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Public Meeting Transcripts

Public Meeting Regarding J. P. Morgan Chase & Company, and Bank One Corporation

Held on Thursday, April 15, 2004, at the Federal Reserve Bank of New York

Unedited Transcript

                                                                      1
             1

             2                       PUBLIC MEETING

             3                            on the

             4                       Proposed Merger

             5                              of

             6                     JPMORGAN CHASE & CO.

             7                              and

             8                     BANK ONE CORPORATION

             9

            10

            11                          PANELISTS:

            12                      SANDRA BRAUNSTEIN

            13                        JAMES HODGETTS

            14                        WALTER McEWEN

            15                        EDWARD KRAMER

            16

            17

            18                        April 15, 2004

            19                          9:00 a.m.

            20

            21

            22              Federal Reserve Bank of New York

            23                      33 Liberty Street

            24                        New York, N.Y.

            25








                                                                      2
             1

             2                MS. BRAUNSTEIN:  Good morning.  I am

             3          pleased to welcome you to this important

             4          public meeting on the application of

             5          JPMorgan Chase to acquire Bank One

             6          Corporation.

             7                Let me first introduce myself.  I am

             8          Sandra Braunstein, and I am the Director of

             9          the Division of Consumer and Community

            10          Affairs for the Federal Reserve Board of

            11          Governors in Washington, D.C.  I am going to

            12          serve as the presiding officer for this

            13          meeting.

            14                The other panelists sitting beside me

            15          are James Hodgetts, who is the Senior Vice

            16          President, Legal and Compliance Risk, for

            17          the Federal Reserve Bank of New York; Walter

            18          McEwen, Senior Counsel, from the Legal

            19          Division of the Federal Reserve Board; and

            20          Edward Kramer, the Deputy Superintendent of

            21          Banks, from the State of New York Banking

            22          Department.  Those panelists are here, and

            23          you will see their name tags.

            24                We are here today because JPMorgan

            25          Chase & Company from New York has applied








                                                                      3
             1

             2          for approval to acquire Bank One Corporation

             3          in Chicago, Illinois.

             4                When the Federal Reserve System

             5          considers one of these applications, we look

             6          at a number of factors under the Bank

             7          Holding Company Act.  These factors include

             8          financial issues, managerial issues,

             9          competitive issues, and the convenience and

            10          needs of the communities affected.

            11                In doing so, we particularly look at

            12          the performance of the parties under the

            13          Community Reinvestment Act, or the CRA.  The

            14          CRA requires the Board to take into account

            15          an institution's record of meeting the needs

            16          of its entire community.

            17                The purpose of the public meeting today

            18          is to receive information regarding these

            19          factors.  We will be seeking to elicit this

            20          information and to clarify factual issues

            21          related to the application, and from time to

            22          time myself and the other panelists may ask

            23          some of the people who are giving statements

            24          additional questions.

            25                We are very pleased that so many








                                                                      4
             1

             2          witnesses have been willing to come and

             3          testify at this public meeting.  We have

             4          more than 70 groups and individuals

             5          represented.

             6                I would like to just make a few remarks

             7          about the procedures before we get started.

             8          This is what is call technically an informal

             9          public meeting.  Members of the panel, as I

            10          said, may ask some questions of the

            11          testifiers, but this is not a formal

            12          administrative hearing, so we are not bound

            13          by rules regarding evidence,

            14          cross-examinations, and some of the other

            15          formal trappings of that kind of procedure.

            16                Because we have so many witnesses, we

            17          are going to try as hard as possible to

            18          stick to the schedule that we have put out

            19          publicly, so that everyone who has offered

            20          to give testimony has a chance to do so.  So

            21          we are going to ask all of the witnesses to

            22          please be mindful of the needs of others who

            23          have come here to testify today and to help

            24          us stay on schedule.  We are asking you to

            25          keep to your allotted time.  We have two








                                                                      5
             1

             2          timekeepers, and they are sitting, for the

             3          panelists' information, right in the front

             4          row over here.  They have signs -- do you

             5          want to show the signs? -- that will tell

             6          you when you have two minutes to go and when

             7          you need to wrap up.

             8                There may have been individuals who did

             9          not have an opportunity to sign up in

            10          advance but would like to make a statement,

            11          so to the extent possible we would like to

            12          give them a chance to do so.  At the end of

            13          the day we have some open-mike time for

            14          those that would like to make some

            15          additional comments or those who would like

            16          to make a presentation who did not

            17          previously sign up.

            18                A couple of other comments.  You will

            19          see that there are cameras here in this

            20          room.  I just wanted to note for everybody

            21          that these are not live, these are not

            22          recording, we are not making a video record.

            23          Yesterday we had asked for them to be

            24          removed, and we found out that they are

            25          stationary in this room and they couldn't be








                                                                      6
             1

             2          taken out.  But they are not recording.

             3          However, there is an audio recording of this

             4          hearing.

             5                A couple of more comments about

             6          testimony.  Witnesses may submit a written

             7          supplement to their oral testimony but must

             8          do so by next Thursday, April 22, and then

             9          the record will be closed.  Any written

            10          supplements should be directed to Jennifer

            11          Johnson, secretary of the Board of Governors

            12          of the Federal Reserve in Washington, D.C.,

            13          2O551, and they must be received by 5 p.m.

            14          Eastern Time on April 22.  You may also fax

            15          additional information to 202 452 3462.  The

            16          deadline applies to faxes also.

            17                If you haven't turned in copies of your

            18          written testimony or you have any other

            19          written statements to put into the record,

            20          and you have those with you, please leave

            21          them with the Federal Reserve staff at the

            22          registration table where you came in.  It's

            23          important that we get this material for the

            24          record.

            25                As I mentioned, this proceeding is








                                                                      7
             1

             2          being audiotaped, and a transcript of these

             3          proceedings will be available both in hard

             4          copy and on the Federal Reserve website.

             5          Those transcripts will be available on April

             6          21, by the end of the day on April 21, at

             7          the latest.

             8                With that, I think we are going to

             9          begin the proceedings.  I will ask this

            10          panel, as well as all the other panels,

            11          before you start your statement could you

            12          please state your name for the record.

            13          Thank you.

            14                MR. HARRISON:  Thank you, Sandra.

            15                MS. BRAUNSTEIN:  I am sorry.  And

            16          organization.

            17                MS. HARRISON:  Excuse me?

            18                MS. BRAUNSTEIN:  Name and organization.

            19                MR. HARRISON:  I'm Bill Harrison,

            20          Chairman and CEO of JPMorgan Chase.  I would

            21          like to introduce Heidi Miller, who is the

            22          Executive Vice President and Chief Financial

            23          Officer of Bank One Corporation; Mark

            24          Willis, who is Executive Vice President and

            25          head of JPMorgan Chase's Community








                                                                      8
             1

             2          Development Group; and Byron Reed, who runs

             3          Bank One's Community Development Group.

             4          And, of course, you will be hearing from all

             5          of us.

             6                It is my pleasure to address you, the

             7          distinguished members of today's panel, and

             8          all of our distinguished people in the

             9          audience.

            10                First, I want to thank the Federal

            11          Reserve Board for convening this public

            12          meeting, giving us the opportunity to

            13          discuss the proposed merger of JPMorgan

            14          Chase and Bank One.  I'd like to explain why

            15          we believe our merger will benefit our

            16          customers, our employees, our shareholders,

            17          and the important communities in which we do

            18          business.

            19                In January, JPMorgan Chase and Bank One

            20          announced our agreement to merge in a

            21          strategic business combination, which, based

            22          on total assets, will establish the second

            23          largest banking franchise in the United

            24          States.  We will have assets of

            25          approximately $1.1 trillion, a strong








                                                                      9
             1

             2          capital base, and over 2,300 branches in

             3          seventeen states.

             4                We will have top-tier positions in

             5          retail banking and lending, which includes

             6          small business and home finance, as well as

             7          top-tier positions in credit cards,

             8          investment banking, asset management,

             9          private banking, treasury and securities

            10          services, middle-market banking, and private

            11          equity.  With balanced earnings

            12          contributions from retail and wholesale

            13          banking, we believe we will be well

            14          positioned to achieve strong and stable

            15          financial performance and to increase

            16          shareholder value over time.  We will have a

            17          more diverse business mix, greater scale,

            18          and enhanced efficiencies and

            19          competitiveness.

            20                I will be Chairman and CEO.  Jamie

            21          Dimon, Bank One's current Chairman and CEO,

            22          will be President and Chief Operating

            23          Officer.  Jamie will succeed me as CEO in

            24          2006 and I will continue to serve as

            25          Chairman.








                                                                     10
             1

             2                Our corporate headquarters will be in

             3          New York.  And both our middle market and

             4          retail banking businesses will be

             5          headquartered in Chicago.

             6                We believe this merger will be a great

             7          benefit to our communities.  Making banking

             8          services widely available and continuing to

             9          help develop affordable housing and

            10          revitalizing the neighborhoods are integral

            11          to our business goals and corporate

            12          values -- they always have been.

            13                JPMorgan Chase has always been both a

            14          major home lender nationwide and major

            15          small-business lender throughout our local

            16          communities, providing innovative products

            17          to meet the credit needs of first-time

            18          homeowners and small businesses.

            19                We have also distinguished ourselves in

            20          the community development field as a lead

            21          lender for large, complex transactions

            22          resulting in affordable housing for low- and

            23          moderate-income households, and for economic

            24          development transactions, that create new

            25          jobs and help revitalize communities.  In








                                                                     11
             1

             2          fact, I am very proud to note that JPMorgan

             3          Chase Bank again earned the highest rating

             4          of "Outstanding" on its most recent CRA

             5          performance examination from the Federal

             6          Reserve Bank of New York.  This is the

             7          seventh consecutive time, spanning fourteen

             8          years, that our lead bank has earned this

             9          highest rating of "Outstanding."  All three

            10          of our subsidiary banks currently have

            11          "Outstanding" CRA ratings.  We are

            12          determined that our new firm will maintain

            13          the highest possible CRA ratings.

            14                Since the merger was announced,

            15          community investment officers of both firms

            16          have already reached out to more than 700 of

            17          our existing community partners across the

            18          country, seeking innovative ways for banks

            19          to work with strategic local and national

            20          partners.  Based on responses from the

            21          community groups, we are creating new

            22          initiatives and redoubling our efforts on

            23          existing ones.

            24                On that note, I am proud to announce,

            25          on behalf of JPMorgan Chase and Bank One, an








                                                                     12
             1

             2          unprecedented nationwide $800 billion

             3          community investment commitment during the

             4          next decade.  I am especially proud because

             5          this is the biggest such commitment ever

             6          made by any financial services company.

             7                This pledge, which includes mortgages,

             8          small-business lending and community

             9          development lending, reaffirms our national

            10          leadership position in community and

            11          economic development.  It also underscores

            12          our efforts to support the credit and

            13          capital needs of underserved markets,

            14          efforts that will involve much of our new

            15          firm, ranging from our market-leading home

            16          finance business to our municipal finance

            17          team.

            18                Our commitment includes $675 billion in

            19          mortgages nationwide for both minority and

            20          lower-income communities and borrowers, and

            21          an expansion of credit and mortgage

            22          counseling programs, $90 billion in loans

            23          and investments to assist small businesses

            24          and community-based nonprofit organizations;

            25          $35 billion in loans and investments for








                                                                     13
             1

             2          affordable housing and commercial and

             3          economic development in low- and moderate

             4          income communities; and a new financial

             5          education partnership office that many

             6          sponsor financial education and social

             7          entrepreneurship programs; work with

             8          mortgage counseling groups; develop

             9          anti-predatory lending programs; work with

            10          our branches to develop bank programs that

            11          are designed to serve recent immigrants; and

            12          teach credit fundamentals to not-for-profit

            13          personnel.  This $800 billion pledge

            14          reaffirms our commitment to "Outstanding"

            15          CRA ratings and strong fair lending

            16          programs.

            17                But we can't do this alone.  We are

            18          relying on many of the groups who are in

            19          this room today -- our partners who are here

            20          in support of us, and those who have come to

            21          raise reasonable concerns.

            22                Our new firm will strive to reach all

            23          segments in our markets.  We value the

            24          leadership and innovation of our community

            25          development group, confident that they, with








                                                                     14
             1

             2          the help of our community partners, will

             3          continue to deliver outstanding results.

             4                Before I hand the microphone over to my

             5          future colleague, Heidi Miller, I want to

             6          thank you again for this opportunity to

             7          speak at today's meeting.  And though Heidi

             8          and I will only be able to stay for the

             9          first panel's presentations, Mark Willis,

            10          who will head the combined firm's Community

            11          Development Group, will be here for the

            12          entire session and address any follow-up

            13          questions you may have regarding CRA.

            14          Heidi.

            15                MS. MILLER:  Thank you, Bill.  Good

            16          morning.  I am Heidi Miller, Executive Vice

            17          President and Chief Financial Officer of

            18          Bank One.  I am appearing here today on

            19          behalf of Jamie Dimon, Bank One's Chairman

            20          and CEO, who is traveling out of the country

            21          and therefore is unable to attend today.  I

            22          too would like to talk about the benefits of

            23          our proposed merger.

            24                By way of background, I spent the first

            25          thirteen years of my banking career at








                                                                     15
             1

             2          Chemical Bank, a predecessor firm of

             3          JPMorgan Chase, and then eight years with

             4          Citigroup and its predecessor firms.  In

             5          October 2000, I joined Bank One's board of

             6          directors and seventeen months later, in

             7          March of 2002, I became a Bank One executive

             8          officer, stepping down from the board at

             9          that point.  Now that we are putting

            10          together Bank One and JPMorgan Chase, I am

            11          seeing many friends and familiar faces,

            12          including Bill.  So I know both companies

            13          from different and important perspectives.

            14                I also understand the important role

            15          that Bank One and its predecessors have

            16          played in their communities across the

            17          country for well over 100 years, and in fact

            18          more than 150 years in a few cities.  Like

            19          all major banks in the country today, Bank

            20          One has grown through acquisitions and

            21          mergers, gaining scale, strength and breadth

            22          to serve our customers, our employees, our

            23          shareholders and our communities in even

            24          better ways.

            25                Over the last four years, Bank One has








                                                                     16
             1

             2          faced some very tough challenges.  Through

             3          diligence, discipline and hard work, we have

             4          created a strong, healthy company that has

             5          begun to expand again.  In 2003, we opened

             6          58 new branches, for a total of 1,841

             7          branches in 14 states, and we've already

             8          added more branches this year as we continue

             9          to expand.  We are in the process of

            10          replacing every one of our 4,300 ATMs in our

            11          network and we are investing millions more

            12          in refurbishing our branches.  In 2003, we

            13          added more than 1,000 additional salespeople

            14          to help customers with everything from

            15          checking accounts and mortgages to

            16          investments and college saving plans.  As we

            17          open additional branches in 2004, we will

            18          continue to add salespeople to help our

            19          customers.

            20                The proposed merger with JPMorgan Chase

            21          & Co. Will begin another exciting chapter in

            22          our company's history.  We know that

            23          consolidation will continue in the banking

            24          industry, and we believe that our combined,

            25          stronger company will have more control over








                                                                     17
             1

             2          our future than we would have had

             3          separately. We now have the unique

             4          opportunity to create one of the truly great

             5          global financial institutions.

             6                We believe that each major business in

             7          the combined enterprise will be strengthened

             8          by the efficiencies that come with scale and

             9          that the businesses will complement each

            10          other, providing substantial competitive

            11          advantage.

            12                For current and prospective customers,

            13          the combined company will provide access to

            14          a broader offering of products and services

            15          more competitively priced.  For employees, a

            16          stronger company ultimately results in

            17          expanded opportunities for career growth and

            18          development, even though, unfortunately, in

            19          the beginning there will be some painful

            20          staff reductions.  For each of our

            21          communities, a vibrant, healthy company is

            22          the prerequisite for responsible corporate

            23          citizenship.  That is a value deeply held by

            24          both our companies.

            25                This merger also will afford the








                                                                     18
             1

             2          combined company a more diversified earnings

             3          stream, a larger capital base, stronger

             4          capital generation capabilities, and

             5          increased capacity to invest in our

             6          businesses.  All of these we believe should

             7          ultimately lead to a lower cost of capital

             8          and the ability to better withstand

             9          difficult times in the economic cycle.

            10                The combined strength of our retail

            11          businesses will be crucial in serving our

            12          communities because it includes not only the

            13          branch and ATM network, but also the

            14          mortgage lending and small business lending.

            15          The company will have their 2,300 branches

            16          in 17 states, and we plan to add more than

            17          100 branches annually for at least the next

            18          three years.  We will open them in low- and

            19          moderate-income neighborhoods as well as

            20          fast-growing suburban areas.  In fact, in

            21          Chicago alone, we will open twelve branches

            22          in LMI areas by the end of next year.

            23                Equally important, JPMorgan Chase's

            24          large mortgage business will be good news

            25          for consumers across Bank One's fourteen








                                                                     19
             1

             2          footprint states.  While Bank One has

             3          provided excellent banking services, the

             4          merger will provide our customers with a

             5          wider range of mortgage products, helping

             6          them achieve the American dream of home

             7          ownership.

             8                Small business owners too will benefit

             9          from this merger.  Small businesses need

            10          banking services -- especially credit -- to

            11          grow, and we will offer the best products

            12          and services of both companies to help our

            13          small business customers do just that.

            14                Mortgage lending and small business

            15          lending are two of the most important

            16          factors in evaluating a bank's Community

            17          Reinvestment Act performance.  Bank One's

            18          lending has helped it earn "Outstanding" and

            19          "Satisfactory" ratings in its markets across

            20          the country.

            21                We are proud that our merger partner's

            22          lead bank, headquartered in New York, has

            23          earned an "Outstanding" CRA rating -- the

            24          highest possible -- for its mortgage, small

            25          business and community development lending








                                                                     20
             1

             2          and community development investments and

             3          services.  In fact, as Bill pointed out, it

             4          has received "Outstanding" CRA ratings for

             5          the last seven consecutive periods covering

             6          more than fourteen years.  It's even more

             7          important to know that the combined company

             8          will strive to maintain that "Outstanding"

             9          record.

            10                Bank One has been a terrific civic

            11          leader and major contributor in our markets

            12          across the country, contributing more than

            13          $40 million annually to economic

            14          empowerment, youth education, and arts and

            15          culture.  Our senior executive officers and

            16          other employees serve on the boards of

            17          civic, community, development, educational

            18          and cultural institutions across all our

            19          markets.  And our employees volunteer in

            20          their neighborhoods, in religious

            21          organizations and in communitywide efforts

            22          throughout the country.

            23                That kind of support will continue

            24          after the companies merge.  Our CEO, Jamie

            25          Dimon, reaffirmed our commitment to








                                                                     21
             1

             2          Chicago's community leaders the night the

             3          merger was announced.  Bill Harrison just

             4          went even further in announcing our $800

             5          billion pledge for mortgages, small business

             6          loans, and community investments and loans

             7          over the next ten years.  That unprecedented

             8          commitment will be delivered one family, one

             9          small business and one apartment building at

            10          a time across America.

            11                There is no doubt that the combined

            12          JPMorgan Chase will be a national and

            13          international leader in banking.  And there

            14          should be no doubt that the combined

            15          JPMorgan Chase will also be a civic leader

            16          in every market it serves.

            17                Now let me turn the podium over to my

            18          colleague, Byron Reed, who, as Bill said, is

            19          the Director of Bank One's Community

            20          Investment Management Group.  Byron will

            21          provide more detailed assessment of how Bank

            22          One has been a leader in our communities

            23          across the country.

            24                MR. REED:  Good morning.  I'm Byron

            25          Reed, the Managing Director of Bank One's








                                                                     22
             1

             2          Community Investment Management Group.  I

             3          appreciate the chance to talk about Bank

             4          One's proud tradition of serving our

             5          communities and about how this merger can

             6          help us even more.

             7                Bigger, Better, Stronger -- you have

             8          heard it from Bill Harrison and from Heidi

             9          Miller.  Certainly, it is exciting for our

            10          customers, employees and shareholders.  But

            11          for me, the most exciting aspect of the

            12          merger is what a bigger, stronger bank can

            13          do with our current and future partners for

            14          our communities.

            15                Sometimes community development is

            16          headline news, attracting local dignitaries

            17          and the media.  For example:

            18                *  In Chicago, Bank One's construction

            19          loan helped replace high-rise tenement

            20          buildings with mixed income townhomes at

            21          North Town Village, the largest

            22          reconstruction of public housing in the

            23          United States.

            24                *  In West Dallas, Bank One helped

            25          welcome the first family to Casa Rio, the








                                                                     23
             1

             2          first affordable single-family housing

             3          development in that part of town.

             4                *  In Denver, Bank One helped create a

             5          170-acre master planned community, Belle

             6          Creek, with over 900 units of affordable and

             7          market rate housing, a charter school, a

             8          community center, and retail and commercial

             9          space.

            10                *  In Tulsa, Bank One's investment in

            11          historical bank credits and our construction

            12          funding helped reincarnate the Tulsa Tribune

            13          Building as housing as the city of Tulsa

            14          worked to redevelop and revitalize the Brady

            15          Arts District.

            16               Most often, however, community

            17          development takes place quietly, with the

            18          biggest impact coming in small and steady

            19          increments:

            20               *  Knowing that small businesses are a

            21          mainstay of the U.S. economy, Bank One has

            22          made the SBA Community Express program a

            23          core component of its outreach to small

            24          businesses.  In 2003 alone, Bank One closed

            25          nearly 2000 Community express loans totaling








                                                                     24
             1

             2          just under $22 million.  Earlier this year,

             3          Bank One's manager of national SBA, Brian

             4          Burke, was awarded the inaugural SBA of the

             5          Year award from the Colorado Lending Source,

             6          the nation's largest and most well regarded

             7          CDC.

             8                While a relatively small player in

             9          overall mortgage origination, Bank One has

            10          focused on some areas of greatest need

            11          because it recognizes the vital role

            12          homeownership plays for low- and

            13          moderate-income families and their

            14          neighborhoods.  Let me share with you just a

            15          few examples:

            16               O  Bank One was the first large

            17          national bank to offer a Section 8 mortgage

            18          product for very low income families moving

            19          from welfare and public assistance to

            20          self-sufficiency and homeownership.

            21                O  Bank One's HUD 184 financing,

            22          including the Apache Dawn project in

            23          Arizona,  has provided over 300 families

            24          safe, decent and affordable housing on

            25          Native American tribal lands.








                                                                     25
             1

             2                Bank One was the first national bank to

             3          participate in the HUD Title VI program

             4          which helps development on Native American

             5          tribal lands.  This project remains the

             6          country's largest.

             7                O  Bank One was the first bank to offer

             8          the Fannie Mae HomeChoice and Group Home

             9          products for people with disabilities,

            10          providing loans and loans for markets.

            11                O  Bank One was the first bank to

            12          provide down payment and closing cost

            13          assistance as part of Fannie Mae's Employer

            14          Assisted Housing Program for eligible

            15          employees.

            16                O  Bank One has already lent nearly $5

            17          billion of a five-year $12.5 billion

            18          commitment with Fannie Mae for both single-

            19          and multi-family homes across Bank One

            20          footprint states.

            21                As Heidi noted, we can do much more

            22          when we pair JPMorgan Chase's extensive

            23          mortgage origination business and Bank One's

            24          1,800-plus branch network.  And we plan to

            25          add at least 100 branches a year for each of








                                                                     26
             1

             2          the next three years in all communities,

             3          including low- and moderate-income

             4          communities.

             5                Bank One has established itself as a

             6          leader in financial education and in helping

             7          families take advantage of financial

             8          opportunities.  The many examples include:

             9                *  Bank One has underwritten The Money

            10          Farm, a public television program in which

            11          children teach children about money, savings

            12          and other aspects of banking.  It airs in

            13          multiple communities across the country.

            14                *  In Illinois, Indiana, Texas,

            15          Wisconsin and Arizona, Bank One has

            16          sponsored financial literacy "train the

            17          trainer" programs for the directors and

            18          employees of multiple nonprofits, increasing

            19          the capacities of nonprofits across the

            20          states.

            21                *  In Arizona, a Bank One grant helped

            22          launch Arizona Saves, a savings and

            23          wealth-building program focused on

            24          low-income families.

            25                *  In Chicago, Bank One contributed








                                                                     27
             1

             2          $100,000 each year from 1999 through 2003 to

             3          support National Housing Service's

             4          education, community building and

             5          neighborhood leading and real estate

             6          development efforts.

             7                *  Bank One employees volunteer as

             8          board members, project coordiators and

             9          fund-raisers for a broad variety of

            10          community-based organizations.

            11                *  Bank One employees, as well as Bank

            12          One grants, help working families take

            13          advantage of the complicated Earned Income

            14          Tax Credit, putting real dollars in their

            15          pockets.

            16                *  Bank One this year introduced a Visa

            17          debit card so that income-tax filers without

            18          bank accounts can quickly receive an

            19          electronic refund, which can be withdrawn

            20          all at once or over time.

            21                *  Bank One provides millions of

            22          dollars in tax credit equity each year,

            23          fueling thousands of affordable multifamily

            24          units for low-income families in communities

            25          across the nation.  Since 2000, Bank One








                                                                     28
             1

             2          invested over $1.9 billion in low-income tax

             3          credit projects either directly or through

             4          funds.

             5                The mid-1900s, in partnership with the

             6          Greater Dallas Community Churches and

             7          Congregations, bank employees have

             8          contributed thousands of hours to low-income

             9          families in Dallas, San Antonio, Phoenix and

            10          Fort Worth. Bank One also makes a

            11          contribution to computer supplies, which

            12          reaches a broad range of individuals,

            13          including Hispanic and recent immigrants in

            14          the areas here.

            15                Bank One this year introduced the Visa

            16          Demo card to pay income tax without bank

            17          accounts.  It follows terms quickly and It

            18          receives refunds, which one may withdraw all

            19          at once or over time.  Bank One provides

            20          millions of dollars in tax credit equity

            21          each year, helping thousands of multi-family

            22          units for long-term loans in communities

            23          across the nation.  Since 2000, Bank One has

            24          $1.9 billion into loans with respect to

            25          income tax products, either directly or in








                                                                     29
             1

             2          funds.

             3                At Bank One, we are very proud of what

             4          we have done with our partners to serve our

             5          communities.  And we are very excited about

             6          the opportunities that this merger brings to

             7          our communities.  I know my future

             8          colleague, Mark Willis, head of JPMorgan

             9          Chase's Community Development, shares this

            10          excitement.  Thank you for the opportunity

            11          to present my testimony.

            12                MR. WILLIS:  Thank you, Byron, for

            13          sharing some examples of the responsive and

            14          meaningful work Bank One is doing throughout

            15          its footprint.

            16                Good morning.  My name is Mark Willis.

            17          I manage JPMorgan Chase & Co.'s Community

            18          Development Group and I have been asked to

            19          head it after the merger.  Thank you for

            20          giving us the opportunity to:

            21                -  discuss JPMorgan Chase's unique and

            22          innovative community development program.

            23                -  outline our $800 billion public

            24          commitment, and

            25                -  talk a little bit about the creation








                                                                     30
             1

             2          of a compact with our communities, an

             3          initiative that is being driven by the

             4          JPMorgan Chase Community Advisory Board.

             5                We are proud that our Community

             6          Development Group is a leader in creating

             7          new approaches to financing community

             8          development projects.  As JPMorgan Chase has

             9          grown, our Community Development Group has

            10          designed new capabilities to deliver a far

            11          more sophisticated array of products and

            12          services.

            13                We have also helped incubate the

            14          affordable mortgage business by providing

            15          mortgages with flexible underwriting

            16          criteria and we have seen this business grow

            17          and mature.  In the early 1990s, we held

            18          tens of millions of dollars in such

            19          mortgages in our portfolio because they did

            20          not conform to the existing secondary market

            21          criteria.  All of these mortgages developed

            22          into a well-seasoned portfolio.  The

            23          secondary market learned from our experience

            24          and created some new affordable products

            25          that all lenders could provide.  It's a








                                                                     31
             1

             2          great success when we can mainstream a

             3          product because it has become both

             4          ubiquitous and profitable.

             5                Our Community Development Group's

             6          entrepreneurial spirit and willingness to

             7          focus on our customers' unique banking needs

             8          has distinguished JPMorgan Chase as the

             9          cutting edge leader for innovation.  While

            10          we are announcing a ten-year $800 billion

            11          program today, we will continue to celebrate

            12          those small, tangible, day-to-day successes

            13          which make such a difference for our

            14          customers and our community partners.

            15                Let me now lay out in a little more

            16          detail our ten-year plan.  The components of

            17          the plan are a set of key performance

            18          measurements against which the public can

            19          assess our annual results.  Bill has talked

            20          about the top-line numbers that comprise the

            21          plan, and I would like to touch on the major

            22          components again and then discuss some new

            23          initiatives.  The vast majority of this

            24          ten-year $675 billion is comprised of

            25          mortgages, which are so vitally important to








                                                                     32
             1

             2          cities and neighborhoods in every market

             3          across the country.  These loans will be

             4          made to households with annual incomes at or

             5          below the median household income and on

             6          properties located in predominantly minority

             7          communities.

             8                Second, we will make more than $90

             9          billion in loans to small businesses and

            10          not-for-profit organizations in the 17

            11          states served by the combined company's

            12          branch system.  Finally, we anticipate $35

            13          billion in community development loans and

            14          investments.

            15                Let me now talk about the initiatives

            16          that grew from our discussions with

            17          literally hundreds of community leaders and

            18          advocates, including some who oppose this

            19          merger.

            20                1.  We are creating a new Home

            21          Ownership Preservation Office in Chase Home

            22          Finance mortgage business that will:

            23                -  work with community groups that help

            24          victims of fraud or other abusive mortgage

            25          practices and








                                                                     33
             1

             2                -  restructure, when possible, their

             3          mortgages to help them keep their homes.

             4                -  work with the mortgage industry and

             5          HUD on FHA foreclosure policy; and

             6                -  work with community groups to sell

             7          or donate certain REO property to help

             8          minimize any negative impact on their

             9          neighborhoods.

            10                2.  We are creating a national

            11          community mortgage-lending unit to serve the

            12          home-buying needs of low- and moderate

            13          income consumers looking to buy their first

            14          homes in inner cities and other historically

            15          underserved communities.  In large markets,

            16          we will use salaried loan officers who will

            17          have both lending goals and outreach goals.

            18          In other markets, we will have incentives

            19          for commissioned loan officers to serve the

            20          needs of mortgage counseling agencies and

            21          their clients.

            22                3.  We will also provide $1 billion in

            23          loans and investments to CDFIs, community

            24          investment institutions, across our markets

            25          as part of our $800 billion plan.








                                                                     34
             1

             2                4.  We will create a new Financial

             3          Education Partnership Office to focus on the

             4          basic financial education needs of consumers

             5          so that they can make more informed choices

             6          about borrowing, investing, saving and

             7          selecting the right banking account for

             8          their needs.  We launched a basic bank

             9          curriculum over a year ago.

            10                5.  We will open new Business Resource

            11          Centers and expand the SBA Community Express

            12          program across our retail banking franchise.

            13                We are also retaining the JPMorgan

            14          Chase Community Development Group model that

            15          allows us to bring together, in a single

            16          organization, community development experts

            17          from across both banks.

            18                Let's turn now to our Community

            19          Advisory Board, which is comprised of 46

            20          community leaders.  At our last two meetings

            21          of this group, we spent a great deal of time

            22          discussing whether to announce a 10-year

            23          plan.  The board voiced its confidence in

            24          our commitment to community development and

            25          to outstanding CRA performance.  They did








                                                                     35
             1

             2          not feel that a large dollar amount would

             3          add incremental value.  However, they wanted

             4          to expand the debate beyond dollars to

             5          values and impact.  Their idea was to create

             6          a kind of "compact with our

             7          communities."

             8                A Board subcommittee has started to

             9          outline principles to guide the compact,

            10          including the following:

            11                *  Partner with the community

            12                *  Listen to all perspectives

            13                *  Execute locally

            14                *  Strive for economic sustainability

            15                *  Share knowledge

            16                *  Invest in innovation

            17                *  Go beyond regulatory requirements

            18                *  Lead with best practices in fair and

            19          responsible lending

            20                *  Deliver the full resources of the

            21          firm.

            22                We value our Community Advisory Board

            23          because the members keep us focused on the

            24          really important issues.  We also learn from

            25          the perspectives and experiences of members








                                                                     36
             1

             2          from around the country as they too learn

             3          from one another.  We look forward to

             4          expanding the board to include community

             5          leaders from the Bank One footprint.

             6                The merger will have great benefits for

             7          the communities we serve.  We are very

             8          excited about the challenges, the

             9          opportunities, and the responsibility.

            10                Thank you very much.

            11                MS. BRAUNSTEIN:  Thank you very much.

            12          I have a question for the panel.  One of the

            13          things that we often hear from consumer

            14          community groups about large organizations,

            15          especially organizations that have grown in

            16          size through mergers and acquisitions, is

            17          that there is some loss of local control and

            18          local responsiveness, and that oftentimes,

            19          because of the time of the organizations,

            20          there are a range of cookie-cutter products

            21          that are put out which sometimes don't meet

            22          the needs of specific local communities.

            23                My question for you is:  As JPMorgan

            24          Chase continues to grow in size and become

            25          truly a nationwide bank, how do you plan to








                                                                     37
             1

             2          retain both a local kind of emphasis and how

             3          do you plan to meet local communities?

             4                MR. HARRISON:  Sandra, that's a great

             5          question, and it's the question I get a lot,

             6          because it relates to all of our activities,

             7          whether it is our community activities that

             8          we are talking about this morning or whether

             9          it relates to how we serve our middle market

            10          or corporate clients across our respective

            11          markets.

            12                The answer is:  We are a very big

            13          company today, and big by itself is not

            14          necessarily a good thing.  You need to make

            15          big good, and you make big good by doing a

            16          lot of things.  One is making it more local.

            17          Mark talked a little bit about that, but we

            18          want the people who represent this firm in

            19          our local communities to be very active, to

            20          have enough authority to get the job done in

            21          all the activities.  That sounds like the

            22          obvious thing to say, but we do work hard at

            23          that, and the firms that can execute that

            24          better than the others will have a huge

            25          advantage, because the fact of the matter








                                                                     38
             1

             2          is, you can combine good local presence with

             3          the global capabilities of a very large firm

             4          if we have integrated properly, and that is

             5          what we work very hard at.  And I think we

             6          do a pretty good job at it, and we will

             7          continue to do a better job at it because it

             8          is a great opportunity for us.

             9                MS. BRAUNSTEIN:  Thank you.

            10                MR. HODGETTS:  I have a question, if I

            11          may, about predatory lending.  Generally,

            12          there is a concern that large banks are

            13          engaged in the purchase and securitization

            14          of mortgage loans and, indirectly through

            15          that practice, encourage predatory lending

            16          practices.  Could you comment on the steps

            17          you have taken to mitigate that risk?

            18                MR. WILLIS:  First of all, we share

            19          everybody's concern about predatory lending

            20          and abusive lending practices, and we are as

            21          diligent as we can possibly be in trying to

            22          make sure that we do not in any way make

            23          those kinds of loans.  I think we all want

            24          to know -- I won't take the time here -- the

            25          best practices in subprime lending.  One of








                                                                     39
             1

             2          the ideas that we have here with this

             3          group -- I created the Home Ownership

             4          Preservation Office -- is to work with

             5          groups out there that may have better ways

             6          than we have found to make sure that we are

             7          not doing business with companies that do

             8          not live up to standards that we think they

             9          should.

            10                So we have, again, outlined in our

            11          letters here a lot of internal controls to

            12          try and ensure that we are not dealing with

            13          predatory lenders, and we are constantly

            14          trying to learn from our experiences and

            15          learn from others if there are ways that we

            16          can do that better.  We have had some very

            17          good conversations with community groups on

            18          this issue.  We see this office as being

            19          very critical in helping us in that area.

            20                MR. McEWEN:  A follow-up question on

            21          that.  Our main concern as expressed by

            22          community groups actually relates to abusive

            23          practices by home builders.  What are you

            24          doing to control the risk of abusive

            25          practices by those groups?








                                                                     40
             1

             2                MR. WILLIS:  As part of our best

             3          practice here, we do screen the companies

             4          that we do business with.  We look to make

             5          sure -- we don't take, for example, HOEPA

             6          loans, as people understand, and we don't

             7          securitize HOEPA loans.  We do a full due

             8          diligence of people that we are doing

             9          business with, and we are eager to have an

            10          initial input from the community groups in

            11          terms of their own due diligence of these

            12          groups.  We have systems that get involved

            13          in properties that are flipping.  There are

            14          a whole bunch of abusive practices that we

            15          look to here to make sure that, as best as

            16          we can, we are doing business with people

            17          that meet the law, meet the regulatory

            18          requirements.

            19                MS. BRAUNSTEIN:  Thank you very much.

            20          Any other questions?  OK, thank you very

            21          much.

            22                MR. HARRISON:  Thank you for giving us

            23          the opportunity to be with you.

            24                MS. BRAUNSTEIN:  The next panel can

            25          come forward, please.








                                                                     41
             1

             2                As with the last panel, I would ask

             3          that everyone please state your name and

             4          organization for the record.

             5                Reverend Jackson, would you like to

             6          lead us off?

             7                REV. JACKSON:  Good morning.  My name

             8          is Jesse L. Jackson Sr.  I am the President

             9          and Founder of the Rainbow/PUSH Coalition,

            10          citizenship Education Fund and its

            11          initiative, the Wall Street Project.  I

            12          begin my comments by stating that presently

            13          we are neither opposed to nor in favor of

            14          JPMorgan Chase's application for merger with

            15          Bank One.  Our role at this time is to

            16          provide research and counsel as to the

            17          importance of inclusion and access as you

            18          consider this merger.

            19                We feel that safeguards are essential,

            20          flowing from the upper levels of planning

            21          and execution.  You often see the Mt.

            22          Everest effect of large and tall mountains

            23          snow-capped at the top but with a lack of

            24          ground bases.

            25                Secondly, given the amount of








                                                                     42
             1

             2          investment banker fees in this present deal,

             3          a history of slavery and race-based legacy

             4          with these companies to be cleared up, it is

             5          a matter of real concern.  The plan to

             6          greenline historically redlined zones, the

             7          matter of CRA and lending predators, people

             8          who prey on the poor -- we work harder for

             9          less, we pay more for less -- demonstrates

            10          something, and the impact of this merger

            11          could have an impact on this, positively or

            12          negatively.

            13                Given the massive corporate malfeasance

            14          that is leading the world's headlines, we

            15          are currently appealing to the New York

            16          Attorney General's Office, the Senate

            17          Banking Committee and corporate America to

            18          take an active role in opening doors of

            19          opportunity and inclusion for diverse

            20          financial services entities.

            21                The Community Reinvestment Act, passed

            22          by Congress in 1977, encourages financial

            23          institutions to help meet their communities'

            24          needs -- through safe and sound lending

            25          practices and by providing retail banking








                                                                     43
             1

             2          and community development services.  This

             3          law must be enforced.  So I have desire to

             4          work with you in this process.

             5                This nearly $60 billion merger will

             6          create the second largest financial services

             7          entity in the world; yet, discussion

             8          concerning diversity has been, I feel,

             9          essentially marginalized.  Thus, we have

            10          several basic questions as we seek to

            11          establish a 5 percent outsourcing goal for

            12          diverse financial firms that is measurable.

            13          It is important to note that these two

            14          entities, combined, may control and manage

            15          nearly $600 billion, and thus we cannot

            16          dispute those who want to see measurable

            17          goals and timetables.

            18                Will we see any usage of women,

            19          African-American, Hispanic or other

            20          ethnically diverse persons in legal,

            21          transition management and auditing firms

            22          participate in this merger?

            23                If so, what percentage will be

            24          allocated?  If not, why are we excluded from

            25          the table?








                                                                     44
             1

             2                The fees that will be generated alone

             3          by this merger may total nearly $100

             4          million.  Just as minorities exist as

             5          contributors of capital to our financial

             6          markets, there must be a representative

             7          distribution of the management of that

             8          capital.  Again, our organization recommends

             9          5 percent.

            10                Will we see an overall increase in the

            11          outsourcing of opportunities for diverse

            12          asset management firms, brokerage firms, as

            13          well as investment in community-based banks

            14          and minority venture capital funds?

            15                As stated earlier, the combined assets

            16          under management will total in the hundreds

            17          of billions of dollars.  Imagine how

            18          equitable the playing field would be if

            19          JPMorgan Chase and Bank One would assign

            20          just 5 percent of that endeavor.

            21                How will the supplier diversity offices

            22          and/or initiatives of both of these

            23          organizations be combined after the merger?

            24          Has there been any sort of analysis done to

            25          determine, out of Bank One and JPMorgan








                                                                     45
             1

             2          Chase, which entity has the better diversity

             3          programs?

             4                What will be the combined procurement

             5          budget for these two entities?  What is the

             6          current spend allocation for each concerning

             7          African American vendors, Hispanic vendors,

             8          native American vendors, and Asian vendors?

             9          How will current relationships be maintained

            10          and enhanced?

            11                African Americans and Hispanics,

            12          concerned about the impact of the loss of

            13          jobs at Bank America, are shedding 12,500

            14          jobs worldwide as part of a move to justify

            15          the $48 billion it spent buying Fleet Boston

            16          Financial Corporation, and yet there has

            17          been silence concerning the effect that

            18          these layoffs have had on the job markets to

            19          those who came in last.

            20                What are the current retention rates of

            21          people of color?

            22                How will the workforce diversity

            23          offices or positions be merged?

            24                Do the selected executive leadership

            25          teams and new board members reflect the.








                                                                     46
             1

             2          Increased diversity of the combined entity's

             3          climate base?  Our Initial research

             4          indicates zero percent diversity within Bank

             5          One's executive leadership or planning group

             6          and a nominal percentage in diversity among

             7          JPMorgan Chase at the top.

             8                Subsequent to the merger, what will

             9          happen to females and diverse executives who

            10          were on leadership tracks within each of

            11          these banks?

            12                Will we see an increase in investments

            13          and venture capital funds that help to grow

            14          women and minority owned businesses?

            15                Lastly, today you will hear from a host

            16          of esteemed organizations concerning CRA,

            17          predatory lending, subprime lending, so I

            18          will limit my remaining remarks to just two

            19          primary areas:  The importance of financial

            20          literacy in faith-based communities, and the

            21          historical context that will provide

            22          justification for inclusion.

            23                According to the SEC, churches,

            24          especially African American churches, are

            25          one of the largest victims of unscrupulous








                                                                     47
             1

             2          financial advisers and bank representatives.

             3          Our churches are in need of more than just

             4          free checking accounts, housing fairs, and

             5          large unfulfilled public commitments to

             6          provide mortgage lending.  The Church is the

             7          cornerstone for education and leadership in

             8          our communities.

             9                I close with a bit of historical

            10          context.  Blocks away from this building

            11          lies an African Slave burial ground.  We

            12          must remember that Wall Street was started

            13          on the commodities industry -- exporting

            14          cotton and importing slaves.  The cries and

            15          pleas of our foreparents whose enslaved

            16          labor helped to grow these banks must not be

            17          ignored.

            18                If we were to compare the Civil Rights

            19          movement in our country to a Freedom

            20          Symphony, it should be broken down in four

            21          stages:  End of slavery; securing the right

            22          to vote; end of segregation; and fourth,

            23          access to capital, industry and technology.

            24          We must address these four stages and use

            25          this magnificent moment to close the gap.








                                                                     48
             1

             2                The last stage must be that of economic

             3          empowerment through shared access to

             4          capital.  Regardless of your views on

             5          reparation.  African Americans, Hispanics,

             6          women, and other underserved groups still

             7          are not exposed to an open playing field

             8          when it comes to wealth creation in this

             9          country.  I implore you to help assist in

            10          filling that void.

            11                Thank you very much.

            12                MS. BRAUNSTEIN:  Thank you.

            13                MR. LEE:  Ms. Braunstein, I wanted to

            14          ask a question to start, which is on the

            15          comment period.  Is it the 23rd or the 22nd?

            16          I thought it was the 23rd.  I think when the

            17          board put out their notice of meeting, not

            18          that it is -- from what we have just heard,

            19          I don't know.

            20                MS. BRAUNSTEIN:  It is the 23rd.

            21                MR. LEE:  All right.

            22                Good morning.  My name is Matthew Lee.

            23          I am the Executive Director of the nonprofit

            24          organizations Inner City Press and Fair

            25          Finance Watch, which are based in the South








                                                                     49
             1

             2          Bronx here in New York City.

             3                I want to say one thing.  As to

             4          everything that I am going to say here, I am

             5          not at all clear that this eleventh-hour,

             6          $800 billion pledge will address any of the

             7          issues that I am about to discuss, and I

             8          wish that that pledge had been made

             9          available before the public meeting so that

            10          the people could actually look at it and

            11          comment on it.  So I am going to stick to --

            12          you know, it is what it is, but I think you

            13          might even want to take an extended comment

            14          period.  To do it at the day of the hearing

            15          is sort of a new technique, let's say.

