent 
          8   years Fleet has become a substantial contributor to 
          9   the programs of the YMCA. 
         10            It is our hope that should this merger go 
         11   through, that the combined bank will be able to 
         12   continue that support.  We have every reason to 
         13   believe that it will through what we read in the 
         14   press.  I thank you for this opportunity.
         15            PRESIDING OFFICER SMITH:  Thank you. 
         16            MS. SCOTT:  My name is Ruth Scott and I'm 
         17   president and CEO of Scott Consulting Associates.  I 
         18   come to this question from an interesting 
         19   perspective, a broad-based one.  I started out in 
         20   the '70s as the president of an organization that 
         21   did the initial research on the redline issue, and 
         22   then over the years I've been involved with Fleet 
         23   and with other banking institutions across the 
         24   country, as well as neighborhood Reinvestment 
         25   Corporation and neighborhood groups in trying to 
  0148
          1   figure out how these organizations could speak 
          2   effectively with each other and form collaborations 
          3   that work. 
          4            I come in favor of the merger between Fleet 
          5   and BankBoston because I see things there that make 
          6   me understand that they know what it's all about and 
          7   they will do the thing that is right in terms of 
          8   these partnerships and community development.  I 
          9   want to just give an example of a leveraging that 
         10   Fleet often does in its marketplace. 
         11            I was involved with a community development 
         12   organization, a faith- based organization, three 
         13   years ago which wanted to build a complex as the 
         14   first African-American organization in Rochester, 
         15   New York, to do such a thing.  We went to Fleet and 
         16   asked them for $5,000 originally as seed money to 
         17   establish a corporation, and they gave us that.  
         18   That commitment grew over time to $100,000.  It 
         19   wasn't just that, though.  That commitment grew in 
         20   addition to a $500,000 commitment for building, and 
         21   it grew in addition with other organizations giving 
         22   over $500,000 to the organization and HUD giving a 
         23   $3 1/2 million grant.  It is that kind of leveraging 
         24   that Fleet understands as we go into the 21st 
         25   century. 
  0149
          1            As I have looked at banks across the 
          2   country, what I have found is these kind of mergers 
          3   work when you have three things:  a solid and an 
          4   active commitment to community building; a mission 
          5   engaged in understanding of a changing landscape and 
          6   its imperative to merge and collaborate with 
          7   like-minded corporations; and a solid organizational 
          8   profit base which allows for the keeping of those 
          9   commitments.  I believe that this merger would give 
         10   all of those things. 
         11            There is a saying that "When certain people 
         12   whisper, everybody listens."  I think that's true in 
         13   our communities.  As Fleet has grown stronger, when 
         14   it whispers, other corporations and governments also 
         15   listen.  And in addition, when the community speaks, 
         16   Fleet listens.  And I believe that the 
         17   Fleet-BankBoston merger will continue to do that.  
         18   Thank you.
         19            PRESIDING OFFICER SMITH:  Thank you very 
         20   much.  (Applause)
         21            MR. CUENCA:  Good afternoon.  My name is 
         22   Peter Cuenca, I'm the president of CuencaVision, 
         23   WCA-T.V., it's a Spanish television station.  I am 
         24   also the editor and the publisher of the newspaper 
         25   Las Manos, which is a weekly Spanish newspaper in 
  0150
          1   the New England area. 
          2            I am here to tell you about my experience 
          3   with Fleet Bank.  I was in need of financial 
          4   assistance of a loan from the bank, and I went to 
          5   them, to the community development department, and I 
          6   found there people that would listen to me.  They 
          7   did help me, they gave me a loan, and thanks to them 
          8   I am able to have new equipment, to expand our 
          9   services to the community. 
         10            And I find that they have a corporate 
         11   responsibility, that they have listened to many 
         12   people like me in the community, they are committed 
         13   for the future to do that, and if that is the case, 
         14   based on my experience, obviously this merger is a 
         15   good thing for our community.  It's important to 
         16   face the fact that our global economy today, there 
         17   is a need for a strong financial institutions. 
         18            And based on that, we also have to think in 
         19   terms there is enough turning the forces around to 
         20   keep them with the proper commitment to our 
         21   communities.  Banks are not only local banks now, 
         22   they are national banks, they are international 
         23   banks.  And those commercial or competitive forces 
         24   will be strong enough, I believe, to maintain a good 
         25   relationship between the community and the banking 
  0151
          1   system.  Thank you. 
          2            PRESIDING OFFICER SMITH:  Thank you.  
          3   (Applause)
          4            MS. DOWNIE:  I'm Lyndia Downie, I'm the 
          5   Acting President of the Pine Street Inn.  We're an 
          6   agency that provides shelter, job training, and 
          7   affordable housing to homeless individuals and most 
          8   recently homeless families.  And I too am here to 
          9   support the merger of Fleet and BankBoston.
         10            Fleet has been a strong, responsive, and 
         11   good corporate citizen.  They have been supporting 
         12   the Inn's work for many, many years since they have 
         13   been in Boston.  Last year they helped us put an 
         14   outreach van on the street that provides 
         15   transportation, blankets, and referrals to homeless 
         16   people living on the street.  In previous years they 
         17   helped us start a program for homeless elderly woman 
         18   focused on finding them housing. 
         19            We have been developing affordable housing 
         20   for over 10 years, and Fleet has consistently 
         21   offered support, both corporate support and lending 
         22   support, for those affordable housing projects.  And 
         23   they have been very responsive to all the issues 
         24   around homelessness.  In fact, last winter when a 
         25   number of people died on the street, Fleet was the 
  0152
          1   first to call and say, "Is there anything we can do 
          2   to help?"  We hope that they will continue this and 
          3   have every expectation they will continue to be good 
          4   and strong corporate citizens and they will continue 
          5   to be in support of homeless issues.  Thank you.  
          6   (Applause)
          7            PRESIDING OFFICER SMITH:  Thank you very 
          8   much.
          9            MS. RODGERSON:  Hi.  My name is Susan 
         10   Rodgerson, and I'm the founder and director of 
         11   Artists for Humanity, which is a grass-roots 
         12   organization here in Boston that serves urban teens 
         13   in an after-school program. 
         14            Fleet and BankBoston both have been very 
         15   supportive from the corporate philanthropy 
         16   departments of their institutions.  But more 
         17   importantly, we provide products and services for 
         18   the business community that are performed by teens, 
         19   and Fleet Bank has hired us very often to do jobs 
         20   that are professional and performed by teenagers. 
         21            And I really believe that their commitment 
         22   to the inner city through working with youth is an 
         23   important one, and I also think that this is a great 
         24   opportunity for two strong institutions that are 
         25   local, that have been here for a long time, to merge 
  0153
          1   and to increase their level of support and 
          2   commitment through their shared history in Boston.  
          3   So I support the merger and hope that they will 
          4   maximize this opportunity for both of them to 
          5   succeed.  Thank you. 
          6            PRESIDING OFFICER SMITH:  Thank you very 
          7   much. 
          8            MR. REGAN:  My name is Bob Regan, and I'm 
          9   president and CEO of New England College of Finance.  
         10   New England College of Finance is a unique 
         11   educational resource founded in Boston in 1909.  
         12   This organization has evolved into an accredited, 
         13   degree-granting college, the only banking institute 
         14   in America ever to achieve full collegiate status 
         15   with 250-member institutions and annual enrollments 
         16   in excess of 7500, this is a very important resource 
         17   to our financial industry. 
         18            Fleet Financial Group is a member of the 
         19   college and is the highest participating bank in our 
         20   programs.  It is extremely generous in encouraging 
         21   its employees to pursue their education.  This 
         22   generosity is especially important to lower-paid 
         23   employees and to minorities, the latter population 
         24   comprising nearly 40 percent of our total annual 
         25   enrollments.  Fleet also provides the college with 
  0154
          1   extraordinary support in the form of governance and 
          2   faculty leadership and free use of classroom space 
          3   at several of their locations throughout New 
          4   England. 
          5            Simply put, without the support of Fleet 
          6   Financial Group, the financial services industry in 
          7   this area would have great difficulty sustaining 
          8   this important educational resource and many 
          9   individuals would be denied access to a college 
         10   education. 
         11            In addition to its dominant role in the 
         12   college, Fleet is a founding member of the Financial 
         13   Services Academy, a newly created service of the 
         14   college, working with CBOs like Urban League, ABCD, 
         15   and Stride, the mission of the academy is to recruit 
         16   and train diverse inner city populations for 
         17   entry-level jobs in the industry.  During the first 
         18   three months of operation the academy has trained 77 
         19   individuals, many of whom have already been placed 
         20   in good-paying jobs.  Of these graduates, more than 
         21   90 percent are ethnic minorities and recent 
         22   immigrants and 75 percent identified English as 
         23   their second language. 
         24            In short, I personal cannot say enough good 
         25   things about Fleet Financial Group.  As 
  0155
          1   consolidation creates ever-larger banking 
          2   institutions, I believe we are very fortunate in New 
          3   England that a responsible powerhouse is being 
          4   formed.  Thank you.
          5            PRESIDING OFFICER SMITH:  Thank you. 
          6            MS. DURADO:  Good afternoon.  My name is 
          7   Rosa Minayo Durado, I am here as a board member of 
          8   the Latino Professional Network.  Latino 
          9   Professional Network is an organization that links 
         10   Boston's Latino professionals with employment and 
         11   business opportunities. 
         12            The Latino Professional Network is here to 
         13   support the merger with Fleet for many reasons.  One 
         14   of them is that Fleet has followed and continues to 
         15   support the mission of the Latino Professional 
         16   Network, which is to give access information and 
         17   business opportunity to the Latino professionals.  
         18   Fleet has given to individuals and also to different 
         19   businesses credit opportunity.  It has helped 
         20   technical assistance to some of the small Latino 
         21   businesses, and also the Community Development Group 
         22   of the Fleet works very closely with many of the 
         23   members that run nonprofit agencies. 
         24            So as a board member of the LPN, I would 
         25   like to support the Fleet merger.  Thank you.  
  0156
          1   (Applause)
          2            PRESIDING OFFICER SMITH:  Thank you very 
          3   much. 
          4            MR. SWANN:  My name is Lynn Swann, and I 
          5   come to this by way of being a member of the Fleet 
          6   In-City Advisory Board.  We make suggestions and 
          7   comments and discussions, debates on Fleet's policy 
          8   to low- to moderate-income families and mortgages, 
          9   small business loans, existing loans, loans to 
         10   existing businesses, so that they can serve the 
         11   community, even as far as small farm equipment for 
         12   Fleet. 
         13            But I really come here because I've been a 
         14   volunteer for more than 19 years, starting with Big 
         15   Brothers and Big Sisters of America as a board 
         16   member, as a national board president and chair of a 
         17   national capital campaign.  And it's this area I'd 
         18   like to talk to you about in terms of Fleet's 
         19   involvement with the community. 
         20            In 1998, there were 17,000 employees who 
         21   were volunteers in the Fleet program.  95,000 
         22   volunteer hours in 1998 alone.  These were made 
         23   possible because Fleet's policy is to give their 
         24   employees two days off with pay to volunteer in the 
         25   community.  That translated into 39,000 kids 
  0157
          1   participating in 450 community projects.  Since 
          2   1996, 82,000 children and young adults have been 
          3   involved in over 1,000 community service projects 
          4   and more than $850,000 awarded to winning teams in 
          5   the Fleet All Star Program. 
          6            You don't have those kinds of programs 
          7   unless you're committed to a program, unless you're 
          8   committed to building a community, because these 
          9   aren't your traditional people who are banking in 
         10   your institute, these are people who are going to be 
         11   making deposits somewhere down the road.  And if 
         12   you're committed to the community, these are the 
         13   kinds of involvements you have.  Fleet has created 
         14   20 tutorial centers, their commitment is to have 25 
         15   by the year 2000 throughout the Northeast, and 
         16   mentoring is an important component in growing a 
         17   community and building that infrastructure.  If you 
         18   don't think so, let me just give you a couple of 
         19   quick numbers. 
         20            Through Big brothers and Big Sisters, here 
         21   is what mentoring has done:  52 percent, in a 
         22   scientific study, 52 percent of the kids in a 
         23   mentoring relationship are less likely to skip 
         24   school, 46 percent are less likely to use drugs, 27 
         25   percent are less likely to use alcohol, 33 percent 
  0158
          1   are less likely to use physical force to resolve 
          2   conflicts.  As the woman who testified earlier about 
          3   programs at Fleet through ACORN having saved her 
          4   family's life, this is the kind of involvement that 
          5   builds the infrastructure of a community, where 
          6   young people grow, feel safe, and can be productive 
          7   citizens.
          8            PRESIDING OFFICER SMITH:  Thank you very 
          9   much.  (Applause) 
         10            MR. JONES:  My name is Tripp Jones, and I'm 
         11   the cofounder and executive director of The 
         12   Massachusetts Institute for a New Commonwealth, also 
         13   known as MassInc., a nonprofit, nonpartisan public 
         14   policy think-tank based here in Boston.  MassInc. 
         15   was established four years ago to develop public 
         16   policy approaches that result in a flourishing 
         17   middle class in Massachusetts. 
         18            I will refrain from elaborating more on 
         19   MassInc., but I do want to use this opportunity to 
         20   testify that the encouragement and support we have 
         21   received from BankBoston and Fleet made an enormous 
         22   contribution to our success.  I have witnessed first 
         23   hand the determination of both institutions, not 
         24   only to provide vital financial support to community 
         25   organizations like MassInc. but to develop strong 
  0159
          1   give-and-take dialogues with local groups borne out 
          2   of sheer commitment to the civic life of our 
          3   Commonwealth. 
          4            At a time when many corporations are 
          5   myopically devoted to bottom-line considerations, 
          6   these two institutions have shown the kind of 
          7   leadership, a willingness to take risks, like 
          8   supporting a small, start-up think-tank, that puts 
          9   them in the front rank of our very best corporate 
         10   citizens in Massachusetts. 
         11            The economic vitality of our state as a 
         12   whole, and to some degree the vitality of our 
         13   community organizations like MassInc., depend on the 
         14   ability of our banking industry to retain its 
         15   independence in the midst of extremely competitive 
         16   national and international pressures to the extent 
         17   that Fleet and BankBoston have found common ground 
         18   in a way to sustain that gain, I support their 
         19   efforts. 
         20            It is often argued that as the Internet and 
         21   other technologies continue to shrink the world in 
         22   which we live, circumstances of geography and place 
         23   are less important in our lives.  Today I want to 
         24   argue that the opposite is often true.  Geography 
         25   matters.  In this case it matters a great deal that 
  0160
          1   the banking decisions affecting the lives of New 
          2   Englanders be made by New Englanders whenever 
          3   possible.  It's not to say that regional industries 
          4   don't have to operate within larger economic 
          5   realities, but it does suggest that we should jump 
          6   at opportunities to bolster our regional economic 
          7   independence and to secure our long-term health. 
          8            I want to applaud the holding of this 
          9   public hearing ensuring that the Fleet-BankBoston 
         10   merger results in equally shared benefits for 
         11   shareholders, customers, and all citizens who 
         12   require a great deal of judgment, compromise, and 
         13   trust building among all parties involved, and I am 
         14   pleased to have had the opportunity to participate.
         15            PRESIDING OFFICER SMITH:  Thank you very 
         16   much. 
         17            MR BROWN:  My name is Michael Brown, I'm 
         18   the president and cofounder of the City Year 
         19   organization, a national service organization 
         20   founded in Boston that engages over 1,000 young 
         21   adults ages 17 to 24 in the area of full-time 
         22   community service.  I appreciate this opportunity to 
         23   testify on behalf of City Year on behalf of the 
         24   proposed merger between BankBoston and Fleet 
         25   Financial Group. 
  0161
          1            We know from direct experience that it is 
          2   critically important for Massachusetts to remain a 
          3   headquarters for a major national financial 
          4   institution.  Indeed, were it not for BankBoston  
          5   and the active leadership of Chad Gifford and Ira 
          6   Jackson, City Year would not exist today.  10 years 
          7   ago when City Year was no more than words on paper, 
          8   BankBoston stepped forward and provided the seed 
          9   capital for our launch.  And along with that initial 
         10   funding came an extraordinary commitment to the 
         11   young people of Greater Boston.  Through their 
         12   direct involvement, BankBoston has helped to grow 
         13   City Year's 54 members in Boston to 1,000 across the 
         14   country. 
         15            BankBoston leads our efforts here and 
         16   around the country to now engage over 300 
         17   corporations, and Chad and Ira have testified before 
         18   Congress and have helped to build the Americorps 
         19   program nationwide.  Recently BankBoston, which 
         20   sponsored the first team in our history 10 years 
         21   ago, permanently endowed a team of young people in 
         22   service to City Year Boston.  This is the first 
         23   endowed community service positions for young people 
         24   in America history. 
         25            Fleet Bank has also been essential to our 
  0162
          1   organization, partnering with us since 1990 and 
          2   cofounding with BankBoston our Rhode Island program.  
          3   Fleet Bank executives now serve on our local 
          4   advisory board, contributing their time, energy, and 
          5   vision and make possible our annual celebrations of 
          6   Dr. Martin Luther King's holiday and our Black 
          7   History Month celebrations.  Over the past 10 years 
          8   these two banks combined have ensured that 260 young 
          9   people have provided a year of full-time service.  
         10   That means 442,000 hours of service tutoring and 
         11   mentoring children. 
         12            Our relationship with both institutions has 
         13   been one of integrity and purpose based on shared 
         14   values and deep wonder of the power of young people. 
         15   Our support for the merger is based on a decade of 
         16   partnership and belief.  I am confident that the 
         17   banks' firmly established traditions of community 
         18   partnership and involvement will continue in the 
         19   decade to come.  Thank you. 
         20            PRESIDING OFFICER SMITH:  Thank you.  
         21   (Applause)
         22            I'd like to remind the witnesses that they 
         23   may submit their statements for the record, and the 
         24   sooner you get them to our registration table the 
         25   better it will be for our court reporters.  Thank 
  0163
          1   you. 
          2            MR. MIRABAL:  My name is Manuel Mirabal, 
          3   I'm the president and CEO of the National Puerto 
          4   Rican Coalition, a nonprofit public policy 
          5   organization out of Washington, D.C.  and I am also 
          6   the chair of the Hispanic Association on Corporate 
          7   Responsibility out of washington, D.C.
          8            Since 1994, NPRC and Fleet have been 
          9   working in partnership on issues of community 
         10   economic development and neighborhood 
         11   revitalization, affordable housing development, home 
         12   mortgage lending, and consumer banking issues.  In 
         13   the New England states where Fleet has a major 
         14   presence, the Puerto Rican community makes up more 
         15   than 50 percent of all of the Latino population.  In 
         16   New York and New Jersey, it is 1.5 million of the 3 
         17   million Hispanics who live in those states. 
         18            We have had many opportunities to meet with 
         19   the senior officials of Fleet and have found them to 
         20   be always accessible, including Mr. Terry Murray, 
         21   Fleet CEO, and Agnes Bundy Scanlan, the managing 
         22   director of Fleet's Community Development 
         23   Department.  And we have had several opportunities 
         24   to discuss the needs of the Latino community with 
         25   them and other banking officials.  We have seen a 
  0164
          1   steady improvement in the bank's investments to 
          2   support community housing development projects. 
          3            We have also targeted corporate and 
          4   foundation resources to support the work of 
          5   organizations serving our communities.  Throughout 
          6   our partnership, this has increased to a level which 
          7   now approaches, we believe, an equitable 
          8   distribution of these funds to the growing Latino 
          9   community.  Fleet has also created one of the most 
         10   flexible, affordable loan programs and has as a 
         11   result helped many Latino low-income families get 
         12   their dream of buying a home. 
         13            Fleet has also responded to our concerns 
         14   over the hiring of more Latinos in their structure, 
         15   and they have done so throughout their system 
         16   through recruitment and hiring.  Based on their 
         17   commitment to neighborhood reinvestment and 
         18   investment in our projects and the corporate 
         19   responsibility which Fleet has demonstrated in 
         20   working`with NPRC over the last six years I 
         21   encourage the Federal Reserve Bank to approve the 
         22   merger between Fleet Group and BankBoston.  Thank 
         23   you. 
         24            PRESIDING OFFICER SMITH:  Thank you very 
         25   much.  (Applause) 
  0165
          1            MR. MOY:  My name is Frank Moy, and I'm the 
          2   chairman of the Boston Chamber of Neighborhood 
          3   Commerce.  The Boston Chamber of Neighborhood 
          4   Commerce was formed in 1991 during a very difficult 
          5   recession period by a group of small business owners 
          6   and representatives from every neighborhood business 
          7   district in Boston representing several thousand 
          8   neighborhood businesses.  Recently the Boston 
          9   Chamber Neighborhood Commerce became an affiliate 
         10   member of the Greater Boston Chamber of Commerce. 
         11            The primary mission of the BCNC is to 
         12   enhance the vitality of Boston's neighborhood 
         13   commercial districts.  The Boston Chamber 
         14   Neighborhood Commerce supports the Fleet-BankBoston 
         15   merger because both banks have New England roots and 
         16   have been active participants in promoting small 
         17   business lending and banking services.  Fleet and 
         18   BankBoston provide financial and staff support to 
         19   the Boston Chamber Neighborhood Commerce. 
         20            Staff from Fleet and BankBoston have and 
         21   continue to serve on the BCNC Board of Directors and 
         22   have participated in numerous workshops on small 
         23   business lending procedures, including the 5 C's of 
         24   Credit, Small Business Administration Low Doc 
         25   Program, second look program if a loan is denied, 
  0166
          1   and the Community Reinvestment Act.  Fleet and 
          2   BankBoston have participated in business support 
          3   programs on marketing, public relations, community 
          4   and public review process, e-commerce, retail 
          5   security, One Stop Program at the Empowerment 
          6   Center, and small business management. 
          7            In closing, we support the Fleet and 
          8   BankBoston merger because both organizations have 
          9   demonstrated their commitment to Boston's small 
         10   business community during good and bad economic 
         11   times.  Thank you. 
         12            PRESIDING OFFICER SMITH:  Thank you very 
         13   much. 
         14            MR. DICKERMAN:  Hello.  I'm Stephen 
         15   Dickerman, the executive director of Friends of New 
         16   England Holocaust Memorial.  I've held this position 
         17   for 11 years.  Since our earliest days it's been our 
         18   dream to build a memorial to the Holocaust on 
         19   Boston's Freedom Trail, and I am pleased to share 
         20   with you the legacy of community leadership that we 
         21   at the memorial have experienced with BankBoston. 
         22            While the idea of the memorial was 
         23   conceived by a group of survivors to the Holocaust 
         24   and encouraged by a small group of their supporters, 
         25   it could not have been realized without the 
  0167
          1   leadership from Boston's corporate and philanthropic 
          2   community.  I have witnessed BankBoston making such 
          3   a leadership happen. 
          4            In 1991, the head of the Boston 
          5   Redevelopment Authority invited business leaders to 
          6   learn more about the potential impact that Message 
          7   of Memory could have on this important American 
          8   site.  It was at that meeting that the crucial 
          9   relationship between the Memorial and BankBoston 
         10   began. 
         11            BankBoston participated in that meeting and 
         12   responded to our plans and saw in it the opportunity 
         13   to remember the historical tragedies of European 
         14   Jews in a way that would speak to the universal 
         15   issues of danger of bigotry, intolerance, and racial 
         16   hatred.  BankBoston began a relationship with the 
         17   Memorial providing us with financial resources as 
         18   well as a wide range of support.  Most importantly, 
         19   BankBoston provided leadership to enlist other 
         20   institutions and individuals in support of the 
         21   project. 
         22            BankBoston's influence on our project has 
         23   been extraordinary.  The bank has supported our 
         24   capital campaign in a wide range of special projects 
         25   that help bring universal lessons to young people 
  0168
          1   and visitors from all backgrounds.  I'm very proud 
          2   of the Memorial, its critical success, and its 
          3   ability to speak to hundreds of thousands of 
          4   visitors.  Simply put, the Memorial could not have 
          5   been built and would not have sustained its 
          6   operations and extraordinary and educational 
          7   programs without BankBoston's remarkable leadership. 
          8            I also think the experience with the 
          9   Memorial told us a lot in support of a Boston-based 
         10   institution.  BankBoston, Fleet, and all of our 
         11   corporate supporters were Boston based.  I'm pleased 
         12   to speak in support of the merger.
         13            PRESIDING OFFICER SMITH:  Thank you very 
         14   much.  (Applause)
         15            We are ready for the next panel. 
         16            (A pause)
         17            PRESIDING OFFICER SMITH:  Panel Six will 
         18   start with the Reverend Sharpton. 
         19            REV. SHARPTON:  I'm Reverend Al Sharpton, 
         20   President of National Action Network, and we have 
         21   members throughout the area that if this merger were 
         22   to go forward would cover much of that area.  I come 
         23   as president of the Network with the vice chair,  
         24   Senator Ephraim Gonzalez, who heads the National 
         25   Coalition of Hispanic State Legislators, to express 
  0169
          1   our unilateral concern and at this hearing objection 
          2   to the merger that is proposed today for several 
          3   reasons. 
          4            I think that first you must distinguish 
          5   between business policy and philanthropy.  It is 
          6   very admirable that Fleet Bank gives away a lot of 
          7   money to certain charities.  That has nothing to do 
          8   with its business policies and the policies that 
          9   will service or not service the community.  You can 
         10   find I'm sure if you check in history slave masters 
         11   were good contributors to certain charities, but 
         12   their business was slavery.  We're not here to talk 
         13   about their philanthropy; we're here to talk about 
         14   their policy, and their policy has left a lot 
         15   wanting. 
         16            The proposal that they give you, the CRA 
         17   proposal, the $14.6 billion, is just about what they 
         18   spend in Massachusetts alone.  For you to approve a 
         19   merger where they would have more range, more states 
         20   for the same amount of money, in fact allows them to 
         21   reduce their commitment to borrowing and lending in 
         22   the community.  They would argue because of certain 
         23   disvestments this is what figure they could best 
         24   come up with, yet with their divestments they have 
         25   an opportunity with the Boston Bank of Commerce to 
  0170
          1   let a black bank that would service the communities 
          2   pick up some of those branches.  They have not 
          3   chosen to make that arrangement. 
          4            So it seems that there is a situation here 
          5   where they want it all on their side and not on the 
          6   side of the community that needs development, that 
          7   needs fair borrowing and lending practices, that 
          8   needs policies that are fair for the people that the 
          9   federal government, and therefore the Federal 
         10   Reserve, are sworn to protect. 
         11            If they had made the effort to try and work 
         12   out some equation, certainly many of us would not 
         13   take that position.  But clearly when you hear what 
         14   they have done with ACORN housing, when you hear the 
         15   problems that you have in mortgages and borrowing, 
         16   and when you hear their own proposal, which I think 
         17   falls far short of what is fair and equitable, we 
         18   have no choice but to appeal to you to block this 
         19   merger.  We have no problem dealing with a Fleet 
         20   Bank, but we do have a problem dealing with being 
         21   fleeced by Fleet Bank.  (Applause)
         22            As they expand into other states, if this 
         23   merger is approved, clearly we have the right to be 
         24   concerned.  The chairman, who the last panelist said 
         25   is such a nice guy, questioned why we would even 
  0171
          1   want to deal with this hearing.  Why would we be 
          2   here?  He's coming in our house with a record from 
          3   allies that gives us a lot to be desired.  It's like 
          4   me knocking on your door asking you "Why are you 
          5   answering it?"  You answer it because you live 
          6   there.  We live in New Jersey; we live in 
          7   Connecticut; we live in Massachusetts. 
          8            So, Mr. Chairman, all of us are not on your 
          9   payroll or your charity roll.  Some of us don't want 
         10   a donation.  We want fairness; we want equity; we 
         11   want parity.  (Applause)  We want to see loans to 
         12   those that seek mortgages and business loans that 
         13   are not at rates that are unbearable and not set up 
         14   with clauses that are unachievable.  We want to see 
         15   an amount of money there that is representative of a 
         16   commitment toward development.  If the Federal 
         17   Reserve passes this merger, where you have no real 
         18   commitment, with the dollar figures where they are 
         19   now, you have in effect already undone the purpose 
         20   of having CRA. 
         21            CRA is to have some redevelopment, not to 
         22   have bankers set their own bar, something they could 
         23   easily make, make all the profit they want and the 
         24   people be damned.  And we would encourage you to 
         25   block this merger until a respectable proposal has 
  0172
          1   been put forth on the divestment side, as I said, 
          2   with the Boston Bank of Commerce.  And clearly they 
          3   should increase what they propose in the borrowing 
          4   and lending department, and their policies around 
          5   loans, and their policies around what they do with 
          6   their housing money. 
          7            I would hope that you will not ignore the 
          8   will of many people.  Many say these hearings are 
          9   formality.  I would hope that as we are on the brink 
         10   of a new millennium that people's wishes will not be 
         11   just listened to, patted on the head, and you go 
         12   forward with business as usual, because we in other 
         13   parts of New England will resist being policed by 
         14   any means necessary.  Thank you.  (Applause)
         15            PRESIDING OFFICER SMITH:  Ms. Yager, on 
         16   behalf of Mr. Lee. 
         17            MS. YAGER:  Good afternoon.  Matthew Lee, 
         18   the executive director of Inner City Press/ 
         19   Community on the Move and Inner City Public Interest 
         20   Law Center was unable to attend today and asked me 
         21   to read his comments into is the record. 
         22            I see he is opposed to this 
         23   anti-competitive merger proposal.  After each of its 
         24   previous mergers, Fleet has dramatically reduced 
         25   lending to low- and moderate-income neighborhoods.  
  0173
          1   Fleet's lending record in New York reveals a bank 
          2   with a troubled history of discriminatory lending. 
          3            For example, in May 1996, Fleet settled 
          4   discrimination charges with the U.S. Department of 
          5   Justice that it systematically overcharged 
          6   minorities from its two New York City area mortgage 
          7   offices.  Fleet's record has not improved.  Fleet 
          8   acquired Shawmut in 1995 and NatWest in 1996.  In 
          9   New York State in 1995, Fleet made 4,994 home 
         10   purchase loans, NatWest made 2,995 such loans, and 
         11   Shawmut before being taken over made 70 such loans, 
         12   for a three-institution total in New York State of 
         13   8,059. 
         14            In 1996, in New York State the combined 
         15   entities made only 4,300 such loans, and by 1997 
         16   this number had declined to 2,415 loans.  The 
         17   combined Fleet's 1997 total was less than NatWest 
         18   alone in 1995.  Particularly troubling is that 
         19   Fleet's lending volumes have declined even more to 
         20   minorities and low income and moderate income census 
         21   tracts in communities overall.  The details are 
         22   included in the written testimony. 
         23            Fleet's combined entities home purchase 
         24   lending volume and LMI census tracts declined 76.6 
         25   percent between 1995 and 1997.  An even steeper 
  0174
          1   decline went to New York State communities overall.  
          2   Fleet's mergers have hurt entire communities.  They 
          3   have disproportionately harmed low and moderate 
          4   income neighborhoods and communities of color as 
          5   well. 
          6            For example, in the New York city 
          7   metropolitan statistical area, in 1997, for home 
          8   improvement loans, Fleet Bank NA in New Jersey 
          9   denied 74 percent of applications from African- 
         10   Americans and Latinos versus only 44 percent 
         11   applications for whites. 
         12            This proposed merger would be 
         13   anti-competitive.  Fleet proposes to acquire 
         14   BankBoston through consolidation of the four 
         15   previous competitors into a single institution.  The 
         16   proposal should not be approved.  Even since it has 
         17   been announced, it has triggered further 
         18   consolidation.  For example, People's Heritage 
         19   Corporation from Maine has proposed acquiring Bank 
         20   North of Burlington, Vermont, and Citizens Bank has 
         21   proposed acquiring U.S. Trust, and in Connecticut 
         22   Websters has made a recent proposal. 
         23            Even where Fleet claims to be proposing a 
         24   clean sweep in its divestiture, it discloses in 
         25   footnotes that it would be retaining a number of 
  0175
          1   Fleet's or BankBoston's operations.  For example, 
          2   see Fleet's antitrust memo, Page 15, stating in a 
          3   footnote that, quote, "The parties proposed to 
          4   retain certain special industry customers in Boston 
          5   and other New England markets, some of which may 
          6   have revenues less than $100 million." 
          7            This is not a clean sweep proposal.  It is 
          8   imperative that Fleet calculate and disclose the 
          9   amounts by which the proposed divestiture would be 
         10   reduced by the withdrawal and retention of deposits 
         11   associated with these retained lines of business. 
         12            Fleet would also gain an anti-competitive 
         13   share and market power in ATMs.  The Providence 
         14   Journal on May 21st wrote, "After its takeover of 
         15   BankBoston, Fleet would control about 36 percent of 
         16   all ATMs operated by banks and credit unions in 
         17   Massachusetts up from 12 percent."  This issue is 
         18   not addressed in Fleet's antitrust memo.  The 
         19   comment period should not close until Fleet reveals 
         20   more of the nature of its divestiture proposal and 
         21   until Fleet completes the proposal by naming the 
         22   banks that would buy the assets it proposes to 
         23   divest. 
         24            His last comment is that he requests that 
         25   the -- he asserts that the community commitment is 
  0176
          1   entirely inadequate and the details of that are in 
          2   the written testimony.
          3            PRESIDING OFFICER SMITH:  Thank you very 
          4   much.  (Applause)
          5            MR. MUHAMMAD:  Greetings.  My name is Abdul 
          6   Jabbar Muhammad, and I'm here on behalf of the 
          7   Nation of Islam under the leadership of the 
          8   Honorable Mr. Louis Farrakhan. 
          9            When Fleet merged with the Bank of New 
         10   England, we, the Nation of Islam, supported the move 
         11   based on a commitment to help the community, its 
         12   organizations, and its businesses.  However, Fleet 
         13   did not honor this commitment.  And the community, 
         14   its organizations, and businesses have paid the 
         15   price.  We have seen documents that show unfair and 
         16   unethical lending practices by Fleet Bank.  Are we 
         17   going to relive the mortgage scandal with this new 
         18   merger?  Will we see our seniors losing homes 
         19   because of unethical lending practices? 
         20            The merger at issue with Fleet Bank and 
         21   Bank of Boston has successfully created a scenario 
         22   of infighting within the community.  Your customers 
         23   are not sure what this merger will bring.  A survey 
         24   conducted by Survey USA asked the following 
         25   question:  What kind of service do you think 
  0177
          1   customers of the new bank will receive?  44 percent 
          2   don't think the merger will have an impact on 
          3   service while 42 percent think things will get 
          4   worse. 
          5            The banking and insurance business is the 
          6   most lucrative business in this country.  This 
          7   merger will serve your interests.  Bigger is not 
          8   necessarily better.  A nickel is bigger and weighs 
          9   more than a dime, but it is less in value.  When 
         10   airlines merged we were told to expect better 
         11   service, and we received peanuts and half a 
         12   beverage.  (Applause)
         13            Hospitals merged with the vision of better 
         14   service and healthcare for minority communities.  
         15   Division has been lost.  Minority communities have 
         16   not experienced better service or healthcare.  Will 
         17   this merger bring more personalized service to the 
         18   community?  We no longer have the word "trust" 
         19   within banking institutions, we need the word 
         20   "trust" reflected within the practices of banks, 
         21   your bank. 
         22            The only thing we have in our best interest 
         23   is the Community Reinvestment Act.  The Nation of 
         24   Islam has a suggestion on how you could honor the 
         25   CRA.  We want a letter of commitment to the 
  0178
          1   community.  You have an obligation to offer more 
          2   than lip service.  The letter should detail what you 
          3   propose to do for minority communities. 
          4            How can you, Fleet Bank, assure us that 
          5   things will not get worse?  William Sands wrote a 
          6   paper entitled "Proper Attitude is Key to Successful 
          7   Community Lending."  He states the CRA was one of a 
          8   series of laws passed by Congress to address 
          9   problems of unequal access to credit.  The CRA 
         10   emphasizes the continuing and affirmative obligation 
         11   of lending institutions to meet the deposit and 
         12   credit needs of the entire community, including low- 
         13   and moderate-income areas, consistent with safe and 
         14   sound lending practice. 
         15            What is your attitude towards minority 
         16   communities?  How will you ensure that the spirit 
         17   and intent of the CRA be met?  One way is for Fleet 
         18   to support the Boston Bank of Commerce.  The Boston 
         19   Bank of Commerce understands our needs and is 
         20   committed to fostering economic and social 
         21   development. 
         22            Yes, Fleet should make it a project to aid 
         23   and support this community by aiding and supporting 
         24   the Boston Bank of Commerce.  They're not your 
         25   competitor; they're the only African-American-owned 
  0179
          1   bank and the only minority-owned community 
          2   development financial institution in New England.  
          3   It is the right and moral thing to do.  It is good 
          4   business practice.  In fact, it is right in line 
          5   with the spirit of serving the convenience and needs 
          6   of the community. 
          7            I don't know what this merger will bring to 
          8   Boston, do you?  How will this merger, creating the 
          9   third largest lender in the nation, handle the 
         10   individual?  The small businesses?  The not-for- 
         11   profit businesses in minority communities? 
         12            I do know that the Boston Bank of Commerce 
         13   is in the best position to handle the needs within 
         14   minority communities.  They have provided over 15 
         15   years of community development and support.  They 
         16   have not lost sight of the individual.  They have 
         17   not lost sight of the small businesses.  They have 
         18   not lost sight of the not-for-profit businesses in 
         19   our communities.  Support the community by 
         20   supporting the Boston Bank of Commerce.  Anything 
         21   less than Fleet will leave us banking while black, 
         22   banking while brown.  Thank you.  (Applause)
         23            PRESIDING OFFICER SMITH:  Questions from 
         24   the panel? 
         25            MR. ALVAREZ:  Reverend Sharpton and 
  0180
          1   Honorable Muhammad, you both mentioned the Boston 
          2   Bank of Commerce.  Do you know, has the Boston Bank 
          3   of Commerce made a bid for any of the branches in 
          4   the Fleet package?  
          5            REV. SHARPTON:  It is my understanding that 
          6   they have made a bid.  I understand that the 
          7   thinking was that they wanted in the divestment 
          8   phase of this merger a major bank to take over most 
          9   of it and some 10 to 15 percent would be left.  I 
         10   think the Boston Bank of Commerce, if I'm not 
         11   mistaken, had only made a bid for like 18 branches 
         12   out of 280, which I think is clearly, as Minister 
         13   Muhammad said, not dealing with the competitiveness.  
         14   The fact that nothing has been made concrete there 
         15   shows to me an arrogance and an insensitivity on not 
         16   even trying to work with the community. 
         17            I don't think that's a reasonable proposal, 
         18   given the fact you're talking about 280 branches 
         19   will become available and the bid for the only black 
         20   bank in the region is only for about less than 10 
         21   percent of that. 
         22            MR. ALVAREZ:  But as far as you know, a bid 
         23   has been made.
         24            REV. SHARPTON:  A bid has been made.
         25            MR. ALVAREZ:  Bids haven't yet been 
  0181
          1   announced.
          2            REV. SHARPTON:  It might be while we're 
          3   here today. 
          4            MR. ALVAREZ:  Yes. 
          5            PRESIDING OFFICER SMITH:  If there are no 
          6   further questions, we thank you very much for coming 
          7   this morning and afternoon. 
          8            (A pause)
          9            PRESIDING OFFICER SMITH:  We are ready to 
         10   start with Panel Seven, and we have about five 
         11   different organizations with five minutes total 
         12   each. 
         13            So where we have Ms. Feingold and Mr. 
         14   Gornstein, is one of you speaking? 
         15            MS. FEINGOLD:  Just one.
         16            PRESIDING OFFICER SMITH:  Thank you very 
         17   much. 
         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. 
          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. 
          9            MS. ARANJO:  Good afternoon.  My name is 
         10   Carol Aranjo, and I am the CEO of D.E. Wells Federal 
         11   Credit Union in Springfield, Massachusetts, and also 
         12   a member of the African-American Executive 
         13   Leadership Council of Springfield, Massachusetts. 
         14            The African-American community of western 
         15   Massachusetts has not benefited from any of the bank 
         16   mergers or new banks entries into the State of 
         17   Massachusetts.  We often say that people in Boston 
         18   think the state ends at 128. 
         19            We have seen the press releases, and we 
         20   have also been part of the bank community group that 
         21   started about five years ago, and we have not seen 
         22   any of the dollar amounts that the banks have 
         23   pledged to be lent in the low- and moderate-income 
         24   communities drift into Springfield, Massachusetts.  
         25   Very little dollars are in there for the business 
  0228
          1   community. 
          2            The banks do lend to the nonprofits.  They 
          3   do give charitable giving.  But as every civilized 
          4   individual knows, it is the business community that 
          5   drives the community's progress. 
          6            The African-American business community has 
          7   been starved for capital and loans from the 
          8   beginning of time, since slavery.  Our community 
          9   seems to be the fertile ground for other ethnic 
         10   groups to come in and get their economic starts.  
         11   Banks loaned to everyone to come into the 
         12   African-American community to start businesses 
         13   except the African-Americans.  This is outrageous. 
         14            I am here to say that people who have 
         15   mortgages also need jobs with which to pay the 
         16   mortgages.  If they are not able to create jobs 
         17   within their community, if they are not able to 
         18   establish a credible business community, if they are 
         19   not able to provide for the needs of their citizens, 
         20   then that community becomes a ghetto, it becomes a 
         21   starved plantation. 
         22            The banks of America treat the 
         23   African-American community as a plantation.  They 
         24   are the owners.  They are the wealth of the 
         25   community.  They control it.  They choose an 
  0229
          1   overseer.  When I use the word "overseer," I'm not 
          2   talking about Uncle Tom.  Those are different.  I am 
          3   talking about someone that the bank will determine, 
          4   "We will allow you to become successful.  We will 
          5   loan to you, but only to you."  It is a method of 
          6   pitting members of the community against one 
          7   another. 
          8            This is stock and trade of the American way 
          9   in the African-American community.  For the 
         10   government, for entities of the government to 
         11   continue to allow it is to take part in it.  Racism, 
         12   the stigma of what happens in our community, will 
         13   not change until the government takes responsibility 
         14   for what it sees happening and its part in it.  
         15   Banks must be able to put these dollars that they're 
         16   talking about into community controlled 
         17   organizations. 
         18            We are recommending that the banks, if they 
         19   are committing $14 billion, that these dollars not 
         20   stay within the banks to be given out piecemeal, but 
         21   to be placed into community loan funds, community 
         22   credit unions, community CDCs that have loan pools.  
         23   The money should be placed within them over a 
         24   five-year period and allow them to loan to the 
         25   businesses in the community so that they can develop 
  0230
          1   their community. 
          2            Communities cannot be developed without 
          3   real capital, and real capital cannot be used in the 
          4   community if it is given to people outside of the 
          5   community to come in, build on their wealth and take 
          6   the wealth from the community.  So we recommend that 
          7   unless the banks are willing to put these dollars 
          8   into the hands of community lenders and allow them 
          9   to loan, then they should not be allowed to merge. 
         10            HEARING OFFICER SMITH:  Thank you very 
         11   much. 
         12            Mr. Draisen. 
         13            MR. DRAISEN:  Thank you very much.  It's a 
         14   little easier for me standing for some reason.  I'm 
         15   not quite sure why. 
         16            My name is Marc Draisen, and I'm president 
         17   and CEO of the Massachusetts Association of 
         18   Community Development Corporations. 
         19            Just for purposes of explaining a little 
         20   bit more about who I am and what I've done, I've 
         21   worked in the community development field for the 
         22   last 18 years, and I have also served for four years 
         23   as a member of the Massachusetts House of 
         24   Representatives, representing Boston and Brookline. 
         25            We represent the 68 community development 
  0231
          1   corporations of Massachusetts.  Banks play critical 
          2   roles in the work of CDCs.  They provide financing 
          3   for the construction of affordable housing, capital 
          4   for loan pools that fund small businesses or home 
          5   improvements, direct credit to entrepreneurs and 
          6   home buyers, basic banking services to consumers and 
          7   critical grant support to a host of CDC efforts. 
          8            In March, we began to assess the impact of 
          9   the proposed merger of Fleet and BankBoston.  We 
         10   looked at the various factors to assess whether this 
         11   merger would keep the promise that the leaders of 
         12   the banks had indicated of one plus one equaling 
         13   greater than two. 
         14            We examined Fleet and BankBoston's past 
         15   records of serving the community reinvestment needs 
         16   of low- and moderate-income communities after 
         17   previous mergers.  We asked the banks to develop a 
         18   comprehensive, detailed and publicly verifiable 
         19   series of benefits to the communities we serve, and 
         20   we asked them to formalize these commitments through 
         21   signed agreements. 
         22            Unfortunately, to date, the banks have 
         23   failed to negotiate a CRA agreement with any 
         24   legitimate community organization or elected 
         25   official.  In fact, they have flatly said they would 
  0232
          1   not do so. 
          2            Furthermore, they have failed to provide 
          3   any detailed commitments either by state or by 
          4   program area in such a way that we can determine 
          5   whether the convenience and needs of low- and 
          6   moderate-income people are being served. 
          7            Please allow me to be clear.  We have 
          8   worked for years with both of these institutions.  