            16                In the South Bronx of New York City, we

            17          have seen Chase close more than a dozen bank

            18          branches.  Now, we find that JPMorgan Chase

            19          finances check cashiers in the same

            20          neighborhoods where it closed its bank

            21          branches.  We have found, and demonstrated

            22          in written submission to the Federal

            23          Reserve, that Bank One supports and enables

            24          payday lenders and even pawn and gun

            25          shops -- a shadow world of fringe finance








                                                                     50
             1

             2          and predatory lending.

             3                We believe that there are a number of

             4          reasons that this merger should be denied.

             5          Based on Morgan Chase's conduct in the Enron

             6          stock research scandals, it would create

             7          another too-big-to-fail, scandal-plagued

             8          megabank, and would limit competition and

             9          raise prices.  But in the five minutes

            10          allotted today, I'll focus on predatory

            11          lending from payday lenders to check

            12          cashiers, in The Bronx and elsewhere, and

            13          even pawn and gun shops nationwide.

            14                Inner City Press is today submitting

            15          for the record a series of Uniform

            16          Commercial Code filings which show that Bank

            17          One finances payday lenders, both large and

            18          small.  Here are a few examples:

            19                First Cash Financial Services, a

            20          top-ten pawnshop chain with 130 storefronts

            21          in 11 sites.

            22                Illinois Payday Loans, Inc.

            23                Discount Payday Loans of Colorado --

            24          the use of the word "discount" is perhaps

            25          unintentionally ironic, or Orwellian.








                                                                     51
             1

             2                Mister Payday of Kentucky.

             3                These are all in exhibits that we

             4          turned in.

             5                First American Cash Advance, which is a

             6          top-ten payday lender with 330 storefronts

             7          in 11 sates -- a company which has been

             8          extensively criticized for its high-cost

             9          lending, particularly to members of the

            10          military.  There is a Washington Post

            11          article to that effect.

            12                The two banks' responses today on these

            13          issues have been evasive.  In their April 7

            14          response to the Delaware Banking Department,

            15          to which ICP has also commented -- and

            16          Rashmi Rangan you will hear from later --

            17          the banks have claimed that "although Bank

            18          One does not specifically target this

            19          market, it has made credit facilities

            20          available to a relatively small number of

            21          small- and middle-market consumer finance

            22          lenders whose predominant business is payday

            23          lending" -- which is a long sentence that I

            24          think flies in the face of the statement we

            25          heard from the bank's panel as to an attempt








                                                                     52
             1

             2          to not do business with people who don't

             3          live up to your standards.  Because if these

             4          lenders live up to the bank's standards,

             5          then the bank has no standards.

             6                The statement I just read was and is

             7          misleading.  Far from being limited to

             8          "small" or "middle-market" payday lenders,

             9          Bank One finances at least two top-ten

            10          payday lenders:  First Cash Financial and

            11          First American Cash Advance.  We have

            12          recently gone back to the salt mines of

            13          research, and now, as part of the exhibits

            14          demonstrated, Bank One is financing the

            15          following companies -- i have the list:

            16                National Pawn Brokers Outlet of Flint,

            17          Michigan;

            18                Pyramid Pawn of Danville, Kentucky.

            19                Moe's Pawn Shop and Gun Store of

            20          Columbus, Ohio.

            21                Instant Cash Advance, Inc., of Miami,

            22          Florida.

            23                Indiana's Casino Cash and Pawn, Inc.

            24                Sunset Cash Advance, Corp. -- a payday

            25          lender.








                                                                     53
             1

             2                Tomcats Pawn, Inc. Of Bloomington,

             3          Indiana.

             4                Cash Till Payday L.t.d.

             5                Bronco Pawn & Gun, Hornet Pawn & Gun,

             6          and Longhorn Pawn and Gun, Inc., all of

             7          Austin, Texas.

             8                There are many more; I'm stopping here

             9          because JPMorgan Chase too is an enabler not

            10          only of predatory mortgage lending but also

            11          of fringe finance.  In the South Bronx, we

            12          have turned in exhibits showing there is

            13          financing at Claremont Check Cashing Co., at

            14          510 Claremont Parkway, The Bronx, which is

            15          across from four housing projects where

            16          25,000 people live and there is no bank

            17          branch.

            18                You know, there are a number of others:

            19          All American Check Cashing Corp, Kimball

            20          Check Cashing.  All of these are in the

            21          South Bronx.

            22                They are also in Brooklyn, Jersey City

            23          and Rochester.  And you are going to hear

            24          from Ruhi in a moment, you will hear from

            25          others, that the JPMorgan Chase








                                                                     54
             1

             2          securitization of subprime lenders is done

             3          without standards.  Many of us have raised

             4          the point that they should have the same

             5          standards of securitization that they have

             6          on their own loans.  They said they might

             7          but they currently don't.  It is imperative

             8          that we nail it down.  $800 billion doesn't

             9          change that.

            10                The biggest problem in terms of this

            11          process in front of the Fed is that once we

            12          raised the issue of payday lending and

            13          subprime lending by JPMorgan Chase, the Fed

            14          asked the banks for a list of the lenders

            15          that it does business for.  The bank turned

            16          it in, but asked for confidential treatment.

            17          So it doesn't want to show the list to the

            18          public.  We are pursuing the list from the

            19          Fed under the Freedom of Information Act.

            20          They say that they only want be to do

            21          business with companies that live up to

            22          their standards.  It is imperative that, if

            23          that be true, they release the list so

            24          everyone can comment on it.  To hide the

            25          list I think flies in the face of being a








                                                                     55
             1

             2          responsible company.

             3                The $800 million or billion dollars, or

             4          whichever it is, to do it on the day of the

             5          hearing indicates that had there not been

             6          this hearing they wouldn't have made the

             7          pledge.

             8                With the Community Advisory Board, many

             9          of whose members I respect and we will hear

            10          from later, I wonder whether JPMorgan Chase

            11          has asked them about payday lending and

            12          whether it is a good thing for our

            13          communities.

            14                Thank you very much.

            15                We are opposed to the motion, by the

            16          way.

            17                MS. MAKER:  Good morning.  My name

            18          is --

            19                MS. BRAUNSTEIN:  I am glad you

            20          clarified that.  (Laughter)

            21                MR. LEE:  I wanted to.

            22                MS. MAKER:  My name is Ruhi Maker, and

            23          I too am here to oppose this motion, despite

            24          the $800 billion pledge.  I co-convene the

            25          Greater Rochester Community Reinvestment








                                                                     56
             1

             2          Coalition, and am also a senior attorney of

             3          the Public Interest Law Office of Rochester.

             4          GRCRC is a coalition of over 35

             5          not-for-profits from the greater Rochester

             6          area. PILOR has a foreclosure prevention

             7          project in Rochester.  This project of ours

             8          is a foreclosure project which has been

             9          around for a few years but it has really

            10          taken off.  We have got already hundreds of

            11          clients, and it is very, very scary for me.

            12          So I want to focus on due diligence.

            13                Mark raised that, and I welcome the

            14          fact that JPMorgan Chase seems to recognize

            15          that due diligence is a problem.  My opening

            16          comments on the issue of due diligence are:

            17          Is it just words or is there going to be

            18          specific enforceability in the order that

            19          the Fed issues as to what is done for due

            20          diligence and how due diligence is improved?

            21          Will it have teeth and will it be

            22          monitorable and enforceable?  And will there

            23          be public information provided as to how

            24          this due diligence is going to improve?

            25                Let's talk about JPMorgan Chase's








                                                                     57
             1

             2          mortgage lending.  You will hear from some

             3          of my colleagues about specific examples of

             4          clients.  I will paint with a broad brush.

             5                Chase, Chase's attorneys, in a March 23

             6          letter, responded to the Fed and stated

             7          there a 42,000 mortgage borrowers in 2003

             8          alone in long-term default.  If necessary, I

             9          could quote the exact words.  This resulted

            10          in those 42,000 borrowers and homeowners

            11          ending up in payoffs, in restitution and

            12          foreclosure.

            13                Now, what number of those are FHA

            14          loans, I don't know.  What number of those

            15          are subprime loans, I don't know.  What

            16          number of those are abusive loans, I don't

            17          know.  We all know foreclosures occur

            18          because of death, disease and divorce, but

            19          without the real due diligence that should

            20          exist we really don't have a true measure of

            21          the problem.  Does Chase know?  Does the Fed

            22          know?  I don't know, and that really

            23          disturbs me.  So let's talk about real due

            24          diligence.

            25                We have clients, for example, who get a








                                                                     58
             1

             2          loan to securitize -- and these are not

             3          Chase loans, by the way; I want to make that

             4          clear -- where you have a teacher who is a

             5          substitute teacher, she is a substitute

             6          teacher, and months after she stops

             7          teaching, her income is half of what she had

             8          and her role becomes problematic.  Does due

             9          diligence capture that?  Does it capture

            10          benefits that a grandmother gets from her

            11          17-year-old child which is going to age out

            12          after the loan has been securitized,

            13          whatever?  There are lots and lots of

            14          problems that we believe due diligence does

            15          not capture as yet.

            16                So is it really a question of the

            17          bank's inability to figure this out and not

            18          do real due diligence, or is it a convenient

            19          way to look the other way while short-term

            20          money is made with little thought for

            21          long-term consequences?

            22                I have been a poverty lawyer for 25

            23          years.  I lay awake thousands of nights to

            24          make sure of what I am going to do to ensure

            25          these kids are not the victims of predatory








                                                                     59
             1

             2          lending.  So I have passion in my voice; I

             3          am told I am very passionate.  And I want

             4          all of you -- some of you live in gated

             5          communities -- to think about the cost of

             6          predatory lending and the cost of

             7          homelessness and the damage to families,

             8          because I see it every single day and it

             9          breaks my heart.

            10                What I would like to focus on is

            11          whether the percentages are low of defaults,

            12          whatever those percentages are.  45,000

            13          people were in default in 2003 alone.  These

            14          are Chase loans.  That troubles me and that

            15          needs to stop.  We need to find a way of

            16          minimizing that number, short of death,

            17          disease and divorce, but let's set what that

            18          number is.  Can a multibillion-dollar

            19          corporation operate?  You know what you are

            20          doing.  I know in this world they can and do

            21          operate in a way that is damaging, and we

            22          need to change that.

            23                There is a concern about state laws

            24          that result in assignee liability for

            25          abusive loans.  They claim it is impossible








                                                                     60
             1

             2          to price securitized pools to reflect the

             3          potential cost of abusive loans which may

             4          end up in these pools.  Yet they claim to

             5          practice thorough due diligence that ensures

             6          that the loans in the pools are not abusive.

             7          They can't have it both ways.

             8                Do we know how pervasive this problem

             9          is?  Or is it like the proverbial elephant?

            10          The banks grab the tail and deem it

            11          minuscule.  The regulators grab the trunk

            12          and hold hearings.  The consumer advocates

            13          repeatedly bump into the massive body and

            14          talk of abandoned neighborhoods and

            15          devastated communities.  They look people in

            16          the eye who are losing or have lost their

            17          homes and say, "You were ripped off but I

            18          can't help you."

            19                So let's get some real due diligence.

            20          I am glad Mark wants you to talk to the

            21          advocates.  There are lots of people who can

            22          tell Chase and other lenders how to do this.

            23          The question for the Fed is:  Are you going

            24          to put this in your order, or are we all

            25          going to go away, have nice conversations








                                                                     61
             1

             2          for the next two years, and nothing is going

             3          to change?

             4                The way it changes is:  You put it in

             5          your order, you follow through.  You know

             6          you have done it before.  We know what I am

             7          talking about and I know what we are talking

             8          about.  Let's get it right this time.  Thank

             9          you.

            10                MS. BRAUNSTEIN:  Thank you.

            11                MS. RANGAN:  My name is Rashmi Rangan.

            12          I am with the Delaware Community

            13          Reinvestment Action Council, and I am here

            14          opposing this merger.

            15                Thank you for this opportunity today to

            16          testify.  My oral testimony supplements the

            17          written comments that have been submitted

            18          into the record to date.  I have also

            19          included communications with the Delaware

            20          Banking Commissioner into the record.

            21                One of the factors to consider, and we

            22          mentioned, was the convenience and the needs

            23          of the entire community that the bank serve.

            24          We are going to talk about the needs that

            25          the bank does not serve or, rather, hurts








                                                                     62
             1

             2          communities.

             3                On that note, the applicants should

             4          release the list of their subprime, payday,

             5          Refund Anticipation lenders, and other

             6          partners.  The list that Mr. Lee has

             7          mentioned you should make available to the

             8          public should they not voluntarily do so.

             9                As Mr. Lee has already mentioned, his

            10          research has found a long list of

            11          questionable lenders as both Bank One's and

            12          Chase's partners -- a very short list.  I

            13          would mention, which had been entered into

            14          your record, compliance compiled by ICP

            15          shows Chase's support of and profit from All

            16          American Check Cashing Corp. Of 412

            17          Soundview Avenue, Kimball Check Cashing

            18          Corp. Of 101 East Burnside Avenue, A & A

            19          Check Cashing Corp. Of 1488 Williamsbridge

            20          Road, Dyre Check Cashing Corp. Of 3813 Dyre

            21          Avenue, etc., etc.

            22                Because the record is already

            23          supplemented with information that is

            24          publicly available, there is absolutely no

            25          need to ask for or get confidentiality for








                                                                     63
             1

             2          this list.  If the applicants have nothing

             3          to hide, what are they afraid of?  If the

             4          applicants are ashamed of their partners,

             5          why enter into such partnerships?  If the

             6          applicants are to engage in such business,

             7          there should be greater scrutiny and

             8          openness.  Who the applicants partner with

             9          demonstrates the standard of due diligence

            10          that they choose to apply.

            11                Therefore, Exhibit 7, list of their

            12          prime investors, Exhibit 9, list of their

            13          asset-based relationships, Exhibit 10. List

            14          of their RAL and payday lenders, and any

            15          other similar lists concerning which they

            16          frivolously asked for confidentiality must

            17          be released.  The public has a right to know

            18          whom they do business with.

            19                On page 46 of the March 23 letter to

            20          you, the applicants acknowledge, and I quote

            21          here:  "Although there is no specific credit

            22          policy requirement that enhanced due

            23          diligence or fair lending compliance be done

            24          with respect to companies engaged in payday

            25          lending or tax anticipation refund lending,








                                                                     64
             1

             2          credit evaluations are expected to deal

             3          with, as applicable, the customer's

             4          reputation and other character-related

             5          issues as well as issues peculiar to the

             6          customer that may affect credit risk."

             7          Given the absence of due diligence, DCRAC

             8          asks that should you approve the merger, it

             9          should be conditioned on the new entity

            10          disengaging from this line of business.  The

            11          applicants have, in their response to such a

            12          request by Metropolitan Milwaukee Fair

            13          Housing Council, on March 30, 2004, at page

            14          6, stated:  "It would not be appropriate to

            15          discuss exiting these businesses."

            16                Mr. Harrison talked about

            17          anti-predatory lending education, and this

            18          is a predatory business that they have

            19          refused to disengage themselves from.

            20                Just two days ago, at a public hearing

            21          in Delaware, the applicants, through

            22          counsel, asked the Delaware Banking

            23          Commissioner to ignore any testimony not

            24          directly relevant to the two entities'

            25          credit card operations.  What the parent and








                                                                     65
             1

             2          its affiliates do outside Delaware is very

             3          relevant to Delaware.

             4                Attached is a News Journal editorial

             5          entitled "Payday loans sully the state's

             6          reputation as a financial center."  Even

             7          from a bank-friendly state such as Delaware,

             8          the media recognized that "payday loans are

             9          a shameful exploitation of inner-city

            10          residents and low-income workers living

            11          day-to-day or in neighborhoods without

            12          regular banks."

            13                My time is up.  I want to thank you.

            14                MS. BRAUNSTEIN:  You oppose this

            15          merger.  Thanks.

            16                MS. HOWARD:  Good morning.  My name is

            17          Deb Howard.  I am Executive Director of the

            18          Pratt Area Community Council, a

            19          community-based housing organization serving

            20          central Brooklyn.  We provide homebuyer and

            21          homeowner services, tenant and community

            22          organizing, affordable housing and economic

            23          development and, through these activities,

            24          we work to preserve the economic and social

            25          diversity of our communities.








                                                                     66
             1

             2                I am appearing here today to express

             3          some of the reservations we have for the

             4          impact of the proposed merger of JPMorgan

             5          Chase and Bank One on our communities.  With

             6          over 200 branches, JPMorgan Chase remains

             7          the financial institution in New York City

             8          with the strongest on-the-ground presence in

             9          traditionally underserved neighborhoods.  In

            10          the Bedford-Stuyvesant community which we

            11          serve, JPMorgan Chase is one of the very few

            12          banks with a physical branch in the area.

            13          In fact, its bank is right in the center of

            14          Bed Stuy.

            15                Given that the merging entities have no

            16          redundancies in their branch locations

            17          within the five boroughs, we would expect

            18          that the new company's presence will remain

            19          constant, if not increase, in these

            20          communities.  However, because the retail

            21          banking operations are moving in Chicago, we

            22          are gravely concerned that this will not be

            23          the case.  Though JPMorgan Chase has a

            24          decent record in these communities, we urge

            25          the Federal Reserve Board to carefully








                                                                     67
             1

             2          scrutinize the proposed merger so that low-

             3          and moderate-income and minority communities

             4          are served by tangible benefits and

             5          continued commitment.

             6                Once the New York City leader in

             7          community development lending, in our

             8          experience Chase has backed off from this

             9          commitment to affordable housing production

            10          since its last merger with JPMorgan.  In the

            11          1990s when Chase was accessible and

            12          committed to working hand in hand with

            13          neighborhood organizations, PACC had two

            14          projects funded by Chase.  Our last two

            15          projects have been funded by Fleet because

            16          it has stepped up as flexible committed

            17          lender.

            18                We recommend that, as a consequence of

            19          this merger, JPMorgan Chase/Bank One again

            20          establish a community development structure

            21          that effectively supports neighborhood-based

            22          organizations in their efforts to produce

            23          affordable housing for their communities.

            24                Just to comment on Mark Willis's

            25          statements also, as a community








                                                                     68
             1

             2          organization, which has been providing

             3          foreclosure and default counseling and

             4          financial literacy and education for over

             5          ten years in our community, I'm a little

             6          affronted when he said the bank is going to

             7          come and teach us about these practices and

             8          teach us about loss mitigation counseling

             9          and false counseling.  So I also say that I

            10          hope that the banks will enlist the help of

            11          neighborhood-based community organizations

            12          that provide these services in spreading the

            13          word on how to better serve our clients.

            14                Our reservations about the proposed

            15          merger can be assuaged by a formalized

            16          written CRA agreement with JPMorgan

            17          Chase/Bank One that commits them to an

            18          increase in lending and philanthropic giving

            19          for community development and housing

            20          preservation, and sets clearly defined goals

            21          in relation to investing practices and

            22          retail services in LMI and Minority Census

            23          Tract areas.  JPMorgan Chase and Bank One

            24          have been negotiating a detailed agreement

            25          with organizations in Chicago and that








                                                                     69
             1

             2          agreement could easily serve as a template

             3          for such an agreement in New York and other

             4          major markets where JPMorgan Chase and Bank

             5          One have significant influence.  With

             6          agreements such as these in place, the new

             7          entity will be ultimately much more

             8          responsive and attuned to the needs of low

             9          and moderate income and minority

            10          communities.

            11                As our original bank around the corner

            12          moves to be the bank of the nation and the

            13          world, we hope that this new firm will

            14          expand its services for our community and

            15          continue to be a strong community partner.

            16          Thank you.

            17                MS. BRAUNSTEIN:  Thank you.

            18                MR. MURIANA:  Good morning.  And thank

            19          you for this opportunity to testify.

            20                My name is Joe Muriana, and I am the

            21          President of the Board of University

            22          Neighborhood Housing Program, created twenty

            23          years ago by Fordham University, the Jesuit

            24          university of New York City, where I

            25          currently serve as Associate Vice President








                                                                     70
             1

             2          for Government and Urban Affairs.

             3                UNHP is a community-institutional

             4          partnership designed to promote the creation

             5          and preservation of affordable housing in

             6          the northwest Bronx, serving as a community

             7          financial intermediary, a technical

             8          assistance and loan packaging assistance

             9          provider, and a catalyst on affordable

            10          housing issues.  University Neighborhood

            11          also has been designated as a Community

            12          Development Financial institution by the

            13          U.S. Treasury Department.  We have made and

            14          leveraged over 70 acquisition, renovation

            15          and refinancing loans to over 50 multifamily

            16          affordable housing projects totaling more

            17          than $15 million, as well as advancing other

            18          projects with tens of millions of other

            19          dollars invested in projects where we have

            20          provided technical assistance and loan

            21          packaging services.

            22                University Neighborhood Housing Program

            23          has a long history with JPMorgan Chase and

            24          with the various predecessor entities that

            25          have become part of the JPMorgan Chase








                                                                     71
             1

             2          organization in recent years.  We have

             3          received grant support from JPMorgan Chase

             4          for a number of years.  Our Executive

             5          Director, Jim Buckley, currently serves on

             6          the Chase Advisory Board.

             7                Chase Manhattan was the first lender to

             8          participate in UNHP's multifamily

             9          acquisition loan fund back in 1988.  Chase

            10          initially established a below prime rate

            11          revolving line of credit for $100,000 that

            12          permitted us to make loans to permit the

            13          acquisition by community-based nonprofit

            14          housing groups of two multifamily properties

            15          that were in serious states of

            16          deterioration.  We were able to continue

            17          drawing against the revolving line of credit

            18          to do other deals, and when it became time

            19          for renewal, Chase increased the line to a

            20          quarter million dollars.  Chase's

            21          willingness to take the lead in this

            22          instance paved the way to bring other

            23          financial institutions into our work.

            24                Chase initially provided acquisition

            25          and construction financing in the amount of








                                                                     72
             1

             2          $4 million on five multi-family buildings

             3          containing 275 apartment units.  We then

             4          began to develop other lending tools to

             5          assist tenant and community organizations.

             6                This time we worked with the folks at

             7          Chemical and ultimately at Chase, through

             8          their Housing Opportunities Program.  Our

             9          first deal involved $50,000 zero percent

            10          loan to get gas service restored to 87

            11          families on Garden Street.  That deal and

            12          its success led to Chase's funding of

            13          University Neighborhood's other lending

            14          programs with another $250,000 loan through

            15          the Housing Opportunities Program in 1996.

            16          Chase issued a new loan in 2001 for $400,000

            17          that we have continued to use to support our

            18          ongoing loan programs.

            19                Chase also collaborated with UNHP to

            20          combine philanthropic dollars and

            21          market-rate loan money to allow the

            22          acquisition and rehabilitation of two

            23          buildings with 31 apartments known as

            24          Tremont-Anthony.  This project highlighted

            25          the value of bank flexibiity and creativity








                                                                     73
             1

             2          combined with our own to make a difficult

             3          deal work that linked together Low Income

             4          Housing Tax Credits with a variety of other

             5          funding sources.

             6                The Merger.

             7                In the course of the many banking

             8          mergers we have undergone in the Bronx, we

             9          always remain concerned about their impact

            10          on our communities.  While we have had a

            11          generally positive history with Chase in our

            12          community, it is only reasonable and

            13          realistic that we would be concerned about

            14          the maintenance of effort, creativity and

            15          willingness to initiate new efforts in and

            16          on the part of the new bank.  It is very

            17          possible for community-based organizations

            18          such as ours to get lost in bank

            19          megastructures, especially if they become

            20          geographically more remote.  It is with

            21          these concerns in mind that we make the

            22          following comments:

            23                Corporate and community leadership has

            24          been a common thread in the history of our

            25          relationship with Chase.  Over sixteen








                                                                     74
             1

             2          years, Chase has maintained its efforts with

             3          us, and the benefit has been clear for both

             4          the bank and our community.  If the merger

             5          is approved, we expect that the new bank

             6          will provide exceptional leadership.  As

             7          part of Jim Buckley's participation on the

             8          Community Advisory Board, We are involved in

             9          ongoing discussions with both banks about

            10          the development of a new compact that Mark

            11          Willis referred to, that would outline some

            12          basic principles that the bank will commit

            13          to as part of their community development

            14          efforts with groups and communities like

            15          ours.  One of those principles is the

            16          importance of developing plans and goals in

            17          active partnership with local leaders.

            18          Chase has been good at this in the past; we

            19          want to make sure that they continue to be

            20          good at it in the future.

            21                Another theme is the recognition that

            22          community development needs are different in

            23          different communities, and that frequently

            24          there is a need for innovative efforts to

            25          meet those needs.  We do support the general








                                                                     75
             1

             2          direction in which these discussions are

             3          headed.  We are eager for the tentatively

             4          merging banks to announce that they will --

             5          I guess they announced it this morning,

             6          although it is just an announcement --

             7          reengage with their communities in new, more

             8          productive and creative ways.  Where much is

             9          given, much is expected.  We along with

            10          other community organizations look forward

            11          to working with the banks to make this

            12          compact a living, breathing and concrete

            13          reality in our communities.

            14                In our own neighborhood, we

            15          specifically look to the bank to maintain

            16          and expand current lending with us.  We also

            17          expect to see greater bank leadership

            18          activity and initiative in the following

            19          areas:

            20                With regard to multi-family housing, we

            21          urge the bank to take a leadership role in

            22          strategic efforts to preserve and maintain

            23          currently occupied, privately owned,

            24          affordable housing.  The vast majority of

            25          affordable rental housing in New York is








                                                                     76
             1

             2          privately held.  A significant amount of

             3          that housing is currently at risk, in part

             4          due to rising prices.  Chase has been a

             5          major leader in multi-family rehabilitation

             6          financing and can be an invaluable asset in

             7          developing awareness in the financial

             8          community about the issues confronting this

             9          type of housing.

            10                Based on our underwriting of recent

            11          sales transactions, margins are very tight,

            12          and if and when the current record low

            13          interest rates rise, the large number of

            14          5-year balloon mortgages with 20- to 30-year

            15          amortization schedules that will be coming

            16          due in the next few years will raise

            17          significant challenges for our

            18          neighborhoods.  We have experienced the

            19          bursting of real estate bubbles before, and

            20          the results for most buildings and tenants

            21          are not good.  We look to the bank to join

            22          us in our efforts to strengthen existing

            23          vehicles and possibly create new ones that

            24          will allow early intervention in financially

            25          distressed buildings to address this








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             1

             2          problem.

             3                With regard to one- to four-family

             4          homes, there is a problem.  We are concerned

             5          with the growing number of foreclosures.  We

             6          have communicated with Chase about the need

             7          to develop a greater effort on foreclosure

             8          prevention on Chase-serviced mortgages.

             9          Research has shown that a large number of

            10          the Chase-related foreclosures in the Bronx

            11          are FHA-insured.  We view as essential the

            12          proposed creation of a centralized office of

            13          operation in the new bank which would make

            14          information available to assist homeowners

            15          and groups trying to assist those

            16          homeowners.  We urge both banks to make this

            17          office a model for the industry and we offer

            18          our assistance to make that happen.

            19                In closing, we at University

            20          Neighborhood pose a leadership challenge to

            21          both these banking institutions to recommit

            22          and reengage in meaningful ways in a new

            23          compact with their communities.

            24                Thank you very much.

            25                MS. BRAUNSTEIN:  Thank you very much.








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             1

             2                We would ask the next panel to come

             3          forward.

             4                Once again, I would ask the panelists

             5          to please make sure to give your name and

             6          organization.  I also ask everybody to

             7          please keep an eye on the timekeepers and

             8          pay attention to their signs.

             9                With that, we will start with Mark

            10          Pinsky.

            11                MR. PINSKY:  Thanks.  Good morning,

            12          Sandy.

            13                My name is Mark Pinsky.  I am President

            14          and CEO of National Community Capital

            15          Association -- nCCA, as we call.  It is a

            16          national membership network of

            17          private-sector community development

            18          financial institutions, numbering more than

            19          150.  Many of them are on this panel; others

            20          are speaking later today.

            21                CDFI is a community-development

            22          financial institution of the private-sector

            23          financial intermediaries that work outside

            24          the margins of conventional finance, with

            25          the goal of sort of moving those margins or








                                                                     79
             1

             2          bringing the economic mainstreams into the

             3          lives and the markets of communities outside

             4          those margins, to bring those markets into

             5          the economic mainstream.  In that role we do

             6          a fair amount of business with a large

             7          number of banks.

             8                The CDFI industry in this country has

             9          done over $10 billion of financing

            10          historically, small in the context of

            11          mainline financial institutions, quite

            12          significant in the context of many of the

            13          communities where we work.  That financing

            14          supported affordable housing, home

            15          ownership, rental, supported businesses from

            16          micro very small businesses to midsize

            17          businesses, and has supported community

            18          facilities, community services.

            19                Both JPMorgan Chase and Bank One have

            20          been active players in the CDFI industry and

            21          supporters of our efforts.  Historically, we

            22          have created about 190,000 housing units,

            23          about 290,000 jobs, maintained and supported

            24          or served over 4,000 community

            25          organizations.








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             1

             2                Let me, if I may, give you a few

             3          examples of the kind of things that these

             4          banks have done historically.  Most

             5          recently, JPMorgan Chase has played a

             6          leadership role in providing investment

             7          funds to the National Cooperative Bank

             8          Development Corporation in creating

             9          liquidity facilities to support the

            10          financing of charter schools, a major area

            11          of activity for CDFI's, and addressed a

            12          need, as CDFI's have developed capacity in

            13          charter school financing, to create

            14          liquidity for financing as far north as New

            15          York, as far south as Virginia.  As an

            16          innovative product, JPMorgan Chase helped

            17          organize the financing and helped do the

            18          structuring of the deal.  It was an

            19          innovative deal.  We think it will have

            20          tremendous benefits for the communities

            21          where we work.

            22                Another example is in Arizona.  Bank

            23          One provided a liquidity facility and some

            24          grant resources, as well as some technical

            25          expertise and staff expertise, to PPEP








                                                                     81
             1

             2          Business Center, which provides business

             3          financing in Tucson and southern Arizona.

             4                Another example of my organization,

             5          National Community Capital; we are in the

             6          process of creating a rating system for CDFI

             7          to use for increasing capital into the

             8          communities where we work.  JPMorgan Chase

             9          has taken a leadership role in helping us to

            10          think through and develop that product, as

            11          well as implement it.

            12                We are here today supporting the

            13          proposal for the merger.  We think it is in

            14          the best interest, by and large, of the

            15          communities that we serve and is most likely

            16          to lead to the integration of some of those

            17          markets and some of those communities into

            18          the economic mainstream creating

            19          opportunities for millions of folks.

            20                Having said that, I want to say that

            21          support for CDFI is not an either/or

            22          proposition; it is a both/and proposition.

            23          And there are many things that have to

            24          happen outside of that.  I speak from the

            25          perspective of CDFI because that's what I








                                                                     82
             1

             2          know best, but I think that there is a wide

             3          role for the proposed merged bank to support

             4          other community organizations and to address

             5          some of the concerns that we have heard

             6          already and, I am sure, other concerns that

             7          you will hear as well.

             8                I think we have heard that the leaders

             9          of the two banks talk about wanting to

            10          create a truly great international financial

            11          services company.  I think we should expect

            12          them to create a truly great community

            13          finance organization as well.  I think that

            14          some of the issues we have heard and issues

            15          that, I suspect, you will hear about are

            16          things that reasonably do need to be

            17          addressed, and I think we need to meet their

            18          expectations.

            19                Payday lending deserves scrutiny.  It

            20          is something that is not good for

            21          communities and shouldn't be continuing.

            22          Efforts to address predatory lending; we

            23          should press the new bank to address them

            24          and take them seriously.  And I think you

            25          will hear other issues.








                                                                     83
             1

             2                In closing, I hope that, I trust that,

             3          JPMorgan Chase and Bank One, the merged

             4          bank, will take those issues seriously and

             5          will address any shortcomings that they may

             6          have and that they may find that may come

             7          out of this hearing or otherwise.  At the

             8          same time I trust that the Federal Reserve,

             9          all of you, as you look at this, will also

            10          take seriously and pay serious attention to

            11          finding the best banking practices in the

            12          underserved communities.

            13                MS. BRAUNSTEIN:  Thank you.

            14                MR. GRANNUM:  Good morning.  My name is

            15          Colvin Grannum.  I am the President of the

            16          Bedford Stuyvesant Restoration Corporation

            17          located in Central Brooklyn, New York.  I am

            18          also on the board of ANHD and the board of

            19          Local Issues Support Corporation, I served

            20          on the Advisory Board for Chase.

            21                Bedford Stuyvesant Restoration is

            22          recognized as the nation's first community

            23          development corporation, having been founded

            24          in 1967 by Senators Robert F. Kennedy and

            25          Jacob Javits and community residents.  That








                                                                     84
             1

             2          model has produced thousands of houses,

             3          created small businesses, and has educated

             4          tens of thousands encompassing housing,

             5          small business lending, youth education,

             6          arts and culture activities.

             7                I am here to ask the Federal Reserve

             8          Board to give favorable consideration to the

             9          application.  JPMorgan Chase and its

            10          predecessor banks have been actively

            11          involved in the work of Bedford Stuyvesant

            12          Restoration since its inception more than 37

            13          years ago.  JPMorgan Chase continues to be

            14          actively involved in supporting the programs

            15          and operations of Restoration, which

            16          included retail operations and community

            17          development lending.  As I said before,

            18          together we have served hundreds of

            19          thousands of people in central Brooklyn.

            20                A nonexhaustive list of the types of

            21          support that has been provided by JPMorgan

            22          Chase to Restoration includes the following:

            23                Retail banking branch.

            24          Bedford-Stuyvesant Restoration operates a

            25          retail and office plaza alongside its art








                                                                     85
             1

             2          gallery, theater, technology center, dance

             3          school.  JPMorgan Chase's predecessor,

             4          Chemical Bank, was the first tenant at the

             5          Restoration Plaza 35 years ago, signifying a

             6          corporate commitment to bring retail service

             7          to a community that was greatly underserved

             8          at the time.  That staff branch continues in

             9          the same location today and continues to

            10          thrive.

            11                In terms of board participation,

            12          JPMorgan Chase over the years has had two of

            13          its Vice Chairmen serve on the board of

            14          Bedford Stuyvesant Restoration.  Both Vice

            15          Chairmen Richard LeBlonde and Joseph G.

            16          Sponholz are now retired but are still

            17          active in working with Bedford Stuyvesant

            18          Development and Support Board and still make

            19          very substantial commitments to Restoration

            20          and thereby the people of central Brooklyn.

            21                Community development lending.

            22          JPMorgan Chase and its predecessor banks

            23          have made available lines of credit to

            24          Bedford Stuyvesant Restoration Corporation

            25          and its affiliates.  A $500,000 line of








                                                                     86
             1

             2          credit was made available to Bedford

             3          Stuyvesant Restoration, and $800,000 was

             4          made available to Bedford Stuyvesant

             5          Supermarket Corporation, which was also a

             6          pioneering effort which brought a

             7          supermarket to central Brooklyn, which

             8          served hundreds of thousands of residents

             9          over the last 25 years.

            10                In the area of philanthropic support,

            11          Chase and its predecessors have a 27-year

            12          history which represents in excess of $2

            13          million in grant funding for affordable

            14          housing, arts and culture, youth

            15          development,and financial literacy.

            16                Most recently, in 2003, JPMorgan Chase

            17          provided a loan executive, a senior

            18          corporate attorney, to work full-time with

            19          Bedford Stuyvesant Restoration, at no cost

            20          to the corporation, and that attorney has

            21          been involved in four major commercial real

            22          estate transactions that we are currently

            23          considering and which will have a huge

            24          impact on central Brooklyn and will bring

            25          new retail services to central Brooklyn,








                                                                     87
             1

             2          which will serve, again, tens of thousands

             3          of people.

             4                When we consider mergers, we obviously

             5          have to take into account the history, and I

             6          think that Restoration and JPMorgan Chase

             7          have had a very strong and productive

             8          history.  But we also have to contemplate

             9          change, and of course change leads to great

            10          concern.  I would just urge both Chase and

            11          the Fed to uphold the goal of having the

            12          bank continue to preserve its active

            13          involvement in neighborhoods.  I think that

            14          strategy has proved over the years to work

            15          very soundly for Chase, and I hope that with

            16          the merger it will adopt and even deepen

            17          strategies which link the bank to local

            18          communities.  To really understand the

            19          nuances of each community, I endorse those

            20          comments which lead to that.

            21                Of course, we certainly don't want to

            22          see any diminution in the leadership of what

            23          Chase has had as a result of the merger.

            24                In conclusion, I would say we have

            25          great expectations for the merged entity.








                                                                     88
             1

             2          We certainly hope that it will show

             3          continued sensitivity to the neighborhood

             4          issues, and we support favorable

             5          consideration of the application.

             6                MS. BRAUNSTEIN:  Thank you.

             7                MS. GERECKE:  Good morning.  I am Sarah

             8          Gerecke, Chief Executive Officer of

             9          Neighborhood Housing Services of New York

            10          City.  I want to thank you for allowing me

            11          to testify here this morning.  I am speaking

            12          in support of the merger.

            13                NHS is a citywide community development

            14          organization that has neighborhood-based

            15          offices located in all five boroughs of New

            16          York City.  In partnership with government,

            17          financial, corporate and nonprofit

            18          organizations, NHS provides low-interest

            19          mortgages, refinancing loans, rehab loans,

            20          down payment assistance, and many education

            21          programs, including anti-predatory lending

            22          awareness programs and homebuyer clubs that

            23          are targeted to low- to moderate-income New

            24          Yorkers who want to buy, fix and keep their

            25          homes.








                                                                     89
             1

             2                Last year, NHS was directly responsible

             3          for $207 million in loans and grants that

             4          assisted 1,100 New Yorkers, both new and

             5          existing homeowners.  We educated nearly

             6          20,000 New Yorkers in pre- and post-purchase

             7          counseling last year alone.

             8                JPMorgan Chase has been a longtime

             9          supporter of our organization, assisting us

            10          in our goal of community revitalization.

            11          Over the years, JPMorgan, Chase, Chemical

            12          and Manufacturers Hanover have contributed

            13          over $3.5 million in support of our programs

            14          and have been involved in various loan pools

            15          and lines of credit, allowing NHS to invest

            16          in New York City communities.

            17                Just to name two, they were a very

            18          early supporter of our Down Payment Program

            19          Cash, and an investor in a multi-family

            20          program that allows us to make loans to very

            21          small multi-family buildings, that still are

            22          very sorely needed throughout the city.

            23                Our governance model, established by

            24          our charter with Neighborhood Reinvestment

            25          Corporation and ultimately through Congress,








                                                                     90
             1

             2          requires that our board be made up of a

             3          majority of neighborhood residents, working

             4          together with government and financial

             5          industry, to address community needs.

             6          JPMorgan Chase has been an exemplary partner

             7          in this respect.  Mark Willis has served on

             8          our Advisory Board since 1999, and Lela

             9          Wingard Hughes and Wayne Davis serve on our

            10          board of directors.  Many other JPMorgan

            11          Chase employees currently serve on

            12          committees and on our local boards of

            13          directors in our neighborhood.  Current and

            14          retired Chase employees, such as Joseph

            15          Reilly and Wesley Wainwright, continue to

            16          assist in the design and direction of our

            17          programs today, even though they don't play

            18          a formal role.  These people understand

            19          community development, and they are willing

            20          to share their time and expertise with us so

            21          that we can create cutting-edge programs to

            22          serve our neighborhoods.

            23                NHS is a proud member of other

            24          coalitions, such as Association for

            25          Neighborhood and Housing Development from








                                                                     91
             1

             2          whom you will hear later today.  However, we

             3          thought it was very important to share with

             4          you the depth and breadth of our experience

             5          with JPMorgan Chase and to support this

             6          merger.

             7                As a major not-for-profit organization

             8          in New York City, we look forward to the

             9          greater commitment announced today on the

            10          part of both companies to those in need.

            11          With our knowledge of the staffing

            12          commitments to date, we believe that in fact

            13          JPMorgan Chase will exceed the promises that

            14          they have made.  Thank you.

            15                MS. RUSSELL:  Good morning.  Thank you

            16          for the opportunity to testify this morning.

            17                My name is Cynthia Russell, and I am

            18          President and Chief Executive Officer of the

            19          Connecticut Housing Investment Fund, also

            20          known as CHIF, based in Hartford,

            21          Connecticut.

            22                The purpose of my remarks this morning

            23          is to testify on the role JPMorgan Chase has

            24          had in helping CHIF achieve its community

            25          development goals and on the bank's record








                                                                     92
             1

             2          in supporting affordable housing and

             3          community development initiatives.

             4                I support the proposed merger because

             5          undoubtedly the combination of JPMorgan

             6          Chase with Bank One will provide greater

             7          financial resources for neighborhood

             8          reinvestment activities.

             9                CHIF is a Community Development

            10          Financial Institution providing financing

            11          and loan portfolio management services to

            12          developers of affordable housing throughout

            13          the State of Connecticut.  CHIF was

            14          established in 1968, and since that time has

            15          provided $120 million in financing to

            16          rehabilitate or build 25,000 units of

            17          housing for lower income families in

            18          Connecticut.  CHIF operates a $9 million

            19          revolving loan fund, and our primary lending

            20          activity is directed to financing home loans

            21          for development in Connecticut.  CHIF

            22          deploys approximately $4 million annually in

            23          lending capital and lends to development in

            24          the poor cities in the states.

            25                CHIF has had a strong relationship with








                                                                     93
             1

             2          JPMorgan Chase for eleven years.  After

             3          providing a small operating grant to CHIF in

             4          1993, the bank gradually increased its

             5          support, and now is one of CHIF's largest

             6          investors.  To date, the bank has provided

             7          CHIF with almost $1.5 million for operating

             8          grants and investment capital.

             9                The bank's ability to strengthen CHIF's

            10          lending and administrative capacity is

            11          indicative of JPMorgan Chase's commitment to

            12          supporting community development

            13          corporations.  From our perspective, there

            14          are two fundamental reasons why the bank's

            15          contributions and investments have had a

            16          significant impact on CHIF.

            17                The first is the bank's expertise and

            18          knowledge about the unique features of

            19          community development finance.  The bank's

            20          staff is familiar with the role

            21          intermediaries like CHIF play and has

            22          developed products and services to suit our

            23          needs.

            24                The second is the bank's recognition of

            25          the importance of providing operational








                                                                     94
             1

             2          support to nonprofit organizations to

             3          strengthen their administrative capacity.

             4          CHIF has benefited from this support, and

             5          has received both operating grants as well

             6          as specific grants to research new loan

             7          products.  The bank is one of the few

             8          lenders who maintain a program to support

             9          the operational activities of community

            10          development organizations.

            11                The best example of the way the bank

            12          works is the recent commitment the bank made

            13          to CHIF.  When we embarked on an ambitious

            14          campaign to raise $3 million in lending

            15          capital 18 months ago, the bank's community

            16          development lenders worked with us to

            17          identify ways JPMorgan Chase could help us

            18          achieve our strategic plan goals.  They

            19          arranged a blend of financing that was

            20          specific to our needs.  Their commitment

            21          also helped us leverage additional

            22          investment from other private institutions.

            23          As a result of the bank's decision to

            24          support our growth, we expect to achieve our

            25          goal.








                                                                     95
             1

             2                In closing, JPMorgan Chase's support of

             3          CHIF has been essential to our growth.  The

             4          bank has provided us with a diverse array of

             5          financial support to enable us to develop

             6          new homes and rental units for lower income

             7          families throughout Connecticut.  We hope

             8          that the new bank will continue the programs

             9          and services it offers to community

            10          development organizations, and we look

            11          forward to continuing our partnership with

            12          it today.  Thank you.

            13                MR. RUBINGER:  Good morning.  My name

            14          is Michael Rubinger.  I am President and

            15          Chief Executive Officer of LISC, the Local

            16          Initiatives Support Corporation.  We place

            17          great value on our partnerships with both

            18          JPMorgan Chase and Bank One, and I am

            19          delighted to have an opportunity to testify

            20          today on what we believe is their

            21          outstanding performance in the low-income

            22          communities where we work and in support of

            23          their proposed merger.

            24                LISC is one of the nation's largest

            25          nonprofit community development support








                                                                     96
             1

             2          organizations, operating in over 300

             3          communities nationwide.  Since 1980, we have

             4          invested over $5 billion in low-income urban

             5          neighborhoods and rural areas through local

             6          nonprofit community development

             7          corporations, or CDCs.

             8                We've helped to finance housing, retail

             9          development, daycare centers, health

            10          clinics, schools and community centers --

            11          all serving lower-income, inner-city and

            12          rural residents.  This work could not have

            13          been accomplished without committed donors,

            14          lenders, and investors like JPMorgan Chase

            15          and Bank One.

            16                Together, these two financial

            17          institutions have placed over $700 million

            18          in investment through LISC into low-income

            19          neighborhoods, places previously burdened by

            20          their inability to attract private

            21          investment.  That is why the commitment of

            22          JPMorgan Chase and Bank One has been so

            23          essential and has had such stunning impact.

            24                Since 1980, our first year of

            25          operation, Chase has been our single largest








                                                                     97
             1

             2          financial partner, providing LISC with

             3          grants of $9 million, below-market loans of

             4          $35 million, and has invested over $555

             5          million in the development of literally

             6          thousands of multi-family, low-income rental

             7          apartments through our subsidiary, the

             8          National Equity Fund.

             9                But numbers alone do not tell the full

            10          story of our relationship.  In virtually

            11          every innovative new program we've launched,

            12          JPMorgan Chase has been at the forefront,

            13          willing to take risks in the interest of

            14          progress.

            15                On the national level, for example,

            16          JPMorgan Chase helped LISC to create the

            17          first secondary market for

            18          community-development loans; an innovative

            19          equity investment fund for major inner-city

            20          supermarkets; and the nation's first real

            21          estate investment trust dedicated to

            22          community development.  Chase has also been

            23          active in generous support of our loan

            24          programs around the country.

            25                Our relationship with Bank One also








                                                                     98
             1

             2          goes back 20 years and includes grants,

             3          loans, and equity investments of over $100

             4          million to support community development

             5          efforts in such cities as Chicago, Detroit,

             6          Milwaukee and Phoenix.  While we can provide

             7          the early-stage and high-risk capital that

             8          community projects need to get started, our

             9          efforts can succeed only if banks are

            10          willing to provide direct conventional

            11          financing as well.

            12                In our shared markets across the

            13          country, JPMorgan Chase and Bank One have

            14          been an important source of construction and

            15          permanent financing for these projects, even

            16          in some of the toughest high-risk markets.

            17                While my written testimony provides

            18          numerous examples, let me cite just one.  In

            19          New York, JPMorgan Chase provided

            20          construction and permanent financing,

            21          through the Abyssinian Development

            22          Corporation, for a 55,000-square-foot

            23          Pathmark Supermarket on 125th Street in

            24          Harlem, completed in 1999.  At the time it

            25          was undertaken, that project was viewed as








                                                                     99
             1

             2          an extremely risky venture.  Today it is

             3          highly successful, providing essential

             4          retail services to local residents and,

             5          perhaps more importantly, has become a

             6          catalyst for the rejuvenation of 125th

             7          Street east of Park Avenue.

             8                There is no doubt in my mind that

             9          without Chase's commitment to the community

            10          and a willingness to go the extra mile,

            11          particularly in the tough times, that

            12          project would not have happened.

            13                In sum, JPMorgan Chase and Bank One

            14          have been vital and productive markets for

            15          LISC in our community revitalization

            16          efforts.  During the years we have worked

            17          with these banks, they have been involved

            18          with a succession of mergers and

            19          acquisitions.  Despite these various

            20          changes, in our experience they have

            21          consistently maintained, or even increased,

            22          the collective commitment of their

            23          predecessor institutions to low-income

            24          neighborhoods and their residents.

            25                We support the merger of these two








                                                                    100
             1

             2          companies in the belief and the expectation

             3          that the larger and more powerful combined

             4          entity will continue its commitment to

             5          communities in need.

             6                Thank you very much.

             7                MS. BRAUNSTEIN:  Thank you.

             8                MR. RAYNOR:  Good morning.  Thank you

             9          for the opportunity to testify.

            10                My name is David Raynor, and I am the

            11          Executive Director of the Leviticus

            12          Alternative Fund, a CDFI serving New York,

            13          New Jersey and Connecticut, with offices in

            14          Yonkers, New York.  Our fund lends for the

            15          development of affordable housing and

            16          community facilities with an emphasis on

            17          child-care centers serving children from

            18          low-income families.  Chase, and now

            19          JPMorgan Chase, has been an important

            20          supporter of our work for many years.

            21                I am here this morning to testify about

            22          the support we have received from JPMorgan

            23          Chase and about our relationship with the

            24          staff of the bank's Community Development

            25          Group.  My purpose in testifying is to








                                                                    101
             1

             2          stress the importance of maintaining the

             3          same level of support for CDFI's and

             4          community development following the merger

             5          with Bank One.

             6                Leviticus receives regular general

             7          operating support from JPMorgan Chase and

             8          has for many years.  Along with the support

             9          came a relationship with the bank at many

            10          different levels.  In my five years as

            11          director of Leviticus, I have received

            12          regular visits from the bank's foundation

            13          staff checking on the effective use of their

            14          grant funds.  There has always been a clear

            15          relationship between our performance and the

            16          level of support.

            17                For instance, our deployment ratio is

            18          an important measure of our effectiveness as

            19          a CDFI, and as our deployment grew over the

            20          last several years, the bank's support for

            21          our efforts also grew.  In my mind the bank

            22          makes a clear effort to invest limited grant

            23          dollars where they will show the greatest

            24          social benefit.

            25                In 1997, when we launched our child








                                                                    102
             1

             2          care lending program, Chase was the first to

             3          step up with a $100,000 grant to support our

             4          effort.  And in 2000, after our child care

             5          Lending had proven its effectiveness with

             6          over $3 million in lending and the

             7          preservation or creation of hundreds of

             8          child care slots, we approached JPMorgan

             9          Chase to provide additional low-cost capital

            10          and they responded with a $200,000

            11          recoverable grant.

            12                When the New Markets Tax Credit Program

            13          was launched, we again saw it as an

            14          opportunity to raise additional capital to

            15          support our child care securities lending,

            16          and we set out to establish the legal and

            17          investment framework to support a tax credit

            18          allocation.  From the beginning, JPMorgan

            19          Chase personnel showed interest in investing

            20          in CDFI's using New Markets Tax Credits.

            21          There was a lot to be learned about the

            22          NMTC.  At the seemingly endless series of

            23          workshops and meetings I attended over a

            24          two-year period, the bank's personnel were

            25          always present and always interested in our








                                                                    103
             1

             2          plans.  Eventually they provided us with a

             3          letter of intent to invest to support our

             4          application to the CDFI Fund, as well as a

             5          $25,000 grant to help us cover some of the

             6          costs involved in pursuing an NMTC

             7          allocation.

             8                Aside from the financial support,

             9          JPMorgan Chase personnel have been involved

            10          with our fund at many levels.  Elliot Hobbs,

            11          a VP in the Community Development Group's

            12          real estate lending department, has served

            13          on our portfolio review committee for over

            14          six years, and Dennis McDermott, a JPMorgan

            15          Chase Streetbanker, has served on our

            16          Finance Committee for eight years.  They

            17          serve faithfully, and regularly roll up

            18          their sleeves to help us through the tough

            19          issues of community development lending.  We

            20          could not accomplish our mission without the

            21          support of volunteers like Elliot and

            22          Dennis.

            23                JPMorgan Chase seems to have an

            24          exceptionally large community development

            25          staff.  I've never actually compared the








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             1

             2          staff size to that of other banks, but the

             3          JPMorgan Chase people seem to be omnipresent

             4          at the many meetings and conferences on

             5          community development that take place in the

             6          New York area.  As a result, the bank makes

             7          a big contribution to the ideas and thinking

             8          that help shape the ever-changing community

             9          development environment.  They get to know

            10          both the issues and the people involved in

            11          community development very well, and they

            12          are able to serve as information and even

            13          deal brokers in a very positive way.

            14                JPMorgan Chase Streetbankers, for

            15          instance, are an important source of

            16          referrals for Leviticus lending programs.

            17          They know what we do and are often in a

            18          position to bring us leads or to promote our

            19          work.

            20                On a wider level, a good example is the

            21          bank's influence over the movement to

            22          institute a rating system for CDFI's.  Mark

            23          mentioned this earlier.  Community

            24          Development Group staff are quite involved

            25          in this effort and have done a great deal to








                                                                    105
             1

             2          educate CDFI's  on the need for a ratings

             3          system and the benefits that will ensue.

             4                This relationship with the JPMorgan

             5          Chase Community Development Group and the

             6          JPMorgan Chase Foundation has clearly been

             7          beneficial for Leviticus, but more

             8          importantly it has been beneficial to the

             9          not-for-profit organizations and CDC's that

            10          our lending supports.

            11                In closing, I would ask the regulators

            12          considering this merger to ensure that the

            13          level of support that New York area

            14          community development organizations like

            15          Leviticus have depended upon from JPMorgan

            16          Chase continue beyond the merger.

            17                Thank you very much.

            18                MS. BRAUNSTEIN:  Thank you very much.

            19                At this point we are going to take a

            20          break.  We are running behind, but we are

            21          going to cut the break to ten minutes, so we

            22          are going to reconvene at 11 o'clock.  It is

            23          now ten of.

            24                (A recess was taken.)

            25                MS. BRAUNSTEIN:  Our next panel is








                                                                    106
             1

             2          representatives from The Greenlining

             3          Institute.  I just want to remind the panel

             4          that you have one-half hour.  As I have

             5          reminded everybody else, please keep your

             6          eye on the timekeepers.

             7                If you have written prepared

             8          statements, please leave them with the court

             9          reporter; hand them to the gentleman sitting

            10          right in the center here, at the table.

            11                The last thing is to please state your

            12          name and organization as you begin your

            13          remarks.

            14                MR. PINA:  Thank you.

            15                Chairman Greenspan and members of the

            16          Federal Reserve Board:

            17                I and the 32 minority organizations of

            18          the Florida Minority Community Reinvestment

            19          Coalition thank you for giving us this time

            20          to speak at this hearing.  I am Al Pina, the

            21          Chairman of the Coalition.

            22                The economic distress of minority

            23          communities may be one of the most pressing

            24          issues not only facing Florida but also

            25          states such as New York, Illinois, Texas,








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             1

             2          Arizona and California.  The lack of

             3          businesses and jobs fuels not only a

             4          crushing cycle of increasing poverty but

             5          also crippling social problems, such as drug

             6          abuse and crime in our minority communities.

             7          The establishment of a sustainable economic

             8          base, together with employment

             9          opportunities, wealth creation, role models,

            10          and improved local infrastructure, is

            11          critical to the future well-being of

            12          minority communities not only in the State

            13          of Florida but throughout the United States.

            14                The global economy will forever change

            15          the face of this nation.  Minorities are the

            16          future economic soldiers who will serve to

            17          continue to ensure that the values of our

            18          country are multiplied that will ensure we

            19          as a country remain strong and the global

            20          economic leader for centuries to come.  But

            21          you at the financial institutions, such as

            22          Chase and the Federal Reserve Board, must

            23          ask yourselves:  Are our minority

            24          communities properly prepared to meet this

            25          challenge.








                                                                    108
             1

             2                The fuel for the economic engine to

             3          reverse this distress in our communities is

             4          capital.  Capitalism without capital is just

             5          an "ism," and I am here representing over 32

             6          minority organizations in Florida to tell

             7          the leaders of JPMorgan Chase, Bank One, and

             8          the Federal Reserve Board that there is

             9          nothing but "ism" in our communities.  This

            10          is not a minority issue but a national issue

            11          that presses directly to the future of this

            12          great country of ours.

            13                This "ism" is something we have termed

            14          "capism."  What is capism?  It is something

            15          that is much more cruel than racism.  What

            16          is the byproduct of capism in Florida to

            17          minority communities:  Above the national

            18          average in both poverty and unemployment, 50

            19          percent of children dropping out of high

            20          school, over 65 percent of children of

            21          single-parent households living in poverty,

            22          and on and on and on.

            23                But, more importantly, what is the

            24          result of this byproduct of capism?  The

            25          loss of hope and dreams.








                                                                    109
             1

             2                Eugene O'Neill, the playwright, in his

             3          autobiographical play "Long Day's Journey

             4          into Night," towards the end of this play

             5          has his mother saying these words:  "None of

             6          us can help the things that life has done to

             7          us.  They are done before you realize it.

             8          And once they are done, they make you do

             9          other things.  Until, at last, everything

            10          comes between you and what you like to be

            11          and you have lost your true self forever."

            12                Those who have suffered from the

            13          byproduct of capism have responded to such

            14          actions and have lost their true self

            15          forever.  How many scietists, teachers,

            16          doctors, engineers, and so on, has this

            17          country lost because of loss of hope and

            18          dreams.

            19                Whether we as a country want to see the

            20          future or not, it will not stop the fact

            21          that minorities will make up over 50 percent

            22          of the population in years to come in such

            23          states as Texas, California, Arizona and

            24          Florida.  Yet these minority future economic

            25          soldiers cannot read, write or, worse,








                                                                    110
             1

             2          participate in capitalism because of lack of

             3          proper access.

             4                I am here to tell the leaders of

             5          JPMorgan Chase, Bank One and the Federal

             6          Reserve Board the model used to monitor and

             7          regulate access of capital for low- and

             8          moderate-income communities is broke.  It is

             9          broke and make no mistake about this.

            10                Just one example, and there are

            11          hundreds:  When a bank can count a high-rise

            12          condominium complex in downtown Miami as a

            13          CRA investment, it offends us and, worse, it

            14          makes this country weaker.

            15                A question that all of us in this room

            16          today must ask ourselves is:  Do we wish to

            17          act in a good way or a great way?  It has

            18          been great acts, not good acts, that have

            19          changed history to the betterment of

            20          mankind.  The new solutions for the 21st

            21          century must be ones that we engage not only

            22          the minority leaders but all minorities into

            23          capitalism.

            24                When Prime Minister Kanoya of Japan

            25          died, by his bedside was found Oscar Wilde's








                                                                    111
             1

             2          book "De Profundis" and in that was

             3          underlined one line.  The Prime Minister had

             4          remembered all the horrific war crimes that

             5          he had been instrumental in perpetrating,

             6          and he had underlined this one line in

             7          Wilde's book:  "As terrible as were the

             8          things I did to others, none of them matched

             9          what I did to myself."

            10                As leaders, we must always realize that

            11          our actions will always affect others, and

            12          the actions of JPMorgan Chase, Bank One and

            13          the Federal Reserve Board on this merger,

            14          and others, will and do affect millions of

            15          minority lives, be it for better or worse.

            16                It is very easy for business and

            17          political leaders to get out of tract?  And

            18          the results are that it brings oppressions

            19          more and more onto the minority people till

            20          the bony shoulders of poverty can only take

            21          it so long and, as Charles Dickens said in

            22          his novel "A Tale of Two Cities":  "Humanity

            23          long oppressed grew up into that distorted

            24          monstrosity called the guillotine."  You

            25          must hear the cries of the people.  You








                                                                    112
             1

             2          cannot hear these cries from a boardroom,

             3          the tower of your bank, or Federal Reserve

             4          building, but in the streets of lost hope

             5          and dreams.

             6                We in Florida understand that bigger

             7          does not mean worse, and those companies

             8          must also prepare themselves for the global

             9          economy to remain financially strong.  But

            10          as companies such as JPMorgan Chase/Bank One

            11          shift their business model to better compete

            12          in the global economy, we must shift the

            13          community development and CRA model to

            14          better serve the future.

            15                Hindsight is always 20/20.

            16                All news is old news happening to new

            17          people.

            18                In Edward Gibbon's novel "The Decline

            19          and Fall of the Roman Empire," he gave these

            20          reasons for the destruction of the Roman

            21          Empire.  The Empire collapsed because of the

            22          undermining of dignity and sanctity of home

            23          as the basis of human society.

            24                Which leads us to:  The ultimate test

            25          of a civilization is what we do with our








                                                                    113
             1

             2          children.  You take any course in ethics,

             3          and when they are testing you out on ethics,

             4          they will ask you something like this:  Is

             5          it right to allow children to suffer?  And

             6          even to those who are against absolutes,

             7          this question becomes:  Is it right to allow

             8          chidren to suffer?  I have never met anyone

             9          who has said "yes."  Because somehow the

            10          ultimate test of any civilization is what we

            11          do with our children.  Yet, we are living a

            12          time in history when more minority children

            13          are suffering in many ways.

            14                Second, description by Gibbon:  Higher

            15          and higher pubic expenditure of free bread

            16          and entertainment for the masses.

            17                Third, the mad craze for pleasure and

            18          sports that grew increasingly sadistic.

            19                Fourth, the building of great armaments

            20          when the real enemy was within and the decay

            21          of individual responsibility.

            22                Fifth, the decay of religion as faith

            23          faded into mere formality.

            24                Does any of this sound familiar.  The

            25          future worries me in many ways.  But I have








                                                                    114
             1

             2          hope.  We want to engage a new model not

             3          based on a social premise but a for-profit

             4          model that will engage our community into

             5          the future global economy.

             6                        As I lead this effort to build

             7          economic bridges in Florida, today I begin a

             8          seven-day fast so I can understand the heart

             9          of those who do without, so I can feel as

            10          well as hear their cries.

            11                Let us make new mistakes, not old ones.

            12                So, as a coalition, we neither oppose

            13          nor support this merger, but we support a

            14          new model and great new solutions.

            15                MS. HA:  My name is Vina Ha.  I am the

            16          Banking Fellow at The Greenlining Institute,

            17          a policy think tank and advocacy

            18          organization located in the San Francisco

            19          Bay area.

            20                Although JPMorgan Chase will likely

            21          become the second largest bank in the

            22          country, it has shown no interest in being a

            23          financial leader to low-income and minority

            24          communities in California.  Unlike the Bank

            25          of America, Wells Fargo, Washington Mutual








                                                                    115
             1

             2          and Citigroup, JPMorgan Chase has no

             3          community reinvestment plans, no supplier

             4          diversity goals and no major philanthropic

             5          programs in our state.  The absence of these

             6          plans, coupled with the fact that the bank

             7          made over $17 billion in mortgage loans in

             8          2002, is indicative of the bank's colonial

             9          relationship with California.

            10                An example of JPMorgan Chase's

            11          disinterest in serving the needs of

            12          California's low income and minority

            13          communities is evident in the failure of its

            14          Dream Maker home mortgage-lending program in

            15          California.  When introducing its Dream

            16          Maker program, a Chase representative stated

            17          that it is "their mission to close the

            18          homeownership gap in America."  But, based

            19          on the most recently available HMDA data,

            20          JPMorgan Chase is failing that mission.  In

            21          2002, when examined with the seven largest

            22          banks in the state, Chase finished last in

            23          making conventional home purchase loans to

            24          Latinos and next to last to low-income

            25          African Americans in California.








                                                                    116
             1

             2                Similarly, Chase's record of charitable

             3          giving to programs that support minority and

             4          low-income communities is equally abysmal.

             5          CEO William Harrison's $20 million in salary

             6          and bonuses easily overshadowed the $200,000

             7          the bank gave in philanthropy for low-income

             8          minority groups in California for 2002.

             9                Considering these figures, it is not

            10          surprising that for two years in a row

            11          JPMorgan Chase has been ranked last among

            12          megabanks in corporate reputation by Fortune

            13          magazine.

            14                So how do we improve JPMorgan Chase's

            15          standing in California and in the nation?

            16          As the second largest bank in the U.S.,

            17          JPMorgan Chase must pay attention to the

            18          sixth largest economy in the world.  We urge

            19          the bank to do the following:

            20                First, the CEOs of JPMorgan Chase and

            21          Bank One should come to California within 30

            22          days and meet with community groups.

            23                Second, although the $800 billion

            24          investment commitment which was announced

            25          today surpasses the Bank of America's $750








                                                                    117
             1

             2          billion commitment, JPMorgan Chase should

             3          also match or exceed Bank of America's

             4          philanthropic agreement of $1.5 billion

             5          committed to philanthropy over ten years.

             6          Both of these should have a specific

             7          allocation for California.  Thank you.

             8                MR. HENDERSON:  Good afternoon.  I am

             9          happy to be here.  My name is John

            10          Henderson.  I am the foremost advocate

            11          throughout the Southeast at the present

            12          time.  Let me just say this.  I represent

            13          the Economic National Foundation and right

            14          now throughout the low- and moderate

            15          economic community we are fighting two wars,

            16          because one way for us to come out of the

            17          cycle of poverty and a lack of network is to

            18          go into the military.  Right now, we are

            19          fighting a war on a front to protect

            20          freedom.  Yet we have to come back here and

            21          fight the Federal Reserve Board for allowing

            22          not just Chase to have access to this big

            23          merger but Bank of America, Wachovia, First

            24          Union -- all these different banks.

            25                I am not opposed to Chase's merger.  As








                                                                    118
             1

             2          a matter of fact, I am for it, because I

             3          believe that this is the time, with the new

             4          $800 billion commitment, that we want to see

             5          Chase respond to all of these petitions from

             6          people that work from paycheck to paycheck,

             7          to get equity capital so that our college

             8          students, our small business firms, our

             9          entrepreneurs, do have access to capital.

            10          OK.  So I am for that.  We are also for you

            11          guys getting involved with us.

            12                But let me tell you:  The current model

            13          of economic development under the CRA is not

            14          working.  1977 legislation to date has not

            15          worked.  There is a continual downward

            16          spiral of net worth in the African-American

            17          community, the Hispanic community, and even

            18          the white community, low- and

            19          moderate-income communities throughout the

            20          black belt and the Southeast and across the

            21          nation.

            22                True economic development takes what

            23          the legislation was written for:  It takes

            24          the person at the bottom and brings him

            25          upward with net worth, with job creation.








                                                                    119
             1

             2                You released a study on 1/23/2003 that

             3          said that the net worth is widening, the gap

             4          is widening, between the haves and the

             5          have-nots.  This is in our proposal.

             6          Homeownership and stock ownership is what

             7          true economic development does.  So those

             8          CDFI dollars that are committed we want to

             9          see committed to organizations and CDCs

            10          first, with business plans that produce

            11          models that are for-profit models, that we

            12          can self-sustain ourselves and build our own

            13          community, not the situation that is

            14          happening in Orlando right now.  In the

            15          African American community, where the bank

            16          took $674 million and gave to a $34 million

            17          organization, they developed in my area, and

            18          only one person was put in the development.

            19          That is deplorable -- no, that is criminal.

            20                Part 24, Title 12, U.S.C. 224 says that

            21          you guys have an obligation to put those

            22          moneys into our community.  You put it into

            23          the hands of rich developers that are not

            24          empowering people.

            25                So we are in a state of emergency.  I








                                                                    120
             1

             2          stand here and represent youth and young

             3          adults.  I see what is going on in our

             4          community on a daily basis.  We haven't been

             5          funded today and we are still here.

             6                So, for the record, I would like to

             7          submit a blank petition to everyone, and I

             8          would like to submit copies of the petition

             9          to both Mr. Willis, the bank, and the

            10          proposal to go with it.

            11                Now let me say we have a project called

            12          Project Turnaround, which is a

            13          revitalization plan that is under our Equity

            14          Now campaign.  It is going to create jobs

            15          for unskilled people,  This is a local

            16          economy.  We must change our thinking in

            17          many areas.  And we actually want Bank One

            18          to take the lead.  With the same

            19          billion-dollar commitment, let's use this as

            20          an opportunity to change our low-income

            21          area.  We want to focus on trade with

            22          Africa.

            23                We thank you for your time and that's

            24          all we have to say.

            25                MS. AUNG:  My name is Khin Aung.  I am








                                                                    121
             1

             2          here to read a couple of statements, for

             3          individuals who couldn't be here today.

             4          First is the statement by Marco Firebaugh.

             5                Good morning.  Thank you for the

             6          opportunity to testify before you today and

             7          to have my testimony incorporated into the

             8          record of today's hearing on the proposed

             9          merger of JPMorgan Chase and Bank One.  The

            10          purpose of my testimony is to identify

            11          specific concerns and to make a number of

            12          recommendations about the proposed merger in

            13          my capacity as the Chair of the California

            14          Latino Legislative Caucus.

            15                I am extremely concerned about several

            16          recent reports citing the need for JPMorgan

            17          Chase to address a lack of social

            18          responsibility in their operations.

            19          Predatory lending and unacceptable ethnic

            20          disparities in loan denial rates are among

            21          issues that have been raised.

            22                For example, according to information

            23          obtained by my office, JPMorgan Chase

            24          contributed approximately $1.6 million

            25          annually in philanthropic contributions in








                                                                    122
             1

             2          California.  In sharp contrast, Bank of

             3          America's philanthropy contributions will

             4          total $45 million or more each year in

             5          California over a ten-year period.  Last

             6          year, Citigroup's philanthropic investments

             7          in the state totaled $38 million, and Wells

             8          Fargo invested more than $35 million.

             9                Accordingly, in consideration of the

            10          JPMorgan Chase's past record, its lack of

            11          specific plans for providing for a banking

            12          presence in California, and the

            13          well-documented need for banking service, I

            14          offer the following recommendations that

            15          should be incorporated as conditions for the

            16          approval of the proposed merger:

            17                JPMorgan Chase should be required to

            18          make a strong and targeted Community

            19          Reinvestment Act commitment to California.

            20                It should be required to increase its

            21          share of philanthropy in California,

            22          including an emphasis on inner city and

            23          rural areas.

            24                It should be required to include

            25          representation by Californians on its newly








                                                                    123
             1

             2          constituted Board of Directors.

             3                Finally, it should be required to

             4          accelerate plans to locate branch offices in

             5          California with an effort to provide

             6          services in "unbanked" communities.

             7                Thank you for the opportunity to offer

             8          testimony at today's hearing.

             9                I am also going to read a statement by

            10          Mark Whitlock, who is Executive Director of

            11          First AME Church and FAME Assistance

            12          Corporation.

            13                As the Executive Director for the first

            14          AME Church and FAME Assistance Corporation

            15          in South Central Los Angeles, I am aware of

            16          the daily challenges facing African

            17          Americans in attaining personal and

            18          household wealth.  Through our organization,

            19          FAME Assistance Corporation, we actively

            20          work with financial institutions such as

            21          Wells Fargo and Bank of America to solve

            22          this problem by bringing in capital

            23          investments to revitalize the South Central

            24          community.

            25                A crucial component of our work is








                                                                    124
             1

             2          improving the level of homeownership among

             3          African Americans in Los Angeles.

             4          Considering that JPMorgan Chase has touted

             5          its Dream Maker program as a panacea to the

             6          equities of homeownership between African

             7          Americans and whites, I would think that

             8          they would be the leader in lending to poor

             9          and low-income blacks.  Unfortunately, they

            10          are not.

            11                For example, a recently released report

            12          on African-American homeownership by the

            13          Greenlining Institute ranks JPMorgan Chase

            14          close to the bottom in making conventional

            15          home purchase loans to poor African

            16          Americans.

            17                Community reinvestments by other banks

            18          like Wells Fargo and Bank of America have

            19          made an incredibly positive impact in South

            20          Central Los Angeles but JPMorgan Chase has

            21          done nothing in our community.

            22                I respectfully ask the Federal Reserve

            23          to deny this acquisition until JPMorgan

            24          Chase makes a CRA commitment equal to that

            25          of bank of America's $750 billion commitment








                                                                    125
             1

             2          -- which I understand has been made -- and

             3          to also make a CRA plan for California.

             4                Lastly, to prove the potential our

             5          community has for capital reinvestment, I

             6          want to extend a personal invitation to CEO

             7          William Harrison to attend Sunday services

             8          at my church and for a community tour

             9          afterwards.

            10                MR. KATO:  Hi.  My name is Daniel Kato,

            11          with The Greenlining Institute.  I am going

            12          to speak on behalf of George Dean.

            13                My name is George Dean.  I am the

            14          President and CEO of The Greater Phoenix,

            15          Arizona Urban League, the largest Urban

            16          League in Arizona.  I am the past-President

            17          of the Caifornia Council of Urban Leagues

            18          and have served as an Urban League Executive

            19          for over 30 years.

            20                JPMorgan Chase has had an almost

            21          invisible presence within the African

            22          American community in Arizona.  Although

            23          Bank One's presence in Arizona is adequate,

            24          it has failed in its mission of fully

            25          serving our state's African American








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             1

             2          community.

             3                On behalf of the African-American

             4          community in Arizona, we urge that the

             5          Federal Reserve condition the approval of

             6          this acquisition upon a CRA plan being

             7          submitted to community groups in Arizona.

             8          This plan should include a substantial CRA

             9          commitment equal to the Bank of America

            10          commitment in Arizona.  This should include

            11          specific commitments regarding philanthropy,

            12          supplier diversity, home loans to low-income

            13          families and minority small business loans.

            14                In conclusion, as a first step in

            15          recognizing the importance of Arizona, the

            16          CEOs of Chase and Bank One should visit our

            17          minority communities within the next 60

            18          days.  The Greater Phoenix Urban League will

            19          co-host this meeting along with local

            20          Latino, Asian American,  and Native American

            21          groups.  Thank you very much.

            22                MR. RIVERA:  My name is Alfredo "Dante"

            23          Rivera.  I am with the Association of Latino

            24          Professionals in Finance and Accounting.  I

            25          am here as a substitute for our CEO who








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             1

             2          could not make it here today.

             3                I would like to thank the Federal

             4          Reserve panel and all our esteemed guests

             5          here today.

             6                The Association of Latino Professionals

             7          in Finance and Accounting, or ALPFA, is the

             8          leading professional association dedicated

             9          to enhancing opportunities for Latinos in

            10          accounting, financing, and related

            11          professions.

            12                Now I am going to indulge all of you to

            13          please forget about the word "Latino" and

            14          think of diversity, think of our entire

            15          nation, and think of the opportunities that

            16          we all have to make a difference in the

            17          lives of those that cannot make a difference

            18          for themselves today.  We have the power

            19          with this merger to bring the Community

            20          Reinvestment Act to a level that it has yet

            21          to manifest itself.  We are looking at

            22          children right now that are afraid of the

            23          dark but the real tragedy is when an adult

            24          grows up and is afraid of the light.

            25                The truth of the matter is that we have








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             1

             2          to build, we must go back and we must build

             3          up our communities.  We have to increase

             4          opportunities for all the members of our

             5          communities.  We are inclusive.  We want to

             6          cultivate initiative and with a spirit of

             7          leadership.  Go back to that community, be

             8          good employees, be good leaders, be good

             9          entrepreneurs.  I want to nurture a

            10          provision that requires mentoring

            11          relationships.  We want the combination of

            12          professionalism with student.  It is a

            13          mentoring synergy that is there.  We have

            14          the opportunity to allow individuals to go

            15          back and make a difference for the future.

            16          The earlier that we can reach our young

            17          people, the greatest resource that we have

            18          in our country, if they have the answer for

            19          cancer, if they have the answer for

            20          leadership void that we currently have in

            21          our nation, whoever comes up with that

            22          solution, we just want it.  We don't really

            23          want to give credit to any particular group,

            24          because our country was built on unity.

            25          That is why we are in the United States.








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             1

             2          But we must learn to go back and give.  And

             3          this is a great opportunity, this merger, to

             4          promote financial literacy education.

             5                There is a host of organizations across

             6          the country with volunteers, they just need

             7          a little support, to go in there on every

             8          single level and to start educating our

             9          children how to add and how to be fiscally

            10          responsible.

            11                When I did mentoring in Newark, New

            12          Jersey, I told one child one time -- I will

            13          never forget it because I need to use it as

            14          an example for today -- I told the child,

            15          why don't you hold on to ten cents for every

            16          dollar that comes into your hands between

            17          now and the end of our mentoring program.  I

            18          said it to a group, but only one child came

            19          back with $2.20.

            20                That child taught me that just those

            21          simple words of giving them a target, giving

            22          them a hope, will give them the incentive to

            23          do the right thing.  Well, we have great

            24          potential leaders, we have great potential

            25          individuals out there, that are the








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             1

             2          children, and right now they need us.

             3                These failures of the past are just

             4          that.  Let's move on.  Let's work together.

             5          Let's promote the ability of individuals to

             6          appreciate the economic value of how to own

             7          a home, of being educated, of embracing the

             8          American dream.  We want to contribute

             9          toward that.  We know everyone here on this

            10          panel wants that.  We all have different

            11          views on how we are going to get there, and

            12          they are all part of the American dream.

            13                We have the freedom to express

            14          ourselves.  But at the end of the day do we

            15          have the ability to communicate?  Do we have

            16          the ability to relationship build and work

            17          together?  That is the challenge that I

            18          throw out to everyone here today but

            19          especially to JPMorgan Chase and Bank One.

            20                We have a great opportunity to do

            21          something that has not been done.  Please do

            22          so.  We want to see the right relationship,

            23          which is everything.  You can make a huge

            24          difference.  In doing so, help us create the

            25          ability to embrace the fact that the power








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             1

             2          of many has the capability of working as

             3          one.  We are going to be out there, we are

             4          going to ask you to join us.  We are not

             5          going to demand anything.  We are going to

             6          lead by example.  Thank you very much.

             7                MR. ALI:  Good morning.  My name is

             8          Malik Ali.  I am the Executive Director of

             9          the Florida Minority Supplier Development

            10          Council.  FMSDC is an affiliate of the

            11          National Minority Supplier Development

            12          Council, headquartered in New York.  NMSDC

            13          is the nation's leader in supplier diversity

            14          and works with over 4,000 major corporations

            15          and government agencies.  Through its

            16          efforts, over $70 billion was spent by

            17          corporate America with minority businesses.

            18                I am going to try to keep this very

            19          simple.  FMSDC has been Florida's leader in

            20          supplier diversity for over 24 years.  I

            21          just want to reemphasize the importance of

            22          Florida as a crossroad state.  Certainly we

            23          had a slight influence over the election

            24          (laughter) and certainly will play another

            25          role.  But being in Florida the last 25








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             1

             2          years, what I have noticed is that because

             3          of the effects of segregation -- and Florida

             4          was one of the leading segregationist

             5          states -- because of the effects of

             6          segregation, minorities have not been able

             7          to accumulate profits nor have corporations

             8          been able to accumulate net worth.  I think,

             9          as we are all aware, banking decisions are

            10          made based upon net worth, which is an

            11          accumulation of profits.  So it certainly is

            12          dependent upon how long you have been

            13          around.

            14                I would like to use the example that

            15          sometimes we have to come up with a new

            16          paradigm.  In other words, a lot of the time

            17          corporations and bankers looks at a track

            18          record.  And track records are fine, but

            19          track records are not necessarily an

            20          indication of future potential.

            21                Michael Jordan had a track record but

            22          he paid prime, $90 million, for his team.

            23          Enron had a track record, Tyco had a track

            24          record.  There are a lot of companies that

            25          had track records but, in terms of future








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             1

             2          profitability, track record is not really

             3          the issue, it is the potential.

             4                Getting back to Florida, Florida has

             5          the lowest per net worth for minorities.

             6          That is the significance of why the Florida

             7          coalition is here.

             8                I do want to emphasize the importance

             9          of supplier diversity.  What does supplier

            10          diversity mean and why is it important?  All

            11          major corporations right now are in the

            12          layoff mode.  However, when companies do

            13          business with minorities, they hire

            14          minorities; those minorities go and buy

            15          product and they stimulate the economy.  It

            16          is by far the most efficient and effective

            17          way to stimulate the economy.  So it is

            18          extremely important.  As was stated earlier,

            19          it needs to happen at the top side and not

            20          just on janitorial spots -- investment

            21          banking, lawyers, etc.

            22                I always like to use as an example that

            23          for a while black ballplayers were not

            24          allowed to come into major league baseball

            25          because they weren't thought to be good








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             1

             2          enough.  For a while it was thought that

             3          blacks could not play quarterback because

             4          they weren't smart enough to measure the

             5          plays, and even for a while only recently it

             6          was felt that blacks couldn't play golf.  So

             7          there are a lot of misconceptions that need

             8          to be dispelled.

             9                Anyway, bottom line, two things.  I

            10          make two recommendations.

            11                Number one, that supplier diversity be

            12          added to JPMorgan/Bank One's $800 billion

            13          formula.

            14                Number two, a lot of us have stated

            15          problems.  What are the solutions?  Moving

            16          forward perhaps, regulations can be amended

            17          to be inclusive of supplier diversity, or

            18          perhaps there is another regulation that

            19          needs to be developed that can positively

            20          impact what the Federal Reserve is trying to

            21          encompass in terms of economic growth and

            22          activity.  Thank you.

            23                MS. YUM:  My name is Helen Yum.  I am

            24          with The Greenlining Institute.  I will be

            25          reading a statement on behalf of the








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             1

             2          National Black Business Council.

             3                First, I would like to thank the New

             4          York Federal Reserve for sponsoring these

             5          hearings.

             6                My name is Mary Ann Mitchell, and I am

             7          the Chairwoman of the National Black

             8          Business Council.  My organization's mission

             9          is to be a catalyst for the development of

            10          minority-owned businesses and to support

            11          reinvestment activities in the inner city.

            12                My hope is that the proposed merger

            13          will make JPMorgan Chase a strong partner in

            14          my organization's goals, but based on

            15          Chase's record I am not optimistic that this

            16          merger will help us at all.  Even though

            17          JPMorgan Chase is one of the largest banks

            18          in the nation and does a significant amount

            19          of business in California, it made no

            20          business loans to African Americans last

            21          year and has made no plans to change its

            22          outreach and lending practices.

            23                Given this record, I respectfully ask

            24          that the Federal Reserve deny this merger

            25          until JPMorgan Chase develops a CRA plan to








                                                                    136
             1

             2          serve the needs of the African American

             3          community in California.  Thank you.

             4                MS. BRAUNSTEIN:  Thank you.  Your

             5          panel's time is up at this point.

             6                MS. HA:  Can we have just one more?

             7                MS. BRAUNSTEIN:  I will give you

             8          additional time.

             9                MR. PAULINO:  Thank you.  My name is

            10          Erik Paulino.  I am a member of The

            11          Greenlining Institute, and I will be

            12          presenting the statement on behalf of David

            13          Lizarraga, the Chairman and CEO of TELACU.

            14                TELACU, The East Los Angeles Community

            15          Union, is a Los Angeles-based nonprofit

            16          community foundation founded in 1968.  It is

            17          currently one of the nation's largest

            18          community development corporations With

            19          offices and partnerships in other key Latino

            20          markets such as Texas, New York and Florida.

            21                From the building of hundreds of

            22          quality, affordable homes, to the creation

            23          of thousands of quality jobs, to the lending

            24          of millions of dollars to families and small

            25          businesses, the TELACU business philosophy








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             1

             2          is inseparable from its social philosophy.

             3          There is no more viable business venture

             4          than one that is economically sound,

             5          enhances the community, and positively

             6          impacts people's lives.  That is the TELACU

             7          approach.

             8                TELACU understands how critical

             9          financial resources are to the community,

            10          and the tremendous negative impact that

            11          occurs when they are not made available for

            12          the community.  That is why there is a

            13          continuous need for community reinvestment

            14          by financial institutions such as JPMorgan

            15          Chase.

            16                At TELACU, we believe you can be a good

            17          corporate citizen and community advocate and

            18          still be successful and profitable.  It is

            19          possible to do well while doing good for

            20          others.  We ask this of all the members of

            21          the California corporate community, and

            22          JPMorgan Chase is no exception.

            23                I do not have an issue with Chase

            24          wishing to merge with Bank One.  My concern,

            25          just like all of us here, is that with this








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             1

             2          merger there be a long-term commitment to

             3          the community with a specific community

             4          reinvestment pledge.

             5                This merger will create the nation's

             6          second largest bank, so I believe Chase

             7          should make a CRA commitment similar to, or

             8          greater than, that of Bank of America, the

             9          nation's third largest bank.  Bank of

            10          America, whose headquarters are based in

            11          North Carolina, seems to understand the

            12          importance of community and philanthropic

            13          investments, pledging $750 billion in CRA

            14          funds and $1.5 billion for philanthropy over

            15          ten years.  I know that they would not make

            16          this commitment if they did not definitely

            17          believe that this commitment would

            18          positively affect their bottom line.

            19                As of today, Chase has virtually no

            20          presence, leadership oversight, or community

            21          reinvestment plan for California, and has

            22          made less than $100,000 in philanthropy to

            23          Latino-led organizations.

            24                This is unacceptable and disappointing.

            25          The need to provide capital and








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             1

             2          business-related services to minority

             3          communities is too large a task to be held

             4          solely by small, community-based nonprofits,

             5          quasi-governmental organizations and

             6          special-purpose entities.  The

             7          responsibility is for all to share.

             8                We at TELACU ask Chase to commit to not

             9          only a national CRA commitment of $850

            10          billion, but commit to providing specific

            11          resources to the minority communities of

            12          California.  We ask them to join with us,

            13          engage with us, benefit from us and provide

            14          us with that access to capital that our

            15          community so badly needs, so we can all

            16          enjoy a piece of that American Dream in the

            17          greatest country in the world.

            18                MS. BRAUNSTEIN:  Thank you very much.

            19          The next panel will please come forward.

            20                Once again, I would ask each of you to

            21          introduce yourself, your name and your

            22          organization, and give your statement.  If

            23          you have a written prepared statement and

            24          you have copies, please hand it to the

            25          gentleman in the center, our recorder, on








                                                                    140
             1

             2          your way out.  Thank you very much.

             3                MR. KLEIN:  Thank you for the

             4          opportunity of presenting testimony on the

             5          proposed JPMorgan Chase/Bank One merger.  My

             6          name is James Klein.  I am the Chief

             7          Executive Officer of the Ohio Community

             8          Development Finance Fund located in

             9          Columbus, Ohio.

            10                The Finance Fund is a statewide

            11          nonprofit corporation, established in 1987,

            12          whose clients are locally controlled

            13          community organizations serving low-income

            14          communities.  Clients develop and implement

            15          projects in single-family and multi-family

            16          housing rehabilitation and new construction,

            17          homeownership, supportive housing for the

            18          homeless, commercial revitalization,

            19          economic development, child care and Head

            20          Start facilities.  Our focus is on

            21          low-income populations in urban and rural

            22          areas in the State of Ohio.

            23                Products currently being offered to

            24          clients are the Linked Deposit Fund, Pre-

            25          Development Program, PreDevelopment Section








                                                                    141
             1

             2          8 Loan, Economic Development Grant, Head

             3          Start Facilities Planning Grant, Head Start

             4          Critical Repair and Safety Grant, Child Care

             5          Facilities Planning Grant, the Child Care

             6          Capital Fund, and New Markets Credit Loan.

             7                The mission of the Finance Fund is to

             8          foster healthy and vital communities by

             9          offering funding support to community-based

            10          organizations that work to improve the

            11          quality of life for low-income persons.

            12          Based upon a commitment to quality, the

            13          Finance Fund engages in creative approaches

            14          that build bridges between capital markets

            15          and distressed communities.

            16                To achieve this mission, three primary

            17          strategies are pursued:  First, to establish

            18          and maintain supportive relationships;

            19          second, to leverage support for projects;

            20          and third, to solicit and obtain investor

            21          commitment.  These were our objectives in

            22          approaching Bank One.  Bank One has been a

            23          strong partner in our efforts to foster

            24          community revitalization over the years.

            25                The Finance Fund views the proposed








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             1

             2          merger of Bank One and JPMorgan Chase as a

             3          potential enhancement to its current

             4          strategies and mission.  The combined

             5          resources of the merged entity, if its

             6          philosophies toward community reinvestment

             7          remain constant or are strengthened from

             8          those we have experienced for Bank One,

             9          could significantly increase benefits to

            10          distressed communities of Ohio.

            11                One of the prime tenets of the Finance

            12          Fund's mission is the creation of bridges

            13          between public and private capital markets

            14          and distressed communities.  To do this, the

            15          corporation's Board of Trustees must have

            16          representation from both sides of the

            17          equation.  Bank One has a history of

            18          eight-year service on the Finance Fund's

            19          Board.  Service has not only been basic

            20          governance but also fund-raising support

            21          enabling implementation of special projects

            22          over the years.  Currently, Bank One's

            23          representation has facilitated additional

            24          collaborative efforts.

            25                The Finance Fund's Linked Deposit Fund








                                                                    143
             1

             2          is a tool that is used to reduce the

             3          interest rates on permanent commercial

             4          financing.  The Linked Deposit Fund provides

             5          community-based developers access to

             6          affordable financing from local lenders for

             7          housing and economic development projects.

             8          The fund provides a source of revenue to

             9          offset the lender's loss resulting from

            10          lowering the interest rate offered to

            11          borrowers.  The offset -- rate subsidy -- is

            12          the difference of the cash stream on a

            13          conventionally priced mortgage and that of

            14          the lower interest rate mortgage.  The

            15          deposit, which is "linked" to the mortgage,

            16          is not collateral or security for the

            17          mortgage and is constructed to satisfy the

            18          shortfall requirement in a term shorter than

            19          the mortgage term.  The Finance Fund's

            20          sources of equity for the Linked Deposit

            21          Fund are public and private investments that

            22          are used to leverage bank financing for

            23          local projects.

            24                Bank One has been a lending partner in

            25          this product since 1990.  As a result of








                                                                    144
             1

             2          their involvement, 240 affordable housing

             3          units and 7 classrooms serving approximately

             4          120 children are accessible by low-income

             5          populations in Ohio.  Bank One's investment

             6          has enabled the Finance Fund to leverage

             7          $12.1 million in those years.

             8                The Finance Fund is a successful

             9          financial intermediary for community-based

            10          clients.  The State of Ohio has been the

            11          primary resource for most of the

            12          corporation's products.  Fiscal year 1998

            13          signaled the initiation of a strategy of

            14          diversifying funding resources to create a

            15          broader base of investment from both public

            16          and private sources.