          9   We know them well.  We respect their staffs.  Each 
         10   one of them has good programs and some programs that 
         11   could be improved. 
         12            However, we are also aware, I might note, 
         13   of the value of having a financial institution 
         14   headquartered in New England, although I would note 
         15   that no one knows who the next merger will be headed 
         16   by, and that remaining in New England could not last 
         17   for long. 
         18            Nonetheless, despite our relationships with 
         19   these two banks, we are not able at this time to 
         20   lend our support to this merger.  We do not take 
         21   this action lightly.  MACDC has never opposed a 
         22   merger in the five years that I've been president 
         23   and CEO. 
         24            But there are three reasons why we take 
         25   that position today:  First, the failure to 
  0233
          1   negotiate an agreement; second, we remain 
          2   unconvinced that the regionwide commitment as 
          3   promised by the bank truly meets the tests of one 
          4   plus one equals two; and finally, and perhaps the 
          5   most importantly, because the bank's statement lacks 
          6   specifics.  Gross numbers in broad categories across 
          7   six states are not good enough. 
          8            We were very precise in our requests, and 
          9   we hope the bank will be precise as well.  Yet in a 
         10   host of areas -- soft second affordable home 
         11   mortgages; rental housing production through the 
         12   Mass. Housing Partnership Fund; membership in the 
         13   Federal Home Loan Bank; basic banking, checking, and 
         14   savings accounts for unbanked households; targets 
         15   for small business lending -- we have only heard, 
         16   "We are still studying your proposal." 
         17            Therefore, without those specifics, we 
         18   cannot be supportive today.  The Fed, however, does 
         19   have the ability to turn this around.  You clearly 
         20   have the authority to establish conditions over any 
         21   approval of this merger under your regulations.  We 
         22   know you tend not to do this, but we hope that you 
         23   will do so at this time. 
         24            We hope that you will require Fleet and 
         25   BankBoston to develop a detailed and publicly 
  0234
          1   verifiable CRA plan negotiated with community 
          2   organizations and elected officials.  We hope you 
          3   will extend the public comment period for at least 
          4   two weeks after such a plan is developed and release 
          5   to the public and take into account the public's 
          6   reaction to the plan in making any decision to 
          7   approve or deny the merger.  And, finally, we hope 
          8   that you will incorporate these commitments into any 
          9   approval that the Federal Reserve might issue. 
         10            In the written testimony that we have 
         11   handed in, we have detailed -- and I might say in 
         12   great detail -- the five reasons why we believe that 
         13   in the case of this merger, there are unprecedented 
         14   conditions why you should establish these 
         15   conditions, even though you may not have established 
         16   CRA conditions in the past. 
         17            We hope you will take these recommendations 
         18   seriously, and please do what you can to make sure 
         19   that Fleet and BankBoston's commitments going 
         20   forward in fact are equal to or greater than the 
         21   activities of the two banks in the past. 
         22            Thank you for your attention. 
         23            HEARING OFFICER SMITH:  Thank you very 
         24   much. 
         25            MS. DuBOIS:  My name is Jeanne DuBois.  I'm 
  0235
          1   the director of the Dorchester Bay Economic 
          2   Development Corporation in Upham's Corner, North 
          3   Dorchester, and East Roxbury.  We're a 20-year-old 
          4   CDA, one of the larger ones in Boston.  And we have 
          5   three branches in Upham's Corner -- Fleet, 
          6   BankBoston and Citizens -- all within about 50 yards 
          7   of each other. 
          8            I think we would be considered one of what 
          9   BankBoston and Fleet call their neighborhood 
         10   development partners.  So there are many positives 
         11   over the years that we have experienced with them, 
         12   and we have some concerns. 
         13            They have supported our Small Business 
         14   Microloan Program.  We have our own in-house loan 
         15   program right in Upham's Corner.  We work with 400 
         16   entrepreneurs/microlenders right in the 
         17   neighborhood.  We have made over half a million 
         18   dollars of our own direct loans to small start-ups 
         19   and small businesses.  They have invested in over 
         20   500 units of rental housing through Mass. Housing 
         21   Investment Corp. 
         22            They have supported our home improvement 
         23   loan program to unbankable homeowners.  We have many 
         24   people living in -- 80 percent of the housing stock 
         25   is owner occupied in North Dorchester, so our home 
  0236
          1   improvement lending is important. 
          2            We have many deals in the works.  
          3   BankBoston and we are working on a manufacturing 
          4   plant to go into Savin Hill Industrial Park that 
          5   will create 70 jobs.  We have had gap financing that 
          6   we have done with Little Brazil Restaurant in 
          7   Allston-Brighton.  Through our community business 
          8   network, we were able to complete a deal.  There is 
          9   an elevator company now.  We are starting to do 
         10   bigger and bigger deals where we are packaging them, 
         11   and the banks can make loans as these smaller 
         12   entrepreneurs graduate. 
         13            We have also worked positively with the CDC 
         14   divisions of both BankBoston and Fleet.  People are 
         15   on our boards and committees.  So these are all the 
         16   positives I wanted to give you as a background while 
         17   I raise some concerns so you know this is not just 
         18   going one way. 
         19            Our anchor supermarket in Upham's Corner is 
         20   called America's Food Basket.  I think many people 
         21   have heard of it.  We have 16,000 shoppers a week.  
         22   They have 200 workers in the market.  It pays 
         23   $36,000 a week in local salaries.  This has been a 
         24   Fleet loan for many years with a $280,000 City 
         25   guarantee behind it.
  0237
          1            When Mr. Medina, the owner, expanded his 
          2   very successful market to Hyde Park, he got into 
          3   some management problems -- often businesses will 
          4   have these kind of problems when they grow -- and 
          5   had some losses in his first year.  Fleet called the 
          6   loan. 
          7            We wound up, with the help of Fleet CDC 
          8   staff, getting some extensions.  But it's an example 
          9   where now we're working with U.S. Trust and the CDC 
         10   Tax Credit Collaborative to try to cover this loan. 
         11            It should never have happened.  This is our 
         12   anchor market.  This is our jewel in the crown.  
         13   This is what is turning the Upham's Corner business 
         14   district around.  It is one of our key businesses, 
         15   and we think that the relationship banking should 
         16   have been more operative in this case.  We think 
         17   BankBoston has acted more like a partner, and we 
         18   hope that that culture will prevail. 
         19            The second business is Kasmeric Elevator.  
         20   This is a Caucasian man who had been 20 years in the 
         21   elevator business, went out on his own, and Fleet 
         22   did a $30,000 line of credit and term loan with him.  
         23   And again, he needed $70,000 to meet the kind of 
         24   contracts that he was hoping for, and they were not 
         25   able to do it.  We had to take it to BankBoston, who 
  0238
          1   successfully made the loan, and his business is 
          2   growing. 
          3            We are finding a lot of our small 
          4   entrepreneurs don't want to go to Fleet.  There is a 
          5   real problem here.  There is a culture problem, an 
          6   attitude problem.  Our Board also, last night, said 
          7   there is a customer service problem in our local 
          8   branch -- too few staff, long lines, and little 
          9   participation in local business activities. 
         10            The attitude is important.  The community 
         11   banking and relationship banking is important.  I've 
         12   said this to other friends in other divisions of 
         13   Fleet.  We need some specific commitments, and there 
         14   are some specific statements in the MACDC position 
         15   paper about loan size and loan volume and the size 
         16   of businesses.  We would like those specifics 
         17   incorporated.  We are concerned that it won't happen 
         18   otherwise. 
         19            HEARING OFFICER SMITH:  Mr. Morehouse. 
         20            MR. MOREHOUSE:  Thank you.  Good afternoon.  
         21   Thank you for the opportunity to testify at this 
         22   hearing. 
         23            My name is Andrew Morehouse.  I'm the 
         24   executive director of the Greater Holyoke Community 
         25   Development Corporation and the chair of the 
  0239
          1   Community Reinvestment Committee of the 
          2   Massachusetts Association of CDCs. 
          3            By helping the constituency that I serve in 
          4   greater Holyoke specifically, we are able to build 
          5   the incomes, assets and human capital.  And through 
          6   that, in my role as a member and the chair of the CR 
          7   committee, other CDCs are able to do the same in 
          8   their respective communities. 
          9            In turn, these individuals, low-income and 
         10   minority individuals, generate income demand for 
         11   goods, services, and, yes, even financial services. 
         12   However, community development organizations, the 
         13   banking community, and public officials have learned 
         14   that financial services must be adapted to these 
         15   underserved communities and markets. 
         16            Only by investing in innovative financial 
         17   products and services can economic activity be 
         18   stimulated, generating profitable opportunities for 
         19   business lending, home mortgages, and community 
         20   development projects.  Yet it takes all three of 
         21   these institutions working together to revitalize 
         22   our nation's underserved communities. 
         23            In Massachusetts, Fleet Bank and BankBoston 
         24   are major partners in innovative financing.  Past 
         25   commitments and contributions of Fleet and 
  0240
          1   BankBoston are critical to the success of regional 
          2   intermediaries of community development, to 
          3   community organizations and to state programs like 
          4   the Massachusetts Housing Investment Corporation and 
          5   the Massachusetts Housing Partnership. 
          6            Small community banks generally just do not 
          7   have the assets and economies of scale to be able to 
          8   afford innovative financial products and the volume 
          9   of lending that Fleet and BankBoston have the 
         10   capacity to offer as a result of their respective 
         11   mergers with smaller banks. 
         12            I would like to share with you, however, a 
         13   different picture, one that is quite disturbing.  As 
         14   both banks have merged with other banks over the 
         15   past decade, amassing greater financial assets and 
         16   profits for shareholder, their lending overall to 
         17   minorities and low-income census tracts has fallen 
         18   precipitously.  HMDA data show that in the 
         19   Springfield MSA, the percentage decline in mortgage 
         20   lending is even greater than that of the 
         21   Commonwealth. 
         22            Focusing on Fleet and Shawmut lending 
         23   before and after the merger, from 1994 to 1998, 
         24   loans to low- and moderate-income borrowers dropped 
         25   83 percent; to Latino borrowers, 90 percent; and to 
  0241
          1   black borrowers, 96 percent.  Total lending for the 
          2   same period dropped 71 percent. 
          3            These figures represent a significant 
          4   retreat from underserved communities in particular 
          5   and home mortgages in general.  It also raises the 
          6   specter that BankBoston's far better track record of 
          7   home mortgage lending will cease to exist after the 
          8   merger. 
          9            Further declines of the proposed banks' 
         10   combined home mortgage lending, especially to low- 
         11   income and minority individuals and census tracts, 
         12   will seriously impair the revitalization efforts of 
         13   these communities.  The proposed divestitures and 
         14   likely branch closings will certainly be cited as a 
         15   justification for further reductions in home 
         16   mortgage lending. 
         17            The public must have guarantees that the 
         18   proposed bank will reserve this trend in home 
         19   mortgage lending to underserved communities.  In 
         20   other words, the public should be assured that the 
         21   proposed FleetBank will uphold its commitment to one 
         22   plus one is greater than two in these communities.  
         23   If fact, this should hold true in all of western 
         24   Massachusetts, where no divestitures are reportedly 
         25   going to take place. 
  0242
          1            I'm here to request that if the merger is 
          2   approved -- and it seems likely -- it be contingent 
          3   on the two banks negotiating in good faith a 
          4   detailed and measurable community reinvestment plan 
          5   with community organizations and elected officials. 
          6            As publicly insured institutions, these 
          7   banks have an obligation to serve the communities 
          8   whose savings are being entrusted in them.  This is 
          9   nowhere more crucial than in low-income and minority 
         10   communities that are traditionally underserved. 
         11            Without a negotiated community reinvestment 
         12   plan, there is every reason to believe that their 
         13   home mortgage lending will continue to spiral 
         14   downward.  Moreover, there is no guarantee that the 
         15   banks will even sustain, much less increase, their 
         16   current commitments to affordable rental housing, 
         17   basic banking services, and accessible branches and 
         18   ATM sites. 
         19            Community organizations and public 
         20   officials from across the Commonwealth have 
         21   painstakingly reached out to each other to debate 
         22   the impact of the proposed merger on community 
         23   reinvestment in underserved communities.  Coalitions 
         24   representing diverse constituencies have come 
         25   together to formulate a realistic and measurable 
  0243
          1   plan that the banks have steadfastly refused to 
          2   negotiate in good faith. 
          3            I respectfully call upon the Federal 
          4   Reserve Bank to break the impasse by requiring the 
          5   banks to negotiate a community reinvestment plan, 
          6   plain and simple.  Moreover, I urge the Federal 
          7   Reserve to extend the comment period after a 
          8   negotiated plan can be reached so that all affected 
          9   parties have an opportunity to respond to it. 
         10            In my humble opinion, I think we should 
         11   expect no less from the Federal Reserve. 
         12            Thank you again for inviting me to testify 
         13   before you. 
         14            HEARING OFFICER SMITH:  Thank you very 
         15   much. 
         16            Mr. Westgate.
         17            MR. WESTGATE:  My name is Michael Westgate 
         18   from Chelsea Neighborhood Housing Services.  We've 
         19   been around for 20 years.  We do about 1.2 million a 
         20   year in rehab of buildings in Chelsea for low- and 
         21   moderate-income people, almost all of it -- I would 
         22   say all of it in fact in partnership with banks.  
         23   And the resulting benefits to the community include 
         24   about a half million dollars in wages paid to 
         25   Chelsea residents. 
  0244
          1            About two years ago a Cambodian family came 
          2   into my office.  They had recently bought a house 
          3   for $150,000.  This was a duplex.  They had a 
          4   $127,000 mortgage from Fleet.  The bankers on my 
          5   Loan Committee said that the building was only worth 
          6   $120,000, and it needed $20,000 worth of work.  It 
          7   needed a new roof, it had no second means of egress, 
          8   the furnace was completely busted. 
          9            It was a Cambodian family, as I mentioned.  
         10   They were unwilling to stick their necks out.  We 
         11   wanted to go to bat for them, but they came from a 
         12   culture where if you stick your neck out too far, it 
         13   was literally blown off.  And there were a lot of 
         14   people that are not willing to step forward. 
         15            I wanted to do something more than 
         16   anecdotal, because we did have some other anecdotes 
         17   like that.  When we started with a 120 percent 
         18   loan-to-value ratio before they even came in for a 
         19   home improvement loan, there wasn't much we could do 
         20   for them. 
         21            Did I ask NCRC, the National Coalition -- 
         22   the National Community Reinvestment Coalition, and 
         23   they did a study of all of the loans made by all of 
         24   the banks in Chelsea during the period of comment on 
         25   Fleet's application for review.  And while the 
  0245
          1   numbers were high, in gross numbers, numbers when 
          2   you picked them apart were rather startling, that if 
          3   you took as a common denominator the average price 
          4   in Chelsea, Asian applicants had paid 120 percent -- 
          5   excuse me -- their mortgages were 120 percent of 
          6   average value, Hispanics were 130 percent, and 
          7   African-Americans were 140 percent. 
          8            I presented that to the OCC a year ago.  It 
          9   took months to get an acknowledgment.  I gave it to 
         10   the head of their CRA office when I was down in 
         11   Washington in March of this year. 
         12            I know OCC is not FRB, but just to explain 
         13   the difficulty that we see in having regulators take 
         14   responsibility for regulating, it was particularly 
         15   insulting to see Fleet get an outstanding review 
         16   from Massachusetts when we -- and I know people in 
         17   Dorchester and elsewhere -- had similar experiences. 
         18            What we're seeing today is a violent 
         19   escalation of prices.  Where during the downtrend 
         20   prices in Chelsea went down 1 percent a month, they 
         21   are now going up 1.5 percent, and unfortunately, 
         22   Fleet is among the leaders in giving excessive 
         23   loans, and it's the banks that are the determinants 
         24   of value rather than the buyers. 
         25            We oppose the merger.  We see that there 
  0246
          1   has been irresponsible lending in Chelsea and 
          2   elsewhere.  We see dollar headlines for millions of 
          3   dollars, but the devil is in the details. 
          4            We have seen millions of dollars languish 
          5   at Mass. Housing Partnership.  We were given loans 
          6   by Mass. Housing Partnership.  The terms were too 
          7   onerous for us to use, so we went elsewhere. 
          8            The solution, I believe, is enforceable 
          9   agreements with regional groups that take full 
         10   advantage of our knowledge of the communities, the 
         11   regulators' ability to regulate, and the banks 
         12   stepping forward with programs that will work. 
         13            CRA today is being gutted in Congress, and 
         14   I think it's incumbent on the people in this room to 
         15   come up with a new tripartite agreement that would 
         16   apply to this or any other major merger where the 
         17   goals are spelled out, we can all agree to them, 
         18   they're transparent, they're enforceable. 
         19            And I thank you for your attention. 
         20            HEARING OFFICER SMITH:  Thank you very 
         21   much. 
         22            MS. WORGAFTIK:  My name is Susan Worgaftik.  
         23   I'm chair of the Massachusetts Micro-Enterprise 
         24   Coalition and director of This Neighborhood Means 
         25   Business!, a micro-entrepreneurship education and 
  0247
          1   technical assistance program in Dorchester, 
          2   Massachusetts.  I would like to thank the Federal 
          3   Reserve for this opportunity to present my views. 
          4            The announcement of the merger of Fleet 
          5   Bank and BankBoston foreshadows a change of great 
          6   concern to micro-enterprise training, technical 
          7   assistance and loan programs. 
          8            The micro-enterprise programs of the 
          9   Commonwealth serve entrepreneurs with businesses of 
         10   five employees or fewer and low and moderate 
         11   individuals who are in the process of creating their 
         12   own businesses.  Most of these businesses are 
         13   located in the Commonwealth's inner cities and rural 
         14   areas.  The development of new micro-enterprises has 
         15   been an important element in the recent economic 
         16   improvements in urban neighborhoods and rural 
         17   communities throughout the Commonwealth. 
         18            In the last decade, we've been able to work 
         19   very closely with both BankBoston and Fleet Bank to 
         20   create loan products designed specifically for the 
         21   smallest of Massachusetts entrepreneurs.  In the 
         22   early days of micro-entrepreneurship, the 
         23   development of these programs in Massachusetts was 
         24   very difficult.  The large banks did not want to 
         25   involve themselves in these types of small loans.  
  0248
          1   Competition between both BankBoston and Fleet Bank 
          2   was very helpful to us in the development of the 
          3   kinds of loan products we need, and today we have 
          4   many loan products that are available to our 
          5   smallest entrepreneurs that were not available to us 
          6   ten years ago. 
          7            In addition, the foundation and corporate 
          8   support that micro-entrepreneurship programs have 
          9   received from BankBoston and Fleet Bank have been 
         10   essential to the development of the technical 
         11   assistance and entrepreneurship education programs 
         12   that are crucial to making micro-enterprises 
         13   succeed.  Without those programs, we have found that 
         14   many of our entrepreneurs fail very early in their 
         15   business life. 
         16            So, clearly, BankBoston and Fleet Bank 
         17   believe that the synergy that's created by the 
         18   merger will be beneficial in the development of 
         19   their business.  We believe that the same should be 
         20   true for the communities, the businesses, and the 
         21   individuals which the banks serve. If one plus one 
         22   equals more than two for the banks, it should also 
         23   equal that for the businesses and the individuals in 
         24   our communities. 
         25            It's my hope that this merger will mean an 
  0249
          1   increase in the number of loans available to micro 
          2   and small community entrepreneurs in urban and rural 
          3   communities, and that there will be a significant 
          4   increase in the technical assistance and education 
          5   support grants essential for making those loans 
          6   successful.  Anything less is a direct step backward 
          7   from the commitments that these two banks have made 
          8   to our communities for micro-entrepreneurs in the 
          9   past. 
         10            As a partner in the efforts of the 
         11   Massachusetts Association for Community Development 
         12   Corporations, Massachusetts Affordable Housing 
         13   Alliance, and the Organization for a New Equality, I 
         14   had hoped that we would be able to have a verifiable 
         15   agreement with the new Fleet-Boston by now. 
         16            I had hoped that such an agreement would 
         17   ensure that the number and availability of funds for 
         18   loans to micro-entrepreneurs would expand much the 
         19   same way that the expectations for the new 
         20   Fleet-Boston would forecast their future.  I had 
         21   hoped that this agreement would recognize the 
         22   importance of entrepreneurship training and 
         23   technical assistance to the success of micro loans 
         24   and that there would be funds available for that 
         25   purpose.  At this time, no such agreement exists. 
  0250
          1            As we move into a new era of banking, it's 
          2   essential that all aspects of the economy benefit 
          3   from the progress and the projections that are put 
          4   forward.  At this time, the projections that we 
          5   have -- that have been presented publicly -- don't 
          6   mention the needs and the concerns of the 
          7   micro-entrepreneurs of the Commonwealth. 
          8            I urge you to recommend that the new 
          9   Fleet-Boston resume discussions with MACDC, MAHA and 
         10   ONE to develop a balanced plan for the future which 
         11   will make this merger a success in everyone's eyes, 
         12   a merger which benefits all of us. 
         13            Thank you. 
         14            HEARING OFFICER SMITH:  Thank you. 
         15            Mr. Young. 
         16            MR. YOUNG:  I'm here representing a rural 
         17   perspective.  Our CDC works in nine towns, 300 
         18   square miles, about 25,000 people.  To personalize 
         19   it, if my septic system fails, and you drink water 
         20   in Boston, you get it.  North Quabbin Region is the 
         21   place I'm representing. 
         22            We have got to be mindful that the CRA, 
         23   coupled with strong compliance on the part of 
         24   financial institutions and regulatory agencies, 
         25   makes stronger communities.  Communities of the 
  0251
          1   North Quabbin Region are concerned over the proposed 
          2   merger, and the concerns thus far raised by the 
          3   North Quabbin Community Reinvestment Coalition are, 
          4   first, diminished local autonomy. 
          5            This has had a profound negative impact on 
          6   institution involvement in our community, as, for 
          7   instance, the role of Fleet, formerly known as 
          8   Shawmut, formerly known to us as Franklin County 
          9   Trust, formerly known as Orange National Bank, has 
         10   been diminished to the point that the Orange -- that 
         11   the Fleet Bank in Orange is jokingly referred to as 
         12   a manned ATM.  But it is not really a joking matter, 
         13   and regulators should look with a keen eye on the 
         14   possible outcomes of this merger on rural 
         15   communities. 
         16            The second concern is the increased 
         17   reliance of credit scoring.  We understand the needs 
         18   of the bank to meet the community's credit needs 
         19   consistent with safe and sound lending practices.  
         20   Small businesses in our region face difficulties 
         21   obtaining credit, and they warrant special 
         22   consideration.  The use of credit scoring continues 
         23   to increase the difficulty. 
         24            With every merger, more and more of our 
         25   small and micro-businesses are no longer 
  0252
          1   creditworthy.  This diminished creditworthiness 
          2   comes, in many instances, after decades of hard 
          3   work, decades of prior credit having been repaid as 
          4   agreed.  Our small and rural and sometimes 
          5   unconventional businesses fall through the cracks in 
          6   national and regional credit scoring models. 
          7            Thirdly, financial institutions need to 
          8   participate in educational and social service 
          9   support.  Fourthly, banks need to provide portfolio 
         10   lending in our region, especially for renovation of 
         11   owner-occupied one- to four-family properties.  The 
         12   portfolio aspect is critical, that they be held and 
         13   not resold. 
         14            The merged bank needs to be responsive to 
         15   community leaders and members of our area.  We 
         16   suggest an advisory Board be made up of members of 
         17   respective regions to ensure that all community 
         18   concerns are addressed by the management of the 
         19   combined bank. 
         20            A little more than a year ago, our CDC went 
         21   through this with Family Bank.  We raised concerns 
         22   about local lending authority, loan funds, mortgage 
         23   outreach, portfolio lending, and in the end we 
         24   signed an agreement.  The agreement provided for 
         25   various commitments by Family Bank to enhance its 
  0253
          1   community development activities.  In the end, I 
          2   think Family Bank appreciated our concerns.  The 
          3   needs were addressed.  Community development banking 
          4   is good business. 
          5            Please extend the comment period.  Don't 
          6   approve this merger without a signed agreement, 
          7   because it's in our mutual interest.
          8            HEARING OFFICER SMITH:  Thank you very 
          9   much. 
         10            Questions from the panel? 
         11            HEARING OFFICER KWAST:  I have a question. 
         12            Mr. Morehouse, I think touched on this, but 
         13   I wonder if some of the other panel members might 
         14   comment on the role of smaller and medium-sized 
         15   banks in serving the needs of the organizations and 
         16   needs of your customers. 
         17            MR. DRAISEN:  We've had a lot of 
         18   discussions internally, Mr. Kwast, among our CDCs 
         19   about the divestiture issue and the different sized 
         20   banks.  And I think the sense among our CDCs is that 
         21   there's a role for everyone. 
         22            Very frequently, we have individual CDCs 
         23   that have a very close relationship with a local 
         24   bank that really knows the customers in that 
         25   community, the entrepreneurs that the CDC is dealing 
  0254
          1   with, and their presence is invaluable.  So the loss 
          2   of those community banks is a severe problem.  Or, 
          3   conversely, the possibility of those community banks 
          4   picking up a few additional branches would be a very 
          5   good thing. 
          6            From another perspective, however, if we 
          7   have a very large bank that comes into the area, 
          8   sometimes it has greater overall CDC -- overall CRA 
          9   capacity, it knows how to work with some of the 
         10   bigger programs, it has experience from other parts 
         11   of its portfolio with doing some of the more 
         12   complicated deals that sometimes involve three 
         13   government programs and six different funding 
         14   programs and things like that. 
         15            I think the summary is that we want to make 
         16   sure that it's not just one big bank, that gets to 
         17   deal here.  We do want to see more competition.  We 
         18   understand the value of that.  We sense that that's 
         19   going to be the direction that the divestiture goes 
         20   in.  But there's also a very important role for the 
         21   small or the medium-sized banks, and we work with 
         22   them very closely, and they should not be shut out. 
         23            MS. WORGAFTIK:  In relationship to 
         24   micro-entrepreneurs, I would second that.  And I 
         25   would also point out that in some ways, the size of 
  0255
          1   the bank relates to programmatic issues, but the 
          2   availability of the bank is something that the 
          3   micro-entrepreneurs need. 
          4            We often find that we don't have banks 
          5   staffed well enough to be -- and some of the larger 
          6   banks -- in terms of their real recognition of the 
          7   micro-entrepreneurs to really give them the kind of 
          8   attention that they need.  It is kind of -- so I 
          9   would be looking for the kind of staffing from any 
         10   sized bank that would really be able to say, "We are 
         11   serious about the work that is done with the 
         12   community and just not simply that we have an 
         13   outpost here." 
         14            So regardless of whether it is a larger 
         15   bank or a smaller bank, that question of taking the 
         16   time to really work through issues of 
         17   entrepreneurship is extremely important to our 
         18   members. 
         19            MR. YOUNG:  The smaller banks are critical 
         20   to our success.  For example, the most recent real 
         21   estate deal we did involved -- we were attempting to 
         22   purchase a building from Fleet which was a 
         23   foreclosure.  While we were trying to borrow money 
         24   from Fleet's community development side, it couldn't 
         25   hold back the asset management or foreclosure side, 
  0256
          1   and they sold the building to Bob Fader.  
          2   Ultimately, it was a local bank that financed the 
          3   deal, and we had to renegotiate it with somebody who 
          4   bought the sold-off paper. 
          5            So in my region, Fleet's branch is really a 
          6   nonplayer.  Although BankBoston and Fleet have been 
          7   important supporters to my organization in terms of 
          8   banking services, they are only going for the 
          9   highest cut, which is really not our CDC strategy in 
         10   economic revitalization. 
         11            MS. ARANJO:  In the African-American 
         12   community -- and as you can see, there are not many 
         13   of us here testifying -- I run a credit union.  I 
         14   just had a gentleman who has a million dollars worth 
         15   of orders from J.C. Penney and the U.S. Army.  These 
         16   are not people who won't pay.  They needed a credit 
         17   line of $348,000 for their merchandise to be made. 
         18   Fleet Bank turned them down even after getting a 
         19   guaranty from the business association in Washington 
         20   who guarantees minority loans, and they were still 
         21   turned down. 
         22            This happens too often in the 
         23   African-American community.  They will give you 
         24   loans of all types except those which allow us to 
         25   develop credible businesses which allow us to 
  0257
          1   develop our community.  And I would like to say that 
          2   it is important to the African-American community 
          3   that there are local, community-driven banks or 
          4   financial institutions which take the time to know 
          5   the community and understand that color is not 
          6   character. 
          7            MR. WESTGATE:  It's the competition that we 
          8   all need, both for our own agencies and for the 
          9   people we serve.  Just to illustrate it, we had an 
         10   unsecured line of credit with a local bank at prime 
         11   plus 2.  Another bank came in, and now we have an 
         12   unsecured line of $400,000 of prime minus a half. 
         13            If you have competition, both the 
         14   homeowners and the businesses and the nonprofits can 
         15   profit from that.  If you have no competition, then 
         16   we all have to live with some of the stories you've 
         17   heard today. 
         18            HEARING OFFICER BROWNE:  I have a question 
         19   for Mr. Westgate. 
         20            In talking about the high value -- well, 
         21   high loan-to-value lending in Chelsea, was that 
         22   unique to Fleet, or did you see that in other 
         23   institutions as well? 
         24            MR. WESTGATE:  I won't say it is absolutely 
         25   unique to Fleet, but in the NCRC data, it was the 
  0258
          1   only banking institution that showed up that way. 
          2            HEARING OFFICER SMITH:  Thank you very much 
          3   for coming this afternoon, and I'm sorry you all had 
          4   to wait so long, as other panels also are having to 
          5   do.
          6            (Pause)
          7            HEARING OFFICER SMITH:  Thank you.  With 
          8   this next group, we again have very brief 
          9   presentations; but what we are also doing is setting 
         10   a time limit, so that at a certain point, if people 
         11   haven't made it through, we will have to move them 
         12   to later in the day in order to not have our other 
         13   panels running quite so late.  So --
         14            MS. WEBSTER:  What is our time limit? 
         15            HEARING OFFICER SMITH:  One minute.
         16            MS. WEBSTER:  Good afternoon.  My name is 
         17   Elizabeth Webster.  I'm here from Ithaca, New York, 
         18   which is the true upstate region of New York State. 
         19            I'm here without statistics or media or 
         20   T-shirts or a group behind me.  I have a story of a 
         21   phone call from a community development corporation 
         22   -- to a community development corporation from an 
         23   economic opportunity corporation. 
         24            We asked the absurd.  We asked Fleet Bank 
         25   to think as a philanthropist.  In fact, they were 
  0259
          1   able to do that at every turn.  We need to become 
          2   self-sufficient in our community so we can continue 
          3   to serve the 5,000 clients or consumers who we are 
          4   guiding on their road to self-sufficiency. 
          5            Fleet Bank came to the table.  Then they 
          6   got on a plane, they came to Tompkins County, they 
          7   listened to the real people that are the statistics 
          8   that have been quoted today, the people who need 
          9   help with their heat bill, the people who need to 
         10   use a food pantry, people who are learning the 
         11   skills to save money for their own home. 
         12            They met what we like to consider reality, 
         13   and then they went back to their bottom line, and 
         14   they tried it again and again and again.  And the 
         15   bottom line finally was able to satisfy us and them.  
         16   And now because of that, we have $1.5 million that 
         17   will enable an institution to become completely 
         18   self-sufficient. 
         19            HEARING OFFICER SMITH:  Thank you very 
         20   much. 
         21            MS. FLYNN:  My name is Denise Flynn.  I'm 
         22   the vice-president of Junior Achievement for 
         23   Northern New England. 
         24            For several decades, BankBoston and Fleet 
         25   have worked together to support our organizations 
  0260
          1   which teaches kids in grades K through 12 about 
          2   business and how business works. 
          3            Although BankBoston has been one of our 
          4   largest supporters, we have also received support 
          5   from Fleet.  Together, the banks have helped JA to 
          6   grow from serving 5,000 students ten years ago to 
          7   over 50,000 students this month. 
          8            We're an organization that serves all kinds 
          9   of students.  In the past few years, we've tried to 
         10   focus our efforts on programs and schools where 
         11   students have least access to business people.  In 
         12   Boston alone, we serve more than 6,000 students who 
         13   were able to meet a business person this year. 
         14            In addition, volunteers from Fleet and 
         15   BankBoston have enabled Junior Achievement to extend 
         16   its reach to areas like Lynn, Lawrence, Lowell, 
         17   Quincy, Worcester and Springfield.  In short, the 
         18   banks have actively supported volunteers in schools 
         19   throughout New England. 
         20            We at Junior Achievement hope that the 
         21   merger will solidify our presence in New England, 
         22   and we hope that the combined banks will help us to 
         23   build a critical mass of volunteers at the new 
         24   larger bank that will enable us to reach 20 percent 
         25   of the student population by the year 2005. 
  0261
          1            This may or may not have been possible 
          2   without the merger, but clearly would have been 
          3   impossible if a non-New England bank had assumed 
          4   control of either bank. 
          5            Thank you.
          6            HEARING OFFICER SMITH:  Thank you.
          7            MS. WHITLOCK:  Hello.  My name is Linda 
          8   Whitlock, and I'm speaking as president and CEO of 
          9   Boys and Girls Clubs of Boston.  And I speak on 
         10   unabashedly in support of the merger. 
         11            I'm speaking on behalf of nearly 7,000 
         12   citizens, some of the poorest neighborhoods in 
         13   Boston and Chelsea, citizens whose voices are absent 
         14   today because they are children and teens who are 
         15   doing what children and teens should be doing on a 
         16   hot day in July.  They're at our clubs learning to 
         17   swim, to surf the Net safely, to cooperate with 
         18   peers, to confide in a trusted adult, all because of 
         19   the notable generosity of donors like BankBoston and 
         20   Fleet Bank.  Stellar corporate citizens, these two 
         21   banks, and BankBoston in particular, are peerless in 
         22   their charitable giving to inner-city programs like 
         23   ours. 
         24            Since 1978 BankBoston has given our 
         25   organization in excess of $800,000 for program and 
  0262
          1   building needs.  Similarly, Fleet has provided us 
          2   with nearly $300,000.  Maintaining the corporate 
          3   headquarters in Boston will ensure that there is no 
          4   diminution of civic and philanthropic involvement on 
          5   the part of the new merged entity. 
          6            I'm honored to endorse the merger on behalf 
          7   of our courageous, worthy and very grateful boys and 
          8   girls. 
          9            Thank you for letting me speak today. 
         10            HEARING OFFICER SMITH:  Thank you. 
         11            DR. SMITH:  Good afternoon.  My name is 
         12   Jane Smith, and I am a member of the Fleet INCITY 
         13   Advisory Board.  I'm also president and CEO of the 
         14   National Council of Negro Women, with a membership 
         15   of over 450,000 women of African descent.  
         16   Previously, I directed the Atlanta Project at the 
         17   Carter Presidential Center, which was about 
         18   neighborhoods and corporations being partners to 
         19   improve our citizens' lives. 
         20            I endorse the merger.  I endorse the merger 
         21   because my job has a simple job description, which 
         22   is to be the watchdog for African-American women in 
         23   terms of commerce and banking.  I have thoroughly 
         24   enjoyed as a member of the INCITY Board seeing the 
         25   balance and response to change that Fleet offers as 
  0263
          1   they look in the inner city to see what women need 
          2   to have wholesome families with or without a partner 
          3   in the same household. 
          4            I have appreciated the support systems that 
          5   have been given to women in terms of training that 
          6   the banks have offered, guidance by the appropriate 
          7   kinds of staff being hired, even those who speak 
          8   other languages, so that the women do not have 
          9   difficulty in making their way through the services 
         10   of the particular banks. 
         11            It is important that BankBoston and Fleet 
         12   have the opportunity to continue their work and to 
         13   continue it together.  Thank you. 
         14            HEARING OFFICER SMITH:  Thank you.
         15            MR. GUZZI:  Good afternoon.  My name is 
         16   Paul Guzzi, and I'm president and CEO of the Greater 
         17   Boston Chamber of Commerce. 
         18            Boston is a vibrant, world-class city with 
         19   important cultural, education, and medical 
         20   institutions, as well as an innovative economy.  A 
         21   great city like Boston should have a world-class 
         22   bank located within its borders to meet our unique 
         23   regional needs.  This merger ensures that result.  
         24   But we should also judge this merger by whether 
         25   Fleet-Boston can meet very high standards in terms 
  0264
          1   of customer service, community outreach, and 
          2   investment in corporate citizenship. 
          3            I am convinced that Fleet-Boston is 
          4   committed to maintain high performance standards in 
          5   each of these areas; and for those reasons, we 
          6   encourage you to support this merger.
          7            MR. MEADE:  Good afternoon.  Thank you for 
          8   this opportunity to testify. 
          9            My name is Peter Meade.  I come to you as 
         10   an individual who is a customer of Fleet Bank and as 
         11   an individual who ran an organization, a regional 
         12   business organization, that had been supported by a 
         13   line of credit from Fleet Bank. 
         14            I want to say to you that the leadership of 
         15   both banks and their contribution to this community 
         16   range from laudable to singularly extraordinary 
         17   kinds of contributions that many times businesses 
         18   don't make.  They have played an important part as 
         19   the pillars of this community. 
         20            I also believe that if this merger had not 
         21   taken place, the man you talk to at the bank would 
         22   be answering the phone in Atlanta or North Carolina, 
         23   in New York or San Francisco.  And so I strongly 
         24   urge you to approve this merger. 
         25            HEARING OFFICER SMITH:  Thank you very 
  0265
          1   much. 
          2            MR. MACDONALD:  My name is Alan Macdonald, 
          3   and I'm the executive director of the Massachusetts 
          4   Business Roundtable, which is a group of 75 
          5   executives from leading institutions in the state, 
          6   leading by nature of their size and activity in the 
          7   economy.  We really exist to help those large 
          8   institutions be involved in channeling their public 
          9   involvement for the improvement of the quality of 
         10   life in Massachusetts, and we have existed for 20 
         11   years in doing that kind of service. 
         12            We work very closely with headquartered 
         13   businesses in Massachusetts, and we find that the 
         14   effectiveness of the public involvement really is 
         15   helped tremendously by the headquarters in 
         16   Massachusetts, and by the fact that the leading 
         17   executives are here, part of the community, part of 
         18   the life, and that they are able to see the needs of 
         19   the community in helping the institutions to support 
         20   those needs. 
         21            As a practical matter, what is happening in 
         22   the banking industry as we see it, around the world 
         23   in fact, is that it takes some financial size to 
         24   remain independent.  And to be headquartered in 
         25   Massachusetts, we want to have a bank that has the 
  0266
          1   financial size to provide the very resources that we 
          2   note today that we worry about losing and not having 
          3   administered in a proper way. 
          4            We think that the kinds of problems we hear 
          5   today, whether they're CRA or otherwise directed, 
          6   are the kinds that we have public officials to worry 
          7   about regardless of size.  And we really favor this 
          8   combination of Fleet Financial Group and BankBoston 
          9   so that we will have the resources in our community 
         10   to be placed in the very spots that we worry about 
         11   losing those resources.  So we support, and hope you 
         12   will, the combination. 
         13            Thank you very much. 
         14            HEARING OFFICER SMITH:  Thank you very 
         15   much. 
         16            MR. JUSTIS:  My name is Robert Justis.  I'm 
         17   here to speak in support of the merger.  I prepared 
         18   15 minutes worth of comments, and I have submitted 
         19   them for the record.  I can't speak that fast, so 
         20   I'll just excerpt a couple of the comments. 
         21            I'm presently the economic development 
         22   director for the Central Vermont Public Service 
         23   Corporation and also a member of the Fleet INCITY 
         24   Advisory Board. 
         25            Immediately prior to my present job, I was 
  0267
          1   for over four years the CEO of a nonprofit community 
          2   development corporation -- Northern Community 
          3   Investment Corporation -- that serves the Northeast 
          4   Kingdom and the North Country of New Hampshire, six 
          5   counties having as many square miles as the State of 
          6   Connecticut and some of the highest concentrations 
          7   of poverty in northern New England. 
          8            It was at NCIC that I first came to know 
          9   well and develop great respect for Fleet Financial 
         10   Group.  During the time I spent with NCIC between 
         11   1990 and 1994, Fleet was an active partner with us 
         12   in our housing development and business lending 
         13   activities. 
         14            You will recall that the early '90s were 
         15   especially difficult economic times in northern New 
         16   England.  Both Fleet and NCIC had our share of 
         17   troubled clients and projects together.  Throughout 
         18   this difficult period, Fleet was diligent and fair 
         19   in working with NCIC, and both organizations 
         20   survived intact and continued to do good work. 
         21            I sincerely hope that you will approve the 
         22   merger in the interests of the communities of our 
         23   service area. 
         24            Thank you very much for the opportunity to 
         25   speak.
  0268
          1            HEARING OFFICER SMITH:  Thank you very 
          2   much, and we appreciate having your longer statement 
          3   for the record.
          4            MR. BRETT:  Former Congressman Mo Udall 
          5   once said, "Everything has been said, but not by 
          6   everyone," so I'll be extremely brief here.
          7            My name is Jim Brett, and I'm the president 
          8   and CEO of the New England Council.  New England 
          9   Council is the oldest regional business organization 
         10   in the United States.  It is made up of large and 
         11   small companies, academic and health institutions, 
         12   nonprofit and for-profit; and our purpose is to 
         13   promote economic growth and high quality of life in 
         14   New England. 
         15            If we were giving out a gold medal this 
         16   year, it would go to Fleet Bank for the work that 
         17   they have done on behalf the New England economy 
         18   promoting economic vitality. 
         19            I am here in support of a combination of 
         20   Fleet Financial and BankBoston.  The Chamber of 
         21   Commerce here in Boston did a study last year, and 
         22   they talked about one of the leading industries here 
         23   in greater Boston area, financial services, in 
         24   particular the banking industry. 
         25            With this new combination of two major 
  0269
          1   banks, it will be a major player here in the city 
          2   and the state and the region.  It has already been 
          3   alluded to about this could have been a worst-case 
          4   scenario of an outside bank coming in and bringing 
          5   about a merger.  This merge makes sense for the 
          6   city, it makes sense for the region.  So I think 
          7   there are tremendous benefits here. 
          8            They have been an outstanding neighbor, a 
          9   citizen.  You have heard the testimony this morning 
         10   about all of the volunteer hours that they give.  I 
         11   think this is good news for our region.  I look 
         12   forward to the merger being enacted. 
         13            Thank you very much for your attention. 
         14            HEARING OFFICER SMITH:  Thank you very 
         15   much. 
         16            MR. MACHTLEY:  Hello.  My name is Ron 
         17   Machtley.  I've been a lifelong resident of Rhode 
         18   Island.  During my adult years, I've been a naval 
         19   officer, a lawyer, for six years a United States 
         20   Congressman, and now I'm president of Bryant College 
         21   in Smithfield, Rhode Island. 
         22            From these various vantage points I have 
         23   observed both BankBoston and Fleet Financial.  They 
         24   have been wonderful corporate citizens of our state, 
         25   taking care of our citizens. 
  0270
          1            I believe, as a college which has 
          2   instituted the first financial service program in 
          3   New England, that banking is going to change 
          4   dramatically just as the telecommunications industry 
          5   has.  If we do not have a large regional bank, we 
          6   will be taken over by an out-of-region bank or a 
          7   bank out of this country.  It is absolutely 
          8   important to our region that we have CEOs who are 
          9   New Englanders, who are here to take care of us.
         10            There are those who testified today that 
         11   there is need for capital to low, medium, moderate, 
         12   and minority populations.  I agree with that.  But 
         13   where Fleet has excelled and BankBoston has excelled 
         14   is not just in capital, but ensuring that the people 
         15   in our state and our region have education. 
         16            They have provided a Women's Resource 
         17   Summit in which over 600 women came to Bryant 
         18   College at no cost to learn the fundamentals of 
         19   business entrepreneurship, financial resource and 
         20   management.  They've provided capital for our joint 
         21   venture Bryant School of Design.  BankBoston funded 
         22   our World Trade Day where 600 businesses learned. 
         23            This is an organization, both at BankBoston 
         24   and Fleet Financial, which is committed to our 
         25   region.  And for that reason, I strongly support the 
  0271
          1   merger and hope that you will support it as well. 
          2            Thank you very much.
          3            HEARING OFFICER SMITH:  Thank you very 
          4   much.
          5            MR. SOTO:  Good afternoon.  My name is 
          6   Felix Soto.  I'm the owner of J&M Auto Sales located 
          7   at 235 Hyde Park Avenue in Jamaica Plain. 
          8            I am in favor of this merger because three 
          9   years ago I came to Fleet Bank from another banking 
         10   institution, and Fleet really took a serious look at 
         11   my situation and where I wanted to go. 
         12            Ever since, I have been growing.  Fleet has 
         13   supported me 100 percent.  They have given me 
         14   several lines of credit and loans, and also they 
         15   have approved loans to buy property where my 
         16   business is, which other banking institutions didn't 
         17   do.  And also they have given me a piece of the 
         18   American dream, to own my own house, and I'm very 
         19   thankful for that. 
         20            I thank Ron Walker that was the person who 
         21   really introduced me to the Fleet CDC, Grant 
         22   Patterson and Mark Hartunian, who helped me in every 
         23   way possible.  I really thank you, Fleet Bank, and I 
         24   am in favor of the merger. 
         25            Thank you very much. 
  0272
          1            HEARING OFFICER SMITH:  Thank you very 
          2   much.
          3            MR. TORRES:  My name is Felix Torres.  I'm 
          4   the executive director of Manchester Neighborhood 
          5   Housing Services in New Hampshire.  We're the 
          6   largest community-based, nonprofit housing developer 
          7   in the State of New Hampshire.  I'm here to support 
          8   the merger, and that should come as no surprise. 
          9            We provide affordable housing.  We do home 
         10   ownership lending and counseling, and we do 
         11   community advocacy.  Fleet and BankBoston have been 
         12   partners of ours from the very beginning, and I'm 
         13   not here to dwell on the past.  But it is important 
         14   to say that their commitment has been total, it has 
         15   been innovative, it has been creative, and it has 
         16   been substantial. 
         17            We believe the merger is important, one, 
         18   because we need a large bank in New England.  I 
         19   don't want to call Columbus.  I don't want to go to 
         20   New York.  I don't want to go to Charlotte.  Boston 
         21   is about as far as I want to travel to talk to a 
         22   banker. 
         23            Second, we think that the sum of the whole 
         24   ought to be greater than the individual parts.  Our 
         25   history, we have gone through mergers before with 
  0273
          1   both BankBoston and Fleet.  In each case in 
          2   Manchester, they have put more resources on the 
          3   street to help low-income families and low-income 
          4   neighborhoods. 
          5            Finally, we have a long relationship with 
          6   Fleet and BankBoston.  We know how to work with 
          7   them, and we look forward to continuing to work with 
          8   them as a unified entity. 
          9            HEARING OFFICER SMITH:  Thank you very 
         10   much. 
         11            MR. JOHNSON:  Good afternoon.  My name is 
         12   Douglas Johnson.  I'm president of Heritage 
         13   Consulting Group, a Providence-based firm, a 
         14   management consulting firm that has the privilege 
         15   over the last ten years of working with Fleet 
         16   Financial Group. 
         17            We were first engaged by Fleet back in 1989 
         18   with the opportunity to support the development of 
         19   its initial Community Reinvestment Act statement.  
         20   Since that time, we have grown as a firm, as a 
         21   little, small business in Rhode Island, to the point 
         22   where now we have a wide variety of clients that are 
         23   based both here in New England and elsewhere in the 
         24   United States. 
         25            We're here today to support this merger 
  0274
          1   because we believe it provides an opportunity for 
          2   small businesses such as ours to interact and to 
          3   obtain important business from major corporations 
          4   such as Fleet, BankBoston. 
          5            It has been a great relationship for our 
          6   firm.  We have, over the years, managed to grow our 
          7   business to the point where we believe that if other 
          8   businesses follow a similar pattern, they too will 
          9   benefit enormously from this proposed merger. 
         10            We thank you for this opportunity and 
         11   certainly endorse what is being proposed before you. 
         12            Thank you. 
         13            HEARING OFFICER SMITH:  Thank you very 
         14   much. 
         15            MR. LANGLEY:  My name is Dennis Langley, 
         16   the executive director for the Urban League of Rhode 
         17   Island. 
         18            The global society means more than 
         19   geographical location to us.  It requires 
         20   organizations and businesses to position themselves 
         21   for survival.  The mega-society sees distance as no 
         22   obstacle in transacting businesses; therefore, 
         23   innovative thinking and concepts must be developed. 
         24            Fleet Bank, in conjunction with Boston, 
         25   recognizes the need to readjust and to position 
  0275
          1   itself for survival within our society.  We need 
          2   that within the Northeast Region.  Failing to do 
          3   that, someone else will take the task and move on 
          4   with the system, which obviously would leave it to 
          5   be noncompliant to many of the concerns you have 
          6   heard earlier on.  We are, therefore, in support of 
          7   this merger. 
          8            Two concerns:  one, that they continue 
          9   their CRA policies; two, we look at the downsizing 
         10   and the employment of those individuals that will be 
         11   laid off.  We are concerned with that, because if 
         12   they do that, that will be to the demise of our 
         13   society. 
         14            Finally, please, Fleet needs us.  We need 
         15   Fleet and BankBoston.  We wholeheartedly support 
         16   this venture.  The merger is important.  It is 
         17   productive to our community.  Please don't let 
         18   another agency or another business come in to take 
         19   over.  Grant them the opportunity to do what is 
         20   prudent for us in this community. 
         21            Thank you. 
         22            HEARING OFFICER SMITH:  Thank you very 
         23   much. 
         24            MS. SATTERWHITE:  Good afternoon.  My name 
         25   is Cherylyn Satterwhite.  I'm the executive director 
  0276
          1   of the Dunbar Community Center in Springfield, 
          2   Mass., and I am speaking I guess for western 
          3   Massachusetts, I do believe. 
          4            I have a stack of cards, and I'm trying to 
          5   figure out how to summarize these cards for you. 
          6            I thought I might speak to Fleet in an 
          7   instance or perspective that has not been spoken to, 
          8   since I've been here at least, and that is Fleet's 
          9   commitment to youth development. 
         10            Fleet and BankBoston I've had very 
         11   favorable experiences with over the past several 
         12   years.  Like most banks, they maintain seats on our 
         13   board of directors, contributing annually to 
         14   operating expenses, but show some flexibility and 
         15   are able to respond additionally in times of 
         16   expenses, Fleet keeping children warm when boilers 
         17   burn in the middle of the winter. 
         18            Fleet, through Agnes Scanlon, helped to 
         19   move the agency's technology to the 21st century, 
         20   assuring that inner-city kids will have equal 
         21   opportunity and access to computer literacy and to 
         22   the wonderful world of the Web. 
         23            The Center has embarked on a $4.5 million 
         24   capital campaign.  Fleet again has taken a major 
         25   role in leadership of developing young children.  
  0277
          1   The campaign is chaired by the Western Mass. 
          2   regional president, Richard Bilowitz.  The New 
          3   Building Steering Committee is co-chaired by a Fleet 
          4   officer, Neal McBride, who has shared resources for 
          5   many years to the Center. 
          6            Through the efforts of Glenn Davis and 
          7   Martin Guiten, the Fleet CDC has extended a 
          8   significant line of credit to help us move forward 
          9   toward developing young people and producing 
         10   productive citizens. 
         11            So we speak in favor of this merger and 
         12   Fleet's demonstration of support for developing 
         13   youth.  Thank you.
         14            MR. CAMPBELL:  Good afternoon.  My name is 
         15   Jeff Campbell.  I'm president and CEO of Cuts and 
         16   Creations, Inc.  We were founded in 1994.  We're a 
         17   unisex hair salon, barber shop.  We have one store 
         18   in the Westgate Mall in Brockton.  That's our 
         19   headquarters store.  We have a brother store in the 
         20   Mystic Mall in Chelsea called Just Cuts. 
         21            Cuts and Creations is a growing company.  
         22   We have about 37 employees now.  We just recently 
         23   signed a ten-year lease with the Arsenal Mall in 
         24   Watertown Massachusetts for an expansion store 
         25   called Cuts and Creation II. 
  0278
          1            We would like to thank Fleet and the CDC 
          2   and also the SBA for the opportunity for us to grow.  
          3   We both employ about 20 to 25 more employees in the 
          4   community.  And I signed a lease, I didn't have the 
          5   funds, but we went to Fleet, and they granted us the 
          6   funds, and they have been working with me strong. 
          7            Mark Hartunian, Grant Patterson, and a 
          8   mixture of Fleet CDC and the SBA have been good to 
          9   Cuts and Creations, Inc.  And I think it's a help 
         10   and a good help to the community, and the merger 
         11   would help the community also. 
         12            I'd also like to say thanks, from Jeff 
         13   Campbell who is here from the company, to Fleet, and 
         14   I hope you guys grant the merger. 
         15            Thank you. 
         16            HEARING OFFICER SMITH:  Thank you very 
         17   much.
         18            MR. SCHWARTZ:  Good afternoon.  My name is 
         19   Eric Schwartz.  I'm the cofounder and president of 
         20   Citizens Schools. 
         21            Our mission at Citizens Schools is to help 
         22   educate children and strengthen the community 
         23   through a network of ten after-school and summer 
         24   school programs spread across the City of Boston.  
         25   We have had a chance to work closely with both Fleet 
  0279
          1   Bank and, particularly in the last year, BankBoston 
          2   in developing really a network of adults who can get 
          3   involved in kids' lives. 
          4            I have here the course catalogues 
          5   representing 124 different courses are being offered 
          6   to 9-to-14-year-old children this summer, all led by 
          7   volunteers in this community, ranging from 
          8   seamstresses who work out of their home, to small 
          9   funeral home operators in Roslindale, to employees 
         10   of large institutions like BankBoston and Fidelity. 
         11            I guess the message that I would leave you 
         12   with is that when it comes to corporate citizenship, 
         13   bigger can be better.  And in the case of 
         14   BankBoston, they have really worked with us in a 
         15   very hand-tailored way.  We have had an opportunity 
         16   to work with employees in this very large 
         17   organization and have them provide very hand- 
         18   tailored and wonderful personalized support to 
         19   children in Boston. 
         20            So thank you, and I do support the merger. 
         21            HEARING OFFICER SMITH:  Thank you very 
         22   much.
         23            MR. LIEBERMAN:  Hi.  I'm Aaron Lieberman, 
         24   president and CEO and one of the founders of 
         25   Jumpstart.  Thank you very much for letting me 
  0280
          1   speak, especially before this cutoff. 
          2            I am here because five years ago, when I 
          3   first wanted to start Jumpstart as a 22-year-old 
          4   right out of college, I had a dream and absolutely 
          5   no hope of getting anyone to support us in the City 
          6   of Boston, but two local institutions really 
          7   responded. 
          8            The Fleet trust officer met with us, 
          9   figured out what could work, and provided one of our 
         10   first grants to get Jumpstart up and going.  
         11   BankBoston shortly followed with becoming one of our 
         12   first real corporate sponsors to support all of our 
         13   aspects. 
         14            I think that just tells part of the story 
         15   of how they have helped us build Jumpstart into a 
         16   national organization, now based in Boston, but 
         17   touching the lives of over 1,000 preschoolers this 
         18   summer.  There have been so many different ways, but 
         19   the involvement has really been quite deep. 
         20            In New Haven BankBoston has been one of our 
         21   lead corporate sponsors.  Kim Alene, a BankBoston 
         22   staff person, has served on our Boston Board of 
         23   Advisors.  Volunteers from both banks have served 
         24   regularly at our service days.  Even the little 
         25   stuff, the furniture that we all sit on in our 
  0281
          1   headquarters was donated through BankBoston, and 
          2   they have even provided countless conference space 
          3   and things like that.  For us it has been an 
          4   important partnership on all levels, and they have 
          5   really helped us make change. 
          6            Thanks.
          7            HEARING OFFICER SMITH:  Thank you very 
          8   much. 
          9            MR. AXELROD:  Good afternoon, ladies and 
         10   gentlemen.  My name is Carl Axelrod, and I chair the 
         11   New England Regional Board of the Anti-Defamation 
         12   League.  As chairman I have the honor of delivering 
         13   to you the remarks -- or excerpts from the remarks, 
         14   given the one-minute limitation -- of Lenny Zakim, 
         15   our esteemed executive director who could not be 
         16   with us today. 
         17            We at the New England Office of the ADL are 
         18   pleased to be here today to support this merger and 
         19   to participate in this important hearing.  We were 
         20   founded as a Jewish civil rights organization in 
         21   1913 to combat anti-Semitism and all forms of 
         22   bigotry and to secure equal justice for all. 
         23            To translate those democratic ideals into 
         24   action, we have utilized public advocacy, education, 
         25   coalition building, and programmatic initiatives 
  0282
          1   that connect people of different racial, religious 
          2   and ethnic groups and economic classes with each 
          3   other and our community. 
          4            We have been fortunate at ADL in New 
          5   England in having Fleet participate with us in many 
          6   creative and new programs, including Black Jewish 
          7   Seder, the Catholic Jewish Seder, Team Harmony in 
          8   particular, and A World of Difference.  The A World 
          9   of Difference program was supported initially by 
         10   Fleet and by one other major corporation.  They have 
         11   been fantastic in terms of the financial support as 
         12   well as in the volunteer help that they have given 
         13   to us. 
         14            And with your permission, I would like to 
         15   submit the remarks of Lenny Zakim to the Board.
         16            HEARING OFFICER SMITH:  Yes.  Please do. 
         17            MR. WIDMER:  My name is Michael Widmer.  
         18   For the past seven years, I've been president of the 
         19   Massachusetts Taxpayers Foundation, a nonprofit 
         20   organization dealing with fiscal, tax and economic 
         21   issues in Massachusetts. 
         22            Both Fleet and BankBoston are strong 
         23   supporters of the Foundation and have taken an 
         24   active part in our activities.  Most recently, for 
         25   example, BankBoston underwrote a major study of the 
  0283
          1   Massachusetts economy which we released last week. 
          2            I want to emphasize two points.  The first 
          3   is that having a corporate headquarters in Boston 
          4   makes a huge difference in terms of that company's 
          5   commitment to the community, whether that commitment 
          6   takes the form of leadership, dollars, volunteer 
          7   support, or an overall level of energy. 
          8            Secondly, financial services institutions 
          9   headquartered here have been particularly 
         10   conscientious in meeting their public 
         11   responsibilities, including both BankBoston and 
         12   Fleet. 
         13            In contrast, when local corporations are 
         14   bought by out-of-state entities, a sharply reduced 
         15   commitment to this community inevitably follows.  
         16   Given these facts, the merger of Fleet and 
         17   BankBoston with headquarters in Boston is especially 
         18   important for this city, state, and region. 
         19            Thank you. 
         20            HEARING OFFICER SMITH:  Thank you very 
         21   much. 
         22            MR. REICKER:  My name is Edward Lane 
         23   Reicker.  I've been a banking lawyer for nearly 40 
         24   years and a banking law teacher for about 20.  I 
         25   will leave some remarks with the panel. 
  0284
          1            But in brief, it seems to me that if the 
          2   past 20 years teaches us anything, it is that 
          3   mergers of this magnitude are inevitable.  So the 
          4   only real question is whether this merger is 
          5   superior to some of the other kinds of mergers that 
          6   might come along if this merger is not approved. 
          7            And it seems to me that the banking public 
          8   and borrowers will be better served by dealing with 
          9   bankers that they know in Boston, rather than 
         10   bankers in perhaps San Francisco or New York or 
         11   Frankfurt.  I think that would even be true for 
         12   community activists who would rather negotiate their 
         13   demands with bankers they know. 
         14            And, finally, it seems to me that as a 
         15   citizen of Massachusetts and a resident of Boston, 
         16   both Massachusetts and Boston will be better places 
         17   if they are the home of a major global banking 
         18   organization. 
         19            Thank you. 
         20            HEARING OFFICER SMITH:  Thank you. 
         21            MR. BROWN:  I'm David Brown, the CFO and 
         22   part owner of the Purple Cactus, which a burrito and 
         23   wrap bar.  We have two locations, one in the South 
         24   End and one now in Jamaica Plain.  I have menus if 
         25   anybody is hungry. 
  0285
          1            This winter we were at a critical juncture.  
          2   We had eroded a lot of our capital.  We had lost 
          3   some money through mistakes.  We had one really 
          4   strong store, and we found a great location. 
          5            We went around to talk to banks.  I heard a 
          6   lot of "We don't do restaurants.  You're not making 
          7   money.  Come back in a year."  But we found a bank, 
          8   Fleet, that really believed in us.  They came, Grant 
          9   Patterson, others came.  They met with us, they ate 
         10   the food, they saw our lines.  They took our 
         11   financials, and three weeks later we had conditional 
         12   approval. 
         13            A lot of work went on from there, but they 
         14   really made us turn the business around, and we're 
         15   very grateful.  And if that's what they are going to 
         16   do for small businesses as a combined entity, the 
         17   area will be better off. 
         18            Thank you.
         19            HEARING OFFICER SMITH:  And, last. 
         20            MR. FARRELL:  My name is William Farrell.  
         21   I'm general counsel to the Rhode Island Bankers 
         22   Association.  The RIBA is the major trade banking 
         23   association for the banking community in Rhode 
         24   Island.  Bank of Boston, through its former 
         25   subsidiary The Rhode Island Hospital Trust, and 
  0286
          1   Fleet have been active members in our association 
          2   since its inception in 1915. 
          3            One of the major objectives of our 
          4   association has been to develop the legal and 
          5   regulatory environment that would foster the 
          6   development of a major national banking association 
          7   located here in New England.  I believe that this 
          8   proposed merger goes a long way in accomplishing 
          9   that objective. 
         10            I have also had numerous opportunities to 
         11   work with both institutions on community issues, and 
         12   I believe the initiatives that have been approved in 
         13   the past will continue with this new merger. 
         14            Thank you. 
         15            HEARING OFFICER SMITH:  Thank you very 
         16   much.
         17            At the Presiding Officer's prerogative, we 
         18   are going to skip for the moment Panels 11 and 12 
         19   and go to Panel 13, which includes Congressman 
         20   Barney Frank and Congressman Delahunt.  If you would 
         21   come on up.
         22            (Pause)
         23            HEARING OFFICER SMITH:  I'm pleased to 
         24   welcome you, and if you would start. 
         25            CONGRESSMAN FRANK:  Thank you very much.  I 
  0287
          1   appreciate being taken at this point.  And I, thanks 
          2   to the Massachusetts Legislature's whims, have a 
          3   district that goes from about a mile away from here 
          4   down to Wareham, and I was in parts of it today, in 
          5   Fall River and New Bedford, and wasn't able to get 
          6   in earlier.  I appreciate your accommodating me now. 
          7            This decision that the federal regulators 
          8   will be making is very important both in itself and 
          9   as an example of the most important public policy 
         10   issue, I believe, facing this country today.  I feel 
         11   similarly today the way I did when we passed the 
         12   banking bill last week, a very important piece of 
         13   legislation that will be soon going to a 
         14   House-Senate conference.  And I expect to be a 
         15   conferee, and I want to make the same point in that 
         16   venue that I want to make here. 
         17            We have been doing an excellent job in 
         18   America in fostering the conditions in which 
         19   capitalism can flourish, and that's a good thing.  
         20   We all benefit when capitalism flourishes.  Wealth 
         21   is created, and that wealth is available for 
         22   satisfying our needs. 
         23            We have not done nearly as well in seeing 
         24   to the equity with which that wealth is distributed.  
         25   And in some cases, we're not simply talking about 
  0288
          1   the rich getting richer and the rest being left 
          2   behind.  In some cases, the very process by which 
          3   capitalism flourishes erodes the condition of some 
          4   other people. 
          5            There are elements of that in the 
          6   international competition in technological advance.  
          7   And what we have got to do is to find a better way 
          8   to go forward with setting the rules by which the 
          9   capitalist system advances, but we do better by the 
         10   people who are not automatically going to benefit. 
         11            Let me say this is not simply a matter of 
         12   equity, it is a matter of self-interest.  A country 
         13   in which a substantial number of the population sees 
         14   itself more threatened than advanced by economic 
         15   measures of the sort we talked about in the Congress 
         16   last week or this merger represents will block that 
         17   from happening. 
         18            People who are in the financial community 
         19   ought to understand, if they don't do a better job 
         20   of dealing with these equity and fairness issues, 
         21   they will generate resistance to those measures 
         22   which they believe, and which I often agree with 
         23   them, are in our overall interest.  People will not 
         24   sit idly by and be left behind. 
         25            And in deference to the chairman of this 
  0289
          1   august system, the Federal Reserve System, Mr. 
          2   Greenspan, I have to differ with him.  He gave a 
          3   speech a couple of months ago.  This is really very 
          4   relevant.  He was talking about trade, but it has to 
          5   do with the whole process of technical and economic 
          6   advance.  He said, "Yes, sometimes some people will 
          7   get hurt, but they should understand that this is 
          8   part of the process of creative destruction 
          9   described by Joseph Schumpeter, and it leads in the 
         10   end to better results." 
         11            Perhaps he would like to come to Fall River 
         12   and New Bedford and preach Schumpeter to people who 
         13   are losing their jobs.  I have not found it 
         14   fruitful, and it is not a process that I wish to 
         15   pursue. 
         16            Instead, what I want to do is to say we 
         17   will understand that there is an element of creative 
         18   destruction.  It's very important for us to 
         19   understand this.  Progress overall will mean some 
         20   pain for some people, and we have a responsibility 
         21   to alleviate that.  That's what I'm talking about 
         22   here today, because unlike some others who may be 
         23   critical of this merger, I think it's inevitable, 
         24   and therefore a good thing, because I think it is a 
         25   bad thing to object to the inevitable. 
  0290
          1            Technology is clearly driving the market.  
          2   Clearly, a merger was called for.  Having it 
          3   headquartered in our area, I think, is a good thing.  
          4   So I am in favor of this merger.  I think it is a 
          5   recognition of economic reality, just as I was in 
          6   favor of many of the pieces of legislation we voted 
          7   on last week that would relax restrictions on banks 
          8   and allow banks and other financial institutions to 
          9   come together more.  I think that's where the 
         10   technology and the market take us. 
         11            But just as I voted against that bill last 
         12   week, I would vote against this merger, if I had to 
         13   vote on it today, under the conditions that have 
         14   been presented to us.  That is, it does a good job 
         15   of advancing the functioning of the capitalist 
         16   system in our region.  I do believe the 
         17   intermediation function will do well. 
         18            Having these two institutions merge has a 
         19   great deal of promise and was probably driven by 
         20   market forces, but it is not enough just to do that.  
         21   It is not enough to say, to the significant 
         22   percentage of our people who will be left behind, 
         23   that that's all we're going to do. 
         24            We recently had a very good report issued 
         25   by Ed Muscovitch about the 495 dividing line in 
  0291
          1   Massachusetts, about our two economies, about an 
          2   economy where technological change and globalization 
          3   are very good news.  People who are in the 
          4   information industry, people who are in software, in 
          5   biotechnology, in financial services, they do very 
          6   well. 
          7            But I just left a lot of people who used to 
          8   be fishermen, people who did basic manufacturing, 
          9   people in industries where America is not advancing 
         10   as much.  And they're being left behind, and there 
         11   is no reason for that.  That's a failure of will; 
         12   it's not a failure of capacity.  So that's the model 
         13   that I hope you will insist on in this case. 
         14            Yes, the merger should go forward, as long 
         15   as, as part of that merger, the legal and moral 
         16   obligations represented by the Community 
         17   Reinvestment Act are fully supported, and it is very 
         18   important that the Community Reinvestment Act be 
         19   seen both as a legal and a moral obligation. 
         20            Those who are wealthy and will get 
         21   wealthier, those who will prosper, those who will 
         22   progress, have an absolute obligation to extend a 
         23   helping hand to the people who would otherwise be 
         24   left behind.  And it's not just their obligation, 
         25   it's common sense, because if they don't, they will 
  0292
          1   build up resistance. 
          2            Now, let me say I have been talking to CEOs 
          3   of banks for some time.  I have urged them to meet 
          4   with a variety of groups that are interested in 
          5   affordable housing and economic development.  They 
          6   have begun the process of meeting. 
          7            But I must tell you that, watching them 
          8   deal with various aspects of this, it is clear to me 
          9   that meeting the moral and legal obligations of the 
         10   Community Reinvestment Act have not been highest on 
         11   their agenda. 
         12            We have some substantive promises that look 
         13   reasonable, but they are at this point only promises 
         14   with very little in the way of specifics, either as 
         15   to what actually is going to happen in the housing 
         16   and economic development area in particular 
         17   regions -- you can't build housing in general, you 
         18   can't help economic development in general; it has 
         19   got to be specific as to where it's going to happen, 
         20   and you have to be talking about organizations you 
         21   are going to work with.  We have to know that 
         22   they're going to be monitoring operations. 
         23            So I will be strongly urging -- I am doing 
         24   this now -- the Federal Reserve to hold off on 
         25   approval of this merger until we get from the two 
  0293
          1   institutions specific, reasonable statements of what 
          2   they plan to do to meet their community reinvestment 
          3   obligations in conjunction with the very responsible 
          4   organizations that have a great deal of experience 
          5   in doing this.  That is, I think the merger is a 
          6   good thing on its own terms, but I voted against the 
          7   bill last week, as I said, not because of what it 
          8   did, but because of what it didn't do.  I approved 
          9   of what it did, but it didn't do enough. 
         10            The merger taking these two important New 
         11   England institutions and giving them a chance to 
         12   work together, that's a good thing, but it is not a 
         13   sufficient thing.  I guess that's the answer.  The 
         14   merger of these two institutions is a necessary but 
         15   not a sufficient set of actions for what we need in 
         16   our region. 
         17            Yes, I want to see a strengthened 
         18   institution, but I want to see as well specific 
         19   actions promised and described that are going to 
         20   help the people who otherwise get left behind. 
         21            I should add finally that I was very 
         22   pleased with the Justice Department statement that 
         23   among the things we will have is a bidding process 
         24   for the assets to be divested.  That will allow 
         25   community banks to be strengthened.  Efficiency is a 
  0294
          1   good thing, large institutions do good work, but 
          2   having locally based institutions are a part of the 
          3   kind of overall picture we want. 
          4            So I urge you very strongly, as I said -- 
          5   and I will be continuing this view in other 
          6   forums -- I know the Federal Reserve will have a 
          7   great deal of interest in the outcome of the 
          8   Conference Committee.  And as a member of that 
          9   Conference Committee, my view on the speed with 
         10   which we can pass a banking bill will be somewhat 
         11   colored by how well we do with the current process.  
         12   And I hope that we will have some -- I hope you will 
         13   show me that the Fed is capable of enforcing the 
         14   Community Reinvestment Act. 
         15            Let me just close with a quotation.  Some 
         16   people have argued that the Community Reinvestment 
         17   Act is kind of a nuisance and an interference and it 
         18   detracts from the ability of the capitalist 
         19   institutions to perform their important function, 
         20   and it is very important function. 
         21            I received a letter from the Governor of 
         22   the Federal Reserve Board a few years ago whose 
         23   responsibility it was on the Board to monitor the 
         24   Community Reinvestment Act, the Home Mortgage Act, 
         25   and other social elements.  And he wrote me a long 
  0295
          1   letter amplifying testimony which said, "There is no 
          2   evidence that any of these laws have caused us any 
          3   harm whatsoever.  They have not raised safety or 
          4   soundness issues.  They have no way interfered with 
          5   the main function of banks." 
          6            The author of that letter is a man named 
          7   Lawrence Lindsey.  He is no longer the Fed Governor 
          8   in charge of this.  He is now the chief economic 
          9   advisor to Governor George W. Bush.  So I think we 
         10   have a pretty good pedigree here to say that there 
         11   is no reason for capitalists to fear this.  Indeed,  
         12   in their own self-interest, I hope they will embrace 
         13   it with more enthusiasm than they have shown so far. 
         14            Thank you.
         15            HEARING OFFICER SMITH:  Thank you very 
         16   much.
         17            CONGRESSMAN DELAHUNT:  Thank you.  I think 
         18   I'll just associate myself with the remarks of my 
         19   colleague on the Banking Committee.  I do share a 
         20   lot of his sentiments. 
         21            He referred to substantive promises 
         22   combined with a lack of specificity and a lack of 
         23   detail.  That causes me a similar concern. 
         24            I think what would be appropriate here is a 
         25   thoughtful conversation, negotiations if you will, 
  0296
          1   among the stakeholders to design a plan with 
          2   specificity memorialized in writing to be reviewed 
          3   by the Board. 
          4            And I'd go beyond what Barney just 
          5   articulated in terms of the CRA.  I would suggest 
          6   that the resulting entity has clearly a legal 
          7   obligation but also truly, as he indicated, a moral 
          8   obligation far in excess of the CRA. 
          9            He and others have talked about the fact 
         10   that it's a good merger because it's inevitable. 
         11   There is this aura of, well, inevitability:  "We're 
         12   here.  Truly, the economy has changed.  We are now 
         13   in a different world."  It's true that the economy 
         14   is global in nature.  Competition has changed.  We 
         15   now compete on an international level. 
         16            Now, I don't know whether that's good or 
         17   bad.  I have serious reservations about it.  I only 
         18   hope that someday we will not rue the consequences 
         19   of not having done something positively and 
         20   constructively and thoughtfully and reflectively 
         21   until we reach that time that everybody predicts we 
         22   will have two or three large megabanks in this 
         23   nation. 
         24            I daresay I would hope that they would not 
         25   err and make the same mistakes as we all witnessed 
  0297
          1   back in the late '80s and in the early '90s.  It 
          2   clearly had a devastating impact here in the 
          3   Northeast.  But I also, too, recognize that the 
          4   world is change and it is inevitable. 
          5            I would like to address -- I'm not going to 
          6   get into the specifics, but what I would like to 
          7   address is the broader transformation of the 
          8   financial services industry of which this particular 
          9   transaction is really only the latest manifestation, 
         10   and to the extent to which what is happening in this 
         11   industry is part of an avalanche, if you will, of 
         12   mergers taking place on an unprecedented scale, 
         13   again, not just domestically but internationally. 
         14            And I also clearly recognize your role in 
         15   reviewing this transaction is a narrow one, and your 
         16   task is to examine the effects of this particular 
         17   merger on competition and on the convenience and 
         18   needs of the communities served by these 
         19   institutions.  Yet I suggest that you cannot carry 
         20   out this mandate without taking into account the 
         21   competitive environment in which this merger is 
         22   taking place. 
         23            It was just about a year ago that the House 
         24   Judiciary Committee held an antitrust hearing on 
         25   consolidation and competition in the financial 
  0298
          1   services industry.  At that hearing -- and I'm 
          2   quoting here -- Governor Lawrence Meyer of the 
          3   Federal Reserve Board testified that over 7,000 bank 
          4   mergers had taken place since 1980 and that the pace 
          5   was continuing to accelerate. 
          6            At that time, nearly 75 percent of domestic 
          7   banking assets were held by the 100 largest banks,  
          8   25 percent by the top ten banks alone.  I guess this 
          9   is what we talk about when we use the term 
         10   "inevitability." 
         11            That was before, by the way, this past 
         12   year's string of colossal mergers, including the 
         13   acquisition of the Bank of America by NationsBank, 
         14   which I understand placed 8 percent of all U.S. bank 
         15   deposits under the control of the resulting entity.  
         16   And I'll acknowledge that this phenomenon is not 
         17   unique to the financial sector. 
         18            Again, having served on the Judiciary 
         19   Committee, we have had the opportunity to review the 
         20   impact of mergers and acquisitions on many sectors 
         21   of our economy.  And it seems to me that whether one 
         22   looks at banking or aerospace, health care or 
         23   telecommunications, the ultimate question ought to 
         24   be the same:  What is the effect of these 
         25   transactions on the life of our communities and the 
  0299
          1   well-being of our workers, consumers, and the 
          2   neighborhoods that sustain them?
          3            I would suggest that this is the concept of 
          4   moral responsibility that my colleague referred to 
          5   earlier. 
          6            Now, some mergers will create some economic 
          7   efficiencies that are and will be in the interests 
          8   of both shareholders and the public.  Now, some may 
          9   be consolidation mergers dictated by genuine 
         10   business necessity as opposed to proxy fights and 
         11   leveraged buyouts and hostile takeovers that we saw 
         12   in the 1980s. 
         13            But even where this is the case, most of us 
         14   would agree, hopefully, that economic efficiencies 
         15   are not the only values at stake.  And whether your 
         16   preferred metaphor is the demise of the independent 
         17   drugstore with its soda fountain or the Bailey 
         18   Building and Loan Company immortalized by Frank 
         19   Harper, the displacement of local institutions 
         20   represents a loss of much of the glue that binds us 
         21   together as communities through the hard times.  And 
         22   that's what we're really talking about. 
         23            There is great prosperity right now.  We 
         24   all know that this is not going to last forever.  
         25   And it was only 30 years ago that Justice Douglas on 
  0300
          1   the Supreme Court warned that economic control was 
          2   being transferred from local communities to distant 
          3   cities where men on the 54th floor with only balance 
          4   sheets and profit-and-loss statements before them 
          5   decide the fates of communities with which they have 
          6   little or no relationship. 
          7            It seems to me that the sheer pace and 
          8   volume of today's merger mania suggests that the 
          9   danger that Douglas was describing is at least as 
         10   great now as it was back then. 
         11            Again, we all recognize that change is an  
         12   irreducible fact of life, this sense of 
         13   inevitability.  But to me, it isn't mere nostalgia 
         14   or being sentimental to worry about the damage that 
         15   may be done to local economies when a giant bank 
         16   merger closes scores of branches and wipes out 
         17   thousands of jobs. 
         18            It's not naive to ask what happens to lower 
         19   and middle class families struggling to afford a 
         20   home, what happens to neighborhood businesses that 
         21   need fresh capital to expand or simply to stay 
         22   afloat, what happens to the local tax base when 
         23   these businesses go under, and what happens to local 
         24   charities that depend on corporate support to make 
         25   their payroll. 
  0301
          1            Now, I know that such concerns are unlikely 
          2   to prevent this merger from going forward, and it 
          3   will proceed like thousands have before it.  
          4   According to Governor Meyer's testimony last year, 
          5   the Board has only denied some four merger 
          6   applications during the entire decade. 
          7            But I think it's important, and 
          8   Representative Frank indicated, there is unanimity 
          9   among the Congressional delegation, I think it is 
         10   important to state, at least members of the House, 
         11   to ask that the Board require the parties, as a 
         12   condition of approval, to enter into clear and 
         13   enforceable undertakings that will mitigate these 
         14   concerns.  Get it in writing.  Let's have it in 
         15   writing after a negotiated process with the 
         16   stakeholders in the community. 
         17            Now, these commitments should provide for 
         18   increased lending in underserved communities, new 
         19   investments to revitalize older, lower-income 
         20   neighborhoods, and assistance to the some 5,000 -- 
         21   that's what I read in the newspapers -- 5,000 
         22   workers and their families who will lose their 
         23   livelihoods as a result of this transaction. 
         24            And I thought it was interesting to note -- 
         25   and, again, I'm quoting here -- a spokesman for 
  0302
          1   Fleet Bank, Mr. Mahoney, who stated severance 
          2   packages for laid-off workers will be among the most 
          3   generous in any merger.  Well, let's get it in 
          4   writing, and let's hope that that is the case. 
          5            And as, again, Representative Frank 
          6   indicated, a divestiture plan that makes adequate 
          7   provisions for bids by smaller and medium-sized 
          8   institutions with roots in the communities they 
          9   serve. 
         10            I would also suggest and submit that these 
         11   commitments, once they have been entered into, the 
         12   Board and the Department of Justice carefully 
         13   monitor their implementation to assure they are 
         14   fully carried out once the merger has been 
         15   consummated. 
         16            And while I don't have a specific remedy in 
         17   mind, I believe the Board should exercise its 
         18   authority to fashion significant sanctions to be 
         19   applied if full compliance is not achieved.  If it's  
         20   not achieved, there ought to be a sanction imposed 
         21   upon the resulting entity. 
         22            Now, this is especially important in light 
         23   of a study that was presented by economists and 
         24   community organizations regarding Fleet's conduct 
         25   following previous mergers.  Let me cite this one 
  0303
          1   study done by a professor from the University of 
          2   Massachusetts.  Clearly, I can't verify its 
          3   accuracy, its methodology, but this is what was 
          4   said. 
          5            He looked at mortgage lending by Fleet and 
          6   Shawmut in 1995 and compared those figures to 
          7   Fleet's lending levels in 1997 following its 
          8   acquisition of Shawmut.  According to Professor 
          9   Campen, Fleet's 1997 lending, both overall and to 
         10   traditionally underserved borrowers, was 
         11   approximately half of what Fleet and Shawmut had 
         12   done jointly in 1995. 
         13            Well, if such statistics are to be 
         14   believed, they suggest that binding commitments are 
         15   important.  I also recognize that the Bank of Boston 
         16   in a different way had a much different record and 
         17   was very positive. 
         18            But let me conclude by daresaying that I 
         19   would hope that the Board would take these 
         20   suggestions and reflect on them.  And to sum it up, 
         21   I guess it's get it in writing, and if there is not 
         22   full compliance, that there be a mechanism to impose 
         23   sanctions on the resulting entity. 
         24            Thank you. 
         25            HEARING OFFICER SMITH:  Thank you very 
  0304
          1   much. 
          2            Any questions?
          3            Thank you very much for coming this 
          4   afternoon.  And now we will move back to Panel 11.
          5            (Pause)
          6            HEARING OFFICER SMITH:  Thank you very much 
          7   for your patience. 
          8            Now, where we have two people from the 
          9   organization, is one of you making the presentation? 
         10            MS. ALLEYNE:  Both of us.
         11            HEARING OFFICER SMITH:  Are you sharing 
         12   your five minutes? 
         13            MS. ALLEYNE:  Yes. 
         14            MR. CALLAHAN:  We're actually told we had 
         15   five minutes each.  I am planning to take one 
         16   minute.
         17            HEARING OFFICER SMITH:  And then she will 
         18   have four.
         19            MR. CALLAHAN:  Can she have five?  We have 
         20   been here since nine. 
         21            HEARING OFFICER SMITH:  Can we start with 
         22   Mr. Callahan. 
         23            MR. CALLAHAN:  Sonia is going to start. 
         24            HEARING OFFICER SMITH:  Okay.  Fine.
         25            MS. ALLEYNE:  First of all, I would like to 
  0305
          1   thank you for the opportunity --
          2            HEARING OFFICER SMITH:  Would you say your 
          3   name and organization, please. 
          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?
         20            MS BODINGTON:  I'm Susan Bodington.  I am 
         21   director of housing policy at Rhode Island Housing 
         22   and speaking on behalf of Rhode Island Housing and 
         23   Mortgage Finance Corporation. 
         24            Rhode Island Housing is the state's housing 
         25   finance agency in Rhode Island.  We're a 
  0338
          1   self-supporting quasi-public corporation.  We offer 
          2   over two dozen housing-related programs targeted to 
          3   low- and moderate-income families.  We administer 
          4   more than 13,000 federally subsidized apartments.  
          5   Our home ownership division provides counseling, 
          6   down-payment and closing cost assistance, and 
          7   low-interest loans to first-time home buyers.  We 
          8   purchase loans from participating lenders and 
          9   originate and service loans ourselves. 
         10            Since 1973, Rhode Island Housing has 
         11   financed the purchase, construction or 
         12   rehabilitation of more than 65,000 homes and 
         13   apartments. 
         14            We have several concerns regarding the 
         15   merger of Fleet and BankBoston.  BankBoston, 
         16   compared to Fleet, has a much better record of 
         17   community lending in Rhode Island and provides more 
         18   responsive service to lower-income customers and to 
         19   community groups.  Rhode Island is a small state 
         20   with limited resources and cannot afford to lose the 
         21   services provided by BankBoston. 
         22            We are also concerned that the lack of 
         23   competition in Rhode Island will severely limit 
         24   access to financial resources unless efforts are 
         25   made to maintain at least the current level of 
  0339
          1   investment by the combined banks and attract new 
          2   financial interests which will be required to 
          3   provide financial services to lower-income 
          4   communities. 
          5            Low- and moderate-income communities in 
          6   Rhode Island depend on financial institutions to 
          7   invest in their neighborhoods, their businesses, and 
          8   to offer financial services to first-time home 
          9   buyers. 
         10            Rhode Island Housing has experienced a 
         11   dramatic decline in Fleet's commitment to first-time 
         12   home buyers in the past five years.  In 1994 Fleet 
         13   was our top lender, closing nearly $32 million in 
         14   mortgages.  By 1998 Fleet had dropped to fifth among 
         15   lenders offering Rhode Island Housing mortgages and 
         16   closed only $6.6 million, a decrease in investment 
         17   of over $25 million. 
         18            And this, by the way, does not include the 
         19   Shawmut portfolio, where Rhode Island Housing saw a 
         20   decline of an additional $16 million through the 
         21   loss of Shawmut. 
         22            This is an 80 percent decline, which 
         23   indicates to us that there's been a shift in focus 
         24   from the needs of our low-income customers.  Fleet's 
         25   share of the total mortgage market in Rhode Island 
  0340
          1   fell during that same period from 8.8 percent of the 
          2   total mortgage market to only 3.3 percent in 1998. 
          3            During that same period, between 1994 and 
          4   1998, BankBoston's mortgages decreased as well, from 
          5   $25 million to $14 million, a 44 percent decline.  
          6   But they did maintain their overall effort in 
          7   offering Rhode Island Housing programs, and they're 
          8   our third most productive lender. 
          9            Our concern is that the Fleet trend will 
         10   prevail and will similarly impact BankBoston 
         11   participation in investing in low- and 
         12   moderate-income communities. 
         13            We have also witnessed a similar pattern in 
         14   the lack of attention to customer service provided 
         15   to low- and moderate-income borrowers.  Fleet does 
         16   not provide the local contact that low- and 
         17   moderate-income customers needs to work out their 
         18   problems.  Instead, nontraditional loans are 
         19   frequently sold on the secondary market and are then 
         20   treated as standard loans. 
         21            Lack of responsive servicing for first-time 
         22   home buyers' loans has resulted in a very high 
         23   delinquency rate for Fleet loans, 12 percent, as 
         24   compared to 6.5 percent that we see for similar 
         25   loans in the Rhode Island Housing portfolio.  
  0341
          1            Financial services for lower-income 
          2   communities requires a commitment to training new 
          3   home buyers and providing the housing counseling 
          4   services necessary to help them succeed.  Without a 
          5   local contact, you cannot effectively serve lower- 
          6   income communities. 
          7            We feel that Fleet should be required to 
          8   adopt BankBoston's community lending practices as a 
          9   condition of the merger.  Rhode Island Housing 
         10   depends on the banks as partners to implement our 
         11   mission to provide safe, affordable, healthy 
         12   housing.  Through consolidations there are now only 
         13   three major banks in the State of Rhode Island to 
         14   assist us with that mission. 
         15            Rhode Island would be losing its second 
         16   largest bank, a good originator with high quality 
         17   production as a participant in our programs, with 
         18   the loss of BankBoston.  In return, we need Fleet to 
         19   assume new policies to benefit consumers and to 
         20   increase the level of investment in lower-income 
         21   communities in Rhode Island. 
         22            We recommend that the Federal Reserve Bank 
         23   require the maintenance of at least the current 
         24   level of investment represented by the two 
         25   institutions.  In addition, we recommend that the 
  0342
          1   Federal Reserve require entities acquiring the 
          2   assets of BankBoston in Rhode Island to make similar 
          3   commitments to investment in lower-income 
          4   communities and assure improved customer service by 
          5   providing local contacts who can resolve problems 
          6   and address customers' needs.
          7            HEARING OFFICER SMITH:  Thank you. 
          8            Ms. Clement.   
          9            MS. CLEMENT:  My name is Brenda Clement, 
         10   and I'm the executive director of the Housing 
         11   Network, which is the state association of CDCs or 
         12   Community Development Corporations in Rhode Island.  
         13   Our member organizations work throughout the state 
         14   developing affordable housing, working on a number 
         15   of community economic development projects including 
         16   home repair loan programs, Main Street 
         17   revitalization programs, and home buyer education 
         18   and counseling programs. 
         19            We are here to express our concern and 
         20   opposition to the merger of Fleet and BankBoston 
         21   because of our concern of the lack of resources or 
         22   the dwindling number of resources that are available 
         23   in Rhode Island to address our affordable housing 
         24   and community economic development needs. 
         25            The needs are indeed great.  You have 
  0343
          1   already heard from many other states about the 
          2   concerns of housing needs in the Northeast, and 
          3   Rhode Island is no exception to that.  We have one 
          4   of the lease affordable states in the country.  We 
          5   have one of the lowest home ownership rates in the 
          6   country.  We have also one of the oldest housing 
          7   stocks in the country, which leads to numerous 
          8   problems, including a major lead problem. 
          9            The problem is not going to be solved by 
         10   one entity.  Government alone can't solve it, 
         11   nonprofits alone can't solve it, private foundations 
         12   and institutions alone can't solve it, but together 
         13   we can.  If our private industry in terms of bank 
         14   investment and bank dollars disappear, then we are 
         15   indeed in serious problems in Rhode Island. 
         16            Over 20 years ago now, I set up my first 
         17   savings account with then Industrial National Bank, 
         18   which was Fleet's earlier beginning origins in Rhode 
         19   Island, setting up my savings account for my first 
         20   job, ironically at a bank, one of the branches that 
         21   will be closed as part of the divestiture plan in 
         22   downtown Pawtucket, another blow to a downtown 
         23   environment, unfortunately, that needs no other 
         24   blows. 
         25            But consequently, I've watched Fleet all my 
  0344
          1   adult life as it's grown and developed into the 
          2   institution that it is, and have seen it grow and 
          3   develop into a way where bigger is not necessarily 
          4   better, particularly im my last five years here, in 
          5   my role as executive director of the Housing 
          6   Network. 
          7            If you will excuse the metaphor, in some 
          8   ways Fleet has sailed its way out of the Ocean State 
          9   and has left behind numerous needs and numerous 
         10   concerns, at least in the neighborhoods and the 
         11   communities that our members work in. 