            17                The first initiative was the

            18          recapitalization of existing corporate

            19          assets, primarily linked deposits, via a

            20          secondary market-type sale.  In this

            21          transaction an investor directly "purchases"

            22          the return on linked deposit Certificates of

            23          Deposit already placed by the Finance Fund.

            24          The transaction allows for the recapture of

            25          deposits and enables additional projects.








                                                                    145
             1

             2          The investor/ lender makes a

             3          cash-collateralized loan to the Finance Fund

             4          based on an aggregated portfolio, or series,

             5          of linked deposit CDs.  The series

             6          collateralizes 100 percent of the loan, and

             7          payment is assured by the interest and

             8          principal payments generated by the series.

             9          Risk is low and collateral coverage is high.

            10          In 2003, a Bank One loan enabled the

            11          recapitalization of a $3 million series.

            12                In conclusion, because of our

            13          experience with Bank One's support of

            14          community revitalization efforts and its

            15          demonstrated concern for meeting the needs

            16          not only of the Finance Fund but also of our

            17          community-based clients, we support the

            18          proposed merger and its potential for

            19          increasing investment in distressed Ohio

            20          communities.

            21                MS. NOONAN:  I speak in support of the

            22          merger.  My name is Rose Noonan, and I am

            23          the Executive Director of the Housing Action

            24          Council, which is a not-for-profit

            25          organization based in Tarrytown, New York.








                                                                    146
             1

             2          For nearly thirty years, the Housing Action

             3          Council has been expanding housing

             4          opportunities for low- and moderate-income

             5          households.  Although our primary service

             6          area is Westchester County, we also serve

             7          the entire mid-Hudson region, including

             8          Rockland, Putnam, Dutchess and Orange

             9          counties.  More recently, we are working in

            10          the Bronx.

            11                We expand housing opportunities in

            12          several ways.  As an intermediary, we

            13          provide hands-on technical assistance to

            14          community organizations and small and

            15          minority and women-owned development

            16          organizations to develop affordable housing.

            17          Over the years we have facilitated the

            18          development of approximately 2,500 units of

            19          affordable housing.  Housing Action Council

            20          provides the necessary infrastructure to

            21          enable small community-based organizations

            22          to develop such housing.  Our experience

            23          demonstrates that community-based

            24          organizations are appropriate vehicles to

            25          develop housing.  They know the need and








                                                                    147
             1

             2          often have the trust of the community top

             3          create successful affordable housing

             4          projects.

             5                In addition, the Housing Action Council

             6          is a homeownership counseling organization

             7          and a member of the New York Mortgage

             8          Coalition, which is a consortium of lenders

             9          and community organizations in the New York

            10          Metropolitan Area dedicated to increasing

            11          homeownership opportunities for low- and

            12          moderate-income households, in particular

            13          minority households.  I also serve on its

            14          Board of Directors.  Without homeownership

            15          counseling, it is my belief that many

            16          households would not have achieved the

            17          homeownership dream in this area.

            18                I present this background on the

            19          Housing Action Council to highlight programs

            20          like ours that respond to community housing

            21          needs, and to let you know that JPMorgan

            22          Chase has been a partner, a leader and a

            23          facilitator in the geographic areas and for

            24          the populations that Housing Action Council

            25          serve.








                                                                    148
             1

             2                For example, JPMorgan Chase recognizes

             3          the importance of intermediaries like ours

             4          and provides annual operating support in

             5          amounts that make a difference to us.  It

             6          offers a Recoverable Grant Program which

             7          provides the all-important predevelopment

             8          funds to nonprofits to initiate and sustain

             9          projects through the difficult development

            10          stages.  It is ready to provide the

            11          construction and permanent financing to

            12          projects that meet its underwriting

            13          criteria, and for projects that are outside

            14          its scope -- which many of mine are due to

            15          their size.  JPMorgan Chase participates in

            16          loan pools that serve as alternative sources

            17          of financing for smaller, higher risk

            18          projects.

            19                In the area of homeownership

            20          counseling, JPMorgan Chase has a menu of

            21          affordable loan products responsive to

            22          community needs and to changing community

            23          needs -- whether it be more flexible but

            24          responsible underwriting criteria, closing

            25          cost assistance, or some other need.  A








                                                                    149
             1

             2          former JPMorgan Chase official, along with

             3          others, brainstormed the concept of the New

             4          York Mortgage Coalition and led it into

             5          assistance and maturity.  JPMorgan Chase

             6          continues as a leader in that coalition.

             7                Importantly, JPMorgan Chase knows its

             8          communities, continues to seek additional

             9          information on its communities, challenges

            10          and supports communities in their efforts to

            11          respond to housing needs, and has an

            12          open-door policy enabling me and others to

            13          discuss issues and concerns with all levels

            14          of employees.  Its Streetbanker approach

            15          assures that JPMorgan Chase has ears in the

            16          community and easy-to-reach entrances into a

            17          large institution.

            18                As a twenty-year servant of the Housing

            19          Action Council, I have experienced the

            20          mergers of Manufacturers Hanover, Chemical,

            21          Chase and JPMorgan.  Each time I felt

            22          concerned and nervous about what this meant

            23          for my organization, my partners such as the

            24          New York Mortgage Coalition and

            25          community-based not-for-profits, and our








                                                                    150
             1

             2          community and our residents.  Each time I

             3          was surprised and pleased that the

             4          relationship between the new institution and

             5          Housing Action Council continued and grew,

             6          that I was regularly informed about the

             7          changes and invited into discussions on

             8          those changes, and that additional resources

             9          were directed to community development.  I

            10          expect no less with the proposed merger of

            11          JPMorgan Chase and Bank One, and given

            12          JPMorgan Chase's track record in my area, I

            13          have reason to believe that the merger will

            14          benefit the communities, the peoples, and

            15          the organizations like mine.  Thank you.

            16                MR. PALEY:  My name is James Paley.  I

            17          am Executive Director of New Haven Housing

            18          Services in New Haven, Connecticut.  I have

            19          been Executive Director for 24 years.  We

            20          are a grassroots community-based

            21          organization, which focuses on

            22          homeownership, and we work hard to promote

            23          homeownership and asset building for

            24          low-income minority families.

            25                Our neighborhood is a very interesting








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             1

             2          one.  It is diverse.  We have great pockets

             3          of affluence, we have great pockets of

             4          poverty.  To bring the American dream to all

             5          our city's residents, we do focus on

             6          homeownership.  JPMorgan Chase has been a

             7          such partner of ours.

             8                I am here to speak in favor of the

             9          merger.  I also sit on the Community

            10          Advisory Board of JPMorgan Chase.  I was

            11          asked to sit in that capacity in 1996, and

            12          in my participation in that board over the

            13          years I have been impressed by the

            14          commitment to community development

            15          activities in which the bank has been

            16          involved since 1986.

            17                I am going to speak a little bit toward

            18          attitude.  If you notice, I speak without

            19          prepared remarks, partially because it gives

            20          me an opportunity to keep thinking about

            21          other things that I want to say.

            22                I want first to recognize the last

            23          panel.  I think that the passion that was

            24          shown by the people on that panel, whether

            25          they supported or opposed the merger, is a








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             1

             2          key to the bases of our society and the kind

             3          of direction in which we should be going to

             4          empower people who are less fortunate than

             5          ourselves, all of us sitting in this room.

             6          I think that that should be one of our

             7          goals.

             8                I have a background in community

             9          organization myself.  I did it in the South

            10          Bronx well before I even knew about

            11          Neighborhood Housing Services programs.

            12                I think that the empowerment of less

            13          fortunate individuals and being able to

            14          prepare people with access to capital,

            15          mortgages that are affordable and

            16          homeownership opportunities is one of the

            17          single most important actions that we can

            18          take.

            19                I think that we have to rely on the

            20          kinds of commitments that JPMorgan Chase has

            21          shown in the many projects that either

            22          happen or will be described to you by the

            23          various panels, and to gain an assumption

            24          that that kind of trend will continue with

            25          the merger.








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             1

             2                If we look at the Community

             3          Reinvestment Act, it was passed in 1977.

             4          Originally many banks were horrified at what

             5          the implications of this legislation would

             6          be.  We have progressed to a point where now

             7          banks compete with their "Outstanding"

             8          ratings and they use that as a marketing

             9          tool.  What better way could we use the

            10          Community Reinvestment Act for and the

            11          occasions that it has, than to be able to

            12          provide banks with incentives to become

            13          involved in community development activity.

            14                I think that JPMorgan Chase has done an

            15          outstanding job.  They have received

            16          "Outstanding" ratings, and we have every

            17          reason to believe that that will continue.

            18                We know, and we fear sometimes, bank

            19          mergers.  In New England, we have had one

            20          with Fleet, so we have already been through

            21          the fear that we are going to end up losing

            22          support when we rely on financial

            23          contributions from many institutions, and

            24          that some of that support will evaporate at

            25          this merger.








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             1

             2                We know that it is important for this

             3          kind of financial commitment to nonprofit

             4          organizations like ours continue, and we

             5          have every reason to believe that the sum

             6          will either equal or exceed the sum of the

             7          parts when this merger is completed.

             8                I want to conclude with one statement

             9          that perhaps is somewhat controversial,

            10          personal beliefs, but we are living in a

            11          society right now that does not show proper

            12          equity to the low-income individuals.  We

            13          are living under a Tax Code where tax relief

            14          is granted to the most affluent people in

            15          this society, people whose extra tax cuts

            16          would not possibly give them more money to

            17          spend in the economy because they already

            18          have enough money to spend in the economy,

            19          and we are not stimulating growth.  We have

            20          a policy that does not favor low-income

            21          minority families.

            22                It's programs like ours, and other

            23          programs that are funded by JPMorgan Chase,

            24          that work in the communities to better help

            25          and empower the people in the communities








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             1

             2          who are really the soul of our cities and

             3          our nation.

             4                I am confident that this merger will

             5          share this commitment and will continue the

             6          support that we have relied on for so many

             7          years.

             8                Thank you so much.

             9                MR. WOODWARD:  Good morning.  Thank you

            10          for allowing me to speak today.  My name is

            11          Arthur Woodward.  I am the Executive

            12          Director of Flower City Habitat for

            13          Humanity, which is Rochester, New York.

            14                One of the remarks that Mr. Harrison

            15          made earlier concerned the issue of localism

            16          of banks, a feeling of a bank being local

            17          and being able to provide for the community

            18          which it serves.  I want to really speak to

            19          that, because that is the only experience

            20          that I have to bring to this table.

            21                I have been with Flower City Habitat

            22          for Humanity eleven years, and so have gone

            23          through vicariously the various mergers of

            24          Lincoln Bank and Chase Manhattan Bank, and

            25          so forth, and now the proposed JPMorgan








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             1

             2          Chase with Bank One.

             3                What I want to say is, there seems to

             4          be two kinds of banks.  One, like JPMorgan

             5          Chase, which, whether it is a gigantic world

             6          Bank or not, really has a very local

             7          presence and a very local presence to the

             8          community.  Other kinds of banks, which I

             9          won't name, have a presence in Rochester

            10          which is totally indifferent to the

            11          community.

            12                Over the years, as you may know,

            13          Habitat for Humanity has been a builder of

            14          homeownership homes with very-low-income

            15          families, who don't take any government

            16          money.  So we rely tremendously on the

            17          support we get from the community.  Part of

            18          that community is our banks.  One of our

            19          biggest supporters over many, many years has

            20          been JPMorgan Chase and the previous names

            21          of that bank.

            22                What is interesting to me is, JPMorgan

            23          Chase has maintained a presence in some of

            24          our most desperate neighborhoods.  We have

            25          had a branch bank located in








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             1

             2          Portland-Clifton, one of the really

             3          distressed areas of our community, and

             4          JPMorgan Chase has provided full-service

             5          banking, one of the few banks that have done

             6          so in our inner city.

             7                I want to mention that one of the

             8          philosophies of JPMorgan Chase is to provide

             9          operating income to not-for-profits.  We are

            10          a small nonprofit of a million dollars a

            11          year.  We build perhaps 10 to 12 houses a

            12          year.  And most people want to give us money

            13          to build houses, and yet we still have to

            14          maintain 130 homes, mortgages that we have

            15          accomplished over the years they have been

            16          in existence.  So the annual gift that we

            17          receive from Chase is really very, very

            18          helpful to us.

            19                I also want to mention that the

            20          partnership that we have goes beyond the

            21          operating funds.  It is helping us build

            22          houses in some of the most difficult

            23          neighborhoods in Rochester and also

            24          sponsoring a house.  This year their home

            25          equity division sponsored a house again on








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             1

             2          Phelps Avenue.

             3                So I just want to commend the work of

             4          JPMorgan Chase and say that from my

             5          experience in the grassroots they are a bank

             6          that is very sensitive to the community and

             7          truly seems to want to do the best for our

             8          Rochester people.  Thank you.

             9                MS. KLABEN:  Good morning.  I am Amy

            10          Klaben and I am the President and Chief

            11          Executive Officer of Columbus Housing

            12          Partnership.

            13                Thank you for providing this

            14          opportunity for me to comment on the

            15          proposed merger of JPMorgan Chase and Bank

            16          One Corporation.

            17                Columbus Housing Partnership -- CHP --

            18          is a nonprofit developer of affordable

            19          housing in Columbus, Ohio, and we provide

            20          services to low- to moderate-income

            21          individuals and families throughout the

            22          Columbus area.  CHP was established in 1987

            23          and has added more than 3,200 units of

            24          housing to the Columbus market, and we plan

            25          to add another 500 units in the next five








                                                                    159
             1

             2          years.  These units include rental housing,

             3          lease-option homes and homeownership

             4          opportunities.

             5                In addition, CHP is a HUD certified

             6          Housing Counseling Agency, and last year we

             7          served over 2000 individuals.  Our clients

             8          participated in eight-hour Homebuyer

             9          Education workshops, budget, credit and

            10          default counseling, home maintenance classes

            11          and post-purchase counseling.  All of these

            12          programs are free and available throughout

            13          the year.  We provide down payment

            14          assistance, forgivable loans and grants to

            15          avoid foreclosure.

            16                CHP continues to forge new programs and

            17          partnerships to develop affordable housing,

            18          economic education and healthy communities

            19          for as many families as possible.  Our goal

            20          is to help families reach the American dream

            21          of homeownership.

            22                In order to properly address the needs

            23          of our community, CHP has partnered with

            24          numerous institutions in Columbus, including

            25          Bank One.  Our relationship with Bank One








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             1

             2          Corporation began at our inception.  Bank

             3          One has consistently provided financial

             4          support to CHP's Housing Counseling

             5          programs, programs that are necessary to

             6          ensure that people not only become

             7          homeowners but become successful homeowners.

             8          This funding has been crucial to our ability

             9          to serve our target population.  In

            10          addition, CHP's primary banking relationship

            11          is with Bank One, and it holds the accounts

            12          of many of our affiliated partnerships.

            13          Bank One has provided construction loans to

            14          many of our affiliated entities that develop

            15          tax credit housing, and Bank One has

            16          invested in the Ohio Capital Corporation for

            17          Housing, one of the equity providers to our

            18          tax credit partnerships.

            19                Over the years, members of the local

            20          Bank One team have volunteered their time

            21          and expertise with our organization.  We

            22          have consistently had a representative from

            23          Bank One serve on our Board of Directors,

            24          and many Bank One members have volunteered

            25          to participate in the housing and training








                                                                    161
             1

             2          classes as well as serving on our Housing

             3          Counseling Advisory Board.  The support,

             4          technical assistance, and collaboration by

             5          members of the Bank One team have made a

             6          difference to our organization and, most

             7          importantly, to the people whom we serve in

             8          the community.

             9                Throughout the years, Bank One in

            10          Columbus' Vice President of Community

            11          Investment has been instrumental in

            12          advocating for organizations that develop

            13          housing and serve the low-income community

            14          of Columbus.  Bank One has supported her

            15          efforts and allowed her to participate in

            16          many programs in our community that serve

            17          the needs of this clientele.

            18                Bank One has been known to be

            19          innovative as well.  Last September, Bank

            20          One announced its plan to offer an

            21          employer-assisted housing program for its

            22          employees.  This program, although open to

            23          all employees of the bank, will serve the

            24          needs of lower-income employees and allow

            25          them to obtain their dream of homeownership.








                                                                    162
             1

             2          CHP is partner of Bank One, providing the

             3          homebuyer education to Bank One employees.

             4                Bank One has always been involved in

             5          our community and supportive of CHP's

             6          programs.  We expect that to continue after

             7          a merger with JPMorgan Chase & Company.  The

             8          merger of Bank One with JPMorgan Chase will

             9          strengthen both institutions' capacity and

            10          lead to new possibilities for collaboration.

            11          A larger organization resulting from the

            12          merger should result in increased support

            13          for housing issues and our community, thus

            14          enhancing our current existing very good

            15          relationship.  As the leadership of Bank One

            16          has been very supportive of CHP and of

            17          serving the needs of residents of our

            18          community, the merger would allow for that

            19          leadership to grow and continue.

            20                Bank One is both a financial and

            21          philanthropic leader in our community, and

            22          Columbus Housing Partnership is proud to

            23          call Bank One Corporation a dedicated

            24          partner in enhancing lives, strengthening

            25          communities, and bringing people home.








                                                                    163
             1

             2          Together, we are making a difference in

             3          Central Ohio.

             4                On behalf of the board and staff of

             5          Columbus Housing Partnership and those we

             6          serve, thank you again for this opportunity,

             7          and we look forward to continuing our

             8          relationship with both Bank One and JPMorgan

             9          Chase after the merger.

            10                MS. BETANZOS:  Good morning.  I am the

            11          president and CEO of Wildcat Service

            12          Corporation.  During Wildcat Service's 32

            13          years of serving the structurally unemployed

            14          of New York City, JPMorgan Chase, and

            15          Chemical Bank before that, have played an

            16          important role in our growth and

            17          development.  Over the years we have served

            18          more than 250,000 African-American and

            19          Hispanic people in New York City who had

            20          given up hopes of ever getting a steady,

            21          meaningful job.

            22                The idea of Wildcat was developed as a

            23          concept by a group of businessmen led by

            24          Norborne Berkley, Jr., then President of

            25          Chemical Bank.  Our mission was to train,








                                                                    164
             1

             2          and still is, and develop the hardest to

             3          employ, so that they might take their places

             4          in society as successful workers and

             5          self-respecting citizens, no longer in

             6          prison or welfare but contributors to our

             7          society.

             8                Over the years we have expanded to take

             9          on welfare mothers, refugees, youth

            10          dropouts, spouses who did not meet their

            11          childcare payment responsibilities and

            12          teenagers who had criminal convictions, or

            13          who had been suspended at least twice from

            14          high school.  We also have run programs for

            15          refugees.

            16                We presently operate three

            17          high-performing high schools:  John V.

            18          Lindsay Wildcat Charter School at 17 Battery

            19          Place, John V. Lindsay Wildcat Charter

            20          School II at Lafayette Street, and an SOS

            21          School in the South Bronx for youngsters who

            22          have brought guns and knives into the public

            23          schools.  We also have a New Beginnings High

            24          School in Queens.  We also have six high

            25          schools based on the JVL model high school








                                                                    165
             1

             2          in Santiago, Chile, and one in Caracas,

             3          Venezuela.  We run employment and training

             4          programs in Manhattan and the South Bronx as

             5          well as a One Stop Center for the Borough of

             6          the Bronx.

             7                I have been President of Wildcat for

             8          the past 26 years.  We are funded mostly by

             9          government, with some very important private

            10          money that allowed us to forge ahead with

            11          some new methods and concepts.

            12                We have always had dedicated support

            13          from JPMorgan Chase.  First Mr. Berkley,

            14          then later Mark Willis, one of the most

            15          respected persons in the community

            16          development field, as a board member, and

            17          Vincent Pellitteri, another employee of

            18          Chase, as a magnificent and dedicated

            19          chairman.  The latter two are still active

            20          and valuable board members.

            21                Over the years as an organization that

            22          depends mostly on public sector for funding,

            23          we have gone through some very tough times,

            24          but officers at Chase kept us functioning by

            25          giving us some very tough but necessary








                                                                    166
             1

             2          survival advice and lines of credit, with

             3          lots of cash-flow charts to make sure that

             4          we survived.  Later on, we learned from them

             5          how to invest and make sure that we would

             6          always stay in business.  Carol Perry, a

             7          former Senior Vice President, will always be

             8          one of our heroines.  Our present

             9          representative, Cathy Quarles, is always

            10          available for consultation and good advice,

            11          and we appreciate her help and interest.

            12                I can only give hearsay testimony on

            13          Bank One and the Dimons in Chicago.  My

            14          friends don't want them to leave and hope

            15          that they will stay there, while I, contrary

            16          to them, hope they will come to New York as

            17          quickly as possible.  Both Jamie and Judy

            18          Dimon played a definitive role in Wildcat's

            19          progress while they were in New York.

            20                During Mr. Dimon's tenure as President

            21          of Smith Barney, he learned of Wildcat's

            22          efforts to establish a Private Industry

            23          Program to allow special training for

            24          welfare mothers, so that they might obtain

            25          internships in investment companies.








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             1

             2          Incidentally, this was the first attempt at

             3          sectoral training in the country.  He not

             4          only embraced the concept but asked his H.R.

             5          people to see how it could work for many

             6          entry-level positions.  They hired more than

             7          100 welfare moms in a year, held special

             8          workshops for them, and became pioneers in

             9          the National Welfare to Work movement.  He

            10          then called his peers and set up

            11          appointments for us to see them.

            12                One of our participants became the

            13          poster woman for the national campaign for

            14          welfare to work and spoke at the White House

            15          meeting in the company of her two daughters.

            16          Mr. Dimon loves to say, "This is good works

            17          and good business."  Our Wildcatters knew

            18          that working for him and his company was the

            19          best thing that could have happened to them.

            20          They started at $25,000 a year, and many of

            21          them later on went to $30,000, and they

            22          received stock options instead of food

            23          stamps.  Consequently, there was more than a

            24          95 percent retention rate.

            25                To celebrate Wildcat's 25th








                                                                    168
             1

             2          anniversary, Jamie and Judy chaired our

             3          luncheon -- incidentally, held at Chase.

             4          Because of their guidance and dedication,

             5          which even involved making calls to invitees

             6          while they were on vacation, it was a great

             7          success.  Judy guided us, as no one at

             8          Wildcat had any experience with the pitfalls

             9          of a banquet or anything like that.

            10                The merging of these two wonderful

            11          organizations, superior staff, and wonderful

            12          histories, in both community service and

            13          development equipment, is one that they

            14          should be very proud of, and I am indeed

            15          honored to be here today to testify in their

            16          favor.

            17                REV. KEATON:  Good morning.  My name is

            18          Rev. Clarence Keaton, and I thank the

            19          Federal Reserve for this opportunity to

            20          share with you my experience with Chase.

            21                I am the pastor and founder of True

            22          Worship Church Ministries.  We have been in

            23          the community of East New York, Brooklyn,

            24          for more than 19 years.  We have been

            25          serving the spiritual needs of our community








                                                                    169
             1

             2          during these years.  We provide career

             3          development, children's and youth programs,

             4          dance ministry, drama and musical

             5          enhancement.

             6                Because of Chase, we were able to

             7          expand our church, which enabled us to

             8          expand our service to the community.

             9                Also, because of Chase, we are now

            10          prepared to meet the day care needs in our

            11          community through a faith-based lending

            12          program.

            13                Before forming a partnership or

            14          relationship with Chase, we experienced

            15          tremendous difficulty obtaining a loan for

            16          our project, which left us vulnerable to

            17          predatory lending.  But through Chase's fair

            18          banking practices, we were given an

            19          opportunity, and we also were able to obtain

            20          the expertise and experience from Chase

            21          through their instruction.

            22                Now when I drive up to my new house of

            23          worship and observe how it has beautified

            24          our community and raised even the fair

            25          market value of all our neighbors' homes by








                                                                    170
             1

             2          having a day care center and church

             3          conveniently located, I thank God for the

             4          help and relationship that has been formed

             5          through the services of Chase.

             6                I wholeheartedly support the merger

             7          between Chase and Bank One for all the good

             8          that it can do in communities worldwide.

             9          Thank you.

            10                MS. BRAUNSTEIN:  Thank you very much.

            11                Will the next panel please come

            12          forward.

            13                Once again, I would like to remind the

            14          next panel to give your name and

            15          organization.  And I would like to remind

            16          you to keep an eye on the timekeepers,

            17          because we need to stick to the schedule.

            18                If you have a written statement, please

            19          provide a copy to the gentleman in the

            20          center, the court reporter.

            21                With that, we will begin.

	    22                MS. LUDWIG:  Hello.  Thank you for holding this 

	    23		public meeting and for the opportunity to testify about

            24          this hugely significant merger proposed between 

            25          JPMorgan Chase and Bank One.  My name is


                                                                    171
             1

             2          Sarah Ludwig and I am the Director of the

             3          Neighborhood Economic Development Advocacy

             4          Project, known as NEDAP.  NEDAP is

             5          a resource center that works with groups 

             6          throughout New York City.  We provide legal,

             7          technical and policy support to community 

			groups that are organizing for economic justice 

	     8          in low-income communities and communities                           

       	     9          of color.  We also bring groups together to work 

			in coalition on community reinvestment and

            10          financial justice matters, and convene,

            11          for example, New Yorkers for Responsible

            12          Lending, which is a statewide coalition of

            13          more than a hundred members including

            14          community financial institutions,

            15          community-based organizations, affordable 

			housing and first-time homebuyer groups, 

			advocates for seniors, community reinvestment and

            16          and fair lending advocates and consumer groups.

	    18		With respect to the proposed Chase-Bank 

	    19		One merger, NEDAP is working with eight other 

			groups from around New York State.  We have submitted 

			detailed comments jointly with the eight other groups and

            20          we will be submitting supplemental comments

            21          by the end of next week as well.  We have

            22          also met with the representatives of Chase

            23          to discuss our concerns and to press them

            24          for a written commitment to a set of 

            25          principles, best practices and community


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             1

             2          reinvestment goals for New York.  I am

             3          going to limit my testimony to four quick

             4          points:

             5                First, it is our group's view that the

             6          Federal Reserve should not approve the

             7          merger without imposing a series of specific 

			and monitorable conditions on Chase to ensure 

			that the merged bank meets the convenience and 

			needs of all communities.  We have had

            10          some discussion with Chase about making this

            11          series of measurable commitments in New York,

            12          in writing, and will continue to press you,

            13          as the Federal Reserve, to set conditions

            14          which we will specify in our supplemental

            15          comments.

            16                The second point.  You have heard the

            17          range of serious concerns about Chase's

            18          involvement in predatory lending practices

            19          and the need for assurances that it will

            20          not originate, purchase or securitize 

            21          abusive loans.  We urge the Federal

            22          Reserve to press Chase very hard on this

            23          issues, and we look forward to Chase's

            24          committing to meaningful reforms and

            25          demonstrating leadership at the national and




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             1

             2          local levels in this area.

             3                But today I would like to address

             4          another area in which Chase contributes to

             5          predatory lending, and that is through what we

             6          regard as inadequate conventional mortgage
	
	     7          lending in predominantly lower income and 

			nonwhite areas.

             8                As this map shows -- I brought it in

             9          transparency form, but I see the technology

            10          is not here, I should have asked first -- we

            11          have documented Chase's home purchase

            12          lending and have found what we see as a

            13          shockingly low market share of home purchase 

			loans in New York City’s predominantly nonwhite census tracts, 
			
			including 

            14          lower income areas.  As one of the city's,

            15          not to mention the country's, not to mention

            16          the world's, largest banks, we feel that by

            17          failing to meet community mortgage lending

            18          needs equitably, that Chase, albeit with

            19          many of its peers, helps to perpetuate

            20          conditions that lead to overwhelmingly

            21          concentrated subprime lending in historically 

			redlined 

            22          neighborhoods.  So, as entire communities

            23          are cut off from access to fair and affordable

            24          lending, lower income people in New York and

            25          cities across the country are relegated to a


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             1

             2          higher cost, and too often predatory, system of 

			mortgage credit.  We will submit 

			this with our testimony today.

             4                Today is Tax Day, as we know, so I

             5          would like to address our group's concerns

             6          about Chase's entry into the tax refund

             7          anticipation lending business.  Bank One, as

             8          I am sure you know, is a leading tax refund 

			anticipation lender.

             9          Tax refund anticipation loans, also known as

            10          RALS, simply put, are junk products that

            11          gouge working people and sap wealth from low 

			income neighborhoods, as taxpayers take out 

			usurious short term loans, securitized by their 

			tax refund. We encourage the Federal Reserve to 

			investigate Bank One’s RALs product and press 

			Chase, as we are doing, to eliminate

            13          RALS, which, among other things, would

            14          violate New York's usury law.

            15                Finally, groups are very concerned

            16          about chartering issues and the prospect

            17          that Chase will relinquish its state charter

	    18          and opt for a national one, particularly in light of

            19          the recently rendered ruling by the OCC

            20          regarding preemption of state consumer

            21          protection laws.  We would like to pass

            22          along our concerns, although we understand 

			there are jurisdictional impediments for the Fed 

			in that regard.

            25                For the past decade we have witnessed,


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             2          and many of us have commented upon, the

             3          tremendous mergers and consolidations that

             4          we have seen in the financial services

             5          industry.  NEDAP believe that this

             6          consolidation presents dangers to our

             7          country's economic health and erodes the

             8          accountability of financial institutions to

             9          communities and consumers.  It would be very

            10          easy to see this merger as just one more in

            11          a long line of bank mergers, and in some

            12          sense it is, but it would be too easy, we

            13          think, to lose sight of the implications of

            14          this merger not only for many financial

            15          consumers but for the economy as a whole.

            16          We hope that the Federal Reserve will

            17          surprise us with this merger.  Some of us

            18          have become cynical about the integrity of

            19          the public process and the regulatory

            20          accountability issues that have come up around

            21          mergers, and we would welcome being surprised

            22          by the Federal Reserve by placing the

            23          public interest above corporate

            24          interests, and that arguments by financial

            25          institutions such as by Chase that in order


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             1

             2          to maintain a competitive advantage they

             3          must continue business as usual, even if

             4          that means continuing to harm communities

             5          and consumers, are not good enough.

             6                Thank you for your consideration.  I am

             7          happy to answer any questions you may have.

             8                MS. KEEFE:  Hi.  Thank you for having

             9          this hearing today.  My name is Kirsten

            10          Keefe. I am a consumer lawyer with the

            11          Greater Upstate Law Project, located in

            12          Albany.

            13                If approved, this merger will make

            14          JPMorgan Chase the second largest bank in

            15          the United States.  Chase is already looked

            16          to in the banking and lending industry as a

            17          model, a symbol to smaller financial

            18          institutions of how to conduct business.

            19          With this merger, and the status it will

            20          bring to Chase, Chase has responsibility to

            21          conduct its business on the highest moral

            22          level.  Chase has a duty to not just look

            23          around at other banks and settle for what is

            24          considered to be the "industry standard."

            25          Chase has an obligation to raise the bar for








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             1

             2          what constitutes good banking practices and

             3          responsible lending.

             4                JPMorgan Chase's application to acquire

             5          Bank One should be denied unless Chase

             6          displays that they have sincerely stopped

             7          the securitization and origination of

             8          predatory loans.

             9                Chase's commitments to curbing its

            10          involvement, both in the origination as well

            11          as the securitization of predatory loans,

            12          have been minimal.  Currently, Chase's due

            13          diligence includes not making or investing

            14          in loans covered by the Home Ownership and

            15          Equity Protection Act, called HOEPA, or

            16          loans defined as "high cost" by state

            17          predatory lending laws.  Chase won't sell

            18          credit life insurance, it claims not to

            19          include mandatory arbitration agreements, it

            20          limits prepayment penalties and it won't

            21          make loans with over 100 percent

            22          loan-to-value ratios.  Most of these

            23          standards, fortunately, have become industry

            24          standards.  , As the second biggest bank, it

            25          is imperative that Chase do better.








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             1

             2                If Chase is sincere in its commitment

             3          not to deal in predatory lending, Chase must

             4          expand its definition of predatory lending.

             5          Chase should not engage in lending of loans

             6          which (1) have high points and fees,

             7          regardless of whether they meet the high

             8          HOEPA threshold, (2) have adjustable

             9          interest rates when made to individuals on

            10          fixed incomes, (3) have high debt-to-income

            11          ratios, especially when made to lower-income

            12          folks, and (4) leave the homeowner with

            13          substandard residual interest after taking

            14          into account the mortgage, tax and insurance

            15          payments.

            16                Furthermore, with such a huge market

            17          share, Chase must develop a responsible

            18          subprime product.  Homeowners with

            19          below-perfect credit must be able to get

            20          loans directly through Chase loan officers,

            21          rather than be pushed off to subprime

            22          products peddled by brokers.  It is well

            23          established that broker-driven models for

            24          subprime lending lead to great abuses.

            25          Unscrupulous Brokers target vulnerable








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             1

             2          homeowners.  Brokers, who make their living

             3          on a percentage of the loan amount, steer

             4          borrowers into loans based on the amount of

             5          equity in their home, not on the amount they

             6          requested.  It becomes virtually impossible

             7          for a homeowner to get a loan for minimal

             8          home improvements as needed.

             9                Furthermore, Chase admits engaging in

            10          the practice of paying its brokers yield

            11          spread premiums -- commissions purely based

            12          on the amount of interest brokers can

            13          upcharge borrowers.  Few people on the

            14          street understand what a yield spread

            15          premium is, and yet Chase compensates its

            16          brokers for essentially deceiving homeowners

            17          into taking out loans at higher interest

            18          rates than their credit scores warrant.

            19          Yield spread premiums Should be abolished in

            20          subprime lending, where vulnerable

            21          homeowners are already subjected to costlier

            22          loans.  Chase's response is that they cannot

            23          compete for the business of brokers, their

            24          true clients, if they don't pay YSP's.  This

            25          immoral practice will not stop, however,








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             1

             2          unless an industry leader, like Chase, takes

             3          the high road and stops charging borrowers

             4          higher interest rates just because they can

             5          get away with it.

             6                Chase must offer homeowners with

             7          below-perfect credit a range of responsible

             8          loan products.

             9                Chase's application to acquire Bank One

            10          should be denied unless Chase cleans up its

            11          mortgage servicing business.

            12                Chase's mortgage servicing industry is

            13          huge.  Not only does it service loans

            14          originated by its own companies; Chase

            15          continually acquires the servicing rights to

            16          FHA, conventional and subprime loans.  Chase

            17          is doing a poor job servicing its loans.

            18          Chase is failing in providing the loss

            19          mitigation remedies to low-income

            20          homeowners, as mandated by our government,

            21          who reached the dream of homeownership

            22          through the FHA program.  Chase fails to

            23          successfully work with FHA homeowners to

            24          find win-win solutions to allow these

            25          lower-income families to maintain the








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             1

             2          stability they worked so hard to achieve.

             3          Instead, Chase follows the industry

             4          standard; if a homeowner doesn't fit into a

             5          box formula under their loss mitigation

             6          program, the homeowner loses their home.

             7          There is no room for a gray area, or

             8          creative solutions, in Chase's loss

             9          mitigation department.

            10                Many loans serviced by Chase services

            11          are owned by Freddie Mac or by trusts on

            12          Wall Street.  Chase hides behind the loss

            13          mitigation criteria "imposed" on them by

            14          these investors.

            15                Chase is an industry leader.  Chase is

            16          a huge bank.  Chase has power to influence

            17          the decision-makers.  Chase should talk back

            18          to the investors, inform them of the

            19          realities of the borrowers whose mortgages

            20          they service and push for better standards

            21          which will enable working families who hit

            22          some financial problems to stay in their

            23          homes.

            24                A poor economy and high unemployment

            25          rate, mixed with rampant lending abuses over








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             1

             2          the past five years, have led to a record

             3          high foreclosure rate in the United States

             4          today.  The loss of homes by families to

             5          foreclosure has reached an epidemic level.

             6          It is painfully apparent that the loss

             7          mitigation standards and processes, designed

             8          in a time of economic boom, are not working

             9          in today's economy.  Chase, as a major

            10          servicer of mortgage loans, must take the

            11          lead and create better default resolution

            12          remedies.  If it is truly not the intent of

            13          Chase and its investors to foreclose on

            14          people's homes, as Chase has stated, then

            15          Chase must examine the economic realities of

            16          today and do better for the homeowners of

            17          this country.

            18                Thank you very much.

            19                MS. ANDRE:  Thank you.  Good morning.

            20          Thank you for this opportunity to testify

            21          today.  My name is Astrid Andre, and I am

            22          testifying on behalf of the Association for

            23          Neighborhood & Housing Development, a

            24          30-year-old nonprofit coalition of 102 New

            25          York City neighborhood-based housing groups.








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             1

             2          Collectively and individually, ANHD members

             3          are very familiar with JPMorgan Chase's

             4          community development programs and how they

             5          compare with those of other New York City

             6          financial institutions.

             7                Our comments today are based on our

             8          direct experiences with JPMorgan Chase for

             9          the past three years, on meetings and

            10          discussions we have had with JPMorgan Chase

            11          staff and leadership during that period, and

            12          on comments and information we solicited

            13          from our membership regarding their

            14          perceptions of Chase's community development

            15          and CRA strengths and weaknesses.

            16                As a result of mergers with several New

            17          York City retail banks over the past fifteen

            18          years, JPMorgan Chase currently has over 200

            19          branches in the five boroughs and is far and

            20          away New York City's largest retail bank.

            21          However, since the last merger, the

            22          acquisition by Chase of JPMorgan, we have

            23          seen a retrenchment from this role, and

            24          JPMorgan Chase has become a less visible

            25          presence on a neighborhood level.  We are








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             1

             2          concerned that the pending merger, and the

             3          relocation of the bank's retail financial

             4          services headquarters to Chicago, will

             5          exacerbate this disturbing trend, to the

             6          great detriment of New York City's

             7          neighborhoods.

             8                Even though JPMorgan Chase is a

             9          national institution, it is still New York

            10          City's largest neighborhood banking network.

            11          Traditionally, Chase had been considered the

            12          premier community development lender and

            13          investor in our neighborhood.  Today, this

            14          is no longer the case.  All of the other

            15          major financial institutions allocate a far

            16          greater percentage of their philanthropic

            17          budget to affordable housing and

            18          neighborhood revitalization than does Chase.

            19          While Chase is still in many ways a strong

            20          and committed partner in community

            21          development, it has surrendered the

            22          leadership role it once held and which is

            23          expected of it as the city's largest bank.

            24                We hope that, as part of this merger,

            25          and as the bank reorganizes yet again, it








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             1

             2          can recommit to New York City, and

             3          especially to the city's low-income

             4          neighborhoods.

             5                We have brief core concerns and issues.

             6                1.  JPMorgan Chase's organizational

             7          structure, through recent reorganizations,

             8          limits its ability to establish effective

             9          partnerships on a neighborhood level.

            10                2,  JPMorgan Chase's community

            11          development programs have become less

            12          responsive in recent years to priorities and

            13          needs of New York City's low-income

            14          neighborhoods.  While Chase remains a

            15          leading community development leader in New

            16          York City and a generous supporter of a

            17          range of charitable initiatives, it seems as

            18          if Chase has been shifting its efforts away

            19          from community-based groups in favor of

            20          larger institutions and intermediaries.  A

            21          number of ANHD's CDC members, those who

            22          develop affordable housing, have found that

            23          it has become more difficult to obtain

            24          community development loans from the bank.

            25                3.  JPMorgan Chase did not fully honor








                                                                    186
             1

             2          certain commitments it made to community

             3          groups around its last merger.  In 2000, at

             4          the time of its merger with JPMorgan, Chase

             5          made several, we thought, good-faith

             6          commitments regarding organizational

             7          structure, amongst other things.

             8          Unfortunately, Chase has not met those

             9          promises.  We fear the same will occur with

            10          this pending merger.

            11                ANHD urges the Federal Reserve Board to

            12          condition approval of the JPMorgan

            13          Chase/Bank One merger upon specific

            14          commitments by JPMorgan Chase to

            15          substantially strengthen its community

            16          development/CRA programs and initiatives in

            17          New York City.  In particular, we recommend

            18          the following:

            19                We urge as a condition of this merger

            20          that JPMorgan Chase/Bank One develop

            21          detailed, specific CRA plans for each of its

            22          major markets, including New York City.  As

            23          we discussed in our comments we submitted,

            24          we do not believe that JPMorgan Chase

            25          honored all of the promises it made during








                                                                    187
             1

             2          previous mergers.  To avoid this occurring

             3          again, we recommend the bank adopt for New

             4          York City a formal, written CRA plan with

             5          clear lending and investment targets, time

             6          lines and outcomes, by which Chase, its

             7          regulators and the public can monitor and

             8          evaluate the bank's performance.

             9                We further recommend that JPMorgan

            10          Chase establish a community development

            11          structure which effectively supports New

            12          York needs and priorities.  For New York

            13          City, we recommend that Chase reestablish a

            14          centralized community development group

            15          within which is housed community development

            16          lending, philanthropy and affordable

            17          mortgages.  Staffing needs to be expanded so

            18          that Chase may begin to reestablish

            19          relationships and partnerships with

            20          communities and community groups to carry

            21          out successful neighborhood-centered

            22          community development programs in our

            23          low-income communities.

            24                We recommend that Chase strengthen its

            25          capacity to undertake direct lending to








                                                                    188
             1

             2          community-based organizations, particularly

             3          in the area of affordable housing.  We

             4          recommend that Chase establish, as a target,

             5          making at least half of its community

             6          development loans to community-based

             7          organizations.

             8                We recommend, again, that at least 50

             9          percent of Chase's CRA-related grants be

            10          awarded directly to neighborhood-based

            11          organizations.  We also recommend that Chase

            12          better focus its grant-making on community

            13          priorities.  Like its peers, the bank should

            14          allocate at least 50 percent of its CRA

            15          grant budget to affordable housing.

            16          Finally, Chase should increase its overall

            17          grant budget.  In keeping with its planned

            18          growth, Chase should increase its CRA

            19          eligible philanthropy in New York City by 40

            20          percent, the amount Bank of America

            21          committed to in its recent merger.

            22                The question of affordable mortgage

            23          programs is an area of tremendous concern to

            24          ANHD.  With the recent dismantling of the

            25          affordable mortgage division, it is not








                                                                    189
             1

             2          clear to us that Chase will be able to

             3          maintain the strong partnerships it has with

             4          housing counseling organizations in New York

             5          City's low-income neighborhoods.  We are

             6          equally concerned that Chase will not be

             7          able to turn around its rising foreclosure

             8          rates without a strong local foreclosure

             9          prevention program. We recommend that Chase

            10          reestablish its affordable mortgage division

            11          and work with community partners to

            12          strengthen and expand its homeownership

            13          programs and foreclosure prevention efforts.

            14                Better monitoring Chase commitments.

            15          We would strongly urge the Federal Reserve

            16          to insist on --

            17                MS. BRAUNSTEIN:  Excuse me, can you

            18          wrap up, please?

            19                MS. ANDRE:  Yes.  -- a transparent

            20          monitoring and reporting process for any

            21          commitments Chase may make in the course of

            22          this merger.

            23                As we have tried to communicate

            24          throughout this comment -- I am wrapping

            25          up -- Chase had traditionally been the








                                                                    190
             1

             2          leader in community development among New

             3          York City financial institutions.  The bank

             4          could once again become the leader in

             5          community development that it once was.

             6          Thank you.

             7                MS. DE LA UZ:  My name is Michelle de

             8          la Uz, and I am the Executive Director of

             9          the Fifth Avenue Committee, which is a

            10          low-income community in South Brooklyn.  I

            11          appreciate the opportunity the Federal

            12          Reserve Board members have given to comment

            13          on the merger.  The Fifth Avenue committee

            14          is an organization that is dedicated to

            15          social and economic justice to South

            16          Brooklyn, just over the bridge, and we do

            17          that principally through developing and

            18          managing affordable housing, creating

            19          economic opportunities, and organizing

            20          residents and workers around the critical

            21          issues facing our community.  The work that

            22          we do assists low-income individuals so

            23          families can still live and work with

            24          dignity, and we do that by really working

            25          with a number of partners to have access to








                                                                    191
             1

             2          opportunities and, most importantly, to

             3          capital.

             4                I am testifying neither in favor of nor

             5          in opposition to the proposed merger.

             6          Rather, I want to urge the Federal Reserve

             7          Board to consider the significant impact the

             8          merger would have on community-based

             9          development in New York City, and to work

            10          with the applicant to assure that, if

            11          approved, the new organization becomes the

            12          leader among banks in supporting

            13          immigrant-based attempts to creating

            14          affordable housing, creating jobs and

            15          improving financial services for low- and

            16          moderate income families.

            17                JPMorgan Chase has been a valuable

            18          partner to the Fifth Avenue Committee and

            19          economic opportunity in South Brooklyn.  We

            20          have received annual generous operating

            21          grants since the JPMorgan/Chase Manhattan

            22          merger and have received a substantial grant

            23          to our capital campaign just established in

            24          South Brooklyn, a community development

            25          program that will house a new office and








                                                                    192
             1

             2          help us expand our programs.