         12            We are very concerned about the continued 
         13   regionalization and growth of the bank and very 
         14   concerned, as are other advocates in other 
         15   communities, about the need for a formal written 
         16   agreement and formal promises. 
         17            My old high school principal used to say, 
         18   "What is not said is not understood," and that is 
         19   very true and very clear to me, unless we see it in 
         20   writing, and unless we have commitments for us to 
         21   continue to grow as partners. 
         22            Even after -- Fleet certainly hasn't left 
         23   Rhode Island, and certainly won't leave Rhode Island 
         24   even after this divestiture, but we need to make 
         25   sure that they continue to provide services and 
  0345
          1   resources to all Rhode Islanders.  And that is one 
          2   of the reasons why we're here today to express our 
          3   concerns and to make sure the low- to moderate- 
          4   income individuals that we serve are continued to be 
          5   served and maintained. 
          6            We want to make sure that any agreement or 
          7   any promises or proposals that are made are fair to 
          8   Rhode Islanders, and are fair to the low- to 
          9   moderate-income Rhode Islanders, and that the 
         10   agreement is clear and broken down by state. 
         11            You have heard that several different times 
         12   already from other speakers, but to us it is 
         13   critical.  And to us it is critical, as Susan has 
         14   already mentioned, because there are not many banks 
         15   in town in Rhode Island.  It's a small state and 
         16   it's a small population, and when a merger of this 
         17   size happens, it has significant impacts on the 
         18   quality of life and the quality of programs in the 
         19   neighborhoods and communities that we serve. 
         20            So we urge you to consider that when you 
         21   are looking at and reviewing this application. 
         22            Thank you. 
         23            HEARING OFFICER SMITH:  Reverend 
         24   Washington. 
         25            REVEREND WASHINGTON:  I'm Reverend Joseph 
  0346
          1   E. Washington, Chairman of the Board of Directors 
          2   and CEO of the Organization for a New Equality, 
          3   which our national headquarters are based here in 
          4   Boston, Massachusetts.  And I am also the senior 
          5   minister at Brooks Memorial United Methodist Church 
          6   in Jamaica Queens, New York. 
          7            ONE is a national economic and civil rights 
          8   organization that works to advance economic 
          9   empowerment for minorities and women and others who 
         10   have traditionally been locked out of the economic 
         11   mainstream of life.  ONE has labored over its 
         12   14-year history to encourage banks and other 
         13   financial institutions to do well by doing good, to 
         14   invest in communities and individuals that have 
         15   traditionally been overlooked. 
         16            We have been part of great strides that 
         17   have been made over the past decades on the part of 
         18   banks seeking to forge productive relationships with 
         19   minority and low-income communities.  And we have 
         20   continually stressed the overwhelming importance of 
         21   access to credit and capital in developing the 
         22   economic infrastructure in our communities 
         23   throughout this country. 
         24            I would be remiss if I did not acknowledge 
         25   the support that ONE has received through Agnes 
  0347
          1   Bundy from Fleet, as well as BankBoston, Ira Jackson 
          2   and Gail Snodis, as we tried to advocate for the 
          3   least of these in the United States of America.
          4            The proposed merger of Fleet and BankBoston 
          5   represents a part of bigger is better attitude in 
          6   American culture and particularly in the modern 
          7   financial services industry. 
          8            Why not add one and one together and get 
          9   something even greater than two?  This was the 
         10   optimistic philosophy of our CEOs Murray and Gifford 
         11   on March 15th.  We are insisting that one plus one 
         12   must be greater than two, not only for the 
         13   shareholders who benefit financially from the 
         14   merger, but also for low- and moderate-income and 
         15   minority communities for whom bigger does not 
         16   necessarily mean better, and which historically have 
         17   not benefited from these large mega-mergers. 
         18            This merger, by combining the two largest 
         19   banks in New England into a leviathan that will 
         20   dwarf any regional competitor even after divestiture 
         21   is of serious concerns to us.  The significant 
         22   reduction of competition that will result from the 
         23   proposed merger makes it especially critical that 
         24   Fleet and BankBoston take specific steps to ensure 
         25   that the new bank's ability to meet the needs of 
  0348
          1   low- and moderate-income minority communities is not 
          2   jeopardized. 
          3            The proposed Fleet-Boston corporation will 
          4   be the eighth largest commercial bank in the United 
          5   States.  It will have an opportunity to emerge as a 
          6   leader in the industry, not only through financial 
          7   services and products it offers, but also through 
          8   its commitment to and investment in its communities. 
          9            In order to make this happen, ONE, along 
         10   with several other community organizations who you 
         11   have heard from this morning and afternoon, has 
         12   urged the banks to make specific commitments to 
         13   expand successful programs and products and to 
         14   partner with community groups in designing and 
         15   implementing community investment plans throughout 
         16   the new bank's service areas. 
         17            Both banks have made significant strides in 
         18   community investment.  Through its First Community 
         19   Bank, BankBoston has pioneered a delivery model for 
         20   banking services to inner-city and lower-income 
         21   communities.  BankBoston Community Development 
         22   Corporation, the first urban investment bank in 
         23   America to be chartered by a commercial bank, 
         24   committed well over $20 million in equity 
         25   investments in Massachusetts alone.  Fleet Community 
  0349
          1   Development Corporation has worked to build capacity 
          2   in institutions that are involved in community 
          3   economic development in low- and moderate-income 
          4   areas. 
          5            These are real accomplishments, and the 
          6   point of our concern is not to diminish them, but 
          7   rather to assert the bank's need to tell us 
          8   specifically how programs like these will be 
          9   maintained and enhanced through the merger. 
         10            In the area of small business lending, for 
         11   example, Fleet and BankBoston have distinct records 
         12   and have reached different markets, and if we could 
         13   get the overhead on, we have a little graph for you.  
         14   (Overhead shown)
         15            In the area of the small business lending, 
         16   for example, Fleet and BankBoston have distinct 
         17   records and have reached different markets.  Data 
         18   reported to the Federal Financial Institution 
         19   Examination Council for 1997 demonstrates that Fleet 
         20   made a slightly greater percentage of its small 
         21   business loans in LMI areas that BankBoston did. 
         22            Actually Fleet made 22.6 percent of its 
         23   small business loans in LMI areas within assessment 
         24   areas in Connecticut, Massachusetts, Rhode Island 
         25   and New York State, while it made only 15 percent of 
  0350
          1   small business loans in these areas within New 
          2   Jersey and New York City.  This raises an additional 
          3   concern about the consistency of the merged 
          4   institution's commitment to making affordable 
          5   products available to minority and low- and 
          6   moderate-income communities. 
          7            At the same time, BankBoston made a 
          8   significantly greater percentage of smaller loans 
          9   than Fleet did, thereby meeting the needs of 
         10   business owners who require smaller amounts of 
         11   capital and who have often difficulty obtaining low- 
         12   cost bank loans for these small amounts. 
         13            Fleet made a higher percentage of its loans 
         14   to smaller businesses, those with annual revenues of 
         15   less than $1 million.  The banks' proposed community 
         16   commitment to make $7.5 billion in small business 
         17   loans does not tell us how these different markets 
         18   will continue to be served. 
         19            ONE and other community organizations have 
         20   asked the banks to commit to specific percentage 
         21   goals in each of these areas, as well as to make 
         22   specific small business equity commitments and 
         23   commitments to investment in community-based 
         24   alternative loans.  The specifics of what we have 
         25   proposed are outlined in our written testimony 
  0351
          1   today. 
          2            And in closing, there are two primary steps 
          3   to be taken.  First, the banks must engage in 
          4   respectful give-and-take partnership with community 
          5   groups who know the needs of different cities, 
          6   towns, and states best.  These partnerships need to 
          7   play an active role in determining both the design 
          8   and the implementation of the proposed Fleet-Boston 
          9   Corporation's community investment commitments. 
         10            The second and related step is putting 
         11   substance behind its numbers.  Fleet and BankBoston 
         12   must enable community groups and concerned citizens 
         13   to judge the adequacy of their proposed commitments 
         14   to low- and moderate-income and minority communities 
         15   by giving us detailed descriptions of what money 
         16   will be allocated and to which programs where.  
         17   Without such details, the commitments will be 
         18   meaningless, because they will be neither verifiable 
         19   or enforceable. 
         20            ONE therefore requests that the Federal 
         21   Reserve Board extend the public comment period on 
         22   the proposed Fleet-Bank Boston merger and withhold 
         23   any approval of the merger until such time as the 
         24   banks' community investment commitments may be 
         25   completed and adequately reviewed. 
  0352
          1            Thank you very much.
          2            HEARING OFFICER SMITH:  Thank you. 
          3            Now our last speaker, whose name I will not 
          4   try to pronounce. 
          5            MR. NEIRINCKX:  My name is Ray Neirinckx, 
          6   and I'm the coordinator of the Rhode Island 
          7   Community Reinvestment Association. 
          8            There is a wonderful quote from the 
          9   Tennessee William play Cat on a Hot Tin Roof that I 
         10   think best describes a number of the panelists that 
         11   have raised objections and outright opposition to 
         12   the merger:  "We have to distrust each other.  It's 
         13   our only defense against betrayal."  And I think 
         14   that describes the ongoing relationship many of us 
         15   have with Fleet. 
         16            The Rhode Island Community Reinvestment 
         17   Association is a 13-year statewide organization 
         18   working to encourage public and private reinvestment 
         19   in the housing and community economic development of 
         20   low- and moderate-income neighborhoods in Rhode 
         21   Island. 
         22            Back in 1985, I was part of a group of 21 
         23   protestants that opposed Fleet's acquisition of 
         24   First Connecticut Bank Corp.  14 years later RICRA 
         25   again finds itself protesting another merger of 
  0353
          1   Fleet with BankBoston. 
          2            RICRA has worked hard with a number of 
          3   organizations in the region to call for a series of 
          4   public hearings on this merger.  Therefore, we are 
          5   extremely disappointed that the Board of Governors 
          6   of the Federal Reserve has granted only one public 
          7   hearing that is two weeks after the comment period 
          8   ended and just two days after the 4th of July long 
          9   holiday weekend and the beginning of prime vacation 
         10   time.  Clearly July 7th must be bankers independence 
         11   day with this one-time public hearing. 
         12            RICRA contends that not only should the 
         13   comment period be extended, but a series of public 
         14   hearings should be held on the $14.6 billion pledge 
         15   that Fleet has proposed without any public written 
         16   program being made available for review. 
         17            RICRA opposes the merger for several 
         18   reasons, including Fleet's poor performance in the 
         19   areas of mortgage servicing, high consumer product 
         20   fees, lending activity, commitment to previous 
         21   agreements with RICRA.  And I'm not going to go 
         22   through all of them, because they're presented in 
         23   the written testimony, but I do want to highlight 
         24   sort of Fleet's reincarnations, which has to do with 
         25   their performance with us. 
  0354
          1            In 1995, we protested the Shawmut merger, 
          2   and after that we saw INCITY, Fleet Focus, and the 
          3   more recent 2020 Vision, which we believe in and of 
          4   itself, if you look at those performances, is 
          5   judgment enough to deny this merger. 
          6            Fleet Bank signed an agreement with us in 
          7   1986 and then amended it successfully in 1989.  
          8   RICRA has enjoyed a positive yet contentious 
          9   relationship to improve programs, practices and 
         10   products in the state. 
         11            However, since the changes within Fleet 
         12   since the mergers, RICRA has not been able to agree 
         13   to any improvements, changes, deletions or 
         14   extensions to our agreement.  And we have to be 
         15   clear about this, we have no financial benefit to 
         16   any of the agreements we have.  We don't receive 
         17   contributions.  There is no contract with us.  It is 
         18   just to provide the best programs and products for 
         19   the people of Rhode Island. 
         20            So what difference does it make to sign 
         21   another agreement with us?  It is our position that 
         22   Fleet's failure to receive nothing higher than the  
         23   "satisfactory" CRA rating since breaking our 
         24   agreement is proof that Fleet INCITY is puff and 
         25   fluff.  In Fleet's 2020 Vision they chose not to 
  0355
          1   invite RICRA to their PC CRA love-fest. 
          2            That was fine.  RICRA did not choose to 
          3   participate -- excuse me.  However, we did choose to 
          4   participate in the Rhode Island follow-up meeting.  
          5   RICRA found nothing of substance in that event 
          6   either.  However, in the spirit of Fleet's remarks 
          7   that the bank wanted input, RICRA presented a nine- 
          8   point program with some specific recommendations. 
          9            Just so Fleet cannot accuse us of being 
         10   unrealistic or that it was a radical plan, we'll 
         11   give you just a brief outline of some of those 
         12   proposals:  Agree to apply to the Affordable Housing 
         13   Program of the Federal Home Loan Bank Board of 
         14   Boston.  Agree to explore a securitization pool for 
         15   the refinancing of multifamily development of 
         16   at-risk, expiring-use products of HUD subsidies. 
         17   Agree to seek from the Office of the Controller of 
         18   the Currency approval to track small business 
         19   lending by race and gender, and to not charge an 
         20   EBT, electronic benefit transfer, ATM surcharge for 
         21   five years. 
         22            This letter was hand-delivered on May 21st 
         23   1998.  RICRA is still awaiting a written reply. 
         24            All of this relates to the pledge, which 
         25   has not been made available in writing to us.  $14.6 
  0356
          1   billion is a promise of what, the failure of INCITY, 
          2   the failure of 2020? 
          3            If we take Fleet at its word in a 
          4   conversation that RICRA had on June 25th of this 
          5   year, that Fleet is looking to achieve an 
          6   outstanding CRA rating going forward, then clearly 
          7   the $14.6 billion, should be closer to $60 billion. 
          8            Finally, Fleet has announced their 
          9   sponsorship and affiliation with Major League 
         10   Baseball.  In looking at the Office of the 
         11   Controller of the Currency's summary of state and 
         12   multistate MSA ratings for their CRA performance, 
         13   Fleet would have a .500 batting average for its 
         14   performance in the three test ratings for the six 
         15   states, a guarantee of being inducted into the Hall 
         16   of Fame, but deplorable for a bank.   In fact, if 
         17   you apply a community credit scoring model, then 
         18   your answer is very simple:  9 low satisfactories 
         19   out of 18 blocks, merger denied. 
         20            And I would like to leave you with a little 
         21   bank that says "Fleet Boston" -- you press it down, 
         22   and it runs away -- because we think that's what 
         23   Fleet is going to do if you approve this merger. 
         24            Thank you.
         25            HEARING OFFICER SMITH:  We're going to take 
  0357
          1   the next panel, and then we will take a five-minute 
          2   break.
          3            (Pause)
          4            HEARING OFFICER SMITH:  We'll start with 
          5   Mayor Albano
          6            MAYOR ALBANO:  Good afternoon.  Thank you 
          7   for the opportunity.  My name is Michael Albano.  
          8   I'm the Mayor of Springfield, Massachusetts, a city 
          9   90 miles to the west of about 156,000 citizens. 
         10            I am here to testify not necessarily in 
         11   opposition nor in favor, but to ask the Board to be 
         12   considerate of cities like Springfield in developing 
         13   a policy on approving of this merger.  One of the 
         14   common complaints I have received as Mayor of 
         15   Springfield is that decisions on business concerns 
         16   and Community Reinvestment Act dollars have to be 
         17   done either in Boston or some other major city. 
         18            What we are looking for in western 
         19   Massachusetts is that we do not divide the economy 
         20   into two areas, one east of 495 and one west of 495.  
         21   And it's important that we have decisions that are 
         22   made on the local level to encourage investment as 
         23   we try to rebuild a city such as Springfield.  And 
         24   with that in mind, I would ask you to consider these 
         25   recommendations, should this merger be approved. 
  0358
          1            First, we ask that the new bank name a 
          2   regional CEO to the Springfield bank who is 
          3   knowledgeable about the challenges that our city 
          4   faces, understands the needs of our business 
          5   community and the community at large, and most 
          6   important of all, has the capability to make 
          7   decisions regarding lending and community 
          8   reinvestment policy. 
          9            Now, while I am being parochial in my 
         10   comments today, I would say that mayors across the 
         11   region that this merger would impact would have 
         12   similar comments as mine as the Mayor of 
         13   Springfield. 
         14            Second, we ask that within the new 
         15   Springfield bank structure that a full-time 
         16   community reinvestment office be created, and that 
         17   it will be charged with the responsibility of 
         18   working with various community-based groups as well 
         19   as the City, in its efforts that are aimed at 
         20   creating new neighborhood housing and economic 
         21   development opportunities. 
         22            Third, in an effort to help the very small 
         23   entrepreneur, we ask that the new bank create a 
         24   microbusiness fund in the amount of $500,000, that 
         25   this fund could be modeled after the highly 
  0359
          1   successful ACORN fund which has generated thousands 
          2   of new jobs particularly within the low-income 
          3   neighborhoods. 
          4            Fourth, we ask that the new bank establish 
          5   a pool of funds in the amount of $5 million that 
          6   could be used as seed capital for new businesses 
          7   locating to Springfield.  This more venture-oriented 
          8   fund would be used for both product development and 
          9   working capital by start-up companies. 
         10            Fifth, to enhance our City's home ownership 
         11   efforts, we ask that the new bank create a pool of 
         12   funds in the amount of $2 million that could be used 
         13   for soft second mortgages and closing costs. 
         14            Sixth, to make home ownership a reality for 
         15   a greater number of people, we ask that the bank 
         16   commit to making $10 million in low-interest loans 
         17   to first-time home buyers. 
         18            Seventh, to assist present homeowners we 
         19   ask that the new bank increase their participation 
         20   by adding another $1 million to our very successful 
         21   home improvement program. 
         22            These are general comments about what my 
         23   City's needs are, and I think they are reflective of 
         24   cities, as I said, like Springfield across the 
         25   region which would be impacted by this merger. 
  0360
          1            In conclusion, I would say that cities like 
          2   Springfield can be rebuilt, and we are doing that in 
          3   my City, but we need assistance in the form of 
          4   private investment. 
          5            This merger, if done with guarantees like I 
          6   have outlined, can truly make a difference in  the 
          7   Cities like Springfield, Massachusetts.  And I thank 
          8   you for your consideration.  Thank you. 
          9            HEARING OFFICER SMITH:  Thank you very 
         10   much. 
         11            Representative Barrios. 
         12            REPRESENTATIVE BARRIOS:  Good afternoon.  
         13   My name is Jarrett Thomas Barrios.  I'm the State 
         14   Representative from Cambridge, Massachusetts. 
         15            By way of background, I am on the Banks and 
         16   Banking Committee for the House of Representatives.  
         17   I'm also a member of the Housing and Urban 
         18   Development Committee.  I also used to work at the 
         19   Federal Trade Commission in the Division of Credit 
         20   Practices, doing Equal Credit Opportunity Act work.  
         21   I'm also a real estate lawyer, and I want to talk to 
         22   you today about a very specific issue, and that 
         23   deals with home mortgage lending as an impact of the 
         24   merger. 
         25            We have been assured throughout this in the 
  0361
          1   press and privately that this merger will be a one 
          2   plus one is greater than two.  You have heard that a 
          3   lot today.  But I would point you to some of the 
          4   evidence as to Fleet's past behavior in mergers 
          5   which would give us a cause for some concern. 
          6            I'm one of the founding members of the 
          7   Latino Caucus in the Legislature.  I have been sort 
          8   of particularly paying attention to Fleet's behavior 
          9   in the Latino community, and I want to just cite a 
         10   couple of statistics for you. 
         11            Prior to Fleet's mergers with NatWest and 
         12   Shawmut, the total banks, those three banks lending 
         13   in 1995, there was, I guess, 1575 home mortgages 
         14   underwritten by the three banks.  Post-merger in 
         15   1997, only 600 loans were underwritten.  That's a 
         16   decline of 62 percent. 
         17            I understand that part of this perhaps has 
         18   something to do with divestiture post-merger.  
         19   However, I would just ask you to contrast that with 
         20   the BayBank-BankBoston merger.  Post-merger, there 
         21   was actually an increase of 83.3 percent lending in 
         22   the Latino community. 
         23            These statistics matter because what they 
         24   tell us is how post-merger we might expect Fleet to 
         25   behave, as Fleet is the ultimate inheritor and 
  0362
          1   director of how the lending is going to continue. 
          2            Fleet's takeover of BankBoston is a cause 
          3   of concern for us because 63 percent of loans to 
          4   low- and moderate-income people, to Latinos, 
          5   African- Americans and other minorities, come right 
          6   now in Massachusetts from Fleet and BankBoston. 
          7            What that's going to be post-merger we're 
          8   not sure, but nonetheless, we can be sure that Fleet 
          9   in large part is going to be the only game in town.  
         10   And for us, who are concerned about home mortgages 
         11   and home ownership, in advancing those goals in the 
         12   minority communities, we must be concerned by what 
         13   we see in Fleet's behavior in the past. 
         14            These numbers give some statistical context 
         15   to my community's anxiety over this merger.  I want 
         16   to give you a little bit of business and policy 
         17   context as well.  As a member of the Housing 
         18   Committee, we see a lot of legislation which 
         19   attempts to advance the goal of home ownership, 
         20   which is a policy initiative both Republicans and 
         21   Democrats seem to embrace. 
         22            Recently, we were able to secure increase 
         23   in funding for the soft second mortgage program, but 
         24   no matter what we do in the Legislature, it only 
         25   gets around the edges.  For example, the soft second 
  0363
          1   mortgage only is a 20 percent second mortgage.  We 
          2   still have to have a first mortgager, someone to 
          3   underwrite that initial loan, somebody which is 
          4   usually Fleet or BankBoston if we're in 
          5   Massachusetts. 
          6            The private market really must participate 
          7   in our efforts if we're going to make an impact at a 
          8   policy level in advancing home ownership as a goal 
          9   throughout Massachusetts. 
         10            So I guess in this context the statistical 
         11   anxiety that many of the people have been testifying 
         12   today, I think, reproduces itself a little bit as a 
         13   suspicion:  How is it that the number of loans has 
         14   declined so much?  What is it about the business 
         15   behavior of Fleet which should give us concern?
         16            A demonstrated record by Fleet in the past 
         17   of inflexible lending criteria through mortgage 
         18   scoring and other practices really is a cause for 
         19   some of this concern.  Diminished number of loans 
         20   originated by Fleet suggests that business practices 
         21   inherent in the loan origination process of Fleet 
         22   are not the same practices of BankBoston and other 
         23   victims of the mergers, if you will, of past mergers 
         24   by Fleet, that these business practices by Fleet are 
         25   somehow toxic to low- and moderate-income 
  0364
          1   communities, to minority communities, communities 
          2   which would like to advance as a policy goal that of 
          3   home ownership. 
          4            And now the Community Reinvestment Act of 
          5   course doesn't require any bank to lend more to low- 
          6   and moderate-income neighborhoods, to minority 
          7   communities, but it does allow you, as those who 
          8   review, through the merger process, their track 
          9   records, it does allow you to ask questions which I 
         10   am not able to as a legislator, which communities 
         11   activists aren't able to, as representatives from 
         12   their bully pulpits in their communities. 
         13            So I guess I would ask you, as a 
         14   representative of the 450,000 Latinos in this 
         15   Commonwealth, and the 2 million people who are low 
         16   and moderate income in this Commonwealth who don't 
         17   own homes but perhaps hope to one day, to ask hard 
         18   questions and be mindful of Fleet's past practices, 
         19   and respect the community's request for a written 
         20   agreements from Fleet, because I think their 
         21   suspicions really are well placed, and I think the 
         22   past practices  of Fleet really are cause for grave 
         23   concern for all of us as to the future practices of 
         24   Fleet going forward. 
         25            Thank you very much.  
  0365
          1            HEARING OFFICER SMITH:  Thank you.
          2            Vermelle Parks. 
          3            MS. PARKS:  Good afternoon.  My name is 
          4   Vermelle Parks, and I am a here on behalf of the 
          5   chairwoman of the Federal Financial Assistance 
          6   Committee, the House of Representatives, 
          7   Representative Shirley Owens-Hicks, who is also 
          8   serving the 6th Suffolk District. 
          9            Thank you for allowing me to talk about the 
         10   things she has entered already as testimony.  Given 
         11   the fact that this merger will result in the closing 
         12   of over 200 branches, the loss of approximately 
         13   5,000 jobs, and the renegotiation of critically 
         14   important programs that address home ownership and 
         15   rental housing, we respectfully urge that prior to 
         16   the approval of this merger, the Federal Reserve 
         17   Bank of Boston mandate that Fleet Bank Boston offer 
         18   a significant written and measurable commitment that 
         19   will provide the loans, investments and services 
         20   needed for low- and moderate-income communities as 
         21   well as people of color. 
         22            We believe that flexibility and 
         23   underwriting guidelines is absolutely necessary in 
         24   order to make home ownership a reality for low- and 
         25   moderate-income populations.  In the past ACORN 
  0366
          1   offered a very successful first-time home buyer's 
          2   program in collaboration with Fleet Mortgage 
          3   Corporation, BankBoston and Citizens Mortgage 
          4   Corporation. 
          5            This program allowed loan applicants to 
          6   certify funds including Social Security, WIC, food 
          7   stamps, unemployment benefits, foster care money and 
          8   other entitlements as part of their income in order 
          9   to qualify for loans.  The program focused on income 
         10   continuity rather than job continuity, and only one 
         11   year of good credit was required. 
         12            ACORN informs us that over the life of 
         13   their program with Fleet, only three mortgages were 
         14   foreclosed and that the delinquency rate was 6 
         15   percent.  Clearly this delinquency rate is lower 
         16   than that of conventional loan delinquencies.  
         17   Therefore, we encourage Fleet to renegotiate this 
         18   program and similar community lending programs.  In 
         19   fact, collaboration with local partners must be 
         20   expanded rather than dissolved. 
         21            Home ownership fosters community stability.  
         22   Families who have a vested interest in the 
         23   neighborhoods where they live become involved in 
         24   neighborhood improvement activities, maintain their 
         25   properties, thus eliminating blight in vacant 
  0367
          1   buildings and add to the safety and economic 
          2   viability of our their cities. 
          3            Programs that serve this basic need must 
          4   acknowledge the reality that families who are 
          5   currently forced to pay exorbitant amounts of rental 
          6   money have the ability to pay reasonable mortgages.  
          7   Therefore, relaxed underwriting guidelines together 
          8   with community home ownership programs are crucial 
          9   to the revitalization of our cities. 
         10            With the potential loss of jobs that this 
         11   merger will precipitate, we are concerned that last 
         12   hired not become first fired.  Approximately 5,000 
         13   individuals will soon find themselves without 
         14   paychecks to support their families, unless the 
         15   institutions that purchase these branches decide to 
         16   hire them, and we sincerely hope that this occurs. 
         17            In the event that these employees are not 
         18   hired, we urge the Federal Reserve to use its power 
         19   to assure that these employees have access to a 
         20   combination of private and public resources that 
         21   will enable them to secure transitional income, 
         22   training and access to other employment. 
         23            Additionally, we ask that our concerns 
         24   about the potential loss of bilingual employees, and 
         25   how this will affect the needs of Latina, Asian and 
  0368
          1   other population who depend upon this assistance in 
          2   order to transact banking business, be addressed so 
          3   that the critical needs of non-English speaking 
          4   populations will not be negatively impacted. 
          5            The location of the merged entities' 
          6   branches is also of concern.  Residents and 
          7   community-based organizations representing various 
          8   underserved neighborhoods have worked long and hard 
          9   to negotiate the opening of branches in low- and 
         10   moderate-income neighborhoods.  We feel that 
         11   limiting access to banking services will negatively 
         12   impact individuals who need to establish credit 
         13   histories, who wish to cash checks, or who wish to 
         14   access any other service that banks offer in other 
         15   neighborhoods. 
         16            Finally, we believe that the nation is 
         17   looking at this merger and how Fleet-BankBoston will 
         18   respond to the needs of low- and moderate-income 
         19   communities as well as how they intend to honor the 
         20   commitments that they have made in the past. 
         21            This is an excellent opportunity for Fleet- 
         22   BankBoston to set the standard for community 
         23   investment practices.  We sincerely hope that they 
         24   will accept this challenge and turn this to a win- 
         25   win situation for all concerned. 
  0369
          1            Thank you very much. 
          2            HEARING OFFICER SMITH:  Thank you. 
          3            Mr. Saunders. 
          4            COUNCILOR SAUNDERS:  Good evening.  I'm 
          5   Boston City Councilor Gareth Saunders.  I represent 
          6   approximately 70,000 residents in Roxbury and parts 
          7   of Dorchester, the South End, Mission Hill and the 
          8   Fenway.  I am a member of the City of Boston's 
          9   Linked Deposit Commission and have worked in the 
         10   banking industry in Boston in various positions.  As 
         11   a manager of a loan office, I worked as a mortgage 
         12   originator and business development officer. 
         13            My duties as the business development 
         14   officer included assisting the bank with outreach to 
         15   the Boston community concerning the Community 
         16   Reinvestment Act. 
         17            I ask the Federal Reserve Bank of Boston to 
         18   listen carefully to what the people are saying 
         19   today.  As a regulatory agency, we look to you for 
         20   guidance as relates to the formulation of monetary 
         21   policy and overseeing many aspects of the New 
         22   England banking system. 
         23            What is true from my experiences is that 
         24   the people, the customers, the affected communities 
         25   of New England must get a clearly spelled-out 
  0370
          1   commitment from the proponents of this proposed 
          2   merger in writing prior to any approvals. 
          3            First and foremost, a strong commitment 
          4   must come from the top, Terry Murray and Chad 
          5   Gifford, accompanied with an aggressive plan of 
          6   implementation.  This plan should include a 
          7   comprehensive marketing plan of the actual and 
          8   potential customer base with a strong emphasis on 
          9   low- to moderate-income earners and specifically 
         10   tailored programs that ensure equitable credit 
         11   availability to traditionally underserved borrowers, 
         12   because they unfortunately will be 
         13   disproportionately and adversely affected by this 
         14   proposed merger. 
         15            Below, I'm just going to give you a brief 
         16   list of what I see as some of the general types of 
         17   commitments that we must see in writing prior to any 
         18   regulatory approval. 
         19            No. 1, it is important that we are 
         20   diversity of the work force, both racial diversity, 
         21   gender, as well as geographical diversity.  And we 
         22   must emphasize that we have diversity as it relates 
         23   to the decision-makers within the new institution. 
         24            No. 2, mortgage products, home improvement 
         25   and other consumer loans, loan products targeting 
  0371
          1   underserved communities and populations. 
          2            We must look at the small business lending 
          3   programs of the new entity. 
          4            We must maintain and enhance programs like 
          5   BankBoston's First Community Banking and Community 
          6   Development Bank.  These are very successful models 
          7   that we must keep and enhance. 
          8            And fifthly, there must be a comprehensive 
          9   approach to this proposed merger that still provides 
         10   consumer choices.  For example, there is still a 
         11   niche for smaller banks like the Boston Bank of 
         12   Commerce.  This bank has submitted a proposal to 
         13   purchase 18 branches that would make it the largest 
         14   minority-owned bank in New England. 
         15            And with regards to some of the other banks 
         16   that are looking to buy some of the assets that the 
         17   bank, Fleet Bank and other banks must sell off, we 
         18   must look to make sure that we have a banking entity 
         19   that is committed to this region, that has a strong 
         20   presence in this region and that will be willing to 
         21   locate its headquarters in this region.  That is 
         22   very important, that we can go right into the 
         23   president's or the CEO's office and not have to jump 
         24   on a plane, you know, and travel thousands of miles 
         25   to get that type of access.
  0372
          1            I would like to use this example.  I sat in 
          2   this room with some of the supporters out here more 
          3   than ten years ago when the Federal Reserve Bank 
          4   came out with a study that showed that there was 
          5   discriminatory lending based on race, with mortgage 
          6   lending the city.  And what did you do?  And what 
          7   did the community do?  And what did the banks do? 
          8            We all came together, and I was there with 
          9   many of the activists in this room.  We came 
         10   together.  We worked out a plan, and we aggressively 
         11   attacked the problem. 
         12            New branches were opened in communities 
         13   where we have not seen branches for years.  ATMs 
         14   were instituted in certain neighborhoods.  People of 
         15   color and women were hired into decision-making 
         16   positions. 
         17            When we look at the underwriters for the 
         18   mortgages and other lending products, it is 
         19   important to have people who understand the local 
         20   economy making these decisions.  And it worked. 
         21            From 1990 to 1994, look at the mortgage 
         22   rates in the minority community, particularly in the 
         23   African-American and the Latino communities.  That 
         24   is a successful model that worked.  And I hope, if, 
         25   in fact, this Board and other regulatory entities 
  0373
          1   approve this merger, that part of that statement 
          2   would be that there must be a commitment, a strong 
          3   commitment from the top down through the ranks of 
          4   the bank in writing prior to any approval.  That 
          5   way, you ensure that the underserved communities 
          6   will not be left out to dry. 
          7            Thank you very much for listening to my 
          8   testimony, and I hope that you would really consider 
          9   what I had to say and share with you this evening.
         10            Thank you.
         11            HEARING OFFICER SMITH:  Any questions? 
         12            HEARING OFFICER KWAST:  I have a question.  
         13   Mr. Saunders addressed this point, but I would be 
         14   interested in what Mr. Barrios and Mayor Albano had 
         15   to say. 
         16            In your experience, what has been the role 
         17   of smaller and medium-sized banks in the economic 
         18   development of a city like Springfield or in the 
         19   granting of housing and other kinds of loans to low- 
         20   and moderate-income communities?
         21            MR. SAUNDERS:  The question is -- who is 
         22   the question --
         23            HEARING OFFICER KWAST:  You addressed the 
         24   issue.  I'm interested in the role of small and 
         25   medium-sized banks in meeting the kinds of concerns 
  0374
          1   that you expressed. 
          2            MR. ALBANO:  Just on the issue of dealing 
          3   with a bank such as Fleet and BankBoston, as mayor 
          4   of Springfield, we have to get decisions from Boston 
          5   to major economic development projects, major 
          6   housing projects; and that takes time.  And 
          7   sometimes those decision makers at the top are 90 
          8   miles away and are not sensitive to the needs in 
          9   cities like Springfield.  And we have to be cautious 
         10   about that, make sure that any type of merger 
         11   guarantees that there is accountability and that 
         12   there is investment. 
         13            The second part I would respond to is that 
         14   under the Community Reinvestment Act, I'm not sure 
         15   how the ratings are done statewide.  I can see that 
         16   some banks have great ratings, but I don't know what 
         17   they're doing for cities like Springfield.  So I 
         18   would like to have more of a regional Community 
         19   Reinvestment Act grading so that we can be sure that 
         20   there is investment in cities like mine.  And I'm 
         21   not sure that we're receiving that.
         22            So between the two, I mean, having to get 
         23   certification or approval from 90 miles away or not 
         24   being sure of what the grade is for the Community 
         25   Reinvestment Act in my particular community, I would 
  0375
          1   hope in this Board would do something to offset that 
          2   so that we can have guarantees on these types of 
          3   decisions and these types of investments in cities 
          4   like Springfield. 
          5            MR. SAUNDERS:  Can I just address -- in 
          6   this decade of mergers, it is important that we have 
          7   different size banks because the larger banks and 
          8   some of the mid-sized banks have no interest in 
          9   serving some of the small and poorer communities; 
         10   but there are smaller banks who have an interest. 
         11            So that's important that we have a clear 
         12   balance of the big -- from the biggest megabanks to 
         13   the mid-size banks to smaller banks that can really 
         14   give a tailored approach to the specific 
         15   neighborhoods needs. 
         16            MR. BARRIOS:  I would just say as a part of 
         17   getting my testimony together, I took the time to 
         18   speak to a number of leaders both in my community 
         19   and Cambridge, in the Latino community in Chelsea, 
         20   in the greater Boston area and Jamaica Plain and 
         21   Roxbury; and there is generally a level of anxiety 
         22   about the mergers of the banks because it seems as 
         23   if, as Mayor Albano has said, it is sort of further 
         24   away, not just geographically but sort of 
         25   psychologically further away from the access that 
  0376
          1   you might like to see. 
          2            It is always the case that -- at least in 
          3   my community in Cambridge -- that the community 
          4   banks are seen as friendlier places to go, and I 
          5   think that is in large part a function of size. 
          6            I know that Fleet has been generous to some 
          7   local nonprofits in Cambridge, but the perception of 
          8   the average person as to the accessibility of credit 
          9   or to community development corporations -- 
         10   locally-based grass roots community development 
         11   corporations that want to do either economic 
         12   development or do an affordable housing project, the 
         13   perception is we first go to the community bank.  
         14   Cambridgeport Bank or Cambridge Trust are the two 
         15   big ones in my community. 
         16            Chelsea, I guess there was a bank, which 
         17   was recently acquired which was sort of the one 
         18   everybody went to.  Now it is U.S. Trust, but now 
         19   U.S. Trust is becoming Citizens so nobody really 
         20   knows where they were going in Chelsea at this 
         21   point. 
         22            Smaller, at that level, I guess, induces 
         23   more confidence. 
         24            I don't know if that answers directly. 
         25            HEARING OFFICER SMITH:  Thank you very 
  0377
          1   much. 
          2            We're now going to take a five-minute break 
          3   and then continue with Panel 15, which is not even 
          4   halfway through the agenda. 
          5            (Recess)
          6            HEARING OFFICER SMITH:  Why don't we get 
          7   started, and the way we're -- okay.  We'll do it the 
          8   same way as before, which is we have, what, 30 
          9   minutes?  And we'll get as many people through as we 
         10   can in that time.  And if anybody is left, then we 
         11   will move them toward the end of the day, which is 
         12   an encouragement to take a minute. 
         13            MR. WILSON:  I'm John Wilson.  I work at 
         14   MIT.  I'm assistant professor and director of 
         15   foundation relations but more importantly, I'm head 
         16   of the Greater Boston Morehouse Alumni Association. 
         17            I want to make a simple point, and it is 
         18   less in the realm of Fleet's wallet -- that is, the 
         19   investment lending policies and financial services 
         20   and all these economic politics -- and more in the 
         21   realm of their heart.  I want to highlight a 
         22   relationship that suggests that Fleet has been a 
         23   good citizen and will be a better citizen after the 
         24   merger. 
         25            I think most people are aware that the 
  0378
          1   African-American male is worse off in any number of 
          2   social ills.  And Morehouse College is the only 
          3   higher ed. institution devoted to educating 
          4   African-American males; and we, as an alumni 
          5   association in the greater Boston area, are trying 
          6   to address the problems as well. 
          7            Fleet has been a great partner with us in 
          8   generating scholarships.  Every year, we have a Mo' 
          9   Better Gala, an annual glee club concert, and we 
         10   partner with Spike Lee.  Fleet has been the flagship 
         11   organization.  We also have a community agency 
         12   called Bridging Bridges, and Fleet has come not only 
         13   with their money but also with their presence. 
         14            So amidst all the voices, I want to be one 
         15   that says that Fleet can do the right thing, has 
         16   done the right thing, and will continue to do the 
         17   right thing. 
         18            And as I close, I ask you to support them 
         19   and also the Boston Bank of Commerce.  I think Fleet 
         20   can do the right thing by them as well. 
         21            Thank you. 
         22            HEARING OFFICER SMITH:  Thank you very 
         23   much. 
         24            MR. HAMILTON:  Good evening.  My name is 
         25   Sam Hamilton.  I'm the executive director of the 
  0379
          1   Hartford Economic Development Corporation and the 
          2   Greater Hartford Business Development Center. 
          3            HEDCo and GHBDC are private, local 
          4   development corporations which pride technical 
          5   assistance and loans to small business in the metro 
          6   Hartford area.  We manage a pool of more than $20 
          7   million of which Fleet and BankBoston have been 
          8   substantial contributors to over the course of time. 
          9            Fleet also, and BankBoston, provided to us 
         10   support that makes our services -- both technical 
         11   assistance and loan packaging services -- free to 
         12   all who come forth looking to provide or to seek 
         13   lending opportunities within the city and the metro 
         14   area of Hartford. 
         15            During of the course of our 25-year 
         16   existing, both Fleet and BankBoston have been active 
         17   supporters of small business development with 
         18   respect to access to capital and technical 
         19   assistance to support, sustain, and grow businesses.  
         20   I have experienced firsthand the continuation of 
         21   their strong commitment during and after previous 
         22   mergers and acquisitions.  In my opinion, I believe 
         23   the same will be true with this proposed merger. 
         24            I have found both Fleet and BankBoston to 
         25   be especially sensitive to the needs of the 
  0380
          1   community.  The creation of Fleet Community 
          2   Development Corporation, and First Community Bank 
          3   are prime examples of each institution's initiative 
          4   to provide means for greater access to the bank's 
          5   products. 
          6            In closing, in my capacity as chairman of 
          7   the Board of directors of the United Way of the 
          8   Capitol Area, Past Chairman of the Hartford 
          9   Neighborhood Housing Support Collaborative, and a 
         10   member of the local initiative support corporation 
         11   local advisory committee, I am also able to confirm 
         12   Fleet and BankBoston's involvement and support of 
         13   innumerable programs and activities that empower 
         14   people, provides comprehensive youth development, 
         15   enhances educational opportunity and performance, 
         16   strengthens families, and creates a strong healthy 
         17   community for all. 
         18            Thank you. 
         19            HEARING OFFICER SMITH:  Thank you very 
         20   much.
         21            MR. THOMAS:  I am Henry Thomas, I am 
         22   president and CEO of the Urban League of 
         23   Springfield, Massachusetts, and former police 
         24   commissioner for the City of Springfield. 
         25            On behalf of the Urban League of 
  0381
          1   Springfield, we are in support of the merger between 
          2   BankBoston and Fleet.  The Urban League has enjoyed 
          3   a long working relationship with both banks and has 
          4   been an excellent -- it has been an excellent 
          5   experience in both cases. 
          6            Further, we have witnessed their work in 
          7   the western part of the state; and their CRA records 
          8   are commendable.  More specifically, over the last 
          9   five years, the Urban League has had an opportunity 
         10   to work with Fleet Bank on local and regional 
         11   issues. 
         12            While serving as vice-president of the 
         13   national Urban League on the special assignment for 
         14   two years, I had privy to the extraordinary work of 
         15   Fleet Bank in the area of community development. 
         16            Through Agnes Bundy Scanlan's leadership 
         17   and foresight, Fleet Bank funded Urban League 
         18   throughout its footprint to levels over one million 
         19   and a half dollars.  This funding was for the 
         20   purpose of building capacity to deliver economic and 
         21   work fair development -- work force development 
         22   services throughout the northeast region. 
         23            In addition, Ms. Scanlon has forged a 
         24   partnership with the national Urban League to 
         25   produce conferences aimed at improving Fleet Bank's 
  0382
          1   understanding of multidimensional needs in the 
          2   marketplace and to effectively communicate their CRA 
          3   strategies.
          4            In closing, the only caveat the Urban 
          5   League would offer is that whatever economic 
          6   business benefit accruing to these two institutions 
          7   should be shared with consumers to some extent.  
          8   Additional capacity and equity programs, mortgage 
          9   loan products, and philanthropic giving should all 
         10   be reasonable expectations resulting from this 
         11   merger. 
         12            Thank you.
         13            HEARING OFFICER SMITH:  Thank you very 
         14   much. 
         15            MR. SOSKIN:  I'm Sol Soskin, director of 
         16   Procurement Technical Assistance Program, Long 
         17   Island Development Corporation, a not-for-profit 
         18   501(c)(3) membership organization in Long Island, 
         19   New York. 
         20            In business since 1980, Long Island 
         21   Development is a certified development company under 
         22   the U.S. Small Business Administration 504 Loan 
         23   Program, as well as the branch bank of New York Job 
         24   Development Authority. 
         25            In addition to its loan programs, Long 
  0383
          1   Island Development Corporation is a designated 
          2   Department of Defense procurement technical 
          3   assistance center for Long Island; and Fleet has 
          4   been a long-time supporter of the various programs 
          5   of Long Island Development Corporation, has 
          6   partnered with allied LIDC to help small business, 
          7   including small disadvantaged business, 
          8   minority-owned and women-owned businesses. 
          9            Currently, the president of LIDC is John 
         10   Dawvy, senior vice-president of Fleet Bank. 
         11            Fleet Bank has been a leading first 
         12   mortgage lender on Long Island under the SBA 504 
         13   Loan Program for the past five years.  With Fleet's 
         14   assistance, LIDC has been able to make over one 
         15   thousand small business loans totaling approximately 
         16   $350 million to Long Island companies. 
         17            Fleet Bank is a financial supporter for Kim 
         18   Technical Assistance Program which provides free 
         19   counseling to all small businesses -- chiefly small 
         20   disadvantaged, women-owned, and minority-owned 
         21   businesses -- to obtain and perform on government 
         22   and private sector contracts. 
         23            PTAP is supported by grants from the 
         24   Department of Defense matched by private sector.  
         25   Fleet Bank has been providing matching funds for 
  0384
          1   PTAP since 1996.
          2            Thanks to Fleet's participation, the Long 
          3   Island Procurement Technical Assistance Program has 
          4   successfully helped over 2,000 Long Island small 
          5   businesses obtain approximately $275 million in 
          6   government and other contracts. 
          7            In connection with the procurement program, 
          8   LIDC, and Fleet coventure initiative, Black Women 
          9   Enterprises, a New York Statewide coalition of black 
         10   women-owned businesses led by BWE, have partnered 
         11   with National Women Business Owner's Corporation to 
         12   help companies be certified as women-owned 
         13   corporations. 
         14            Fleet has been an active advocate for small 
         15   business on Long Island for many years.  Fleet's 
         16   activities with Long Island Development Corporation 
         17   have been instrumental in helping LIDC become one of 
         18   the leading SBA 504 certified development companies 
         19   in the nation, as well as helping LIDC become one of 
         20   the most active DOD procurement technical assistance 
         21   program. 
         22            The proposed merger will bring additional 
         23   resources to the table which will benefit our small 
         24   business customers.  The sheer size of the Bank of 
         25   Boston will amplify the financial abilities of Fleet 
  0385
          1   Financial Corporation, which will make more products 
          2   and services available to our Long Island and Boston 
          3   small business markets.
          4            HEARING OFFICER SMITH:  Mr. Soskin, can you 
          5   wrap it up.
          6            MR. SOSKIN:  Thank you.  And we strongly 
          7   urge that the Reserve Board approve this merger. 
          8            Thank you. 
          9            HEARING OFFICER SMITH:  Thank you very 
         10   much. 
         11            MR. GAGLIARDI:  Hello.  My name is Peter 
         12   Gagliardi.  I'm the executive director of the 
         13   Hampden/Hampshire Housing Partnership, a nonprofit 
         14   organization that is the major provider of housing 
         15   services in the 43 cities and towns in Hampden and 
         16   Hampshire County. 
         17            Fleet Bank and BankBoston have both been 
         18   significant partners in our efforts to provide 
         19   affordable housing and to revitalize neighborhoods 
         20   and communities. 
         21            In my written testimony, you will see a 
         22   list of very positive achievements in which one or 
         23   both of these banks have been a partner with us.  
         24   Perhaps premier of those is our First Home Program 
         25   through which over 3,000 households have been 
  0386
          1   educated in becoming first-time home buyers, and 500 
          2   of those have purchased their first homes. 
          3            While citing very significant achievements, 
          4   I also want to raise a couple of cautions.  We are 
          5   concerned as we see banks merge and become larger 
          6   about them becoming distant and harder to access 
          7   from cities the size of Springfield, the central 
          8   city in our region.  We are hopeful that the 
          9   commitments that are made will ultimately be 
         10   committed to writings so that in the event we're 
         11   talking about a successor bank some day, that we 
         12   will be able to look back and have some benchmarks 
         13   by which to compare the performance. 
         14            Thank you very much. 
         15            HEARING OFFICER SMITH:  Thank you.
         16            MR. KUMRO:  My name is Richard Kumro.  I'm 
         17   vice-president and general counsel of the Community 
         18   Preservation Corporation, a nonprofit community 
         19   lender in New York City that serves the states of 
         20   New York and New Jersey.  You would refer to us as a 
         21   lending consortium or an intermediary in all 
         22   likelihood. 
         23            We have a wonderful 25-year track record 
         24   that I was looking forward to regaling you with; 
         25   but, obviously, I won't do that now.  Suffice it to 
  0387
          1   say that our success in the last 25 years would not 
          2   have been possible without the support of financial 
          3   institutions in the New York area that have been 
          4   providing us with financing.  And among that group, 
          5   which now numbers in the 80s or 90s, Fleet stands 
          6   out for the breadth and depth of its support of our 
          7   programs.  When we solicit a bank to join our -- to 
          8   join participation in our programs, we essentially 
          9   require that they participate in two and then offer 
         10   them a bit of a smorgasbord of other programs to 
         11   take a look at. 
         12            Fleet has been doing everything.  They do 
         13   not simply take the easy way out and provide us with 
         14   warehousing line of credit and participate in the 
         15   specialized secondary market that we ask our banks 
         16   to do.  They have been helping us create new 
         17   programs.  They have been providing all sorts of 
         18   technical assistance.  And they've really just 
         19   supported -- they are essentially unique among our 
         20   large group of banks in doing everything in 
         21   supporting us in all of our lending areas. 
         22            Beyond their money, they also provide us 
         23   with great leadership in serving on our boards and 
         24   committees.  We have a long-standing relationship 
         25   with them.  They are very, very strong supporters of 
  0388
          1   affordable housing. 
          2            Thank you. 
          3            HEARING OFFICER SMITH:  Thank you.
          4            MR. SIKES:  Good evening.  It's been a 
          5   beautiful day out there.  If you missed it, take my 
          6   word for it, it's really nice out there. 
          7            I am Chris Sikes, and I am the executive 
          8   director of the Western Massachusetts Enterprise 
          9   Fund.  We are a community development financial 
         10   institute making micro-enterprise and small business 
         11   loans throughout that vast, vast subcontinent of 
         12   western Massachusetts. 
         13            I'm here basically to say that we have had 
         14   an excellent working relationship with Fleet and 
         15   BankBoston, and that is described more fully in my 
         16   written testimony. 
         17            I would just like to highlight the fact 
         18   that Fleet has made significant capital and 
         19   operating grants to us, as well as BankBoston; and 
         20   they have been -- Fleet has been the underwriter of 
         21   our small business loan program of a $500,000 line 
         22   of credit. 
         23            Of particular note, I would like just to 
         24   mention Neal McBride from Fleet, Agnes Bundy Scanlan 
         25   of Fleet, and Martin Geitz from Fleet CDC, as well 
  0389
          1   as Mike Glavin from BankBoston, all of whom work 
          2   quite closely with us to have the successful loan 
          3   fund that we are. 
          4            I would also like to say that although we 
          5   make fun of being this vast subcontinent in western 
          6   Mass., it is very critical for us when a merger 
          7   takes place, that we know that the bank that is 
          8   being merged or the merging is headquartered in 
          9   Massachusetts; and, therefore, we feel that this is 
         10   the best that -- in a merging situation that could 
         11   happen for us in western Mass. 
         12            Just two cautions if I could.  One is there 
         13   are no divestitures scheduled for western 
         14   Massachusetts so that we really do hope that one 
         15   plus one equals two. 
         16            And, finally, the other caution is that -- 
         17   or concern is that we hope that after all this is 
         18   over, that there is a very clear partnership 
         19   agreement made with the community groups because 
         20   their well-being is absolutely integral to our 
         21   well-being. 
         22            And I'd just also like to say many, many 
         23   thanks to Fleet CDC, because I really think they are 
         24   taking a lead in understanding what it means to 
         25   invest in the financial intermediaries, which I 
  0390
          1   think is the wave of economic development in the 
          2   future. 
          3            Thank you. 
          4            HEARING OFFICER SMITH:  Thank you. 
          5            MR. TOWERY:  I'm Carlisle Towery, president 
          6   of Greater Jamaica Development Corporation in 
          7   Queens, New York City.  Our mission is the economic 
          8   recovery and revitalization of that older downtown. 
          9            Jamaica underwent some severe economic 
         10   trauma in a short period of time; and since then, it 
         11   has advanced considerably, and a great deal of that 
         12   advancement I can attribute to the involvement of 
         13   banks and the support of banks.  And, certainly, 
         14   Fleet has been there in the forefront.  In fact, 
         15   our -- my conclusion says -- which I will say first 
         16   in the interest of time -- that for us, Fleet has 
         17   been a serious-committed, exceptionally good 
         18   corporate citizen. 
         19            They've provided strong and ongoing 
         20   leadership for our corporation itself.  Two senior 
         21   executives from Nat West served as our chairmen.  
         22   They have contributed to our Board and staff's 
         23   activities in special events and retreats, including 
         24   chairing the fund-raiser.  But most important, they 
         25   have underwritten or they have provided construction 
  0391
          1   and permanent financing for several projects we have 
          2   initiated, and we have with them a very flexible 
          3   line of credit that's enabled us to undertake 
          4   numerous strategic small developments.  And that's 
          5   an instrument that has been essentially in our 
          6   operations. 
          7            They participated in the provision of small 
          8   business loans through our revolving loan fund which 
          9   is capitalized by USEDA and by the City with its 
         10   community development block grant funds. 
         11            Just last month, two senior Fleet 
         12   executives hosted a working session with York 
         13   College which is a centerpiece of our development 
         14   which is going to get hooked to Kennedy Airport with 
         15   a new air train.  We think there are economic and 
         16   academic opportunities, and Fleet is helping us 
         17   think that through. 
         18            Working with Fleet's people is inevitably a 
         19   pleasant and productive process for us.  They are 
         20   thoroughly professional, responsive, and 
         21   responsible, and eager to facilitate results to get 
         22   things done. 
         23            I've learned at conferences that -- of 
         24   Fleet's impressive community development and 
         25   reinvestment roles in numerous places, and I just 
  0392
          1   repeat for us they've been an exceptionally good 
          2   corporate citizen. 
          3            Thank you.
          4            HEARING OFFICER SMITH:  Thank you very 
          5   much.
          6            MR. MORGO:  Good evening.  My name is Jim 
          7   Morgo.  I'm president of the Long Island Housing 
          8   Partnership.  I'm up from Long Island, New York, for 
          9   my four o'clock testify.  But you folks have been -- 
         10   you folks have been here since about eight so you 
         11   have my condolences.  I'll now switch to 78 rpms. 
         12            The Long Island Housing Partnership is a 
         13   private, not-for-profit initiative that invests 
         14   private and public funds to create housing which in 
         15   turn spurs economic development and neighborhood 
         16   revitalization in low- and moderate-income 
         17   neighborhoods.  And, yes, there are low- and 
         18   moderate-income neighborhoods out on Long Island out 
         19   to the Hamptons.
         20            The Housing Partnership was the first 
         21   not-for-profit public private housing development 
         22   company based solely in the suburbs.  It was our 
         23   nation's first.  It is a consortium of fitness, 
         24   religious, civic, professional, and labor 
         25   organizations. 
  0393
          1            The Housing Partnership has enabled more 
          2   than 2500 low- and moderate-income families to 
          3   obtain home ownership in high-priced Long Island.  
          4   The Housing Partnership's success is due in great 
          5   part to the support of private sector partners, and 
          6   one of our most involved partners is Fleet. 
          7            In 1988, Fleet was one of the founding 
          8   members of the Housing Partnership.  Fleet has 
          9   cosponsored educational seminars in mortgage 
         10   counseling and financing for our first-time home 
         11   buyers.  And most importantly, Fleet has made 
         12   investments, the kind of investments envisioned by 
         13   CRA in our low-income neighborhoods, in construction 
         14   financing both for us as a developer and for our 
         15   contractors, and has made inroads to our first-time 
         16   buys that had -- that have very flexible 
         17   underwriting criteria. 
         18            In short, Fleet has been a dedicated 
         19   Housing Partnership member.  Fleet is a responsible 
         20   financial institution that is committed to community 
         21   service, and the Housing Partnership supports the 
         22   proposed merger. 
         23            But I am compelled to add after listening 
         24   to a lot of the testimony and particularly because 
         25   of the incredible urge to merge among financial 
  0394
          1   institutions, that the Long Island Housing 
          2   Partnership certainly supports the concept of one 
          3   plus one has to equal more than two. 
          4            We have lost many members and much support 
          5   because of the merging of financial institutions; 
          6   and while we support this merger, we want to make 
          7   sure that the provisions of CRA are followed by 
          8   their intent and in their spirit. 
          9            Thank you very much.
         10            HEARING OFFICER SMITH:  Thank you. 
         11            MS. PHILLIPS:  Good afternoon.  I'm Karen 
         12   Phillips.  I represent the -- I'm president and CEO 
         13   of the Abyssinian Development Corporation, a 
         14   comprehensive community building initiative that was 
         15   started by the Abyssinian Baptist Church to help the 
         16   revitalization of the community of Harlem.  And I'm 
         17   here today to give you examples of our interaction 
         18   with Fleet and the support that they have given our 
         19   ten-year-old community-based organization. 
         20            The one that Fleet has been supportive of 
         21   is ADC operations.  And we have seen this 
         22   organization -- Fleet grow with its merger with 
         23   other banks in the New York City market, and with 
         24   that, their support to ADC's operations grow. 
         25            One of the best examples of the stand that 
  0395
          1   they've taken in community development is a project 
          2   that we currently have underway which is that 
          3   redevelopment, complete gut and rehabilitation of 33 
          4   brownstones in the Harlem community, buildings that 
          5   were previously owned by the City of New York and 
          6   vacant, and this is the first time that the City of 
          7   New York has embarked on housing that is market rate 
          8   and not subsidized. 
          9            We have gone to four of the major banks in 
         10   the New York City market, and Fleet is the one that 
         11   aggressively stepped up to the plate, and even 
         12   though the project was not perfect, have worked with 
         13   us to close and will now be providing the 
         14   construction financing as well as the end loans for 
         15   our buyers, houses that will bring in 
         16   moderate-income families who will help in our 
         17   community building.  And these houses range in 
         18   prices from 325 to 450.  It is a very important 
         19   stand that they have taken with our development and 
         20   other private developers.  They are being a good 
         21   banking citizen. 
         22            The other is that their staff has 
         23   participated and served on our boards and other 
         24   activities in the community, and that with 
         25   additional resources, we think that they can do more 
  0396
          1   in communities like Harlem where there is 
          2   economic-disadvantaged communities. 
          3            Thank you. 
          4            HEARING OFFICER SMITH:  Thank you very 
          5   much. 
          6            MR. MORROW:  We have a hook.  We have this 
          7   beeper here. 
          8            My name is Phillip Morrow.  I'm the 
          9   president of the South Bronx Overall Economic 
         10   Development Corporation, which is an economic 
         11   development, industrial development work force, 
         12   CEFI, all of those things. 
         13            Fleet has been involved with us, and we 
         14   have a director, Phil Grossman, who is on our Board 
         15   of Directors.  They're involved with industrial 
         16   financial and commercial financing in the South 
         17   Bronx.  They have provided us with corporate 
         18   support, and they have worked with us on almost 
         19   everything that we do. 
         20            And that's -- one of the things about the 
         21   bank in the territory of Chase and Citibank, Fleet 
         22   has been a major competitor and has been keeping up 
         23   with the major bank, with Chase having 70 percent of 
         24   the business in the Bronx, providing us with support 
         25   that's comparable to what we get from Chase 
  0397
          1   Manhattan Bank.  And I think that's laudable when we 
          2   consider how these banks now with their -- after 
          3   their mergers have provided support for 
          4   organizations like ours. 
          5            Ours is a very low-income community.  We 
          6   need everything.  And Fleet has helped us across 
          7   broad range of activities in which we're engaged in 
          8   from financing housing and commercial and industrial 
          9   activities to providing support for our events and 
         10   activities that we run in our community. 
         11            Thank you. 
         12            HEARING OFFICER SMITH:  Thank you.
         13            MR. MARSHALL:  Good afternoon.  My name is 
         14   Timothy Marshall, and I'm president of the Jamaica 
         15   Business Resource Center.  And by way of background, 
         16   Jamaica Business Resource Center was designated in 
         17   1994 through presidential authorization to become 
         18   the national model and pilot for President Clinton's 
         19   One-Stop Capital Shop Small Business Program.  And 
         20   since our inception in 1995, we have provided 
         21   technical assistance to over 2800 businesses, 
         22   secured capital financing of over $30 million, and 
         23   have trained over 800 businesses in the fundamentals 
         24   of business management.  And part of this has become 
         25   possible because of strategic partnerships that we 
  0398
          1   have with private sector partners, including Fleet 
          2   Bank which has been in a very, very key leadership 
          3   role. 
          4            First of all, let me just share a couple of 
          5   things.  While credit scoring remains a reality 
          6   especially in our community, Fleet Bank has taken an 
          7   enlightened posture relative to understanding, 
          8   serving, and aggressively marketing to the small 
          9   business sector.  And while some banks are extremely 
         10   reluctant to even considering start-ups or in some 
         11   cases, manufacturing businesses, we have had real 
         12   successes with Fleet especially in these areas 
         13   because they're willing to at least look at these 
         14   deals before making a determination on their 
         15   disposition. 
         16            And in my document that will come to you 
         17   following, I'm going to give you some specific 
         18   examples of businesses that Fleet Bank has helped. 
         19            But not only have they worked with 
         20   businesses.  There was a very special initiative 
         21   that we were involved with with the Southeast Queens 
         22   clergy to teach churches how to engage in community 
         23   economic development, and there had been a West 
         24   Indian congregation that had been meeting in the 
         25   gymnasium of the YMCA for several years, and their 
  0399
          1   dream was to have their own church and to open a day 
          2   care center. 
          3            And we went to a couple of banks, but when 
          4   we went to Fleet, they worked with us in providing 
          5   technical assistance to that congregation.  
          6   Ultimately, they were successful in securing a 
          7   $1.1 million mortgage to both house the 
          8   congregation, as well as to open a day care center. 
          9            There are many other things that I can say.  
         10   One of the concerns that we would like to raise, not 
         11   so much with Fleet, but the trend towards 
         12   consolidation in the banking industry does cause 
         13   real concerns in communities such as the ones that 
         14   we serve especially as it relates to the loss of 
         15   jobs, potentially reduced services and branches, and 
         16   possibly increased rates. 
         17            Our experience with Fleet, however, has 
         18   been a very strong commitment at the community 
         19   level, with a branch network that listens to the 
         20   concerns raised by the community and has been 
         21   responsive to those concerns in what we believe to 
         22   be a very fair manner. 
         23            So it is for these reasons that we believe 
         24   that Fleet will continue to be an excellent 
         25   corporate citizen that is concerned with the plight 
  0400
          1   of those who are most disenfranchised in the 
          2   communities that we serve. 
          3            Thank you very much. 
          4            HEARING OFFICER SMITH:  Thank you. 
          5            MR. STOKES:  Good afternoon.  My name is 
          6   Keith W. Stokes.  I'm currently the executive 
          7   director of the Newport County Chamber of Commerce 
          8   in Newport, Rhode Island. 
          9            My testimony before you today is in strong 
         10   support of the prosed merger.  My support is based 
         11   upon my many years of professional experience in 
         12   affordable housing community development, business 
         13   development, and urban planning. 
         14            From my personal professional viewpoint, 
         15   this merger represents a key opportunity for 
         16   advocates of community reinvestment and development 
         17   to create new strategic partnerships that will 
         18   stimulate innovation and enhance investment 
         19   opportunities for our urban and rural communities. 
         20            Some community leaders might worry that one 
         21   less major bank may reduce the amount of community 
         22   reinvestment activities in the regional marketplace.  
         23   It has been my personal experience that both Fleet 
         24   and Bank of Boston which have historically 
         25   demonstrated the highest level of community 
  0401
          1   reinvestment initiative and involvement will meet 
          2   these needs. 
          3            It is also my belief that this level of 
          4   involvement would not only enhance -- with the 
          5   combined financial resources of a larger merger 
          6   enhance the opportunities for local community, but 
          7   it will also create innovative ways to meet even 
          8   additional needs in our most greatest communities of 
          9   need. 
         10            In closing, as you can continue to hear 
         11   testimony and collect information relating to the 
         12   merger, I ask that you seriously consider that this 
         13   unification of two highly-regarded banks is an 
         14   opportunity to not only create the strongest 
         15   financial institution in and for our region but a 
         16   means to create more community reinvestment 
         17   opportunities for our urban and rural communities.  
         18   Plainly speaking, the newly created Fleet Boston 
         19   will be able to increase its level of business and 
         20   charitable contributions throughout their northeast 
         21   market.  This is good for business.  This is good 
         22   for our community. 
         23            Thank you.
         24            HEARING OFFICER SMITH:  Thank you very 
         25   much. 
  0402
          1            MR. POLLOCK:  Good evening.  My name is 
          2   Jeff Pollock.  I'm the president of the New 
          3   Hampshire Business Development Corporation, and I'm 
          4   here to offer my strong support for the merger of 
          5   Fleet Financial Group and BankBoston Corp.
          6            New Hampshire Business Development 
          7   Corporation exists to promote economic development 
          8   in the state by addressing underserved market 
          9   segments with financial services both directly and 
         10   in partnership with the banking community. 
         11            As evidenced and in light of our strong 
         12   commitment to the small business community, I'm very 
         13   pleased to note that the U.S. Small Business 
         14   Administration recently recognized us as the 
         15   Financial Services Advocate of the Year for 1999. 
         16            We have worked very closely with Fleet over 
         17   the years.  They have invested in three of our 
         18   partnerships which have helped us stimulate over 
         19   $125 million of investment capital with higher risk 
         20   lending in New Hampshire. 
         21            BankBoston is a later entrant to New 
         22   Hampshire and was very quick to participate, as did 
         23   Fleet, in our new venture capital fund in hopes of 
         24   supporting their more direct investment strategy by 
         25   partnering with us in this fund. 
  0403
          1            I'm in support of the merger because I see 
          2   synergy rather than redundancy in the combination of 
          3   these two institutions.  From the community 
          4   development perspective, it's quite exciting to 
          5   envision the potential of Fleet CDC's partnership 
          6   model in combination with BankBoston's direct 
          7   investment strategy. 
          8            On the flip side, I believe New England 
          9   will suffer a tremendous loss of community 
         10   commitment in the event that it doesn't mean home to 
         11   one of the banking leaders after the industry 
         12   consolidates.  To this end, I ask you to witness the 
         13   mayor of San Francisco threatening to remove City 
         14   funds BankAmerica after the headquarters moved to 
         15   Charlotte, North Carolina, and decisions became made 
         16   from there.
         17            In closing, I want to point out that it is 
         18   my good fortune to serve on the Fleet Inner City 
         19   Advisory Board in representation of New Hampshire's 
         20   interests.  In this regard, the bank -- I recognize 
         21   that the bank sees that the best interests of the 
         22   community are best served by helping its citizens to 
         23   create wealth.  Some people confuse this market 
         24   orientation with a lack of interest in community 
         25   affairs. 
  0404
          1            From my part, I share the view of renowned 
          2   Harvard professor Michael Porter that such an 
          3   approach to the market is the only sustainable means 
          4   of community support in a market-oriented economy.  
          5   This, in fact, is the philosophy with which we 
          6   approach our business in NHBDC.  I hope will you 
          7   give due weight to these factors. 
          8            Thank you.
          9            MR. CROWLEY:  Hi.  My name's David Crowley, 
         10   and I'm the executive director of a nonprofit called 
         11   Generations, Incorporated, that brings together 
         12   1,000 Boston area youth and seniors in 
         13   intergenerational programs each year. 
         14            I just want to say that at this time, when 
         15   government is shrinking its services, calling upon 
         16   nonprofits to do more in terms of human service and 
         17   education, and we have to turn to the private sector 
         18   increasingly to be able to deliver those vital 
         19   services, that Fleet has been a shining example of a 
         20   company that's really stepped up to the plate, not 
         21   just to provide charitable funding, which of course 
         22   we value and is critical to our work; but they 
         23   really role up their sleeves and work with 
         24   nonprofits like us to make sure that we can serve 
         25   the community effectively. 
  0405
          1            And over the past couple of years with 
          2   Fleet's help, we have been able to roll out new 
          3   programs that they have helped us with where senior 
          4   citizens have helped raise kids' reading scores by 
          5   an average of over three grade levels a year, and 
          6   also provide documented impact for seniors who are 
          7   isolated in nursing homes who we're able to serve 
          8   thanks to Fleet and touch their lives at the end of 
          9   their day. 
         10            I really just appreciate Fleet's attitude 
         11   of really seeing holistic partnerships with 
         12   nonprofits and with communities to make things a 
         13   better place.  And so I really feel it's critical 
         14   that we continue to have Fleet as a major player in 
         15   the Boston area to have that continue to happen. 
         16            Thanks. 

         17            HEARING OFFICER SMITH:  Thank you very 
         18   much. 
         19            I understand our 30 minutes are up; 
         20   however, Mr. Herbie Flores is at the tail end of the 
         21   panel, so I hope you will bear with us, and if you 
         22   will do your one minute very quickly, each of you.
         23            MS. HABIBY:  My name is Anne Habiby.  I'm 
         24   the director of research at the Initiative for 
         25   Competitive Inner City.  ICIC is a national 
  0406
          1   not-for-profit organization established by Harvard 
          2   Business School professor Michael Porter. 
          3            One of the most important things clearly 
          4   that anyone can do for the inner city is provide 
          5   access to capital.  And as Walter Riskin says, 
          6   "Capital goes where it is invited and stays where it 
          7   is welcome." 
          8            BankBoston's Community Development Bank 
          9   under Chad Gifford and Gail Snowden's exemplary 
         10   leadership has proven that it is committed to this 
         11   premise.  In fact, ICIC has been outspoken in our 
         12   support of BankBoston's community bank model and 
         13   strong inner city franchise, and often cited to the 
         14   media as the preeminent community bank in the 
         15   country. 
         16            Over the past year, ICIC has chronicled the 
         17   competitive advantage of inner cities; and, in fact, 
         18   in a recent study we will release, in fact, this 
         19   week, shows that BankBoston and Fleet have been the 
         20   leaders in making SBA 7A loans to inner city 
         21   businesses. 
         22            In fact, in 1996, BankBoston led all banks 
         23   in Boston's inner city in inner city lending; and in 
         24   1997, if was Fleet.  Significantly, 7A lending 
         25   dramatically increased from 2 million to 7 million 
  0407
          1   in 1997 and in great part due to the lending 
          2   practices of BankBoston and Fleet. 
          3            We would urge both banks to sustain and 
          4   extend these lending practices, lending as much as 
          5   possible profitably.
          6            HEARING OFFICER SMITH:  Thank you very 
          7   much.
          8            MR. CHAMPAGNE:  I would like to have an 
          9   interpreter, please. 
         10            HEARING OFFICER SMITH:  Interpreter from 
         11   what? 
         12            MR. CHAMPAGNE:  Hispanic. 
         13            UNIDENTIFIED AUDIENCE MEMBER:  There was no 
         14   special request for an interpreter. 
         15            HEARING OFFICER SMITH:  Can we -- okay.  
         16   See, I knew there was a purpose to this. 
         17            MR. CHAMPAGNE (through Hierberto Flores):  
         18   My name is Jose Champagne, president of Sofri El 
         19   Coqui.  I'd like to thank you for the privilege of 
         20   being here to express to you the work that Fleet 
         21   Bank is doing in the Spanish community. 
         22            Everybody knows the Spanish community is 
         23   growing very fast.  And to the year 2010, 2015, the 
         24   Hispanic community will be the largest minority. 
         25            I would like to thank Fleet for making a 
  0408
          1   dream of mine come true.  For six years, we had a 
          2   project or factory.  In 1997, we were able to make 
          3   that a reality by Fleet Bank.  I would like you to 
          4   consider this kind of project for a Spanish 
          5   community.  It's a great potential in the Spanish 
          6   community, and we know that we can count on Fleet 
          7   Bank. 
          8            I would like to thank Fleet Development 
          9   Bank for all their support they have given us.  
         10   Thank you very much for the support. 
         11            MR. COMULADA:  Good afternoon.  My name is 
         12   Fernando Comulada.  I'm vice-president for finance 
         13   and administration for InterAmerica Wholesalers.  
         14   It's a small distributor of Spanish products in 
         15   Waterbury, Connecticut.  And until recently, I was 
         16   also a financial advisor for Universal Financial 
         17   Services in Hartford, Connecticut. 
         18            I'm here today to express my support for 
         19   this merger of Fleet Bank and Bank of Boston.  
         20   During my tenure with the Universal Financial 
         21   Services, I was able to do business planning for 
         22   Hispanic local business in Hartford, Connecticut; 
         23   and I am pleased to say -- to report to you that of 
         24   six projects that we presented to Fleet Bank in the 
         25   last year and a half, all six -- to Bank of Boston, 
  0409
          1   all six were approved.  I think there is -- they 
          2   have shown a sensitivity and the need to the 
          3   community and to economic development in the 
          4   neighborhoods. 
          5            Even those these loans were not big 
          6   amounts, they were significant to the business 
          7   people that applied for them.  More significant, it 
          8   was a contribution that less than half a million 
          9   dollars in funds created over twenty jobs. 
         10            I want to encourage the Federal Reserve 
         11   Bank to approve this merger.  And I just caution -- 
         12   I would like to see that Fleet Bank and Bank of 
         13   Boston continue to give access of capital to 
         14   minorities and to small business, that they keep the 
         15   diversity among all ranks in the organization, and 
         16   to keep bicultural and bilingual lending officers.
         17            Thank you.
         18            HEARING OFFICER SMITH:  Thank you very 
         19   much. 
         20            MR. FELLENZ:  Good evening.  I'm Peter 
         21   Fellenz, executive director of Worcester Community 
         22   Housing Resources.  We do lending, first-time home 
         23   buyer services, and property development.  Sometimes 
         24   small; sometimes larger.  It is all meant to put a 
         25   smile back on older neighborhoods that have good 
  0410
          1   enough history to deserve the revitalization, both 
          2   as individuals and as neighborhoods. 
          3            We work very well with the entire banking 
          4   community and are very proud with our relationship 
          5   with both Fleet and BankBoston.  That goes for local 
          6   staff in Worcester and central Mass., and also for 
          7   the number of corporate people.  Meeting yesterday 
          8   with corporate leadership included many people who 
          9   have walked our neighborhoods, in fact, made it 
         10   quite clear that their credit is available anytime 
         11   we can tee up the deals.  So let's go ahead. 
         12            I feel a little bit like I've been invited 
         13   to two people who have decided to get married, in 
         14   this case, two institutions.  I'm ready to be at the 
         15   wedding and say just stay active right here in the 
         16   middle of New England.  We need your combined 
         17   assets, both human and financial. 
         18            So I speak strongly in favor of the merger 
         19   as proposed. 
         20            HEARING OFFICER SMITH:  Thank you. 
         21            MR. FLORES:  My name is Hierberto Flores, 
         22   resident of Springfield, Massachusetts, Brightwood 
         23   Development Corporation, and also Planning for 
         24   Community.
         25            We have over 360 employees from Manchester, 
  0411
          1   New Hampshire, to Fairfield County, human services.  
          2   We have a lot of minorities that work for us in the 
          3   work force.  So, again, the two banks, Fleet and 
          4   Bank of Boston, I have done business with them, very 
          5   supportive to our organization, to our community.  
          6   I'm here to support this merger. 
          7            And, again, I would like to thank you for 
          8   the privilege of being able to be a member of your 
          9   Board, Federal Consumer Advisory Counsel, for the 
         10   past three years.  And, again, I think that the work 
         11   you are doing today here is one work that all of us 
         12   as citizens have to say thank you for the work that 
         13   you are doing and keep up the good work. 
         14            HEARING OFFICER SMITH:  Thank you very 
         15   much. 
         16            HEARING OFFICER SMITH:  Panel 16.
         17            Mr. Cofield. 
         18            MR. COFIELD:  Good afternoon to members of 
         19   the Federal Reserve Bank of Boston and the larger 
         20   community.  I'm Juan Cofield, treasurer of the 
         21   NAACP, Boston branch.  The NAACP is the oldest civil 
         22   rights organization in the country.  It was founded 
         23   in 1909, almost a century ago.  The Boston branch 
         24   was the first branch being established in 1911. 
         25            The NAACP is credited with being one of the 
  0412
          1   organizations to make contributions -- the most 
          2   significant contributions to the goals of the 
          3   founding fathers of this great country, and we are 
          4   pleased to be credited with such. 
          5            The Boston branch is gravely concerned 
          6   about the proposed acquisition of BankBoston 
          7   Corporation by Fleet Financial Corporation.  And I 
          8   want to make it clear, and there has been a misnomer 
          9   a lot.  This is not a merger.  It's an acquisition.  
         10   The application before the Federal Reserve is as an 
         11   acquisition and not a merger.  That's very 
         12   important, and I will get to that in a minute, 
         13   because one of the entities is taking control of the 
         14   other.  And what we have witnessed is a varied 
         15   difference in the philosophy of the two as it 
         16   relates to low-income communities and communities of 
         17   color.
         18            Major differences have been exhibited by 
         19   the two institutions in serving the needs of 
         20   communities of color and low-income communities.  
         21   Fleet's lending and investment activities in 
         22   communities of color is significantly worse than 
         23   BankBoston.  In fact, if the acquisition were 
         24   reversed, there probably would be far less 
         25   opposition than there is today. 
  0413
          1            Much of the opposition is because of what 
          2   is perceived to be the policies and the philosophy 
          3   and certainly the activities of Fleet as opposed to 
          4   BankBoston.  We believe that the two -- we believe 
          5   that the activities of the two institutions are 
          6   quite different because of the philosophies and 
          7   policies. 
          8            We are concerned because we feel that we 
          9   will be losing a bank that's philosophically 
         10   committed to serving communities of color and low- 
         11   and moderate-income communities.
         12            As it relates to employees and the expected 
         13   layoffs, people of color are employed at Fleet in a 
         14   proportion -- in a disproportion to the population 
         15   of people of color in this area, and that's 
         16   throughout the ranks of Fleet.  The percentages get 
         17   worse as we move up in higher echelons of the bank. 
         18            As Fleet has the expectation of laying off 
         19   as many as 5,000 employees, the potential for 
         20   disproportionate layoffs certainly exist.  Such 
         21   disproportionate layoffs would be devastating to 
         22   such communities of color who have -- who already 
         23   suffer significantly higher unemployment rates, and 
         24   higher underemployment rates. 
         25            We believe that the Federal Reserve Bank 
  0414
          1   must take action to see that people of color are not 
          2   disproportionately laid off.  This is clearly a need 
          3   of the community to see that they are treated 
          4   equally, and it's -- and we believe that it's the 
          5   responsibility of the Federal Reserve Bank of Boston 
          6   as it looks at the needs of the community to address 
          7   this issue. 
          8            Further, we think that what needs to happen 
          9   is that there needs to be a firm legal commitment to 
         10   the Federal Reserve to ensure that that doesn't 
         11   happen.  And that needs to come after a negotiation 
         12   between Fleet and the communities of color that 
         13   we're talking about. 
         14            We further think that all of the employees 
         15   that will be laid off should be given generous 
         16   severance packages, and Fleet should make a 
         17   commitment to retrain those employees.  If in fact 
         18   there is no commitment and people throughout the 
         19   system -- not just people of color, but all of the 
         20   employees -- if there is not a commitment to retrain 
         21   and/or give a severance package, it will be harmful 
         22   to the communities of -- throughout the area where 
         23   they are coming from. 
         24            HEARING OFFICER SMITH:  Thank you very 
         25   much.  We would be happy to have additional comments 
  0415
          1   submitted later, or would you like to take about ten 
          2   seconds to wrap-up? 
          3            MR. COFIELD:  Yes, I would.  I didn't 
          4   realize that I was that close to the end. 
          5            There has been a very different -- there 
          6   are very significant differences in the activities, 
          7   the lending practices and the investment in 
          8   communities of color that have been demonstrated 
          9   between Fleet and BankBoston.  The problem is, Fleet 
         10   is the acquirer; and the management of Fleet is -- 
         11   will be at the top after this is over, and we think 
         12   that will bode very negatively for the new 
         13   institution and for communities of color and low- 
         14   and moderate-income communities. 
         15            Lastly, let me say that we believe that 
         16   there -- well, two other things quickly.  The 
         17   proposed commitment of 14.6 billion in a community 
         18   commitment by Fleet is woefully inadequate.  That 
         19   commitment level does not meet the current level of 
         20   the combination of Fleet and BankBoston.  It is 
         21   woefully inadequate. 
         22            Lastly, let me say that the bank -- the 
         23   Boston Bank of Commerce figures into this.  They 
         24   are -- maybe a few of you who may know that I was 
         25   the founder of the Boston Bank of Commerce.  I am 
  0416
          1   speaking in an official position as the treasurer of 
          2   the NAACP, expressing the position of the NAACP and 
          3   not mine personally; but I assure you that you I 
          4   have no formal association with the Boston Bank of 
          5   Commerce today, neither am I a director or officer 
          6   or receive any compensation from the Boston Bank of 
          7   Commerce. 
          8            When the Boston Bank of Commerce was 
          9   founded, it had -- in addition to all the kinds of 
         10   missions that other banks have, it had a special 
         11   mission.  And that special mission was to serve the 
         12   needs of the Roxbury and Dorchester communities, in 
         13   essence, the communities of color.  The Boston Bank 
         14   of Commerce, I believe, has done a very good job in 
         15   fulfilling that commitment, certainly with its level 
         16   of capital and level of assets. 
         17            The community needs a strong and viable 
         18   institution with a special commitment if it is going 
         19   to serve the economic development of that community.  
         20   It is absolutely essential.  The NAACP firmly 
         21   believes and supports the Boston Bank of Commerce in 
         22   its attempt to acquire 18 of the 293 branches that 
         23   Fleet is proposing to divest itself of.  And I 
         24   think, given the mission of the Boston Bank of 
         25   Commerce, that they should get it.  It will allow 
  0417
          1   the Boston Commerce to continue that special 
          2   commitment, to spread it further, and to be 
          3   competitive in the environment that we are facing 
          4   today. 
          5            Thank you very much. 
          6            HEARING OFFICER SMITH:  Reverend Kelly. 
          7            REV. KELLY:  Thank you. 
          8            My name is Frank Kelly.  I am the senior 
          9   pastor of the Way of the Cross Church in Dorchester 
         10   bordering Mattapan, Morton Street.  I'm also the 
         11   economic chair for the Black Ministerial Alliance. 
         12            My voice is one of many faith-based 
         13   organizations representing a constituency of over 
         14   200 strong, and they will be sent a press release 
         15   along with a copy of my request to testify here, as 
         16   well as the statement. 
         17            In greater Boston, over 200 faith-based 
         18   organizations -- or FBOs as they are popularly 
         19   known -- service over a hundred thousand people.  
         20   And that includes 25,000 plus families. 
         21            My affiliation with these FBOs grew out of 
         22   my early career of 20 years in a major Boston bank.  
         23   By the way, that was merged in 1995. 
         24            From there, I was called out into full-time 
         25   community service in 1987 and then into the pastoral 
  0418
          1   ministry in 1990, founding and chairing the United 
          2   Christian Financial Services Association, a broad 
          3   based nonprofit corporation, open doors for 
          4   networking and relationship building. 
          5            The concern is obvious.  Questionable 
          6   resources and options.  There are questionable 
          7   resources for our people.  There are questionable 
          8   facilities and options for the community in our 
          9   neighborhoods and the FBOs that serve them.  There 
         10   are significant gaps, and we have heard them, 
         11   potentially 5,000 jobs lost, over 270 branch 
         12   closings which introduce barriers to service access.  
         13   Two banks will become one.  Those two banks 
         14   committed monies separately.  These commitments will 
         15   probably be withdrawn or significantly changed. 
         16            The resulting need, however, is viable 
         17   programs written into the plans of the new megabank 
         18   if this passes to address these gaps.  A community 
         19   voice is needed now as a necessary tool in program 
         20   planning to be present at the planning tables, to 
         21   provide input on specifics of programs to address 
         22   these gaps, and to link the community with the 
         23   approval process.  The necessary tool, Boston's 
         24   network of faith-based organizations, the FBOs, the 
         25   faith-based organizations are continually being 
  0419
          1   challenged to grow, challenged by the community, and 
          2   lately by government and other sectors; and they 
          3   have grown up. 
          4            Under the IRS guidelines of 501(c)(3)s and 
          5   (c)(4)s, related nonprofit structures, a diverse 
          6   representation of the city having increasingly taken 
          7   on responsibility for the prosperity of their 
          8   neighborhoods and surrounding communities resulting 
          9   in corporate financial accountability as never 
         10   before. 
         11            I have a list of twelve of many who edify 
         12   our urban communities which includes the Black 
         13   Church Capacity Building Project, Black Ministerial 
         14   Alliance, Greater Boston Interfaith Organization, 
         15   Mattapan and Dorchester Action, Churches in Action, 
         16   United Christian Financial Services, Ten Point 
         17   Coalition, and United Pentecostal Ministers' 
         18   Conference. 
         19            Since dismantling of the welfare system and 
         20   proposing more local solutions, the federal 
         21   government and others are looking to the FBOs for 
         22   proven expertise in service delivery at the 
         23   community level.  The City of Boston Empowerment 
         24   Enterprise Zone, Initiative Rounds 1 and 2, a 
         25   Baystate organization initiative tied to the Boston 
  0420
          1   Empowerment Zone Center. 
          2            Interest has been heightened among 
          3   university academic admissions towards the 
          4   faith-based organization in recent years, which 
          5   include Harvard University, Kennedy School of 
          6   Government, Brandeis University, Yale University, 
          7   and others.  Several colleges and universities have 
          8   been recognizing and working together developing 
          9   curriculum through the experience participation and 
         10   leadership of the FBOs. 
         11            In conclusion, there are three steps.  
         12   There is a three-step call to action.  There needs 
         13   to be intentional and inclusiveness when addressing 
         14   the above-mentioned gaps and needs.  There needs to 
         15   be a seat provided at the table for representation 
         16   and representatives of the organized faith-based 
         17   organized community to contribute their knowledge 
         18   and expertise and networking resources to the 
         19   research and proposal-writing process. 
         20            Finally, call upon the faith-based 
         21   organizations to issue support for the merger 
         22   approval process from the needs assessment through 
         23   the program writing and approval sign-off. 
         24            Thank you for this time to speak and to 
         25   provide a voice for the faith-based organizations.  
  0421
          1   Continuous community input is welcome through the 
          2   faith-based organization voice mailbox at (617) 
          3   929-0352, and I have come copies of my testimony. 
          4            HEARING OFFICER SMITH:  Thank you very 
          5   much.
          6            MR. ASTOLFI:  Hi.  Thanks for having me. 
          7            My name is Drew Astolfi.  I'm with at 
          8   Anti-Displacement Project out of Springfield, Mass.; 
          9   and I guess I'm here to say that I know that you 
         10   won't, but I wish that you would refuse to accept 
         11   this merger.  Since you probably aren't going to do 
         12   that, I guess I'm going to ask you to extend the 
         13   comment period two weeks after Fleet has 
         14   disclosed -- fully disclosed what it plans to do to 
         15   meet its CRA obligations. 
         16            My organization is a coalition of tenant 
         17   associations in western Mass., 950 units of which 
         18   are low-income cooperative housing, 300 of which 
         19   would not have been developed and converted into 
         20   low-income co-op without the assistance of the 
         21   Federal Home Loan Bank, which Fleet has still 
         22   refused to say whether or not the new entity is 
         23   going to be a member of the Federal Home Loan Bank.  
         24   And I just feel it is outrageous that they're saying 
         25   that they're not going to do it until the charter 
  0422
          1   issues are worked out.  I'm very suspicious of that 
          2   and so are the people that I represent who couldn't 
          3   come here today because they're at work. 
          4            But there's an overarching attitude of sort 
          5   of, I don't know, of arrogance that Fleet has 
          6   approached, at least western Mass. from what I here 
          7   today, other groups, other parts of the New England 
          8   region as well; and that arrogance is characterized 
          9   a couple of different ways.  One is just in their 
         10   refusal to say whether this is a part of the Federal 
         11   Home Loan Bank or not, and when they don't say it, I 
         12   kind of think they're not going to do it. 
         13            I'm just going to give you two stories 
         14   really quickly about sort of smaller examples of 
         15   that arrogance as well.  And I just say if they 
         16   can't negotiate with ACORN and MAHA and the Mass. 
         17   Association of CDCs, then a group like mine, which 
         18   is a much smaller group, has got no chance.  So 
         19   without sort of your intervention, I know we're not 
         20   going to get their attention; and I hope you guys 
         21   will consider that when you make your decision. 
         22            Just to give you two stories.  There 
         23   there's group called Friends of the Homeless which 
         24   operates the only supportive services SRO in 
         25   Springfield or in the greater Springfield area.  It 
  0423
          1   also operates the only homeless shelter in the 
          2   Springfield area, and the only one that's open all 
          3   year-round in the whole sort of Southern Pioneer 
          4   Valley.  And this shelter has -- was created by a 
          5   consortium of local banks, and their mortgage was 
          6   later taken over by Fleet.  And it had been at 8 
          7   percent; and the State subsidies increased, and 
          8   Fleet raised the interest rates to 10 percent, and 
          9   that place is now in danger of foreclosure. 
         10            Two years ago when the foreclosure became 
         11   sort of a visible reality to Friends of the 
         12   Homeless, they tried to get a meeting from Fleet; 
         13   and they have been trying for two years, and Fleet 
         14   still hasn't talked to them.  They won't even meet.  
         15   I just find that kind of behavior to be outrageous.  
         16   It is not fair. 
         17            A second example sort of closer to home for 
         18   me is that our own neighborhood of Liberty Heights 
         19   in Springfield, which has been mentioned here 
         20   earlier, in which Fleet does not have a good lending 
         21   record according to their own HMDA data, we have the 
         22   ongoing participation of BankBoston in the 
         23   neighborhood.  They have been going to meetings.  