             3                While we appreciate the support that we

             4          have received from JPMorgan Chase, we are

             5          deeply concerned by the overall trend of

             6          shipping rent support away from those

             7          working in a low- to moderate-income

             8          neighborhood to large areas and regional and

             9          national organizations.

            10                We are also concerned about JPMorgan

            11          Chase's more recent record of

            12          unresponsiveness in providing funds to

            13          nonprofits for affordable housing

            14          development.  This is in sharp contrast to

            15          the previous record of JPMorgan in community

            16          development, real estate loans and as a

            17          leading partner in increasing homeownership

            18          opportunities for the underserved community.

            19                It has become clear, especially after

            20          the most recent merger, that the bank has

            21          restructured its programs and products to

            22          match its more national focus.  This

            23          restructure has been to the detriment of

            24          community-based groups that build affordable

            25          housing.








                                                                    193
             1

             2                The Fifth Avenue Committee has

             3          developed $75 million in housing development

             4          projects and has projects of $50 million

             5          currently in development or redevelopment.

             6          None of this financing was received from

             7          JPMorgan Chase.  In contrast, Citibank,

             8          Roslyn and Astoria Federal Savings Bank have

             9          all financed our housing development

            10          projects.

            11                We believe one of the major reasons we

            12          and other New York City community

            13          development corporations have been unable

            14          often to obtain affordable housing loans

            15          from JPMorgan Chase is their failure to

            16          coordinate their community development

            17          projects, nonprofit development and mortgage

            18          lending within a single group.

            19                Should it be approved, the merger

            20          between JPMorgan Chase and Bank One would

            21          have a major impact on development in New

            22          York City.  The new bank could continue to

            23          shift its focus away from underserved

            24          communities or it could use the merger as an

            25          opportunity to reestablish itself as a








                                                                    194
             1

             2          leader among banks in supporting

             3          neighborhood housing development.

             4                We hope the grant support we received

             5          from Chase will not be an exception in the

             6          bank's CRA investment in New York City which

             7          is tied to community priorities.  We hope

             8          that Chase will make a formal commitment

             9          during this merger to honor CRA

            10          responsibilities and our community-based

            11          organizations in low- and moderate-income

            12          neighborhoods throughout the city.  We

            13          believe a formal commitment is necessary

            14          because after the most recent merger several

            15          promises were made specific to maintaining a

            16          centralized community development program,

            17          which were not kept, which have contributed

            18          to a diminished lending presence and

            19          diminished lending for affordable housing.

            20                In particular, we urge the Federal

            21          Reserve to consider, as a condition of

            22          approval, Chase's willingness to direct a

            23          greater percentage of its CRA to

            24          community-based organizations, strengthen

            25          its capacity for direct lending, reestablish








                                                                    195
             1

             2          a development group that coordinates lending

             3          grants and affordable mortgages, and adopts

             4          a formidable New York City plan to New York,

             5          as part of its merger agreement, which has

             6          clear outcomes.  They will do that working

             7          with local groups.  By committing its

             8          lending resources to the city's

             9          not-for-profit, community-based housing

            10          developers, the new bank will play a major

            11          royal in solving New York City's affordable

            12          housing crisis.  We hope it will live up to

            13          both.

            14                MS. BRAUNSTEIN:  Thank you.

            15                MS. Van KERKHOVE:  Good afternoon.  My

            16          name is Barbara van Kerkhove, and I'm from

            17          the Public Interest Law Office of Rochester,

            18          in Rochester, New York.  Along with Ruhi

            19          Maker, I head the Rochester Coalition.

            20                With over $3 billion in deposits, Chase

            21          is the second largest bank in the Rochester

            22          MSA.  The size of the post-merger bank has

            23          many members of the Greater Rochester

            24          Community Reinvestment Coalition concerned

            25          about the impact that post-merger changes








                                                                    196
             1

             2          will have on our community, particularly the

             3          level of lending and investment in

             4          traditionally underserved communities.

             5                The main points I would like to make

             6          this afternoon are that:

             7                First, as mentioned by many others, we

             8          are happy about today's announcement by

             9          JPMorgan Chase of their $800 billion

            10          commitment.  But, however, until Chase and

            11          Bank One make specific CRA commitments in

            12          New York State, broken down by local

            13          markets, we are protesting the merger.

            14                Another point we would like to make is

            15          that Chase must increase its consistency in

            16          the proportion of its origination going to

            17          underserved communities.

            18                Next, JPMorgan Chase/Bank One must

            19          retain local expertise in its Community

            20          Development Group, particularly with respect

            21          to residential mortgage lending in

            22          low-moderate income communities.

            23                Fourth, despite the fact that Chase

            24          Manhattan Mortgage Corporation is now

            25          regulated by OTS, which has preempted many








                                                                    197
             1

             2          state anti-predatory lending laws, including

             3          New York's, and that Chase has stated that

             4          it will abide by New York's law with respect

             5          to originations, Chase must do due diligence

             6          to make sure that any loans purchased do not

             7          violate state anti-predatory lending laws.

             8                Finally, Chase must provide more

             9          information on its subprime lending

            10          activities by all of its affiliates,

            11          particularly Chase Manhattan Bank USA NA.

            12          Until Chase does so, GRCRC will continue,

            13          like HUD, to label Chase Manhattan Bank a

            14          subprime lender.

            15                I would like to expand on one of the

            16          points.  But first I would like to thank

            17          Chase for providing us with their 2003 home

            18          purchase data.  We were able to analyze that

            19          for the Rochester MSA.  We notice that

            20          between 2002 and 2003, Chase substantially

            21          decreased its home purchase and refinance

            22          lending penetration in the city of Rochester

            23          to low-moderate income households and

            24          neighborhoods, and to minority households

            25          and neighborhoods, while increasing lending








                                                                    198
             1

             2          in the Rochester MSA.  This is after

             3          substantially increasing the percentage of

             4          its loans going to these underserved

             5          communities between 2001 and 2002.

             6                So they got us thinking, and we went to

             7          further examine their originations during

             8          their last few CRA exam periods.  We found

             9          that the percentage of Chase's loans going

            10          to underserved communities would increase

            11          significantly between the first and second

            12          year being examined, and then it would level

            13          off or decrease the year after the exam.

            14          This suggests that Chase loan officers may

            15          be under pressure to substantially improve

            16          lending to low-moderate communities during

            17          CRA exam years.

            18                I attach a graph illustrating that.  We

            19          took the total lending in the MSA from '94

            20          to 2003, and I marked where the second year

            21          was of this CRA exam, and you can notice

            22          that there is a high point in the percentage

            23          of lending in the low-moderate income

            24          household and communities, which are the

            25          pink and yellow lines, there in the second








                                                                    199
             1

             2          year of the exam.

             3                What the coalition would like to see is

             4          good penetration in these communities, but

             5          we want to see also consistent penetration,

             6          not these fluctuations.  So when lending in

             7          MSA goes up, we would like the lending in

             8          these communities to go up by a similar rate

             9          and that will keep it consistent.

            10                I made further points on my other main

            11          points in my written comments, and the

            12          coalition will be submitting supplemental

            13          comments by April 23.  Thank you.

            14                MS. BRAUNSTEIN:  Thank you.

            15                REV. PARKER:  Good afternoon.  I am

            16          Father Frank Parker of Boston College.  I am

            17          here representing and speaking for the

            18          Jesuit Conference.  The Jesuit Conference

            19          represents 3,300 Catholic priests of the

            20          Jesuit Order in the United States.  We have

            21          28 affiliated colleges and universities,

            22          including Fordham, St. Peter's, and

            23          Fairfield in this area.  We also have

            24          schools and parishes and other apostols.

            25                I am a professor of real estate at








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             1

             2          Boston College, have been for 35 years, was

             3          Editor of the Journal of RDC Real Estate in

             4          Vermont in the early '90s.

             5                Before starting, I would like to

             6          associate myself totally with the comments

             7          of my colleagues here on this panel, both

             8          for myself and the Jesuit Council.  I

             9          believe they have all made very cogent

            10          points.  Sometimes it is hard to think that

            11          different panels have the same planning, but

            12          that seems to be happening.

            13                In January of this year, I wrote the

            14          Federal Reserve about the Bank of America

            15          "takeover" -- the word version of my

            16          question in both cases, that case and

            17          today's -- the "takeover" of Fleet Bank.  I

            18          observed at the time that throughout our

            19          nation's financial history there has been a

            20          largely unwritten but deeply understood

            21          fundamental principle that banks were

            22          quasi-public service entities.  For the

            23          privilege of making money by administering

            24          and investing the money of the average

            25          citizen, the banks were charged with the








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             1

             2          quasi-fiduciary duty to act prudently in the

             3          best interest of the depositors and, to a

             4          lesser extent, of the shareholders of the

             5          entity involved.  Not only with banks but

             6          also throughout law firms, accounting

             7          offices and corporate board rooms in the

             8          United States during the last 20 years or

             9          so, fiduciary responsibilities have taken a

            10          back seat to service provider greed.

            11                Looking in the three months since that

            12          merger, or "takeover," by the Bank of

            13          America, the old NationsBank people, we see

            14          not much action on the part of the Federal

            15          Reserve.  Although these two banks agreed to

            16          pay $75 million in penalties for actions

            17          that they had taken, there was no comment

            18          made on that.

            19                The first action after April 1 by Bank

            20          of America in Boston was to close down Fleet

            21          Development.  I would like to quote from

            22          Stephen Bailey, a columnist in the Boston

            23          Globe:  "Over seven years, Fleet Development

            24          invested over $1 billion into businesses led

            25          by women and minorities and 25 funds that








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             1

             2          target these markets.  That money, in turn,

             3          leveraged another $200 million to $300

             4          million for these businesses.  Fleet's

             5          return was in the 20 to 25 percent range,

             6          and this on the first day it was closed down

             7          by Bank of America, despite their $75

             8          million promises and everything else."

             9                We have similar concerns when we look

            10          at JPMorgan Chase and Bank One.  We have a

            11          concern that so many jobs of medium- and

            12          low-income people will be taken out of New

            13          York City and moved to Chicago.  This seems

            14          in total contradiction to promises made to

            15          support New York City after 9/11.

            16                We also note the plea of complicity by

            17          Chase in the Enron failure and its active

            18          participation in that.  We know that the

            19          civil suits are not settled, they have not

            20          come out yet, and the money undoubtedly that

            21          will have to be paid will come, we think,

            22          from many of the programs that we are

            23          talking about here today.

            24                We also note with some concern Bank

            25          One's moving more and more in the credit








                                                                    203
             1

             2          card field to charge high rates of interest

             3          to people who are using credit cards, and

             4          both banks we are concerned about as to

             5          predatory lending, as was mentioned by my

             6          colleagues.

             7                The Jesuit Conference recommends that

             8          the Federal Reserve Board not approve the

             9          merger until Chase has provided meaningful

            10          and verifiable CRA plans about how it will

            11          improve its CRA and fair lending performance

            12          and pledge substantial reforms and

            13          safeguards for purchases of subprime loans.

            14                We believe that Chase should be

            15          required to make these plans for states as a

            16          whole and for their rural and metropolitan

            17          areas and include specific loan investment

            18          and branching targets.

            19                We also encourage the Federal Reserve

            20          to have this new entity participate fully in

            21          the Small Business Administration 501 loan

            22          programs and 7A loan programs; also, to

            23          supervise the credit card fee question, and

            24          finally bring a halt to predatory lending.

            25          Thank you.








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             1

             2                MS. BRAUNSTEIN:  Thank you very much,

             3          and thanks to the panel.  Will the next

             4          panel please come forward.

             5                We would like to move forward with this

             6          next panel.  I just remind everybody to

             7          state your name and organization before you

             8          start your statement and to keep an eye on

             9          the timekeepers.  We really need to keep

            10          everybody to five minutes and no more.  If

            11          you have written statements, please submit

            12          them to the gentleman in the center who is

            13          our recorder.

            14                MR. HARDY:   Members of the panel, my

            15          name is Clifford Hardy.  I am the President

            16          of First Housing, based in Tampa, Florida.

            17                I appreciate the opportunity to appear

            18          before you today to support the

            19          JPMorgan/Bank One merger.

            20                First Housing, incorporated in 1978, is

            21          a quasi-public corporation.  Its primary

            22          purpose is to provide financing for

            23          affordable housing in the State of Florida.

            24          The corporation's stock is owned by 18

            25          financial institutions, including JPMorgan








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             1

             2          Chase.  In addition to a Board of Directors

             3          representing the stockholders, there is an

             4          advisory board representing the State of

             5          Florida, including the Secretary of the

             6          Department of Community Affairs, the head of

             7          the Department of Financial Services or a

             8          designee with banking expertise, and a

             9          designee with expertise in insurance

            10          matters, a representative from the House and

            11          one from the Senate.

            12                First Housing is also a regulated

            13          financial institution under the supervision

            14          of the Office of Financial Regulation of the

            15          Financial Services Commission, Florida.

            16                Since its inception, First Housing's

            17          activities have been focused on financing

            18          rental communities serving low- and

            19          moderate-income families and individuals.

            20          That financing has been provided primarily

            21          by way of lending pools in which First

            22          Housing's stockholders participate.  First

            23          Housing also provides financing using the

            24          FHA programs and loan administration

            25          services to issuers of housing bonds, the








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             1

             2          Florida Housing Finance Corporation, the

             3          Federal Home Loan Bank of Atlanta, and the

             4          Department of Housing and Urban Development.

             5                JPMorgan Chase is a stockholder of

             6          First Housing and a participant in the

             7          present lending pool.  It became a

             8          stockholder in 1993, as Chase Manhattan in

             9          the same year became a participant in the

            10          lending program.  It is represented on the

            11          Board of Directors, the Loan Committee and

            12          the Administrative Committee.

            13                Although the bank has had a limited

            14          presence in Florida, it has been supportive

            15          of First Housing's efforts in the state.

            16          The thirty rental communities financed by

            17          the lending pool in which JPMorgan Chase has

            18          participated are scattered throughout the

            19          state, providing 5,507 units for people

            20          earning 60 percent of median income or

            21          below.

            22                Thank you very much.

            23                MR. JENKINS:  My name is Chris Jenkins

            24          and I am Vice President for Business

            25          Development and Planning at the Nonprofit








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             1

             2          Finance Fund -- NFF.

             3                The NFF is an experienced CDFI that

             4          operates nationally.  It has $50 million in

             5          assets and seven offices serving the San

             6          Francisco Bay Area, New England,

             7          Philadelphia, New Jersey, Detroit and

             8          Washington, D.C., as well as New York.  NFF

             9          supports its nonprofit clients' multifaceted

            10          contributions to low- and moderate-income

            11          communities, advances community and economic

            12          development goals, and works to fill the

            13          overall need for capitalization of

            14          organizations in this sector.  We have

            15          financed approximately $258 million in

            16          projects with $80 million in loans, mostly

            17          in the New York area.

            18                As most of us are aware, small- and

            19          medium-sized nonprofit organizations,

            20          especially those serving low- and

            21          moderate-income communities, have a

            22          difficult time accessing capital in general.

            23          They are frequently engaged in low- or

            24          no-margin businesses, thus lack retained

            25          earnings to fund their growth needs.  They








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             1

             2          lack the ability to raise equity since

             3          individual ownership is prohibited.

             4                NFF works in a variety of ways to

             5          improve their access to capital.  One of its

             6          main strategies in doing so is to partner

             7          with banks -- as direct lenders to

             8          nonprofits, as investors in NFF's loan

             9          program, and as partners in innovation,

            10          creating new products and services to

            11          address the needs of this market.

            12                NFF has a long history of bank

            13          partnerships.  Ten banks are direct

            14          investors in NFF's loan fund; some take part

            15          in other ways.  With a few, we have

            16          relationships that include a complex mix:

            17          Volunteer involvement, financial and

            18          business advice, product development,

            19          participation in deals and referrals -- in

            20          addition to investment and grant support.

            21          JPMorgan Chase has been such a partner,

            22          working with us to strengthen the nature and

            23          volume of financial and advisory services

            24          that we can provide to the nonprofit sector.

            25          As NFF has expanded nationally, our








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             1

             2          relationship with JPMorgan Chase has

             3          expanded geographically as well.

             4                JPMorgan Chase has been a particularly

             5          valuable part of innovation in our sector

             6          because of the quality as well as the size

             7          of their investment.  Over the years,

             8          JPMorgan Chase has invested over $5 million

             9          in NFF's programs and services and much more

            10          in direct loans, loan guarantees, led

            11          syndicates, lines of credit and shared

            12          transactions.

            13                We have found that JPMorgan Chase is

            14          willing to take the long view.  It looks at

            15          the long-term growth needs of borrowers,

            16          including CDFIs such as NFF, is curious

            17          about and engaged in the community

            18          development market, and understands the

            19          broad needs of the market we together are

            20          trying to serve, including management

            21          development, nondebt financing and ongoing

            22          financial advice, as well as capital.

            23                Based on our direct experience with

            24          JPMorgan Chase over more than twenty years,

            25          I have no reason to believe that the








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             1

             2          proposed acquisition of Bank One would

             3          impair JPMorgan Chase's commitment to

             4          community investment.

             5                MS. BRAUNSTEIN:  Thank you.

             6                MR. HASTICK:  Thank you very much.

             7                Ladies and gentlemen, Commissioners:

             8                On behalf of the Board of Directors of

             9          the Caribbean American Chamber of Commerce

            10          and Industry, I am pleased to support the

            11          merger of our partner, JPMorgan Chase &

            12          Company with Bank One Corporation.

            13                The Caribbean American Chamber of

            14          Commerce -- I will call it CACCI -- founded

            15          in August 1985, is a statewide membership

            16          organization, which has developed expertise

            17          in providing assistance to small and

            18          start-up business owners, in areas of

            19          business planning, financing, procurement,

            20          certification, expansion, and export/import

            21          opportunities.

            22                The Caribbean American Chamber of

            23          Commerce's first bank was Manufacturers

            24          Hanover Trust Company, later Chemical, then

            25          Chase, then JPMorgan Chase.  The Caribbean








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             1

             2          American Chamber of Commerce and Industry

             3          has remained with each of these banking

             4          entities, and the bank's support and

             5          involvement with the Caribbean American

             6          Chamber of Commerce and Industry has been

             7          consistent and reliable.

             8                The scope of services includes monthly

             9          business development seminars, business

            10          networking  meetings, procurement seminars

            11          and marketplace, trade and investment

            12          missions to the Caribbean, numerous

            13          referrals to city, state and federal

            14          economic development agencies and annual

            15          events.  The Caribbean American Chamber of

            16          Commerce and Industry has had an extensive

            17          track record of service delivery.

            18          Established partnerships with government and

            19          private business entities have contributed

            20          to the success of such annual events as:

            21          Tribute to Rev. Dr. Martin Luther King in

            22          January, Salute to African American Business

            23          History Month in February, Salute to Women

            24          Entrepreneurs in March, Annual Entrepreneur

            25          of the Year Awards Gala in April,








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             1

             2          International Conference on Doing Business

             3          in the Caribbean in June, Annual Celebration

             4          of Service and Salute to Caribbean American

             5          Leadership in August, Collaboration with

             6          West Indian American Labor Day Carnival

             7          Association in September, Doing Business

             8          with New York City, New York State and

             9          federal government agencies in October, and

            10          Salute to Small Business Visionaries in

            11          December.

            12                CACCI's most recent Entrepreneur of the

            13          Year Awards Gala attracted over 600

            14          entrepreneurs and was attended by such

            15          luminaries as New York State Governor George

            16          E. Pataki, New York City Mayor Michael

            17          Bloomberg and New York State Comptroller

            18          Alan Hevesi.

            19                As an elected delegate to the 1995

            20          White House Conference on Small Business, I

            21          lobbied to include two-way trade as one of

            22          6O recommendations for Congressional

            23          consideration.  The Caribbean American

            24          Chamber of Commerce and Industry convened

            25          and sponsored numerous business meetings in








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             1

             2          New York City for visiting heads of state

             3          from the Caribbean region.  The vision and

             4          planning for the development of the first

             5          ever Caribbean Trade Center was on the

             6          agenda when the Prime Ministers of Jamaica,

             7          the Honorable P.J. Patterson, and Dr. Keith

             8          Mitchell of Grenada, and H.E. Julian Robert

             9          Hunte, President of the 50th Session of the

            10          United Nations General Assembly addressed

            11          the Caribbean American Chamber of Commerce

            12          and Industry on trade and economic

            13          development issues affecting the Caribbean

            14          region.

            15                The organization has been recognized

            16          internationally as a leading advocate for

            17          small businesses.  We have received numerous

            18          awards in ceremonies and citations from

            19          academic, civil, social, and political and

            20          community groups and organizations as well

            21          as New York City, New York State and Federal

            22          economic development agencies for untiring

            23          service and advocacy on behalf of women and

            24          minority entrepreneurs here in the United

            25          States.








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             1

             2                The Caribbean American Chamber of

             3          Commerce and Industry has solidified

             4          excellent partnerships with the New York

             5          City Department of Small Business Services,

             6          Empire State Development Corporation, United

             7          States Department of Commerce, United States

             8          Small Business Administration, Chambers of

             9          Commerce, New York City Economic Development

            10          Corporations, Caribbean Diplomatic Corps,

            11          numerous small business organizations, SCORE

            12          and CARICOM.  CACCI partnered in 2003 with

            13          the United Nation Information and

            14          Communications Technology Task Force and

            15          sponsored a seminar at the United Nations on

            16          "Bridging the Digital Divide."

            17                The Caribbean American Chamber of

            18          Commerce and Industry is in its third year

            19          as the management agency for the Flatbush

            20          Caton Merchants Market, a 9,000-square-foot

            21          facility Micro Enterprise incubator in the

            22          East Flatbush section of Brooklyn, which

            23          houses 61 vendors selling cultural products

            24          such as Caribbean and African cultural

            25          artifacts, traditional African clothing, and








                                                                    215
             1

             2          electronic products.

             3                In August 2002, the Caribbean American

             4          Chamber of Commerce and Industry launched,

             5          with the assistance of JPMorgan Chase, Phase

             6          1 of the Caribbean Trade Center's e-commerce

             7          website here in New York.  Financial

             8          commitments from New York State Governor

             9          George E. Pataki, New York City Mayor

            10          Michael Bloomberg and also the Brooklyn

            11          delegation have enabled us, the Caribbean

            12          American Chamber of Commerce and Industry,

            13          to select a site for the first ever

            14          Caribbean Trade Center here in New York.

            15                The Caribbean American Chamber of

            16          Commerce and Industry's Educational

            17          Foundation, which is a 501(c)3

            18          not-for-profit entity, provides

            19          microentrepreneurial grants for small

            20          entrepreneurs.

            21                As you can see, the organization has

            22          grown and developed and has expanded to

            23          respond to the needs of the small business

            24          community.  Our membership exceeds 1,700

            25          members in the United States and the








                                                                    216
             1

             2          Caribbean region.  JPMorgan Chase's

             3          commitment and financial support to CACCI

             4          has also grown and its service to our

             5          membership has also increased.  The bank has

             6          been particularly instrumental in providing

             7          financial support to make available

             8          technical assistance to microentrepreneurs

             9          and other small business owners in several

            10          enterprises within CACCI.  The relationship

            11          with the bank has also helped to assist us

            12          in the conceptualization of our new

            13          projects.

            14                Serving as a member of the Community

            15          Advisory Board of JPMorgan Chase has

            16          provided me with an invaluable opportunity

            17          to participate in a sharing-of-information

            18          process that has enhanced JPMorgan Chase's

            19          ability to  assess and to respond to the

            20          community's needs, particularly in areas of

            21          housing, small business lending practices,

            22          faith-based initiatives undertaken by

            23          JPMorgan Chase.

            24                MS. BRAUNSTEIN:  Excuse me, would you

            25          please finish up.








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             1

             2                MR. HASTICK:  I have also experienced

             3          firsthand the concerted and diligent efforts

             4          on the part of senior administration and

             5          other banking representatives of JPMorgan

             6          Chase to ensure community representation in

             7          the planning process and a willingness to

             8          accept advisory board input and incorporate

             9          recommendations that have helped to forge

            10          stronger links with minority communities.

            11                I strongly recommend and support the

            12          merger of JPMorgan Chase and Bank One.

            13          Thank you.

            14                MS. BRAUNSTEIN:  Thank you.

            15                MS. GOMEZ:  Thank you for the

            16          opportunity to comment on the merger of

            17          JPMorgan Chase/Bank One.  My name is Luz

            18          Gomez. I'm the Director of ACCION USA in

            19          Miami, Florida.  ACCION USA is a private,

            20          nonprofit organization that provides access

            21          to credit and business training to low- and

            22          moderate-income business owners, what we

            23          call "microentrepreneurs."  The purpose of

            24          my testimony today is to describe the

            25          overall positive interaction and








                                                                    218
             1

             2          relationship that ACCION has had with

             3          JPMorgan Chase.  Every ACCION program is

             4          located in a city or community where

             5          JPMorgan Chase has an active presence and

             6          therefore a responsibility.

             7                JPMorgan Chase has provided significant

             8          financial support to our network for over a

             9          decade.  This has included grant support to

            10          build ACCION USA's lending capacity.

            11          Specifically, this grant support allowed us

            12          to create an online lending platform, which

            13          has far-reaching implications for increasing

            14          AUSA's scale of operations and its ability

            15          to reach thousands more entrepreneurs

            16          throughout the United States.

            17                In addition to this capacity-building

            18          support, JPMorgan Chase supported the

            19          launching of our newest program serving all

            20          of Miami Dade County.  Miami was ranked by

            21          the U.S. Census Bureau as the poorest big

            22          city in the United States two years in a

            23          row.  JPMorgan Chase's grant support

            24          assisted us in establishing a capital

            25          resource option for microentrepreneurs in








                                                                    219
             1

             2          this area.

             3                JPMorgan has also served generously on

             4          our board of directors and advisory boards

             5          of a number of our network members.  In

             6          Miami we have one individual, Michael

             7          Cabanas, who serves on the ACCION USA

             8          advisory board.  He has introduced ACCION to

             9          various local constituents, and provided

            10          strategic direction, contributing to our

            11          program's tremendous growth this past year.

            12                Finally, we work very closely with

            13          JPMorgan Chase to establish joint customer

            14          programs throughout our network.  When banks

            15          are unable to provide small business loans

            16          to potential customers, they will often

            17          refer this lead to us.  Many of our current

            18          borrowers come to us from bank referral

            19          programs.  With Bank One sites already

            20          existing throughout Florida, this merger

            21          will provide ACCION USA Miami the

            22          opportunity to provide new bank partner

            23          relationships in other areas of the State of

            24          Florida as we expand statewide in the coming

            25          years.  We believe this relationship








                                                                    220
             1

             2          established with JPMorgan Chase will only

             3          enhance our ability to reach new markets of

             4          small business owners throughout the state.

             5                Because of the support of JPMorgan

             6          Chase, ACCION has been able to help

             7          thousands of hard-working microentrepreneurs

             8          with no other access to loans.  These small

             9          business owners, in turn, have not only

            10          helped themselves, but their families, their

            11          employees, as well as their local

            12          communities.  Thank you.

            13                MS. BRAUNSTEIN:  Thank you.

            14                MR. REEDER:  My name is Dennis C.

            15          Reeder.  I am the Executive Director of the

            16          Washington Heights and Inwood Development

            17          Corporation.  I want to thank the Federal

            18          Reserve Bank for providing me with the

            19          opportunity to comment on the proposed

            20          merger, which my organization supports.

            21                The Washington Heights and Inwood

            22          Development Corporation is a not-for-profit

            23          local development corporation that has been

            24          providing community economic development

            25          services to the neighborhoods of Upper








                                                                    221
             1

             2          Manhattan for over twenty-five years.

             3                We currently operate the Upper

             4          Manhattan Business Outreach Center and the

             5          Business Opportunity Success System, better

             6          known as BO$$, microbusiness development

             7          program.  BO$$ has assisted in the creation

             8          of almost 400 new businesses and over 700

             9          new jobs in Upper Manhattan since its

            10          inception in 1992.  BO$$ will provide

            11          one-on-one business counseling and technical

            12          assistance to over 300 microentrepreneurs

            13          this year, and its microbusiness loan

            14          program will provide over 60 loans totaling

            15          over $1,000,000.  The vast majority of

            16          people we assist are poor, recent immigrants

            17          and have very limited English language

            18          skills.

            19                JPMorgan Chase has been our most

            20          consistent supporter over these past

            21          twenty-five years.  The BO$$ program would

            22          not have existed if it were not for the

            23          direction and support of JPMorgan Chase and

            24          key members of its staff.  Since its

            25          inception, BO$$ has been maintained in large








                                                                    222
             1

             2          part by financial and technical assistance

             3          support provided by Chase.  Their commitment

             4          to our community has always come from a true

             5          desire to assist low- and moderate-income

             6          neighborhoods and not from the corporate

             7          necessities of CRA.  Their staff, including

             8          branch managers, loan officers and those

             9          involved in community development have

            10          volunteered to serve on our board of

            11          directors on a continuous basis since our

            12          inception in 1978.  Members of Chase's staff

            13          have served actively on our BO$$ loan review

            14          committee since the program's inception in

            15          1994 -- as an aside, 1992 is a mistake.

            16                We strongly support the merger of

            17          JPMorgan and Bank One because it will make a

            18          stronger bank.  I am confident that this

            19          bank will show an even greater commitment to

            20          the economic development of our city's and

            21          nation's low- and moderate-income

            22          communities.  Thank you.

            23                MS. BRAUNSTEIN:  Thank you very much,

            24          and thank you to the panel.  We are now

            25          going to take a 30-minute break.  We will








                                                                    223
             1

             2          reconvene at 1:35.

             3                MR. REED:  Before we break, I am on

             4          this panel -- I am late -- could I possibly

             5          give two minutes of testimony?  I would like

             6          to do that, please.

             7                MS. BRAUNSTEIN:  All right.

             8                MR. REED:  Thank you.  Timing is

             9          everything.  I apologize to the board and to

            10          the chairman.  Traffic in New York is always

            11          something that is to be somehow avoided if

            12          possible.

            13                My name is Edwin Reed, and since 1995 I

            14          have served as Chief Financial Officer of

            15          the Greater Allen Cathedral and its related

            16          corporations.  The church has nearly 18,000

            17          members and provides services to the

            18          community in the area of senior citizen

            19          housing -- we own about 630 units; a school

            20          for children pre-K 3 to 8th grade with over

            21          600 students; a transportation corporation

            22          with six scenic cruiser buses; a housing

            23          development corporation that has built

            24          approximately 225 units and rehabilitated

            25          over 300 units; operates a senior citizen








                                                                    224
             1

             2          feeding program; provides a resident program

             3          for battered women and their families;

             4          provides transportation for seniors to

             5          local-area stores, hospitals and banking

             6          services; and housing for formerly homeless

             7          individuals.

             8                The Greater Allen Cathedral has been an

             9          active participant in many of the programs

            10          and projects that I have just mentioned.

            11                First, JPMorgan is our lead bank.  As

            12          such, they were the driving force behind a

            13          $15 million loan to build a new sanctuary.

            14          This was a major expansion, as the church

            15          more than doubled its seating capacity.

            16          JPMorgan Chase exhibited a great deal of

            17          expertise as the financing package was

            18          developed.  They had people who understood

            19          churches and banking.  They look at the

            20          potential for being a partner in supporting

            21          the development of a neighborhood and

            22          community.

            23                At the Greater Allen Cathedral, we

            24          operate on the principle of leverage and

            25          relationship.  While the bank has a limited








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             1

             2          amount of funds or grants, which are

             3          critical, important, essential, and

             4          hopefully much larger after the merger, the

             5          real power of the banking is lending.  We

             6          wanted to be evaluated as any other small

             7          business, in that our increase in seating

             8          was a capacity expansion.  Chase understood

             9          that this expansion would lead to increased

            10          revenue because we only had a small share of

            11          our market.  It takes insight and expertise

            12          for a bank to understand unconventional

            13          financing in conventional ways.

            14                While it is significant for JPMorgan

            15          Chase to do a transaction, the power of the

            16          institution is reflected when the leadership

            17          of the bank decided to initiate a house of

            18          worship lending program.  It is a pleasure

            19          to deal with an institution that is

            20          innovative, but also it is even more

            21          important for an institution to recognize

            22          market opportunities that will provide a

            23          foundation for broader community

            24          development.  Their program was set up in

            25          1998, long before the attention was given to








                                                                    226
             1

             2          "faith based initiatives."  JPMorgan Chase

             3          is making a difference in the community.

             4                There is one other program that I would

             5          like to highlight that is uniquely JPMorgan

             6          Chase.  Recognizing that houses of worship

             7          were one of the most effective bases for

             8          community development, the bank started a

             9          grant program for institutions that had no

            10          previous experience in development.  Grants

            11          were given at the earliest possible time and

            12          could fund items such as hiring a consultant

            13          to develop 501(c) application, invest in raw

            14          materials, or jump-start the organization.

            15          This program is so innovative and unique, I

            16          have encouraged others across the country to

            17          engage their local banking institutions in

            18          doing a similar program.

            19                To implement the program, JPMorgan

            20          Chase developed a board of practitioners in

            21          the field, on which I serve.  There are

            22          large institutions that have been in the

            23          development business for a number of years

            24          but are involved in the process of expanding

            25          the base of institutions that are attempting








                                                                    227
             1

             2          to impact their communities.  I have seen

             3          this work in the lives of people and I am

             4          encouraged that more will be done in the

             5          future because of this merger.

             6                Let me conclude by saying that I am

             7          supportive of the merger of Bank One and

             8          JPMorgan Chase.  It is encouraging to me

             9          that there will be a major expansion of the

            10          programs that make JPMorgan Chase a leader

            11          in community development.  However, it is

            12          important to note that in the merger the

            13          position of an executive vice president for

            14          community development and related issues is

            15          critical.  At JPMorgan Chase, success is due

            16          to access to dedicated senior management

            17          reporting directly to the office of the

            18          president and chairman.  This, for me, is

            19          the critical test for evaluating the future

            20          performance of the merger of J.P. Morgan

            21          Chase and Bank One.

            22                Madam Chairman, thank you very much for

            23          this opportunity and your forbearance.

            24                MS. BRAUNSTEIN:  You're welcome.

            25                Now we are going to take a break and








                                                                    228
             1

             2          revise the time a little bit.  We will

             3          reconvene at 1:40.

             4                 (A luncheon recess was taken.)

             5

             6

             7

             8

             9

            10

            11

            12

            13

            14

            15

            16

            17

            18

            19

            20

            21

            22

            23

            24

            25








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             1

             2                   AFTERNOON SESSION

             3

             4                MS. BRAUNSTEIN:  We are now going to

             5          start the afternoon session.  Welcome back

             6          to those of you who were here this morning.

             7                If there is anybody still in the

             8          audience who is supposed to be on this first

             9          afternoon panel, please come forward.

            10                I will reiterate some things that I

            11          said this morning for the afternoon panel,

            12          which is that we do have timekeepers here.

            13          Everybody has five minutes.  Please keep

            14          your eye on the timekeeper.  They will tell

            15          you when your time is up.  We do have, as I

            16          am sure you know, a very tight schedule this

            17          afternoon.  We are trying to stay on

            18          schedule, so we really appreciate your

            19          cooperation in terms of timing.

            20                Additionally, if you have written

            21          statements with you and you have a copy,

            22          please leave it with the gentleman sitting

            23          right here in the center, our reporter for

            24          the session.

            25                The last thing is, please state your








                                                                    230
             1

             2          name and organization at the beginning of

             3          your statement.

             4                MS. BARRERA:  Good afternoon.  My name

             5          is Jamie Barrera.  I am President and CEO of

             6          ACCION TEXAS, and I am grateful for the

             7          opportunity to support the merger of

             8          JPMorgan Chase and Bank One.  In Texas,

             9          ACCION is a statewide, not-for-profit

            10          lending corporation.  We make small-business

            11          loans, $35,000 and under.  100 percent of

            12          our customers are not bankable, and we serve

            13          the entire State of Texas.  We have offices

            14          in San Antonio, Austin, Houston, Dallas-Fort

            15          Worth, El Paso, Brownsville and Oakalla,

            16          Texas.  We started with a first loan in June

            17          of 1994 and now we have over 800 active

            18          customers throughout the state, an

            19          outstanding portfolio of about $8 million

            20          and average loan size of about $5,000.  And

            21          we have gotten to that scale through the

            22          help of JPMorgan Chase and Bank One.

            23                They were, I call JPMorgan Chase and

            24          Bank One, the godfathers, if you will.  They

            25          were the first banking financial institution








                                                                    231
             1

             2          that came to us not only with grants but

             3          with long-term financing that was needed.

             4          And they were very limited, in the fact that

             5          this long-term finance was at zero percent.

             6          They are individuals that maintained their

             7          leadership, because having the idea of

             8          coming statewide and wanting to rescale,

             9          they helped us create the methodology in

            10          which to do that.

            11                So they helped put together our

            12          financials, and we created a vacuum

            13          operation much like banks do knowing that

            14          Florida's way of becoming more efficient and

            15          bank efficient.  So we have a back room

            16          operation in San Antonio and our bank

            17          offices throughout the state in those cities

            18          I made reference to.  The paperwork is

            19          electronically brought into the San Antonio

            20          office.  We do the underwriting process and

            21          collections, and so on, in San Antonio and

            22          on the individual sites.

            23                The other ideas of innovation that came

            24          with JPMorgan Chase was the fact that where

            25          are people going to make their payments.








                                                                    232
             1

             2          So, free of charge, we use the Chase Bank,

             3          Chase retail operations.  A customer goes

             4          in, makes a payment right there at JPMorgan

             5          Chase Bank, which gives the customer an

             6          opportunity to go into a bank.  Now with the

             7          merger we will have about 200 more retail

             8          operations with Bank One facilities.

             9                JPMorgan Chase also gave us the

            10          opportunity to buy one of their facilities,

            11          which was a building that they owned, at


            12          cost.  So we now have a permanent home in

            13          San Antonio, Texas, that is paid for free

            14          and clear.

            15                In the other sites throughout Texas, we

            16          have free office space for our loan officers

            17          in Houston and Brownsville and Oakalla.

            18          Operations like that, that kind of free

            19          in-kind contribution, are really worth many,

            20          many dollars in terms of retail space.

            21                So we have a long history since 1994

            22          with JPMorgan Chase, and we have seen their

            23          commitment and we have been through the

            24          mergers of Chemical Texas bank, the JPMorgan

            25          Chase, so we don't see any reason why that








                                                                    233
             1

             2          can't work out at this present time.

             3                MR. CHAMBERS:  My name is Curt

             4          Chambers.  I am the General Manager of

             5          Progressive Neighborhood Federal Credit

             6          Union in Rochester, New York.  I want to

             7          thank the Federal Reserve and Bank One for

             8          this opportunity to testify.  Progressive

             9          Federal Neighborhood Credit Union is a

            10          credit union that has been in operation

            11          since 1995 in Rochester, New York.  Our

            12          focus as a CDCU is to offer financial

            13          services to the low income and underserved

            14          in our field of membership.  We offer

            15          assistance in credit, financial literacy, as

            16          well as savings account, home improvement

            17          and mortgages.  We have also developed a

            18          number of cooperatives with community

            19          organizations to offer microenterprise loans

            20          to our field of membership.  Having the CDCU

            21          designation, we are able to solicit support

            22          from any and all organizations to help us

            23          fulfil our mission.

            24                Having said that, I am here to state

            25          that JPMorgan Chase stepped up and went far








                                                                    234
             1

             2          beyond its peers in Rochester in assisting

             3          us to continue our work.  First off,

             4          JPMorgan Chase has since our beginning

             5          maintained a large nonmember certificate of

             6          deposit with us.  This support allows us to

             7          continue to make loans to our members who

             8          may not, for any number of reasons, be able

             9          to obtain these loans and services from the

            10          more conventional financial institutions.

            11          Barbara Jones, with Chase in Rochester, New

            12          York, has been instrumental in offering

            13          literacy training to not only our members

            14          but other members of the community, to help

            15          them to learn not to live from paycheck to

            16          paycheck, and how to recognize predatory

            17          practices in the community and how to avoid

            18          them, as well as many other financial issues

            19          that need to be addressed by our members.

            20                Most importantly, JPMorgan Chase has

            21          donated a branch building to Progressive

            22          Neighborhood Federal Credit Union which

            23          allowed us to move to a building that we not

            24          only own but allows us to move closer to the

            25          membership that we serve.  We were able to








                                                                    235
             1

             2          move out of our small, cramped storefront

             3          into a building that allows us to expand and

             4          grow, to serve more of the underserved and

             5          poor people in our area.  This also allows

             6          us to give something back to the community

             7          by being able to offer our facility to

             8          neighborhood organizations for their use as

             9          well.

            10                These are just a few examples of the

            11          activities that JPMorgan Chase is doing in

            12          Rochester.  Given the history of this kind

            13          of activities that JPMorgan Chase has

            14          demonstrated, I am certain that they will

            15          continue them after the proposed merger

            16          takes place.  Thank you very much.

            17                THE COURT:  Thank you.

            18                MS. CLARK:  Good afternoon.  My name is

            19          William Clark.  I am the President and Chief

            20          Executive Officer of the Urban League of

            21          Rochester, N.Y. Inc.  I have held my current

            22          position for the past ten years.

            23                First of all, I commend the members of

            24          the Board for allowing me to be here today

            25          to give testimony on behalf of JPMorgan








                                                                    236
             1

             2          Chase.

             3                The Urban League of Rochester is one of

             4          105 affiliates of the National Urban League,

             5          of which six affiliates are located in New

             6          York State.  Our services in Rochester are

             7          focused primarily in Monroe County, but we

             8          also provide limited services to the five

             9          surrounding counties.  Our mission, which is

            10          shared by our National office and all

            11          affiliates, is:  To enable African

            12          Americans, Latinos, the poor, and other

            13          disadvantaged to secure economic

            14          self-reliance, parity and power, and civil

            15          rights.

            16                In Rochester, New York, the Urban

            17          League provides comprehensive services in

            18          the areas of youth education, small business

            19          development, employment training and job

            20          placement programs, family stability,

            21          services for the developmentally disabled

            22          and housing development and economic

            23          development programs.  Each year, the Urban

            24          League of Rochester provides direct services

            25          to approximately 5,000 individuals and








                                                                    237
             1

             2          families in the Greater Rochester area, and

             3          we provide that through an array of 20-plus

             4          programs.

             5                On an organizational level, our

             6          relationship with Chase actually predates my

             7          22-year work history with the Urban League.

             8          Chase currently provides the Urban League of

             9          Rochester with its operating account.  Chase

            10          also granted us our first ever line of

            11          credit, a line of credit which has grown

            12          over the years to $800,000 to meet our

            13          emerging needs.  In 1998, when we decided to

            14          purchase our headquarters, Chase found an

            15          innovative way to finance the purchase

            16          through a $1.15 million mortgage.

            17                I am here today in support of the

            18          JPMorgan Chase & Company and Bank One

            19          merger.  JPMorgan Chase has been a role

            20          model in the Rochester community in

            21          providing low- to moderate-income financing,

            22          and in their support of community-based

            23          organizations that provide services to this

            24          clientele.

            25                When the Urban League announced its








                                                                    238
             1

             2          capital campaign in 1999, JPMorgan Chase was

             3          the first corporation to make a substantial

             4          gift.  An officer of JPMorgan Chase, Barbara

             5          Jones, also joined and worked with the

             6          capital campaign committee until the

             7          $750,000 goal was successfully achieved.

             8                During the past year, an officer of

             9          JPMorgan Chase ran a series of financial

            10          literacy workshops through the Urban League

            11          of Rochester, benefiting both our clients

            12          and staff of Urban League of Rochester in

            13          the benefits of asset accumulation.

            14                JPMorgan Chase has been actively

            15          involved in the Rochester City School

            16          District also, providing students the

            17          opportunity to engage in hands-on learning

            18          opportunities through the JPMorgan Chase

            19          "Champions of Active Learning" program.

            20          Students at the Freddie Thomas Learning

            21          Center are learning the skills required to

            22          operate a radio station, plus students at

            23          Frederick Middle School are learning

            24          web-page design, through grants from the

            25          Chase Foundation.








                                                                    239
             1

             2                JPMorgan Chase was the first local

             3          lender to offer down payment closing

             4          assistance funds for the clients of our Home

             5          Store, which provides home ownership

             6          opportunities for low- to moderate-income

             7          individuals.  Our Home Store has close to 92

             8          loans with JPMorgan Chase since January

             9          2002 -- all to low- to moderate-income

            10          buyers.

            11                As the representative of an agency

            12          whose clients have benefited greatly from

            13          the JPMorgan Chase involvement in our

            14          community, I fully support this merger.  I

            15          also believe that the values and commitment

            16          that JPMorgan Chase brings to the table,

            17          along with the strength and commitment

            18          involved in it, will only strengthen

            19          community involvement in the expanded

            20          territory that will be covered by the

            21          JPMorgan Chase/Bank One merger.

            22                In closing, I want to thank all of you

            23          for the opportunity to come before you today

            24          and to lend my support to this merger.