         24   And when the merger was announced, we tried to get 
         25   Fleet to say that after the merger, they would 
  0424
          1   continue to attend sort of meetings with the local 
          2   community groups there and to make some loans in a 
          3   more aggressive way in the neighborhood.  And we 
          4   also said, you know -- "Will we have, you know, sort 
          5   of a permanent CRA officer to service the 
          6   Springfield area?" which I think our mayor, Mayor 
          7   Albano, asked about earlier today.  And in the same 
          8   way that they have refused to meet with the Friends 
          9   of the Homeless, they haven't answered the question.  
         10   If fact, we haven't heard anything from them. 
         11            And just  -- it has sort of come down to 
         12   the wire for us, and so we're hoping that you will, 
         13   at least, if not deny the merger, give us the extra 
         14   two weeks after the Fleet makes its announcement 
         15   which we feel like has not been fully disclosed. 
         16            Thank you very much. 
         17            HEARING OFFICER SMITH:  Thank you very 
         18   much. 
         19            Mr. Haskell.
         20            MR. HASKELL:  Good evening.  My name is Jim 
         21   Haskell, and I come here today in my dual capacity 
         22   as the executive director of the Salem Harbor 
         23   Community Development Corporation and as the 
         24   chairperson of the Mass. Association of Community 
         25   Development Corporations, MACDC. 
  0425
          1            During its 20-year history, Salem Harbor 
          2   CDC has developed affordable housing.  We've 
          3   assisted small businesses, helped families obtain 
          4   their first homes, and allowed people to get a job 
          5   by helping them with their English skills.  And we 
          6   have done much of our work in an immigrant Latino 
          7   neighborhood that most people had simply written off 
          8   20 years ago. 
          9            As the chair of MACDC, I represent 68 such 
         10   organizations across this Commonwealth; and we are 
         11   but a small part of 3500 CDCs nationwide, and all of 
         12   us do the same thing, help turn areas that were 
         13   previously considered beyond repair into thriving 
         14   working class communities.  And we have accomplished 
         15   this impossible feat by bringing a lot of parties 
         16   together into a partnership to try to figure out how 
         17   best to affect this turnaround, because the solution 
         18   has often been different in different communities. 
         19            And, frankly, it's very difficult for me to 
         20   sit here today and oppose this merger, because, 
         21   frankly, we're much better at building bridges than 
         22   we are at burning them.  But we feel that we have no 
         23   alternative but to oppose the merger of Fleet and 
         24   BankBoston since it appears that the resulting 
         25   institution will be one where this partnership will 
  0426
          1   not be respected. 
          2            Pronouncements from corporate headquarters 
          3   will take the place of thoughtful, effective, and 
          4   meaningful determinations of how best to meet the 
          5   credit needs of low- and moderate-income 
          6   communities. 
          7            The recent decision by major banks to merge 
          8   has resulted in significant community reinvestment 
          9   agreements being negotiated which resulted in the 
         10   development of community reinvestment products to 
         11   benefit a wide range of low-income communities.  In 
         12   all of these instances, it would have been 
         13   impossible for the bank to promulgate a 
         14   one-size-fits-all approach to community development. 
         15            On the other hand, it would have equally 
         16   been impossible for the community-based 
         17   organizations to have developed the types of 
         18   products that the bank did in order to meet those 
         19   needs.  In the truest sense of partnership, each 
         20   side depended on the other. 
         21            Unfortunately, our recent experience with 
         22   Fleet has shown us that this sense of partnership 
         23   has not been taken to heart.  Once the three-year 
         24   term of the Fleet-Shawmut agreement, MACDC and MAHA 
         25   attempted to extend this agreement.  After a year of 
  0427
          1   futile meetings at which I was personally in 
          2   attendance, we were told that no such agreement 
          3   would occur. 
          4            Similarly, a large group of community 
          5   organizations and public officials has attempted to 
          6   begin negotiations about an agreement concerning 
          7   this proposed merger.  Once more to no avail. 
          8            Most distressing of all, we have found that 
          9   Fleet's actual performance in mortgage lending to 
         10   low- and moderate-income families and small business 
         11   lending is significantly less in the absence of 
         12   agreements than when they are required to reach 
         13   performance targets within the framework of an 
         14   agreement. 
         15            The merger of Fleet Bank-Boston threatens 
         16   to become a monolithic force that will unilaterally 
         17   determine how its community development resources 
         18   will be allocated in low- to moderate-income 
         19   communities. 
         20            We have seen far too many examples where 
         21   lots of dollars have effectively destroyed our 
         22   communities.  We only need to look at urban renewal 
         23   to see that.  Dollars alone are not the answer.  
         24   Thoughtful solutions and effective partnerships are. 
         25            Several colleagues of mine have outlined or 
  0428
          1   will outline specific reasons why their 
          2   organizations are deeply concerned about this 
          3   merger, as well the chair of the Board of Salem 
          4   Harbor CDC, Wayne Burton. 
          5            Although we will express our opposition, 
          6   please be mindful of what I initially said.  This is 
          7   not an action we relish nor a decision we have come 
          8   to lightly; however, on behalf of the communities we 
          9   serve, we believe it is the only one we can make. 
         10            HEARING OFFICER SMITH:  Thank you. 
         11            Are you going to take about a minute or --
         12            MR. BURTON:  Can I restart and take one 
         13   minute?
         14            HEARING OFFICER SMITH:  One minute. 
         15            MR. BURTON:  Very quickly.  By day, I'm the 
         16   dean of the School of Business at Salem State 
         17   College and teach capitalism and the joys of the 
         18   capitalist system.  By night, as president of the 
         19   Salem Harbor CDC, I try to find that capital to fund 
         20   development projects and housing in Salem.  It has 
         21   been an eye-opening experience for me.  I wouldn't 
         22   have been here seven years ago.  There is a 
         23   desperate need for capital that has to be available 
         24   to meet the needs of Salem and the other low-income 
         25   communities. 
  0429
          1            The very existence of our organization is 
          2   proof that the capitalist system does not work for 
          3   everyone.  It takes human intervention. 
          4            Let me make one last point.  My presence 
          5   here today is inspired by the words of Ira Jackson, 
          6   the vice-president of BankBoston who he had the 
          7   privilege of hearing on four separate occasions this 
          8   year, because he is the only business leader I could 
          9   find that spoke from conscience about the value of 
         10   community service.  He made two points I would like 
         11   to just reiterate today.  I'm sure we came to 
         12   different conclusions on the merger, but I would 
         13   like to reiterate the points that he made. 
         14            One is that BankBoston became renowned for 
         15   its community service by making community service a 
         16   core strategy of the bank for its success.  It has 
         17   to become part of the culture.  They call that 
         18   managing value with values. 
         19            The second point he made is he made such an 
         20   impression on people in Salem that he was invited to 
         21   be our commencement speaker in May.  Now, most 
         22   commencement speakers are the only thing standing 
         23   between parents and ending their child's tuition 
         24   bills.  He had people spellbound.  His point was 
         25   very simple.  He said that capitalism has no 
  0430
          1   conscience.  Capitalism distributes goods and 
          2   service in ways that leave people out.  It's only 
          3   through the intervention of people like yourselves 
          4   who are in a position to introduce conscience into 
          5   this debate that we get a public good advanced. 
          6            And the conclusion I have reached is that 
          7   on balance, the MACDC position as outlined by Jim 
          8   Haskell, executive director of our agency, is the 
          9   appropriate one to take; and I fully support it.
         10            Thank you.
         11            HEARING OFFICER SMITH:  Thank you very 
         12   much. 
         13            Miss Peters. 
         14            MS. PETERS:  Thank you.  My name is Marcia 
         15   Peters.  I have a small community-based law practice 
         16   in Jamaica Plain.  I was asked to come here today 
         17   when I let it be known that I had seen specific 
         18   examples in my law practice of overappraisals by 
         19   Fleet.  I understand that that issue has been put to 
         20   this panel by at least two speakers today and I 
         21   don't have to introduce it as an issue. 
         22            I didn't really understand what I was 
         23   seeing at the beginning, but I now do; and I really 
         24   found it quite shocking. 
         25            Family A was an African-American couple who 
  0431
          1   were buying a house in Roxbury which needed a gut 
          2   rehab.  They were going through UNAC.  They put down 
          3   $1500.  Fleet loaned them $207,140 on a sale price 
          4   of 125,000 because the difference was needed for 
          5   rehab. 
          6            I -- from my knowledge of the market, I 
          7   thought the place would be worth about a $135,000 
          8   when it was all fixed up.  I called some experts I 
          9   knew, and they said I was absolutely on the money, 
         10   that it couldn't possibly be worth more than 
         11   135,000; and yet -- after the work, and yet Fleet 
         12   was loaning 207. 
         13            I asked to see the appraisal because I had 
         14   learned from my other example -- which I guess I 
         15   should have given you first that I should be looking 
         16   at these things -- I found it to be totally 
         17   dishonest.  The way they got the value up so high 
         18   was to go an entire mile to a completely different 
         19   neighborhood of Boston for one of their comps.  They 
         20   called it in better condition and adjusted it by 
         21   only $11,200.  An honest adjustment would have been, 
         22   I would think.  $60,000, $70,000.  That faraway 
         23   mansion in a completely different neighborhood was 
         24   so uncomparable.  It was just flagrantly dishonest 
         25   to put it into the average and come up with a 
  0432
          1   justification for lending this family $207,000. 
          2            The other one which I actually saw earlier 
          3   was a Haitian couple buying on the 
          4   Dorchester-Mattapan line, probably close to Reverend 
          5   Kelly's church.  It was a City-foreclosed property.  
          6   Boarded up.  Shell.  Needed everything. 
          7            I talked to two people in the Boston city 
          8   government who told me that the place should not 
          9   have gone for more than $20,000 in the shape that it 
         10   was in.  They said that contractors and people who 
         11   knew what they were doing came to the auction and 
         12   dropped out at $20,000 because they knew that 20 
         13   plus what it needed would equal what it would then 
         14   be worth. 
         15            But naive first-time home buyers stayed in 
         16   the bidding.  It was their chance at the American 
         17   dream.  They just didn't know what they were doing.  
         18   This family bid it up to $58,400.  Fleet came up 
         19   with an appraisal which justified that sale price. 
         20            Fleet was not lending for rehab.  Fleet was 
         21   not even asking if anybody was lending for rehab or 
         22   where the work was going to be financed.  They 
         23   simply lent $58,000 on a shell will that was worth 
         24   $20,000 and have a nice day.  That was really all 
         25   there was to that transaction. 
  0433
          1            The result of this is manyfold.  I would 
          2   hope that you as regulators would be concerned that 
          3   when Fleet tells you that their portfolio is worth 
          4   X, that maybe it really isn't.  They are not 
          5   appraising honestly; and, therefore, their books are 
          6   not really telling you the picture of what their 
          7   assets are. 
          8            On a human level, these people cannot ever 
          9   have equity in their homes.  They will work for 
         10   years and all they will do is pay down on that 
         11   difference between their large loan and their small 
         12   real value. 
         13            In closing, I would ask that you make a 
         14   condition of this acquisition -- not merger -- that 
         15   there be spot checks of appraisals, that there be 
         16   funding set aside for professional appraisers to 
         17   pull random files and check the honesty of 
         18   appraisers that are working for this merged entity. 
         19            Fleet is going to set the culture for the 
         20   new entity, and I'm concerned that it will not be a 
         21   culture of honesty. 
         22            Thank you.
         23            HEARING OFFICER SMITH:  Miss Pisacane.
         24            MS. PISACANE:  My name is Gail Pisacane, 
         25   and I'm deputy director of Valley Opportunity 
  0434
          1   Council, the federally-designated community action 
          2   agency in Chicopee and Holyoke. 
          3            With an annual budget of approximately $9 
          4   million, we provide services to all 24 community 
          5   cities and towns of Hampden County, including 
          6   Westfield, Ludlow, West Springfield, and on 
          7   occasion, Springfield.  Last year, we provided 
          8   direct services to over 26,000 low income and 
          9   disadvantaged residents of our service areas. 
         10            I testify today on behalf of the Valley 
         11   Opportunity Council and the low-income residents we 
         12   represent, addressing some of the very basic banking 
         13   issues that all of us must face on a daily basis. 
         14            John Rubins, author of Main Street, not 
         15   Wall Street, writing in the July-August 1999 edition 
         16   of Consumers Digest writes, "With few exceptions, 
         17   big banks have traditionally been inhospitable 
         18   places for small savers; and their penchant for 
         19   combining into bigger entities does not seem to be 
         20   changing that.  The recent mergers are producing 
         21   higher fees, fewer branches, fewer ATMs, and fewer 
         22   tellers." 
         23            He cites Brian O'Connor, managing editor of 
         24   Bank Rate Monitor.  "Our experiences suggest that 
         25   low-income individuals cannot be expected to 
  0435
          1   maintain minimum balances which might qualify them 
          2   for lower or no-cost services within the bank.  They 
          3   need inexpensive checking and ways to access their 
          4   minimal savings without accruing service charges.  
          5   They need bank branches and/or ATMs located in their 
          6   neighborhood.  Few, if any, banks seem willing to 
          7   accommodate these needs." 
          8            According to O'Connor, we are seeing banks 
          9   charging $25 to $35 to print a couple of hundred 
         10   checks when a customer can get that done for $5 
         11   dollars by mail. 
         12            Some banks hit the customer for $20, $25, 
         13   or even $30 for a bounced check when returning the 
         14   check costs approximately $2. 
         15            When you open a checking account with a 
         16   large bank, you're inviting it to find every way it 
         17   can to rake you over the coals. 
         18            Why, then, should we, or any organization 
         19   that serves the poor and low-income, support this 
         20   merger?  Without some assurances that the needs of 
         21   those whom we represent will be addressed, we would 
         22   be remiss in our duty as an advocate for the poor to 
         23   do so. 
         24            In human services, there is an expectation 
         25   that as the number of clients increases, the costs 
  0436
          1   per client decrease.  Economy of scale is a mantra 
          2   of those who espouse the bigger is better theory of 
          3   service provision. 
          4            In the private sector, however, the 
          5   elimination of competition through merger frequently 
          6   serves as the prelude to increased costs to the 
          7   consumer. 
          8            In addition to the effect of the merger on 
          9   clients, we must consider the effects on Valley 
         10   Opportunity Council itself.  As an agency that has 
         11   been involved in housing development, 
         12   rehabilitation, and management, we have had cordial 
         13   relationships with the local banking community.  As 
         14   the merger takes place and decision making is 
         15   centralized, our ability to deal with decision 
         16   makers on a local level is impaired.  Currently, the 
         17   only way to call Fleet Bank located across the 
         18   street from our office is to call Boston. 
         19            We would hope that prior to approval of 
         20   this merger, the Federal Reserve will require that 
         21   Fleet and BankBoston develop a detailed and 
         22   publicly-verifiable reinvestment plan which has been 
         23   negotiated with community organizations and elected 
         24   officials with specific commitments ensuring a net 
         25   benefit to low- and moderate-income in minority 
  0437
          1   communities. 
          2            We also ask that the public comment period 
          3   be extended for two weeks after such a plan has been 
          4   released. 
          5            It is essential that this merger be 
          6   approved and that the stipulations regarding 
          7   lifeline banking services for the poor, access to 
          8   branches and ATMs, and economies of scale for 
          9   service fees are attached to said approval. 
         10            We would also hope that some allocation in 
         11   of money to support local nonprofit needs and 
         12   committed bank involvement in the local community is 
         13   considered. 
         14            Thank you for this opportunity. 
         15            HEARING OFFICER SMITH:  Thank you very 
         16   much.
         17            Are there any questions?
         18            HEARING OFFICER McDONOUGH:  I have a brief 
         19   question for Marcia Peters. 
         20            You gave two examples of inappropriate 
         21   loan-to-value ratios, and I think one of those you 
         22   cited as being a UNAC loan.  And I don't recall 
         23   whether the other loan was a UNAC loan. 
         24            MS. PETERS:  No.
         25            HEARING OFFICER McDONOUGH:  What role did 
  0438
          1   you play in the process to allow such disparate 
          2   loan-to-value ratio? 
          3            MS. PETERS:  I'm not sure that I can answer 
          4   that.  There was a work write-up which I think was 
          5   done by UNAC staff person that said the property 
          6   would need -- I think it was $82,000 worth of work.  
          7   But UNAC isn't doing the appraisals.  They're doing 
          8   the first-time home buyer counseling and getting 
          9   people to understand the process, et cetera. 
         10            But when the thing goes into Fleet, Fleet 
         11   is hiring its own appraiser to justify the huge 
         12   price.  So I'm not sure. 
         13            If UNAC had something to do with getting 
         14   the numbers up so high and getting the hopes up so 
         15   high, I would still have hoped that Fleet's 
         16   appraiser would have said, "Whoa.  No can do." 
         17            HEARING OFFICER BROWNE:  My I ask a 
         18   follow-up question? 
         19            Ms. Peters, when did these -- when were 
         20   these properties purchased?  Is this something that 
         21   happened fairly recently or several years ago? 
         22            MS. PETERS:  The first one that I talked 
         23   about where there was the purchase plus rehab loan 
         24   was less than a year ago. 
         25            The City foreclosure one was approximately 
  0439
          1   two years ago. 
          2            HEARING OFFICER ALVAREZ:  I have a question 
          3   for Mr. Haskell. 
          4            You said that you were beginning some 
          5   discussions with Fleet about an agreement -- 
          6   renewing an agreement that your group had or other 
          7   groups had.  I would like to you speculate for a 
          8   minute, if you would, feel comfortable about what 
          9   kind of reasons you might think -- what was actually 
         10   going on with Fleet's decision not to enter into an 
         11   agreement.  And what I'm looking for is for a sense 
         12   of whether you had the sense that Fleet was 
         13   withdrawing its support from the community or was 
         14   Fleet more changing its approach to dealing with 
         15   communities to become more like some other banks 
         16   that we have seen where they still have a commitment 
         17   to the community but they choose not to have formal 
         18   agreements in implementing their programs. 
         19            MR. HASKELL:  When I know what Terry Murray 
         20   is thinking, I'm sure I will be much richer.
         21            Sorry. 
         22            HEARING OFFICER ALVAREZ:  No.  I appreciate 
         23   that. 
         24            MR. HASKELL:  I wouldn't want to speculate 
         25   what is in Fleet's thought process. 
  0440
          1            Overall, in my experience in negotiations 
          2   with Fleet, the approach to community groups is that 
          3   everything that is given by the bank is viewed 
          4   somewhat as a net loss to the bank, that they do not 
          5   see -- they do not see their commitments to the 
          6   community as somehow figuring out a way to make the 
          7   investment in the community; and our experience, 
          8   frankly, with BankBoston through its mergers was the 
          9   exact opposite, that the bank was, in fact, 
         10   attempting to find a way that they could, in fact, 
         11   do banking in low-income communities and by that 
         12   certainly making a profit. 
         13            And that attitude hasn't been evident in 
         14   several different forums with Fleet. 
         15            HEARING OFFICER SMITH:  Thank you very 
         16   much, and especially for waiting so long into the 
         17   afternoon and evening to make your appearance.  We 
         18   really do appreciate it.
         19            (Pause)
         20            HEARING OFFICER SMITH:  We are starting 
         21   with Mr. Sarkissian. 
         22            MR. SARKISSIAN:  Thank you.
         23            In the first place, I appreciate the 
         24   opportunity to testify on behalf of ARC 
         25   Massachusetts.  Our organization's mission is to 
  0441
          1   enhance the quality of life for persons with 
          2   specific developmental disabilities, and we 
          3   accomplish this mission by promoting quality 
          4   community services and advocating for enlightened 
          5   public policy.  Our former name is the Massachusetts 
          6   Association for Retarded Citizens. 
          7            My comments are going to focus -- my short 
          8   comments -- on the needs of people with 
          9   disabilities.  And, basically, there have been 
         10   others here to speak about community reinvestment 
         11   which is also what I'm going to focus on in the 
         12   general sense.  And I presume the Board will be 
         13   looking at some objective figures in terms of what's 
         14   been realistic in the past, the community banks 
         15   versus larger institutions around the issue of 
         16   community reinvestment. 
         17            If it was any other time, and if things 
         18   were great for people with disabilities in terms of 
         19   affordable, accessible housing, I think this 
         20   wouldn't be an issue for me to come in front of this 
         21   Board; and it is pretty unusual for us to be present 
         22   in front of this Board.  But, in fact, only in 1998, 
         23   there was a report published; and it was called 
         24   "Priced Out in 1998."  I don't know if you are 
         25   familiar with it, but it was a report published by 
  0442
          1   the Consortium for Citizens with Disabilities and 
          2   the Technical Assistance Collaborative which is its 
          3   main office is actually housed in Boston. 
          4            And what that showed is the severity and 
          5   nature of the housing crisis for people with 
          6   disabilities, and it cited in the report that the 
          7   most evident part of this crisis was in the 
          8   affordability of efficiency or studio and 
          9   one-bedroom apartments.  On a national average, the 
         10   cost of such housing is 60 percent of the average 
         11   monthly income of people with disabilities who are 
         12   living primarily on SSI and related income.  For 
         13   many people, that's the situation, especially those 
         14   with cognitive or intellectual disabilities.  SSI 
         15   and related income is the primary source. 
         16            In Massachusetts, this income is under 17 
         17   percent of the one-person median income; and that's 
         18   a direct statistic from "Opening Doors" published in 
         19   May 1999.  And people with disabilities often end up 
         20   in the category of very low income.  HUD studies 
         21   estimate that 70 percent of households with incomes 
         22   below 30 percent of median income who are not 
         23   receiving any assistance in housing from HUD or 
         24   elsewhere, they have priority housing problems. 
         25            In Massachusetts, the percentage of that 
  0443
          1   income to rent an efficiency unit alone is 95 
          2   percent of income.  So just to give you the flavor 
          3   of how -- such a price it is, another piece, 
          4   families aren't much better off that are working 
          5   class, and, again, even lower income.  When they're 
          6   looking for affordable apartments that are also 
          7   accessible, it can be an impossible process.  We 
          8   hear from local advocates of people that work on a 
          9   local level, whether it's Boston or the South Shore; 
         10   and you hear about situations where people end up 
         11   renting apartments on the second floor, the third 
         12   floor.  They have to bring their child up, and they 
         13   go have to go back and bring the wheelchair up. 
         14            A great story, because we also happen to 
         15   have a wait list for people with disabilities who 
         16   are adults.  A gentleman and his wife who were in 
         17   their 70s.  Every day he would carry his daughter up 
         18   three flights of stairs and only three years ago was 
         19   he able to get housing for his daughter and some 
         20   State-supported funding program. 
         21            So, anyway, it is a crisis; and I won't --  
         22   I have other statistics that I have handed in.  I 
         23   won't repeat them publicly.
         24            But what we need, we have a megamerger here 
         25   so it is a great opportunity for some kind of 
  0444
          1   standard around megacommunity reinvestment; and I 
          2   would suggest that there be some kind of standard 
          3   developed around that.  Use this as an opportunity 
          4   to raise the stakes and take a look at what would be 
          5   reasonable given the scope of this merger, and let's 
          6   include housing for people with disabilities 
          7   affordable as part of the low-income piece. 
          8            We're not asking for set aside or anything, 
          9   you know?  We want to be part of the main stream of 
         10   this. 
         11            When you think about affordable housing, we 
         12   need to think about an accessible housing.  And 
         13   there are two types in this community reinvestment 
         14   aspect that I want to encourage.  One is, really, we 
         15   need to subsidize some heavy development of 
         16   apartments across metropolitan areas.  We really 
         17   need a dearth of those, again, accessible ones.  So 
         18   that's one area that community reinvestment can play 
         19   a role in low-cost mortgage financing for people who 
         20   are willing to develop such affordable housing. 
         21            And the second is for home ownership.  You 
         22   heard about that earlier for people with low income.  
         23   It is important for people with disabilities, too, 
         24   and something around community reinvestment where we 
         25   would have mortgage programs and downpayment 
  0445
          1   programs to enhance what is there already such as 
          2   soft second and programs that already exist. 
          3            One of the big programs for people with 
          4   disabilities is really the Fannie Mae program, and I 
          5   am embarrassed to tell them how many people -- it's 
          6   a great program.  I'm glad Fannie Mae's doing it, 
          7   bur really in terms of Massachusetts with 90,000 
          8   people with specific developmental disabilities 
          9   alone, not counting the physical disability world, 
         10   it really falls far short of what we need. 
         11            So we're going to have to come up with a 
         12   private partnership.  We're going to have to make a 
         13   merger.  And I really encourage the Board to think 
         14   in these lines of some kinds of standards 
         15   surrounding community reinvestment.
         16            Thank you very much for this opportunity.
         17            HEARING OFFICER SMITH:  Thank you.
         18            Mr. Van Meter.
         19            MR. VAN METER:  Thank you for the 
         20   opportunity to testify today.  My name is Bob Van 
         21   Meter, and I'm executive director of the Allston 
         22   Brighton Community Development Corporation and an 
         23   active member of the Massachusetts Association of 
         24   Community Development Corporations. 
         25            The Allston Brighton CDC is a 19-year-old 
  0446
          1   nonprofit, community-based organization in the 
          2   Allston-Brighton section of Boston, a neighborhood 
          3   of 70,000 people.  Our organization has worked 
          4   closely with both BankBoston and Fleet Bank for 
          5   several years and values the relationships we have 
          6   with each institution.  We view them both as 
          7   partners in community development. 
          8            However, we come to this hearing 
          9   disappointed at the stands taken by the two banks.  
         10   They have so far opposed making specific commitments 
         11   would give us confidence that one plus one is more 
         12   than two.  We, therefore, must oppose the proposed 
         13   merger unless and until the banks make specific 
         14   commitments to the community. 
         15            Past experience with bank mergers and the 
         16   track record of community lending post merger makes 
         17   it necessary to look for specific commitments.  
         18   Moreover, those commitments should be negotiated 
         19   with the community, not made unilaterally by press 
         20   release. 
         21            The Federal Reserve Bank should require 
         22   that Fleet and BankBoston develop a detailed and 
         23   verifiable community investment plan that assures 
         24   this merger is a net benefit to our communities. 
         25            We urge the Federal Reserve to extend the 
  0447
          1   public comment on the mergers as my colleagues 
          2   before have urged, and we urge that the Federal 
          3   Reserve not approve this merger until such a plan is 
          4   developed. 
          5            We also would look to the Federal Reserve 
          6   to ensure that consumer and worker interests are 
          7   interested.  Reduction of competition in 
          8   Massachusetts that will result from this merger is a 
          9   serious concern for all of us in the commonwealth. 
         10            I'd like to talk a little bit about the 
         11   area of small business lending and work in 
         12   commercial revitalization efforts in urban 
         13   communities.  I know that the hour is late, and I am 
         14   not going to talk about other aspects of community 
         15   development. 
         16            While both banks have some important 
         17   successes in small business lending and assistance 
         18   to commercial revitalization efforts, we see at the 
         19   neighborhood level a clear difference in the two 
         20   banks in that area; and we want to urge that if the 
         21   merger goes forward, that the merged bank build on 
         22   BankBoston's example of engagement. 
         23            We're active in Main Street's commercial 
         24   revitalization efforts in both of the major 
         25   commercial zones of our neighborhoods and also in 
  0448
          1   Brighton and are participating in the community 
          2   business network which provides technical assistance 
          3   and loan packaging to smaller micro-businesses in 
          4   our communities. 
          5            BankBoston has been a more consistent 
          6   presence and ally in local revitalization efforts.  
          7   Fleet's corporate policies on branch staffing mean 
          8   that rarely, if ever, are Fleet branch managers  
          9   able to play a leadership role in local 
         10   revitalization efforts, while BankBoston branch 
         11   managers are active in leadership roles.  If Fleet's 
         12   corporate culture and policies dominate the new 
         13   bank, we will see a further draining of energy and 
         14   leadership from neighborhoods. 
         15            BankBoston's First Community Bank has been 
         16   a welcome addition to the banking scene in our 
         17   neighborhood.  First Community Bank lenders have 
         18   gone the extra mile to work with immigrant 
         19   businesses in our community.  We have not yet seen a 
         20   similar commitment from Fleet to small business 
         21   lending in our community. 
         22            Within the past three years, our 
         23   neighborhood business districts have seen the loss 
         24   of several banks as Greater Boston Bank was acquired 
         25   by Grove, and Grove was acquired by Citizens.  Now 
  0449
          1   Allston and Brighton's major commercial districts 
          2   could each see the loss of one additional bank 
          3   because we don't think that after the sale of 
          4   branches, branches will continue necessarily.  We 
          5   haven't seen that evidence in the past with past 
          6   mergers.  We will he will also see additional branch 
          7   loss with the Citizens-U.S. Trust merger possibly. 
          8            Maintaining healthy community business 
          9   districts is part of maintaining healthy vital urban 
         10   communities.  Increasingly, banks which have been 
         11   the mainstays of these districts are a smaller 
         12   presence in the business districts. 
         13            The emphasis on banking electronically 
         14   means that resources are siphoned away from staffing 
         15   of branches.  Bankers who know the community are 
         16   becoming increasingly rare.  And the new emphasis on 
         17   mini branches in supersized grocery stores also 
         18   hurts the vitality of local business districts by 
         19   pulling people away from community business areas.  
         20   We hope that bank regulators will consider these 
         21   issues carefully. 
         22            Finally, it's important to note that 
         23   philanthropic support for community revitalization 
         24   is an essential complement to community 
         25   reinvestment.  It's important to maintain 
  0450
          1   community-based organizations with strong capacity.  
          2   Both banks have supported community development with 
          3   philanthropy.  But with the increasing pace of 
          4   change in the corporate world and the emphasis on 
          5   strategic high visibility, philanthropy by 
          6   corporations, including the banks, support by 
          7   financial institutions becomes increasingly 
          8   precarious; and it's very difficult to replace. 
          9            We urge a $5 million commitment to 
         10   community development in Massachusetts from the 
         11   merged bank in the next calendar year, and that 
         12   commitment would go to local and statewide 
         13   organizations and community development 
         14   intermediaries. 
         15            Thank you for the opportunity to testify 
         16   today. 
         17            HEARING OFFICER SMITH:  Thank you very 
         18   much. 
         19            We'll go to Mr. Grainger.
         20            MR. GRAINGER:  Thank you.  My name is 
         21   Andrew Grainger, and I'm appearing here today as 
         22   president of the New England Legal Foundation.  New 
         23   England Legal Foundation is a not-for-profit public 
         24   interest law firm which has as its mission a 
         25   balanced economic growth throughout our six-state 
  0451
          1   region and support of our system of free enterprise. 
          2            We are represented by a board of directors 
          3   which is comprised of general counsel and senior 
          4   partners from leading businesses and law firms 
          5   throughout New England. 
          6            In addition to that, we have an advisory 
          7   counsel network, one in each New England state, 
          8   which provides a foundation with an ear to the 
          9   ground so to speak on issues affecting business, the 
         10   economy, and property rights in the state and local 
         11   level. 
         12            Generally, what we do is engage in 
         13   courtroom advocacy on behalf of our constituents in 
         14   filing amicus briefs in the U.S. Supreme Court and 
         15   state and federal courts, mostly in New England.  We 
         16   also engage in advocacy outside the courtroom from 
         17   time to time when it's an important issue affecting 
         18   business interests and free enterprise; and in that 
         19   context, I'm here today to speak in support of the 
         20   proposed merger or acquisition, whichever it's 
         21   called.  It doesn't matter.  I think we know what 
         22   we're talking about. 
         23            The inescapable fact from our perspective 
         24   is that the economic well-being of New England, and 
         25   the best interests of individuals and companies 
  0452
          1   doing business here, and I would include in that all 
          2   the community groups that have testified here today, 
          3   are all better served if we can preserve a large, 
          4   strong, regionally-based commercial lender in New 
          5   England, which is what this merger contemplates.  It 
          6   is simply -- cannot be denied that institutions the 
          7   size of Fleet and BankBoston are vulnerable to 
          8   out-of-region acquirers many times their size. 
          9            I heard Mayor Albano from Springfield refer 
         10   to the problem of perhaps having to get approval 
         11   from 90 miles away.  That is probably what is 
         12   happening in the marketplace today, but it pales 
         13   compared with the problem of going to Charlotte or 
         14   San Francisco.  This merger may help to prevent 
         15   that. 
         16            Large, national, and international 
         17   businesses based in New England can select on a 
         18   national and international basis to meet capital 
         19   requirements.  Middle market, smaller companies are 
         20   hurt when deposit and credit decisions are moved to 
         21   other parts of the country.  In particular, the 
         22   branch system and cash management services that New 
         23   England-based lenders can provide are important to 
         24   New England businesses. 
         25            If the proposed merger does preserve a 
  0453
          1   local regional presence, Boston and the rest of New 
          2   England and everyone here will benefit. 
          3            Because New England Legal Foundation 
          4   represents business interests in all the New England 
          5   states, I have in the past week specifically 
          6   discussed this proposed merger with Board and 
          7   counsel members from my foundation throughout the 
          8   region.  I have got a list in my written remarks 
          9   which have been filed with you; and I won't go 
         10   through all of them, but I will note that sort of in 
         11   echoing what I think you heard in Panel 15, the 
         12   Connecticut Business and Industry Association, which 
         13   represents many, many, many businesses large and 
         14   small in that state; the New Hampshire Business and 
         15   Industry Association, are both among the 
         16   constituencies that I talked to, as well as 
         17   Jefferson Pilot Financial in Concord, New Hampshire; 
         18   the Maine Medical Center in Portland, Maine; IDX 
         19   Systems in Vermont; every state large and small, the 
         20   overwhelming consensus among the foundations, 
         21   participants, and supporters is that this merger in 
         22   the very least is necessary and in most cases 
         23   desirable in view of the consolidation we're seeing 
         24   today. 
         25            We do share the concern raised in some 
  0454
          1   quarters that competitive environment should not be 
          2   sacrificed to retain what we view as the important 
          3   economic advantages of local control.  We are in 
          4   favor of free enterprise and competition. 
          5            As I understand the divestiture proposal 
          6   that's been put forward today, it is really designed 
          7   to avoid any material change in market 
          8   concentration.  In that context, we believe further 
          9   that a competitive environment includes the right 
         10   and the ability of businesses to make and execute 
         11   management and strategic decisions which their own 
         12   thinking and which the market brings them to. 
         13            Businesses that have taken at least 
         14   reasonable steps to comply with the myriad of legal 
         15   and regulatory requirements that are imposed on them 
         16   by so many agencies and so many statutes should be 
         17   free to pursue their business plans and react to 
         18   market forces, which is what these two institutions 
         19   are seeking to do today. 
         20            I want to throw one slight curve ball at 
         21   you which is to say that I also served as chairman 
         22   of Arts Boston which is a local, not-for-profit 
         23   organization that serves as an umbrella group for 
         24   150 local and regional arts organizations. 
         25            In Copley Square today, there is a very 
  0455
          1   nice half-price ticket booth that helps us support 
          2   arts organizations, that helps us take inner city 
          3   school children to cultural events.  That booth 
          4   would not be there today except that Fleet stepped 
          5   forward and gave us financing for it.  I went to 
          6   many other banks to try to get that money first. 
          7            Thank you for your consideration.
          8            HEARING OFFICER SMITH:  We'll go to Mr. 
          9   O'Connor and then to Mr. Brown.
         10            MR. O'CONNOR:  Good afternoon.  I guess I 
         11   should say good evening.  My name is John O'Connor.  
         12   I'm a longtime community organizer with substantial 
         13   experience in consumer and urban department issues.  
         14   I also run a small business incubator, and I proudly 
         15   serve on State Senator Dianne Wilkerson's Community 
         16   Advisory Committee.  For all these reasons, I have 
         17   followed with great interest and growing concern the 
         18   planned merger of Fleet Bank and BankBoston. 
         19            I speak today to express my strong 
         20   opposition to that proposal.  This merger would 
         21   substantially lessen competition in Massachusetts 
         22   and around New England, nor would there be 
         23   sufficient, if any, net positive benefits to the 
         24   public interest to justify its approval. 
         25            Put simply, this is a deal that made 
  0456
          1   greenline the pockets of Fleet and BankBoston 
          2   shareholders, but it redlines the needs of -- but it 
          3   redlines the needs and concerns of Massachusetts 
          4   consumers, small businesses, and urban communities.  
          5   Let me start by stating the obvious. 
          6            Although what's being proposed here is 
          7   usually described as a merger of two, Fleet and 
          8   BankBoston, it in fact represents the consolidation 
          9   of what had been just a few short years ago four of 
         10   the largest banks in Massachusetts into a single 
         11   entity.  Surely going from four to two and now to 
         12   one cannot be a recipe for robust, healthy 
         13   competition, the heart of free enterprise. 
         14            Not surprisingly, even after divestiture, 
         15   this new Fleet Boston entity would utterly dominate 
         16   regional markets, commanding a roughly one-third 
         17   share across Massachusetts, and possibly more in 
         18   greater Boston. 
         19            In other areas, like Worcester, Hartford, 
         20   Rhode Island, Fleet's -- Hartford and Rhode Island, 
         21   Fleet Boston's overwhelming presence would even be 
         22   more dramatic.  Ironically, many of these markets 
         23   are already overconcentrated in the hands of Fleet 
         24   alone at its current site. 
         25            Likewise, the new Fleet Boston would be by 
  0457
          1   far the biggest holder of ATMs in Massachusetts.  
          2   Again, even after divestiture, Fleet Boston is 
          3   likely to control upwards of half of all the 
          4   bank-owned ATM machines in our state, many times the 
          5   number held by any other institution. 
          6            Some say the solution lies in recruiting 
          7   some financial behemoth from Charlotte or San 
          8   Francisco to come up to New England and compete with 
          9   Fleet Boston on its own terms, while others favor 
         10   helping our existing smaller banks do more. 
         11            Let's be clear.  This is a no-win 
         12   situation. 
         13            If history is the guide, small banks 
         14   probably will better serve their customers in our 
         15   communities than megabanks like the proposed Fleet 
         16   Boston, but they cannot effectively compete with the 
         17   super-heavyweight division occupied by a Fleet 
         18   Boston.  Eventually, many of these smaller banks 
         19   will be acquired, squeezed out, or just plain run 
         20   over. 
         21            So I for one cannot see how this proposed 
         22   merger, no matter how it's handled, can do anything 
         23   other than substantially lessen competition.  At 
         24   best, it pushes us further in the direction of a 
         25   market oligarchy, which is not an acceptable 
  0458
          1   substitute for true competition. 
          2            The question then becomes will consumers 
          3   and communities see sufficient new benefits from 
          4   Fleet Boston in terms of convenience or service to 
          5   offset the bad side effects of diminished 
          6   competition.  Again, the answer is a clear no. 
          7            BankBoston and Fleet are both plenty big 
          8   enough now to be able in theory, anyway, if not 
          9   always in practice, to offer the full range of 
         10   services and products needed by our consumers and 
         11   our economy. 
         12            This isn't a case of two little community 
         13   banks teaming up to be able to do more lending to 
         14   mid-sized businesses.  Nor is there any reason to 
         15   think that when it comes to banks, bigger inherently 
         16   means better for consumers.  Just the opposite in 
         17   fact.  A recent study pointed out that as banks get 
         18   bigger, they charge an average of about 15 percent 
         19   higher fees in terms of checking accounts and ATM 
         20   charges and the like. 
         21            Significantly, Fleet and BankBoston have 
         22   been very quiet on the subject of customer fees and 
         23   consumer issues.  So unless and until they make some 
         24   public commitments to the contrary, I see no 
         25   evidence to assume the outcome here will be any 
  0459
          1   different.  More money for less services. 
          2            Fleet and BankBoston may consider that 
          3   perfectly convenient, but consumers and small 
          4   businesses will probably think otherwise. 
          5            Finally, there is the vital issue of how to 
          6   deal -- of how this deal meets or fails to meet the 
          7   needs of all communities and whether the proposed 
          8   merger in the component banks are truly in 
          9   compliance with the purposes of the Community 
         10   Reinvestment Act. 
         11            A couple of weeks ago, Fleet and BankBoston 
         12   unveiled what they're touting as a 14-billion-plus 
         13   CRA commitment that allegedly addresses some of 
         14   these concerns.  Having examined it closely, I 
         15   concur totally with the many others who have 
         16   criticized it as both woefully insufficient in 
         17   funding, lacking in forward-looking innovations that 
         18   anticipate likely changes in the financial services 
         19   landscape, and critically missing an enforcement 
         20   mechanism. 
         21            Parse the numbers, and you find that the 
         22   Fleet-BankBoston CRA proposal fails short of 
         23   representing what the two institutions have achieved 
         24   separately.  The CRA plan will constitute a 12 
         25   percent decline in small business lending and a 
  0460
          1   whopping 46 percent drop in lending and investment 
          2   for community development. 
          3            Let me close by going back to the 
          4   beginning.  Fleet and BankBoston kicked off this 
          5   process some months ago with now famous phrase that 
          6   one plus one is greater than two.  Asked to attach 
          7   some specifics to that promise, Fleet officials soon 
          8   asserted their statement was meant to apply only to 
          9   supposed business synergies, a synonym, I take it, 
         10   for shareholder profits. 
         11            But I suggest today that Fleet must be held 
         12   to its word, and that the merits of this proposed 
         13   merger must be tested against the same benchmark 
         14   Fleet has set for itself.  Does Fleet plus 
         15   BankBoston really add up to more than the sum of its 
         16   part for all of our people and all of our 
         17   communities?  In short, it doesn't work for us; and 
         18   it doesn't work for all of us. 
         19            Or is it actually the case that 
         20   Fleet-BankBoston's deal asks us to work for them 
         21   through higher fees, fewer choices, and less 
         22   attention to the pressing needs of so many 
         23   communities? 
         24            I respectfully submit to you that this 
         25   proposal does not and will not pass these tests and, 
  0461
          1   therefore, should be rejected. 
          2            Thank you.
          3            HEARING OFFICER SMITH:  Mr. Brown.
          4            MR. BROWN:  Thank you very much for this 
          5   opportunity.  I'm here today to speak as a partner 
          6   of RDR Properties, and our company is based in 
          7   Asbury Park, New Jersey. 
          8            RDR is a low-income, single-family housing 
          9   developer.  A substantial part of our business is 
         10   also buying abandoned, boarded-up properties in 
         11   Asbury -- which are plentiful if any of you have 
         12   ever been down there -- and turning them into the 
         13   highest quality rentals in the area. 
         14            We have a for-profit side to our business 
         15   and a not-for-profit or 501(c)(3) side as well, 
         16   which I will explain as I go along the necessity of 
         17   doing that. 
         18            I want to touch briefly on three areas -- 
         19   an overview of Asbury Park so you get a feeling for 
         20   what we're up against and the banks in dealing 
         21   there; the focus and growth of our business; and, 
         22   finally, our relationship with Fleet Bank. 
         23            Asbury Park is a uniquely blighted area 
         24   from the top of Maine clear down the eastern 
         25   seaboard to Key West.  Thirty years ago, it was the 
  0462
          1   jewel and economic hub of the northern Jersey shore.  
          2   At one time, there were over 200 hotels in the area.  
          3   Now there is one.  Surrounding real estate prices on 
          4   the shore are at an all-time high.  In Asbury, the 
          5   total value of taxable property has shrunk each year 
          6   since 1993.  The downtown area is virtually deserted 
          7   and boarded up, but hopefully showing some signs of 
          8   life. 
          9            This recent article with a page and a half 
         10   in the New York Times a couple of months ago is 
         11   called "Blocks of Oceanfront Property in Asbury Park  
         12   Once a Magical Result Have Been Festering for 15 
         13   Years."  And the headline is "Caught in the 
         14   Undertow."  It kind of gets into more detail about 
         15   the problems in Asbury. 
         16            But the article described the waterfront as 
         17   looking like Beirut.  It's totally desolate.  The 
         18   city's population is 60 percent African-American, 
         19   and the unemployment rate is in the high teens.  
         20   Compared economically to Asbury, Bridgeport, 
         21   Connecticut, looks like the Silicon Valley. 
         22            RDR Properties, our company, is a unique 
         23   company; and here are a few reasons why.  We buy 
         24   almost exclusively abandoned, boarded-up properties 
         25   and rehab them for sale or rent.  We have our own 
  0463
          1   construction and management companies that are also 
          2   based in Asbury Park.  RDR is the only property 
          3   developer with a major physical presence in the 
          4   downtown Asbury area. 
          5            Our goal is to move our best renters from 
          6   the rental status to homeowners.  And we work very 
          7   closely with the faith-based organizations in the 
          8   area.  We have no local community home buyer 
          9   assistance programs, so we serve in that role 
         10   ourselves, hence, the nonprofit part of our 
         11   business. 
         12            In fact, we can put a family into a brand 
         13   new three-bedroom, bath-and-a-half home, built by a 
         14   modular builder for less than $50,000; and that's 
         15   with State assistance.  We also have our own 
         16   construction company, and a year ago that was almost 
         17   all white.  Today, it is more than 50 percent 
         18   minority, whether it is blacks, Latinos, and Asians.  
         19   And by next year, we expect that number to exceed 70 
         20   percent, with many of the minorities moving into 
         21   management positions.  We have our own skilled 
         22   training program because none of that exists in the 
         23   area. 
         24            What's been Fleet's role in all of this?  
         25   Three months ago, our company owned eight properties 
  0464
          1   comprising about 53 rental units.  By Labor Day of 
          2   this year, we will own and be converting at least 
          3   another 150 new abandoned units in the area.  We 
          4   have an existing three million line with Sovereign 
          5   Bank, which is LTS regulated; and we have a new line 
          6   of $2 million with First Union.  By the way, PNC and 
          7   Summit Bank are also in the area. 
          8            But I want to say that Fleet is by far and 
          9   away becoming our lead lender, not just in dollars, 
         10   but in creativity, flexibility, understanding, and 
         11   response.  When we need to move on a deal, they have 
         12   somebody who is there immediately; and they work 
         13   very closely with us.  It is a very competitive 
         14   situation.  They've done a very fine job. 
         15            We also want to give particular thanks to 
         16   Joyce Harley.  She is the senior VP and community 
         17   development officer for all of New Jersey for Fleet, 
         18   Bill Grossman who is the senior VP and head of 
         19   community lending for the head of the real estate 
         20   division, and, of course, our own representative 
         21   down there, Jim Maloney.  Of the five banks we deal 
         22   with, they are by far and away the most expert. 
         23            And, finally, let me just say we look 
         24   forward to staying in touch with Gail Snowden and 
         25   Agnes Bundy Scanlon.  I've known Gail for five years 
  0465
          1   in our work with the National Community Reinvestment 
          2   Coalition; and I've worked with Agnes since she 
          3   first arrived in Fleet from her former position in 
          4   the Senate Budget Committee. 
          5            And I want to thank Fleet for being part of 
          6   our company's success, and we look forward to an 
          7   even stronger relationship with them as a Boston 
          8   combination.
          9            Thanks very much.
         10            HEARING OFFICER SMITH:  Mr. Raff. 
         11            MR. RAFF:  Thank you.  First, let me say I 
         12   admire your stamina.  
         13            My name is Larry Raff.  I'm vice-president 
         14   of development and external affairs for Morgan 
         15   Memorial/Goodwill Industries, which is located in 
         16   lower Roxbury and in the heart of the recently 
         17   designated empowerment zone in Boston. 
         18            Goodwill provides a variety of job training 
         19   and other services to people with disabilities and 
         20   other barriers to work to help them maintain 
         21   self-sufficiency.  Goodwill is also an important 
         22   participant in the revitalization of the 
         23   economically-challenged communities in Boston. 
         24            I'm here this evening to speak to the issue 
         25   of philanthropy.  I'm a -- Goodwill is a 
  0466
          1   representative on the Community Advisory Committee 
          2   initiated by Senator Wilkerson and have hosted 
          3   several of these meetings.  We're very involved with 
          4   the Advisory Committee because we're deeply 
          5   concerned for the well-being of the physically- and 
          6   economically-challenged residents of our service 
          7   area which encompasses all of eastern and central 
          8   Massachusetts. 
          9            Access to affordable, user-friendly banking 
         10   services is especially important to people with 
         11   physical and educational challenges and to those 
         12   with limited and fragile financial resources.  Any 
         13   reduction in services in affordability as a result 
         14   of this merger would be an assault on an array of 
         15   public and philanthropic initiatives that have 
         16   sought to better and assimilate this population into 
         17   the mainstream and into the economic mainstream.  
         18   Many of these programs are supported by Fleet Bank 
         19   and BankBoston. 
         20            I want to share with you the support that 
         21   Fleet Bank has provided Goodwill.  Especially in the 
         22   last year, it has been quite generous. 
         23            Fleet has committed nearly a quarter of a 
         24   million dollars to Goodwill over the next three 
         25   years for a few programs that address job training 
  0467
          1   to help people acquire computer skills, to acquire 
          2   competitive employment, as well as to help them put 
          3   clothing on their backs for job interviews and for 
          4   being on the job so they can maintain their 
          5   employment. 
          6            Fleet's also been our banker for many years 
          7   and has supported and underwritten $4 million in 
          8   bonds to help us purchase our main headquarters 
          9   building in Roxbury. 
         10            In terms of corporate charitable giving, 
         11   both Fleet and BankBoston have been very generous to 
         12   Goodwill; and for that I thank them very much. 
         13            However, it's incumbent upon me to also 
         14   look at the larger picture; and I want to do that 
         15   now. 
         16            Fleet has clearly been generous to Goodwill 
         17   and many other organizations in Boston and in 
         18   Massachusetts; and this is emblematic of why it's 
         19   important to preserve the integrity and the level of 
         20   Fleet Boston's corporate philanthropy in 
         21   Massachusetts, which is what I want to speak to 
         22   directly.
         23            It's my concern, however, that this merger, 
         24   the proportion of Fleet Bank's combined corporate 
         25   giving that goes to Massachusetts will diminish 
  0468
          1   significantly and in favor of those marketplaces 
          2   where the new Fleet BankBoston or new Fleet Boston 
          3   will be expanding its business operations.  It's no 
          4   secret that corporate philanthropy in general is 
          5   based on enlightened self-interest for the benefit 
          6   of the business operations and for the community.  
          7   It is certainly understandable. 
          8            Given this reality, however, it is also 
          9   understandable for Fleet Boston to maximize its 
         10   charitable giving programs in those areas where the 
         11   bank is expanding its business operations.  Unless 
         12   precautions are taken by this body and the other 
         13   regulatory agencies addressing this merger, the 
         14   result will be a significant decline in charitable 
         15   giving in Massachusetts.  This will further diminish 
         16   the ability of human service organizations to 
         17   effectively benefit their constituencies and 
         18   assimilate them into the economic and social 
         19   mainstream, which benefits everyone. 
         20            In closing, I want to make an observation. 
         21            If I as a philanthropic or as a charitable 
         22   organization, a community-based organization were to 
         23   make application to Fleet Bank or BankBoston with a 
         24   proposal reflecting the integrity of the proposal 
         25   that has been put forth by the bank to you on behalf 
  0469
          1   of this merger, I can assure you Goodwill would not 
          2   receive a grant and would not receive a loan based 
          3   on the facts, figures, promises, and measurable 
          4   outcomes that have been provided by this proposal to 
          5   you. 
          6            I would suggest you apply the same 
          7   standards to this proposal for merger as Fleet Bank 
          8   and BankBoston would apply to their own 
          9   philanthropic program in your own considerations. 
         10            Thank you very much.
         11            HEARING OFFICER SMITH:  Any questions? 
         12            Thank you very much for taking the time to 
         13   share your views with us.
         14            (Pause)
         15            HEARING OFFICER SMITH:  Mr. Campen.
         16            MR. CAMPEN:  My name's Jim Campen.  I an 
         17   associate professor of economics at the University 
         18   of Massachusetts in Boston.  I'll focus my comments 
         19   today on the issue of mortgage lending to 
         20   traditionally underserved borrowers.  This is an 
         21   issue on which I've done a number of studies in the 
         22   last several years. 
         23            In early June, I released a report entitled  
         24   "Does One Plus One Equal More Than Two or Less Than 
         25   One?  A Study of Mortgage Lending Before and After 
  0470
          1   Recent Mergers by Fleet and BankBoston."  A copy of 
          2   that report is attached to my written testimony. 
          3            The main finding of this study, which has 
          4   been referred to frequently today, was that both in 
          5   the city of Boston and in all of Massachusetts, 
          6   lending to black, Latino, and low- and 
          7   moderate-income LMI borrowers by Fleet in 1998 was 
          8   approximately half of the total lending to these 
          9   borrowers by Fleet and Shawmut combined in 1995; 
         10   that is, the result of the most recent Fleet merger 
         11   was one plus one equals one. 
         12            In contrast, I find that lending to these 
         13   borrowers by BankBoston in 1998 was approximately 
         14   equal to the total lending to these borrowers by 
         15   Bank of Boston and BayBanks combined in 1995; that 
         16   is, the result of the most recent BankBoston merger 
         17   was one plus one equals two. 
         18            These findings were very robust.  The same 
         19   general pattern exists whether one looks at Boston 
         20   or at the entire state at loans to blacks, to 
         21   Latinos, or to LMI borrowers and starting dates of 
         22   1994, 1995, ending dates of 1997 or 1998. 
         23            In the findings reported for New York, New 
         24   Jersey, New Hampshire, and Connecticut in Table 3 of 
         25   my report are even stronger than those for Boston in 
  0471
          1   Table 1 and Massachusetts in Table 2. 
          2            Fleet's principal response to my findings 
          3   was stated in a June 29 letter from William 
          4   Mutterperl to Boston Fed CRA officer Richard Walker.  
          5   The same general response was articulated this 
          6   morning by Agnes Bundy Scanlan on today's first 
          7   panel, and it's presented in a 15-page document that 
          8   I received today from Fleet. 
          9            Fleet points out that it has ranked first 
         10   in market share in lending to blacks, Latinos, and 
         11   LMI borrowers; and that the percentage of its total 
         12   loans that go to these borrowers is substantially 
         13   above the industry average.  This, of course, is not 
         14   a refutation of my findings.  Fleet does not dispute 
         15   my findings. 
         16            Rather, Fleet's response, perhaps 
         17   unwittingly, underlines exactly why the substantial 
         18   drop in Fleet's mortgage lending to these borrowers 
         19   following its merger to Shawmut is so important.  It 
         20   is precisely because Fleet and Shawmut had such 
         21   strong performance in lending to traditionally 
         22   underserved borrowers that the decline matters so 
         23   much. 
         24            When a major lender cuts back its lending 
         25   to middle- and upper-income households, there is no 
  0472
          1   reason for public policy concern, because there are 
          2   plenty of other lenders aggressively seeking to lend 
          3   to these borrowers.  But when the largest lenders to 
          4   traditionally underserved borrowers cut back 
          5   substantially, there is a shorter of other lenders 
          6   who will step in and take up the slack. 
          7            Fleet's cutback in lending to minorities 
          8   and LMI borrowers was approximately proportional to 
          9   its cutback in overall lending.  However, by total 
         10   lenders -- by all lenders -- to all borrowers rose 
         11   by 29 percent between 1995 and 1997.  Total lending 
         12   by all lenders to black and Latino borrowers fell by 
         13   1 percent during that period. 
         14            When the two largest lenders -- LMI to 
         15   minority and LMI borrowers -- merge, it is possible 
         16   for the subsequent lending of the surviving 
         17   institution to fall to the level of the merger 
         18   partner which had the lower level; that is, to fall 
         19   by more than 50 percent so that one plus one is 
         20   equal to less than one and still have it be the case 
         21   that the surviving institution retains the position 
         22   of the largest single lender to blacks, Latinos, and 
         23   LMI borrowers. 
         24            Indeed, Fleet and Shawmut were by far the 
         25   largest such lenders in 1995; and Fleet remains, as 
  0473
          1   I emphasize, the largest lender.  In fact, at this 
          2   time, Fleet and BankBoston are the two largest 
          3   lenders to minority and LMI borrowers. 
          4            I doubt that Mr. Mutterperl or Agnes 
          5   Scanlon means to suggest it would be all right if 
          6   the lending to these borrowers by the institution 
          7   resulting from the proposed merger were to fall by 
          8   50 percent, as long as that institution retains a 
          9   No. 1 market share and continued to make a high 
         10   percentage of its loans to these borrowers. 
         11            I have attached to the written version of 
         12   my testimony, six newly-completed tables for -- that 
         13   replicate for six Massachusetts metropolitan areas, 
         14   the MSA, the analysis previously done for the city  
         15   of Boston and the state of Massachusetts. 
         16            These were done for the Boston, Worcester, 
         17   and Springfield MSAs, as well as for the three MSAs 
         18   in the southeastern part of the state.  I 
         19   particularly call your attention to the tables for 
         20   Springfield, which is Table 5, and to New Bedford, 
         21   Table 7. 
         22            In Springfield, the state's second most 
         23   populous MSA, between 1995 and 1998, Fleet's home 
         24   purchase loans to blacks fell from 46 loans to just 
         25   2; to Latinos, from 99 loans to 10; and to LMI 
  0474
          1   borrowers, from 226 loans to just 38.  Of course, 
          2   money percentage declines, so on the right-hand 
          3   column of that table, were 97 -- 95.7 percent, 90 
          4   percent, and 83 percent. 
          5            In New Bedford, the state's poorest MSA, 
          6   total lending by both Fleet and BankBoston dropped 
          7   precipitously.  Total loans to blacks and Latinos 
          8   fell from 23 loans to 3.  While total lending to LMI 
          9   borrowers by the two banks combined fell from 127 
         10   loans to 11. 
         11            Fleet and BankBoston suggested that the 
         12   criterion of one plus one greater than two should be 
         13   modified to take into account the fact that post 
         14   merger -- post divestiture institutions will be only 
         15   about 80 percent as large as the combined size of 
         16   the two current banks; that is, that the appropriate 
         17   criterion should be one plus one is greater than 
         18   1.6. 
         19            However, there's no guaranty that a bank 
         20   acquiring divested branches will engage in mortgage 
         21   lending will make up for a drop in lending by the 
         22   divesting institution.  In fact, I'm aware of two 
         23   cases in the last round of mergers where a 
         24   substantial number of branches and deposits in a 
         25   single MSA were divested to a single institution; 
  0475
          1   and in neither case, did the acquiring bank make a 
          2   significant number of mortgage loans. 
          3            In Worcester, several branches divested in 
          4   the Fleet-Shawmut merger provided a basis for a new 
          5   bank, First Massachusetts Bank.  Like everywhere 
          6   else, lending fell substantially there to Latinos, 
          7   blacks, and the LMI borrowers.  To what extent did 
          8   lending First Massachusetts Bank make up for these 
          9   lending decreases?  Well, in 1997, First 
         10   Massachusetts Bank made a total of two home purchase 
         11   loans in Worcester MSA. 
         12            Similarly, in Boston, U.S. Trust acquired a 
         13   lot of BayBank/BankBoston branches.  They made a 
         14   total of three home purchase loans in the Boston MSA 
         15   in 1997. 
         16            Thus, I would strongly urge that the level 
         17   of post merger mortgage lending required to be 
         18   adjusted downward only to the extent that the banks 
         19   acquiring that divested branches make firm 
         20   commitments for mortgage lending to traditionally 
         21   underserved borrowers.
         22            I think that the one plus one greater than 
         23   two criterion emphasized by CEOs Gifford and Murray 
         24   in their March 15 press conference establishes an 
         25   appropriate minimum level of post merger home 
  0476
          1   purchase lending to traditionally underserved 
          2   borrowers and neighborhoods. 
          3            I urge the Fed to require a firm written 
          4   commitment to this level of lending as a condition 
          5   of approving the merger.  In light of my earlier 
          6   comments, I further urge the Fed first to accept a 
          7   commitment to a lower level of lending by the 
          8   post-merger institution only to the extent that the 
          9   bank acquiring divested branches makes a firm 
         10   commitment to making such loans. 
         11            Second, to require that the commitment be 
         12   made not only overall but for individual states and 
         13   appropriate submarkets to avoid having other areas 
         14   experience outcomes like that observed in New 
         15   Bedford.  And third, to have the commitment 
         16   expressed in numbers of home purchase loans rather 
         17   than dollar amounts.
         18            Finally, I want to emphasize that the 
         19   information so far made available by Fleet and 
         20   BankBoston is insufficiently detailed to make 
         21   possible an evaluation of their proposed mortgage 
         22   lending in light of this criterion. 
         23            I strongly endorse the call by many other 
         24   parties testifying in today's hearing that the Fed 
         25   extend the comment period so that it remains open 
  0477
          1   for a reasonable period of time after Fleet and 
          2   BankBoston make their detailed final plan
          3   available to community groups and other interested 
          4   parties.  Thank you. 
          5            HEARING OFFICER SMITH:  Mr. Davis. 
          6            MR. DAVIS:  Thank you.  I am Robert Davis, 
          7   and I serve as Director of Government Relations for 
          8   America's Community Bankers.  We appreciate the 
          9   opportunity to present our views today on the 
         10   acquisition of BankBoston by Fleet Financial. 
         11            Your day has been pretty long.  I promise 
         12   to be as brief as I possibly can be. 
         13            America's Community Bankers is a national 
         14   banking trade association that represents 
         15   progressive community banks of all sizes.  In New 
         16   England our membership covers a complete range of 
         17   institutions other than Fleet and BankBoston, 
         18   consisting of savings banks, cooperative banks, 
         19   savings associations and commercial banks.  We're 
         20   the only national trade group that represents the 
         21   entire spectrum of banks in New England other than 
         22   money center banks. 
         23            Our statement focuses on the divestiture of 
         24   branches, ATMs and other assets necessary for the 
         25   proposed acquisition to comply with the antitrust 
  0478
          1   laws as well as other competitive situations.  I 
          2   should comment that while a good bit of the 
          3   testimony today is focused on the behavior of the 
          4   new Fleet-Boston after the acquisition, especially 
          5   with respect to community development, I think there 
          6   can be no question that any assets that are acquired 
          7   through divestiture by the community-based 
          8   institutions in New England are going to be managed 
          9   to the benefit of those communities, and I think 
         10   that is one of the strengths of the community banks 
         11   in this region. 
         12            Our concerns really can be summarized in 
         13   five points.  Community banks in New England are 
         14   fierce and effective competitors, and they should be 
         15   afforded a significant role in resolving antitrust 
         16   problems that are inherent in any large acquisition 
         17   in a concentrated banking market. 
         18            Two, unlike other regions of the country, 
         19   savings institutions in particular in New England 
         20   have well-diversified portfolios and are strong 
         21   competitors for the business customer, which is one 
         22   of the concerns. 
         23            Three, the unprecedented potential 
         24   concentration of ATM ownership that could result 
         25   from the proposed acquisition raises special 
  0479
          1   economic concerns that must be addressed in the 
          2   regulators' anti-trust analysis.  The divestiture 
          3   plan being developed must take into account the 
          4   unique implications of such a high concentration of 
          5   ATM ownership that would result from this 
          6   acquisition, particularly within the 128 corridor. 
          7            Four, so as not to revisit problems that 
          8   have emerged in the past, the government should 
          9   continue to provide careful scrutiny of any 
         10   restrictive real estate covenants that would hamper 
         11   future competition. 
         12            Five, along a similar vein, other contract 
         13   provisions, such as unreasonable restrictions on 
         14   communications between potential consortia partners 
         15   in the bidding process or restrictions on future 
         16   hiring practices of banks that bid for divested 
         17   branches, two issues which have been raised and are 
         18   potentially problematic in this acquisition, should 
         19   be prohibited.
         20            A more detailed analysis of each of these 
         21   points is in our written statement that is submitted 
         22   for the record. 
         23            In conclusion, I want to emphasize that 
         24   America's Community Bankers has no interest in 
         25   impeding the BankBoston acquisition by Fleet.  To 
  0480
          1   the contrary, we believe the transaction can bring 
          2   new efficiencies and competition to the marketplace.  
          3   However, for that to occur, we believe the Federal 
          4   Reserve and the Justice Department must carefully 
          5   oversee the divestiture plan to resolve anti-trust 
          6   concerns, and that divestiture plan should take 
          7   account of the points that we have raised in 
          8   particular. 
          9            We strongly believe that the acquisition 
         10   and divestitures in question can result in gains for 
         11   the entire banking community and all of its 
         12   customers in New England.  We're just as strongly 
         13   convinced that the best solution will be a 
         14   divestiture that ensures a strong role for 
         15   competitive community banking throughout the region.  
         16   Thank you. 
         17            HEARING OFFICER SMITH:  Thank you. 
         18            Mr. Glass. 
         19            MR. GLASS:  Thank you.  For the record, my 
         20   name is Donald Glass.  I'm president of the 
         21   Community Bank League of New England, which is a 
         22   regional trade association representing 118 
         23   community banks located throughout the six New 
         24   England states.  Our members range in size from as 
         25   small as $9 million to as large as $1.2 billion, 
  0481
          1   with an average asset size of $147 million. 
          2            We believe that generally this merger will 
          3   have a very positive impact on the economic vitality 
          4   of the New England region.  It is good for the two 
          5   companies, and the region as a whole.  We advocate a 
          6   win-win scenario where community banks, small 
          7   businesses, local communities and consumers win as 
          8   well, as a consequence of this transaction. 
          9            Community banks are a vital source of 
         10   financial services to small businesses, local 
         11   communities and consumers.  Community banks strive 
         12   to provide quality products and services at 
         13   affordable prices while demonstrating a strong 
         14   commitment to and investment in their local 
         15   communities.  A key principle in the League's 
         16   mission statement is to foster an environment in 
         17   which community banks can operate in a productive, 
         18   profitable manner.  In line with our mission, we 
         19   believe it is essential and in the best interest of 
         20   the banking industry as a whole that this proposed 
         21   transaction be conducted in a way that allows 
         22   community banks to play a role in the completion of 
         23   this merger. 
         24            We have three key concerns regarding the 
         25   proposed merger between Fleet Financial Group and 
  0482
          1   BankBoston Corporation, and they are as follows: 
          2            First, there are a number of antitrust 
          3   issues such as overall market dominance, state- 
          4   imposed deposit caps, as well as a concentration of 
          5   ATM ownership.  The latter is of primary concern to 
          6   our members, since together Fleet and BankBoston own 
          7   the largest number of bank-owned ATM machines in use 
          8   today in Massachusetts. 
          9            In the metropolitan Boston area, their 
         10   combined ATM ownership is well over 50 percent.  
         11   This gives them the ability to employ predatory 
         12   pricing practices, such as surcharging. 
         13            We strongly urge that these antitrust 
         14   concerns be thoroughly evaluated and that serious 
         15   consideration be given to requiring the divestiture 
         16   of a specific percentage of ATM machines, both those 
         17   located in branches and freestanding alike. 
         18            Second, in the past large banks in this 
         19   region have included noncompete clauses in sale and 
         20   other documents relating to the divestiture of bank 
         21   branches and real estate.  In this regard, we would 
         22   urge you to make sure that this practice is 
         23   prohibited. 
         24            Finally, we believe that community banks 
         25   should be allowed to have the opportunity to 
  0483
          1   participate in the purchase of deposits and branches 
          2   that are to be divested.  Their participation in the 
          3   divestiture process will help ensure that 
          4   community the community banking industry remains a 
          5   strong and vibrant player serving local communities 
          6   in their respective markets. 
          7            Thank you for consideration of our views. 
          8            HEARING OFFICER SMITH:  Thank you.  
          9   Questions from the Panel?
         10            HEARING OFFICER KWAST:  Yes.  Thank you. 
         11            I have a question for Mr. Davis and Mr. 
         12   Glass.  Could you amplify on the role of your banks 
         13   and so-called middle-market lending.  One of the 
         14   concerns that was expressed earlier today was 
         15   whether small- and medium-sized banks would be able 
         16   to compete effectively in the so-called middle 
         17   market.  What role do your banks play in making 
         18   middle-market-type loans. 
         19            MR. DAVIS:  Let me make the first 
         20   observation there.  Our members range in size from 
         21   multi-billion dollar regional community banks, like 
         22   People's Heritage in Webster and People's in 
         23   Bridgeport, Connecticut, to very small institutions.  
         24   We have, as Don mentioned, institutions that, with 
         25   less than $10 million in assets, their assessment 
  0484
          1   areas are literally defined as blocks. So there is a 
          2   whole range of institutions. 
          3            And obviously the very small institutions 
          4   have much less capacity to engage in business 
          5   lending except for community Mom-and-Pop businesses.  
          6   But the larger institutions that are still community 
          7   banks and they're still community oriented, even if 
          8   they operate regionally, we believe have very 
          9   substantial capacity to engage in business lending 
         10   and also can make the jump into middle markets. 
         11            We recognize that it's important to 
         12   establish that middle market competitor.  We 
         13   recognize that the government has an interest in 
         14   establishing a new, large, dominant player.  We 
         15   don't disagree with that objective. 
         16            And we realize, frankly, also, that the 
         17   majority of the assets divested are probably going 
         18   to have to go to that type of player.  Frankly, 
         19   community banks don't have the capital to absorb all 
         20   the assets that are going to be divested.  But we 
         21   think that a very substantial proportion of the 
         22   assets that are divested can be effectively deployed 
         23   in the hands of the community banks, and they can be 
         24   effective competitors. 
         25            MR. GLASS:  We view this transaction taking 
  0485
          1   place as being in two parts, basically.  The first 
          2   part is the creation of a mid-market competitor, 
          3   probably an outside financial institution, and 
          4   another part where community banks will be able to 
          5   participate in consortia and pick it up in the after 
          6   market, so-called after market. 
          7            And there are ways of doing some of the 
          8   mid-market by participation, with a small bank being 
          9   the lead and putting together groups of banks that 
         10   can participate in some of those types of loans.  So 
         11   there is a way of doing it.  Certainly they aren't 
         12   going to be the competitor that either the Justice 
         13   Department or the Fed would like to have in here, 
         14   and we view that as probably the reality. 
         15            MR. DAVIS:  I want to add also that we're 
         16   not looking for Fleet and BankBoston to carve out a 
         17   segment for sort of a discount sale.  In fact, we 
         18   think that the community -- the highest value usage 
         19   of a lot of the divested assets are going to be with 
         20   community banks, and they will often be willing and 
         21   able to pay the highest premium for some of the 
         22   divested assets. 
         23            So I think that the strong participation 
         24   and an open process that lets community banks bid 
         25   probably also ultimately benefits the stockholders 
  0486
          1   of Fleet and BankBoston the most in terms of 
          2   realizing gains from the sale of divested assets. 
          3            HEARING OFFICER KWAST:  I also have a 
          4   question for Mr. Campen.  I was a little unclear, 
          5   did your study of mortgage lending apply to dollar 
          6   value of lending as well as the number of loans or 
          7   is it only the number of loans? 
          8            MR. CAMPEN:  I just looked at the number of 
          9   loans. 
         10            HEARING OFFICER KWAST:  Thank you. 
         11            HEARING OFFICER BROWNE:  I also have a 
         12   question for Mr. Campen.  If I understood correctly, 
         13   you were saying that for minorities, that the 
         14   cutbacks by Fleet resulted in basically a cutback 
         15   overall or at least no growth overall; whereas for 
         16   non-minorities, there was overall expansion. 
         17            Who is picking up the -- or who is doing 
         18   the expanding in both cases, and is there -- and as 
         19   a consequence, who is not stepping in as much in 
         20   terms of lending to minorities?  Is there a 
         21   differential?  Is it mortgage banks?  Or where is 
         22   the slack?  Who is picking up the slack? 
         23            MR. CAMPEN:  The big lenders -- I could 
         24   answer this more precisely if I looked at the data. 
         25   But the big lenders in Massachusetts and Boston 
  0487
          1   overall -- there are a number of out-of-state 
          2   mortgage companies -- countrywide, NorWest, 
          3   BankAmerica, just looking at 1997 data -- which have 
          4   made lots of loans, which are among the five or six 
          5   biggest lenders statewide and citywide to all 
          6   borrowers.  They made very few loans to minorities. 
          7            So the big Boston-based banks were 
          8   disproportionately the lenders -- I mean, in 1995, 
          9   they had almost two-thirds of the total lending 
         10   between them.  There were four banks then, but they 
         11   accounted for almost two-thirds of the total lending 
         12   in the state to minority borrowers.  In 1997 that 
         13   had gone down to slightly below 50 percent. 
         14            HEARING OFFICER SMITH:  Thank you very much 
         15   for coming to present your views.
         16            We'll move on to Panel No. 19.  Mr. 
         17   Carvalho.
         18            MR. CARVALHO:  Good evening.  My name is 
         19   Frank Carvalho, and I'm the Executive Director of 
         20   the Coalition for a Better Acre, a community 
         21   development corporation in Lowell, Mass. 
         22            I'm here tonight to testify as executive 
         23   director of a community development corporation that 
         24   deals with low- to moderate-income residents in the 
         25   oldest and poorest neighborhood of Lowell, and I'm 
  0488
          1   very concerned about this proposed merger. 
          2            First, it's hard for me to understand why 
          3   this new proposed entity refuses to deal with my 
          4   trade organization, the Massachusetts Association of 
          5   Community Development Corporation, who we chose to 
          6   represent our community. Second, why can't they make 
          7   specific commitments in response to our proposals? 
          8            I urge you to support us in the following 
          9   requests:  that Fleet and BankBoston develop a 
         10   detailed and publically verifiable community 
         11   reinvestment plan negotiated with community 
         12   organizations and elected officials with specific 
         13   commitments ensuring the net benefit to low- and 
         14   moderate-income and minority communities. 
         15            Two, to extend the public comment period 
         16   until such brand is developed and released to the 
         17   public, and to issue no approval unless and until 
         18   the aforementioned conditions are fully met. 
         19            This is our hope, that the mergers of the 
         20   largest banks in New England should benefit low- and 
         21   moderate-income and minority communities as well as 
         22   shareholders.  One plus one should equal more than 
         23   two. 
         24            This is very important because each bank 
         25   has been a significant part of the solutions for our 
  0489
          1   community through their grant program.  I went to 
          2   BankBoston to help CBA to put 16 low- and 
          3   moderate-income residents of Lowell into their first 
          4   houses as homeowners.  We are very proud of them.  
          5   And a grant from Fleet Bank has allowed CBA to 
          6   develop 50 resident leaders who are researching and 
          7   addressing community obstacles such as child care, 
          8   transportation, lack of benefits and other issues 
          9   relating to the employment issues that affect low- 
         10   and moderate-income residents of our city to get 
         11   good and liveable wage jobs. 
         12            Fleet Bank and BankBoston should ensure 
         13   that one plus one will be greater than two in 
         14   charitable contributions for community development.  
         15   They should include what we propose, which is a $5 
         16   million statewide charitable budget for the Year 
         17   2000 and increasing beyond that.  It is currently 
         18   estimated that the merged banks' Chapter 102 
         19   obligation to the Mass. Housing Partnership fund, 
         20   MHP, could range hundreds of millions of dollars in 
         21   net financing. 
         22            The merged bank could help to meet the 
         23   critical equity needs in the affordable housing 
         24   development market by converting all or a majority 
         25   of the debt to a grant that can be administered by 
  0490
          1   the MHP fund.  This would greatly contribute to the 
          2   development of affordable housing.  BankBoston's 
          3   grant conversion at the time of the last merger 
          4   yielded approximately one grant dollar for every $9 
          5   of debt.  As a result, MHP was able to capitalize a 
          6   firm plus program with over 367 affordable rental 
          7   units financed through firm plus.  It also allowed 
          8   MHP to capitalize the fund resulting in additional 
          9   241 units. 
         10            The merged bank should result in Fleet and 
         11   BankBoston's participation in the Basic Banking for 
         12   Massachusetts program that offers low-cost checking 
         13   and savings accounts targeted to low-income 
         14   consumers who have been discouraged from using the 
         15   banking system by high transaction fees.  The new 
         16   bank should adopt a program that allows ten checks 
         17   and ATM transactions per month with a $2.50 fee and 
         18   75 cents per additional check. 
         19            In addition, the bank should create an 
         20   aggressive campaign to market its products in low- 
         21   to moderate-income and minority communities. 
         22            Finally, Fleet and BankBoston can best 
         23   assure that these goals are met by negotiating and 
         24   signing the Community Investment Agreement with 
         25   MACDC covering the above-discussed items and others 
  0491
          1   in the proposal previously forwarded to them.  The 
          2   agreement should be for at least five years.  It 
          3   should include a process and commitment to 
          4   renegotiate an extension of this agreement for an 
          5   ongoing relationship. 
          6            It should also include provisions for 
          7   regular communication among the parties, plus 
          8   specific mechanisms for reporting and verifying that 
          9   the goals of the agreements are being met.  By 
         10   agreeing to enter this agreement, the new entity 
         11   would assure that my community needs are being met, 
         12   and sending a loud and clear message that one plus 
         13   one does equal more than two.  Thank you for 
         14   listening. 
         15            HEARING OFFICER SMITH:  Thank you very 
         16   much. 
         17            Mr. Colton. 
         18            MR. COLTON:  Thank you.  My name is Roger 
         19   Colton.  I am an attorney and a member of the 
         20   Belmont, Massachusetts, Fair Housing Committee.  I 
         21   speak tonight on behalf of the Belmont Fair Housing 
         22   Committee, an arm of the local government of the 
         23   Town of Belmont. 
         24            One question presented to federal 
         25   regulators by the proposed merger of Fleet Financial 
  0492
          1   Group and the BankBoston Corporation is whether the 
          2   merged bank will adequately address the credit needs 
          3   of the community.  In assessing whether this will 
          4   occur, there is a need to differentiate between the 
          5   urban and the suburban communities.  There is a 
          6   significant focus of attention today on the urban 
          7   community.  Unfortunately, there is much less 
          8   attention focused on the suburbs.  One of the next 
          9   major steps that must occur in fair housing lending 
         10   is to facilitate the diversification of suburban 
         11   communities. 
         12            My discussion tonight focuses on one slice 
         13   of Boston suburbia, beginning with Belmont and 
         14   radiating north and west eventually to capture the 
         15   communities of Belmont, Waltham, Lexington, Woburn 
         16   Winchester, Arlington, Burlington, Bedford, Sudbury 
         17   and Concord.  Information on Lincoln was sought but 
         18   was not available. 
         19            Unfortunately, it is not only difficult but 
         20   it is impossible to discuss the data in five 
         21   minutes.  Accordingly, I will present our 
         22   conclusions to you this evening and commend our 
         23   written presentation to you for perusal of the 
         24   supporting data.
         25            The first major credit need in the suburban 
  0493
          1   community relevant to tonight involves the promotion 
          2   of socioeconomic diversity.  One lesson found in the 
          3   available data from the ten study communities is 
          4   that the affordability of units is not the only 
          5   barrier to home ownership in the ten communities 
          6   studied.  Home ownership is unavailable even when 
          7   affordable home ownership opportunities exist. 
          8            Information was obtained for each of the 
          9   study communities on the number of units that are 
         10   affordable at different levels of median income.  
         11   This information shows that merely because a unit is 
         12   affordable at a designated income level does not 
         13   mean that it is actually occupied by a family or 
         14   household with that income. 
         15            It is often asserted that Boston's suburban 
         16   community lacks a greater socioeconomic diversity 
         17   because of the lack of affordable housing.  The data 
         18   confirms that this is frequently the cause.  The 
         19   data further show, however, that something more 
         20   stands as a barrier to socioeconomic 
         21   diversification. 
         22            The data present a compelling case that 
         23   when and where affordable home ownership units 
         24   exist, they are not being purchased by households at 
         25   lower incomes.  To meet the needs of diversifying 
  0494
          1   the suburbs, specific proactive steps are necessary.  
          2   From a fair housing lending perspective, this need 
          3   is more than simply to avoid discrimination. 
          4            The second major credit need in the 
          5   suburban community, as relevant for purposes 
          6   tonight, involves the promotion of racial and ethnic 
          7   diversification.  The data from the ten study 
          8   communities used for our report show a lack of 
          9   diversification even when controlling for income as 
         10   measured by percent of median income. 
         11            Merely because units may be affordable to 
         12   households of color does not mean that households of 
         13   color are becoming homeowners in these suburban 
         14   communities.  The lack of racial and ethnic 
         15   diversity in the ten study communities cannot be 
         16   attributed exclusively to the lack of affordable 
         17   housing availability. 
         18            By definition the price of housing was not 
         19   the limiting factor in our analysis.  The data was 
         20   limited to housing determined to be affordable at 80 
         21   percent of median income or more with which to 
         22   begin.  The data was also limited to 
         23   African-American and Hispanic households who have 
         24   income of at least that amount. 
         25            Something more than the mere affordability 
  0495
          1   of home ownership is creating barriers to suburban 
          2   home ownership for households of color. 
          3            So why do I present all of this tonight to 
          4   you folks?  Identifying and seeking remedies for 
          5   barriers to diversity and home ownership is one 
          6   essential element in fair housing lending.  Fair 
          7   housing lending involves more than merely avoiding 
          8   discrimination.  Fair housing lending has as its 
          9   ultimate goals the elimination of the effects of any 
         10   fair housing impediments outside the lender's 
         11   control and the elimination of any identified 
         12   impediments within the control of the lender. 
         13            This proposed merger should not only not 
         14   impede but should affirmatively promote this 
         15   construct of fair housing lending. 
         16            Based on the two credit needs of the 
         17   suburban communities which I previously identified, 
         18   it would be appropriate for a Fleet-Boston to commit 
         19   to working with the Greater Boston fair housing 
         20   community to develop a plan of action to promote the 
         21   diversification of the suburbs. 
         22            This plan should include a stated goal, 
         23   supported by both short-term and long-term 
         24   objectives, a written work plan in furtherance of 
         25   accomplishing those objectives, an evaluation 
  0496
          1   mechanism to determine performance relative to the 
          2   stated objectives, and a review mechanism charged 
          3   with utilizing evaluation to formulate 
          4   recommendations on modifications as needed to the 
          5   plan of action should the objectives not be 
          6   achieved. 
          7            Thank you for providing an opportunity for 
          8   a representative of local government to speak with 
          9   you tonight.
         10            HEARING OFFICER SMITH:  Thank you.
         11            And we'll move to Mr. Cusick. 
         12            MR. CUSICK:  My name is Pat Cusick.  I'm 
         13   the Executive Director of the South End Neighborhood 
         14   Action Program, SNAP, in Boston, and for the record, 
         15   I reside at 521 Shawmut Avenue in the South End of 
         16   Boston. 
         17            I'm departing from my written testimony.  
         18   It has been noted that something unusual has 
         19   happened here today.  Of the 72 organizations 
         20   testifying in favor of the acquisition by Fleet in 
         21   the charitable lending category -- of the 75 that 
         22   testified here today, 72 are nonprofits. 
         23            Now, I'm not against nonprofits.  I'm the 
         24   executive director of a nonprofit.  But isn't that 
         25   strange?  Where are the small businesses?  I would 
  0497
          1   hope that the Fed would be concerned.  I mean, 
          2   really, this is astounding. 
          3            For most of my professional career, I've 
          4   been concerned with affordable housing, affordable 
          5   rental housing.  I was the organizer that seized the  
          6   Harvard commencement in 1970 and held it hostage 
          7   over the issue of affordable housing. 
          8            In the 1980s I was the organizer of a 
          9   coalition in my neighborhood that enabled 360 
         10   families to live in affordable housing that cost $60 
         11   million.  I myself am the owner/developer of a 
         12   nonprofit that has won national honors in the South 
         13   End, 84 units of limited equity co-op housing. 
         14            But I've shifted my principal concern after 
         15   all this time from being concerned about rental 
         16   housing to that of home ownership.  Maybe it's 
         17   because in my neighborhood, in Lower Roxbury, less 
         18   than 5 percent of the units are home ownership.  
         19   Now, I'm going to repeat that, because that's the 
         20   least amount in the city of Boston, less than 5 
         21   percent are home ownership.  And that is in a city 
         22   which, as you know, has the least amount of home 
         23   ownership in the United States. 
         24            Now, this is a terrifying statistic when 
         25   you think about it, and this is why that 
  0498
          1   neighborhood is so vulnerable to every takeover of 
          2   any sort.
          3            Home ownership is more than shelter.  It is 
          4   more than a psychological support for families.  
          5   Home ownership is not only part of the American 
          6   dream, but on a scale that doesn't have anything to 
          7   do with individual housing, home ownership sinks 
          8   roots into the communities.  And in the low income 
          9   communities, there are very few roots.  And when you 
         10   have rootless communities, the entire community and 
         11   then the entire city is at risk.  We desperately 
         12   need more home ownership. 
         13            Now, at this portion of my testimony, I was 
         14   going to reiterate Professor Campen's excellent 
         15   report, but there is no need to do that; you have 
         16   the report, you have heard from him. 
         17            I just want to make a plea that we really 
         18   need home ownership.  What's happening in Boston is 
         19   the tale of two cities:  people of affluence and 
         20   people that are poor.  The working class is very 
         21   fragile in this city.  They can't find housing, and 
         22   we need affordable home ownership for working class 
         23   families and for the lower middle class.  So that is 
         24   my focus and my plea. 
         25            I will say that we had hoped that one plus 
  0499
          1   one would equal more than two, but I'm sure you have 
          2   seen Brian Mooney's column in the Boston newspaper 
          3   of record, the Globe, on Saturday which iterates the 
          4   number of banks that have been subsumed by other 
          5   banks and are now Fleet.  There are 450 former 
          6   independent banks that are now Fleet. So maybe 
          7   instead of saying one plus one should equal more 
          8   than two, we should say 451 plus one should equal 
          9   more than two. 
         10            I think we need several things.  We need 
         11   mortgage lending that allows families to stay in 
         12   their own neighborhoods and to invest in their 
         13   neighborhood.  We need home equity lending programs 
         14   which help ensure that the family homestead can be 
         15   passed on to the next generation.  We need small 
         16   business lending that ensures that neighborhoods can 
         17   sustain their local infrastructure, while local 
         18   entrepreneurs are encouraged to continue investing 
         19   their own blood, sweat and tears in their 
         20   communities. 
         21            And we also need a banking presence in 
         22   which bank employees look like the people in our 
         23   neighborhoods and are hired from our neighborhoods 
         24   with a helping hand in the area of training and 
         25   education. 
  0500
          1            We are very concerned about this proposed 
          2   merger, and we very much insist that there be an 
          3   agreement which is verifiable and accountable, and I 
          4   think it's the responsibility of the Federal Reserve 
          5   Bank -- who else can do it -- to ensure that this is 
          6   a written agreement on the offers that Fleet-Boston 
          7   is making, and obviously it has to be signed.  I 
          8   mean, no agreement is an agreement unless it is 
          9   signed.  If I go into Fleet and get a loan and I 
         10   have to pay back $150 a month or something, 
         11   obviously I can't get away with a local agreement, 
         12   with an oral agreement. 
         13            So Fleet-Boston should sign a signed 
         14   agreement overseen by the Feds, because we must turn 
         15   to you for any of the benefits that we'll receive.  
         16   Thank you. 
         17            HEARING OFFICER SMITH:  Thank you very 
         18   much.
         19            Mr. Harris. 
         20            MR. HARRIS:  My name is David Harris, and 
         21   I'm the Executive Director of the Fair Housing 
         22   Center of Greater Boston, an organization promoting 
         23   equal housing opportunities for all people 
         24   throughout the Greater Boston metropolitan region. 
         25            I have spent much of the last two days 
  0501
          1   trying to edit my testimony down to five minutes.  
          2   This morning as I sat gasping for air after reducing 
          3   my comments to seven minutes, I realized that every 
          4   second I saved cost substance.  I was reminded of a 
          5   joke I used to tell students to loosen them up 
          6   before administering exams.  A proctor notices a 
          7   student has sat statue still for two and a half 
          8   hours of a three-hour exam on the tradition of 
          9   rhetoric.  When she warned the student that time was 
         10   wasting, the student protested that he had studied 
         11   for two weeks and reduced the article into a single 
         12   word.  "And now I've forgotten the word," cried this 
         13   beleaguered fellow.  "That's bull," intoned the 
         14   proctor.  "That's the word," exclaimed the student. 
         15            This is how it feels to peal away substance 
         16   and come before you with abbreviated arguments.  
         17   After reading the articles in today's Globe, I 
         18   realized I should save my breath.  The real battle 
         19   took place in the editorial room to which I do not 
         20   have access and which bank representatives surely 
         21   had more than five minutes to make their case.  So 
         22   I've submitted a copy of my expanded version 
         23   writings, and I offer here only a few highlights and 
         24   comments on process. 
         25            I must say, as I looked at you all, I 
  0502
          1   thought of another comment from a professor of mine 
          2   who used to say that he attended a union meeting at 
          3   which a speaker stood up and said, "Ladies and 
          4   gentlemen, the last speaker spoke to you in vague 
          5   generalities.  I, however, am going to speak to you 
          6   at random."  You must feel a bit of that coming on, 
          7   and I hope that I'm a little bit more focused than 
          8   that. 
          9            I should begin by saying that many of the 
         10   comments that you heard today touch on fair housing 
         11   issues, from affordable housing to mortgage lending, 
         12   from diversity of the work force to the location of 
         13   branches.  The Fair Housing Center agrees with those 
         14   who have come before you to ask the Federal Reserve 
         15   Bank to closely scrutinize the banks' stated 
         16   commitment to community. 
         17            The Fair Housing Center is among a hundred 
         18   plus community groups with whom the banks have 
         19   proudly boasted meeting.  We had to request that 
         20   meeting, and while the tone was cordial and 
         21   discussion open, we were distressed by the 
         22   suggestion that we return at the end of the year to 
         23   explore fair housing issues after the merger is 
         24   complete and the new entity is consolidated. 
         25            Given the history of housing discrimination 
  0503
          1   in this country and Fleet's chapter in that history, 
          2   a firm public and detailed commitment to fair 
          3   housing must precede and not following a merger. 
          4            The practice of effective fair housing is 
          5   or certainly should be a basic element of good 
          6   banking, basic but not simple.  The practice 
          7   requires lasting institutional commitment driven by 
          8   an honest and ongoing self criticism.  Effective 
          9   practice does not occur in isolation but is by 
         10   nature cooperative and open.  It depends upon 
         11   developing and maintaining internal mechanisms, as 
         12   well as partnerships with external organizations 
         13   across institutional lines. 