            25                MS. BRAUNSTEIN:  Thank you.  Talk about








                                                                    240
             1

             2          timing, Mr. Madeo, you have arrived in the

             3          nick of time.

             4                MR. MADEO:  Someone said they were

             5          moving this panel back in time.  I

             6          apologize.

             7                Good afternoon, Madam Chair and

             8          members:  For the record my name is John

             9          Madeo.  I am the President of Fairfield 2000

            10          Homes Corp. And a member of the JPMorgan

            11          Chase Community Advisory Board.  I reside in

            12          Connecticut.  Initially I would like to

            13          thank the Federal Reserve for providing the

            14          public with this opportunity to comment.

            15                Fairfield 2000 Homes Corporation is a

            16          nonprofit which affords housing

            17          opportunities in Fairfield County,

            18          Connecticut.  500 affordable housing units

            19          ranging from rental housing to the homeless

            20          to transitional housing to condominium and

            21          single-family home ownership house.  We

            22          provided this housing not only in inner

            23          cities such as Bridgeport, Stanford and

            24          Danbury, but also in affluent suburban

            25          communities such as Wilford and Trumbull.








                                                                    241
             1

             2          Fairfield 2000 has provided consultant

             3          service as pro bono services to the local

             4          organizations which seem to provide

             5          affordable housing in their communities.

             6          All of the households that occupy our homes

             7          have incomes that are less than 80 percent

             8          of the median income, and the overwhelming

             9          majority of those households have incomes

            10          that are less than 50 percent of the median

            11          income.

            12                Over the years we have looked to Chase,

            13          and then to JPMorgan Chase, for both

            14          low-income loans and grants, some of which

            15          were project specific and some of which were

            16          to support our annual operating budget as

            17          well as the construction and permanent

            18          financing.  Additionally, we have

            19          consistently relied on JPMorgan Chase for

            20          technical assistance.

            21                In all this work, JPMorgan Chase has

            22          demonstrated responsiveness, consistency and

            23          commitment to serving low- to

            24          moderate-income households in our area and

            25          they have been outstanding.








                                                                    242
             1

             2                I wish this afternoon to speak in

             3          support of the merger.  JPMorgan Chase has

             4          been a leader in the lending industry in the

             5          community development field and has

             6          demonstrated that leadership in the area of

             7          housing, the arts and education.  I truly

             8          believe that with this merger JPMorgan

             9          Chase/ Bank One can take an outstanding

            10          track record of responsiveness, consistency

            11          and commitment to low-income households and

            12          communities and make it even better.

            13                JPMorgan Chase has assisted Fairfield

            14          2000 by making the difficult loans.  Most

            15          nonprofits don't have the seed money to

            16          undertake the planning and design work to

            17          undertake their projects.  JPMorgan Chase

            18          has advanced Fairfield 2000 seed money to do

            19          so and has done this for other nonproducts

            20          as well.  In this, JPMorgan Chase often

            21          takes the largest risk at a time when

            22          nonprofit developers need it most.  That is

            23          a reflection of the type of leadership

            24          JPMorgan Chase has shown over the years.  It

            25          is one of the few financial institutions








                                                                    243
             1

             2          that have consistently provided operating

             3          grants to nonprofits to assist them in

             4          meeting their operational needs.

             5                In the case of Fairfield 2000, it has

             6          allowed us to provide technical assistance

             7          to small business and nonprofits, planning

             8          boards, and housing authorities which are

             9          interested in supporting affordable housing.

            10                To me, what is most reflective of the

            11          case of JPMorgan Chase's commitment, and I

            12          believe this commitment runs from the

            13          leadership down to the street vendors, is

            14          the fact that, even when they provided a

            15          seed-money loan or an operating grant, there

            16          was never a requirement to use Chase or

            17          JPMorgan Chase as the construction or

            18          permanent lender.  Its goal was to see that

            19          the housing got built and to see that the

            20          community improved.  If some other

            21          institutions received cc credit, that was

            22          truly less significant to them.  But, quite

            23          simply, Fairfield 2000 Homes Corporation

            24          would never have been able to provide

            25          affordable housing opportunities to 500








                                                                    244
             1

             2          households without Chase and JPMorgan Chase.

             3                Beyond that, however, as a member of

             4          the Community Advisory Board, I can attest

             5          to how seriously Chase, and then JPMorgan

             6          Chase, has taken their responsibility as a

             7          citizen in the bank's ongoing activities.

             8          They have asked us to provide input as well

             9          as to provide suggestions as to how the bank

            10          can better serve low- and moderate-income

            11          communities in which it does business.

            12                In closing, I would say that I have

            13          been involved in the nonprofit affordable

            14          housing field for almost twenty-five years,

            15          in both Westchester County, New York, and

            16          Fairfield County, Connecticut, and have

            17          worked with numerous lending institutions.

            18          I can testify before you today that JPMorgan

            19          Chase has the most thoughtful, comprehensive

            20          and, I believe, the most effective community

            21          development strategy of any of the lending

            22          institutions of which I know.

            23                I support the proposed JPMorgan

            24          Chase/Bank One merger, in the sincere belief

            25          that it will enable the combined entity to








                                                                    245
             1

             2          be even more successful in supporting low-

             3          and moderate-income community efforts in the

             4          service areas.  Thank you.

             5                MS. NECARSULMER:  My name is Barbara

             6          Necarsulmer.  I am here representing the

             7          Delaware Small Business Development Center.

             8          I would like to thank the Federal Reserve

             9          for the opportunity to be here today.

            10                The Delaware Small Business Development

            11          Center provides free business counseling,

            12          technical assistance, and training

            13          information to small business owners

            14          throughout the State of Delaware in four

            15          locations.

            16                Small business builds and sustains

            17          communities.  In addition, It plays a vital

            18          role in helping low- and moderate-income

            19          individuals to grow their incomes and build

            20          equity.  We work with small business owners

            21          and individuals to do just that.

            22                We have a longstanding relationship

            23          with both JPMorgan Chase and Bank One.  We

            24          first approached both of these institutions

            25          a number of years ago to provide operating








                                                                    246
             1

             2          support for our program.  And while they

             3          certainly provided that, both JPMorgan Chase

             4          and Bank One have provided far more than

             5          simple routine monetary assistance.  Both

             6          have provided extraordinary and substantial

             7          support that changed the way we deliver our

             8          programs and services.  Time will not allow

             9          me to list all of their many contributions,

            10          so I choose the most significant and provide

            11          additiona information in a comment at a

            12          later time.

            13                Traditionally, Small Business

            14          Development Centers are located on a college

            15          campus.  Recognizing that business owners

            16          and the underserved populations we assist

            17          are not typically found on university

            18          campuses and don't happen to be hanging

            19          around colleges and universities, DSBDC

            20          embarked on a long-term project to move our

            21          facilities to where business people are, to

            22          downtown retail locations that are more

            23          accessible and less intimidating.  This

            24          expanded space also allows us to expand our

            25          programs and services to the things that








                                                                    247
             1

             2          this market really needed.  Finding a lead

             3          sponsor to make the three-year financial

             4          commitment that we needed in order to sign a

             5          lease on this space was a daunting task.

             6          Bank One was the first institution to make

             7          such a commitment.  Others followed their

             8          lead, and a year or so later we opened up

             9          the first of these facilities.  Our program

            10          was changed forever.

            11                JPMorgan Chase also provided generous

            12          financial support, plus office furniture,

            13          assistance in technology issues, as well as

            14          a significant financial grant that allowed

            15          us finally to finish our last off-campus

            16          center in rural Sussex County, the most

            17          rural part of our state.

            18                As a result of the support of these

            19          institutions and our joined visions, in one

            20          year alone the number of people that visited

            21          DSBDC locations grew by a factor of 10

            22          times, from less than 600 to over 6,000,

            23          resulting since that time in 30,000

            24          additional business owners and potential

            25          business owners being able to access our








                                                                    248
             1

             2          programs, our information, our training, our

             3          counseling.

             4                The composition of the people we

             5          service has changed greatly as well.  Where

             6          prior to our relocation 12 percent of our

             7          clientele may have been minorities, now it

             8          is over one-third.

             9                We have wondered if the combined

            10          community involvement of these two

            11          extraordinarily committed organizations

            12          could be less than the sum of the individual

            13          parts. But we are supportive of this merger.

            14          Bank one and JPMorgan Chase are our largest

            15          private sector supporters.  Changes would be

            16          devastating to us.  However, in the past

            17          they have been more than supportive of us

            18          and the community at large.  They have

            19          survived past mergers, both institutions,

            20          without a significant decrease in human

            21          support.  Their history in respect to

            22          extraordinary leadership in support of small

            23          business in the Delaware community as a

            24          whole speaks to their commitment to the

            25          communities which they serve.








                                                                    249
             1

             2                We hope to follow them and have them

             3          follow up as we, together, work to build a

             4          Delaware community of which we all are a

             5          part and to help all those succeed.

             6                I thank you again for the opportunity

             7          to speak today.

             8                MS. BRAUNSTEIN:  Thank you very much,

             9          and thanks to this panel.  Could the next

            10          panel please come forward.

            11                Just a reminder to everybody that we do

            12          have limited time, so everybody is limited

            13          to five minutes.  We have our timekeepers

            14          over there.  Please pay heed to them.  If

            15          you have printed statements, please give

            16          them to the gentleman in the center who is

            17          our recorder.

            18                Lastly, at the beginning of your

            19          statement, please state your name and

            20          organization for the record.  Thank you.

            21                MS. PASCAL:  Thank you.  Good

            22          afternoon.  My name is. Amanda Pascal, and I

            23          am a member of SUN, Syracuse United

            24          Neighbors, from Syracuse, New York.  SUN is

            25          a 26-year-old grassroots community








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             1

             2          organization that organizes residents to

             3          work to improve the quality of life for

             4          people living in the south and west sides of

             5          Syracuse.  SUN has over 800 dues-paying

             6          member families and we represent over 10,000

             7          households in our area.  It makes up 15

             8          percent of the city's households and is

             9          considered a low- to moderate-income area.

            10                SUN is also a member of NPA, National

            11          Peoples Action.  NPA is a grassroots

            12          coalition of hundreds of neighborhood groups

            13          representing hundreds of thousands of people

            14          from coast to coast who work on issues that

            15          improve their communities.  NPA's founding

            16          chairperson, Gail Cincotta, was known as the

            17          mother of the Community Reinvestment Act.

            18          Gail's work has inspired us all and we carry

            19          on in her tradition.

            20                I am also speaking on behalf of

            21          specific organizations today who have been

            22          asking JPMorgan Chase and Bank One to sign a

            23          CRA agreement with us.  These groups are

            24          Central Illinois Organizing Project, who

            25          cover seven counties in Central Illinois;








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             1

             2          Communities United for Action of Ohio;

             3          Creston Neighborhood Association, Grand

             4          Rapids, Michigan; Iowa Cities for Community

             5          Improvement from Des Moines, Iowa; East Side

             6          Organizing Project, Cleveland, Ohio,

             7          Pittsburgh Reinvestment, from Pittsburgh,

             8          Pennsylvania; South Austin Coalition

             9          Community Council, Chicago, Illinois;

            10          Sunflower Community Action, Wichita, Kansas,

            11          and, of course, Syracuse United Neighbors.

            12                Representatives from these

            13          organizations met with JPMorgan Chase on

            14          March 5 in Chicago.  Mark Willis, the head

            15          of community development at Chase, told us

            16          then that it is against the bank's corporate

            17          policy to sign CRA agreements -- a policy

            18          that is set in a remote corporate office far

            19          removed from communities like mine and with

            20          little idea of our need.  Although

            21          Mr. Willis and other representatives from

            22          Chase said we had brought him some good

            23          ideas, they were unwilling to put any

            24          commitment in writing.  So both parties do

            25          work toward mutual and measurable goals with








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             1

             2          some accountability.

             3                When JPMorgan Chase does business, a

             4          consumer can't get a mortgage with just a

             5          handshake and a verbal promise to pay.  The

             6          borrower needs to commit to it in writing by

             7          signing a promissory note.  It is somewhat

             8          disingenuous that JPMorgan Chase does not

             9          understand that signing CRA agreements is

            10          the same concept and establishes the depth

            11          and seriousness to the commitment by the

            12          signatories.  Spoken promises can be changed

            13          and distorted over time.

            14                We have some serious concerns about

            15          JPMorgan Chase Bank and Bank One's

            16          commitment to community reinvestment.  For

            17          example, in an effort to streamline

            18          operations in the lead-up to this proposed

            19          merger, Chase in Syracuse recently made some

            20          disastrous changes to their community

            21          development department.  Syracuse had an

            22          amazing loan officer named Bruce Shea who

            23          worked hard to make loans in neighborhoods

            24          and had that as his primary focus.  Chase

            25          was the number-one lender in our census








                                                                    253
             1

             2          tracts when Bruce was on the job.  But last

             3          fall JPMorgan Chase decided to eliminate

             4          salary-based mortgages and replace them with

             5          commission-based officers.  In our market in

             6          Syracuse, Bruce would not have been able to

             7          continue his dedicated work lending in

             8          low-income neighborhoods and be able to

             9          support his family from commissions.  He is

            10          a good man and wouldn't compromise what he

            11          believed in, so he resigned from Chase.  His

            12          replacement does not care about lending in

            13          our neighborhoods.  In fact, since Bruce

            14          left, zero loans have been made in my

            15          neighborhood.  With one departmental change,

            16          Chase managed to go from the top of the heap

            17          to the bottom of the pile.  This is

            18          extremely distressing.  JPMorgan should

            19          commit to go back to salary-based loan

            20          officer who can focus on the inner city.

            21          This officer should be someone who cares

            22          about our neighborhood like Bruce did.  We

            23          want to see a commitment to do this in

            24          writing.

            25                There are other issues that NPA wants








                                                                    254
             1

             2          commitment on.  These are commitments to

             3          low- to moderate-income lending, lending to

             4          minorities, and to predatory lending

             5          policies, servicing farm and ranch

             6          management, charitable giving, and

             7          accountability to existing CRA agreements.

             8                These are the issues that the community

             9          groups represented in the NPA coalition have

            10          collectively decided are the major concerns

            11          in our neighborhoods.

            12                We have been asking William Harrison,

            13          the CEO of JPMorgan Chase, for a meeting.

            14          We hope to have a meeting with him before

            15          March 23, before the next public hearing.

            16          We took 800 people to visit the JPMorgan

            17          Chase office in D.C. to deliver a message to

            18          invite him to a meeting.  We have yet to

            19          hear anything.  They keep choosing to not

            20          come to the table and negotiate with us.  We

            21          therefore strongly oppose this merger until

            22          our CRA issues have been dealt with.

            23                MS. BRAUNSTEIN:  Thank you.  Mr. Cole?

            24                MR. COLE:  Good afternoon.  My name is

            25          Chris Cole, and I am Regulatory Counsel for








                                                                    255
             1

             2          the Independent Community Bankers of

             3          America, a trade association representing

             4          approximately 4,600 banks with 17,000

             5          locations nationwide.  Nationally, ICBA

             6          members hold more than $624 billion in

             7          assets and more than $391 billion in loans

             8          for consumers and small businesses.  We are

             9          very pleased to be here commenting on the

            10          proposed merger of Bank One Corporation and

            11          the JPMorgan Chase & Company.

            12                ICBA continues to be concerned with the

            13          continued concentration of banking assets in

            14          the United States and the effect this

            15          concentration has not only on bank

            16          competition but on consumers, small

            17          businesses, and communities.  This merger

            18          will catapult JPMorgan Chase into the second

            19          largest bank holding company in the U.S. in

            20          terms of assets and, with the consummation

            21          of the Bank of America/Fleet merger will

            22          mean that the top eight financial

            23          institutions in this country will control

            24          well over 50 percent of the total U.S.

            25          banking assets.  As the FDIC chairman








                                                                    256
             1

             2          recently predicted, "We could well see a

             3          banking industry with a few institutions

             4          having assets in the trillions of dollars,

             5          and perhaps only half as many community

             6          banks as we have today."  This trend has

             7          disturbing implications not only for our

             8          financial system, but also for consumers,

             9          small businesses and communities.

            10                This evidence shows that increased

            11          concentration in the banking industry has

            12          not benefited bank customers and has not had

            13          a positive effect on the convenience and

            14          needs of the communities served by the

            15          acquired banks.  The economies of scale that

            16          supposedly justify large bank mergers either

            17          do not materialize or are not passed on to

            18          customers.

            19                For example, large bank mergers often

            20          have an adverse effect on consumer deposit

            21          pricing and often result in higher fees to

            22          consumers.  A Harvard study showed that

            23          instances of improved operating results

            24          after a large bank merger were due primarily

            25          to higher repricing, not economies of scale,








                                                                    257
             1

             2          suggesting the use of increased market power

             3          by the large banks to raise taxes.  Year

             4          after year, the Federal Reserve's own annual

             5          survey of bank retail fees shows that the

             6          average fees charged by multistate banks are

             7          significantly higher than those charged by

             8          single-state banks.  We therefore urge the

             9          board to examine closely the effect that

            10          this merger will have on deposit pricing and

            11          fees in areas where the merger partners

            12          overlap, such as in Texas and Florida, and

            13          whether consumers will be adversely impacted

            14          by this merger.

            15                Bank mergers and large bank

            16          consolidation often have an adverse effect

            17          on small business lending, which is a key

            18          engine for sustaining the U.S. economy.

            19                We therefore hope that the Federal

            20          Reserve will look at the effect of this

            21          merger on small bank lending.

            22                Along with consumers and small

            23          businesses, it is often the case that local

            24          communities are also adversely impacted when

            25          statewide banks are acquired by large,








                                                                    258
             1

             2          national bank franchises located outside the

             3          state.  The new, larger bank seldom has the

             4          same commitment as the acquired bank to the

             5          local communities and to local charities and

             6          civic groups.  Independent Community Bankers

             7          thinks that large, national banks like

             8          JPMorgan Chase should be examined locally

             9          under the CRA -- as community banks are

            10          examined -- instead of simply at the main

            11          office of the bank.

            12                However, the biggest concern to

            13          regulators by this mega-merger should be the

            14          fact that trillion-dollar financial

            15          institutions pose systemic risks to our

            16          financial system.  Citigroup, Bank of

            17          America and JPMorgan Chase together will

            18          have more than $3.5 trillion in assets and

            19          will control approximately 35 percent of

            20          total banking assets.  Former Federal

            21          Reserve Board Governor Larry Meyer warned

            22          after the passage of the Gramm-Leach-Bliley

            23          Act in 1999, noting:  "The growing scale and

            24          complexity of our largest banking

            25          organizations...raises as never before the








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             1

             2          potential of systemic risk from a

             3          significant disruption, let alone failure,

             4          of one of these institutions."

             5                We note that the Bank Holding Company

             6          Act, as amended by Riegle-Neal Interstate

             7          Banking and Branching Efficiency Act in

             8          1994, prohibits the Federal Reserve Board

             9          from approving an interstate transaction

            10          that would result in the acquirer holding

            11          more than 10 percent of the total amount of

            12          deposits of insured depository institutions

            13          in the United States.  Following the merger,

            14          JPMorgan will have approximately 6.7 percent

            15          of the nation's deposits.  However, under

            16          the law, the Federal Reserve Board is also

            17          required to respect state deposit caps.

            18          JPMorgan Chase's market share will not be

            19          near the state deposit caps of Colorado, 25

            20          percent, Kentucky, 15 percent, or West

            21          Virginia, 25 percent, but will exceed the

            22          Texas cap of 20 percent if the deposits in

            23          Texas as of the date of its Federal Reserve

            24          application are counted.

            25                In its application to the Federal








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             1

             2          Reserve Board, JPMorgan Chase claims that

             3          over $20 billion of deposits in that state,

             4          in Texas, are "national" deposits located in

             5          Houston, Texas, and should not be counted as

             6          Texas deposits.  JPMorgan Chase argues that

             7          these deposits are for national securities

             8          services or for mortgage escrow services and

             9          should be excluded not only from any

            10          statewide analysis or merger, but also on

            11          the likely impact the merger would have on

            12          the Houston bank market.  We understand, in

            13          fact, that JPMorgan Chase has already moved

            14          some of these deposits to branches outside

            15          of Texas.  If these deposits were counted,

            16          JPMorgan Chase would not only exceed the 26

            17          percent cap in Texas but would have a 46

            18          percent share of deposits in the Houston

            19          banking market, which would be well in

            20          excess of antitrust guidelines.

            21                MS. BRAUNSTEIN:  Mr. Cole, please wrap

            22          up.

            23                MR. COLE:  Be glad to.

            24                We hope, therefore, that both the Texas

            25          State Bank Commissioner and the Federal








                                                                    261
             1

             2          Reserve will examine JPMorgan Chase's claim

             3          very carefully.  Large banks should not have

             4          the ability to recharacterize their deposits

             5          as "national" or move them to another state

             6          in order to comply with the state deposit

             7          caps or to resolve an antitrust issue.

             8                We thank you for the opportunity to

             9          testify.

            10                MS. AMIRI:  Good afternoon.  My name is

            11          Bridget Amiri.  I am an attorney at South

            12          Brooklyn Legal Services Foreclosure

            13          Prevention Project.  Thank you for the

            14          opportunity to provide testimony here today.

            15                We are in opposition to the merger

            16          because we are concerned about Chase's

            17          involvement in predatory lending issues.  My

            18          office focuses almost exclusively on

            19          preventing foreclosures and predatory home

            20          mortgages, where the home owner is the

            21          victim of predatory lending.

            22                We echo the concerns of other

            23          organizations that testified today about

            24          Chase's involvement in predatory lending,

            25          particularly with the securitization of bad








                                                                    262
             1

             2          loans and the servicing of loans as well.

             3                I would like to focus on one particular

             4          area that we see that is very prevalent in

             5          the case of the clients that come to my

             6          office.  We staff a hot line for all five

             7          boroughs for homeowners who are facing

             8          foreclosure or in default on their loans or

             9          feel that they have been the target of some

            10          unscrupulous lending practice.  We screen

            11          all of those calls.

            12                We have found, in a number of cases in

            13          which we have found merit, some of those

            14          loans are now held by Chase.  So what we see

            15          is Chase purchasing predatory loans on a

            16          secondary market, particularly loans that

            17          have been insured by the Federal Housing

            18          Administration, with the property considered

            19          flipped, or, in other words, has been bought

            20          for a small amount of money, resold to the

            21          unsuspecting home buyer, and within a very

            22          short period the mortgage is insured by the

            23          FHA program and the borrower is usually

            24          faced with then having to make unaffordable

            25          mortgage payments, the property is then








                                                                    263
             1

             2          fraudulently overpriced, and he has to make

             3          repairs on the property.  Usually the

             4          homeowner can't do both, as a result is in

             5          default on the mortgage.

             6                Ultimately, as with most predatory

             7          lending practices, this practice affects

             8          drastically borrowers, something that we are

             9          trying to address in many different ways

            10          through litigation and through negotiation.

            11                This is somewhat akin to the home buyer

            12          fraud in the Poconos, which was the article

            13          in The Times last Sunday.  In that case we

            14          see Chase has been the purchaser of the

            15          loan.

            16                So really what we think is the problem

            17          is twofold:  That Chase must stop buying

            18          these predatory loans on the secondary

            19          market.  By doing so, they are giving

            20          capital to the predatory lenders to repeat

            21          the cycle of predatory lending and

            22          perpetrate those bad practices on the

            23          unsuspecting first-time homeowners.  They

            24          must comply with a number of rules before

            25          buying loans.  We feel that Chase should








                                                                    264
             1

             2          make a significant commitment to instituting

             3          very complex and concrete due diligence

             4          guidelines for purchasing these loans.

             5                The second problem is that, once a

             6          borrower has become the target of a bad loan

             7          and Chase has bought that loan, Chase needs

             8          to work with the homeowners to find

             9          affordable solutions and work creatively

            10          with the homeowner to find a resolution to

            11          keep her in the home.

            12                Unfortunately, we have found that Chase

            13          has been very reluctant to find creative

            14          solutions, whether explicitly authorized by

            15          the HUD guidelines or not.  There is a lot

            16          of room for thinking outside the box in

            17          creating new ways to keep the homeowner in

            18          the home, and Chase has ultimately been

            19          reluctant to do that.

            20                So, really, it is two things:  Stop

            21          buying these loans; but once they do buy

            22          these loans, work with the homeowners -- and

            23          not when we come to them; not when the

            24          homeowners have found their way to us that

            25          need help.  There are a lot of homeowners








                                                                    265
             1

             2          out there who will not find their way to my

             3          organization or another community-based

             4          organization, and Chase needs to be

             5          proactively reaching out to them when they

             6          detect a predatory practice on a loan that

             7          they can purchase.

             8                Right now, we have talked to Chase, and

             9          we are trying to work out some kind of

            10          agreement or commitment with Chase to come

            11          to some sort of agreement on their due

            12          diligence practices, and ways to find

            13          creative solutions once they purchase the

            14          loan.

            15                But, ultimately, if Chase doesn't

            16          voluntarily agree to that, we ask that the

            17          Federal Reserve condition the merger on

            18          implementing these guidelines.  Thank you.

            19                MS. BRAUNSTEIN:  Thank you.

            20                MR. MYER:  Good afternoon.  My name is

            21          Joe Myer, I am Executive Director of NCALL

            22          Research in Dover, Delaware, and I chair the

            23          Delaware Rural Housing Consortium.  Thank

            24          you for the opportunity to comment on the

            25          proposed merger.








                                                                    266
             1

             2                This proposed merger combines both

             3          great anticipation and great concern for

             4          those in the affordable housing and

             5          community development sectors in Delaware.

             6                The National Council on Agricultural

             7          Life and Labor Research Fund, Inc. --

             8          NCALL -- is a Delaware-based nonprofit

             9          corporation that provides housing

            10          development technical assistance resulting

            11          in affordable multi-family housing

            12          development and direct services such as

            13          Homeownership Counseling and Individual

            14          Development Account counseling which impact

            15          lower income households.  In addition, NCALL

            16          administers a Loan Fund for affordable

            17          housing development purposes and chairs the

            18          "Best Practice" Delaware Rural Housing

            19          Consortium collaborative.  We have assisted

            20          over 5,000 first-time home buyers realize

            21          their dream.

            22                We are very pleased with the

            23          CRA-related performance of both merging

            24          entities in Delaware.

            25                JPMorgan Chase and Bank One are both








                                                                    267
             1

             2          set apart in the manner they go about

             3          fulfilling their responsibilities and

             4          serving those in need in Delaware.

             5                What sets them apart from many other

             6          banks that we witness?

             7                First, the quality of their CRA staff

             8          is absolutely second to none in Delaware.

             9                Their working relationship of both

            10          urban and rural environments in Delaware.

            11                The leadership provided to the

            12          nonprofit partners that they work with,

            13          including serving on boards of directors.

            14                The creativity that both CRA teams

            15          bring to the issues and problems within this

            16          state has been nothing short of exemplary.

            17                Helen Stewart and her team at JPMorgan

            18          Chase, and Roland Ridgeway and his team at

            19          Bank One, are totally committed to the CRA

            20          mission, and highly responsive and

            21          accountable, first-rate CRA managers.

            22                Similarly, the grant and investment

            23          resources provided by the above entities to

            24          nonprofit partners have been "industry

            25          leading" in Delaware.  The approach has been








                                                                    268
             1

             2          to underwrite and invest in nonprofit

             3          partners in a manner to make a real impact.

             4                The support of our counseling program

             5          with grants of $55,000 and $25,000,

             6          respectively, from Bank One and JPMorgan

             7          Chase helps us to raise our $325,000 housing

             8          counseling budget privately each year.  This

             9          task is much easier to accomplish with

            10          $55,000 than it is with $5,000 grants.

            11                JPMorgan Chase also provided the

            12          Consortium with a grant to help with the

            13          innovative rural asset management initiative

            14          to assure that rental properties are managed

            15          well, maintained well, in compliance, and

            16          financially sound.  These grants really make

            17          an impact to a nonprofit partner.  The

            18          alternative is a small nominal grant that

            19          really requires much more in the way of

            20          fund-raising.  Also, Bank One recently

            21          capitalized NCALL's Loan Fund with $200,000.

            22          That represents 24 percent of our fund

            23          capitalization.  There is no substitute for

            24          this level of support, the loss of which

            25          would be devastating.








                                                                    269
             1

             2                A final example is that JPMorgan Chase

             3          is funding a study on the Economic Impact of

             4          Affordable Housing in Delaware, and this is

             5          helping on a concerted public policy push

             6          for the state to dramatically increase

             7          resources and priority for its Housing Trust

             8          Fund.

             9                It is truly uncommon for bank CRA teams

            10          to be knowledgeable particularly of the

            11          rural housing needs and issues in central

            12          and southern Delaware.  Rural areas

            13          frequently are ignored and few resources are

            14          devoted to them.  Yet rural Delaware has

            15          rates of overcrowding, higher housing costs,

            16          seasonal farmer populations, long waiting

            17          lists for assisted housing, and lower median

            18          incomes.  Without attention to the rural

            19          areas, Delaware's overall needs cannot be

            20          met.  To their credit, both JPMorgan Chase

            21          and Bank One have been deeply involved in

            22          Delaware statewide and are providing

            23          leadership to the rural areas as well.

            24                However, without an opportunity to view

            25          the future or look at a plan for serving








                                                                    270
             1

             2          Delaware, there certainly are some concerns

             3          that we have.

             4                Will there be a loss of quality CRA

             5          staff -- knowledge capital, if I will --

             6          that could negatively impact our state?

             7                Will there be a move to outsource CRA

             8          in Delaware and move the base of CRA staff

             9          to another state?  We have seen this on

            10          occasion and it always represents and

            11          results in less favorable second-rate

            12          service.

            13                Will a merged entity grant and invest

            14          substantial resources into nonprofit

            15          partners as the two separate entities have

            16          demonstrated individually?

            17                Will the philosophy of "impact grants"

            18          be continued as opposed to the mentality of

            19          small "spread it around" grants?

            20                Will the merger upset the substantial

            21          affordable housing infrastructure that these

            22          banks are a part of and contribute to in

            23          Delaware?

            24                Finally, will the merged entity

            25          maintain interest in statewide needs and








                                                                    271
             1

             2          issues, including rural Delaware as well?

             3                NCALL has a lot at stake with this

             4          merger.  The families we serve, the elderly

             5          families of migrant and farmer workers, have

             6          a lot at stake.  The Delaware Rural Housing

             7          Consortium, a collaborative of seven rural

             8          units, has just unveiled the 3-year housing

             9          plan to improve family housing for 240

            10          households.  This needs increased

            11          investment --

            12                MS. BRAUNSTEIN:  I ask you to wrap up,

            13          please.

            14                MR. MYER:  -- and will need

            15          capitalization assistance as well.

            16                We believe that a merger between

            17          JPMorgan Chase and Bank One can benefit the

            18          community if the merged entity will accept

            19          and embrace the high standards set by both

            20          individual banks, at least maintaining and

            21          hopefully raising that standard even higher.

            22                Thank you for the opportunity.

            23                MS. BRAUNSTEIN:  Thank you.

            24                MR. MARSICO:  Good afternoon.  My name

            25          is Richard Marsico.  I am a professor at New








                                                                    272
             1

             2          York Law School.  I am a member of the

             3          National Community Reinvestment Coalition.

             4          I am also participating in a coalition of

             5          organizations in New York State that filed

             6          written comments opposing the bank merger

             7          and is also currently negotiating with

             8          JPMorgan Chase, requesting them to commit to

             9          certain lending policies and practices in

            10          connection with this merger.

            11                My testimony today is based on the 2002

            12          Home Mortgage Disclosure Act data and the

            13          2002 CRA disclosure reports of small

            14          business lending.  The basic point of my

            15          testimony is that JPMorgan Chase, and in

            16          particular its affiliate banks, JPMorgan

            17          Chase Bank and Chase Manhattan Mortgage

            18          Corporation, are failing to meet the credit

            19          needs of predominantly minority

            20          neighborhoods, minority individuals in the

            21          New York Metropolitan Area.  In addition,

            22          their lending to small businesses, defined

            23          as businesses with $1 million or less in

            24          gross annual revenue, in low- or

            25          moderate-income census tracts, is a very








                                                                    273
             1

             2          small number.

             3                First, regarding the minority

             4          individuals in predominantly minority

             5          neighborhoods, according to the 20002 LMI

             6          data, JPMorgan Chase Bank and Chase

             7          Manhattan Mortgage Corporation failed to

             8          meet industry benchmarks.  In other words,

             9          the percentage of their loans to minority

            10          individuals and to predominant minority

            11          neighborhoods is lower than the industry as

            12          a whole.

            13                For example, if we look at conventional

            14          home mortgage lending in predominantly

            15          minority neighborhoods, while JPMorgan Chase

            16          makes 12.9 percent of its loans and Chase

            17          Manhattan Mortgage Corporation makes 10.9

            18          percent, the aggregate is 14.9 percent,

            19          meaning that JPMorgan Chase Bank is only 69

            20          percent of the aggregate, and Chase

            21          Manhattan Mortgage Corporation is only 64

            22          percent of the aggregate.

            23                My written testimony contains

            24          additional data, but the Federal Reserve

            25          should not tolerate this bank, which is








                                                                    274
             1

             2          going to be the second largest bank in the

             3          country and asserts its leadership position

             4          in the banking industry, not meeting these

             5          industry benchmarks of lending to minority

             6          individuals in predominantly minority

             7          neighborhoods.

             8                In addition, two of JPMorgan Chase's

             9          affiliates, again JPMorgan Chase Bank and a

            10          Chase Bank USA, virtually control the market

            11          of small business lending as defined in the

            12          CRA disclosure statement.  In other words,

            13          their loans below certain amounts, they make

            14          30 percent of those loans.  However, if you

            15          look at a very particular segment of that

            16          lending -- the lending to small businesses

            17          in LMI census tracts -- those banks that

            18          make tens of thousands of loans in the

            19          Metropolitan Area made only a total of 42

            20          loans to small businesses in LMI census

            21          tracts, according to the 2002 CRA disclosure

            22          statement.

            23                Since they have such a big portion of

            24          the lending market, the Federal Reserve

            25          again should hold them to higher standards.








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             1

             2          They have the capacity and ability to make

             3          more loans than that, and if they are going

             4          to merge the capacity, it ought to be

             5          stronger.

             6                In considering the merger application,

             7          the Federal Reserve should either not grant

             8          the application or should conditionally

             9          approve the application with commitment from

            10          JPMorgan Chase to increase its home mortgage

            11          lending and to predominantly minority

            12          neighborhoods, minority businesses, and to

            13          individuals, in the low- and moderate-income

            14          areas of the Metropolitan Area.

            15                Thank you for this opportunity to

            16          testify.

            17                MS. BRAUNSTEIN:  Thank you.

            18                MS. AARON:   Good afternoon.  My name

            19          is Ket Aaron, and I am going to give

            20          testimony on behalf of Alan Fisher of the

            21          California Reinvestment Coalition.

            22                My name is Alan Fisher.  I am Executive

            23          Director of the California Reinvestment

            24          Coalition.  CR is a statewide coalition of

            25          more than 200 nonprofit organizations and








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             1

             2          public agencies that have advocated for

             3          equal access to banks for low-income

             4          communities and communities of color since

             5          1986.  CRC has CRA agreements with

             6          California's major financial institutions,

             7          but Chase has not come to any negotiated

             8          commitment with California organizations.

             9                CRC opposes the JPMorgan Chase merger

            10          with Bank One because it will have a

            11          negative impact on community needs in

            12          California where these financial

            13          institutions do tens of billions of dollars

            14          in lending and have offices and branches.

            15                The State of California on its own is

            16          the world's sixth largest economy.  JPMorgan

            17          Chase seeks to take billions of dollars of

            18          profits from California without returning

            19          anything in the way of benefits, and many of

            20          their loans appear to be high interest.

            21                The Federal Reserve should not approve

            22          this merger without ensuring that profits

            23          from Californians bear a positive return for

            24          Californians, as is the intent of the

            25          Community Reinvestment Act.  To approve it








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             1

             2          otherwise is a hypocritical act on the part

             3          of the federal regulators of community

             4          reinvestment.

             5                Our issues with both banks are as

             6          follows:

             7                CRA Responsibility.  The Banks have

             8          more than fifty offices of their mortgage

             9          companies as well as a trust bank in

            10          California.  JPMorgan Chase has applied for

            11          a thrift charter for the mortgage company

            12          but seeks to have no CRA responsibility for

            13          the new entity.  They have delayed the

            14          charter process for that entity in order to

            15          keep this issue hidden from public view.

            16          Based on our review of lending data, Chase

            17          did $101 million in CRA-reportable business

            18          loans and $26 billion in mortgages during

            19          2002.  CRC members do not believe the merger

            20          should be approved without a community

            21          investment plan for California that is

            22          representative of the full scope of

            23          California lending, including the

            24          presumptive thrift charter.

            25                Subprime Mortgage Lending.  From our








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             1

             2          review of lending, Chase made 117,069

             3          mortgage loans in 2002 to Californians.  It

             4          is our understanding from national studies

             5          that a significant portion of Chase's

             6          mortgage lending is subprime.  Chase has

             7          announced that only 5 percent of California

             8          lending is subprime but its presence on the

             9          HUD subprime lending list and other

            10          community perceptions question this

            11          statement.  From the data, African American

            12          and Latino applicants are much more likely

            13          to receive subprime loans from Chase.

            14                The Federal Reserve should thoroughly

            15          investigate both financial institutions'

            16          credit card lending, and publicly report

            17          their predatory aspects prior to any

            18          consideration of approval of the merger.

            19          The Bank and mortgage company have stated

            20          that they have a "benefit test" that avoids

            21          predatory lending but have not publicly

            22          revealed the methodology and results of this

            23          test.

            24                Subprime Investments.  Chase is a major

            25          investor in subprime market-backed








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             1

             2          securities.  The bank has no screen to avoid

             3          purchasing beyond its legal requirements.

             4          The Federal Reserve should thoroughly

             5          investigate both financial institutions'

             6          investments in mortgage-backed securities

             7          and publicly report their predatory aspects

             8          prior to any consideration of approval of

             9          the merger.  CRC has offered Chase our

            10          "Financing Best Practices" to move the

            11          screening process forward to greater benefit

            12          of the consumer.

            13                Credit Card Lending.  Chase and Bank

            14          One are merging to become the number-two

            15          credit card lender in the U.S.  It is not

            16          clear how much of the credit card lending

            17          the merged banks will do in California that

            18          is subprime.  The Federal Reserve should

            19          thoroughly investigate both financial

            20          institutions' credit card lending and

            21          publicly report their predatory aspects

            22          prior to any consideration of approval of

            23          the merger.

            24                EBT:  Chase has acquired Citigroup's

            25          EBT program.  CRC has been very involved in








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             1

             2          statewide and local discussions with state

             3          agencies, county governments, and banks

             4          regarding accessible free access to EBT.

             5          U.S. Bank recently agreed to offer free

             6          access to their ATMs for EBT recipients.

             7          Chase should guarantee that Citibank West

             8          will offer free access permanently.  Chase

             9          should facilitate surcharge fee ATM access

            10          with the other major financial institutions,

            11          since it has no branches in California, so

            12          that all EBT recipients have three or more

            13          geographically distinct access points in zip

            14          codes in which they are living.

            15                RALs:  Bank One does 10 percent of all

            16          Refund Anticipation Loans, which are

            17          predatorily priced loans against income tax

            18          refunds.  The Federal Reserve should ensure

            19          that Chase will end its involvement in

            20          Refund anticipation Loans upon completion of

            21          the acquisition.

            22                As a side note, the Bank has been

            23          aggressive in contacting community grantees

            24          and asking them to testify.  I would ask you

            25          to discount testimony from grantees from








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             1

             2          this perspective.

             3                Thank you for the opportunity to

             4          testify.

             5                MS. BRAUNSTEIN:  Thank you.

             6                Mr. Williams.

             7                MR. WILLIAMS:  Good afternoon.  My name

             8          is Lloyd Williams.  I serve as President,

             9          CEO, of the Greater Harlem Chamber of

            10          Commerce.  Our Chamber this year is

            11          celebrating its 108th year of continued

            12          service to the upper Manhattan area in

            13          particular and New York City in general.  We

            14          are proud to have in excess of 1800 members

            15          of our Chamber.  Amongst that membership, we

            16          have 48 banks and financial institutions.

            17                So, with that in mind, we have a pretty

            18          decent understanding of what most of the

            19          banks and financial institutions have done.

            20          Without question, all banks are behind in

            21          terms of what their commitment can and

            22          should be to the issues of small business

            23          development, community development, loans,

            24          etc.  But JPMorgan Chase is, without

            25          question, in the forefront of vision and








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             1

             2          leadership on the part of the banking and

             3          financial communities.  In the fields of

             4          community development, economic development,

             5          CRA.

             6                The hands-on connection of JPMorgan

             7          Chase is simply not matched by any of the

             8          other banks.  They just don't talk about

             9          what they are doing.  They actively

            10          participate, whether it is by sitting as

            11          advisers, consultants as loan executives or

            12          board members.  Working particularly with

            13          community development division of Chase,

            14          Mark Willis and his excellent team of Louis

            15          Jones, John Imperial, and others.

            16                It is my view that when I look at the

            17          merger with Bank One, my concern is that I

            18          hope Bank One does not pull back JPMorgan

            19          Chase.  The issue is in terms of Bank One

            20          being able to keep focused on the issue of

            21          community development, small-business

            22          development, CRA issues, and the broader

            23          outreach which I see with JPMorgan in terms

            24          of their ability to connect dots, to connect

            25          the issue of jobs, the community safety








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             1

             2          health issues, small business, cultural

             3          development, things of that nature -- to

             4          connect the dots so that you see the whole

             5          picture.

             6                We are very pleased in Harlem now,

             7          where it is pretty much recognized that

             8          there is a second Harlem Renaissance and

             9          people are recognizing that and giving much

            10          attention and credence to it.  But I can say

            11          what I would say in front of any financial

            12          group:  Without question, JPMorgan Chase is

            13          the institution, when no other bank was

            14          there in a leadership role, that stepped to

            15          the forefront, and they are the group that

            16          has allowed for many other banks now to come

            17          to our Harlem community to have a broader

            18          vision and see a better picture.

            19                We very much support this proposed

            20          merger, and we challenge Chase Bank and Bank

            21          One to find a way to do more with its

            22          combined resources and to do it better.  We

            23          think at the end of the day that if they do

            24          so, all parties will benefit.  So we are

            25          here to support the proposed merger.








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             1

             2                MS. BRAUNSTEIN:  Thank you very much.

             3          Thank you to this panel.  Would the next

             4          panel come up, please.

             5                Welcome to our next panel.  You have

             6          been around, you have heard it a million

             7          times, but I will say it again:  We have

             8          five minutes per person.  We appreciate

             9          people sticking to the timetable because we

            10          do have a lot of people to hear from today.

            11          The timekeepers are right there and will

            12          give you signs.  Please heed them.

            13                If you have any written copy of your

            14          statement, please drop it off with the

            15          gentleman in the center, who is our

            16          recorder.

            17                Lastly, before you begin speaking,

            18          please state your name and your

            19          organization.  For the record.  With that,

            20          we will begin.  Mr. Gallagher.

            21                MR. GALLAGHER:  My name is David

            22          Gallagher.  The organization is the Center

            23          for Neighborhood Economic Development.

            24                I'd like to begin by thanking the

            25          Federal Reserve for giving the Center and








                                                                    285
             1

             2          other community organizations the

             3          opportunity to comment on this matter.

             4                My name is David Gallagher.  I am the

             5          Executive Director of the Center for

             6          Neighborhood Economic Development.  The

             7          Center provides technical assistance,

             8          training, and other services to Local

             9          Development Corporations (LDCs) and other

            10          locally based economic revitalization groups

            11          in the five boroughs of New York City,

            12          primarily in low and moderate income

            13          neighborhoods.  The Center also provides

            14          information outreach regarding LDCs and the

            15          services they provide to local businesses,

            16          informing public and private decision-makers

            17          of the valuable network of local partners

            18          that exists in the five boroughs.

            19                Because the Center and the LDCs it

            20          serves are concerned with small business

            21          preservation and development, banks are

            22          crucial partners in much of the work we do.

            23          Banks provide funding for economic

            24          development organizations, provide funding

            25          for neighborhood economic development








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             1

             2          programs -- for example, capitalization for

             3          revolving loan funds -- and provide

             4          technical assistance to local groups and to

             5          neighborhood businesses and aspiring local

             6          entrepreneurs.  In our experience, JPMorgan

             7          Chase has been a reliable supporter of local

             8          economic development in all of the ways I

             9          just described, throughout the "gorgeous

            10          mosaic" of New York City.

            11                When the Center was first formed, in

            12          1992, JPMorgan Chase was the Center's first

            13          funder, a key to our securing of government

            14          support, forming a funding partnership that

            15          has sustained the Center ever since.

            16                The bank has funded the Center's

            17          publication of citywide directories of LDCs

            18          and small business loan funds that help to

            19          market LDC programs to small businesses and

            20          to public and private referral agencies,

            21          thus broadening the reach of local programs.

            22          They have funded conferences, seminars and

            23          workshops that have helped educate LDCs

            24          about new and existing revitalization

            25          resources, and have showcased LDC efforts to








                                                                    287
             1

             2          preserve jobs and to create new ones,

             3          helping bring local groups into contact with

             4          public and private funders.  They have sent

             5          bank personnel to LDC workshops to explain

             6          the bank's lending programs and other

             7          resources that small businesses can access,

             8          giving LDC staff greater familiarity with

             9          the requirements of both special

            10          neighborhood-oriented bank programs as well

            11          as mainstream banking resources that are

            12          available.

            13                In all of these instances of program

            14          assistance the bank has not only provided

            15          initial aid but has provided repeated

            16          assistance periodically over the years since

            17          the Center first received support from

            18          JPMorgan Chase.

            19                For all of the reasons I have noted

            20          above, we urge that you grant approval of

            21          the proposed merger.  JPMorgan Chase has

            22          established a firm record of committing

            23          itself to community revitalization goals and

            24          then sticking to that goal and achieving it,

            25          continuing funding even in difficult








                                                                    288
             1

             2          financial times.  This consistency has made

             3          the bank a most valued partner for the

             4          Center and for LDCs throughout the city, and

             5          we are confident that the merger will only

             6          result in a continued and strengthened

             7          commitment to community revitalization.

             8                In conclusion, let me thank the Board

             9          once again for providing a forum for comment

            10          on the proposed merger.  I also reiterate

            11          our support for approval of the merger.

            12          JPMorgan Chase's excellent, longstanding

            13          track record in community revitalization

            14          activities virtually commands an expectation

            15          of continued devotion to CRA's ideals.

            16          Thank you.

            17                MS. BRAUNSTEIN:  Thank you.

            18                MR. GONZALEZ:  My name is Ernest

            19          Gonzalez.  I represent the Long Island

            20          Hispanic Chamber of Commerce.  Our

            21          membership is close to about 250 members.

            22          Most of the members reside in the Long

            23          Island region, which is Suffolk County and

            24          Nassau County.

            25                I have known Chase Manhattan Bank for








                                                                    289
             1

             2          fifteen years, and I have found that Chase

             3          Manhattan has always been active in

             4          supporting the Hispanic community,

             5          especially its business.  In many cases they

             6          have taken the opportunity to support some

             7          of the businesses that were funded in terms

             8          of start-up business, and they have worked

             9          with our organization that has supported

            10          that.

            11                Also, I found out that Chase Manhattan

            12          has always taken the role to support and

            13          assist, by having workshops and other

            14          learning tools.

            15                Chase Manhattan Bank has also supported

            16          an organization called Children with

            17          Learning Disabilities.  I am very proud to

            18          say I am a member of that organization,  I

            19          know that they gave money to raise a center,

            20          and also capitalization of a new therapy

            21          area.

            22                Chase Manhattan Bank has worked for an

            23          organization called SAS, a hospital, and

            24          they have supported the gala, which utilizes

            25          that money for the support of a new








                                                                    290
             1

             2          emergency room at Nassau Hospital.

             3                In my fifty years' experience, I have

             4          experienced a professionalism and support by

             5          the Chase Manhattan Bank.  The merger of

             6          JPMorgan Chase and Bank One I support.  I

             7          feel in my heart that the relationship is

             8          more important at this point than anything

             9          else.

            10                I know that from time to time, when we

            11          as businessmen have certain problems, I can

            12          always reach Mark Willis or anyone for

            13          support, and they are always there to

            14          support these groups.

            15                It is the desire and feeling of the

            16          Long Island region that the Federal Reserve

            17          Bank should wholeheartedly support this

            18          merger.

            19                Thank you very much.

            20                MS. BRAUNSTEIN:  Thank you.

            21                MR. McDONALD:  My name is George

            22          McDonald.  I am the founder of the Doe Fund.

            23          I want to thank the Federal Reserve for the

            24          opportunity for us to comment here today.

            25                Our organization helps homeless people








                                                                    291
             1

             2          in New York City.  We run a very successful

             3          work program called Ready, Willing and Able.

             4          You may see the men in blue that clean up

             5          the streets of Manhattan and in some of the

             6          other boroughs.

             7                In 1999, the City of New York issued a

             8          request for a proposal to replace half of

             9          the Bellevue Men's Shelter, which is a

            10          thousand-bed facility on 30th Street and

            11          First Avenue, and they required that the

            12          provider of these services come to the city

            13          with a site and with financing, at which

            14          point the city would give a contract to

            15          start when a new facility was built.

            16                As you can imagine, it wasn't a very

            17          easy thing to go out to lending institutions

            18          to get a loan, a construction loan for $23

            19          million.  And again this was 1999.  The only

            20          bank in New York City that would consider

            21          the proposal and actually commit to doing

            22          the financing was JPMorgan Chase

            23          development.  We went ahead and put in our

            24          response to the request.  We were granted a

            25          contract, $182 million over 20 years, that








                                                                    292
             1

             2          said the contract will kick in when you

             3          build the facility and it is licensed by the

             4          state for us to operate as a homeless

             5          facility.  So it was a tremendous risk on

             6          behalf of JPMorgan Chase to do this, because

             7          at the end of the day, if anything had

             8          happened, they would have been left with

             9          this facility that wasn't licensed to be

            10          operated.  They took a tremendous risk, and

            11          of course, in light of subsequent events,

            12          the tragedy of 9/11 kind of threw a monkey

            13          wrench into it and it was very difficult

            14          then.  But, in spite of that, they went

            15          ahead and continued with the financing.  I

            16          am happy and pleased to say that on December

            17          9 of last year the facility opened in East

            18          Williamsburg, and they are about to do the

            19          permanent financing.

            20                But I really came here today to speak

            21          on behalf of JPMorgan Chase and to ask you

            22          to approve this merger, because we would not

            23          have been able to get any other lending

            24          institution in the City of New York to give

            25          us this acquisition construction loan.  And








                                                                    293
             1

             2          I know because I tried.

             3                So, again, I want to reiterate I would

             4          ask for your approval of this.  Thank you

             5          very much.

             6                MS. BRAUNSTEIN:  Thank you.

             7                MR. MORGO:   Good afternoon.  I am Jim

             8          Morgo, President and Chief Executive Officer

             9          of the Long Island Housing Partnership.  I

            10          speak in support of the JPMorgan Chase

            11          Bank's  proposed merger.

            12                The Long Island Housing Partnership

            13          develops housing development sponsors and

            14          facilitates affordable housing, provides

            15          pre- and post-purchase home ownership

            16          counseling, administers technical assistance

            17          programs and low-cost loan funds, and brings

            18          economic development to low-income

            19          communities.

            20                In its first fifteen years, the Housing

            21          Partnership produced 1,500 affordable loans,

            22          most of them were sale loans, and through

            23          its counseling programs enabled more than

            24          10,000 low- to moderate-income families to

            25          achieve homeownership.








                                                                    294
             1

             2                Chase Manhattan Bank was a founding

             3          member of the Housing Partnership fifteen

             4          years ago.

             5                Let me give you an idea of the region

             6          in which the Housing Partnership works.

             7          Long Island has a total population greater

             8          than nineteen states, and if we were a city,

             9          we would be the fourth largest city in the

            10          United States.

            11                Creating safe and affordable homes in a

            12          disjointed, fragmented suburban region like

            13          Long Island is very different from doing so

            14          in an urban area.  Long Island is a region

            15          of 2 counties, 13 towns, 2 cities and 95

            16          villages.  Each one has its own jurisdiction

            17          over housing development.  Municipal

            18          approvals take years to secure.

            19                Although basically in New York City,

            20          JPMorgan Chase has responded to the suburban

            21          needs of Long island.  JPMorgan Chase has

            22          made several millions of dollars of

            23          construction and permanent loans to the

            24          Housing Partnership's developments.  In so

            25          doing, it has manifested patience and








                                                                    295
             1

             2          understanding of the very lengthy suburban

             3          development process.

             4                Let me give you a recent example.  In

             5          2002, JPMorgan Chase funded a $6.8 million

             6          construction loan for 44 homeownership

             7          units, those homes to be sold to families

             8          with incomes under 50 percent and 34 of

             9          those homes to families with incomes less

            10          than 80 percent of the Long Island region

            11          median income.  It was not an easy loan.

            12          The development, Millennium Hills, in

            13          upscale Melville, in the town of Huntington,

            14          includes public housing units along with the

            15          44 affordable for-sale units.  Millennium

            16          Hills construction had been stalled for

            17          nearly 20 months.  But because of the bank's

            18          responsiveness, especially the

            19          responsiveness of Mark Willis, 44 families

            20          will be homeowners this summer -- families

            21          who otherwise would never, never have owned

            22          a home, especially on high-cost Long Island.

            23          The 44 homes available at Millenium Hills

            24          generated 5,000 requests for applications,

            25          with close to 1,300 applications returned.








                                                                    296
             1

             2          Each and every one of those applications had

             3          to be reviewed three times.  JPMorgan

             4          Chase's community development group,

             5          personnel from that group, volunteered to

             6          assist the Housing Partnership in the

             7          arduous task of reviewing these applications

             8          and keep the development moving.  The

             9          involvement with Millennium Hills is but one

            10          illustration of JPMorgan Chase's support of

            11          our work on Long Island.

            12                It has granted a $250,000 no-interest

            13          revolving loan to the Housing Partnership,

            14          which we, in turn, gave to our

            15          community-based partners to enable them to

            16          develop and rehabilitate critically needed

            17          affordable housing.  The revolving nature of

            18          the loan allows its maximum use over the

            19          years.  Countless Housing Partnership

            20          homeowners receive their fair and affordable

            21          mortgages through JPMorgan Chase's mortgage

            22          division.

            23                Finally, because of a construction loan

            24          from the bank's small-business division, in

            25          1999 the Housing Partnership, in concert








                                                                    297
             1

             2          with community groups in Wyandanch, Long

             3          Island, in the Town of Babylon, was able to

             4          bring that low-income minority community its

             5          first supermarket in a generation.

             6                In short, the Long Island Housing

             7          Partnership supports the proposed merger

             8          because of JPMorgan Chase's responsiveness

             9          to the home ownership needs of Long

            10          Islanders and the low-income development

            11          needs of Long Island communities.

            12                You know, we frequently view mergers

            13          with some suspiciousness and unpleasantness

            14          because we lose private-sector investment

            15          partners.  But in this proposed merger the

            16          Housing Partnership will not be losing a

            17          past partner, but rather it will be gaining

            18          a strengthened, consistent, reliable and

            19          responsive community investment partner.

            20                Thank you for the opportunity to

            21          testify.

            22                MS. BRAUNSTEIN:  Thank you.

            23                MR. SEGALL:  Good afternoon.  My name

            24          is Maurice Segall.  I am Deputy Director of

            25          the Pro Bono Partnership.  We are a








                                                                    298
             1

             2          nonprofit organization providing services to

             3          groups disadvantaged.  We don't provide

             4          service to individuals.  It is pro bono

             5          services to nonprofit groups, services in

             6          our community.  We work in the suburban

             7          tristate area, Westchester County and the

             8          surrounding area, Fairfield County,

             9          Connecticut, and Northern New Jersey.  Our

            10          clients work in the areas of economic

            11          development, neighborhood revitalization,

            12          health and human services and affordable

            13          housing, and we serve these groups with

            14          their business legal needs, helping them to

            15          address their day-to-day legal needs so they

            16          can more strongly and better address them in

            17          our community.  We do that by including

            18          volunteer lawyers from corporate America who

            19          volunteer their services through us to

            20          provide these services.  In addition, we

            21          provide many educational workshops for the

            22          nonprofit community on a variety of topics.

            23                One of our strongest supporters in

            24          pursuing our mission has been our work with

            25          Chase.  When we started six and a half years








                                                                    299
             1

             2          ago, in late 1997, we realized the

             3          importance of working with financial

             4          institutions not only to support our efforts

             5          financially but in order to get to know the

             6          nonprofit community.

             7                And, by the way, the leading financial

             8          institution in our catchment area, working

             9          in the community, has been Chase.  We work

            10          very closely with the streetbankers in

            11          JPMorgan Chase in our area, particularly

            12          Dennis McDermott in Westchester, Bob

            13          Mantilia in Fairfield County, and Etta Denk

            14          in Northern New Jersey.  We found that our

            15          partnerships with these folks and the other

            16          people at JPMorgan Chase have been pivotal

            17          in the success and growth of our and their

            18          work in the success and growth of the

            19          nonprofit sector.

            20                Just by way of example, our office is

            21          located in White Plains, New York.  We have

            22          an office in New Jersey.  So we are well

            23          entrenched in our group in Westchester.

            24          There isn't a nonprofit group in Westchester

            25          that doesn't know, rely on, and look to








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             1

             2          counsel to Dennis McDermott, who knows

             3          everybody, for advice on how they can

             4          succeed.  These streetbankers are the face

             5          and identity of the banking community.  It

             6          is not just a big global bank.  It is a

             7          local bank that cares about the nonprofit

             8          community.  The streetbanker is also looking

             9          for ways to address the needs of the

            10          community, unique ways to not only provide

            11          for their financial needs but their

            12          programmatic needs.  They take the time to

            13          get to know the nonprofit organizations in

            14          the community.  Each community has its own

            15          legal and unique needs and they get to know

            16          what the needs are of those groups.

            17                We were particularly close to JPMorgan

            18          Chase and streetbankers with our educational

            19          workshops.  We offer 30 to 40 workshops a

            20          year on a wide variety of legal topics,

            21          employment law, corporate governance,

            22          volunteerism, risk management -- a variety

            23          of topics that help to identify the legal

            24          needs of the nonprofits and give them

            25          practical ways to address those legal needs.








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             1

             2          We work with them to come up with topics, to

             3          come up with locations, CRA, and it has been

             4          just a wonderful ongoing partnership.

             5                JPMorgan Chase provides financial

             6          support for the series of workshops for us

             7          and direct financial support to the Pro Bono

             8          Partnership in order for us to achieve our

             9          mission.

            10                We are very pleased to support Chase.

            11          We have not worked with Bank One, but we are

            12          in support of this merger and hope that the

            13          merged entity will continue its wonderful

            14          support in the areas in which we work.

            15                Thank you very much for the

            16          opportunity.

            17                MS. BRAUNSTEIN:  Thank you, and thank

            18          you to the entire panel.

            19                The next panel will come up, please.

            20                Welcome.  I will just restate the

            21          procedures here.  Everybody has five minutes

            22          for their presentation.  We are on schedule,

            23          as you know.  We have a lot of people to

            24          hear from, so we would appreciate your

            25          paying attention to the timekeeper sitting








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             1

             2          in the front row, who will hold up times.

             3          When it is time for you to wrap up, then you

             4          will have two minutes left.

             5                In addition, if you have a printed

             6          published statement, please leave a copy

             7          with the gentleman sitting right in the

             8          center, who is our reporter.

             9                Lastly,  when you start speaking,

            10          please state your name and organization for

            11          the record.

            12                With that, Mr. Carbone, do you want to

            13          lead us off?

            14                MR. CARBONE:  Yes.  I do thank you very

            15          much.

            16                My name is Joe Carbone.  I am President

            17          and Chief Executive Officer of The WorkPlace

            18          Incorporated.  We are the Southwestern

            19          Connecticut's Regional Workplace Development

            20          Board.  We are a 501(c)3, and we receive

            21          money from the federal government, the state

            22          government, and we have raised a lot of

            23          money from the private sector, in order to

            24          provide a workforce opportunity for the

            25          people of our region who serve the needs of








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             1

             2          the businesses of our region.  Our mission

             3          is to really develop a well-educated, a

             4          well-trained and a self-sufficient workforce

             5          so that our businesses can compete and

             6          people can take full advantage of what we

             7          have now in the global markets.

             8                The WorkPlace has had a more than

             9          50-year record in this business, and the

            10          process of our serving the main centers of

            11          our activity are what's called one-stops, a

            12          very familiar term in the American workforce

            13          system.  A one-stop is where the rubber

            14          meets the road in this business, where

            15          people access programs that are offered by

            16          the federal workforce system and that of our

            17          states as well.

            18                We serve people who are unemployed,

            19          people who are underemployed and, the latest

            20          addition, folks that we do in fact provide

            21          services to are low-wage workers, people who

            22          are gainfully employed but in a low-wage

            23          worker category; certainly to folks with

            24          disabilities who drop out, older workers,

            25          those moving from welfare to work, and a








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             1

             2          whole bunch of other people.

             3                Like many not-for-profits who have some

             4          reliance upon government resources, we have

             5          faced the problems of a number of years of

             6          seeing our resources from the Feds being

             7          reduced and in some cases from our states as

             8          well.  Unemployment having risen, we are

             9          being charged to serve more people with less

            10          money.  That meant that we had to turn to

            11          businesses and foundations for a lot of our

            12          financial support.

            13                I am proud to say that one of the first

            14          that came to our support and one of our

            15          strongest supporters has been the JPMorgan

            16          Chase Foundation and their bank.  My sense

            17          in the last eight years of being CEO of The

            18          workPlace is that this was an institution

            19          that kind of recognizes the real

            20          relationship between skill enhancement and

            21          economic opportunity.  Obviously, people

            22          need to buy homes at some point in their

            23          lives, but it was important that this bank

            24          clearly portrayed the need for people to

            25          become familiar with technology and to








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             1

             2          engage in programs of lifelong learning.

             3          That in and of itself would provide a more

             4          worthy opportunity to increase their

             5          standard of living.

             6                So this was a different kind of a bank.

             7          It was a different kind of a foundation.

             8          They were not just a philanthropic group,

             9          but they were a group that understood this

            10          kind of relationship.

            11                They helped us in two ways.  Obviously,

            12          they helped us with money, and I will get to

            13          that in a second, but they gave us

            14          personnel.  Bob Mantilia, who is our

            15          streetbanker in the county that I serve, was

            16          not just another person on our board,

            17          another business leader.  He really gave of

            18          himself and got himself in the mix of what

            19          we needed to raise from our private sector

            20          and from foundations.  We raised over $250

            21          million in the past six years, and Bob and

            22          the bank were with us every step of the way

            23          when we had to make a campaign to make that

            24          happen.  Bob Mantilia was central to that

            25          effort.  We are certainly grateful to him,








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             1

             2          grateful to the bank, for giving us a person

             3          of that caliber who understood the larger

             4          picture of our business.

             5                This Foundation and this bank has

             6          helped us and certainly provided us with

             7          more than $300,000 over the past several

             8          years.  They have done so in a whole bunch

             9          of ways.

            10                One that I think is certainly worthy of

            11          mentioning is that when our state went

            12          through some turmoil this year with not

            13          having adequate money, they sought to close

            14          two of our one-stop centers -- one of them

            15          actually in Stamford, Connecticut, one of

            16          the most vibrant economic engines in our

            17          state.  It would have been a sin to close

            18          that center, but JPMorgan Chase came to the

            19          rescue of that center, provided us our first

            20          grant to make it happen.

            21                We at The WorkPlace very, very strongly

            22          support this merger.  We see it as an

            23          opportunity to take the culture of both of

            24          these institutions, bring them together, and

            25          be able to serve more people.  I think in








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             1

             2          our business, which, as I said before, would

             3          be not-for-profit, we have come to recognize

             4          that bigger is better.  You can't be

             5          everything to everybody.  In this case you

             6          are taking two banks who have admirable

             7          records in serving people in the communities

             8          of their region, putting them together, and

             9          we see them as a chance to do more for more

            10          people.

            11                With that, let me close by once again

            12          stating that we very, very much support this

            13          merger between JPMorgan Chase and Bank One.

            14                Thank you very much for the opportunity

            15          to speak.

            16                MS. BRAUNSTEIN:  Thank you.

            17                Reverend?

            18                REV. FLAKE:  Thank you.  Good

            19          afternoon.  I am Floyd Flake, retired member

            20          of the United States House of

            21          Representatives.  I served for eleven years

            22          on the House Banking Committee, and during

            23          the course of those years had an opportunity

            24          to work with a number of banks.  From a

            25          personal perspective, I am pastor of a








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             1

             2          18,000-member church here in Jamaica,

             3          Queens, New York, which is a church that is

             4          involved in community development.  Through

             5          that, I have had the opportunity to work

             6          directly with JPMorgan Chase.  During the

             7          course of those years, when some twenty-five

             8          years ago we could not find a lender to make

             9          investments in the community, where most of

            10          the reports from the media were that it was

            11          a community in decline, JPMorgan stepped up.

            12                During the course of these years,

            13          JPMorgan has invested directly in projects

            14          that I am involved in, more than $60

            15          million.  We have built more than $60

            16          million largely because of that

            17          relationship, which has allowed us to

            18          leverage the resources that we have got from

            19          JPMorgan Chase.  We built more than 630

            20          units of senior housing and assisted-living

            21          housing -- 630 units of homes that have been

            22          purchased by individuals where JPMorgan

            23          holds most of the mortgages.  We have

            24          thrived, as the community has grown, in

            25          large measure because of these developments,








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             1

             2          and the interest in the community has come

             3          to such a level that we have been able to

             4          generate both the Federal Aviation

             5          Administration Regional Building and the

             6          Federal Drug Administration Regional

             7          Building, which is 2,000 additional jobs in

             8          that community.

             9                Furthermore, the Air Train project

            10          could not have happened without the full

            11          support not only of JPMorgan Chase but, of

            12          course, other banks.  But because of its

            13          consistency in investing in the community,

            14          it presented an image for the community that

            15          was sellable to those who would make

            16          ultimate investments in trying to make it a

            17          better place in which to live.

            18                I also served on the Advisory Board,

            19          the something based Advisory Board of

            20          JPMorgan and have been involved in Houston,

            21          Dallas, and New York, and in those cities

            22          have been able to see the same kind of

            23          commitment and dedication on the part of the

            24          bank in terms of its desire to ensure that

            25          inner-city communities had access to the








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             1

             2          same capital resources that any other

             3          community would have, and to see those

             4          resources made available in such ways that

             5          communities that would otherwise die are now

             6          communities that are thriving, not only in

             7          terms of residential development, but that

             8          which comes with residential development,

             9          and that is commercial development.

            10                When you look at a community like mine,

            11          where heretofore there was not even a

            12          supermarket, there were not even any

            13          shopping malls, and look today and see

            14          people wanting to come into that community,

            15          it is in large measure because of the

            16          participation of JPMorgan Chase.

            17                I don't know what Bank One has done,

            18          but I am certain of one thing:  The level of

            19          the commitment of JPMorgan Chase brings a

            20          degree of strength that allows us to have a

            21          level of confidence that the two merged

            22          banks will be able to do even greater works.

            23          This is a commitment that I don't think will

            24          be lost simply because the bank gets bigger.

            25          As a matter of fact, I think bigger will be








                                                                    311
             1

             2          better in this instance.

             3                Lastly, let me say to you, when

             4          JPMorgan made a mortgage for my church, $15

             5          million, which at the time was the largest

             6          that they had made for building a church,

             7          they then went back and set up a whole

             8          division to speak to these churches and

             9          communities who could not get loans, and

            10          what they say to me is, they have never lost

            11          a dollar making a loan to a church.

            12                So I would hope that we have more


            13          moneys available to build Houses of God in

            14          our community where people seem to have lost

            15          their direction.  I believe this merger is

            16          one that ought to happen, its season is

            17          here, and with your commitment I know that

            18          it will happen.  Thank you very much.

            19                MS. BRAUNSTEIN:  Thank you.

            20                Mr. Frey?

            21                MR. FREY:  My name is William Frey,

            22          Senior Vice President of The Enterprise

            23          Foundation.  Good afternoon.

            24                The Enterprise Foundation appreciates

            25          this opportunity to testify in support of








                                                                    312
             1

             2          the application by JPMorgan Chase & Company

             3          to merge with Bank One Corporation.

             4                We commend the Federal Reserve Board

             5          for agreeing to the recommendations of both

             6          the banks and community advocates to hold

             7          public hearings on this important proposed

             8          merger.

             9                Enterprise is a national nonprofit

            10          organization.

            11                The Foundation and its subsidiary

            12          organization, The Enterprise Social

            13          Investment Corporation -- ESIC -- have

            14          committed more than $5 billion to finance

            15          more than 160,000 homes.

            16                Almost all of them have been for low-

            17          and very-low-income families and in low- and

            18          very-low-income communities.

            19                Most of the resources we bring to bear

            20          support the activities of community-based

            21          organizations.

            22                Enterprise's network of grassroots

            23          groups numbers 2,500, in more than 850

            24          locations nationwide.

            25                Enterprise strongly supports the the








                                                                    313
             1

             2          proposed merger between JPMorgan Chase and

             3          Bank One.  Our support is based on our long

             4          working relationships with both institutions

             5          on a variety of initiatives in multiple

             6          locations.

             7                Our partnerships with JPMorgan Chase

             8          and Bank One have been critical to our

             9          ability to achieve our mission of helping

            10          people up and out of poverty by providing

            11          affordable housing and revitalizing

            12          communities.

            13                One example is these institutions'

            14          extraordinary commitment to affordable

            15          rental housing for low-income families

            16          through the Low Income Housing Tax Credit

            17          program.

            18                Since 1994, JPMorgan Chase, in

            19          partnership with ESIC, has invested more

            20          than $247 million to finance nearly 23,000

            21          affordable homes through the Housing Credit.

            22                Bank One has also worked with ESIC to

            23          finance Housing Credit apartments since 1989

            24          and has invested more than $101 million to

            25          create more than 19,000 affordable homes.








                                                                    314
             1

             2                Enterprise has also worked with

             3          JPMorgan Chase and Bank One to provide

             4          innovative, low-cost financing for housing

             5          and community development activities around

             6          the country.

             7                JPMorgan Chase has provided more than

             8          $8 million in low-interest loan funds, which

             9          Enterprise has leveraged with other public

            10          and private funds to make more than $54

            11          million in loan commitments.  These funds

            12          have helped over 150 community-based groups

            13          develop 21,000 affordable homes in ten

            14          cities.

            15                In New York, JPMorgan Chase has

            16          provided funding, mortgage and equity

            17          investments and leadership to the Enterprise

            18          program that has supported the development

            19          of 16,000 units of low-income housing.

            20                The bank's support was also

            21          instrumental in a housing and workforce

            22          program that was responsible for 650 public

            23          assistance recipients finding employment and

            24          maintaining jobs for at least 180 days.

            25                And JPMorgan Chase has been our partner








                                                                    315
             1

             2          in Rochester, New York, lending over $25

             3          million to the Rochester Housing Partnership

             4          Fund Corporation as the lead lender offering

             5          homeownership opportunities for low- and

             6          moderate-income families.

             7                It has been the Enterprise' experience

             8          that JPMorgan Chase and Bank One are

             9          committed to community reinvestment, willing

            10          to work with community-based organizations

            11          and able to bring tremendous capital and

            12          expertise to tough community development

            13          challenges.

            14                We understand, as we have heard today,

            15          that many other organizations have similar

            16          views and share our recommendation that the

            17          Fed approve the merger application.

            18                We also understand, as we also have

            19          heard today, that some have concerns about

            20          the proposed merger.  We encourage the Fed

            21          to take seriously these concerns and

            22          encourage the banks to continue to listen to

            23          and work with those who have raised them.

            24                We appreciate this opportunity to bring

            25          our testimony to the Fed.








                                                                    316
             1

             2                MS. BRAUNSTEIN:  Thank you very much.

             3                MR. SCHECK:  David Scheck, New Jersey

             4          Community Capital.

             5                On behalf of New Jersey Community

             6          Capital, I appreciate the opportunity to

             7          comment on the proposed combination of

             8          JPMorgan Chase and Bank One.  New Jersey

             9          Community Capital invests intellectual and

            10          financial capita in New Jersey's emerging

            11          markets.  New Jersey Community Capital

            12          includes New Jersey Community Loan Fund,   a

            13          $25 million nonprofit financial institution,

            14          a $2.5 million asset management firm,

            15          including funds for early care, affordable

            16          housing, economic development and small

            17          businesses; a consulting group providing an

            18          array of product services and training to

            19          service providers; a newly formed nonprofit

            20          lending in the area, and Equitable Partners,

            21          a partner in our $15 million Tax Credit

            22          Fund.

            23                Since its founding in 1987, New Jersey

            24          Community Capital has committed nearly 400

            25          loans of $7 million in the housing community








                                                                    317
             1

             2          services and small business sectors.  New

             3          Jersey Community Capital was the 2003

             4          recipient of the CDFI Excellence Award for

             5          Community Impact, for demonstrating efforts

             6          that make a difference in the communities it

             7          seeks to serve.

             8                As Executive Director of New Jersey

             9          Community Capital, I am always concerned

            10          about consolidation in the banking sector.

            11          However, I have every reason to believe that

            12          this merger will be in the best interests of

            13          New Jersey, based in large part on the fact

            14          that Chase has worked so hard to develop in

            15          this market area.  Chase is a nationally

            16          recognized leader in terms of community and

            17          economic development, affordable housing,

            18          financial institutions and philanthropy.

            19          The products and services it has brought to

            20          the state are broader and deeper than what

            21          previously existed.  The institution is

            22          renowned for its creativity and innovation

            23          and it brings capital and resources to the

            24          marketplace in far greater amounts than many

            25          other financial institutions.








                                                                    318
             1

             2                JPMorgan Chase is a leader, and its

             3          ongoing commitment to community development,

             4          as evidenced by its continuous outstanding

             5          CRA ratings, assure that other financial

             6          institutions will replicate its offerings in

             7          order to remain competitive.  New Jersey

             8          Community Capital utilizes the following

             9          offerings from the JPMorgan Chase family:

            10          Retail deposit services, multimillion dollar

            11          credit facilities in the forms of lines of

            12          credit to the Community Loan Fund, standby

            13          letters of credit to enhance investments

            14          from other financial institutions with lack

            15          of sophistication to invest in community

            16          development financial institution, capital

            17          in terms of grants to the Community Loan

            18          Fund and two of our managed asset pools.

            19          They supply operating support and

            20          programmatic support to our community.

            21                New Jersey Community Capital also

            22          benefits from representation by JPMorgan

            23          Chase on its employment board.

            24                JPMorgan Chase is a valued partner in

            25          the community and because Bank One does not








                                                                    319
             1

             2          have a presence in the New Jersey

             3          marketplace, the expectation is that the

             4          successful relationships Chase has developed

             5          will be maintained, if not expanded, picking

             6          the combined entity's large capital base.

             7                We trust the bank will reaffirm its

             8          commitment to New Jersey and the combined

             9          bank, JPMorgan Chase and Bank One,  will

            10          continue Chase's philosophy of management of

            11          achieving outstanding ratings.  We also

            12          suggest that senior management in the

            13          institution be continually updated and

            14          educated in the field of community

            15          development finance as well as with the

            16          accounts.

            17                With these provisions, I am confident

            18          the combination will be in the best interest

            19          of New Jersey Capital and the individuals it

            20          serves.

            21                Thank you for your consideration.

            22                MS. BRAUNSTEIN:  Thank you.

            23                MR. PAGAN:  Good afternoon.  I would

            24          like to thank the Federal Reserve Board for

            25          permitting us to comment on this merger.








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             1

             2                My name is David Pagan; I'm the

             3          administrator of Southside United Housing

             4          Development Fund Corporation.

             5                Los Sures is a Community Development

             6          Corporation established in 1972 for the

             7          purpose of providing housing services to the

             8          Southside area of Williamsburg.  Our mission

             9          is to improve the housing stock that is

            10          being used by the low-income residents of

            11          the Southside of Williamsburg.  Since our

            12          inception we have worked with over 500

            13          buildings, 4,500 units for low- and

            14          moderate-income families.  We have

            15          successfully developed over 2,500 units via

            16          new construction or rehabilitation of vacant

            17          apartment buildings in the area.  We are one

            18          of the best-known, Latino, nonprofit housing

            19          agencies in the City of New York.  We are

            20          also well known for our tenant organizing

            21          unit that provides help to those families

            22          which are in danger of losing their

            23          residences.  We work with over 50 buildings

            24          on a regular basis preventing displacement.

            25                The Southside of Williamsburg is a poor








                                                                    321
             1

             2          neighborhood in the shadows of the

             3          Williamsburg Bridge.  The neighborhood is

             4          being transformed as we speak.  Williamsburg

             5          has been inhabited by new generations of

             6          immigrants.  Lately it has been attracting

             7          younger and more professional tenants

             8          bringing displacement problems to the

             9          long-time residents of the area.

            10                Our organization has been involved with

            11          JPMorgan Chase since our founding.  At the

            12          beginning it was called Chemical Bank.  With

            13          the merger with Manufacturers Hanover Trust

            14          it kept the name of Chemical.  When it

            15          merged with Chase, it became Chase, and the

            16          name changed again with the merger with

            17          JPMorgan.  Through those years we saw the

            18          number of local branch banks drop as the

            19          banks were looking to get rid of excess

            20          branches.

            21                We must say that the merging

            22          institution maintained a good relation with

            23          our organization.  There were lines of

            24          credit given to us, beginning with

            25          $25,000 -- that's the time we were broke --








                                                                    322
             1

             2          to the last one of $320,000, and this was

             3          when there was no collateral.  In addition,

             4          working with the mortgage division, they

             5          provided over 100 mortgages to small

             6          homeowners to new purchasers of the houses

             7          in the area.

             8                The bank also worked with us in the

             9          Homeownership Transfer Program, which gave

            10          the opportunity to groups of apartment

            11          dwellers to purchase as a co-op the

            12          buildings where they resided.

            13                Last but not least, it has provided

            14          housing grants to our organization.  Those

            15          grants are not restricted and gave us the

            16          flexibility to provide services, which

            17          otherwise we would not be able to give.  And

            18          they have never dwindled in the amount that

            19          they have given us.

            20                We favor the merger.  The past mergers

            21          have not been detrimental to our

            22          organization.

            23                In conclusion, we favor the merger of

            24          JPMorgan Chase and Bank One.  Our

            25          relationships have always been with the New








                                                                    323
             1

             2          York banks, not with Bank One, but we still

             3          favor the merger.  Thank you.

             4                MS. BRAUNSTEIN:  Thank you.

             5                MS. TROIA:  Hi.  Thank you, and I am

             6          sorry I was late.

             7                I am Rev. Terry Troia, a minister of

             8          the Dutch Reformed Church, the oldest

             9          incorporated entity in these United States

            10          and the oldest continuous Protestant

            11          denomination in this country.  I am the

            12          pastor of the New Utrecht Reformed Church of

            13          Bensonhurst, Brooklyn.  I have also served

            14          for the last 20 years as the Project

            15          Director of the Interfaith Ministry serving

            16          the hungry and homeless on Staten Island for

            17          more than fifteen years.

            18                I have a close working relationship

            19          with JPMorgan Chase in both community

            20          development and low-income housing in the

            21          Borough of Staten Island.  I am one of the

            22          longest-serving members of the Community

            23          Advisory Board, though not the oldest

            24          member,  I am serving for well over a

            25          decade.  Our interfaith-based not-for-profit








                                                                    324
             1

             2          entity, Project Hospitality, in Staten

             3          Island has been the consistent recipient of

             4          housing development funds from JPMorgan

             5          Chase Bank and its earlier entities for more

             6          than fifteen years.  JPMorgan Chase has

             7          basically been doing business with the faith

             8          communities long before "faith based" became

             9          a popular thing to do.

            10                The commitment to affordable housing

            11          and community development that JPMorgan

            12          Chase has maintained in the Staten Island

            13          community and has been unparalleled in these

            14          last fifteen years of relationship.  And I

            15          don't say that lightly, knowing that our

            16          work has garnered much support in recent

            17          years for many other banks in our

            18          community -- and we are grateful to each of

            19          them.

            20                But JPMorgan, then Chemical Bank, was

            21          the first to reach out and substantially

            22          financially support low-income housing in a

            23          borough that had hidden homelessness and

            24          some unease in our community about the

            25          presence of the poor.  Their sustained








                                                                    325
             1

             2          support has resulted in the development or

             3          management of more than 100 permanent

             4          apartments for disabled, formerly homeless,

             5          persons over the last decade and a half,

             6          which is a major accomplishment.  They never

             7          reneged on a commitment for funding despite

             8          intense community opposition at times to

             9          some of our projects.  Basically, they

            10          didn't need us to complete an outstanding

            11          portfolio of community reinvestment.  But

            12          they did more than establish the right

            13          relationship in Staten Island; they did the

            14          right thing, consistently supporting housing

            15          development within disenfranchised and

            16          low-income communities on Staten Island.

            17                Most recently, they have launched a

            18          financial literacy campaign, realizing the

            19          critical role literacy -- the ability to

            20          read and add and subtract numbers -- played

            21          in the lives of disempowered poor persons

            22          with low literacy rates.  They did not just

            23          send curriculum; they sent bankers to teach,

            24          exposing the for-profit community to the


            25          needs and life situations of the persons in








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             1

             2          our community that are most in need.

             3                This year JPMorgan Chase embarked on a

             4          new community development project with us,

             5          sponsoring two potential leaders from

             6          disenfranchised new immigrant communities to

             7          participate in a CIVIC Institute sponsored

             8          by the College of Staten Island.  This new

             9          initiative, with financial backing for

            10          JPMorgan Chase, will cultivate the immigrant

            11          leaders of tomorrow among our newly arrived

            12          immigrant communities today.  Their

            13          foresight and commitment has only brought

            14          good to our neighborhoods and increased

            15          quality of life to the poor communities we

            16          are committed to serving.

            17                That is why, without reservation, I

            18          support the proposed merger of JPMorgan

            19          Chase and Bank One, and thank them publicly

            20          for their sustained, unwavering and

            21          courageous commitment to the disenfranchised

            22          communities of Staten Island.

            23                MS. BRAUNSTEIN:  Thank you very much,

            24          and thank you to the entire panel.  We are

            25          going to take a 15-minute break, until 3:50.








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             1

             2          I would ask that the members at the next

             3          panel be up here seated by 3:50.

             4                (A recess was taken.)

             5                MS. BRAUNSTEIN:  We are missing one

             6          person, but we will get started.  If that

             7          person shows up, he can just jump in.

             8                Welcome to this panel.  Just to repeat

             9          the ground rules, we have two timekeepers

            10          sitting over there who will wave signs at

            11          you.  Everybody has five minutes for their

            12          presentations.  We do appreciate your

            13          keeping to the time frame.

            14                If you have a printed copy of your

            15          statement, if you haven't already given it

            16          to somebody on the staff up at the

            17          registration desk, please leave a copy with

            18          the gentleman in the center of the room, who

            19          is our recorder.

            20                Lastly, when you start your statement,

            21          please state your name and organization for

            22          the record.

            23                With that, Mr. Diaz.

            24                MR. DIAZ:  My name is Lautaro Diaz.  I

            25          am Deputy Vice President of National Council








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             1

             2          of La Raza. I am going to be reading a

             3          letter from out President, Raul Yzaguirre.

             4                I write on behalf of the National

             5          Council of La Raza to inform you of our

             6          views regarding the proposed merger between

             7          JPMorgan Chase and Bank One.  NCLR is the

             8          nation's principal Hispanic organization,

             9          representing over 300 affiliated-based

            10          organizations that together serve more than

            11          4 million Latinos in 41 states, the District

            12          of Columbia and Puerto Rico.  As an

            13          organization committed to reducing poverty

            14          and discrimination against and improving

            15          life opportunities of 38 million Americans

            16          of Hispanic descent, NCLR has a deep and

            17          profound interest in the nation's financial

            18          services industry.

            19                NCLR typically does not take policy

            20          positions on industry mergers per se.

            21          However, we have been active on a range of

            22          public policy issues, including the

            23          preservation and strengthening of the

            24          Community Reinvestment Act, supporting fair

            25          housing and fair lending laws, increasing








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             1

             2          access to Financial services among

             3          low-income people, and promoting

             4          homeownership in the Latino community.  In

             5          addition, NCLR serves as a major community

             6          development intermediary.  We provide

             7          training and technical assistance to our

             8          affiliates in homeownership, housing, and

             9          community development.  Our subsidiary, the

            10          Raza  Development Fund, is the nation's

            11          largest Hispanic Community Development

            12          financial institution.  NCLR also manages

            13          the largest network of community-based

            14          homeownership counseling providers in the

            15          Latino community.  This extensive policy and

            16          program involvement has shaped and informed

            17          our views on financial industry trends in

            18          general and the proposed merger in

            19          particular.

            20                As the nation's largest ethnic

            21          minority, the concerns of Hispanic families

            22          are critical to decisions concerning access

            23          to financial services.  Latino families

            24          historically have been underserved by

            25          mainstream financial institutions.








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             1

             2          Approximately 35 percent of Latino families

             3          and 42 percent of foreign-born Latinos do

             4          not have bank accounts.  The white-Latino

             5          wealth gap is currently 27 to 1.  Latinos do

             6          not receive a proportionate number of

             7          conventional mortgage loans; and the

             8          white-Latino homeownership gap is 25

             9          percent.  The largest barriers to accessing

            10          these critical financial services is a lack

            11          of access to products that meet the needs of

            12          low-income Latino families and a paucity of

            13          comprehensive financial servicces in

            14          low-income Latino neighborhoods.  Based on

            15          our initial research, NCLR has several

            16          concerns regarding JPMorgan Chase's and Bank

            17          One's performance in serving the Latino

            18          community:

            19                Neither Chase nor Bank One has Hispanic

            20          representation on their respective boards of

            21          directors, nor do they have any Hispanic

            22          executive officers, according to the

            23          Hispanic Association for Corporate

            24          Responsibility, HACR.  In this context, both

            25          banks are well below the industry averages








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             1

             2          and both receive a thumbs-down from HACR.

             3          We believe that the merged bank must have

             4          proportionate representation of America's

             5          largest ethnic minority in its policymaking

             6          inner circle.

             7                Our initial impression is that neither

             8          bank serves the Latino community in

             9          proportion to their market share in most

            10          communities.  Both Chase and Bank One have

            11          lower than average lending rates to

            12          Hispanics and predominantly Hispanic

            13          communities than their market peers.  To the

            14          best of our knowledge, neither bank has

            15          executed meaningful national or regional

            16          partnerships with Latino-based

            17          organizations, and neither has been active

            18          in public policy issues of mutual interest

            19          to the Latino community and the financial

            20          services industry; and neither bank has

            21          created significant new products targeted to

            22          the needs of Latino and immigrant

            23          communities.  Both banks lack retail

            24          presence in low-income Hispanic communities.

            25          Further, we have received reports that








                                                                    332
             1

             2          JPMorgan Chase has actually reduced its

             3          support to the Latino community following

             4          the JPMorgan Chase merger.

             5                Credible sources have reported on

             6          JPMC's and Bank One's questionable

             7          performance in the areas of CRA performance,

             8          subprime and fair lending.  Previous CRA

             9          commitments have been large but lack

            10          specificity necessary to assess fully how

            11          and where the funds are being spent,

            12          particularly with respect to the Latino

            13          community.  Chase Manhattan Bank USA and

            14          Chase Mortgage Corp. Make and sell

            15          significant amounts of subprime loans, many

            16          of which are high-cost loans and have

            17          prepayment penalties in excess of two years.

            18          While Chase's merger application and other

            19          data presented to NCLR provided some

            20          information as to its due diligence

            21          procedures for subprime lending, the

            22          narratives are vague and do not

            23          satisfactorily explain how Chase is

            24          protecting consumers and investors.

            25                Does that sign say it is over?  I can't








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             1

             2          see it.

             3                MS. BRAUNSTEIN:  Wrap up.

             4                MR. DIAZ:  While noting these concerns,

             5          there are serious indications that the

             6          merged bank intends to improve its

             7          performance considerably in respect to the

             8          Latino community in the years to come.  I

             9          note further the bank's strong ties to some

            10          key Latino community organizations in its

            11          principal Northeast service areas.

            12                Second, the banks have made affirmative

            13          commitments to NCLR regarding their senior

            14          management's intention that the merged bank

            15          will fully serve the Latino community.

            16                Third, and more importantly, I am fully

            17          convinced that the firm's leaders recognize

            18          that it is in the interest of the merged

            19          bank to significantly expand its reach in

            20          the Latino market with respect to mortgage

            21          financing, savings and other financial

            22          investment products and community retail

            23          presence.  Having said that, at this time we

            24          cannot make a judgment one way or another

            25          regarding whether and to what extent these








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             1

             2          commitments will be fulfilled in the future,

             3          and reserve the right to amend these

             4          comments in light of future developments.

             5          Thank you.

             6                MS. BRAUNSTEIN:  Thank you.

             7                MS. CAROSELLI:  My name is Maura

             8          Caroselli.  I am a Community Reinvestment

             9          Organizer for New Jersey Citizen Action.

            10          New Jersey Citizen Action is the state's

            11          largest citizen watchdog organization, with

            12          over 60,000 members and over 100 affiliate

            13          organizations in our state.  In the past 20

            14          years we have established over 28 statewide

            15          community reinvestment agreements with banks

            16          totaling more than $13 billion, and these

            17          commitments are in below-market-rate

            18          mortgages and community and economic

            19          development loans.  Chase is not one of the

            20          banks with whom we have a CRA agreement or

            21          business plan.