         14            Of course creating these partnerships 
         15   requires a basic element sorely missing from the 
         16   proposal that you are considering:  Trust.  Fair 
         17   housing involves more than the widely acknowledged 
         18   commitment to LMI consumers and neighborhoods, and 
         19   the scope of the Fair Housing Center's mission 
         20   extends throughout the 150 plus cities and towns 
         21   which comprise our service area. 
         22            The Federal Reserve Bank must also look 
         23   beyond the CRA horizon and condition any approval on 
         24   specific commitments to fair housing in the broader 
         25   community as well.  A step toward creating that 
  0504
          1   trust and ensuring that any approved bank practices 
          2   effective fair lending, the Federal Reserve Bank 
          3   should require two specific commitments. 
          4            The first is a comprehensive review of the 
          5   two banks' policies, practices and procedures to 
          6   identify possible impediments to fair housing.  The 
          7   review should be conducted by internal and external 
          8   analysts and cover impediments within the lender's 
          9   control as well as more general impediments in the 
         10   market.  The results of this review should be made 
         11   public. 
         12            Second, the Federal Reserve Bank should 
         13   require the new entity to translate that review by 
         14   specified date within the first year of operation  
         15   into a detailed plan of action to increase lending 
         16   to persons of color and other protected classes 
         17   throughout the region, rather than merely within LMI 
         18   census tracts. 
         19            This plan will include quantifiable, 
         20   verifiable, short-term and long-term objectives -- 
         21   well, I'm sorry.  Roger and I have the same proposal 
         22   here, so I won't -- in deference to the one minute I 
         23   won't go on, and it is in my comments. 
         24            Those of us who come here today have done 
         25   so in good faith.  Our efforts may be characterized
  0505
          1   variably as begging, extortion or mau-mauing, 
          2   depending upon the sympathy or the temerity of the 
          3   critic.  But by refusing to enter into enforceable 
          4   commitments prior to approval, it is the banks who 
          5   come to you with their hands out.  They come, one of 
          6   them burdened by a history of questionable practices 
          7   and commitment to fair lending, asking for a free 
          8   ride. 
          9            We're not talking about the $14.6 billion, 
         10   but about formal commitments to certain practices.  
         11   They refuse to make such commitments and indulge 
         12   today's spectacle with the arrogant self assurance 
         13   that you will punch their ticket. 
         14            The Fair Housing Center believes increased 
         15   size and power must be accompanied by increased 
         16   responsibility and accountability.  We call upon the 
         17   Federal Reserve Bank to consider the type of 
         18   corporate citizen it may be creating by endorsing 
         19   the proposed merger.  Such an entity must accept the 
         20   leadership role in the area of fair housing and fair 
         21   lending.  It must be expected to do more than its 
         22   former constituent parts and more than its smaller 
         23   competitors.  It must set the pace for others with 
         24   fewer resources and less influence in affirmatively 
         25   furthering fair housing. 
  0506
          1            There's an old saying in the Civil Rights 
          2   movement that freedom is not free.  It is a lesson 
          3   with which we conduct ourselves, knowing that stands 
          4   we take may be ridiculed and eventually dismissed by 
          5   those preoccupied by what they consider the bottom 
          6   line. 
          7            But these banks and any new bank must 
          8   realize that there is a cost to discrimination, not 
          9   only diminished lives of victims and the community 
         10   as a whole, but to those who discriminate as well; 
         11   in other words, a cost to the banks themselves. 
         12            The Fair Housing Center will be watching 
         13   and where indicated investigating.  But we also 
         14   stand ready to participate as full partners in the 
         15   quest to eliminate the practice and effect of 
         16   discrimination in the housing market.  Thank you.
         17            HEARING OFFICER SMITH:  Thank you very 
         18   much. 
         19            Reverend Barnwell.
         20            REVEREND BARNWELL:  I'm William Barnwell, 
         21   representing the Greater Boston Interfaith 
         22   Organization, also a resident, like Pat Cusick, of 
         23   the South End and Boston. 
         24            Greater Boston Interfaith Organization, 
         25   GBIO, is a large and active social reform 
  0507
          1   organization consisting of about 75 faith 
          2   communities, ten community development corporations, 
          3   and five other community groups across race, class, 
          4   denomination, and geographic lines.  Over 4,000 
          5   people attended our founding assembly last November, 
          6   the first of its kind in many, many years in Boston. 
          7            I'm here today to represent that 
          8   organization, which has made affordable housing, 
          9   especially for low-income people, its top priority. 
         10   After many small group meetings, my church, Trinity 
         11   Episcopal Church in Copley Square in Boston, decided 
         12   to make affordable housing our top outreach concern 
         13   as well. 
         14            We at GBIO and at Trinity Church believe 
         15   that if we are not able to make housing available to 
         16   all of our citizens, we will rather quickly become a 
         17   one-class city, forcing most of our church members 
         18   and other low- to moderate-income people into the 
         19   distant suburbs.  Not only would that make life 
         20   extremely difficult for them, for those persons, 
         21   destroying their present communities, it would also 
         22   have the effect of greatly diminishing the diversity 
         23   of the city that we cherish so much. 
         24            Specifically, GBIO urges that you approve 
         25   the merger only if these six conditions are met:  
  0508
          1   One, as a lot of others have said, that you require 
          2   a detailed written and signed reinvestment 
          3   agreement.  The idea that such an agreement not be 
          4   written out in detail and signed is unthinkable to 
          5   us and we believe should be unthinkable to banks 
          6   that rely entirely on signed agreements with their 
          7   customers. 
          8            Two, that the merger result in at least the 
          9   same amount of benefits to low income areas that 
         10   both banks have offered before the merger. 
         11            Three, that Fleet Bank convert its 
         12   obligation for a loan pool to the Massachusetts 
         13   Housing Partnership into an affordable housing 
         14   grant, that is, equity conversion.  Here Fleet would 
         15   be following the model of the Bank of Boston when 
         16   they merged with BayBank.  By our calculations, $30 
         17   to $60 million would be available for affordable 
         18   housing grants.  This, we believe, would help many 
         19   more low- to moderate-income families buy their 
         20   homes or rent than a small reduction in interest 
         21   payments would allow. 
         22            Four, that Fleet Bank and BankBoston meet 
         23   their commitments to the soft second mortgage 
         24   programs that they made to the community on May 12th 
         25   at Roxbury Community College. 
  0509
          1            Five, that the new bank extend the soft 
          2   second mortgages to other parts of the Commonwealth. 
          3            Six, that low- to moderate-income 
          4   neighborhoods continue to have nearby branches of 
          5   the new bank and that none be closed or sold unless 
          6   two of the old bank branches are in the same 
          7   immediate neighborhood.  Thank you very much. 
          8            HEARING OFFICER SMITH:  Mr. Bolling. 
          9            MR. BOLLING:  My name is Bruce Bolling.  I 
         10   am the Executive Director of the Massachusetts 
         11   Alliance for Small Contractors.  I am a lifelong 
         12   resident of the Boston and Roxbury community.  I 
         13   served on the City Council and was President of the 
         14   City Council.  I served on the body for 12 years and 
         15   have been involved in business development, economic 
         16   development, particularly for small minority and 
         17   women business enterprises for quite some time. 
         18            The Massachusetts Alliance for Small 
         19   Contractors is a nonprofit corporation that provides 
         20   business development, capacity building services to 
         21   small minority and women-owned business enterprises.  
         22   Mass Alliance helps M/WBEs to acquire the financial 
         23   resources, the technical capabilities, and 
         24   management skills needed to successfully compete for 
         25   projects in the construction industry, including 
  0510
          1   bonding approval, creditworthiness, management and 
          2   accounting systems, technical expertise, estimating 
          3   capacity, project experience. 
          4            We address these needs in businesses 
          5   through two programs:  Our Business Development 
          6   Support Services Program, our Educational and 
          7   Training program. 
          8            The Business Development Support Services 
          9   Program provides technical assistance and support to 
         10   M/WBEs through one-on-one management and technical 
         11   consulting services.  We also assist M/WBEs with the 
         12   financing, tax and insurance issues many contractors 
         13   face while managing the growth of their companies.  
         14   These services are provided by construction 
         15   contracting industry experts, including engineers, 
         16   estimators, project managers, lawyers and 
         17   accountants. 
         18            The various services that we provide, thus 
         19   far over 350 companies have benefited directly from 
         20   one or more of MassAlliance's wide range of 
         21   technical assistance and capacity-building services. 
         22            Our Education and Training component has 
         23   served many people in construction management areas.  
         24   We have provided educational training services to 
         25   1,753 participants representing 490 companies. 
  0511
          1            MassAlliance engaged in a financial 
          2   analysis of the clients that we provide services to.  
          3   That financial analysis was based on our ability to 
          4   provide programs and tailor programs specifically to 
          5   meet the needs of minority and women construction 
          6   contractors.  The objective of that profile was to 
          7   profile the financial position of companies actively 
          8   receiving services from MassAlliance to determine 
          9   trends, common characteristics, strong and weak 
         10   points.  The findings will allow us to maximize the 
         11   delivery of various programs offered to -- and to 
         12   assist in the design of new programs. 
         13            One of the major findings of that study, 
         14   the main financial obstacle that small contractors 
         15   are experiencing is undercapitalization, resulting 
         16   in high leverage ratios and lack of liquidity. 
         17            The more than 50 percent of the 
         18   participants in our study in fact are rated worse 
         19   than the industry.  And to understand some of the 
         20   reasons causing this situation, we should start with 
         21   the high percentage of companies having very low 
         22   days of cash. 
         23            What we have been able to determine is 
         24   that, when you do a comparison of accounts 
         25   receivable balances compared to sales and accounts 
  0512
          1   payable balances as compared to cost of goods sold, 
          2   the hidden factor in the accounts receivable numbers 
          3   is that the retainage is 5 percent.  5 percent of 
          4   the contract is withheld until the end of the 
          5   contract.  Many contractors start early, which means 
          6   that they in fact can't get the retainage until a 
          7   year or two years after the project has been 
          8   completed. 
          9            The adverse impact of that is significant 
         10   to this constituency.  What is needed is equity 
         11   financing, access to capital in ways that 
         12   traditional financing programs don't commit to.  
         13   Most of these companies have very low leverages.  
         14   It's a mature industry.  The profit margins usually 
         15   range from 2 to 5 percent, and it is very difficult 
         16   for these companies to access capital. 
         17            My concern with this merger is that what I 
         18   would like to see for this constituency, and for 
         19   that matter small businesses, is the ability to 
         20   access capital based on the real growth needs that 
         21   these companies have.  At present, financial 
         22   institutions, major financial institutions simply 
         23   are not doing it. 
         24            This is a time where the economic expansion 
         25   should lend itself to innovative, creative 
  0513
          1   approaches to accessing capital.  It is not 
          2   happening for this constituency.  Just in 
          3   Massachusetts, $3 billion a year in construction 
          4   publicly financed for the next five years, for the 
          5   next five years.  These small businesses are having 
          6   a difficult time trying to take advantage of those 
          7   construction opportunities. 
          8            This merger, if it doesn't address this 
          9   constituency and other small business 
         10   constituencies, they will be marginalized forever, 
         11   and that has been the problem to date. 
         12            This is an area where major financial 
         13   institutions have shied away from, and it is 
         14   something that needs to be done if we're going to 
         15   bridge this gap to ensure that small businesses in 
         16   fact get the kind of capital they need in order to 
         17   stabilize and grow their businesses like anyone 
         18   else. 
         19            HEARING OFFICER SMITH:  Questions? (No 
         20   response)
         21            We are going to have a one-person panel so 
         22   that Mr. Porter can catch his flight at 10 o'clock. 
         23            MR. PORTER:  Thank you for allowing us to 
         24   speak here today.  My name is Alvin Porter, and I'm 
         25   the Executive Director of the New York Mortgage 
  0514
          1   Coalition.  The New York Mortgage Coalition is an 
          2   organization of ten banks and eight community 
          3   groups, and we provide mortgage counseling services 
          4   throughout New York, Long Island and Westchester. 
          5            Fleet Bank has been a member of the New 
          6   York Mortgage Coalition since its inception five 
          7   years ago, and last year they were one of the 
          8   leading lenders.  They originated more than $9 
          9   million in mortgage loans. 
         10            The New York Mortgage Coalition, since its 
         11   inception, has been responsible for over $100 
         12   million dollars in mortgage low.  We target low- to 
         13   moderate-income families throughout New York, Long 
         14   Island and Westchester.  The banks within our 
         15   organization provide grant money, which supports the 
         16   counseling efforts by our community groups. 
         17            Fleet has been an active member of the 
         18   Mortgage Coalition, and it has supported the 
         19   Mortgage Coalition since its beginnings.  They have 
         20   been a strong supporter of the Mortgage Coalition.  
         21   They're in touch with the community, and they're 
         22   responsive to the community needs.  Fleet, as an 
         23   organization, is supportive of mortgage counseling.  
         24   I think a lot of the problems that have been 
         25   expressed here today can be resolved through 
  0515
          1   mortgage counseling, and Fleet has been one of the 
          2   leaders in helping to provide and support mortgage 
          3   counseling throughout the past five years. Thank you 
          4   very much.
          5            HEARING OFFICER SMITH:  Thank you very much 
          6   for coming.  We will have a two-minute break for the 
          7   court reporter.
          8            (Brief recess)
          9            HEARING OFFICER SMITH:  We're ready to 
         10   start with our last panel, starting with Luz 
         11   Santana.
         12             MS. SANTANA:  Good evening.  My name is 
         13   Luz Santana.  I'm a member of a grass-roots 
         14   neighborhood organization named Vecinos Unidos, 
         15   which means in English United Neighbors, and we work 
         16   with disadvantaged residents to try to improve the 
         17   economic conditions.  And we have been working 
         18   with -- we have been dealing with issues of Fleet 
         19   for many years. 
         20            Back in 1978, '79, I believe the name -- 
         21   the previous name was Connecticut Bank and Trust, 
         22   and we had to deal with them, you know, with issues 
         23   like people on public assistance trying to cash 
         24   their checks and having problems and having the 
         25   police calling people who had, you know, differences 
  0516
          1   with some of the tellers and things getting kind of 
          2   out of hand.  We had to be involved. 
          3            And at this point, now, we turned our 
          4   attention to Fleet back in January, because we saw 
          5   an article in the paper, in the business section, 
          6   that they had been given an award from the President 
          7   because how great they were doing with the welfare 
          8   work, you know. 
          9            And we kind of got concerned and we called 
         10   a meeting.  I invited them.  However, we had a hard 
         11   time getting some of the decision-makers from Fleet 
         12   to come to meet with us.  We finally got a recruiter 
         13   staff to come and talk to us about how welfare was 
         14   working. 
         15            It happens to be that what seems to be a 
         16   successful story, it wasn't successful at all for us 
         17   in Connecticut, because what ends up to be, that 
         18   particular recruiter said that out of 20 people that 
         19   she hired, the person on recruiting, to work for the 
         20   Welfare to Work, none of the people stayed at the 
         21   job for, you know, 60 days or 30 days, and there was 
         22   no reason or explanation of what happened with the 
         23   person that stayed on the job. 
         24            And when we offered to -- we wanted to be 
         25   involved, we wanted to help them retain their 
  0517
          1   employees, and we also want to get people good jobs.  
          2   And it seems like we have a problem with that.  They 
          3   are not being too cooperative with us. 
          4            So we're very concerned about how this 
          5   acquisition will reflect in terms of the people who 
          6   are looking for jobs, meaningful jobs for them to 
          7   become self-sufficient.  So at this moment we are 
          8   opposing this acquisition, and hopefully that will 
          9   put attention, because, as you know, companies are 
         10   being compensated for hiring people from Welfare to 
         11   Work, and what we're concerned is that if people are 
         12   not staying on the job, however, the people who did 
         13   the recruiting for the company is not necessarily 
         14   the people who are presenting the tax credits, you 
         15   know, for the Welfare to Work.  So we're kind of 
         16   concerned that while people are not staying on the 
         17   job, the possibilities are they still can be able to 
         18   claim people, you know, for the tax credit.  So we 
         19   would like to ask this Board to look into that, and 
         20   things will hopefully get better, and we can improve 
         21   all relations.
         22            HEARING OFFICER SMITH:  Thank you very 
         23   much. 
         24            Mr. Vickers. 
         25            MR. VICKERS:  I'm Greg Vickers.  Thank you 
  0518
          1   for having us here today.  I work with the Citizens' 
          2   Research Education Network, which is a small 
          3   research-oriented nonprofit in Hartford, and 
          4   representing today 21 organizations who have signed 
          5   on to our printed report, which we have handed in 
          6   and filed with you. 
          7            And I will talk about some of the concerns 
          8   that the coalition has raised.  The coalition is 
          9   Connecticut Friends of Community Reinvestment, and 
         10   it is kind of a broad-based coalition of women's 
         11   organizations, minority groups, small business, and 
         12   housing interests. 
         13            The coalition, there are several things 
         14   that we're concerned about.  I guess the three that 
         15   stand out are the anticompetitive nature of the 
         16   merger, Fleet's decline or the decline in home 
         17   mortgage lending of Fleet after the merger with 
         18   Shawmut, and Fleet's record of small business 
         19   lending.  I'm just going to touch on those. 
         20            Fleet's acquisition of Shawmut four years 
         21   ago resulted in the significant concentration of 
         22   deposits and services in one behemoth institution in 
         23   Connecticut, yet the increase of size created 
         24   absolutely the opposite effect desired by the Board:  
         25   It decreased the availability of services to the 
  0519
          1   Connecticut community. 
          2            If the merger is accomplished, Fleet Boston 
          3   will have almost 50 percent of the market share for 
          4   Hartford and 30 percent of the market share for the 
          5   state as a whole in terms of deposits.  The next 
          6   closest competitor has only 11 percent of the 
          7   deposits in Connecticut, and in Hartford, the next 
          8   two competitors, No. 2 and 3, if combined, would 
          9   still only be one fifth of the size of Fleet. 
         10            The sale of the new institution will 
         11   positively dwarf the remaining independent banks in 
         12   Connecticut.  Sharing the market among institutions 
         13   of is rarely considered -- rarely meets the 
         14   definition of competition. 
         15            With Fleet having already acquired its 
         16   closest competitor, Shawmut, and BankBoston having 
         17   acquired its closest competitor, BayBank, the 
         18   continuing concentration of the market from four 
         19   competing banks to one megabank constitutes an 
         20   alarming trend.  These mergers may result in gains 
         21   for stockholders, but they provide little or no 
         22   benefit to consumers who are to be protected by the 
         23   Board. 
         24            Our second concern has been affordable 
         25   housing lending, and this was the -- looking at the 
  0520
          1   HMDA data is when I was initially interested in this 
          2   whole issue.  I was originally not interested in the 
          3   merger, and people said, "Well, Greg, you know, 
          4   let's get together," and I said, "Well, you can meet 
          5   in my basement, but I'm not all that interested."  
          6   And when we began to look at the numbers, I began to 
          7   realize how significant this was. 
          8            In the Hartford Metropolitan Statistical 
          9   Area -- we have graphs for all of the statistical 
         10   areas in Connecticut in the submitted documentation.  
         11   In the Hartford MSA, the total mortgage lending of 
         12   both Fleet and Shawmut in minority households in 
         13   1994 was 469 loans.  In 1997 it had plummeted to 
         14   102, and by 1998 it had dropped to 78.  So that it's 
         15   less than one fifth. 
         16            And I did some math after Jim Campen's 
         17   comments about the one plus one equals less than or 
         18   more than two, and it seemed to me, and my math may 
         19   be wrong here, but that one plus one is equal to .4 
         20   when it comes to minority lending and home 
         21   mortgages. 
         22            If you look at Hartford again, in the low- 
         23   to moderate-income loans in the Hartford MSA, they 
         24   went from '94, in 1994, which was again the year of 
         25   the merger, from 609 down to 151, or 25 percent.  Of 
  0521
          1   the mortgages that Fleet and Shawmut together did, 
          2   they were doing one quarter of that; Fleet by itself 
          3   was doing one quarter of that in '98.
          4            In Fleet's SBA lending -- there is more 
          5   documentation on Fleet's small business lending, but 
          6   just in terms of their SBA lending, even though 
          7   they're a preferred lender, and they are the largest 
          8   lender in the state, they ranked, in the first seven 
          9   months of the '98-'99 fiscal year, Fleet Bank was 
         10   23rd in the total -- 23rd of all lenders in the SBA 
         11   lending in this state. 
         12            And I will conclude, then, quickly.  There 
         13   is more that you will see when you read the 
         14   documentation.  But I want to say one thing.  We 
         15   would love to say see an extension of the public 
         16   comment period for two weeks after Fleet's published 
         17   commitment, after it's published and folks have had 
         18   a chance to look at it.
         19            Also we would love to see a public hearing 
         20   in Connecticut, and while I'm sure at this hour 
         21   that's not at all what you're interested in hearing, 
         22   there are a lot of organizations and groups which I 
         23   have talked to that would love to have an 
         24   opportunity to address you. 
         25            And last, we would ask that the Federal 
  0522
          1   Reserve Board deny the merger until and unless there 
          2   are negotiated, detailed, signed and publicly 
          3   monitorable CRA agreements, and until there is a 
          4   more extensive divestiture plan. 
          5            HEARING OFFICER SMITH:  Thank you very 
          6   much. 
          7            Mr. Garvin. 
          8            MR. GARVIN:  Good evening, ladies and 
          9   gentlemen.  My name is Roger Garvin.  I thank you, 
         10   Board, for having me speak tonight.  I'm here 
         11   because I'm a businessman in Roxbury.  I'm also 
         12   running for Roxbury District 7 City Councilor.  And 
         13   because I am a businessman in Roxbury, it becomes 
         14   very important to me to talk to you for just a few 
         15   minutes. 
         16            It's very important that the Roxbury 
         17   community have a stake in Roxbury.  It bothers me as 
         18   a businessman because in this community, more people 
         19   go to jail than in any other community that I can 
         20   think of.  Because they go to jail, it's a very 
         21   serious issue.  It is because, mostly, economic 
         22   development, as a businessman, I look at economic 
         23   development on a very, very broad plan. 
         24            In order to keep people from going to jail, 
         25   we need to do something about that.  No. 1 is 
  0523
          1   providing monies to existing businesses so that they 
          2   can improve their businesses, so that they can 
          3   provide more jobs for the people in the community.  
          4   We do not have access to the lending institutions.  
          5   We do not have access to monies that we should have.  
          6   Believe it or not, if the people in District 7 who 
          7   are in business already could have access to monies, 
          8   just the businessmen alone could solve a lot of 
          9   problems and a lot of issues that are now plaguing 
         10   District 7. 
         11            I'm here tonight.  I'm not begging, I'm 
         12   just pleading to you to act on a more positive basis 
         13   as far as getting and making access and making 
         14   monies more available to the businesses in Roxbury.  
         15   I have provided a lot of jobs, but if I cannot 
         16   provide a lot more jobs, it's because of 
         17   accessibility to funds.
         18            As we approach the beginning of a new 
         19   millennium, megamergers are the talk of the times.  
         20   Presently, the merger being discussed is the one 
         21   with Fleet and BankBoston.  If these type mergers 
         22   are to occur, then it should happen to best benefit 
         23   the community in which it does its business. 
         24            I would like to see corporate mergers such 
         25   as a proposed merger of Fleet and Boston bank have a 
  0524
          1   viable and positive impact on the City of Boston, 
          2   the fair and equitable lending practices for small 
          3   businesses, educational programs, citywide programs 
          4   for the elderly, and continued partnerships with 
          5   housing programs, such as the ACORN housing program. 
          6            In closing, I would like to see Fleet and 
          7   BankBoston be sensitive to the economic needs of 
          8   lower and moderate income families as well as 
          9   demonstrating a commitment to invest in the 
         10   community.  I thank you. 
         11            HEARING OFFICER SMITH:  Thank you very 
         12   much. 
         13            Ms. Hurewitz. 
         14            MS. HUREWITZ:  Good evening, I would like 
         15   to thank the Federal Reserve Bank of Boston for 
         16   holding this public hearing on Fleet and giving me 
         17   the opportunity to speak here tonight. 
         18            My name is Vickie Hurewitz.  I work for 
         19   SENSES, a statewide organization in New York State.  
         20   The acronym stands for the Statewide Emergency 
         21   Network for Social and Economic Security.  We 
         22   advocate for a variety of issues that affect low- 
         23   income New Yorkers.  I work on community 
         24   reinvestment matters for SENSES. 
         25            I am here today to testify about Fleet's 
  0525
          1   lending in New York State, particularly our Capital 
          2   District and Orange County, two areas that are 
          3   particularly active in CRA work.  On its last CRA 
          4   exam in New York State, Fleet got a low satisfactory 
          5   on the lending and service tests. 
          6            The Capital District of New York State is 
          7   roughly a six-county area consisting of Albany, 
          8   Schenectady, Rensselaer, Saratoga, Schoharie and 
          9   Montgomery Counties.  Fleet Bank is the region's 
         10   largest, with over $3 billion in deposits, and it 
         11   has branches in all Capital District counties.
         12            Within these counties are several declining 
         13   central cities and pockets of rural poverty.  You 
         14   might have heard of the three cities of Albany, 
         15   Schenectady and Troy.  Those are within our Capital 
         16   District. 
         17            Orange County is downstate.  Many residents 
         18   commute to Manhattan to work.  However, the county 
         19   has two distressed central cities, Newburgh and 
         20   Middletown, and Kiryas Joel, an Hasidic Jewish 
         21   community that is in need of reinvestment. 
         22            On Friday, July 2nd, myself and 
         23   representatives of 17 community organizations met 
         24   with Fleet representatives, including Mr. Hermes 
         25   Ames, the president of Fleet National Bank, to 
  0526
          1   discuss Fleet's lending in the Capital District.  
          2   I'm attaching to this testimony a proposal that was 
          3   presented to Fleet and served as the focus of our 
          4   Capital District meeting. 
          5            I won't belabor the numbers that we've 
          6   heard several times here today, but during the last 
          7   several years Fleet has acquired Shawmut Bank and 
          8   NatWest, both of which had branches that were 
          9   located in New York State, and their home purchase 
         10   loans had dropped precipitously, 70 percent 
         11   statewide, and in low-income census tracts their 
         12   home purchase loan rate had dropped 76 percent from 
         13   1995 to 1997 after the mergers. 
         14            I have also done my own analysis of Fleet's 
         15   1997 home purchase lending in the Capital District 
         16   and Orange County, and I had found that the bank had 
         17   extremely low market shares, no matter whether the 
         18   geography was the county, the city or the distressed 
         19   neighborhood.  And I didn't find this surprising, 
         20   given the finding for the state. 
         21            Prior to the meeting with Fleet, I had 
         22   called Don Prusak of Fleet Bank and asked him about 
         23   obtaining the results of Fleet's INCITY program, the 
         24   megapledge Fleet Bank made when it acquired Shawmut 
         25   in 1995.  He told me the results of INCITY could be 
  0527
          1   found in the HMDA data.  When I related to him the 
          2   poor results of the analysis, he said, "There are 
          3   some problems with those numbers.  You need to look 
          4   at our 1998 HMDA data."  Subsequently, he supplied 
          5   me with the 1998 data for the Capital District and 
          6   Orange County. 
          7            As I mentioned, in 1997, I found that Fleet 
          8   had very low market shares for home purchase loans, 
          9   no matter the geography.  By 1998 Fleet's home 
         10   purchase lending had increased by 115 percent in 
         11   Albany County.  However, the bank made no loans in 
         12   the distressed neighborhoods in the City of Albany. 
         13            In Rensselaer County the lending was flat.  
         14   The bank made no loans in the City of Troy in either 
         15   1997 or 1998.  In Schenectady County, lending went 
         16   down by 41 percent, although the dollar amount in 
         17   the distressed neighborhoods went from $59,000 to 
         18   $82,000, a small increase of small dollars. 
         19            Also I had been speaking to community 
         20   groups around the Capital District, and they had 
         21   informed me that Fleet has affordable housing 
         22   products.  However, they felt that the bank was 
         23   reluctant to use the product and was not out 
         24   actively seeking mortgage application. 
         25            During our meeting Fleet related that there 
  0528
          1   had been a problem with their mortgage origination 
          2   department after the mergers.  60 mortgage 
          3   originators had left to form their own company.  
          4   Fleet informed us that it had hired new originators; 
          5   however, when I mentioned they had still not 
          6   penetrated the lower-income neighborhoods in our 
          7   region in 1998, they additionally informed us that 
          8   they had recently reworked their commission 
          9   structure that so that each originator got a minimum 
         10   of $500 per loan. 
         11            We encouraged them to hire a noncommission 
         12   community service loan officer like some their 
         13   competitors to outreach to community organizations 
         14   and actively seek applications. 
         15            I belabor these points about home purchase 
         16   lending because these problems occurred while Fleet 
         17   had a megapledge in place, the INCITY program I 
         18   mentioned.  Fleet has currently offered another 
         19   $14.6 billion pledge with very few specifics.  I 
         20   urge the Federal Reserve to ensure that this pledge 
         21   be made locally specific and locally accountable so 
         22   that we can be certain that this new pledge does not 
         23   go the way of INCITY. 
         24            During our meeting we also spoke about home 
         25   improvement lending, bank services and investments.  
  0529
          1   A disturbing trend noted in all the distressed 
          2   neighborhood is that the depository institutions are 
          3   leaving and the subprime lenders are arriving, which 
          4   is not good news for low-income households.  For 
          5   example, in Arbor Hill, a low-income neighborhood in 
          6   Albany, Fleet made no loans.  The subprime lenders 
          7   were the leading lenders there. 
          8            I'll finish with just saying that even 
          9   though Fleet has an outstanding record in 
         10   investments in New York State, I still urge you to 
         11   make sure that this $14.6 billion pledge, as many of 
         12   my colleagues up here have said, will be locally 
         13   specific and locally accountable.  It is very 
         14   important for the future of lending by this bank in 
         15   our neighborhood. 
         16            Thank you. 
         17            HEARING OFFICER SMITH:  Mr. Timilty. 
         18            MR. TIMILTY:  My name is Greg Timilty, and 
         19   I'm a candidate for the City Council, citywide.  I'm 
         20   also an employee of an investment banking firm.  I 
         21   come here to testify tonight as neither.  I come 
         22   here to testify actually as we get on past nine 
         23   o'clock, I come as a 24-year-old resident of the 
         24   City of Boston, which probably makes me one of the 
         25   youngest people to testify today. 
  0530
          1            I remarked to someone as I came in today, I 
          2   said, "I wonder who's last today."  Little did I 
          3   know.  But I think that that also gives me an 
          4   enviable position because I am going to forgo my 
          5   remarks now as we get past nine o'clock, and I would 
          6   like to just leave you with a theme, because it's a 
          7   theme that was one of the main reasons why I came 
          8   here to testify tonight, one of the reasons why I 
          9   stayed, and I applaud everyone in the audience for 
         10   staying this long.  It's been a long day; I know 
         11   it's been a long day for you. 
         12            But I think that one of the main reasons 
         13   why I came today is I represent a growing dynamic in 
         14   the City of Boston of young people, young men and 
         15   women who are faced with an uncertain future.  As 
         16   one of the panelists in the previous panel spoke 
         17   about, housing ownership in the City of Boston is an 
         18   abysmal failure, I think, for the banking industry. 
         19            I think that if you look at some of the 
         20   figures as far as the involvement in local 
         21   communities, based upon a person who owns their 
         22   house as opposed to someone who just rents, and you 
         23   look at how that can change, I think our 
         24   communities, and the communities that the Fleet Bank 
         25   and the merged company will serve, are much stronger 
  0531
          1   as a result of housing ownership. 
          2            I think that my generation is largely an 
          3   ATM generation, a generation that doesn't have the 
          4   resources that my parents' generation had, where 
          5   when you go to look for a loan, whether it be for 
          6   your child's education or whether it be for your 
          7   first home, you're looked at as a number and not an 
          8   individual.  And I think especially when you look at 
          9   low- and moderate-income families, when they go into 
         10   those banks and they sit across that desk, they're a 
         11   number, they're not an individual.  We've lost 
         12   banking with a conscience. 
         13            And it's caused, if you see, as the 
         14   panelist before, Pat Cusick, mentioned, 5 percent in 
         15   the area of Roxbury in home ownership.  Something 
         16   has got to be done about that.  I think that a lot 
         17   of it goes to the community, and the community is 
         18   doing a great job.  They need help.  They are 
         19   communities that will bank will represent, and it 
         20   only makes the bank stronger to have the community 
         21   stronger that it represents. 
         22            My generation, as I said, is left in an 
         23   area where we don't know what's the future.  We 
         24   don't know if we're going to be able to own a home 
         25   in a neighborhood on a street in the City of Boston 
  0532
          1   or anywhere else in the New England area.  We don't 
          2   know, as we get into the next 10 to 15 years, how 
          3   we're going to fund our children's education. We 
          4   don't know what the costs will be.  We don't know 
          5   what the structure, the financing will be. 
          6            But what we do know, in leaving this room 
          7   today, and this merger with this bank, is that 
          8   there's going to be no competition.  The bank down 
          9   the street, the local bank that my family went to to 
         10   get their loan for their first house, is no longer 
         11   existent.  It has been one of the 450 banks that 
         12   Fleet now encompasses.  And without that type of an 
         13   outlet, where do these low- and moderate-income 
         14   family go?  Where does my generation go?  Without 
         15   that, we don't have a community, and without a 
         16   community, you don't have the customers that you 
         17   want, you don't have the customers that you deserve, 
         18   and the banks are going to suffer. 
         19            I just want to leave you with a theme.  As 
         20   you leave here tonight, and as you think this over, 
         21   and as this -- as this deal is brokered, it's my 
         22   generation's future that's brokered, because right 
         23   now it's a transient generation, as I said, it's an 
         24   ATM generation.  It's not a generation that's used 
         25   to going down the street and knowing their banker 
  0533
          1   and being seen as an individual. 
          2            If we move away from banks looking at 
          3   individuals, rather than numbers, if we look at this 
          4   merger as being good for Wall Street, although it's 
          5   not good for River Street in Matapan, and if we look 
          6   at this as enhancing shareholder value, and not 
          7   enhancing the communities that they serve, then I 
          8   think that we lose.  The shareholders might gain, 
          9   but I think the communities that this bank serves 
         10   lose. 
         11            I just want to thank you for the 
         12   opportunity to testify today, I know I'm the last.  
         13   Hopefully, I left with you a high note and something 
         14   to think about as you go on.  Thank you. 
         15            HEARING OFFICER SMITH:  Questions? 
         16            (No response)
         17            HEARING OFFICER SMITH:  Thank you very much  
         18   for coming to testify today.  We do have the open 
         19   mike session following, and I understand that we 
         20   have at least one person who has signed up.  The 
         21   name is R.K. Schwartz.
         22            MS. SCHWARTZ:  Well, I would like to 
         23   address my brothers and sisters from the federal 
         24   community.  I'm with the U.S. Department of 
         25   Commerce, Minority Business Development Agency.  I 
  0534
          1   head the Boston District Office covering New England 
          2   and my brothers and sisters in the audience who are 
          3   left. 
          4            I had not originally planned to share 
          5   comments, because I had spoken at a community 
          6   hearing which Congressman Capuano and Senator 
          7   Wilkerson held at the Roxbury Community College.  
          8   But inasmuch as I reviewed the presentation agenda, 
          9   and because I was not absolutely sure that you would 
         10   incorporate the proceedings of that hearing within 
         11   your review, which I hope you will, I decided just 
         12   to share a few comments with you. 
         13            And this particularly responds to Pat 
         14   Cusick's comments about the sparsity of business- 
         15   related comments.  So, as Bruce was here, Honorable 
         16   Bruce Bolling, and I and some other folks, we're 
         17   advocates in the sense that the business community 
         18   folks, as you know, are out there earning a living, 
         19   or trying to, so they might not have been here in 
         20   large numbers. 
         21            I want to thank you all for finally 
         22   scheduling this meeting, because it's very, very 
         23   important, and I have faith in your sensitivity and 
         24   openness to hear the comments that we all are 
         25   making. 
  0535
          1            I would like to say, as you may or may not 
          2   know, that the Minority Business Development Agency 
          3   of the United States Department of Commerce is the 
          4   lead agency in the federal government for minority 
          5   business development.  And we are committed, having 
          6   survived 30 years, to the development of economic 
          7   parity for the minority communities in this nation. 
          8            And therefore, looking at this request or 
          9   proposal that you're reviewing, to consider allowing 
         10   the creation of the eighth largest bank in the 
         11   country, we are particularly concerned that the 
         12   minority business community be allowed an 
         13   opportunity for capital access, and in whatever is 
         14   created, not only in this bank, but in other 
         15   institutions. 
         16            As you know very well, the impact of this 
         17   proposal goes far beyond the New England area, and 
         18   I'm sure you're aware of that.  We've had some 
         19   testimony here from New York, New Jersey, and I 
         20   have -- I was away for a few hours, so I'm sure 
         21   there are other places that Fleet and BankBoston 
         22   impact.  So that becomes very important. 
         23            I would like to call your attention, when 
         24   you review the proceedings of that hearing that was 
         25   held at Roxbury Community College, to the 
  0536
          1   presentation by the district director of the Small 
          2   Business Administration for the Commonwealth of 
          3   Massachusetts.  She really laid out some very 
          4   important figures in terms of business lending, 
          5   lending to small businesses, in the history of these 
          6   two banks, and I think you might want to review that 
          7   in your considerations. 
          8            Now, I would like to say that the 
          9   cooperative agreement which is being proposed 
         10   between the financial institution, as you may 
         11   approve it as it's proposed, and various community 
         12   groups, is to be considered and respected, and I 
         13   surely deeply respect the position of the community 
         14   groups. 
         15            I would like to point out, however, that 
         16   I'm aware that in Philadelphia a very large bank 
         17   acquired another bank, and there was a commitment 
         18   made to the community groups about the maintenance 
         19   of neighborhood branches, and as soon as that bank 
         20   proposal was approved by the regulatory agencies, 
         21   those bank branches were totally eliminated.  At 
         22   least that's my information. 
         23            So what I'm really looking at is that it's 
         24   up to the Fed, if you'll forgive me using that 
         25   shorthand version, and the Department of Justice, 
  0537
          1   the Oversight Committees of the Congress.  I'm sure 
          2   you're aware from today's testimony and from other 
          3   things that our Congressional delegation in the 
          4   Commonwealth of Massachusetts is very concerned 
          5   about the outcome of this, and the fairness of it, 
          6   and I'm sure that's joined by Congressional people 
          7   who are involved in the banking committees from 
          8   across the country. 
          9            So I really think that the stipulations 
         10   that you would add on to any agreement to allow this 
         11   to happen that can be monitored by the regulatory 
         12   agencies would be extremely important, because of 
         13   the history of banks violating their commitments 
         14   that they've made to community groups. 
         15            I would also like to recommend to you very 
         16   strongly that you consider allowing the proposal of 
         17   the community-based banks such as Boston Bank of 
         18   Commerce to acquire a number of these branches. 
         19            As you know, I'm sure, over many, many 
         20   years, it's been the policy of the Federal 
         21   Government to nourish and support minority-owned 
         22   banks, and this would certainly be very important, 
         23   if you could create language in such a way to assure 
         24   that the community-based banks, as I say 
         25   particularly Boston Bank of Commerce, be allowed to 
  0538
          1   acquire these targeted divested branches or proposed 
          2   divested branches. 
          3            I guess that I would conclude with that, 
          4   and we're all, I'm sure, quite exhausted. 
          5            I have heard the proposal here from at 
          6   least two or three people to recommend to you that 
          7   you consider extending the comment period to allow 
          8   the proposed merging banks to very closely and 
          9   definitively make a proposal that can be reviewed 
         10   and hopefully would be fair and then allow for 
         11   comment period.  And I would like to support that, 
         12   if it's within the realm of your guidelines and 
         13   possibilities. 
         14            So I want to thank you for being willing to 
         15   listen to me.  I want to thank you for what I, as I 
         16   say, trust will be the openness of your 
         17   considerations, and I would say good evening. 
         18            HEARING OFFICER SMITH:  Thank you. 
         19            Do we have any other individuals who would 
         20   like to offer remarks? 
         21            Mr. Dennis Flynn?  
         22            MR. FLYNN:  First I would like to apologize 
         23   to the Board for my opening statement.  I would like 
         24   to thank all the panel members, not just the men 
         25   that are there.  I just said "sir" at the beginning. 
  0539
          1            I notice, going through the panel list, 
          2   that I seem to be the only veteran here.  I'm not 
          3   representing a veterans' group. 
          4            I just happen to have had a transaction 
          5   with Fleet Bank which involved a secured government 
          6   mortgage product that they have.  I was denied the 
          7   right to negotiate a favorable interest rate 
          8   according to the Veterans Administration guidelines.  
          9   Fleet Bank did not even take my application at the 
         10   time of the loan.  My mortgage consisted of 
         11   approximately 40 pages that were faxed, and these 
         12   were faxed after the closing date. 
         13            In processing the VA mortgage, they 
         14   violated their own internal guidelines, according to 
         15   their own documents.  They violated the Veterans 
         16   Administration's guidelines that I was to be allowed 
         17   to negotiate a favorable interest rate.  And quite 
         18   possibly, they violated federal law, but I'm not a 
         19   lawyer, I'm just someone who is trying to get a 
         20   house on the GI bill. 
         21            As I say in the statement, I'm just one 
         22   veteran to went to Fleet back to get a loan under 
         23   the GI bill, but am I the only one that has had this 
         24   type of experience with the Fleet Bank?  The Federal 
         25   Reserve, Veterans Administration and the veterans 
  0540
          1   population will never know unless you gentlemen and 
          2   ladies take the time to send these concerns to the 
          3   proper authorities. 
          4            Fleet had assured me that we would close on 
          5   a certain date, and in the middle of the closing, my 
          6   mortgage loan officer disappeared and never called 
          7   me anymore, and I had to call down to Rhode Island 
          8   and find someone who would assist me, and that's 
          9   where the 40 pages of faxed documents came from.  
         10   They had nothing on me, we were past the closing 
         11   date, and they left me in a very, very difficult 
         12   position. 
         13            I'm not a banker, I'm not a lawyer, and I 
         14   trusted Fleet to do the right thing, to do what they 
         15   said they would.  And it left my family and myself 
         16   in a very, very difficult position.  I know that in 
         17   the age of deregulation there are less and less 
         18   people out there to regulate what the banks are 
         19   doing. 
         20            It's my concern that, from my experience, 
         21   Fleet is too big right now.  I couldn't imagine it 
         22   getting any bigger and trying to negotiate the 
         23   things that I had to, to try to secure housing for 
         24   my family. 
         25            I would like to thank you for the time, and 
  0541
          1   I think I am the last one.  Thanks very much. 
          2            MR. ALVAREZ:  Mr. Flynn, I have a question 
          3   for you.  Do you know which of the Fleet entities 
          4   you filed your original application with?  Was it 
          5   the Fleet Bank in Massachusetts?
          6            MR. FLYNN:  Yes, it was the Fleet Bank in 
          7   Worcester.  I went through the Worcester office, and 
          8   then again none of the paperwork was ever filed with 
          9   the people in Rhode Island that needed to process 
         10   the loan.  And, again, all my financial statements, 
         11   everything had to be faxed to the people that 
         12   processed the loan. 
         13            And the thing that troubled me and troubled 
         14   my family was, not once did the mortgage loan 
         15   officer call to say he was sorry that there was a 
         16   problem, that he ever called to apologize. 
         17            Thank you very much. 
         18            HEARING OFFICER SMITH:  Anyone else?
         19            (No response)
         20            HEARING OFFICER SMITH:  Well, I want to 
         21   express appreciation on behalf of the Federal 
         22   Reserve for all of those who remain and those who 
         23   were here before to offer their views as well as to 
         24   listen to the views of others. 
         25            This has been an important meeting.  We 
  0542
          1   have had discussion and have been able to ask 
          2   questions on a lot of significant issues, and you 
          3   can be assured that that this is information that 
          4   the Board will take into account as it makes its 
          5   analysis and reaches a determination on this 
          6   application. 
          7            I'll ask my fellow members if there is 
          8   anything you would like to add.  
          9            (No response)
         10            HEARING OFFICER SMITH:  Thank you all very 
         11   much, and we are adjourned.  
         12                 (Whereupon the meeting was
         13                 adjourned at 9:30 p.m.)
         14   
         15   
         16   
         17   
         18   
         19   
         20   
         21   
         22   
         23   
         24   
         25   
  0543
          1                   C E R T I F I C A T E
          2            We, Anne H. Bohan and Carol H. Kusinitz, 
          3   Registered Professional Reporters, do hereby certify 
          4   that the foregoing transcript, Volume I, is a true 
          5   and accurate transcription of our stenographic notes 
          6   taken on July 7, 1999. 
          7   
          8   
          9   
         10                            ________________________
         11                            Anne H. Bohan, RMR
         12   
         13   
         14   
         15   
         16   
         17                            ________________________
         18                            Carol H. Kusinitz, RPR
         19   
         20   
         21   
         22   
         23   
         24   
         25   
 
            

                                                            
	
Last update: December 3, 2010