            22                Just to give you a background, in the

            23          past, Citizen Action had a very productive

            24          relationship with Chemical Bank before it

            25          was purchased by Chase.  We had a specific








                                                                    335
             1

             2          community reinvestment agreement with the

             3          bank, and Chemical took a clearly pivotal

             4          role in community and economic development

             5          in our state.  After the merger, Chase

             6          refused to sign a new CRA agreement with

             7          NJCA and the Housing and Community

             8          Development network that worked in New

             9          Jersey, which would have outlined specific

            10          products and goals for our state.

            11                The result was that there is a general

            12          feeling in New Jersey that the low- and

            13          moderate-income population of the state did

            14          not in fact benefit from the merger.

            15                While we do have a productive

            16          relationship with the New Jersey CRA

            17          Officer, Etta Denk, and the bank does

            18          support our financial education program and

            19          our First Time Homebuyers Program, the

            20          overall relationship with the bank and New

            21          Jersey Citizen Action has been tenuous due

            22          to communication problems with their

            23          mortgage staff as well as a lack of

            24          competitive community reinvestment mortgage

            25          products in our state which have plagued








                                                                    336
             1

             2          us..

             3                We believe that in order for this

             4          merger to be approved, JPMorgan Chase should

             5          be required to provide more information on

             6          its high-cost lending practices and

             7          involvement with predatory loans -- which I

             8          am going to go into a little bit more -- but

             9          foremost the bank must be required to

            10          provide monetary goals, product descriptions

            11          and lending criteria that are specific to

            12          New Jersey's low- and moderate-income

            13          communities.  We know from twenty years of

            14          doing this work that good intentions don't

            15          always count and that as banks get bigger

            16          they must make a very specific public

            17          commitment to get better.

            18                The commitment made by the bank in the

            19          Chicago area is a step in the right

            20          direction, but specific monetary goals for

            21          specific products will provide New Jersey

            22          with evidence of the direct benefits in our

            23          state from this merger.  We also see this

            24          commitment as a way to preserve community

            25          investment in New Jersey in the face of this








                                                                    337
             1

             2          nationwide colossal merger.

             3                We are also concerned about this merger

             4          because of our past experiences with Chase

             5          and the bank's involvement with high-cost

             6          lending.

             7                In 1999, Citizen Action discovered that

             8          Chase purchased about 40 predatory loans

             9          which were a part of a major predatory

            10          property flipping scheme involving 150

            11          families in Northern New Jersey.  This is

            12          similar to what Brigitte Amiri mentioned in

            13          a previous panel from the Southern Brooklyn

            14          Legal Services.  In our case in New Jersey,

            15          Chase had a corresponding agreement to

            16          purchase and service these loans from a

            17          predatory mortgage company called

            18          Neighborhood Mortgage.  These loans could

            19          have easily been identified as predatory

            20          from the loan files since in these loan

            21          files we found multiple falsified documents,

            22          gift letters and signatures.  It is evident

            23          that the bank never conducted thorough due

            24          diligence on these loans.  Four years later

            25          we are still working to remediate the








                                                                    338
             1

             2          problem in a first-of-its-kind "Workout

             3          Solutions."  We continue to have problems

             4          with Chase as we work with them to resolve

             5          their past mistakes with these loans during

             6          our workout process.

             7                We are also concerned that Chase makes

             8          a substantial amount of high-cost subprime

             9          loans and the bank is considered a subprime

            10          lender by HUD.

            11                We also are concerned that Chase will

            12          not reveal lenders who do that business.

            13                These reasons, combined with our

            14          experience with the bank, do not provide the

            15          Federal Reserve, we believe, with enough

            16          information to show whether the bank's

            17          high-cost lending practices are in fact

            18          responsible or not.  Both Chase and Bank One

            19          should be required to provide more

            20          information on its practices to assure that

            21          this merger will indeed benefit the State of

            22          New Jersey.  Chase's inability to view New

            23          Jersey as an important part of their

            24          footprint and lack of market share in New

            25          Jersey have translated into a lack of








                                                                    339
             1

             2          interest, creativity and innovation in New

             3          Jersey, we believe.  Chase must make a

             4          commitment that New Jersey will no longer be

             5          treated as a stepchild of New York.  Thank

             6          you.

             7                MS. BRAUNSTEIN:  Thank you.

             8                MR. KLATSKY:   My name is Wilbur

             9          Klatsky.  I am the President and Chief

            10          Officer of the Community Development

            11          Corporation.  I thank the Federal Reserve

            12          for inviting us to make a comment.  We have

            13          had a 15-year relationship with Chemical,

            14          and then Chase, and then JPMorgan Chase.

            15                Just to take the mystery out of where

            16          we stand on the proposed merger between

            17          JPMorgan Chase and Bank One, we are in

            18          support of it, I guess with some

            19          reservations.

            20                Change is something hard, especially

            21          for an older person like me, to think of as

            22          having a benefit.  Chase has provided CDC of

            23          Long Island initially with leadership on the

            24          board.  The original board member from Chase

            25          was a gentleman we just adored named Kevin








                                                                    340
             1

             2          Burns, who first introduced me to Mark

             3          Willis, followed by another gentleman,

             4          Vincent Pellitteri, both rather senior

             5          people at the bank.  Both gave their hearts

             6          and souls and really enhanced the programs.

             7                From that initial discussion, I must

             8          comment to you that what I heard some

             9          fifteen years ago is that there is a herd

            10          mentality in the banking community.  And

            11          once I was able to secure the support of

            12          Chase, other banks began to follow.  At this

            13          point in time, we have a partnership with

            14          every money center bank in the tristate area

            15          as well as every community bank and regional

            16          bank.  So the results and the rewards from

            17          the relationship are ongoing.

            18                More specifically, we were the first in

            19          the country to provide home ownership for

            20          Section 8 recipients.  Chase, along with

            21          some other banks, contributed to a loan

            22          reserve, which, in turn, provided us with

            23          the ability to secure $2 million from Fannie

            24          Mae in a very, very high cost area.

            25                Long before that, the board of the








                                                                    341
             1

             2          corporation decided that while housing is

             3          still a critical issue for us, creating jobs

             4          was an even more critical issue, and we

             5          created the first multibank in the New York

             6          area.  Again I was able to convince Mark,

             7          struggling to some degree, but to convince

             8          Mark to be the first investor into the

             9          multibank, with other banks contributing,

            10          and we have an ongoing lending program.

            11                Following that, we were so productive

            12          in providing infrastructure for doing

            13          micro-lending that we had a small grant from

            14          Chase of $80,000.  From that, we became a

            15          micro-lender.  And we are now the leading

            16          micro-lender in the tristate area, with a

            17          relationship with the Small Business

            18          Administration.

            19                We are about to be regulated because we

            20          are close to securing an SBA 7A program, and

            21          we are hoping that Mr. Kramer smiles upon

            22          that in a relatively short time; he is now

            23          considering that.

            24                Beyond that, the other issue that we

            25          worked out together with Chase -- and we








                                                                    342
             1

             2          have no relationship with Bank One, we hope

             3          we will -- is in the area of child care.  We

             4          became aware very quickly that in talking

             5          about economic development we weren't

             6          providing quality child care to blue-collar

             7          workers within Long Island, which

             8          incidentally stretches along for 125 miles,

             9          literally from the rural area of Greenport

            10          to the western boundary of Queens.  So we

            11          have actually created a child care loan

            12          product of up to $25,000 -- very, very

            13          successful.  Again, Chase is the first one

            14          to come up with dollars.  We have had four

            15          other banks then followed suit and a number

            16          of foundations.  And that's another very

            17          successful piece of the puzzle.

            18                Chase, early on, was helpful in

            19          creating a loan loss reserve, which was

            20          required by the Small Business

            21          Administration.  In general terms, we have

            22          been able to leverage what Chase has been

            23          doing with every other institution.

            24                We are a long-term member of the CDFI.

            25          We are a long-term member of the








                                                                    343
             1

             2          Neighborhood Reinvestment Corporation.  Much

             3          of those programs require a match from other

             4          institutions that are nonfederalization.

             5          Chase has provided that kind of substance

             6          for us, and we have grown in the last ten

             7          years from a staff of a little over 20 to,

             8          as of yesterday, 75, with two offices, two

             9          home centers, and we have provided a range

            10          of services.

            11                We are becoming the major producer of

            12          all major taxpayers on the Island.  Chase

            13          has been supportive of that.  So things have

            14          gone well.

            15                But what concerned us, I think -- and I

            16          have heard this from others -- what

            17          concerned us from the street is that what is

            18          the merger going to do.  Is it really going

            19          to enhance the financial capability of this

            20          merged institution?

            21                An example of that to some degree is

            22          that we have a number of recoverable grants

            23          from Chase which were very helpful and which

            24          we are paying back.  It would be a nice

            25          gesture, I think, to the not-for-profit








                                                                    344
             1

             2          community, at least in the tristate area, if

             3          all of those grants were forgiven, to leave

             4          us more capital to continue on doing other

             5          things.  So we are supportive of that.

             6                We are concerned.  We think we have a

             7          friend.  We hate change, but we are going to

             8          tolerate it and we are going to try to make

             9          the best of it, and we hope to get a more

            10          aggressive and a more comfortable partner

            11          with a lot more assets to bring to an area

            12          of the underserved on Long Island.  Thank

            13          you.

            14                MS. BRAUNSTEIN:  Thank you.

            15                MS. GRIST:  Thank you.  My name is

            16          Lisa-Nicolle Grist.  I am the Executive

            17          Director of Neighbors Helping Neighbors.

            18          Neighbors Helping Neighbors is based in

            19          Sunset Park, Brooklyn.  We are an advocacy

            20          organization serving tenants, home buyers

            21          and others of small properties and small

            22          businesses.  Our mission is to enable loan

            23          borrowing of people to build assets for

            24          their families in Brooklyn communities by

            25          securing, approving and owning their homes








                                                                    345
             1

             2          and businesses.

             3                I am here to urge you to examine

             4          carefully the impact of the proposed merger

             5          of JPMorgan Chase and Bank One on the

             6          convenience and ease of New York City

             7          communities, especially as it pertains to

             8          the policies of combined banks.  We have

             9          reason for concern about the proposed

            10          merger.  Through our core programs,

            11          low-income tenants obtain and have approved

            12          their loans, low- to moderate income persons

            13          in purchasing affordable first homes.

            14          Homeowners repair their homes.  Local

            15          shopping streets become good places to work,

            16          shop and live, and community members work

            17          with policymakers to create affordable

            18          housing.

            19                NHN has enjoyed a good relationship

            20          with the Chase for many years, primarily

            21          through contact with the New York Mortgage

            22          Coalition.  I commend Chase in founding the

            23          Mortgage Coalition in the early '90s and in

            24          building the coalition and holding it

            25          together ever since.  With Chase leadership,








                                                                    346
             1

             2          the New York Mortgage Coalition has

             3          addressed an important CRA goal by

             4          facilitating mortgage loans for low-income

             5          and minority home buyers and neighborhoods.

             6          Over the years, NHN has helped over 105

             7          first-time home buyers obtain Chase

             8          mortgages worth $15 million.  Chase has

             9          talented and committed employees and, in

            10          addition, its organizational structure has

            11          contributed to its leadership in mortgage

            12          lending for the low-income and minority home

            13          buyers in the neighborhoods.

            14                There appears to be a reducction in the

            15          likelihood of continued leadership.  Those

            16          that formerly were in New York within the

            17          community development group are now in

            18          Tampa, Florida, and that does suggest that

            19          those who probably would have been approved

            20          in New York are being sent to Tampa.

            21                NHN is a member of city and state

            22          nonprofit coalitions and they help inform us

            23          about the proposed merger of JPMorgan Chase

            24          and Bank One.  I have tried to carefully and

            25          critically examine the information that they








                                                                    347
             1

             2          provide us and I agree with much of it.  So

             3          I am going to at some point, as you may have

             4          heard already today, shape my opinion of the

             5          proposed merger accordingly, and I hope

             6          these points will also influence your

             7          examination.

             8                As to the organizational structure, the

             9          recent reorganizations seem to limit

            10          JPMorgan Chase's ability to establish

            11          partnerships on a neighborhood level.  Its

            12          programs seem to become less responsive to

            13          the priorities and needs of New York's

            14          low-income neighborhoods.  It now works more

            15          and more with larger intermediaries and

            16          regional or national organizations and less

            17          with community-based groups.  Until

            18          recently, community groups had urged other

            19          banks to model their CRA activities on

            20          Chase's organizational structure.  Now

            21          concerns are appearing that it is not only

            22          in mortgage underwriting but also in grant

            23          making, construction lending and other

            24          areas.  The organizations are particularly

            25          worrisome because Bank One had committed to








                                                                    348
             1

             2          retaining a successful organizational

             3          structure at the time of the merger of

             4          JPMorgan and Chase Manhattan.

             5                Another cause of concern is, we don't

             6          know about high-cost lending activities.

             7          JPMorgan Chase does make substantial

             8          subprime loans and has been investigated

             9          about its practices, and received

            10          confidential treatment from the Federal

            11          Reserve regarding the list of subprime

            12          persons.  Bank One makes participation loans

            13          and loans to payday lenders, but again we

            14          don't have enough information about the

            15          extent of their financing, which lenders

            16          they are working with, or their due

            17          diligence procedures.  Thus, the Federal

            18          Reserve and the public cannot judge whether

            19          their activities are predatory or abusive.

            20                In some way I hope that the

            21          policymakers both at the banks and the

            22          regulators will hear the respect and

            23          appreciation that we have for our Chase

            24          colleagues as well as the seriousness of our

            25          request that this huge empowered institution








                                                                    349
             1

             2          be held accountable to community investment.

             3                MS. BRAUNSTEIN:  Thank you.

             4                MS. DOWNES:  Good afternoon.  My name

             5          is Toni Downes.  I am the Executive Director

             6          of the Westchester Residential

             7          Opportunities. Westchester Residential

             8          Opportunities is a 36-year-old

             9          not-for-profit organization that prevents

            10          homelessness, promotes equal opportunity in

            11          rental and housing sales, provides housing

            12          for the mentally ill, and empowers

            13          first-time homebuyers with equity building

            14          tools that help them in achieving their

            15          goals.  Our offices are in White Plains,

            16          Yonkers, and Mount Vernon, and we serve

            17          about 7,000 people each year.

            18                I would like to restrict my comments

            19          today to the services aspect of the proposed

            20          merger.  And by services I mean not only

            21          retail banking sites as services but what we

            22          have learned to count on from Chase in

            23          Westchester.  Although the county does have

            24          a reputation as being a community of

            25          affluence, I can assure you that there are








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             1

             2          many families not in that circumstance.  Our

             3          poverty rate is 8.8 percent, and given the

             4          high cost of housing, families even 200

             5          percent or 300 percent of poverty are truly

             6          struggling to keep food on the table and

             7          roofs over their heads.  Over 35 percent

             8          percent of our residents are minorities.

             9          When you speak of mergers, I become

            10          concerned about the loss of services or

            11          resources.  In the last few years, with the

            12          merger with Washington Mutual and when

            13          Citibank absorbed another federal home loan

            14          bank, we lost two very valuable sources of

            15          down payment assistance, and those have not

            16          been replaced.  I don't want to lose what

            17          Chase provides in our community if this

            18          merger takes place, and I would hope for the

            19          best.

            20                So, getting back to some of what we

            21          have learned to count on, Chase does provide

            22          real and substantial assistance to

            23          nonprofits in our community.  They have a

            24          streetbanker position, I guess most recently

            25          referred to as a staff position, in the








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             1

             2          Community Development Group.  But whatever

             3          the name, the representatives really are

             4          involved in the not-for-profits interagency

             5          initiatives for bringing opportunities to

             6          the less fortunate in Westchester.  For

             7          example, we have a lot of participation on

             8          boards of directors, Westchester Interfaith

             9          Housing Corporation, Westchester Residential

            10          Opportunities, and Housing Action Council.

            11          The Westchester Interfaith Housing

            12          Corporation does an affordable housing expo

            13          each year, which has come to be well

            14          attended by low- to moderate-income

            15          households and new immigrants, which were

            16          actively engaging in asset building.  And I

            17          can cite today that a Chase representative

            18          was responsible for us bringing in another

            19          partner, the local Gannett newspaper, which

            20          resulted in infinitely more publicity and

            21          much greater participation at the Expo by

            22          the households trying to reach.  So we have

            23          our people working actively in our

            24          community.

            25                A Chase person has been very engaged in








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             1

             2          the local debate about how to close our

             3          county's budget gap.  This is a real

             4          challenge as many of our safety-net services

             5          are provided by not-for-profits, and they

             6          are considered discretionary, not mandatory,

             7          and yet they are essential services.

             8                We have seen Chase staff involved in

             9          very constructive discussion and analysis of

            10          sales tax versus property tax, and advocates

            11          and leaders in really tackling this problem.

            12                Chase has been involved in networks of

            13          economic development, such as the

            14          Association of Women Business Owners,

            15          technology forums, and other initiatives

            16          that support minority and women-owned

            17          businesses.  Then in the area of financial

            18          literacy, I would like to say, we know there

            19          are this predatory lenders in Westchester

            20          and subprime lending is absolutely alive and

            21          well.  In fact, the 2001 HMDA data indicates

            22          that 38 percent of all refinancing loans to

            23          African Americans in the city of Mount

            24          Vernon are subprime.

            25                I want to add one other thing.  I have








                                                                    353
             1

             2          done a little bit of research, and it does

             3          seem that there is very little subprime

             4          lending in Westchester by Chase, although

             5          that is a bigger nut than I can get my arms

             6          around.  There's a lot of work that needs to

             7          be done there.

             8                But I do know that Chase has been

             9          active in building a community coalition

            10          that will reach out to these victims of

            11          high-priced loans and try to get them to

            12          take advantage of better mortgage products.

            13                They have been active in building a

            14          coalition around financial literacy, and

            15          this involves several banks, a community

            16          college, community advocates, who are

            17          looking to develop an ongoing capacity, not

            18          just Financial Literacy 101.

            19                So the Chase model of having a

            20          community development officer involved

            21          really needs the people to think of calling

            22          on him when there are problems.  I have

            23          contacted him if there were a problem with

            24          servicing issues that they can't resolve on

            25          mortgage defaults using normal channels.








                                                                    354
             1

             2          Chase also hosts community meetings and is

             3          very involved in, as I say, the network of

             4          services.

             5                In closing, I would like to urge that

             6          you insist that the model of a community

             7          involvement that is provided by Chase in a

             8          place like Westchester not be reduced, and

             9          in fact this model should be replicated in

            10          communities where these services are not

            11          currently extended.  Thank you.

            12                MS. BRAUNSTEIN:  Thank you.  Will the

            13          next panel please step up.

            14                We have actually reached the last panel

            15          today.

            16                So, for the last time, I will repeat

            17          for the record the procedures to the panel.

            18          Each speaker has five minutes.  We have a

            19          timekeeper over there who will flash signs

            20          to you.  Please heed the signs so that we

            21          can stay on schedule.

            22                Additionally, if you have copies of

            23          your statement which you have not handed in

            24          to the registration desk, please give them

            25          to the gentleman in the center of the room,








                                                                    355
             1

             2          who is our official recorder.  On your way

             3          out you can hand them to him.

             4                Lastly, when you start to speak, please

             5          state your name and organization for the

             6          record.

             7                And, with that, we will start the

             8          panel.  Mr. Diaz, would you like to?

             9                MR. DIAZ:  Good afternoon.  My name is

            10          Mariano Diaz.  I am with the National

            11          Supermarket Association.  I am here today to

            12          testify and give my endorsement in favor of

            13          the merger between JPMorgan Chase and Bank

            14          One.  I own and operate three C-Town

            15          Supermarkets in the New York/New Jersey

            16          Metropolitan Area.  As I said before, I am

            17          here also representing the National

            18          Supermarket Organization, an organization

            19          with more than 300 supermarket locations,

            20          mostly in the tristate area.  I have also

            21          been a customer of Chase for over ten years.

            22                The independent supermarket industry is

            23          comprised of many different ethnic minority

            24          owners, usually first- and second-generation

            25          immigrants.  The majority of these








                                                                    356
             1

             2          supermarket stores are located in low-income

             3          communities.  One of our trademarks has been

             4          going into abandoned and underserved

             5          neighborhoods and being the anchor, the

             6          beacon of transformation of that community.

             7          We know now how to cater and get involved

             8          with the local community.  We employ people

             9          from the community.  And because we take

            10          great pride in upgrading and renovating our

            11          stores, we are an important source of work

            12          for local electricians, plumbers,

            13          carpenters, and other trades.

            14                Historically, financing for independent

            15          supermarket owners was limited to suppliers

            16          and other unconventional lenders at very

            17          high interest rates and fees and other

            18          unfavorable terms.  Major banks such as

            19          Chase, Citibank and Fleet had stayed away

            20          from lending to independent supermarkets for

            21          a number of reasons -- in my opinion, some

            22          legitimate and some not.

            23                Approximately eight years ago I became

            24          aware that Chase was beginning to express

            25          some interest in developing a targeted








                                                                    357
             1

             2          lending program for supermarkets.  I applied

             3          and was fortunate to receive my first loan

             4          in October 1998.  I have borrowed twice more

             5          since then as my businesses have grown.

             6                Personally and as a representative of

             7          the National Supermarket Association, I am

             8          here to attest to the tremendous positive

             9          contribution of Chase's supermarket lending

            10          program to the independent supermarket

            11          industry.  Chase has made it possible for me

            12          and many of my colleagues to own the real

            13          estate, secure long-term leases, become

            14          independent from our suppliers, renovate and

            15          upgrade our locations.

            16                I hope that Chase's merger with Bank

            17          One gets finalized.

            18                Chase has been an excellent partner

            19          over the years and Chase has shown a

            20          willingness to break new ground where others

            21          have been reluctant.  Without their support

            22          over the years, it would have been much

            23          harder and definitely more expensive to

            24          accomplish the success I have incurred over

            25          the past decade.  For this, I am grateful.








                                                                    358
             1

             2                Thank you very much.

             3                MS. BRAUNSTEIN:  Thank you.

             4                MS. KOTELCHUCK:  Hi.  I am Ronda

             5          Kotelchuck, the Executive Director of the

             6          Primary Care Development Corporation.  PCDC

             7          is a nonprofit organization and a Community

             8          Development Financial Institution.  Our

             9          mission is to "expand and finance primary

            10          and preventive healthcare for underserved

            11          communities."

            12                As a major strategy for achieving this

            13          mission, we provide capital financing to

            14          expand, renovate, upgrade and build new

            15          health facilities serving such communities.

            16          Absent PCDC, this sector has little to no

            17          access to credit or capital.  We also

            18          provide a very strong program of

            19          predevelopment and operational technical

            20          assistance to the organizations that operate

            21          such facilities and will thereby help us to

            22          be even more effective and successful in

            23          accomplishing our mission.

            24                JPMorgan and Chase, separately and then

            25          together, have been critical partners in








                                                                    359
             1

             2          PCDC's founding and in creating its most

             3          successful lending program, the Primary Care

             4          Capital Fund.  We support the merger of

             5          JPMorgan Chase with Bank One, because we

             6          understand that it will strengthen and

             7          expand the bank's commitment to community

             8          development financing and will therefore

             9          help us be even more effective and

            10          successful in accomplishing our mission.

            11                JPMorgan played a critical role in the

            12          founding of PCDC ten years ago.  It was an

            13          early and enthusiastic stakeholder,

            14          providing a grant by its own foundation,

            15          but, more important, using its influence and

            16          relationships to help PCDC recruit a dynamic

            17          and committed board of directors, raise

            18          necessary philanthropic funds to start up

            19          the organization -- that is, in addition to

            20          its own grant -- and to introduce us to many

            21          important community organizations.  Its

            22          presence as friend, strategist, and partner

            23          in this period was critical.  Together in

            24          1998 the community development division of

            25          JPMorgan and PCDC won the national award for








                                                                    360
             1

             2          community development innovation from Social

             3          Compact.

             4                After our founding, Chase took

             5          leadership in bring together a consortium of

             6          four major New York City banks, which

             7          included JPMorgan, to enable PCDC to offer

             8          long-term loans during the Primary Care

             9          Capital Fund, and Chase currently acts as

            10          the construction lender for such projects.

            11          The fund has been enormously successful

            12          since it was launched in 1997.  Its success

            13          can be measured in multiple ways:

            14                We have completed 17 facilities, making

            15          loans totaling $26 million, and leveraging a

            16          total investment of $33 million in New York

            17          City's low-income neighborhoods with that

            18          fund.

            19                The new, expanded and renovated

            20          facilities together add the capacity to care

            21          for 140,000 low-income New Yorkers.

            22                All facilities are current on their

            23          debt service.

            24                The program has contributed

            25          significantly to improving health indicators








                                                                    361
             1

             2          in New York City -- growing rates of life

             3          expectancy, falling rates of infant

             4          mortality, and preventable hospitalizations.

             5                The "PCDC model" has inspired the

             6          development of similar loan funds and

             7          efforts in other parts of the country --

             8          West Virginia, Texas, Arkansas, Mississippi

             9          and Georgia and similar initiatives in

            10          Detroit, California and Washington, D.C.

            11                Finally, we believe we have proved that

            12          the development of primary and preventive

            13          care is a powerful and essential component

            14          of community development.  At one level it

            15          provides steady, sustainable, well-paying

            16          jobs for community residents and generates

            17          important secondary economic activity in the

            18          community.  But more importantly, it is

            19          essential to the ability of families to

            20          participate successfully in the workforce

            21          and for their children to succeed in school.

            22          It is essential to reducing preventable

            23          illness and hospitalization, and reducing

            24          disability, dependency and premature death.

            25                Through its foundation, JPMorgan Chase








                                                                    362
             1

             2          has also supported PCDC in developing a

             3          powerful set of technical assistance

             4          programs, both for the predevelopment stage

             5          and for operations.  We have trained 116

             6          teams from 23 facilities in the latter

             7          program and demand is increasing both within

             8          our service area and from across the

             9          country.

            10                We expect continued partnership from

            11          the merged JPMorgan Chase/Bank One entity,

            12          and we expect it to play a major role in our

            13          future growth.  That growth includes our use

            14          of New Markets Tax Credits to better serve

            15          our community and expanding our lending

            16          program statewide.  The latter is made

            17          possible by a CDFI grant that will allow us

            18          to replicate the very successful New York

            19          City program throughout the rest of the

            20          state.

            21                Finally, our success is attributable to

            22          those who served on our board of directors

            23          and help guide our efforts and build the

            24          necessary relationships -- Ruth Salzman, the

            25          current Senior Vice President of JPMorgan








                                                                    363
             1

             2          Community Development Group, and before her

             3          Hildy Simmons, from JPMorgan.

             4                We expect that the merger of JPMorgan

             5          Chase and Bank One will expand the

             6          commitment to community development, and the

             7          merged entity will help us make even a

             8          greater impact on the underserved

             9          communities of New York State.

            10                MS. BRAUNSTEIN:  Thank you.

            11                MR. MARSHALL:  Good afternoon.  My name

            12          is Timothy Marshall, President and CEO of

            13          the Jamaica Business Resource Center.  It is

            14          indeed a pleasure to come before you in

            15          support of the JPMorgan Chase/Bank One

            16          merger.  In an era of considerable

            17          consolidation in the banking industry, and

            18          at a time when minority communities are

            19          particularly hurting, I do not take this

            20          opportunity lightly.  The notion that less

            21          is more is not always applicable.

            22                However, it is because of the nearly

            23          ten-year relationship with Chase and its

            24          predecessor, Chemical Bank, that I can

            25          attest to an unparalleled view of leadership








                                                                    364
             1

             2          and service that has been demonstrated time

             3          and time again by this institution.

             4                It is therefore the contents of these

             5          two themes, leadership and service, that I

             6          would like to briefly speak of at this time.

             7                Approximately ten years ago, I had the

             8          opportunity to work as chief of staff to the

             9          chairman of a major division of a

            10          Fortune-500 corporation.  One important

            11          lesson I learned during that time is that

            12          companies are like people:  They have

            13          distinctive characters, values, and

            14          personalities.  Moreover, when you are a

            15          multibillion-dollar corporation giant, it

            16          would be easy to throw dollars at the very

            17          problems that exist in communities

            18          throughout this nation and then tell folks

            19          to just simply go away.

            20                But that is not the case with Chase.

            21          They have chosen another road, that of

            22          direct involvement in bringing about

            23          solutions to problems that low- and

            24          moderate-income communities are facing.  A

            25          brief history of my organization is such a








                                                                    365
             1

             2          case in point.

             3                As a result of the hue and cry from

             4          small businesses throughout this nation for

             5          more and better access to financing and

             6          capacity building services in low- and

             7          moderate-income communities, former

             8          President Clinton directed the White House

             9          Office of Management and Budget to develop a

            10          new policy and programmatic initiative.  The

            11          result was a program called the One Stop

            12          Capital Shop.  The national model and pilot

            13          for this program was to be housed in the

            14          Sixth Congressional District.  Then

            15          Congressman Flake, whom you heard from

            16          earlier, reached out to then Chemical Bank,

            17          who helped to give birth to this new entity

            18          by providing extensive support ranging from

            19          grants to technical assistance to

            20          capacity-building support in the form of a

            21          loan executive, provision of office

            22          furniture and equipment, and a broad range

            23          of support to help get this initiative

            24          launched and to open its doors.

            25                This was a significant role of








                                                                    366
             1

             2          leadership, but what is of signal importance

             3          is that they did not just provide that

             4          initial support.  They have been with us

             5          through thick and thin in the past with tech

             6          aid, providing ongoing support, growth and

             7          development strategies and a broad range of

             8          other services.

             9                As a result of this critically

            10          important support, JBRC has emerged as a

            11          leader in the field of economic development

            12          in the New York Metropolitan Area and has

            13          provided technical assistance to over 6,000

            14          minorities on businesses and has trained

            15          over 3,750 businesses in the fundamentals of

            16          business management, has helped to create

            17          and retain over 6,000 jobs, and has secured

            18          over $350 million in financing and

            19          procurement opportunities.  This model has

            20          now been replicated in 16 markets throughout

            21          the United States.

            22                While these numbers are significant,

            23          they are more meaningful because minority

            24          businesses are often the gateway to jobs and

            25          training opportunities in the minority








                                                                    367
             1

             2          community.

             3                During a time of significant

             4          unemployment and the need for affordable

             5          housing and budget cuts at the federal,

             6          state and the local level, Chase has

             7          continued to stand in the gap, helping to

             8          keep community-based organizations alive and

             9          thus continuing much needed services at a

            10          grassroots level.  It has been one of those

            11          corporate citizens the community knows will

            12          not go away.  They are truly committed to

            13          the well-being of communities that are

            14          hurting.

            15                This, we believe, is an excellent

            16          example of leadership in the area of

            17          sustainable development.  This includes

            18          providing financing for small businesses,

            19          and with continued challenges to affirmative

            20          action, Chase has maintained a major

            21          commitment to supply diversity.

            22                From Mark Willis to Greg King, John

            23          Pellitteri, Lou Salzman, Harvey Butler,

            24          their predecessor Carol Carey, and a host of

            25          those who worked on hybrid systems, we are








                                                                    368
             1

             2          grateful for their leadership and service

             3          and present, this testimony in the

             4          fundamental belief that this commitment will

             5          not go away but will continue because of its

             6          character, core values and long history of

             7          demonstrated commitment.  Thank you very

             8          much.

             9                MS. BRAUNSTEIN:  Thank you very much.

            10                MS. MATOS:  Good afternoon.  My name is

            11          Maria Matos and I am the Executive Director

            12          of the Latin American Community Center in

            13          Delaware, and the President of its

            14          Development Corporation.  I would like to

            15          thank the Federal Reserve Board for giving

            16          my the opportunity to share my perspective

            17          on the Bank One and JPMorgan Chase merger.

            18                The Latin American Community Center, or

            19          the LACC as it is known in Delaware, was

            20          incorporated in 1969, and it is the largest

            21          nonprofit agency serving Latinos in

            22          Delaware.  With a staff of approximately 70

            23          employees, our organization serves more than

            24          6,000 clients every year.  Our mission is

            25          "to advocate for and assist the Latin








                                                                    369
             1

             2          community by offering resources and programs

             3          that promote empowerment and an enhanced

             4          quality of life, while celebrating our

             5          diverse cultures."  Our area of service

             6          spans New Castle County, but focuses

             7          primarily on Latino residents of the city of

             8          Wilmington, where the agency is located.

             9          New Castle County is the most densely

            10          populated county in the state, and has seen

            11          a 136 percent increase in Latino population

            12          since 1990, the vast majority now coming

            13          from Mexico.

            14                I speak from the perspective of a

            15          director of a nonprofit, community-based

            16          agency that serves poor, ambitious

            17          immigrants and also seeks to redevelop a

            18          blighted inner-city Enterprise community.

            19                The LACC initially focused on providing

            20          key social and intervention services to the

            21          community.  More recently, it has sought to

            22          expand its educational initiatives for

            23          individuals of all ages, starting at the age

            24          of one.  In this arena we provide preschool

            25          education and care programs for children








                                                                    370
             1

             2          ages one to five, complementary care,

             3          educational enrichment programs, and a youth

             4          mentoring program for youth 6 to 12 years

             5          old, and evening activities for older,

             6          middle and high school youth.  Our adult

             7          education programs include civics, English

             8          as a second language, computer and parenting

             9          classes.  Most recently, we have begun a

            10          conversational Spanish program for law

            11          enforcement officers of the New Castle

            12          County Police.

            13                In the social services area, the agency

            14          offers family support services, community

            15          outreach programs for substance abuse and

            16          HIV/AIDS prevention, workforce development

            17          and placement, and financial literacy

            18          programs primarily for Latino immigrants,

            19          although everyone is welcome.  As a matter

            20          of fact, the agency was one of the pilot

            21          sites for the FDIC Money Smarts program.

            22                Our Development Corporation was created

            23          in 2000 as an independent 501(c)3 to respond

            24          to the deteriorating housing conditions and

            25          the high levels of lead in the blood of








                                                                    371
             1

             2          children in our neighborhood.  To date the

             3          CDC has renovated six abandoned houses, is

             4          building a three-story, twenty-four unit

             5          apartment building for low-income seniors,

             6          to be fully occupied by the end of this

             7          year, and has provided lead abatement and

             8          low-level intervention to over 500 units in

             9          our immediate neighborhood.

            10                Over the coming years we expect to see

            11          a significant increase in the demand for

            12          Agency services, as the migrant and

            13          immigrant flow of Latinos into Delaware

            14          continues to grow.

            15                Regarding Bank One and JPMorgan Chase,

            16          our relationship with these two financial

            17          institutions predates merger discussions by

            18          many years.

            19                When Bank One was First Chicago and I

            20          had recently joined the LACC as its

            21          executive director, their CRA officer,

            22          Roland Ridgeway, provided expert technical

            23          assistance on fund-raising and grant

            24          writing.

            25                JPMorgan Chase gave us seed money for a








                                                                    372
             1

             2          computer literacy program.  We leveraged

             3          this initial investment and have created an

             4          award-winning program.

             5                I also have the pleasure of sitting on

             6          the JPMorgan Chase Community Advisory Board,

             7          and I think they take our advice very

             8          seriously.

             9                I would be remiss if I did not mention

            10          one concern that comes to mind with all

            11          mergers.  As a nonprofit organization, we

            12          have experienced many bank mergers, and we

            13          found that banks tend to consolidate their

            14          charitable giving.  This could conceivably

            15          constrain services that agencies like ours

            16          offer.

            17                Overall, I support the merger.  I thank

            18          you very much.

            19                MR. RONQUILLO:  Madam chairman, members

            20          of the panel, I want to thank the Federal

            21          Reserve Board for the opportunity to come

            22          here today and to testify in support of the

            23          application of merger of JPMorgan Chase and

            24          Bank One.

            25                For the record, my name is Marcos








                                                                    373
             1

             2          Ronquillo.  I am Chairman of the public law

             3          section of Godwin Gruber in Dallas, Texas.

             4                I feel a little bit out of place this

             5          afternoon, but I believe the merger does

             6          impact the State of Texas.  So I am here

             7          today to offer my testimony in that

             8          capacity.  I am also here today not as an

             9          attorney but as a volunteer.  I have been a

            10          Dallas resident since 1979, and have had the

            11          opportunity, as the former Chairman of the

            12          Dallas Spanish Chamber of Commerce, former

            13          President of the Dallas County Bar

            14          Association, and the honor of representing a

            15          multitude of Hispanic people in the

            16          Dallas/Fort Worth area.  In that capacity I

            17          have had the opportunity to work with Chase

            18          and its predecessor institutions over the

            19          span of at least fifteen years, and I can

            20          give before the Board direct testimony in

            21          terms of my observations, experiences and

            22          activities with those financial

            23          institutions.

            24                It has been my personal experience that

            25          Chase has offered innovative leadership in








                                                                    374
             1

             2          the areas of community-based development,

             3          low- to moderate-income housing, and has

             4          made inroads in the Latin-American

             5          community, especially in the Texas area.

             6                It has also been my observation that

             7          Chase has also been the leader in the

             8          establishment of public and private

             9          partnerships.  They come together to serve

            10          infrastructure, housing and other needs of

            11          the low- to moderate-income community.

            12                In addition to those initiatives, I

            13          have also had the privilege of working with

            14          JPMorgan Chase with respect to those

            15          activities in the Dallas/Fort Worth area

            16          with respect to access to capital.  No one

            17          here is here today to say that that is not

            18          an issue.  It is indeed a very important

            19          issue that all members of our community have

            20          access to capital -- small business

            21          entrepreneurs, microbusinesses -- and I am

            22          glad to say that Chase is an innovator and a

            23          leader in that area as well.

            24                Then, finally, time does not allow me

            25          to list all the activities, projects and








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             2          activities where JPMorgan Chase bankers,

             3          from the highest levels to the folks that

             4          basically run the bank, participate in

             5          programs and activities in the Dallas/Fort

             6          Worth area.  And because of those

             7          activities, I have been pleased to work with

             8          JPMorgan Chase on the Dallas Community

             9          Advisory Committee, on the Chase Community

            10          Advisory Board as well.

            11                So I am here to support the application

            12          of the merger and to, more importantly,

            13          underscore the following sentiment, and that

            14          is, it is our belief and it is our hope, as

            15          the Latino community grows in Texas, that

            16          with the leadership of Bank One, with the

            17          leadership of JPMorgan Chase, that hopefully

            18          2 and 2 will be fine.  Thank you very much.

            19                MS. BRAUNSTEIN:  Thank you.  Mr. Kui?

            20                R. KIU:  Hi.  Good afternoon.

            21                Distinguished members of the Federal

            22          Reserve Board Bank System, my name is

            23          Christopher Kui and I am the Executive

            24          Director of Asian Americans for Equality.

            25          Since its inception in 1974, AAFE has been








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             2          providing economic development and small

             3          business assistance, affordable housing,

             4          home ownership opportunities, and social

             5          services to low-income immigrant and

             6          minority communities.  Today, we serve more

             7          than 20,000 clients a year at six offices

             8          citywide.

             9                Community development lending and

            10          investment, affordable mortgage programs,

            11          and philanthropy are all vital interests and

            12          issues to the Asian American community.

            13          Today, the Asian American community

            14          represents more than 10 percent of New York

            15          City's population.

            16                Additionally, it is the single

            17          community with the largest deposits in

            18          neighborhoods such as Manhattan Chinatown,

            19          Flushing, Queens, and Sunset Park, Brooklyn.

            20          As our community continues to grow and

            21          develop, Chase's commitment to these efforts

            22          is all the more critical.

            23                In our experience in the Asian American

            24          community, Chase has been a strong partner.

            25          In its dealings with AAFE, Chase has








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             2          traditionally shown its willingness to work

             3          collaboratively with and provide support for

             4          community-based projects.

             5                Last year, AAFE partnered with Chase to

             6          complete Norfolk Apartments, 52 apartments,

             7          52 units of low-income housing in the

             8          Chinatown area.  Chase has also been a

             9          leading partner with other community groups

            10          through the New York Mortgage Coalition in

            11          increasing homeownership opportunities for

            12          underserved and minority constituencies.

            13                After the September 11 attacks, Chase

            14          took the unusual step of channeling $10

            15          million directly to over fifty

            16          neighborhood-based groups and intermediate

            17          areas in New York City to avoid bureaucratic

            18          or structural delays in order to help

            19          victims and affected businesses.  As a

            20          result, AAFE was able to move quickly to

            21          leverage over $12 million of government and

            22          corporate funding to lend to over 200 local

            23          small businesses in the Chinatown area who

            24          sacrificed on September 11.

            25                Having worked closely with JPMorgan








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             2          Chase, I have full confidence in the bank's

             3          commitment to investing in the local

             4          communities.

             5                When the Community Reinvestment Act

             6          came under Congressional attack in 1999, led

             7          by the Senate Banking Committee Chairman

             8          Phil Gramm, Chase was an important ally in

             9          opposing the gutting of that legislation,

            10          seeing it not only as socially responsible

            11          but as good business.  Since this battle,

            12          senior bank officers continue to speak

            13          decisively in support of the CRA and the

            14          programs that they have established.

            15                Therefore, today I ask the Federal

            16          Reserve to extend its support to the

            17          JPMorgan Chase/Bank One merger, based on

            18          recommendations to Chase Bank to continue

            19          the bank's strong leadership presence in New

            20          York City and to expand its community

            21          development programs and interest in our

            22          communities.

            23                Are we and many other community

            24          organizations concerned about the pending

            25          merger and its impact on local communities?








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             2          Are we to be concerned about the pending

             3          merger and location of the bank's retail

             4          services headquarters in Chicago?  Will New

             5          York City's neighborhoods take a back seat

             6          to other priorities?

             7                As this merger proceeds, many community

             8          development practitioners are concerned that

             9          JPMorgan Chase may have a lesser presence on

            10          a neighborhood level in New York City;

            11          additionally, that they might become too big

            12          to continue to build relationships on a

            13          one-to-one basis for community-based

            14          organizations.

            15                Therefore, we join with our fellow

            16          community-based organizations in

            17          recommending that:

            18                *  JPMorgan Chase's future

            19          organizational structure expand its ability

            20          to establish effective ownerships on a local

            21          level.

            22                *  JPMorgan Chase's community

            23          development program continue to be

            24          responsive to the priorities and needs of

            25          New York City's low-income neighborhoods.








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             2                *  JPMorgan Chase stand by its record

             3          of providing community development loans in

             4          New York City to reflect the bank's

             5          increased assets and market share.

             6          Particularly, more philanthropic dollars

             7          should be targeted to fund affordable

             8          housing and neighborhood redevelopment.

             9                Finally, we would also like to see

            10          JPMorgan Chase pursue relationships with

            11          many additional community-based

            12          organizations serving the Asian American and

            13          immigrant communities as these communities

            14          continue to grow in size and diversify.

            15                Additionally, Chase has been the model

            16          that other banks have tried to emulate.  As

            17          it expands, we are confident, I am

            18          confident, that Chase will stand firm in its

            19          commitment to communities.  With the

            20          increased resources of the future

            21          institution, the bank could continue and

            22          will continue to enjoy its place of

            23          leadership in community development.  Thank

            24          you.

            25                MS. BRAUNSTEIN:  Thank you.  Thank you








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             2          to the entire panel.

             3                We now come to the portion of the

             4          program where, if there is anyone who has

             5          not already spoken today who would like to

             6          make some comments, they may come forward,

             7          please, at this time.

             8                No one.

             9                Before we adjourn, I would like to make

            10          a couple of closing comments.  As you can

            11          imagine, putting on a public meeting like

            12          this is no small undertaking, so I would

            13          like to take the chair's prerogative to,

            14          first of all, thank New York and the Federal

            15          Reserve Bank of New York for its great

            16          hospitality in hosting us today.  I would

            17          like to thank my colleagues on the panel

            18          today for their support.  Thank you very

            19          much.

            20                Then I would also like to extend thanks

            21          to some people specifically who made this

            22          happen.  As I say, this is no small process

            23          and it took a lot of work.  From the New

            24          York Fed, I would like to thank Charles

            25          Sander, Mary Ann Campbell, all the ushers








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             2          and greeters that worked so hard today to

             3          get people in and out and keep us on time.

             4                I would like to thank the AD people who

             5          did a great job in keeping the systems up

             6          and working.

             7                I would also like to thank our timers,

             8          Lauren Cohen and Sunita Pierce.  Thank you

             9          very much for keeping people on time.

            10                Then from the board I would like to

            11          thank Beverly Smith and David Evans for all

            12          the work they did in working with the New

            13          York folks to prepare for this meeting.

            14                With that, unless there is any further

            15          business, we are adjourned.

            16                (Time noted:  4:50 p.m.)

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Last update: December 3, 2010